8, Title 24 of the California Code of Regulations, a portion of the ~2025 California Building Standards Code, as defined in the California Health and Safety Code, Section 18901 et seq. (authorized by Health and Safety Code Sections 18950 through 18961 ).
Chapter 15.21
EXISTING BUILDING CODE
Sections:
15.21.010 Adoption of the 2002:2025 California Existing Building Code, Part 10, Title 24 of the California Code of Regulations.
15.21.010 Adoption of the 2002:2025 California Existing Building Code, Part 10, Title 24 of the California Code of Regulations. There is adopted and incorporated by reference herein as the City's Existing Building Code for the purpose of prescribing regulations in the City of Poway to provide alternative building regulations for the rehabilitation, preservation, restoration, or relocation of existing buildings, the ~2025 California Existing Building Code, Part 10, Title 24 of the California Code of Regulations, a portion of the ~2025 California Building Standards Code, as defined in the California Health and Safety Code, Section 18901 et seq, which is based on the ~2024 International Existing Buildings Code.
Sections:
15.22.010
Chapter 15.22
GREEN BUILDING STANDARDS CODE
Adoption of the California Green Building Standards Code, Part 11, Title 24 of the California Code of Regulations.
15.22.010 Adoption of the California Green Building Standards Code, Part 11, Title 24 of the California Code of Regulations. There is adopted and incorporated by reference herein as the City Green Building Standards Code for the purpose of prescribing regulations in the City of Poway for the enhancement of the design and construction of buildings through the use of building concepts having a reduced negative impact or positive environmental impact and encourage sustainable construction practices the 2002:2025 California Green Building Standards Code, Part 11, Title 24 of the California Code of Regulations, a portion of the California Building Standards Code, as defined in the California Health and Safety code, Section 18901 et seq, and the California Green Building Standards Code. Except as otherwise provided by this Chapter and Chapter 15.02 of the City of Poway Municipal Code, all construction of buildings shall be in conformance with the ~2025 California Green Building Standards Code and any rules and regulations promulgated pursuant thereto, including the California Green Building Standards Code 2002:2025 Edition, published by the California Building Standards Commission.
Sections:
15.23.010
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Chapter 15.23
REFERENCED STANDARDS CODE
Adoption of the 2002:2025 California Referenced Standards Code, Part 12, Title 24 of the California Code of Regulations.
November 18, 2025, Item #10
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15.23.010 Adoption of the ~2025 California Referenced Standards Code, Part 12, Title 24 of the California Code of Regulations. The California Referenced Standards Code, ~2025 edition, Chapter 15.23 is adopted by reference without change to Buildings and Construction Title
15. Sections:
15.24.010
15.24.015
15.24.020
15.24.030
15.24.040
15.24.050
15.24.060
15.24.070
15.24.080
Chapter 15.24
FIRE CODE
Adoption of the 2025 California Fire Code, Part 9, Title 24 of the California Code of Regulations.
Deletions, revisions and additions.
Administration.
Definitions.
General precautions against fire.
Fire service features.
Building services and systems.
Fire sprinkler systems.
Construction requirements for existing buildings. Fire alarm and detection systems.
15.24.090 Fire safety during construction.
15.24.100 Wild land urban interface fire area. Repealed.
15.24.105 Hazardous Materials -General Provisions.
15.24.110 Fireworks display.
15.24.120 Chapter 80 Referenced Standards.
15.24 .130 Appendix B, fire flow requirements for buildings. Repealed. +1 ac5 ,,+2~4 ,....._ 144H-0--C-HOHnfH+I i1c-nct~. Repealed.
15.24.010 Adoption of the 2025 California Fire Code, Title 24, Part 9 of the California Code of Regulations.
15.24.010 Adoption of the 2025 California Fire Code, Title 24, Part 9 of the California Code of Regulations. The City of Poway adopts by reference the 202~§. California Fire Code, including Appendix Chapter 4 and Appendices B, C, E, F, H, I and O including Sections 305, 307, 308, as published by the International Code Council, except those portions that are deleted, modified or amended by this chapter. One copy of the above-mentioned code has been and is not filed in the office of the City Clerk or the fire code official, City of Poway, and the same is adopted and incorporated as fully as if set out at length herein.
From the effective date of the ordinance codified in this chapter, the provisions thereof shall be controlling within the limits of the City of Poway.
15.24.015 Deletions, revisions and additions.
15.24.015 Deletions, revision and additions. Deletions, revisions and additions to the 2025 California Fire Code. Deletions, revisions and additions to the 2025 California Fire Code shall be set forth in PMC 15.24.020 through 15.24.140.
15.24.020 Administration.
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Section 102.1M Repeal of conflicting ordinances, resolutions or motions is added to read:
102.1~ Repeal of conflicting ordinances, resolutions or motions. All former ordinances, resolutions, motions, or parts thereof that are conflicting or inconsistent with the provisions of this Ordinance or the Code or standards hereby adopted are repealed. Wherever a conflict exists in this chapter, the more restrictive requirement shall apply.
Section 104.-92.4 Modifications is modified added and modified to read:
104.-92.4 Modifications. Whenever there are practical difficulties involved in carrying out the provisions of this code, the fire code official shall have the authority to grant modifications for individual cases, provided the fire code official shall first find that special individual reason makes the strict letter of this code impracticable, and the modification is in compliance with the intent and purpose of this code and that such modification does not lessen health, life and fire safety requirements. The applicant's request for a modification shall state the specific section(s) for which a modification is requested, material facts supporting the contention of the applicant, the details of the modification or mitigating measure proposed and, if applicable, a map showing the proposed location and citing of the modification or mitigation measure. The details of action granting modifications shall be recorded and entered in the files of the department of fire prevention.
Section 105.6.53 Christmas tree lots is added to read:
105.6.53 Christmas tree lots. ,A,n operational permit is required to operate a Christmas tree Im-with or 'Nithout flameproofing services.
Section 105.5.13 Dry cleaning is added to read:
105.5. 13 Dry cleaning. An operational permit is required to engage in the business of dry cleaning or to change to a more hazardous cleaning solvent used in existing dry cleaning equipment.
Section 105. 5.22 Hazardous materials is added to read:
105.5.22 Hazardous materials. An operational permit is required to store, transport on site, dispense, use or handle hazardous materials in excess of the amounts listed in Table 105.5.22.
Section 105.5.30 LP-gas is added and modified to read:
105.5.30 LP-gas. An operational permit is required for the storage and use of LP-gas.
Section 105.5.33 Miscellaneous combustible storage is added to read:
105.5.33 Miscellaneous combustible storage. An operational permit is required to store in any building or on any premises in excess of 2,500 cubic feet (70 m3) gross volume of combustible empty packing cases, boxes, barrels or similar containers, combustible pallets, rubber tires, rubber, cork or similar combustible material.
Section 105.5.35 Motor fuel-dispensing facilities is added to read:
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105.5.35 Motor fuel-dispensing facilities. An operational permit is required for the operation of automotive, marine and fleet motor fuel-dispensing facilities.
Section 105.5.37 Open flames and torches is added to read:
105.5.37 Open flames and torches. An operational permit is required to remove paint with a torch, or to use a torch or open-flame device in a wildfire risk area.
Section 105.5.38 Open flames and candles is added to read:
105.5.38 Open flames and candles. An operational permit is required to use open flames or candles in connection with assembly areas, dining areas of restaurants or drinking establishments.
Section 105.5.41 Places of assembly is added to read:
105.5.41 Places of assembly. An operational permit is required to operate a place of assembly
Section 105.5.46 Refrigeration equipment is added to read:
105.5.46 Refrigeration equipment. An operational permit is required to operate a mechanical refrigeration unit or system regulated by Chapter 6.
Section 105.5.47 Repair garages and motor fuel-dispensing facilities is added to read:
105.5.47 Repair garages and motor fuel-dispensing facilities. An operational permit is required for operation of repair garages.
Section 105. 5.49 Spraying or dipping is added to read:
Section 105.5.49 Spraying or dipping. An operational permit is required to conduct a spraying or dipping operation utilizing flammable or combustible liquids, or the application of combustible powders regulated by Chapter 24.
Section 105.5.50 Storage of scrap tires and tire byproducts is added to read:
105.5.50 Storage of scrap tires and tire byproducts. An operational permit is required to establish, conduct or maintain storage of scrap tires and tire byproducts that exceeds 2,500 cubic feet (71 m3) of total volume of scrap tires, and for indoor storage of tires and tire byproducts.
Section 105.5.54 Wood products is added to read:
105.5.54 Wood products. An operational permit is required to store chips, hogged material, lumber or plywood in excess of 200 cubic feet (6 m3).
Section 105.5.55 Temporary heating or cooking in tents or membrane structures is added to read:
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105.5.55 Temporary heating or cooking in tents or membrane structures. An operational permit is required to operate temporary heating or cooking equipment within tents or membrane structures.
Section 105.5.60 Farmers Market is added to read:
105.5.60 Farmers Market. An operational permit is required to operate a farmers market.
Section 105.5.61 Holiday lot/event is added to read:
105.5.61 Holiday lot/event. An operational permit is required to operate a holiday lot or event.
Section 105.5.62 Street fair/parade is added to read:
105.5.62 Street fair/parade. An operational permit is required to operate a street fair or parade.
Section 15.6.2 Automatic sprinkler systems is added to read:
105.6.2 Automatic sprinkler systems. A construction permit is required for installation of or modification to an automatic sprinkler system. Maintenance performed in accordance with this code is not considered to be a modification and does not require a permit.
Exceptions:
1. A construction permit is not required when one of the following conditions is met:
a. When fewer than five sprinkler heads are modified, added or removed to a commercial sprinkler system.
b. When fewer than two sprinkler heads are modified, added or removed to a residential sprinkler system.
Section 105.6.2.2 Construction documents is added to read:
105.6.2.2 Construction documents. Construction documents shall be submitted in accordance with Section 901.2.
Section 108.1 Fees is added and modified to read:
108.1 Fees. A permit shall not be valid until the fees have been paid, nor shall an amendment to a permit be released until the additional fee, if any, has been paid.
Section 1142.1 Means of appeals is added and modified to read:
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1142.1 Means of Agppeals procedure established. Whenever the fire code official has denied a permit or other entitlement, or when it is alleged that a mistake has been made in the interpretation or application of the code, the applicant may appeal the decision of the fire code official to the City Manager by filing a written appeal with the City Clerk within 30 days of the decision. If the appeal is denied by the City Manager, the City Manager's November 18, 2025, Item #10
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decision may be appealed to the City Council by filing a written appeal with the City Clerk within 30 days of the City Manager's decision and paying of the appeal fee set forth in the City's Master Fee Schedule for administrative appeals.
Section 113.3.2 Compliance with orders and notices is added and modified to read:
113.3.2 Compliance with orders and notices. A notice of violation issued or served as provided by this code shall be complied with by the owner, the owner's authorized agent, operator, occupant or other person responsible for the condition or violation to which the notice of violation pertains. It is unlawful for any person to fail to comply with any lawful order issued pursuant to this Code by the City Attorney or by a court of competent jurisdiction.
Section 1124.4 is added and modified to read:
11~.4 Violation penalties. It is unlawful for any person to violate any of the provisions of this Code or standards hereby adopted by reference as a part of this Code, or to fail to comply vvith any la•Nful order issued pursuant to this Code, or to violate any permit or condition of approval issued pursuant to this Code. It is further unla1Nful for any person to fail to comply with any lmvful order issued pursuant to this Code by the City Attorney or by a court of competent jurisdiction. A violation of any provision of this Code, or failure to comply with orders or conditions issued pursuant to this Code, shall constitute a misdemeanor or (in the discretion of the prosecuting attorney) an infraction, in any event as set forth in Chapter .L.Q§_ PMC. In addition to any criminal penalties any violation may also be enforced by civil action, and shall be subject to civil and administrative penalties, as set forth in Chapters .L.Q§_ and i..1Q PMC. A violation of any provision of this Code, or failure to comply with orders or conditions issued pursuant to this Code, shall constitute a misdemeanor or (in the discretion of the prosecuting attorney) an infraction, in any event as set forth in Chapter 1.08 PMC. In addition to any criminal penalties any violation may also be enforced by civil action, and shall be subject to civil and administrative penalties, as set forth in Chapters 1. 08 and 1.10 PMC.
Section 1 G416.1 a Cost recovery is added to read:
1G4.1§.13 Cost recovery. The purpose of this section is to establish authority to obtain reimbursement from responsible individuals for the expenses of any emergency response and/or enforcement action by the City of Poway to protect the public from criminal or negligent activities, and from fire or hazardous substances.
Section 1G4.1§.4-ai Reimbursement is added to read:
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1 G416.4-ai Reimbursement. In accordance with Health and Safety Code Section 13000 et seq., an individual who acts negligently or in violation of the law and thereby requires the jurisdiction to provide an emergency response to a danger posed by a fire or hazardous substance shall be liable for reimbursement to the agency for the costs incurred. In accordance with Government Code Sections 53150 through 53158, any individual who is under the influence of an alcoholic beverage, or any drug, or the combined influence of an alcoholic beverage or any drug, and whose negligent operation of a motor vehicle, boat or vessel, or civil aircraft caused by that influence, proximately causes any incident and thereby requires the agency to provide an emergency response, shall reimburse the agency for the cost incurred.
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Section 1~1§.3,..9 Expense recovery is added to read:
1~16.3,..9 Expense recovery. The fire code official may impose a fee for recovery of expenses incurred to enforce the fire prevention provisions of this code. Such expense recovery fees shall be established by a resolution of the City Council.
15.24.030 Definitions.
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The following definitions are added or modified to Section 202:
Accessory Dwelling Unit. An Accessory Dwelling Unit (ADU) is an attached or detached residential dwelling unit which provides complete independent living facilities for one or more persons on the same property as a single-family dwelling in a residential zone. The unit shall meet the definition of an ADU in the Government Code Section 65852.2.
Defensible Space. An area abutting and/or adjacent to a structure 11✓here material capable of allowing a fire to spread has been treated, cleared, or modified to slow the rate and intensity of fire spread to provide defense from an advancing 1Nildfire and to create an area for fire suppression operations to occur.
Fire Apparatus Access Road or Fire Access Roadway. A road that provides fire apparatus access from a fire station to a facility, building or portion thereof. This is a general term inclusive of all other terms such as fire lane, public street, private street, parking lot lane, access roadway, and driveway.
Fire Authority Having Jurisdiction (FAHJ). The designated entity providing enforcement of fire regulations as they relate to planning, construction, and development. This entity for the City of Poway also provides fire suppression and other emergency services.
Fire Department. Any regularly organized fire department regularly charged with the responsibility of providing fire protection to the jurisdiction.
Fire Hazard. Anything that increases or could cause an increase of the hazard or menace of fire to a greater degree than customarily recognized as normal by persons in the public service regularly engaged in preventing, suppressing, or extinguishing fire; or anything or act, which could obstruct, delay, hinder, or interfere with the operations of the fire department; or egress of occupants in the event of fire.
Fire Protection Plan (FPP). The FPP is a document prepared for a specific project or development proposed in the wildland urban interface fire area that describes ways to minimize and mitigate potential loss from wildfire exposure, with the purpose of reducing impact on the community's fire protection delivery system.
Fuel Break. An area, strategically located for fighting anticipated fires, where the native vegetation has been permanently modified or replaced so that fires burning into it can be more easily controlled. Fuel breaks divide fire prone areas into smaller areas for easier fire control and to provide access for fire fighting.
Fuel Modification Zone. A strip of land •.vhere combustible vegetation has been thinned or modified or both and partially or totally replaced with approved fire resistant and/or November 18, 2025, Item #10
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irrigated plants to provide an acceptable level of risk from vegetation fires. Fuel modification reduces the radiant and convective heat on a structure and provides valuable defensible space for firefighters to make an effective stand against an approaching fire frGRt-
Hazardous Fire Area. Any geographic area designated by the FAHJ because the type and condition of vegetation, topography, weather and structure density increase the probability that the area will be susceptible to wildfire.
Heritage Tree. Any mature tree or mature stand of trees designated by the City Council as having historic or cultural significance.
Highly Flammable Native Vegetation. Species that provide large fuel loads such as sumac, native oak, chamise, grassland, chapparal, coastal sage scrub and sage. It does not include low fuel load species such as toyon, yucca, lemonade berry, and other similar types of plants.
Local Responsibility Area (LRA). Areas in which the financial responsibility of preventing and suppressing fires is the responsibility of the City.
Nonrequired (Voluntary) Systems and Components. Additional safety or notification features to an existing fire alarms system, installed by a building owner at their own request, even though not mandated by code. These voluntary systems must be documented on record drawings. The installer is responsible for defining their features based on the owner's goals and ensuring they are correctly installed, tested, and maintained to comply with code requirements.
Open Space Easement. Any right or interest in perpetuity or for a term for years in open space land, as that term is defined in Government Code section 51051, acquired by the County, a city or a nonprofit organization where the instrument granting the right or interest imposes restriction on use of the land, to preserve the land for public use or enjoyment of the natural or scenic character of the land.
Response Time. The elapsed time from the fire department's receipt of the first alarm to •.vhen the first fire unit arrives at the scene.
Structure. Includes any of the following: (1) buildings designed primarily for human use, including attached structures such as garages; or (2) buildings designed to house large animals. "Structure" does not include sheds, storage buildings, or detached garages that are not designed for human use or the housing of large animals.
Travel Time. The estimated time it would take for a responding agency to travel from the fire station to the furthest structure in a proposed development project, determined by measuring the safest, most direct, appropriate, and reliable route with consideration given to safe operation speeds for heavy fire apparatus.
15.24.040 General precautions against fire.
Section 304.1.4.§ Outdoor carnivals and fairs is added to read:
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304.1.4§ Outdoor carnivals and fairs. Outdoor carnivals and fairs shall only be conducted on grounds free of combustible vegetation or trimmed to the satisfaction of the FAMJ fire code official.
Section 32-904.1.6 Declaration of public nuisance is added to read:
Section 32-904.1.6 Declaration of public nuisance. All highly flammable chaparral vegetation, and dead or dying trees or shrubs, growing upon the streets, sidewalks, or upon private property within the City, which by reason of their size, manner of growth, and location constitute a fire hazard to any structure, improvements, crops or other property, are declared by this chapter to be a public nuisance. A dead or dying tree or shrub shall not be classified as a public nuisance unless the tree or shrub is in a condition that constitutes a fire hazard. All vegetation which constitutes a public nuisance pursuant to this section shall be reduced or removed as determined necessary by the Director of Development Services or Fire Marshal. Highly flammable native vegetation shall be reduced as described in 4907.4.1 604.3.2.
Section 32-904.1.6.1 Abatement of public nuisance is added to read:
Section 32-904.1.6.1 Abatement of public nuisance. If the responsible person fails or neglects to abate the nuisance, abatement may be completed in accordance with Section
8.76 of the Poway Municipal Code.
Section 305.6 Rockets, model aircraft and similar devices is added to read:
305.6 Rockets, model aircraft and similar devices. Rockets, model airplanes, gliders, balloons, sky lanterns, floating luminaries or similar devices powered with an engine, propellant, open flame, or other feature liable to start or cause a fire shall not be projected into or across hazardous fire areas or areas identified as a fire hazard severity zone without prior approval of the fire code official.
Section 307.5 Attendance is added and modified to read:
307.5 Attendance. Open burning, bonfires, recreational fires and the use of portable outdoor fireplaces shall be constantly attended by an adult until the fire is extinguished. A minimum of one portable fire extinguisher complying with section 906 with a minimum 4- A rating or other approved on-site fire-extinguishing equipment, such as dirt, sand, water barrel, garden hose or water truck, shall be available for immediate utilization.
Section 324 .1 is added to read:
324 .1 Storage of firev.iood. Fire'Nood shall not be stored in unenclosed space beneath a building or structure, on a deck or under eaves, a canopy or other projection or overhand. In the V8f3/ high fire hazard severity zone firev1ood shall be stored at least 30 feet from any structure, be separated from the cro1Nn of any trees by a minimum of 15 feet, measured horizontally, and have a minimum of 10 feet of clearance, dovm to bare mineral soil, in all directions. Firewood not for use on the premises shall be stored so as to not pose a fire hazard.
Section 315.1.8.1 Exceptions is added to read:
315.1.8 Exceptions:
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1. Firewood piles that are completely covered in a fire resistant material are exempt.
15.24.050 Fire service features.
Section 503.2.1 Dimensions is modified to read:
503.2.1 Dimensions. Fire apparatus access roads shall have an unobstructed, improved width of not less than 20 feet, exclusive of shoulders, except for approved security gates in accordance with Section 503.6, and an unobstructed vertical clearance of not less than 13 feet 6 inches. Roadways with gated entrances, guard stations, or center medians which have separated lanes of one-way traffic shall not be less than 12 feet wide per lane. except single family residential driveways serving no more than two improved parcels containing dwelling units shall have a minimum of 16 feet of unobstructed improved width. In most cases, the City of Poway construction standards for streets (Chapter 12.20 PMC) wi+I may be more restrictive.,., and +the more restrictive standard shall apply. Vertical overhead clearance shall be a minimum of 13 feet 6 inches.
Exceptions:
1. Upon approval by the fire code official, vertical clearances or width may be reduced provided such reduction does not impair access by fire apparatus and approved signs are installed and maintained indicating the established vertical clearance.
2. Fire access roadvvays, gated entrances 111ith card readers, guard stations, or center medians, which have separated lanes of one way traffic shall be not less than 12 feet wide per lane.
2. Single-family residential driveways serving no more than two improved parcels containing dwelling units shall be permitted to have a minimum of 16 feet of unobstructed improved width.
Section 503.2.3 Surface is modified to read:
503.2.3 Surface. Fire apparatus access roads shall be designed and maintained to support the imposed loads of fire apparatus not less than 75,000 pounds per a geotechnical report unless authorized by the -FAf4J fire code official and shall be provided with an approved paved surface so as to provide all-weather driving capabilities. A paved surface shall mean asphalt, concrete, or a permeable paver system, except that decomposed granite, gravel, or equivalent is permissible for residential driveways.
Section 503.2.4 Turning radius is modified to read:
503.2.4 Turning radius. The turning radius of a fire apparatus access road shall be a minimum of 28 feet as measured to the inside edge of the improvement width or as approved by the fire code official.
Section 503.2.5 Dead ends is modified to read:
503.2.5 Dead ends. All dead-end fire apparatus access roads in excess of 150 feet in length shall be provided with approved provisions that allow emergency apparatus to turn around. A cul-de-sac shall be provided in residential areas where the access roadway 32 of 49
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serves more than two improved parcels. The minimum, unobstructed paved radius width for a cul-de-sac shall be 38 feet in residential areas. Dead ends of 300-feet or greater shall be provided with a turnout at halfway point and a turnaround at end locations, with turnouts every 150-feet. The fire code official shall establish a policy identifying acceptable turnarounds and turnouts for various project types.
Section 503.2. 7 Grade is modified to read:
503.2.7 Grade. The gradient for a fire apparatus access roadway shall not exceed 20 percent.
Grades exceeding 15 percent (incline or decline) shall be constructed of Portland Cement Concrete (PCC), with a deep broom finish perpendicular to the direction of travel, or equivalent, to enhance traction. Grades exceeding 10 percent shall be constructed of asphalt or PCC. Permeable paver systems, decomposed granite, gravel or equivalent shall not be permitted for used for grades exceeding 10 percent.
Section 503.2.8 Angles of approach and departure is modified to read:
503.2.8 Angles of approach and departure. The angle of departure and the angle of approach of a fire apparatus access roadway shall not exceed seven degrees (12 percent) or as approved by the fire code official.
Section 503.3 Marking is modified to read:
503.3 Marking. Where required by the fire code official, approved signs or other approved notices or markings that include the words "NO PARKING-FIRE LANE" shall be provided and maintained for fire apparatus access roads to identify such roads and prohibit the obstruction thereof or both. The means by which fire lanes are designated shall be maintained in a clean and legible condition at all times and be replaced or repaired when necessary to provide adequate visibility.
All new public roads, all private roads within major subdivisions, and all private road easements serving four or more parcels shall be named. Road name signs shall comply with City of Poway Supplemental Engineering Standards, Street Sign Specifications.
The fire code official may require the posting of a fire access roadway where parking has obstructed reduced or could obstruct reduce the required width.
Section 503.6.1 Security gate access is modified to read:
503.6.1 Security gate access. All automatic gates across fire access roadways and driveways shall be equipped with approved, emergency key-operated switches overriding all command functions and opening the gate(s). Gates accessing more than four residences or residential lots, or gates accessing hazardous institutional, educational or assembly occupancy group structures shall also be equipped with approved emergency traffic control-activating strobe light sensor(s), or other devices approved by the fire code official, which will activate the gate on the approach of emergency apparatus with a battery backup or manual-mechanical disconnect in case of power failure.
Section 505.1 is modified to read:
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505.1 Address numbers. Approved numbers and/or addresses shall be placed on all new and existing buildings and at appropriate additional locations as to be plainly visible and legible from the street or roadway fronting the property from either direction of approach. ,Aiddress numbers shall contrast with their background and meet the City of Po1Nay standards. Additional address numbers may be required where deemed necessary by the fire code official. Accessory dwelling units and junior accessory dwelling units shall require separate addresses. VVhen required by the fire code official, roof numbers shall be installed meeting current fire department standards.
Section 505.1.1 Accessory dwelling unit address numbers is added to read:
505.1.1 Accessory dwelling unit address numbers. Accessory dwelling units and junior accessory dwelling units shall require separate addresses.
Section 505.1.2 Additional address numbers is added to read:
505.1.2 Additional address numbers. Additional address numbers may be required where deemed necessary by the fire code official.
Section 505.3 Easement address signs is added to read:
505.3 Easement address signs. All easements which are not named differently from the roadway from which they originate, shall have an address sign installed and maintained, listing all street numbers occurring on that easement located where the easement intersects the named roadway. Address sign design shall meet the requirements outlined in Section 505.1. The minimum size of the numbers on that sign shall be four inches in height with a minimum stroke of 3/8 inch and shall contrast 1Nith the background.
Section 505.4 Map/Directory is added to read:
505.4 Map/Directory. A lighted directory map, meeting current fire department standards, shall be installed at each driveway entrance to multiple unit residential projects and mobile home parks where the number of units in such project exceeds 15.
Section 506.1 Key boxes is modified to read:
506.1 Key boxes. When access to or within a structure or an area is unduly difficult because of secured openings or where immediate access is necessary for life saving or firefighting purposes, the fire code official is authorized to require a key box to be installed in an accessible location. The key box shall be a type approved by the fire code official and shall contain keys to gain necessary access.
506.1 Key boxes. The fire code official is authorized to require a key box to be installed in an accessible location when:
1. Access to or within a structure or an area is unduly difficult because of secured openings or where immediate access is necessary for life saving or firefighting purposes.
2. A structure has a central station-monitored fire detection system and/or fire sprinkler system.
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The key box shall be a type approved by the fire code official and shall contain keys to gain necessary access.
Section 506.2 Key box maintenance is modified to read:
506.2 Key box maintenance. The operator of the building shall immediately notify the fire code official in writing and provide the new key where a lock is changed or rekeyed. The key to such lock shall be secured in the key box.
Section 506.2.1 is added to read:
Section 506.2.1 Emergency Key Access. All central station monitored fire detection systems and fire sprinkler systems shall have an approved emergency key access box on site in an approved location. The owner or occupant shall provide and maintain current keys for the structure(s) for fire department placement in the box and shall notify the fire department in writing when the building is re keyed.
Section 507.2.2 Water storage tanks is modified to read:
507.2.2 Water storage tanks. Water storage tanks, when permitted by the fire code official, shall comply with the below requirements including Table No. 507.2.2 and be installed in accordance with NFPA 22.
Table No. 507.2.2
Gallons Per
Building Minute Water Capacity Duration
Square Feet Flow Gallons Minutes
Up to 3,600 10,000 40
3,601 to 7,700 250 15,000 60
7,701 and above 333 20,000 60
When the exposure distance is 100 feet or less from an adjacent property or the severity of the potential fire risk has been determined to exist, an increase in water storage may be required by the fire code official.
1. Tank elevation shall be equal to or higher than the fire department connection on the premises. Regardless of domestic use, all tanks shall be equipped with a device that will ensure that the tank contains the designated amount of water for fire flow duration as determined by the Fire Department. Tank size may be increased to serve multiple structures on a single parcel.
2. The supply outlet shall be at least four inches in diameter from the base of the tank to the point of outlet at the fire department connection. The fire department connection shall be at least one 4-inch National Standard Thread (male), reduced to one 2 1/2-inch National Standard Thread (male). Additional outlets may be required. 35 of 49
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3. Tanks that are supplied by municipal water, when permitted by the fire code official, shall have a capacity of 10,000 gallons provided that the sole use of these tanks is for fire protection purposes.
4. Location of fire department outlet shall be determined on the plot plan when submitted to the fire department. Consideration will be given to factors such as topography, elevations, and distance from structures, driveway access, and prevailing winds.
5. The outlet shall be located along an access roadway and shall not be closer than 50 feet or further than 150 feet from the structure.
6. All exposed tank supply pipes shall be of an alloy or other material listed for above-ground use. Adequate support shall be provided.
7. Water storage tanks shall be constructed from materials approved by the fire code official and installed per manufacturer recommendations.
8. The fire code official may require any necessary information be submitted on a plot plan for approval.
9. Vessels previously used for products other than water shall not be permitted.
15.24.060 Building services and systems.
Section 605.g.z_ 1 Residential incinerators is modified to read:
605_gz_ 1 Residential incinerators. Residential incinerators shall be prohibited.
15.24.070 Fire sprinkler systems.
Section 903.3 Installation requirements is modified to read:
903.3 Installation Requirements. Automatic sprinkler systems shall be designed and installed in accordance with Sections 903.3.1 through 903.3.8. The system shall be designed 10% below ("off the top") available water source pressure during peak usage.
Section 903.3.1.1.4903.3.1.1.5 System design is added to read:
903.3.1.1.4903.3.1.1.5 System design. Occupancies referred to as "spec buildings" wherein no specific end use is identified at the time of plan check, the sprinkler system shall provide a density of 0.45 gallons per minute per square-foot for a 3,000-square-foot design area.
Section 903.3.1.3.1903.3.5.1.1 Water supply design is added to read:
~.4-:-3-4903.3.5.1.1 Water Supply Design. New structures shall be equipped with a minimum one-inch water service line and one-inch water meter. 36 of 49
November 18, 2025, Item #10
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903.3.5.1.2 Tank supplied fire sprinkler systems. Where fire sprinkler systems are installed outside the City water service area and are supplied by water tank and booster pump, the pump shall be equipped with auxiliary power supply.
15.24.080
systems.
Construction requirements for existing buildings. Fire alarm and detection Section 907.9.1 Nonrequired (voluntary) system and component upgrades is added to read:
907.9.1 Nonrequired (voluntary) system and component upgrades. Voluntary system and component upgrades to existing fire alarm systems shall be reviewed and approved by the fire code official.
Construction documents shall be of sufficient clarity to indicate the location, nature and extent of the work proposed and show in detail that it will conform to the provisions of the California Fire Code; the California Building Code; and relevant laws, standards, ordinances, rules and regulations, as determined by the fire code official.
The nonrequired voluntary system shall contain all the following before approval:
1. A manual fire alarm box.
2. A remote annunciator panel in a location approved by the fire code official.
3. A smoke detector above the fire alarm control unit (FACU), fire alarm control panel (FACP), or dedicated monitoring panel.
4. A documentation cabinet.
After review of the occupancy type, operation, and current conditions, greater requirements may be specified at the discretion of the fire code official Exception:
1. After review and at the discretion of the fire code official, lesser requirements may be specified.
Section 1103.5 Sprinkler systems is modified to read:
1103.5 Sprinkler systems. An automatic sprinkler system shall be provided in existing buildings in accordance with Sections 1103.5.1 through 1103.5.5 1103.5.6, and all existing buildings and structures with an existing fire sprinkler system(s) undergoing improvements and/or additions shall be provided with approved fire sprinkler protection in accordance with the appropriate NFPA design.
15.24.090 Fire safety during construction.
Section 33-1-S04.3 Flammable vegetation is added to read:
Section 3318
Fuel Modification Zones
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November 18, 2025, Item #10
Ordinance No.
334S04.3 Flammable vegetation General. Any person during construction of any kind which requires a building permit and includes installation of a fuel modification zone, shall remove all flammable vegetation within the approved fuel modification zone prior to the arrival of combustible material on the site and shall maintain during the duration of the project until all elements of approved fuel modification zones are installed and approved.
15.24.100 Wildland urban interface fire area. Repealed.
Section 15.24.100 is repealed in its entirety to be replaced with Chapter 15.05 Wild land Urban Interface Code.
Section 4903 is added to read:
SECTION 4903
FIRE PROTECTION PLAN
4903.1 VVhen required. The Development Services Department or the FAHJ may require an applicant for a parcel map, subdivision map, minor development review application, development review, specific plan or major use permit for any property located in a wildland urban interface fire area to submit a Fire Protection Plan (FPP) as part of the approval process.
4903.2 Contents. The FPP shall consider location, topography, geography, aspect, combustible vegetation (fuel types), climatic conditions and fire history. The plan shall address the following in terms of compliance •.vith applicable codes and regulations, including, but not limited to, water supply, vehicular and emergency apparatus access, travel time to nearest serving fire station, structural ignitability, structure set back, ignition resistive building features, fire protection systems and equipment, impacts to existing emergency services, defensible space, and vegetation management. The plan shall recommend measures to reduce the ignitability of structures throughout the area being addressed.
Section 4904.4 is added to read:
4904.4 Local Responsibility Area Fire Hazard Severity Zones. The City of Pmvay designates the fire hazard severity zones as recommended by the Office of the State Fire Marshal pursuant to Government Code Section §.11l§..
Section 4904.4.1 is added to read:
4904.4.1 Parcel Identification. Any parcel that is •.vithin one or more fire hazard severity zones or is partially included in a fire hazard severity zone shall be considered entirely within the most restrictive of the fire hazard zones identified.
Section 4904.4.2 is added to read:
4904.4.2 Display of Fire Hazard Severity Zones and Hazardous Fire Areas. The maps have been duly noticed and posted as required by law and are available for public viewing at the office of the City Clerk or on the City of Poway website. 38 of 49
November 18, 2025, Item #10
Ordinance No.
Section 4905.4 is added to read:
4905.4 General Fire Setbacks. Within Rural Residential Zones, except for noncombustible buildings and structures, buildings and structures located within a wildland urban interface area shall be setback a minimum of 30 feet from property lines and biological conservation and/or open space easements unless the Poway Municipal Code requires a greater minimum or if existing legally permitted buildings and structures are located within 30 feet of the property line (legal nonconforming), then the existing distance from the property lot line established by the nonconforming portion of the building shall be used as the required setback distance for any detached accessory structures or additions to that building. VI/hen the property line abuts a roadway, the setback shall be measured from the farthest roadway edge.
Exception:
1. VI/hen the fire code official determines the hazard from a wildland fire is not significant or when the terrain, parcel size or other constraints on the parcel make the required setback infeasible, this setback may be reduced to less than 30 feet •.vhen additional measures are employed to the satisfaction of the fire code official.
2. No other exceptions to the General Fire Setback is permissible except for where local setbacks are pre empted by State law.
Section 4905.5 is added to read:
4905.5 Structure Setback from Slope. Single story structures shall be setback a minimum 15 feet horizontally from top of slope to the farthest projection from a roof. A single story structure shall be less than 12 feet above grade. A hvo story structure shall be setback a minimum of 30 feet horizontally from top of slope to the farthest projection from a roof.
Structures greater than two stories may require a greater setback when the slope is greater than 2 to 1.
Exceptions:
1. Structures constructed •.vith a noncombustible exterior wall adjacent to the slope, no openings adjacent to the slope, no combustible attachments to the exterior wall adjacent to the slope, and no roof eaves adjacent to the slope.
2. There exists no open wild land fuel area directly adjacent or juxtaposed to the structure, and the slope is directly adjacent to developed parcels with fuel management principles in ~
3. The fire code official determines the hazard to be minimal.
Section 4906.3 is modified to read:
4906.3. Landscape Plans. Landscape plans are required for new residential developments, residential custom homes, production tract homes, multi family residential, and commercial buildings in the wildland urban interface area. The plan shall include 39 of 49
November 18, 2025, Item #10
Ordinance No.
development and maintenance requirements for the fuel modification zone adjacent to structures and roadways, and to provide significant fire hazard reduction benefits for public and firefighting safety. Landscape plans shall be submitted and approved by the Development Services Department and the fire code official prior to the issuance of a building permit. The fire code official may expand or reduce the distance of the fuel modification zones based on project location, surrounding vegetation, and topography.
Section 4906.3 is modified to read:
4906.3.1 Contents. Landscape plans shall follo111 the submittal requirements found in the Landscape and Irrigation Design Manual and shall, at a minimum, include:
1. Delineation of the 5 foot, 30 foot, and 100 foot fuel management zones from all structures.
2. Identification of the existing vegetation to remain and proposed new vegetation.
3. Identification of all irrigated areas.
4. A plant legend with both botanical and common names, and identification of all plant material symbols.
5. Identification of ground coverings •.vithin the 5 foot and 30 foot zones
6. A readable scale
Section 4906.3.2 is added to read:
4906.3.2 Landscape Installation. All landscaping shall be installed according to the landscape plan prior to final inspection for issuance of a certificate of occupancy.
Section 4906.5 is added to read:
Section 4906.5 Fuel Modification. VVithin 100 feet from each building or structure, or as determined by the fire code official, all new vegetation shall be planted and all existing vegetation shall be modified as described below.
Fuel Modification Zones.
Zone O "Immediate Zone" from O to 5 feet. This zone shall consist of the area under and around buildings or structures and measures from the exterior wall surface or edge, patio, deck, or attachments to, and extending out to 5 feet. This zone shall be constructed of continuous hardscape or non combustible materials. The use of natural mulch and other combustible materials shall be prohibited.
Zone 1 "Intermediate Zone" from 5 to 30 feet. This zone shall consist of 25 feet of planting of low grovA:h, drought tolerant and fire resistive plant species from 5 to 30 feet or to the property line, 1Nhichever is closer. Vegetation in this zone shall be irrigated and planted in accordance with the City of Poway Landscape and Irrigation Design Manual. 40 of 49
November 18, 2025, Item #10
Ordinance No.
Zone 2 "Extended Zone" from 30 to 100 feet. This zone shall consist of 70 feet of maintained vegetation from 30 to 100 feet, or to the property line, whichever is closer.
Vegetation in this zone shall be maintained in accordance with the City of Poway Landscape and Irrigation Design Manual.
Figure 4906.5 Measurements of Fuel Modification Distance Exceptions:
1. Single specimens of trees, ornamental shrubbery or similar plants used as ground cover, provided that they do not form a means of rapidly transmitting fire from the native growth to any structure.
2. With the approval of the fire code official, the •1.1idth of the fuel modification zone may be reduced where ignition resistant construction or other mitigation measures are implemented.
Section 4 906. 5.1 is added to read:
Section 4906.5.1 Fuel Modification of Combustible Vegetation from Sides of Roadways.
The FAHJ may require a property owner to modify combustible vegetation in the area within 10 feet from each side of the driveway or a public or private road adjacent to the property to establish a fuel modification zone.
Exception:
The FAHJ may reduce the fuel modification zone if it \Viii not impair access.
Section 4906.5.2 is added to read:
Section 4906.5.2 Inspection. The FAHJ has the right to enter private property to ensure the fuel modification zone requirements are met.
Section 4906.6 is added to read:
Section 4906.6 Community Fuel Modification. The FAHJ may require a developer, as a condition of issuing a building permit, to document, with a landscape plan, one or more fuel modification zones to protect a new community by reducing the fuel loads adjacent to a community and structures within it.
Section 4 906.6.1 is added to read:
Section 4906.6.1 Land 011.1nership. Once a fuel modification zone has been established under section 4906.6, the land on which the zone is located shall be under the control of an association or other common ownership established in perpetuity, for the benefit of the community to be protected.
Section 4907.4 is added to read:
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Section 4907.4 Defensible Space. Any person 111ho 011.1ns, leases, controls, operates, or maintains an occupied dwelling or occupied structure that is within a very high fire hazard November 18, 2025, Item #10
Ordinance No.
severity zone or hazardous fire area shall maintain defensible space in accordance with Government Code §1.1.§l and California Code of Regulations Title 14, Division 1. 5, Chapter 7, Subchapter 3, Article 3.
Section 4907.4.1 is added to read:
4907.4.1 Highly Flammable Native Vegetation. Highly flammable native vegetation shall only be reduced by mowing or trimming the vegetation to a height of 6 to 12 inches, leaving the plant root intact to stabilize the soil. Native vegetation may not be reduced by clearing, brushing or grubbing and may not be removed to bare soil. Native vegetation may not be removed beyond the fuel modification zone without a permit.
Section 4907.4.2 is added to read:
4907.4.2 Good Neighbor/ Neighborhood Protection. When a structure is less than 100 feet from a property line and hazardous vegetation on an adjacent improved or unimproved parcel is deemed to be a fire hazard to the structure, the responsible person where the fire hazard exists shall be responsible for removing the fire hazard in that area that is within 100 feet of the structure. The determination for appropriate clearance distances will be made by the fire code official based upon a visual inspection of the parcel and shall consider all factors that place the property or structure at risk from an approaching fire. These factors shall include local weather conditions, fuel types, topography, and the environment where the property or structure is located.
Section 4907.4.3 is added to read:
Section 4907.4.3 Exceptions. The following types of vegetation may require an administrative clearing permit and shall not be subject to reduction or removal pursuant to this chapter without the prior approval of the fire code official:
1. Heritage Trees.
2. Vegetation 11.iithin streambeds, banks, and vernal pools.
3. Vegetation located within a recorded Biological Conservation Easement. In the case of vegetation that is within any habitat that is required to be removed pursuant to this chapter shall be mitigated in kind by the property owner at a 1: 1 ratio.
Section 4907.8 is added to read:
4907.8 Maintenance of Defensible Space. Any person owning, leasing, controlling, operating or maintaining a building or structure required to establish a fuel modification zone shall maintain the defensible space. The FAHJ may enter the property to determine if the person responsible is complying with this section. The FAHJ may issue an order to the person responsible for maintaining the defensible space directing the person to modify or remove non fire resistant vegetation from defensible space areas, remove leaves, needles and other dead vegetative material from the roof of a building or structure, maintain trees as required or to take other action the FAHJ determines is necessary to comply.
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November 18, 2025, Item #10
Ordinance No.
15.24.105 Hazardous Materials -General Provisions.
Section 5001.5.1 Permits is modified to read:
5001.5. Permits. Permits shall be required as set forth in Sections 105.5 and 105.6. A Hazardous Materials Management Plan (HMMP) and a Hazardous Materials Inventory Statement (HMIS) shall be required by the fire code official with the application for a permit.
15.24.110 Fireworks display.
Section 5608.1 General is modified to read:
5608.1 General. Outdoor fireworks displays, use of pyrotechnics before a proximate audience and pyrotechnic special effects in motion picture, television, theatrical and group entertainment productions shall comply with California Code of Regulations, Title 19, Chapter 6 and Poway Municipal Code. The Fire Chief is the Issuing Officer for any fireworks permit required by this Chapter. The Fire Chief may delegate the duties of Issuing Officer at his or her discretion.
Section 5608.1.1 Scope is modified to read:
5608.1.1 Scope. The possession, manufacture, sale, storage, use and display offireworks are prohibited in the City of Poway except as provided in the Poway Municipal Code.
15.24.120 Chapter 80 Referenced Standards.
The following referenced standard§ of the California Fire Code is modified to read:
NFPA 13D is modified to read:
Section 7.1.5 is added to read:
7.1. 5 Pressure regulating valve. When available system water pressure exceeds 150 pounds per square inch (psi), a listed/approved pressure regulating valve shall be installed at the system riser. Such valves shall be adjusted to restrict the outlet pressure to a maximum of 150 psi gauge (psig) at any flow or no flow. When such valves are installed submittal documents must include manufacturer information sheets along 1Nith charts showing the dimensions (size) and flow characteristics inlet and outlet pressures at various flows for the type of valve being installed, and the valve shall be included in the design calculations.
Exception: At the discretion of the FAHJ the contractor may install a listed/approved pressure relief valve.
Section 7.2.5 is modified to read:
7.2.5 Inspector Test. Each sprinkler system shall have a 1/2" or larger test connection 11,ith a threaded keyless valve. The valve shall be remote to the riser, located on the building exterior about five 5 feet above final grade and shall be remote from the riser. It shall be labeled with a permanent plate with minimum 1/4" lettering, contrasting with background, 43 of 49
November 18, 2025, Item #10
Ordinance No.
and stating: "INSPECTOR TEST." (Pre assembled riser assemblies 1.vith a built in Drain/Test valve shall not be accepted for inspector test valve unless approved by the FAHJ.)
Exception: Automatic fire sprinkler systems for manufactured homes installed at the factory may have the inspectors test valve located at the location as designed at the factory.
Section 7.3.4 is added to read:
7.3.4 Pressure gauge. A listed 300 psi pressure gauge shall be permanently installed at the riser.
Section 7.6 is modified to read:
7.6 Alarms. A water flow switch shall be provided and located on the sprinkler riser and shall actuate an audible fire alarm bell within 90 seconds. The fire alarm bell shall have a minimum diameter of 8 inches and be mounted on the exterior in the vicinity of the master bedroom.
Section 8.3.4 is modified to read:
8.3.4. Sprinklers shall not be required in detached garages with no habitable space, open attached porches, carports with no habitable space above, and similar structures.
However, attached and/or detached habitable garages shall be protected with quick response intermediate temperature rated sprinklers.
Section 8.3.5.1.1 is modified to read:
8.3.5.1.1. Where fuel-fired FAU is present equipment is located above occupied areas of the dv.ielling unit or on the same floor as an occupied area, at least one quick-response intermediate temperature sprinkler shall be installed above the equipment.
Section 11.2.1.1 is modified to read:
11.2.1.1 Hydrostatic Tests. System shall be hydrostatically tested at 200 psi for 2 hours.
15.24.130 Appendix B, fire flow requirements for buildings.
Section B103.3 is modified to read:
B103.3 Areas Without V¼:iter Supply Systems. For information regarding water supplies for firefighting purposes in rural areas and suburban areas in which adequate and reliable water supplies do not exist, the fire code official is authorized to utilize provisions in NFPA 1142, or the standard published by the Insurance Services Office document entitled Guide for Determination of Required Fire Flow.
15.24.140 Conflict
All other ordinances or parts of ordinances in conflict here1.vith are hereby repealed.
VVherever a conflict exists in this chapter, the more restrictive requirement shall apply. 44 of 49
November 18, 2025, Item #10
Ordinance No.
SECTION 6: This Ordinance shall be codified.
SECTION 7: Severability. If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this ordinance or its application to any person or circumstance, is for any reason held to be invalid or unenforceable by a court of competent jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remaining sections, subsections, subdivisions, paragraphs, sentences, clauses or phrases of this ordinance, or its application to any other person or circumstance. The City Council declares that it would have adopted each section, subsection, subdivision, paragraph, sentence, clause, or phrase hereof, irrespective of the fact of any one or more sections, subsections, subdivisions, paragraphs, sentences, clauses, or phrases hereof be declared invalid or unenforceable.
EFFECTIVE DA TE: This Ordinance shall take effect and be in force thirty (30) days after its adoption.
CERTIFICATION/PUBLICATION: The City Clerk shall certify the adoption of this Ordinance and cause it or a summary of it, to be published with the names of the City Council members voting for and against the same in the Poway News Chieftain, a newspaper of general circulation in the City of Poway within fifteen (15) days after its adoption and shall post a certified copy of this Ordinance in the Office of the City Clerk in accordance with Government Code § 36933.
II
II
II
II
II
II
II
II
II
II
II
II
II
II
II
II
II
45 of 49
November 18, 2025, Item #10
Ordinance No.
INTRODUCED AND FIRST READ at a Regular Meeting of the City Council of the City of Poway, California, held the 18th day of November, 2025, and thereafter.
PASSED AND ADOPTED at a regular meeting of said City Council held the 2nd day of December, 2025 by the following vote, to wit:
AYES:
NOES:
ABSTAINED:
ABSENT:
DISQUALIFIED:
Steve Vaus, Mayor
ATTEST:
Carrie Gallagher, CMC, City Clerk
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November 18, 2025, Item #10
Ordinance No.
EXHIBIT 1
Findings Supporting the
City of Poway Amendments to the
California Fire Code, 2025 Edition:
As required by Health and Safety Code Section 17958, the Poway City Council does herewith make express findings that amendments to the California Fire Code, 2025 Edition, are necessary for the protection of the public health, safety, and welfare due to certain climatic, topographic, or geographical features existing in the County of San Diego.
Findings for the City of Poway amendments to the California Fire Code, 2025 Edition.
FINDING 1
The City of Poway is situated on the slopes and at the base of the coastal mountains with drainage from the eastern portion of the City of Poway, including the San Dieguito River and Rancho Penasquitos Creek, which, when flooded, could result in conditions rendering vehicular access unduly burdensome or impossible for the Fire Department.
Further, the flood conditions described above carry the potential for overcoming the ability of the Fire Department to aid or assist in fire control, evacuations, rescues, and the emergency tasks and demands inherent in such situations. The potential for the aforementioned flooding conditions to result in limiting Fire Department emergency vehicular traffic, with resulting overtaxing Fire Department personnel, may further cause a substantial or total lack of protection against fire for the buildings and structures located within the jurisdiction.
FINDING 2
The City of Poway is situated near several known major faults, each capable of generating earthquakes of significant magnitude. These include the Rose Canyon fault the Newport- 1 nglewood fault, the Coronado Banks fault, and the Silver Strand fault, (located generally west of the City of Poway), and the Elsinore fault and Agua Caliente fault (located east of the City of Poway). These faults are subject to activity at any time, and the City of Poway is particularly vulnerable to devastation should such an earthquake occur.
The potential effects of earthquake activity include, isolating the City of Poway from the surrounding area, restricting or eliminating internal circulation due to the potential for the collapse of highway overpasses and underpasses along with other bridges in the City, or an earth slide and the potential for vertical movement rendering surface travel unduly burdensome or impossible.
FINDING 3
The City of Poway and Southern California are semi-arid regions and experience water shortages from time to time. Those shortages can have a severely adverse effect on water availability for firefighting. Fires starting in sprinkled buildings are typically controlled by one or two sprinkler heads flowing as little as 13 gallons per minute per sprinkler head activation.
Hose streams used by engine companies on well-established structure fires operate at a minimum of about 250 gallons per minute each, and the estimated water need for a typical residential fire is 1,000 to 1,500 gallons per minute, according to the Insurance Service Office and the California Fire Code.
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November 18, 2025, Item #10
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Under circumstances such as lack of water, infrastructure, earthquakes, and multiple and wildland fires within a community, the limited water demands of residential fire sprinklers would control and extinguish many fires before they spread from building to wildland. In such a disaster, water demands needed for conflagration firefighting probably would not be available.
FINDING 4
The topography of the City of Poway presents problems in delivery of emergency services, including fire protection. The hilly terrain has narrow, winding roads with little circulation, preventing rapid access and orderly evacuation. Much of these hills are covered with highly non fire resistive natural vegetation. In addition to access and evacuation problems, the terrain makes delivery of water extremely difficult. Some hilly areas served by water tank and pump systems are subject to failure in fire, high winds, earthquake, and other power failure situations.
FINDING 5
The seasonal climatic conditions during the late summer and fall create numerous serious difficulties regarding the control of, and protection against, fires in the City of Poway. The hot, dry weather that is typical of this area in summer and fall, coupled with Santa Ana winds and low humidity, frequently result in wildfires that threaten, or could threaten, the City of Poway.
Although some Code requirements, such as fire-resistive roof classification, have a direct bearing on building survival in a wildland fire situation, others, such as residential fire sprinklers, may also have a positive effect. In a dry climate on low humidity days, many materials are much more easily ignited. More fires are likely to occur and any fire, once started, can expand extremely rapidly. Residential fire sprinklers can arrest a fire starting within a structure before the fire is able to spread to adjacent brush and structures.
A seasonal wind also has the potential for interfering with emergency vehicle access and delaying or making impossible fire responses because of toppling of extensive plantings of dense chaparral, eucalyptus, and conifer trees. The trees are subject to uprooting in strong winds due to their relatively small root bases compared to the tree itself. The aforementioned problems support the imposition of fire-protection requirements greater than those set forth in the California Building Code or Fire Code.
FINDING 6
Due to the topography in much of the City of Poway, roadway condition, gates, angle of approach or departure, steeply sloping roadways, and grades are common. In addition, a combination of potentially severe rainstorms and ground-water retention could occur in many areas of the City where there is expansive soil. This produces a condition wherein the moisture content of the soil is sufficient, that roadways become damaged due to soil expansion and shrinkage. All-weather, paved surfaces, capable of supporting the imposed loads of fire apparatus are necessary to ensure access of emergency response personnel. These roadways, gates, approach angles, steep slopes, and grades can also make it difficult for fire apparatus and other emergency vehicles to access a site. It is, therefore, essential that these roadway accesses be provided with proper all-weather, paved surfaces, angle of approach, grades, and gate access.
FINDING 7
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The City of Poway has State Route 67, Poway Road, Scripps Poway Parkway, Pomerado Road and Espola Road as major roadways within its boundaries. Transportation vehicles carrying known toxic, flammable, explosive, and hazardous materials travel these roadways.
The potential for the release or threatened release of hazardous materials along these routes is likely given the volume that is transported within Poway city limits. Incidents of this nature will normally require all available emergency response personnel to prevent injury and loss of life and to limit or prevent environmental and property loss. Emergency personnel responding to such aforementioned incidents may be unduly impeded and delayed in accomplishing an emergency response as a result of this situation, with the potential result of undue and unnecessary risk to the protection of life and public safety and, in particular, endangering residents and occupants in buildings or structures without the protection of automatic fire sprinklers.
The aforementioned problems support the imposition of fire protection requirements greater than those set forth in the California Building Code or Fire Code. 3 49 of 49
November 18, 2025, Item #11
DATE:
TO:
FROM:
CONTACT:
SUBJECT:
Summary:
AGENDA REPORT CityofPoway
November 18, 2025
Honorable Mayor and Members of the City Council
Julie Procopio, Director of Development Serviceq
Tracy Beach, City Engineer
858-668-4652 or [email protected]
CITY COUNCIL
Resolution Approving All-Way Stop Control at the Intersection of Bowdoin Road and Los Olivos Avenue
The City's Traffic Safety Committee (TSC) supported staffs recommendation for all-way stop control at the intersection of Bowdoin Road and Los Olivos Avenue, which was analyzed after receiving a resident request to evaluate the intersection. The proposed all-way stop is recommended pursuant to the California Manual on Uniform Traffic Control Devices (CA MUTCD) based on corner sight distance.
Recommended Action:
It is recommended the City Council adopt the attached Resolution (Attachment A) approving all-way stop control at the intersection of Bowdoin Road and Los Olivos Avenue.
Discussion:
On February 8, 2025 the City received a request, along with a petition, from a resident of the Garden Road North neighborhood to evaluate the Bowdoin Road and Los Olivos Avenue intersection for all way stop control. This intersection is a T-intersection where Los Olivos Avenue dead ends into Bowdoin Road. Attachment B shows an aerial of the intersection. Both streets are classified as residential streets. Currently, there are no traffic control devices installed at the intersection and drivers are required to follow the right-of-way rules for an intersection where right-of-way is determined by order of arrival at the intersection. The petition received was signed by 15 property owners or residents within 500 feet of the intersection. The petition stated near miss collisions and vehicles traveling at unsafe speeds were the primary concern. The same request was considered by the TSC in 2021. The 2021 TSC report did not recommend an all-way stop at this intersection.
In response to the recent request to consider an all-way stop at this intersection, staff re-evaluated the intersection. On Tuesday, April 22, 2025, staff collected new traffic data (Attachment C).
Additionally, staff assessed field conditions on April 30, 2025, to review sight distance and geometric conditions of the roadway. The intersection was analyzed based on the stop sign warrant procedures 1 of 13
November 18, 2025, Item #11
in
accordance
with
Sections
2B.06
and
2B.07
of
the
CA
MUTCD.
The
CA
MUTCD
is
the
governing
criteria
and
standard
for
traffic
signs.
Section
2B.07
"Multi-Way
Stop
Applications"
of
the
CA
MUTCD
is
used
as
the
guideline
to
evaluate
intersections
for
all-way
stop
controls.
The
noted
CA
MUTCD
guidelines
identify
two
groups
of
conditions
where
an
all-way
stop
control
can
be
installed:
Should
Conditions
Conditions
when
all-way
stop
controls
"Should"
be
used
involve
minimum
traffic
volumes,
number
of
accidents,
and
locations
where
traffic
signals
are
justified.
May
Conditions
Conditions
when
all-way
stop
controls
"May"
be
used
involve
a
need
to
control
left-turn
conflicts
and/or
vehicular
and
pedestrian
conflicts,
lack
of
sight
distance,
and
local
collector
intersections
with
similar
design
and
operating
characteristics.
The
subject
intersection
of
Bowdoin
Road
and
Los
Olivos
Avenue
does
not
meet
any
of
the
criteria
under
the
"Should"
conditions
due
to
its
low
traffic
volumes
and
number
of
accidents
per
year.
Under
the
"May"
conditions,
Bowdoin
Road
and
Los
Olivos
Avenue
have
the
same
classification
per
the
City's
Transportation
Master
Element
(Residential),
with
the
same
speed
limit
of
25 miles
per
hour
(mph).
These
similarities
in
roadway
characteristics
and
operating parameters
qualify
the
subject
intersection
for
an
all-way
stop
control
pursuant
to
Section
2B.07
of
the
CA
MUTCD.
Additionally,
sight
distance
was
evaluated.
According
to
the
most
recent
speed
survey,
the
85th
percentile
speed
on
Bowdoin
Road
is
31 mph.
Assuming
this
speed
on
the
uncontrolled
approach
from
Los
Olivos
Avenue
onto
Bowdoin
Road,
the
California
Highway
Design
Manual
(HDM)
calls
for
a
minimum
corner
sight
distance
(CSD)
of
297
feet
for
right
turn
movements
and
342
feet
for
left
turn
movements.
Staff performed
a
field
review
of
the
subject
intersection
to
determine
available
sight
distance.
Available
sight
distance
for
both
right
turn
and
left
turn
movements
either
meet
or
exceed
the
requirements
set
forth
by
California
HDM.
Attachment
D
provides
additional
details
for
the
observed
corner
sight
distance
. On-street
parking
on
Bowdoin
Road
is
allowed
near
Los
Olivos
Avenue.
Depending
on
the
size
of
the
vehicle
in
the
allowed
on-street
parking
area
on
the
west
side
of
Bowdoin
Road,
exit
traffic
from
Los
Olivos
Avenue
may
have
trouble
seeing
oncoming
traffic
due
to
the
horizontal
curvature
of
the
road.
Additionally,
homes
near
the
intersection
have
trees
and
foliage
that
may
obstruct
a
driver's
line
of
sight
if
left
untrimmed
over
time.
Shadows
cast
from
vegetation
on
the
lots
along
the
horizontal
curvature
may
also
create
visibility
issues.
A
photo
of
the
existing
conditions
is
shown
below.
During
this
analysis
staff
also
noticed
the
approach
of
Standish
Drive
with
Neddick Avenue/Bowdoin
Road
in
the
middle
of
the
horizontal
curvature
. This
approach
occurs
within
the
required
342
feet
sight
distance
for
left
turn
movements from
Los
Olivos
Avenue.
A
vehicle
turning
right
from
Standish
Drive
onto
Neddick
Avenue/Bowdoin
Road
heading
eastbound
may
not
be
visible
and/or
provide
sufficient
reaction
time
to
vehicles
at
the
intersection
of
Los
Olivos
Avenue
with
Bowdoin
Road.
2 of
13 November 18, 2025, Item #11
Figure
1. Looking
westbound
on
Bowdoin
Road
from
Los
Olivos
Avenue
Pursuant
to
condition
C,
Paragraph
5 of
Section
28 .07
of
the
CA
MUTCD,
the
intersection
of
Bowdoin
Road
and
Los
Olivos
Avenue
qualifies
for
all-way
stop
control
based
on
the
corner
sight
distance
conditions
.
At
its
meeting
on
May
14,
2025,
the
TSC
voted
to
support
staff's
recommendation
to
install
an
all-way
stop
control at
the
intersection
of
Bowdoin
Road
and
Los
Olivos
Avenue,
with
appropriate
markings
and
advance
warning
signs.
Prior
to
the
TSC
meeting
staff
received
three
emails
which
were
split
in
favor
and
against
the
installation
of
the
all-way
stop control
(two
emails
were
from
the
same
residence).
At
the
TSC
meeting,
residents
in
attendance
were given
an
opportunity
to
voice
their
opinions
and
concerns.
Of
the
seven
residents
who
chose
to
spe
_ak,
five
were
in
favor
o~
the
stop
sign,
one
was
_against
it, and
one
spoke
of
3 of
13 November 18, 2025, Item #11
other concerns in a nearby area. Of the five supporting the installation, several were in favor of adding more than just stop signs. The TSC voted to recommend installation of the all-way stop control and to evaluate the effectiveness of this measure six months after installation.
Environmental Review:
The project is categorically exempt from the provisions of the California Environmental Quality Act (CEQA) pursuant to Section 15301 (c) of the CEQA Guidelines (Class 1 -Existing Facilities), which applies to the operation, repair, maintenance, permitting, leasing, licensing or minor alteration of existing public or private structures, facilities, mechanical equipment or topographical features involving negligible or no expansion of use beyond that existing at the time of the lead agency's determination.
The installation of all-way stop control on existing City streets is considered a minor alteration of an existing public facility (roadway) and involves no expansion of capacity or new use. None of the exceptions to the use of a categorical exemption under Section 15300.2 apply.
Fiscal Impact:
There are sufficient funds available in the Fiscal Year 2026-26 Adopted Budget, Street Maintenance Division (411040) Street Striping Account (43300) to install new stop legends and limit lines estimated at $1,000, and in the Sign Maintenance Materials Account (45300) to install new stop signs at under $500. The City proactively plans for street maintenance services as part of the budget development process.
Public Notification:
Letters were mailed to interested parties November 6, 2025 and signage was placed at the intersection twelve days prior to the hearing.
Attachments:
A. Resolution
B. Aerial Map
C. Traffic Data
D. Corner Sight Distance
Reviewed/Approved By:
Assistant City Manager
4 of 13
Reviewed By:
Alan Fenstermacher
City Attorney
App:v:.d BP,,,..------,.
~)
Ch risHazeltine
City Manager
November 18, 2025, Item #11
RESOLUTION NO. 25-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
POWAY, CALIFORNIA, ESTABLISHING ALL-WAY STOP
CONTROL AT THE INTERSECTION OF BOWDOIN ROAD AND
LOS OLIVOS AVENUE
WHEREAS, Section 21100 of the California Vehicle Code permits local authorities to adopt by resolution traffic control measures meeting the requirements set forth under Section 21351 of the California Vehicle Code;
WHEREAS, Section 21351 of the California Vehicle Code permits local authorities to place and maintain such traffic signs upon streets and highways as may be necessary to properly indicate and carry out the provisions of the local ordinances and to warn or guide traffic; WHEREAS, Section 21354 of the California Vehicle Code permits local authorities to designate any intersection under its exclusive jurisdiction as a stop intersection and erect stop signs at one or more entrances thereto;
WHEREAS, Section 10.24.020 of the City's Municipal Code permits installation of stop signs where the City Council has determined that there is a special hazard to life and property by reason of lack of visibility to the drivers of vehicles approaching such intersection; WHEREAS, Resolution No. 05-086, adopted by the City Council on October 4, 2005, sets the guidelines to determine a special hazard to life and property condition in accordance with Sections 28.06 "STOP Sign Applications" and 28.07 "Multi-Way Stop Applications" of the California Manual on Uniform Traffic Control Devices (CA MUTCD); WHEREAS, the City Council has determined that the intersection of Bowdoin Road and Los Olivos Avenue qualifies for an all-way stop control due to lack of adequate sight distance and the need to control vehicle conflicts in accordance with the guidelines set forth in Section 28.07 of the CA MUTCD; and
WHEREAS, the City Council has determined that an all-way stop control and appropriate markings should be established at the intersection of Bowdoin Road and Los Olivos Avenue.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Poway as follows:
SECTION 1: In accordance with said Section 21351 of the California Vehicle Code, all way stop control with appropriate markings and advance warning signs shall be installed at the intersection of Bowdoin Road and Los Olivos Avenue.
5 of 13
II
II
II
II
ATTACHMENT A
November 18, 2025, Item #11
Resolution No. 25-
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Poway, California on the 18th day of November 2025 by the following vote, to wit:
AYES:
NOES:
ABSTAINED:
ABSENT:
DI SQUALi Fl ED:
Steve Vaus, Mayor
ATTEST:
Carrie Gallagher, CMC, City Clerk
6 of 13
November 18, 2025, Item #11
N
-
7 of
13 SITE
LOCATION
BOWDOIN
ROAD
AND
LOS
OLIVOS
AVENUE
ATTACHMENT
B
November 18, 2025, Item #11
I
I
California MUTCD
(FHWA's MUTCD 2014 Revision 8, as amended for use in California)
MULTIWAY STOP CRITERIA
Transportation Division, Public Works Department
• City of Poway
CALC J. Collins DATE
CHK ______ DATE
4/22/25
Major St: Bowdoin Road Posted Speed
Posted Speed
___ 2_5 ___ mph
Minor St: Los Olivos Avenue ___ 2_5 ___ mph
Criteria A -Interim Traffic Control Measure SATISFIED YES□ NO[gi Where traffic control signals are justified, the MUL TIWAY STOP is an interim measure that can be installed quickly to control traffic while arrangements are being made for the installation of the traffic control signal.
Criteria B -Accident Experience SATISFIED YES□ NO [8J
A crash problem, as indicated by 5 or more reported crashes within a 12-month period that are susceptible to correction by a MULTIWAY STOP installation. Such crashes include right-turn and left-turn collisions as well as right angle collisions. One (1) collision reported from 10/1/2019 -10/1/2024.
Criteria C.1, C.2 -Minimum Traffic Volumes
(All parts - C.1, C.2a, and C.2b must be satisfied)
C.1 Major Street Vehicular Volume Average 300 or more
0700-0800-1100- 1200- 1400-1500- 1600-
0800 0900 1200 1300 1500 1600 1700
Both Approaches 96 55 42 56 91 88 85 Major Street
1700-
1800
64 SATISFIED YES□ NO [8J
Yes D No [8J
AM Peak Hour
(0730-0830)
111
PM Peak Hour
(1600-1700)
85 C.2 a. Minor Street Vehicular, Pedestrian & Bicycle Volume Average 200 or more Yes D No [8J 0700-0800-1100- 1200- 1400-
0800 0900 1200 1300 1500
1500- 1600-
1600 1700
1700-
1800
AM Peak Hour
(0700-0800)
PM Peak Hour
( 1600-1700)
Both Approaches 37 33 26 24 27 36 37 25 Minor Street
C.2 b. Minor Street Vehicular Traffic Delay 30 seconds or more Minor Street Average Delay,
(seconds per vehicle)
AM Peak Hour Delay
9.3 Criteria C.3 -85th Percentile Speed SATISFIED
REQUIREMENT CRITERIA
85th Percentile Speeds Exceed 40 mph
70% CRITERIA C.1. Major Street Volume of at least 210 vehicles per hour SATISIFIED C.2a Minor Street Volume of at least 140 units per hour C.2b Minor Street Average Delay of at least 21 seconds per vehicle Criteria D -Combination of Criteria SATISFIED
REQUIREMENT CRITERIA
B. Five or more reported crashes within a 12-month period. 80% CRITERIA C.1. Major Street Volume of at least 240 vehicles per hour SATISFIED C.2a Minor Street Volume of at least 160 units per hour C.2b Minor Street Average Delay of at least 24 seconds per vehicle 8 of 13 ATTACHMENT C
37 37
Yes D No [8J
PM Peak Hour Delay
9.2 YES O NO □ NA [8J
FULFILLED
Yes□ No 1:8]
Yes□ No□
Yes□ No□
Yes D No□
YES O NO □ NA [8J
FULFILLED
Yes□ No 1:8]
Yes□ No□
Yes□ No□
Yes□· No□
November 18, 2025, Item #11
Day:
Tuesday
Date:
4/22/2025
.
Prepared
by
National
Data
&
Surveying
Services
VOLUME
Los
Olivos
Ave
&
Bowdoin
Rd
0:00
0 1 1
2 12:00
9 5
10 24
0:15
0 0 0
0 12:15
3 12
4 19
0:30
0 1 1
2 12:30
8 6 2
16 0:45
0 0 0
0 12:45
4 9 8
21 1:00
0 0 0
0 13:00
7 5 6
18 1:15
0 1 0
1 13:15
4 12
6 22
1:30
1 2 0
3 13:30
6 9 6
21 1:45
0 0 0
0 13:45
10 11
4 25
2:00
0 0 1 1
14:00
8 9
19 36
~15
0 0 0 0
1~15
5 14
7 26
2:30
0 0 0 0
14:30
8 16
7 31
2:45
0 0 0 0
14:45
6 13
6 25
3:00
0 1 0
1 15:00
5 14
5 24
3:15
0 0
2 2
15:15
14 15
9 38
• . 3:30
0 0 0
0 15:30
• 9
12 12
33 3:45
0 1
0 1
15:45
8 17
4 29
4:00
1 0 1 2
16 :00
8 10 18
36 4:15
0 0 1 1
16 :15
6 11
7 24
4:30
1 0 2 3
16 :30
8 18
7 33
4:45
5 0 4 9
16:45
15 10
4 29
5:00
3 0 2 5
17:00
5 12
5 22
5:15
4 0 1 5
17:15
7 10
4 21
5:30
7 0 3
10 17:30
6 12
3 21
5:45
0 1 4 5
17:45
7 12
6 25
6:00
4 1 7
12 18:00
4 17
8 29
6:15
4 0 3 7
18:15
6 15
4 25
6:30
3 2 7
12 18
:30
7 12
4 23
6:45
7 1 8
16 18:45
7 10
3 20
7:00
2 3 4 9
19:00
6 10
6 22
7:15
13 8
11 32
19 :15
1 10
6 17
7:30
16 17 10
43 19:30
7 5 2
14 7:45
6 8
35 49
19:45
4 11
3 18
8:00
7 8 9
24 20:00
1 7 2
10 8:15
12 2
11 25
20:15
4 7 3
14 8:30
9 8 3
20 20:30
4 7 3
14 8:45
5 2
12 19
20:45
3 4 2 9
9:00
8 4 9
21 21:00
7 3 1
11 9:15
1 4 8
13 21:15
1 6 1 8
9:30
7 5 4
16 21:30
3 4 0 7
9:45
8 5 5
18 21
:45
2 3 3 8
10:00
4 2 4
10 22:00
0 2 2
4 10
:15
7 4 2
13 22:15
1 3 0
4 10
:30
11 5 3
19 22
:30
2 3 0
5 10
:45
7 5 4
16 22
:45
1 4 1 6
11 :00
6 5 4
15 23:00
2 2 1 5
11:15
8 8 3
19 23:15
1 2 1 4
11:30
3 5 3
11 23:30
1 0 0 1
11:45
9 3
11 23
23:45
2 1 1 4
TOTA
O
189 123
203
515
TOTA
O
253
422
226
901
00:00
01 :00
01 :00 02
:00
02 :00
03 :00
03 :00
04:00
04:00 05:00 05:00 06:00 06:00 07:00 07:00
08 :00
08:00 09:00 09:00
10 :00
10:00
11:00
11:00
12 :00
12:00
13 :00
13 :00
14 :00
14;00
15 :00
15:00
16 :00
16 :00
17:00
17 :00
18:00
18 :00
19:00
19 :00
20:00
20:00
21 :00
21:00
22 :00
22:00
23 :00
23:00
00:00
City:
Poway
Project#:
CA25_040057
_001
0 1 0 0 7 14 18 37 33 24 29 26 24 27 27 36 37 25 24 18 12 2 3 0 2 0 1 4 36 20 18 16 21 32 37 52 58 49 46 54 36 25 2 0 1 2 8 10 25 60 35 26 13 21 24 22 39 30 36 18 19 17 10 13 16
5 4
12 3
6 5 3
4 4 1 4 15 25 47 133 88 68 58 68 80 86 118 124 122 89 97 71 47 34 19 14 . -:
\ 2-,--,-~-
'~°i,f~;~
51ATISTIC.5
;: ~~~:
1~
:;r
~:.
~-~t'
1 -'
• ~-
;
,:
'ills
~: i·-~
sa
_~:~
EB
-'!WB
l.ToTAL
Peak
Period Volume
Peak
Hour
Peak
Volume
Peak
Hour
Factor
Peak
Period Volume
Peak
Hour
Peak
Volume
Peak
Hour
Factor
Peak
Period Volume
Peak
Hour
Peak
Volume
Peak
Hour
Factor
Peak
Period Volume
Peak
Hour
Peak
Volume
Peak
Hour
Factor
00 :00
to
12:00
189 123
203
7:15
7:15
7:15
42 41
65 0.656
0.603
0.464
12:00
to
00:00
253
422
226
15:15
14:30
15:15
39 58
43 0.696
0.906
0.597
07 :00
to
09:00
70 56
95 7:15 7:15
7:15
42 41
65 0.656
0.603
0.464
16 :00
to
18 :00
515 7:15 148 0.755 901 15:15 136 0.895 221 7:15 148 0.755 62 95
54 211
16:00
16 :15
16 :00
16 :00
37 51
36 12
2 0.617
0.708
0.500 0
.847
SPLIT
%,__
..c.Oc..% __
cc.37--%_o_--'
2--4%_o_---'-
3CC.9%--'-o_.
---'-
3-"6'-'%_.
ccSP--L--IT--%--"--
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..c,28"-'%_o_--'
4'-7%--• _
_c
2--5%_o_.
_
6_4_%~
-~
----
--"--
----------
~
-
70 9
of
13 November 18, 2025, Item #11
C
~~
tims.berkeley
.edu
/tools
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ap/
TIMS
I SWITRSGISMap By
Safe
TREC
, UC
Berke
ley
a
ft
10 of
13 CASEID:9560863
Date
&
Time
Location
Intersection
Dis
t. &
Dir.
from
intersection
Crash
Severity Injuries
Type
of
Crash
Involved
With
Pedestrian
Involved
L
X
2/23
/2023
213
.a
Neddick
A.v &
Stand
ish
Dr
No 01
.00
fi:
South
3 -lnj
iry (Othe-r
Visil
:;le)
0 Ki
:led
&
1 I .jur
ed
E
-Hit Ob
ject
I -Fixed
Ob
ject
No
Bicvcle
Involved
No
November 18, 2025, Item #11
HCM 7th TWSC
2: Bowdoin Road & Los Olivos Avenue
ntersection
Int Delay, s/veh 3.1
Movement EBL: EBT WBT WBR SBL SBR
Lane Configurations +l t. ¥
Traffic Vol, veh/h 10 36 60 10 37 10
Future Vol, veh/h 10 36 60 10 37 10
Conflicting Peds, #/hr 0 0 0 0 0 0
Sign Control Free Free Free Free Stop Stop
RT Channelized -None -None -None
Storage Length 0
Veh in Median Storage, # -0 0 0
Grade,% 0 0 0
Peak Hour Factor 92 92 92 92 92 92
Heavy Vehicles, % 2 2 2 2 2 2
Mvmt Flow 11 39 65 11 40 11
ajor/Minor Major1 Major2 Minor2
Conflicting Flow All 76 0 0 132 71
Stage 1 71
Stage 2 61
Critical Hdwy 4.12 -6.42 6.22
Critical Hdwy Sig 1 -5.42
Critical Hdwy Sig 2 -5.42
Follow-up Hdwy 2.218 -3.518 3.318
Pot Cap-1 Maneuver 1523 -862 992
Stage 1 -952
Stage 2 -962
Platoon blocked, %
Mov Cap-1 Maneuver 1523 -856 992
Mov Cap-2 Maneuver -856
Stage 1 -945
Stage 2 -962
:Approacn EB WB SB
HCM Control Delay, s/v 1.6 0 9.33
HCM LOS A
Minor Lane/Major Mvmt EBL EBT WBT WBRSBLn1
Capacity (veh/h) 391 -882
HCM Lane V/C Ratio 0.007 -0.058
HCM Control Delay (s/veh) 7.4 0 9.3
HCM Lane LOS A A A
HCM 95th %tile Q(veh) 0 0.2
AM Peak 8:57 am 04/30/2025 Baseline
11 of 13
04/30/2025
Synchro 12 Report
November 18, 2025, Item #11
HCM
7th
TWSC
2:
Bowdoin
Road
&
Los
Olivos
Avenue
Intersection Int
Delay,
s/veh
3.3 Movement
EBL:
EBT
WBT
WBR
SB
l
SBR
Lane
Configurations
4 ~
\f
Traffic
Vol
, veh/h
10 49
36 10
37 10
Future
Vol
, veh/h
10 49
36 10
37 10
Conflicting
Peds
, #/hr
0 0 0 0 0 0
Sign
Control
Free Free Free Free
Stop Stop
RT
Channelized
-
None
-
None
-
None
Storage
Length
0 Veh
in
Median
Storage
, #
-
0 0 0
Grade,%
0 0
0 Peak
Hour
Factor
92 92
92 92 92
92 Heavy
Vehicles,
%
2 2 2 2 2 2
Mvmt
Flow
11 53
39 11
40 11
ajar/Minor
Major1
Major2
Minor2
Conflicting
Flow
All
50 0 0
120
45 Stage
1 45
Stage
2 75
Critical
Hdwy
4.12 -
6.42 6.22
Critical
Hdwy
Stg
1 -
5.42 Cr.itical
Hdwy
Sig
2 -
5.42 Follow-up
Hdwy
2.218
-
3.518
3.318
Pot
Cap-1
Maneuver
1557
-
876
1025
Stage
1 -
978
Stage
2 -
948
Platoon
blocked,
%
Mov
Cap-1
Maneuver
1557
-
870
1025
Mov
Cap-2
Maneuver
-
870
Stage
1 -
971
Stage
2 -
948
~pproacti
EB
WB
SB
HCM
Control
Delay,
s/v
1.24 0 9
.25
HCM
LOS
A
Minor
Lane/Major
Mvmt
EBL
EBT
WBT
WBRSBLn1
Capacity
(veh/h)
305
-
899
HCM
Lane
V/C
Ratio
0.007
-
0.057
HCM
Control
Delay
(s/veh)
7.3 0
9.2 HCM
Lane
LOS
A A
A
HCM
95th
%tile
Q(veh}
0 0.2
PM
Peak
9:54
am
04/30/2025
Baseline
12 of
13 04/30/2025
Synchro
12 Report Page
1 November 18, 2025, Item #11
..... w
0 ..... .....
w
)::,
--i
--i )::,
n :::r
s: m
z
--i
0 /
297' CSO R .. q
8ow,-., . ......... vo,nf? -.. -..._ d
-.....
NOTES
The 85th percen tile speed on Bowdoin Rd was
recorded l o be 3 1 miles per hour (mph) . for cro ss
traffi c speeds of 31 mph, lh e r~qui.-ed Corner Sigh l Distance (CSD) io.- vehicles making .-ighl lum
movements from Los Olivos Ave onlo Neddick Ave
is 297' and th e ,·,;qui,·ed CSD i or left turn
movements on l o Bowdoin Rd is 342' p,;r Calif ornia
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November 18, 2025, Item #12
DATE:
TO:
FROM:
CONTACT:
SUBJECT:
Summary:
AGENDA REPORT CityofPoway
November 18, 2025
Honorable Mayor and Members of the City Council
Craig Schmollinger, Director of Finance (Ji
Craig Schmollinger, Director of Finance
(858) 668-4411 or [email protected]
CITY COUNCIL
Set Public Hearing for Proposed Five-Year Water, Recycled Water, and Wastewater Rates
This staff report recommends setting the public hearing date for water, recycled water and wastewater rates for January 20, 2026, and authorizing the mailing of the Proposition 218 notice to properties that receive one or more of these services at least 45-days before the noted hearing date.
The funding sources for water (including recycled water) and wastewater services are through the water and wastewater "Enterprise" funds, respectively for each service. Enterprise funds are discrete funding sources utilized to provide services that are funded primarily from user fees and charges.
These funds operate similar to a business where funding from user fees and charges (along with other smaller revenue streams) are designed to recover the costs of providing services, including for treating and supplying water in the water enterprise and wastewater collection and treatment services for the wastewater enterprise.
Four-year water, recycled water and wastewater rates were adopted by the City Council on November 2, 2021, effective each January 1 for 2022, 2023, 2024 and 2025. To ensure the ongoing financial sustainability of the water enterprise system staff recommended and City Council, in accordance with the procedures required by Proposition 218, approved passing through the San Diego County Water Authority (SDCWA) rate adjustments for 2025 beyond what was assumed in the water rate model to ratepayers effective in January 2025. This measure helped sustain the Water Enterprise Fund while helping mitigate against larger rate increases in the future.
Recommended Action:
It is recommended the City Council direct staff to set the public hearing for January 20, 2026 and proceed with the Proposition 218 process which includes mailing the notice of public hearing to ratepayers pursuant to California law at least 45 days prior to the January 20, 2026 Public Hearing.
Discussion:
On November 2, 2021, the City adopted new rate structures and four-year rate increases for water, recycled water, and wastewater rates that were implemented for calendar years 2022, 2023, 2024 and 2025. The proposal for water rates included assumed annual cost increase adjustments from SDCWA of a 6% adjustment, which were in-line with actual adjustments for calendar year 2023 and 2024.
SDCWA adopted rates for calendar year 2025 which equated to over double the modelled rate at an 1 of95
November 18, 2025, Item #12
13.52% increase to Poway, which would increase Poway's costs for raw water purchases by $1.27 million for the year. To help ensure the ongoing fiscal health of the water enterprise, a wholesale water pass-through adjustment was proposed and approved by the City Council, in accordance with the procedures required by Proposition 218, effective in calendar year 2025 which equated to be $0.32 per unit of water sold.
Included in the Finance Department work plan in the Fiscal Year (FY) 2024-25 budget was an update to the Water (including Recycled Water) and Wastewater Cost of Service Studies (COSS). On November 19, 2024 the City awarded a contract with Raftelis Financial Consultants, Inc. (Raftelis) to provide a comprehensive COSS update for both Water (including Recycled Water) and Wastewater enterprises.
Part of the deliverables from the COSS updates include recommended rate adjustments to ensure the ongoing fiscal sustainability of the water and sewer enterprises. Raftelis have been utility rate experts in the water and sewer rate setting field in California for over 30 years. Raftelis provided Water and Sewer Rate Models and recommendations resulting in the noted rate adjustments for calendar years 2022, 2023, 2024 and 2025. The City had also retained and worked with Raftelis on water and wastewater rates going back several rate cycles prior to the recent four-year rate adjustment cycle as well.
Staff has worked closely with Raftelis for the past nine months to model updates to the cost of providing safe and reliable water and wastewater services. These updates include operations and maintenance costs, wholesale water and recycled water purchase costs, wastewater treatment rates, and Capital Improvement Program (CIP) projects. Figures include the adopted FY 2025-26 budget, known and projected adjustments for future year costs, long-range Capital Improvement Plan (CIP) project needs, water sales volumes, new connections, wholesale cost adjustments, and experience factors by customer class. Experience factors are tied to customer classes commensurate with their use of and burden on the water or wastewater system. This can result in different adjustments to each customer class depending on how much each is utilizing the enterprise systems.
Cost Allocation Plan Update:
Like most agencies with enterprise funds, Poway utilizes a Cost Allocation Plan (CAP) to proportionally distribute the costs of general, citywide support services (i.e. Administration, Finance, Information Technology and Human Resources) to departments and enterprise funds which use and benefit from those services.
Allocating costs across funds is not unique to Poway and is legally permitted under State law. This process results in savings for residents and ratepayers as staff and support service costs are shared.
The current cost allocation plan was prepared a number of years ago and while it has been modified to reflect organizational changes in recent budget cycles, preparing a new cost allocation plan was identified as a priority by both the Budget Review Committee and the City Council. Preparing a new cost allocation plan included a comprehensive analysis of current citywide overhead allocations and preparation of a model that can be updated in future years. The new cost allocation plan figures will be used as part of the annual budget development process beginning in FY 2026-27 and have been incorporated into these water and wastewater COSS updates.
In summary, a CAP analyzes the annual support each central service department provides by using various metrics, such as number of full-time employees, budget size, or number of agenda items, to allocate costs fairly and equitably to all receiving departments. Costs are spread regardless of a receiving department or program's ability to reimburse for the support. The methodology used to develop this CAP follows guidelines set by the Office of Management and Budget (0MB), as well as Generally Accepted Accounting Principles (GAAP).
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November 18, 2025, Item #12
Importantly, the adjustments to charges to the water fund resulting from this CAP update resulted in less than $9,000 annual difference between the current cost allocation and the updated allocation.
This amount is less than 0.02% of the total cost of operating water services, indicating the indirect charges to the water fund have been in-line with the updated figures in the cost allocation plan.
Water and Wastewater Enterprise Reserves:
Financial reserves are utilized for many beneficial reasons in order to address anticipated future costs and uncertainty associated with operating complex utility systems. Reserve levels are set based upon city policy in concert With industry standards, state requirements, debt coverage requirements, and in alignment with best practices. Reserves are available to:
• Address timing differences between periodic cash inflows and outflows • Pay for unexpected or extraordinary operating expenses • Set aside funds for current and future identified CIP projects and anticipated capital requirements
• Pay for unexpected or extraordinary capital repair and replacement projects Both the water and wastewater enterprises have operating reserve minimums set at 90 days of operating expenses, with a target of 120 days of operating expenditures. Capital reserves are set for each enterprise at the rolling 5-year average capital improvement program cost, to ensure adequate funding for future projects and needs. These reserve levels are within American Water Works Association (AWWA) industry standards and strike a balance with adequate funding on hand versus setting reserve levels higher, which would require increasing rates for customers. In comparison the General Fund has reserve levels set at a higher level at 45% of operating expenditures, and doing something similar for the Enterprise funds would require increasing water and wastewater rates to achieve such a level.
The below recommended rate revisions are reflective of ensuring minimum reserve levels are met, with the goal of hitting target reserve levels, among meeting other functional needs.
Proposed Water Rates:
In November 2021, the City Council adopted four-year water rate increases for implementation in calendar years 2022, 2023, 2024 and 2025. The approved rates cover the increasing costs of providing safe, reliable water on demand to ratepayers.
Imported Water:
The largest cost factor for Poway in serving customers clean drinking water on demand is the cost to purchase raw water from the SDCWA. San Diego County has a semi-arid climate. Before 1947, the San Diego region relied on rainfall and groundwater to meets its water needs (SDCWA, Urban Water Management Plan 2020). As the economy and population grew, local water resources became insufficient to meet the region's water supply needs and required imported water from hundreds of miles away to support the growth. Much of the region's water is imported from northern California near San Francisco and Sacramento (i.e. the Bay-Delta).
Importing water is very energy and infrastructure intensive. Over time, the cost to transport this water increases as factors like energy prices increase. Investment by SDCWA into regional water supply and infrastructure projects to reduce reliance on imported water and mitigate the effects of natural 3 of95
November 18, 2025, Item #12
disasters, such as earthquakes, is also expensive. For example, SDCWA's investment into the Claude "Bud" Lewis Desalination Plant cost close to $1 B, but it gave the region a new drought-proof, locally controlled supply of water.
Imported water represents just over 60% of City water operating costs. When imported water costs increase, this significantly impacts City water rates which are passed on to customers. The SDCWA rate and charge increase to the City is 9.2% for calendar year 2026. In an effort to help mitigate impacts to member agencies, SDCWA took several actions to reduce the increases to rates including applying grant funding, delaying capital expenses and associated debt issuance costs, and trimming operating costs. Their rate increase was driven by an average rate and charge increase of almost 8% from the Metropolitan Water District (MWD), a major SDCWA water supplier, along with wholesale costs from operating the Claude "Bud" Lewis Desalination Plant. Additionally, the impacts of both the Rainbow and Fall brook Municipal Water District's detaching from SDCWA has resulted in an increase in SDCWA costs being spread among the remaining 23 member agencies that continue to receive water from the SDCWA. The SDCWA also has declining water sales to those remaining 23 member agencies which results in less water sold to spread SDCWA costs. The SDCWA actual water sales figures are reported downward by 17% for the 23 months ending May 31, 2025 respectively (source: SDCWA Staff Report for Fiscal Years 2026 & 2027 Budget, July 24, 2025). The result is an increase in costs spread among less units of water sold for the remaining SDCWA member agencies, including the City.
Water Capital Improvement Program:
The next largest factor driving the proposed revenue increases is rate-funded capital improvement projects to the water system. Rate-funded capital improvement projects are paid for via rates or reserves. The City's existing water system includes over $88 million in infrastructure necessary to provide associated services. This infrastructure includes water assets to transport water from the SDCWA system to the city's system, assets to treat the water to safe drinking levels, and assets to deliver safe, reliable water on demand to each rate payer's property. The following are some facts about the water system:
• 319 miles of transmission and distribution pipelines
• 8,890 water valves, 22 pressure-reducing stations and 15 pump stations (designed to raise water to higher elevations)
• 19 reservoirs (Lake Poway holds -one billion gallons of water) • One 24 million gallon/day water treatment plant
• 2,898 fire hydrants
• Approximately 60,000 tests are performed annually to ensure Poway water meets or exceeds the State and Federal standards for water quality
Historically the City has rate-funded its water capital improvement projects rather than funding through issuance of debt. Rate-funded capital projects are paid for via rates or reserves, not debt.
However, to improve the reliability, redundancy and resiliency of Poway's water system, in 2020 the City embarked on the Water Infrastructure Improvement Program (Water Program). This is the largest series of capital projects in the City's history. The Water Program is comprised of the Clearwell Bypass (Phase 1 ), the Clearwell Replacement (Phase 2), and the SDCWA Treated Water Facilities (Phase 3) projects. The Clearwell Bypass project has been completed and is in operation. The Clearwell Replacement project is in construction and roughly 75% complete, with commissioning expected in late Spring 2026. The SDCWA Treated Water Facilities project is currently in the design phase, working in coordination with both the Ramona Municipal Water District (RMWD) and SDCWA. These coordinated efforts have the potential for significant cost offsets to the City, which could help reduce the cost to City ratepayers. City staff are working diligently to realize some of these financial benefits, 4 of95
November 18, 2025, Item #12
including negotiating a water sales agreement with RMWD per a Memorandum of Understanding recently approved by both agencies' governing bodies.
As discussed in a November 17, 2020 water funding staff report, there are several approaches to financing these projects. They can be financed using a pay-go approach (using cash on hand and yearly rate increases to provide the necessary cash flow). They can also be debt or grant funded or a combination of all three. As staff had indicated in that report, comparing cash on hand to the estimated cost of the projects helps determine which funding option may be most appropriate. When cash on hand exceeds the estimated cost of the proposed project, there is a strong argument for pay go financing. When the estimated cost of the proposed capital projects exceed cash on hand, there is a strong argument for debt financing. Debt financing is a reasonable solution in that it provides the cash upfront to construct the projects while spreading the repayments out over a longer time horizon.
This helps create intergenerational equity by aligning the water CIP costs to the people who benefit from the project. When debt is issued, current ratepayers would not be responsible for fully funding projects today that will have a useful life beyond 30 years.
Another factor to consider when specifically looking at capital improvement projects funded by water ratepayers is how pay-go funding impacts the annual water rates. Water rates could be increased significantly over the next five years to fund the program on a pay-go basis. However, based on the estimated cost of the Water Program the annual increases to ratepayers would likely be so large that it would be financially unfeasible for many ratepayers. This would create an undue burden on current ratepayers and impact the current sustainability of the water enterprise.
Phases 1 and 2 of the Water Program have been primarily funded with debt issuances in the form of 2021 Water Revenue Bonds, and 2023 Water Revenue Bonds. Phase 3 of the Water Program is modeled to include another debt issuance to fund this portion of the project.
All other water CIP projects are funded through reserves, water rate revenue, grant proceeds, and water connection fees. Connection fees are paid to the City as new developments occur which pay for the proportional share of a properties new demand into the existing water system. Programming of $4.55 million in connection fee revenue, and $400 thousand in grant proceeds is included in the City's FY 2025-26 .adopted budget. Grant proceeds and the connection fee revenue paid from new development helps offset the revenue needed from water rates, which has a rate suppression effect.
Proposed Fixed/Variable Ratio Adjustment:
During the 2021 rate setting process, staff discussed the importance of the fixed/variable ratio. The fixed/variable ratio reflects the amount of revenue collected between fixed charges which are not dependent on water usage and volumetric, or variable, charges which are dependent on water usage.
This ratio is important for understanding the level of revenue stability. The more revenue collected via a fixed charge, the less likely the water system will be impacted by changes in volumetric ratepayer usage.
Under the current rate structure, the fixed/variable ratio was at 20/80% for 2022, moving tci the current 2025 split of 25/75%. The City Council opted not to significantly increase revenue recovered from fixed charges during previous rate adjustments due to the potential impacts on lower volume users. Alternatively, Council directed staff to slowly increase the fixed/variable ratio with each subsequent rate setting process, consistent with the requirements of Proposition 218.
Consistent with this direction, the current five-year rate model continues the incremental increase to the fixed/variable ratio to 28/72% for 2026 rates. Adjustments under the proposal for 2027-2030 will 5 of95
November 18, 2025, Item #12
result in an unknown fixed/variable ratio adjustment as SDCWA pass-through costs will not be known until late summer each year. The realized fixed/variable ratio is also impacted by actual water sale volumes each year.
Uniform Single-Family Residential Volumetric Rate:
Included in the rate recommendations is a transfer from a three-tiered increasing cost per tier volumetric water rate structure for Single Family Residential customers to a uniform "single-tier''water rate structure. This update is being proposed similarly with other water user classification groups, including multi-family residential, non-residential, landscape irrigation, and city potable water groups.
This approach standardizes charge methodologies across all customer classes, supporting equitable treatment of all customer classes.
Tiered volumetric rates have been utilized by a majority of water purveyors in California for a host of reasons, primarily for supporting conservation efforts mandated by the California Water Board. These conservation mandates include maximum residential indoor water use, reducing through 2030 as mandated by the State of California. Tiered single-family residential rates, in part, incentivize water conservation as the increase in cost for escalating tiers provides a financial dis-incentive to utilize large volumes of water.
However, recently there have been Court of Appeal decisions in San Diego County that successfully invalidated tiered water rates for two local water purveyors, based on rulings that the tiers did not reflect the cost of providing the water service as required by Proposition 218. (Patz v. City of San Diego (2025) 113 Cal.App.5th 225; Coziahr v. Otay Water District (2024) 103 Cal.App.5th 785) As a result, tiered rates are now very difficult to justify and vulnerable to legal challenges. Although one of the cases included a 70-page dissent of the majority opinion, each was met with a majority opinion that the tiered rate structure at issue did not support the data provided on increased costs for tiered rates. City staff is recommending moving to the uniform water rate structure as a more equitable and defensible structure, while affirming current rates being compliant with Proposition 218's cost of service principles.
Residential Water Adjustment Impacts:
Revenue requirements to meet ongoing costs of supplying safe and reliable water services necessitate adjustments to each year in the proposed five-year rate adjustment period. Year one (2026) requires an adjustment of 9.9%, where years two through five (2027-2030) require a 4% adjustment each year.
The 2026 adjustment reflects the impact of a 9.9% total revenue adjustment, which is broken down as City cost adjustments attributable to 4.1 %, and an SDCWA wholesale water rate increases to the City attributable to 5.8%. Years two through five adjustments are inclusive of only known City cost adjustments to maintain ongoing safe and reliable services, as SDCWA and San Diego Gas & Electric (SDG&E) future year adjustments are unknown figures to be passed along once known (see below on wholesale pass-through adjustments).
Table 1 below shows the estimated impact to residential customers who have a ¾" water meter and use 29 units of water over one bimonthly billing period (every two months). (Remainder of page intentionally left blank)
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November 18, 2025, Item #12
Table 1: Estimated Residential Impacts of Proposed Revenue Adjustments Debt Funding Option Existing Jan.2026 Jan. 20272 Jan. 20282 Jan. 20292 Jan. 2030:
Revenue Increase(%) N/A 9.9% 4.0% 4.0% 4.0% 4.0%
Estimated Water Bill1 $302.69 $351.12 $365.16 $379.77 $394.96 $410.76 Bimonthly Impact($) N/A $48.43 $14.04 $14.61 $15.19 $15.80 Monthly Impact($) N/A $24.22 $7.02 $7.30 $7.60 $7.90
1. Assumes the average residential customer has a¾" meter and uses 29 units of water bimonthly.
2. Figures are for Poway revenue adjustments and do not include future year pass-through adjustments from SDCWA for wholesale water or SDG&E for energy costs.
As the table shows, the average residential customer would be paying $48.43 more per bimonthly billing period for water following adoption with the proposed rate adjustment, which equates to $24.22 per month.
Table 2 below shows the Single Family Residential (SFR) impacts of the proposed Year 1 adjustments, for usage at different levels through a ¾" meter.
Table 2: Estimated Residential Impacts of Proposed 2026 Revenue Adjustments $2,500
$2,000
$2,500
$2,000
$500
$0
■Current BUI
■ Proposed BUI· Uniform
Impact{$)• Uniform
Impact(%)-Uniform
Recycled Water:
$165.47 s195•13
$165.47
lOunlb
$165.47
$195.13
$29.66
17.9%
SFR Bimonthly Impacts at Different Usage Levels -3/4" Meter -Uniform Rates $302.69 5351•12
$302.69
29unlts
$302.69
$351.12
$48.4'
16.0%
$364.93
37unlb
$364.93
$416.80
$51.87
14.2%
$512.75
S6unlts
$512.75
$572.79
$60.04
11.7%
$933-11 $934.03
$.3.ll
lOOunlts
$983.11
$934.03
-$49.08
-5,0%
$2,052,11
$1,517.61
$1,517.61 $:Z.052.11
lSOunlts 200unlts
S1.s11.61 $2,052.11
$2,344.53 $1,755.03
-$173.08 -$297.08
-11.,11% -14.5%
The City serves roughly 212 recycled water customers located primarily in the South Poway Business Park. Recycled water is purchased from the City of San Diego, then sold to these customers utilizing the City's recycled water infrastructure. The largest cost associated with serving recycled water to customers is the actual cost of purchasing recycled water from the City of San Diego, representing almost 80% of the total cost of providing recycled water services. The City of San Diego recently increased recycled water rates anticipated to the City by roughly 45%.
Recycled water customers pay the same bi-monthly meter service charges as potable water customers, based on meter size, as they occasionally use the potable water system when recycled water is unavailable. Recycled water customers also pay a uniform volumetric rate. Recycled water charges are based on the costs associated with the City's recycled water system, which includes the 7 of95
November 18, 2025, Item #12
noted recycled water purchase costs from the City of San Diego. Given the large increase for purchasing recycled from the City of San Diego, and minor increases for the City to operate the recycled water system, the volumetric rate for recycled water has been calculated to increase by 23% for the year 1 adjustment in 2026.
Wholesale Water, Wastewater Treatment and Energy Cost Pass-Through Provisions:
California Government Code Section 53756 was adopted in 2009 and allows agencies providing water and wastewater services to adopt a schedule of fees and charges for a period of up to five years that authorize automatic adjustments based on wholesale charges for those wholesale costs outside of a retail agencies control. For the City, wholesale pass through costs would come from SDCWA for wholesale water charges, for recycled water services this includes wholesale recycled water purchases from the City of San Diego, and the Metro Wastewater Joint Powers Authority for wholesale wastewater treatment costs. These costs are all outside of the control of the City. Therefore, these costs are being included through the current Proposition 218 process to authorize the pass-through of future year adjustments that have yet to be identified.
Energy cost increases from SDG&E for wholesale energy costs are proposed to automatically adjust based on the Energy Rates for the Consumer Price Index for All Urban Customers, Energy in San Diego -Carlsbad ("CPI"), measured from September to September, to the extent the actual cost increases for purchased energy exceed those projected for energy costs.
The City relies almost exclusively on the SDCWA for its raw water supply and therefore does not have a choice in accepting rate adjustments from its wholesale water provider. As a best practice, almost all water agencies (21 out of 23) in San Diego County have a pass-through provision in their adopted rate schedules allowing them to automatically pass on any increases in SDCWA rates to customers upon providing thirty days' notice of the increased pass-through cost. Poway does not currently have a pass-through provision which is why staff needed to bring forward a one-year adjustment (and comply with Proposition 218 procedures) to incorporate the SDCWA rate increases into the City's water rates when they took effect in January 2025. These industry standard, best practice, pass through provisions are being incorporated with this full cost of service study update, and will be incorporated into the Proposition 218 notice that will be sent at least 45 days prior to the public hearing.
If approved in the current Proposition 218 process for the next five years, at least 30 days before implementing any such pass-through increases, the City will provide written notice of the rate increase or increases to customers.
Proposed Wastewater Rates:
In November 2021, the City Council adopted four-year wastewater rate increases to cover calendar years 2022, 2023, 2024 and 2025. Rate adjustments of 4% annually were approved over the four-year period. The approved rates cover the increasing costs of providing safe, reliable wastewater collection, treatment and disposal services on demand to ratepayers. The City operates and maintains the collection system infrastructure and associated operations and maintenance and CIP projects to maintain the system. The City outsources for the wastewater treatment and disposal services with the Metro Wastewater Joint Powers Authority.
Wastewater Treatment:
The most significant rate driver for the proposed revenue increases is wastewater treatment costs, 8 of95
November 18, 2025, Item #12
those services are provided by the Metro Wastewater Joint Powers Authority. Several municipalities share in the use of the City of San Diego's regional wastewater facilities that provide treatment services for wastewater conveyed to those facilities. Wastewater treatment represents almost 42 percent of all wastewater operating expenses. When wastewater treatment costs increase, this impacts City wastewater rates. The largest factor increasing wastewater treatment costs is the San Diego Pure Water project. San Diego's Pure Water project is a multi-year project that is projected to supply one third of San Diego's water supply locally by 2035. Several years ago, staff began incorporating these costs into rates as part of a long-range financial management strategy to mitigate the impacts of this project to ratepayers. Funds collected have been set aside in reserves. As such, a combination of reserve drawdowns and rate increases will be used over the coming years to temper the impacts to ratepayers. Additionally, a wastewater treatment pl antis designed to treat certain types of waste. As people dispose of pharmaceuticals, food waste, cooking oil, industrial chemicals, etc. down the wastewater system, the treatment process gets extended which increases costs.
Wastewater Rate Adjustment Impacts:
Recommended adjustments for wastewater services include no changes for each of the first two years (0% in 2026 and 0% in 2027), and 3% adjustments each year for the last three years of the five-year rate study period (2028, 2029 and 2030).
Like water, the impacts in the first year will be uneven as a result of the COSS process where costs are analyzed by customer class resulting in changes between these groups. The adjustments are necessary to fund the costs of wastewater collection and treatment, capital infrastructure, and operational expenses. These proposed rate increases for 2028, 2029 and 2030 reflect the use of reserves to temper the impacts to rate payers during 2026 and 2027. Funds to cover Poway's estimated share of the San Diego Pure Water project were set aside as part of a strategic financial management decision to help mitigate the impacts to rate payers.
The next largest factor driving the proposed revenue increases is rate-funded capital improvement projects. Rate-funded capital projects are paid for via rates or reserves; no debt is currently used to fund capital projects. The City of Poway's existing wastewater system includes over $37 million in infrastructure necessary to provide associated services. Rate-funded capital is also being proactively invested in the rehabilitation and repair of the wastewater infrastructure to ensure Poway continues to provide safe, reliable, and affordable wastewater services. Wastewater infrastructure includes infrastructure to transport wastewater from the City to various treatment plants within the County of San Diego in a safe and reliable manner including over 190 miles of wastewater pipes, five lift stations (designed to raise wastewater material to a higher elevation}, and over 4,030 maintenance covers.
Rate, grant, and connection fee-funded CIP projects are currently programmed at approximately $14 million over the next five years, or slightly more than $2.8 million per year on average. Funding of $2.44 million in connection fee revenue, and $600 thousand in grant revenue is programmed in the City's current FY 2025-26 budget to pay for various capital improvement projects. Grant proceeds and connection fee revenue paid from new development helps offset the revenue needed from wastewater rates, which has a rate suppression effect.
Table 3 shows the effects of each year's adjustments for an average residential customer. These adjustments include a reduction in January 2026 rate adjustments for this customer group as the cost incurred to serve this group has gone down slightly.
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Table 3: Estimated Residential Impacts of Proposed Revenue Adjustments Debt Funding Option Existing Jan. 2026 Jan. 20272 Jan. 20282 Jan. 20292 Jan. 20302 Revenue Increase(%) N/A 0% 0% 3% 3% 3%
Estimated Wastewater Bill1 $115.03 $112.86 $112.86 $116.27 $119.86 $123.48 Bimonthly Impact($) NIA -$2.17 $0.00 $3.41 $3.59 $3.62
Monthly Impact($) N/A -$1.09 $0.00 $1.71 $1.79 $1.81
1. Assumes the average residential customer has 15 units of winter wastewater flow bimonthly.
2. Figures are for Poway revenue adjustments and do not include future year pass-through adjustments from Metro JPA for wholesale wastewater treatment costs.
Table 4 below shows the impacts of the first year's revenue increase to fund the costs of wastewater collection and treatment, operation, maintenance, and replacement of infrastructure along with maintaining appropriate reserves across various wastewater generation levels. As shown below, the cost of providing services has changed between customer classes. As such this update results in a decrease in rates to single family residential rates even with a 0% revenue adjustment for 2026. Non residential rates increased slightly as the cost to serve these customers went up following updates to the wastewater COSS.
Table 4: Estimated Residential Impacts of Proposed 2026 Revenue Adjustments $180
$160
$140
$120
$100
$80
$60
$40
$20
$0
■ Current Bill
■ Proposed Bill
Impact($)
Impact{%)
Wastewater SFR Bimonthly Bill Impacts at Different Usage Levels II
5 cct
$60.43
$59.86
-$0.57
-0.9%
15 ccf
$115.03
$112.86
-$2.17
-1.9%
19 ccf
$136.87
$134.06
-$2.81
-2.1%
26 ccf
$164.17
$160.56
-$3.61
-2.2%
Combined Household Rate Adjustment Impacts:
37 ccf
$164.17
$160.56
-$3.61
-2.2%
Over 86% of customers in the City receive both water and wastewater services for their properties.
Providing a household anticipated impact from the noted revenue and rate adjustments will likely have value for most customers. Table 5 below shows the SFR impacts of the proposed Year 1 adjustments, for usage at different levels through a¾" meter, for both water and wastewater services combined.
(Remainder of page intentionally left blank)
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November 18, 2025, Item #12
Table 5: Estimated Residential Combined Impacts Proposed 2026 Revenue Adjustments $2,500
$2,000
$1,500
$1,000
$500
so
■ Current Bimonthly em
■ Proposed Bimonthly Bill-Uniform
Impact ($)-Uniform
Impact(%)· Uniform
Community Outreach:
SFR Combined Bimonthly Bill Impacts at Different Usage Levels -3/4" Meter -Uniform ss11.19 SS29.10 ss7;.41
$253.20 $466.86 $529.10
10 units 29unlts 37unlts
$253.20 $466.86 $529.10
$281.60 $511.79 $577.47
$28.40 $44.93 $48.37
11.2% 9.6% 9.1%
S733.46
$676.92 /
$676.92
56 units
$676.92
$733.46
$56.54
8.4%
$1,147.28
$1,147.28
100 units
$1,147.28
$1,094.70
-$52.58
·4.6%
$1,681.78
I
$1,681.78
150 units
$1,681.78
$1,505.20
-$176.58
·10.5%
$2,216.28
I
$2,216.28
200 units
$2,216.28
$1,915.70
-$300.58
·13.6%
To help the community understand the impacts of the proposed pass-through rate increases, staff updated the residential bill estimator tool (poway.org/Rates-Fees). This will help evaluate how the proposed increases impact their specific usage patterns. This tool, as well as information specifically about the majority-protest public hearing, and proposed rates, will be posted to the homepage of the City's website and the Water and Sewer Services section of the Finance Department web page. This information will also be actively communicated to the public via the Poway Today e-newsletter.
Timeline:
The following graphic shows the proposed rate cycle for the potential rate adjustment for year 1 (Calendar Year 2026). Subsequent year adjustment would be effective each January 1 for the remaining 4-years in the proposed 5-year rate adjustments (2027, 2028, 2029, and 2030).
Set Public Hearing: Mail 218 Notice: Public Hearing: Rates Effective:
November 18, 2025 By November 20, 2025 January 20, 2026 Following adoption For future pass-through rate adjustments, at least 30 days before implementing any such pass through increases, the City will provide written notice of the rate increase or increases to customers.
Environmental Review:
This action is not subject to review under the California Environmental Quality Act (CEQA). 11 of 95
November 18, 2025, Item #12
Fiscal Impact:
There is no direct fiscal impact associated with this staff report because it only sets the public hearing.
However, based on the information contained in this staff report, sufficient revenues to fund operations, investment in capital infrastructure, and appropriate reserve levels will be generated from the recommended water, recycled water, and wastewater revenue increases. Over the next five-year period, it is estimated approximately $33.0M in additional water revenues will be generated while approximately $1.SM in additional wastewater revenues will be generated if the proposed rates are adopted at the public hearing.
Safe reliable water delivered on demand to an average residential ratepayer cost under two pennies per gallon.
Public Notification:
The California Constitution, Article XIIID, Section 6, states that local governments must hold a Majority Protest Public Hearing and notify property owners and/or other eligible recipients at least 45 days in advance of the public hearing related to proposed water, recycled water, and wastewater rates. The notice required by Proposition 218 will be mailed at least 45 days prior to the public hearing, or on or before November 20, 2025. The public hearing, at which eligible ratepayers can protest proposed increases should they desire to do so, will take place as follows:
Attachments:
Tuesday,January 20, 2026 at 7:00 p.m.
City of Poway Council Chambers
13325 Civic Center Drive
Poway, CA 92064
A. Notice of Public Hearing
B. City of Poway Water and Wastewater Cost of Service and Rate Study Report (11/10/25, subject to revision based on comments received or required revisions) Reviewed/Approved By:
Assistant City Manager
12 of95
Reviewed By:
Alan Fenstermacher
City Attorney
November 18, 2025, Item #12
The City is committed to providing the highest quality
water and wastewater services at the lowest possible rates.
To keep this commitment, the City regularly evaluates
infrastructure needs, and operations and maintenance costs for the upcoming years. In compliance with Proposition 218, enclosed in this notice are the proposed rate adjustments for 2026 through 2030. The rate adjustments being considered will become effective upon adoption for Year 1 (2026)
and January 1 of each year and reflected on bimonthly bill statements following the effective dates. Details on the written protest and written objections process is located on page 5 of this notice.
The City of Poway is mailing this notice to you
because you are a water and/or wastewater customer
responsible for payment of water and/or wastewater
fees, or you are the owner of record for a property
that receives water and/or wastewater service. This
notice describes proposed adjustments to water and
wastewater rates, rate structure changes, and provides
notice of the upcomirig public hearing at which these
proposed changes will be considered by the Poway City
Council.
For rates information and
links to resources quoted
in this notice, scan this
QR code or visit:
poway.org/rates-fees.
Proposed Changes to
Water and Wastewater Rates
The City of Poway provides safe, reliable water on demand to its customers and purchases nearly 100 percent of its water from the San Diego County Water Authority (SDCWA). The cost to purchase and treat imported water continues to increase. The City proactively plans for increases in these costs, along with costs associated with operations, maintenance, and replacement of infrastructure along with maintaining appropriate financial reserves. To accommodate these increases, the City is proposing adjustments in potable and recycled water rates over the next five years.
The City of Poway maintains a wastewater system that provides customers with wastewater collection, treatment and conveyance services to the San Diego Metropolitan Wastewater System (Metro) where the wastewater is treated at the Point Loma Wastewater Treatment Plant and then discharged into the ocean or into San Diego's advanced treatment facilities for reuse. The City proactively plans for increases in costs associated with operations, maintenance, and replacement of infrastructure along with maintaining appropriate financial reserves. The City also pays a percentage share of the operation, maintenance, and capital replacement costs of the Metro system. To accommodate these increases in costs, adjustments in wastewater rates and charges over the next five years are being proposed.
A five-year rate setting process strikes a balance between investor preferences and flexibility, while noting additional assurances with the pass-through provisions noted further in this notice. A five-year period is long enough to increase investor confidence (see "Debt Financing" for more details) while still short enough to allow rate changes if future projections are different than anticipated.
0 For additional information on how your rates have been calculated, please refer to the staff report on November 18, 2025 titled "Set Public Hearing for Proposed Five-Year Water, Recycled Water, and Wastewater Rates."
13 of95 ATTACHMENT A
November 18, 2025, Item #12
PASS-THROUGH INCREASES AND ADJUSTMENTS
The City incurs wholesale costs from third party agencies to provide water, recycled water and wastewater services. For water services these include energy costs from San Diego Gas & Electric (SDG&E) and wholesale water purchase costs from the SDCWA, which alone represent over 60% of the costs to provide safe and reliable water services to customers. For wastewa- ter services this includes wholesale wastewater treatment and disposal services from Metro. For recycled water services this includes wholesale recycled water purchases from the City of San Diego.
To avoid operational deficits, depletion of reserves, and inability to address water, recycled water and wastewater capital infra structure needs, the City is proposing to adopt an ordinance that would authorize the City, commencing February 1, 2026, and at any time through and including December 31, 2030, to pass through any increases in purchased water wholesale costs from SDCWA and increases to SDCWA fixed monthly charges
WATER INFRASTRUCTURE IMPROVEMENTS
With the goal of increasing the reliability of drinking water for wa ter customers now and generations to come, the City of Poway has undertaken the largest capital improvement program (CIP) in the city's 45-year history.
The CIP includes replacing the clearwell (water storage reservoir) at the water treatment plant and new treated water connec tion(s) and redundant pipeline(s). Before replacing the clearwell, a temporary bypass system was constructed. The clearwell replacement project is approximately 75 percent complete with commissioning expected in late Spring 2026. The SDCWA treated water facilities project is currently in the design phase, working in coordination with both the Ramona Municipal Water District (RMWD) and SDCWA. These coordinated efforts have the potential for significant cost offsets to the City, which should help reduce the cost to City ratepayers.
These infrastructure improvement projects were in the planning stage for a long time and are moving forward on schedule and within budget.
For more information: poway.org/water-projects.
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("SDCWA Charges"); increases in wholesale wastewater treat ment and disposal costs from Metro; and increases in wholesale recycled water costs from the City of San Diego. Energy cost increases are proposed to automatically adjust based on the Energy Rates for the Consumer Price Index, All Urban Customers, Energy in San Diego -Carlsbad ("CPI"), measured from Septem ber to September, to the extent the actual cost increases for pur chased energy exceed those projected for energy costs ("Energy Inflationary Increase" and collectively, the "Pass-Throughs").
Any and all Pass-Through Increases and Adjustments shall in no event result in rates exceeding the City's cost of providing water, recycled water or wastewater services to the City's customers.
Prior to implementing any Pass-Through Increases and Adjust ments, the City will provide written notice of increases or adjust ments to customers not less than 30 days prior to the effective date of the pass-through increases.
DEBT FINANCING
The capital projects described in this notice are being financed through a combination of rate revenue, connection fee revenue from new development, grant proceeds, and debt issuance.
Based on the cost of these projects and the impact to current ratepayers, the City has explored financing alternatives. Debt financing is a reasonable solution in that it provides the cash up front to construct the projects while spreading the repayments out over a longer time horizon. This helps create intergenerational equity by aligning the water CIP costs to the people who benefit from the project. When debt is issued, current ratepayers would not be responsible for fully funding projects today that will have a useful life beyond 30 years.
The City issued a series of water bonds to fund the Water Infra structure Improvement Program in 2021 and 2023 and is planning another round of issuances for the treated water connections and redundant pipeline projects commencing in 2026. The pro posed five-year rate increases give investors assurances that the City will have a sufficient revenue stream to pay the annual debt service, which helps to lower the cost of debt and the impacts to ratepayers. While this debt financing plan helps ensure the City has a solution in place to fund the program, City staff is also committed to pursuing every available grant opportunity these projects may be eligible for, along with noted joint ventures to help reduce costs.
November 18, 2025, Item #12
CURRENT AND PROPOSED WATER RATES*
5/8" 72.69 81.54 84.81 88.21 91.74 95.41
3/4" and 1" fire 98.27 113.03 117.56 122.27 127.17 132.26 1· 149.41 176.03 183.08 190.41 198.03 205.96
11/2" 277.27 333.52 346.87 360.75 375.18 390.19
2· 430.67 522.50 543.40 565.14 587.75 611.26
3" 916.53 1,120.96 1,165.80 1,212.44 1,260.94 1,311.38
4" 1.632.50 2,002.89 2,083.01 2,166.34 2,253.00 2,343.12 6" 3,345.71 4,113.23 4,277.76 4.448.88 4,626.84 4,811.92 8" 6,158.49 7,577.96 7,881.08 8,196.33 8,524.19 8,865.16 Single Family Residential
Tier 1: 1-20 Units 6.72 N/A N/A N/A N/A N/A
Tier 2: 21-56 Units 7.78 N/A N/A N/A N/A N/A
Tier 3: 57+ Units 10.69 N/A N/A N/A N/A N/A
Uniform Rate N/A 8.21 8.54 8.89 9.25 9.62
Recycled Water 5.68 6.96 7.24 7.53 7.84 8.16
Landscape Irrigation 9.41 N/A N/A N/A N/A N/A
Non-residential 7.29 N/A N/A N/A N/A N/A
Multi-family Residential 6.88 N/A N/A N/A N/A N/A
City Potable Usage 7.29 N/A N/A N/A N/A N/A
Uniform Water Rates 1 unit = 7 48 gallons
In light of recent court cases challenging tiered volumetric water rates, the City is moving to a uniform water rate structure as a more equitable and defensible structure, while affirming current rates being compliant with Proposition 218's cost of service principles.
*Water Rate Notes
The rates that may be implemented on or after January 21, 2026 do not include any projected increases in the wholesale water purchase costs from the San Diego County Water Authority that may be imposed on the City, in energy costs from San Diego Gas & Electric, and recycled water wholesale purchase costs from the City of San Diego. Such increases will be passed through directly as they are adopted by the respective service providing agency for wholesale water and recycled water services, and through a consumer price index adjustment for energy cost increases as earlier described following at least 30-day notice to service provided properties for water and recycled water wholesale costs.
Any water rates or fees associated with water service, including raw water, not addressed within this notice shall remain in full force and effect as previously adopted by the Poway City Council. 15 of 95
November 18, 2025, Item #12
CURRENT AND PROPOSED WASTEWATER RATES*
Residential
Single Family Residential 5.46 5.30 5.30 5.46 5.63 5.80 Multi-family & Mobile Home 6.85 6.97 6.97 7.18 7.40 7.63 Non-Residential
General Commercial 5.91 5.96 5.96 6.14 6.33 6.52
Medium-low 6.61 6.76 6.76 6.97 7.18 7.40
Medium 7.42 7.21 7.21 7.43 7.66 7.89
Medium-high 7.58 7.90 7.90 8.14 8.39 8.65
High 10.44 10.71 10.71 11.04 11.38 11.73
Light Industry 6.42 6.49 6.49 6.69 6.90 7.11
Industrial Special User 6.48 6.60 6.60 6.80 7.01 7.23
Government & Membership 4.85 5.94 5.94 6.12 6.31 6.50 Organizations .
Churches 5.91 6.06 6.06 6.25 6.44 6.64
Elementary School (ADA) 5.98 6.12 6.12 6.31 6.50 6.70
Secondary & High School 5.93 6.07 6.07 6.26 6.45 6.65 (ADA) *Wastewater Rate Notes
The rates that may be implemented on or after January 21, 2026 do not include any projected increases in the wholesale wastewater treatment and disposal service costs from San Diego Metropolitan Wastewater System that may be imposed on the City. Such increases will be passed through directly as they are adopted by the San Diego Metropolitan Wastewater System following at least 30-day notice to service provided properties.
How Wastewater Rates are Calculated
Single family residential wastewater flow based on 85% of lowest winter water use averaged over the past three years. Multi-family and mobile home customers' wastewater flow is calculated based on 75% of bimonthly water use for accounts without a landscape meter and 85% of bimonthly water use for accounts with a landscape meter. Non-residential customers' wastewater flow is calculated based on 75%, 85% or 90% of bimonthly water use depending on customer class. Wastewater flow for schools is estimated based on the average flow per student per day using 75% or 85% of the water use from the March/April billing period. 16 of95
November 18, 2025, Item #12
PROPOSED RATE CHANGE PROTESTS AND OBJECTIONS
Protests
As part of the rate setting process, on
January 20, 2026, the City of Poway will
conduct a public hearing on the proposed
changes to water and wastewater rates
and will consider all oral and written pro
tests to the proposed changes. Oral com
ments at the public hearing will not qualify
as formal protests unless accompanied by
a written protest. Only one written protest
will be counted per identified parcel. While
email is not an official rate protest mecha
nism under California law, the City Council
Objections
Objections may be submitted pursuant
to Government Code section 53759.1,
and any person that wishes to challenge
the rates in a legal proceeding must file
an objection, which complies with the
requirements detailed below. While the
same person or entity may submit both
a protest and an objection, to be valid,
protests and objections must be submit
ted separately, as clearly labeled, distinct
documents.
Requirements for a Valid Objection
1. Must include a clear statement that it
is an objection to the proposed water
or wastewater service rates.
2. Must be filed separately from pro
tests.
3. Must include the name of the record
owner or customer of record and the
assessor's parcel number or service
address associated with the objector's
parcel that is subject to the proposed
water or wastewater service rates.
4. Must include the specific subsections
of the California Constitution Article
17 of95
values resident input and will read all email
correspondence regarding rates.
Written protests must include:
A description of the property, such
as the address or assessor's parcel
number; and
The name and signature of the cus
tomer submitting the protest.
The City Council will receive a final tabu
lation of all written protests received by
the City Clerk. Written protests must be
received by the City Clerk's office no later
than 12 p.m. January 20, 2026, or can be
submitted in writing in the Council Cham-
XIII D, section 6(b) or any other appli
cable law that the objector believes
would be violated by the approval
and/or imposition of the proposed
water service or wastewater rates.
5. Must include a detailed explanation,
with references to the Water and
Wastewater Cost of Service and Rate
Study Report, legal authority, and any
additional data or evidence the objec
tor chooses to present that will enable
the City to understand the grounds
for the objector's claim that the
proposed water or wastewater service
rates do not comply with Proposition
218 or any other applicable law.
a) an objection may include expert
analysis in support of the objec
tion.
• b) if an objection includes expert
analysis, the expert's contact in
formation and statement of their
qualifications must be included.
6. Must include the original signature
of the objector. As such, electronic
objections will not be valid.
7. To be valid, all written objections must
include the information listed above
and be received by the City Clerk
bers before the public hearing is closed.
If a majority of the affected customers
do not file written protests of the pro
posed rate changes, the Council will then
consider and may adopt the rate changes
described in this notice. If a majority of af
fected customers file written protests, the
City Council will not adopt the proposed
rate adjustments and the City will recon
sider the rate structure and rates.
Please send written protests to:
City Clerk of the City of Poway
PO Box 789
Poway, CA 9207 4-0789
of the City of Poway by 5 p.m. on
January 5, 2026, at the address above
for protests. Hours for in person
objection submittal are 7:30 a.m. to
5:30 p.m. Monday through Thursday,
closed every other Friday with open
Friday hours of 8 a.m. to 5 p.m.
Prior to the close of the public hearing, the
City Council will consider and respond in
writing to any timely, valid written objec
tion. The City's response will explain the
substantive basis for retaining or altering
the proposed water or wastewater service
rates in response to the written objection,
and, if applicable, the grounds for not
making any amendments in response to
the objection. The proposed water and
wastewater service rates are subject to
Government Code section 53759. You are
hereby notified pursuant to Government .
Code section 53759 that any judicial
action or proceeding to attack, review,
set aside, void, validate, or annul the City
Council's adoption of the proposed water
service rates must be commenced within
120 days of the effective date or the date
of the final passage, adoption, or approval
of the ordinance or resolution adopting
the water or wastewater service rates,
whichever is later.
November 18, 2025, Item #12
PO Box789
Poway, California 92074-0789
poway.org
DATED MATERIAL -DO NOT DELAY DELIVERY
Important information
about your WATER and
WASTEWATER account!
How were rates determined? Changes to how Poway's water and wastewater rates are structured involve a deliberate series of steps to ensure rates remain affordable, fair, and equitable.
First. future demands on our
water and wastewater systems are
projected, as well as water quality
impacts, potential risks to system
reliability, and anticipated changing
conditions to sustainability.
Ne)(t, specific water and wastewater
infrastructure improvements are prior
itized and incorporated into the frame
work. These projects support near-and
long-term needs, from regular system
operations and maintenance to proactive
investments to improve system quality,
reliability, and sustainability.
Finally, a third-party rate consultant leads a
cost of service study in partnership with City
Council and staff. The study designs a legally
compliant rate framework that recovers
water and wastewater costs across different
customer classes. These studies are typically
updated every four to six years to ensure the
rate design is still fair and equitable. The most
recent full cost of service study was per
formed in December 2019 for rates effective
during calendar year 2020.
If you have any questions regarding this notice, please call (858) 668-4401. 18 of 95
Water and Wastewater Cost of Service and
Rate Study Report
Report / November 10, 2025
CITY OF POWAY
ATTACHMENT B
19 of 95
November 18, 2025, Item #12
~ RAFTELIS
November 18, 2025, Item #12
20 of95
November 18, 2025, Item #12
~ RAFTELIS
November 10, 2025
Craig Schmollinger
Director of Finance
City of Poway
13325 Civic Center Drive
Poway, CA 92064
Subject: Water, Recycled Water, and Wastewater Cost of Service and Rate Study Dear Mr. Schmollinger,
Raftelis is pleased to provide this Water, Recycled Water, and Wastewater Cost of Service and Rate Study Report (Report) for the City of Poway (City). The overall goal of the study was to develop updated rates for the City for the next five fiscal years (FY 2026-FY 2030) that are fair and equitable and in alignment with Proposition 218 requirements.
The major objectives of the study include the following:
1. Develop five-year financial plans for the water and wastewater enterprises through FY 2030 that sufficiently fund the City's operating costs, debt obligations, prudent reserves, and necessary capital expenditures
2. Review and revise as necessary the current water and wastewater rate structures
3. Perform a cost-of-service analysis to equitably allocate costs across customer classes
4. Propose equitable water, recycled water, and wastewater rates for FY 2026 to FY 2030 This Report summarizes the key findings and recommendations related to the development of the financial plans and proposed rates.
It has been a pleasure working with you and we thank you, Ms. Liabel Menguita, and other City staff for the support provided during this study.
Sincerely,
Sudhir Pardiwala
//£2;__2
ly'~k~_)
Senior Principal
611 Wilshire Blvd Suite 900 PMB 1009
Los Angeles, CA 90017
www.raftelis.com
21 of95
Lindsay Roth
~ w»r!Zo'c
Senior Consultant
November 18, 2025, Item #12
22 of 95
November 18, 2025, Item #12
Table of Contents
1. EXECUTIVE SUMMARY ............................................................ 1
1.1. SYSTEM OVERVIEW ............................................................................. 1
1.2. METHODOLOGY .................................................................................... 1
1.2.1. Water Utility ................................................................................................................ 1
1.2.2. Wastewater Utility ...................................................................................................... 2
1.3. PROPOSED FINANCIAL PLANS ........................................................... 2
1.3.1. Water Utility Financial Plan ....................................................................................... 2
1.3.2. Wastewater Utility Financial Plan ............................................................................. 5
1.4. PROPOSED RA TES ............................................................................... 8
1.4.1. Proposed Water Rates ............................................................................................... 8
1.4.2. Proposed wastewater Rates ..................................................................................... 9
2. STUDY BACKGROUND .......................................................... 11
2.1. SYSTEM OVERVIEW ........................................................................... 11
2.2. LEGAL FRAMEWORK ......................................................................... 11
2.3. RATE-SETTING METHODOLOGY ....................................................... 12
3. KEY ASSUMPTIONS ............................................................... 14
4. WATER RA TE STUDY ............................................................. 16
4.1. WATER UTILITY FINANCIAL PLAN .................................................... 16
4.1.1. Existing Rate Structure and Rates .......................................................................... 16
4.1.2. Account and Usage Projections ............................................................................. 17
4.1.3. Revenues .................................................................................................................. 18
4.1.4. O&M Expenses ......................................................................................................... 19
4.1.5. Capital Improvement Plan .................................................................... ; .................. 20
4.1.6. Recommended Reserve Policies ............................................................................ 22
4.1.7. Status Quo Financial Plan ....................................................................................... 22
4.1.8. Proposed Financial Plan .......................................................................................... 24
4.2. COST OF SERVICE ANALYSIS ........................................................... 29 CITY OF POWAY WATER AND WASTEWATER COST OF SERVICE AND RATE STUDY REPORT i 23 of 95
November 18, 2025, Item #12
4.2.1. Cost of Service Methodology .................................................................................. 29
4.2.2. Revenue Requirement. ............................................................................................. 29
4.2.3. Functionalization and Allocation of Expenses ...................................................... 30
4.2.4. Peaking Factors ........................................................................................................ 31
4.2.5. Allocation of Costs ................................................................................................... 32
4.2.6. Units of Service ........................................................................................................ 37
4.2.7. Allocation of Revenue Requirements to Cost Causation Components ............... 38
4.3. WATER RATE DEVELOPMENT ........................................................... 41
4.3.1. Derivation of Proposed Bi-monthly Fixed Charge ................................................. 41
4.3.2. Derivation of Proposed Commodity Rates ............................................................. 41
4.3.3. Proposed Water Rate Schedule .............................................................................. 43
4.4. BILL IMPACTS ..................................................................................... 43
4.5. LARGEST TEN PERCENT OF USERS ................................................ 45
5. WASTEWATER RATE STUDY ................................................ 46
5.1. WASTEWATER UTILITY FINANCIAL PLAN ....................................... 46
5.1.1. Existing Rate Structure and Rates .......................................................................... 46
5.1.2. Account and Usage Projections ............................................................................. 4 7
5.1.3. Revenues .................................................................................................................. 47
5.1.4. O&M Expenses ......................................................................................................... 48
5.1.5. Capital Improvement Plan ....................................................................................... 49
5.1.6. Recommended Reserve Policies ............................................................................ 49
5.1.7. Status Quo Financial Plan ....................................................................................... 50
5.1.8. Proposed Financial Plan .......................................................................................... 52
5.2. WASTEWATER COST OF SERVICE ANALYSIS ................................ 56
5.2.1. Cost of Service (COS) Methodology ....................................................................... 56
5.2.2. Revenue Requirement. ............................................................................................. 56
5.2.3. Mass Balance ............................................................................................................ 57 .
5.2.4. Functionalization and Allocation of Expenses ...................................................... 58
5.2.5. Allocation of Costs ................................................................................................... 59
5.2.6. Units of Service ........................................................................................................ 61
5.2.7. Allocation of Revenue Requirements to Cost Causation Components ............... 61
CITY OF POWAY
24 of95
WATER AND WASTEWATER COST OF SERVICE AND RATE STUDY REPORT ii November 18, 2025, Item #12
5.2.8. Distribution of Cost Causation Components ......................................................... 63
5.3. WASTEWATER RATE DEVELOPMENT .............................................. 64
5.3.1. Derivation of Proposed Bi-monthly Fixed Charge ................................................. 64
5.3.2. Derivation of Proposed Commodity Rates ............................................................. 65
5.3.3. Proposed Wastewater Rate Schedule .................................................................... 66
5.4. BILL IMPACTS ..................................................................................... 67
CITY OF POWAY
25 of95
WATER AND WASTEWATER COST OF SERVICE AND RATE STUDY REPORT iii November 18, 2025, Item #12
List
of
Tables
Table
1-1:
FY
2026-2030
Proposed
Water
Bimonthly
Meter
Service
Charges
.............
....
.........
...................
9 Table
1-2: FY
2026
-2030
Proposed
Water
and
Recycled
Water
Commodity
Rates
($
/ccf)
........................
9 Table
1-3: FY
2026
-2030
Proposed
Wastewater
Charges
..........................
...................
....
..........
.................
10 Table
3-1: Water
Key
Inflationary
Fa
ctor
s ...............................
.....
...............
.....
...............
......
..............
..........
14 Table
3-2
: Water
Key
Revenue
Assumptions
................................................................................................ 15 Table
3-3: Wastewater
Key
Inflationary
Factors
..............
..............................................
.......
........................
15 Table 3-4
: Wastewater
Key
Rev
enue
Assumptions
................................................................ ......................
15 Table
4-1: Existing
Bi-monthly
Water
Meter
Service
Charges
....................................
................................
16 Table
4-2
: Ex
isting
Bi-monthly
Water
Commodity
Rates
($/ccf
) .......................
....
.....
..............
...................
16 Table
4-3: Potable
and
Recycled
Water
Meters
....
....
..........
.......
........................................
...........................
17 Table
4-4
: Potable
and
Recycled
Water
Use
by
Class
(c
cf)
....................................
.....................................
18 Tabl
e
4-5
: Projected
Operating
Revenues
Under
Exist
ing
Water
Rates
...................
.................................
18 Table
4-6: Water
Proje
cted
Other
Rev
enue
s ................................................................................................. 19 Tabl
e
4-7: Wat
er Revenue
Summary
.............................................................................................................. 19 Table
4-8: Water
Operating
Expenditures
Summary
..........................................
.......
...................................
20 Table
4-9: Water
Capital
Improvement
Plan
.................................................................................................. 21 Table
4-10
: Water
Proposed
Reserve
Targets
.............
......
.....................................
.....
...................................
22 Table
4-11
: Water
Financ
ial
Plan
under
Current
Rates
.............................................
...................................
23 Table
4-12
: Water
Projected
Fund
Balan
ces
Under
Current
Rates
................
............
.................................
24 Table
4-13
: Water
Proposed
Revenue
Adjustments
................................................................... ..................
24 Table
4-14
: Water
Proposed
Financial
Plan
.........
..................
..................................
.....
................
................
25 Table
4-15
: Water
Projected
Fund
Balances
Under
Proposed
Rates
............
.........................
......
..............
26 Table
4-16
: Water
Revenue
Requirement
................
................................................................... ...................
30 Table
4-17
: System
Peaking
Fa
ctors
.............
......................
..................
............
...............
..............................
32 Table
4-18
: Functional
ized
O&M
Cost
Distributions
to
Cost
Causat
ion
Factors
......................................
33 Table
4-19
: Water
O&M
Cost
Allocations
...................................................................... .............
......
..............
34 Table
4-20
: Fun
ctionalized
Capital
Cost
Distr
ibutions
to
Cost
Causat
ion
Factors
.......
...........................
35 Table
4-21
: Water
Capital
Cost
Allocations
.............................
...................................................................... 36 Table
4-22
: Water
Cost
Allocat
ion
Distribution
Summary
..............................
......................
.........
......
........
36 Table
4-23
: Potable
Water
Equ
ivalent
Meters
1 .........................
.......................................
.............................
. 37
Table
4-24
: Recycled
Water
Equivalent
Meters
.................................................................................... .........
38 Table
4-25
: Derivation
of
Cost
Causation
Component
Units
of
Service
......................
..............................
38 Table
4-26
: Water
Unit
Cost
Cal
culation
........................................................................................................ 40 Table
4-27
: Derivation
of
the
Bi-monthly
Fixed
Charges
......................................
...........
....................
........
41 Table
4-28
: Recy
cled
Water
Commodity
Rate
Calculation
.....
.........................
............................................
42 Table
4-29
Calculation
of
PSAWR
Rates
...........
.................................................................. ...........................
42 Table
4-30
: Derivation
of
the
Commodity
Rates
($
/ccf
) ..................................
.........................
...........
.........
43 Table
4-31
: CY
2026-2030
Proposed
Water
Bi-monthly
Meter
Servi
ce
Charges
....................................
... 43
Table
4-32
: CY
2026-2030
Proposed
Water
Commodity
Rates
................................................................... 43 Table
5-1: Existing
Bi-monthly
Wastewater
Serv
ice
Charges
.............................................
.........
, ..............
46 Table
5-2: Existing
Bi
-monthly
Commodity
Rates
($/ccf
wastewater
) .....................................
.......
...........
46 Table
5-3
: Wastewater
Accounts
.....
....................................................... .............................
...................
........
47 Table
5-4
: Billed
Wastewater
Flow
by
Class
(cc
f) .........................................
.....................
...........................
47 Table
5-5
: Projected
Operating
Revenues
Under
Existing
Wastewater
Rates
.......
............................
.......
48 Table
5-6: Projected
Other
Wastewater
Revenues
..........................................
..........
...................................
48 Table
5-7
: Wastewater
Revenue
Summary
at
Current
Rates
...................................
.......
......
......................
48 Table
5-8: Wastewater
Operating
Expenditures
Summary
..................
............................................
............
49 CITY
OF
POWAY
WATER
AND
WASTEWATER
COST
OF
SERVICE
AND
RATE
STUDY
REPORT
Iv
26 of95
November 18, 2025, Item #12
Table
5-9: Wastewater
Capital
Improvement
Plan
.......................
..................
................
.............
.....
...........
.. 49
Table
5-10
: Wastewater
Proposed
Reserve
Targets
........
.......
......
......
..........................................
............
....
50 Table
5-11
: Wastewater
Financ
ial
Plan
under
Current
Rates
....
........
........
............
.............
............
......
.......
51 Table
5-12
: Wastewater
Proje
cted
Fund
Balances
Under
Current
Rates
......
......
......
................
............
.... 52
Table
5-
13 : Wastewater
Proposed
Revenue
Adjustments
......
........................
........
.......
....
.........
..............
... 52
Table
5-14
: Wastewater
Proposed
Finan
ci
al
Plan
....
...........
......
..............
....
..........
.........
...............
...............
53 Table 5-15
: Wastewater
Projected
Fund
Balances Under
Proposed
Rates
...............................
................
54 Table
5-16
: Wastewater
Revenue
Requ
irement
..............
..........
......
.................
.....................
....
.......
.............
57 Table
5-17: Mas
s
Balance
Analys
is .....
..........................
.........
......
....
..........................................
....................
58 Table
5-18
: Wastewater
O&M
Cost
Allo
cations
.......
.....................
.....
........
....
.......................
...........
.............
59 Table
5-19
: Wastewater
Capital
Cost
Allocat
ions
.....................................
.......
...........
............
.......
.........
......
60 Table
5-20
: Wastewater
Cost
Allo
cat
ion
Distr
ibut
ion
Summary
...
................................
...........
.............
...... 60
Table
5-21
: Wastewater
Customer
Class
Data
.......
......
.........
........
......
............
.....
........................
.............
....
61 Table
5-22
: Wastewater
Un
it Cost
Cal
culat
ion
..........
......
........
...
.....
..........
...................
..................
...............
62 Table
5-23:
Allocation
of
Costs
to
Customer
Clas
ses
.....
.......
.......
........
............................
.............
.............
63 TABLE
5-24
: Der
ivation
of the
Wastewater
Bi
-monthly
Fi
xed
Charge
.............
..........
..............
......
............
64 Table
5-25
: Der
ivat
ion
of
the
Wastewater
Commod
ity
Rates
($/ccf
) ....
...
...................................
................
65 Table
5-26
: CY
2026
-2030
Proposed
Bi-monthly
Wastewater
Charges
......
.................
........
.....
......
............
66 List
of
Figures
Fi
gur
e
1-1: Water
Rev
enue
Adjustments
and
Debt
Co
verage
.....
........
............
......
.........
..........
.....
...........
.....
3 Figur
e
1-2
: Water
Operating
Financial
Plan
at
Proposed
Rates
...
....
....................................
....
..........
......
....
4 Figure
1-3: Proposed
Water
Cap
ital
Improvement
Plan
and
Fund
ing
Sources
.......................
.......
............
4 Figure
1-4
: Water
Projected
End
ing
Balances
at
Proposed
Rates
......
..............
...........................
................
5 Figure
1-5: Wastewater
Revenue
Adju
stments
.....
........
........
...........
............................................................. .. 6
Fi
gur
e
1-6: Wastewater
Operating
Finan
ci
al
Plan
................
.................
...................................
.....
......
...........
6 Fi
gure
1-7: Wastewater
Capital
Replacement
Plan
and
Fund
ing
Sour
ces
.................
.......
.........
.........
........
7 Figure
1-8: Wastewater
Projected
End
ing
Balances
.......................
.........................
............
..........................
8 Figure
4-1: Water
Operating
Financ
ial
Plan
at
Proposed
Rates
...
.............
..............
...........
..........
..............
27 Fi
gure
4-2: Proposed
Water
Cap
ital
Improvement
Plan
and
Funding
Sour
ce
..........
.................
.............
.. 27
Figure
4-3
: Water
Proje
cted
Ending
Balances
at
Proposed
Rate
s ....
........................................................ . 28
Fi
gure
4-4
: Single
-Fam
ily
Residential
Water
Bill
Impact
Analysis
.....
..............
...........
..........
.......
.........
.....
. 44
Figure
4-5: Non
-Residential
Water
Bill
Impa
ct Analys
is ..........
.........
...
...................
...............
...........
.........
.. 44
Figure
5-1: Wastewater
Operating
Financ
ial
Plan
at
Proposed
Rat
es ........
...........
.....
.......
........................
54 Fi
gur
e
5-2
: Proposed
Wa
stewater
Cap
ital
Improvement
Plan
and
Fund
ing
Sour
ce .
........
.....
.............
.....
55 Figure
5-3: Projected
End
ing
Wastewater
Reserves
at
Proje
cted
Rate
s .
..............................
....................
55 Figure
5-4
: Single
-Family
Resident
ial
Wastewater
Bill
Impa
ct Analysis
.....................
.......
.....................
.. 67
Figure
5-5: Non
-Res
idential
Wastewater
Bill
Impa
ct Analysis
..........
..........
..................
.........
........
.............
67 CITY
OF
POWAY
WATER
AND
WASTEWATER
COST
OF
SERVICE
AN
D
RATE
STUDY
REPORT
v
27 of
95 November 18, 2025, Item #12
CITY
OF
POWAY
28 of
95 This
page
intentionally
left
blank
to
facilitate
two-sided
printing.
W
ATER
AN
D
WASTEWATER
COST
OF
SERVICE
AND
RATE
ST
UD
Y
REPORT
vi
November 18, 2025, Item #12
1. Executive
Summary
1.1. System
Overview
The
City
of
Poway
provides potable
water,
recycled
water,
and
wastewater
service
to
a population
of
over
49,000
.
The
majority
of
water
customers
also
receive
wastewater
service.
The
City
currently
imports
all
its
potable
water
as
raw
water
from the
San
Diego
County
Water
Authority
(SDCW
A)
and
treats
the
water
in
its
own
treatment
plant.
The
City
also
provides
wastewater
collection
service
and
transports
the
wastewater
to
the
San
Diego
Metropolitan
Wastewater
System
(METRO
Joint
Powers
Authority)
for
treatment
and
disposal.
Recycled
water
is
purchased
from
the
City
of
San
Diego
and
provided
to
approximately
212
customers
primarily
located
in
the
South
Poway
Business
Park.
The
City
currently
charges
potable
water
customers
a fixed
bi-monthly
meter
charge
and
a volumetric
rate
based
on
customer
class.
Single-family
residential
customers
have
a three
-tier
rate
structure
based
on
units
of
consumption
. All
other
customers
pay
a uniform
volumetric
rate.
Recycled
water
customers
pay
the
same
fixed
bi
monthly
meter
charge
with
their
own
uniform
volumetric
rate.
Single
family
wastewater
customers
pay
a uniform
bi
-monthly
fixed
service
charge
and
a uniform
volumetric
charge
based
on
the
customer's
winter water
usage.
All
other
customers
pay
the
same
fixed
uniform
bi-monthly
service
charge
and
a uniform
flow
charge
by
customer
class
based
on
estimated
wastewater
flows.
The
City
engaged
Raftelis
in
2024
to
conduct
a comprehensive
cost-of-service
water
and
wastewater
rate
study
to
establish
proposed
water
and
wastewater
rates
for
fiscal
years
(FY)
2026
to
FY
2030
. The
primary
project
objectives
of
the study
include
:
I.
Develop
five-year
financial
plans
for
the
water,
recycled
water,
and
wastewater
enterprises
through
FY
2030
that
generate
sufficient
revenues
to
fund
the
City's
operating
costs,
debt
obligations,
prudent
reserves,
and
necessary
capital
expenditures
2. Review
and
revise
as
necessary
the
current
water
and
wastewater rate
structures
3. Perform
a
cost-of-service
analysis
to
equitably
allocate
costs
across
customer
classes
in
compliance
with
Proposition
218
4. Propose
equitable
water,
recycled
water,
and
wastewater
rates
for
FY
2026
to
FY
2030
A
FY
is
defined
as
beginning
on
July
1 and
ending
on
June
30;
for
example,
FY
2026
begins
July
1,
2025,
and
ends
June
30,
2026.
1.2. Methodology
1.2.1.WATER
UTILITY
The
water
rates
presented
in
this
report
were
developed
using
cost
-of
-service
principles
set
forth
by
the
American
Water
Works
Association
Ml
Manual
titled
Principle
s of
Water
Rates,
Fees
and
Charges
(A
WW
A
Ml
Manual)
. Cost
of-service
principles
endeavor
to
distribute
costs
to
customer
classes
in
proportion
to
the
cost
each
class
imposes
on
the
water
system.
This
methodology
is
described
in
detail
in
Sections
4.2 and
5.2. The
Base-Extra
Capacity
Method
of
the
A WW
A M 1
Manual
was
used
to
distribute
costs
to
customer
classes
and
tiers
. This
method
separates
costs
into
five
main
components
: (1)
supply
costs,
(2)
base
costs,
(3)
extra
capacity
costs,
(4)
customer
costs
, and
(5)
fire
protection
costs.
Supply
costs
are incurred
to
purchase
raw
water
from
the
San
Diego
County
Water
Authority
(SDCW
A).
Base
costs
are
costs
associated
with
meeting
average
daily
demand
needs
and
include
operations
and
maintenance
costs
and
capital
costs
designed
to
meet
average
load
conditions.
Extra
capacity
costs
are
costs
(both
operating
and
capital
costs)
associated
with
meeting
peak
demands.
Those
extra
capacity
costs
are
inherently
borne
1 C
IT
Y
OF
POWAY
29 of95
November 18, 2025, Item #12
to meet the larger infrastructure and water capacity requirements of those peak demands (including larger diameter pipeline sizing, reservoir sizing, pump station capacity, and treatment plant capacity, among others). Customer costs are associated with serving customers, such as meter reading, billing, and customer service. Fire protection costs are related solely to the fire protection function of a water system, such as fire hydrants, private fire connections, and related mains and valves.
1.2.2. WASTEWATER UTILITY
The wastewater rates presented in this report were developed using cost-of-service principles set forth in the Water Environment Federation (WEF) Manual of Practice No. 27, Financing and Charges for Wastewater Systems, 2025. To calculate fair and equitable rates so that users pay in proportion to the cost of providing service, Raftelis allocated the total revenue requirements to wastewater flow, chemical oxygen demand (COD), and total suspended solids (TSS) consistent with the previously identified WEF /industry guidelines. Since wastewater flow or volumes are not directly measured for each customer, wastewater flows and loadings (flow, COD, and TSS) are estimated for each customer class through a plant balance analysis, which is used to estimate and validate the wastewater loadings (flow, COD, and TSS) generated by each customer class.
1.3. Proposed Financial Plans
1.3.1.WATER UTILITY FINANCIAL PLAN
To determine the revenue requirements needed to fund the City's ongoing expenses, Raftelis projected the O&M costs, capital improvement costs, and reserve requirements for the study period between FY 2026 to FY 2030.
O&M expenses include salaries and benefits, materials, services, supplies, utilities, water purchases, and general administrative costs. Water and power costs are held constant, and the City will pass through increases in water purchase and power costs annually (power costs by the increase in relevant Consumer Price Index figure). The City plans to spend approximately $82M on capital expenditures from FY 2026 to FY 2030.
Reserve targets are provided for prudent fiscal management and described in detail in Sections 4.1.6 and 5 .1.6 for water and wastewater, respectively. With bi-monthly billing, the minimum operating reserve is 90 days of operating expenses and the target is 120 days of operating expenses to provide working capital and to mitigate unexpected changes in operating costs. The capital reserve target is set to the five-year average capital expense to provide funds for capital expenses and unexpected increases or repairs/replacements.
Figure 1-1 through Figure 1-4 display the Water Utility Financial Plan in graphical format. Figure 1-1 shows the proposed revenue adjustments ( dark blue bars) of 9. 9% year one and 4. 0% for years two to five on the left axis. The rate models are based on each revenue adjustment going into effect in January of the corresponding fiscal year, however, year one adjustments will occur later in January 2026 following adoption. Although the graph shows anticipated revenue adjustments for the entire study period, the City will review and confirm the necessary revenue adjustments each year. The right axis of the graph shows the calculated and required coverage ratios for the City.
For the purpose of this study, the Poway Treated Water Facilities & Redundant Pipeline project is primarily funded through issuance of debt in late FY 2026, with funds available in FY 2027. Costs of this project are unknown at this time but included at the highest estimated cost for planning purposes.
CITY OF POWAY
30 of95
WATER AND WASTEWATER COST OF SERVICE AND RATE STUDY REPORT 2 November 18, 2025, Item #12
12 %
10 %
'o
6%
<t QJ ::, C !?;;
4%
QJ c:::
2% 0%
Figure
1-1
: Water
Revenue
Adjustments
and
Debt
Coverage
Rev
enue
Adju
stment
s
FY
2026
FY
2027
FY
2028
FY
2029
FY
2030
-
Revenue
Adjustm
ent
s
-
Debt
Cove
rage
-
Requ
ired
Coverage
•
Coverage
Alert 270
%
220
%
QJ
170
%
& QJ > 0 u
120
%
~ 0
7r.J% 20
%
Figure
1-2
graphically
illustrates
the
water
financial
plan,
comparing
existing
and
proposed
revenues
(orange
and
purple
lines,
respectively)
with
projected
expenses
(bars)
. The
expenses
are
represente
,d by
stacked
bars
to
indicate
each
expense
type's
share
of
total
expenses.
The
net
cash
flow
is
shown
in
green
.
3 CIT
Y
OF
POW
AY
31 of
95 November 18, 2025, Item #12
Figure
1-2: Water
Operating
Financial
Plan
at
Proposed
Rates
Operating
Financial
Plan
V,
$60
C .Q 2
$50 $40 $30 $20 $10 $0
-$10
FY
2026
FY
2027
FY
2028
FY
2029
FY
2030
-
Op
erati
ng
Expenses
-
Wate
r Purcha
ses
-
Rate
Funded
Capital
-
Debt
Service
-
Net
Cashflo
w
-
current
Reve
nu
e
-
Propo
sed
Revenue
Figure
1-3
shows
that
the
total
amount
of
the
water
capital
projects
are
funded
by
a combination
ofrates/reserves
(green
bars),
debt
proceeds
(blue
bars),
and
connection
fees
(orange
bars).
The
total
estimated
water
CIP for
the
study
period
of
FY
2026
to
FY
2030
is
$82M.
A
significant
amount
of
connection
fee
revenue
is
being
utilized
in
FY
2025
($4.SSM),
offsetting
a significant
amount
of
funding
that
otherwise
would
be
required
from
rate
revenue
or
more
expensive
debt
proceeds.
Figure
1-3: Proposed
Water
Capital
Improvement
Plan
and
Funding
Sources
V,
$25
.0
C .Q 2
$20
.0
$15.0 $10.0 $5
.0
$0
.0
CITY
OF
POWAY
32 of
95 $17
.5
FY
2026
Ca
pital
Funding
Sources
$23.2
$20
.2
$14.1
$6
.9
FY
2027
FY
2028
FY
2029
FY
2030
■
Debt
Funded
■
Rates/Reserve
s
Funded
■
Connection
Fee
Funded
WATER
AND
WASTEWATER
COST
OF
SERVICE
AND
RA
TE
STUDY
REPORT
4 November 18, 2025, Item #12
Figure
1-4
shows
the
City
's water
operating
and
capital
reserve
ending
balances
for
each
fiscal
year
after
operating
and
capital
costs
are
funded
. As
shown,
the
City
will
maintain
its
reserves
in
FY
2026
and
FY
2030
to
cover
capital
costs
and
will
meet
its
minimum
reserve
level
in
all
years
(indicated
by
the
orange
line)
.
v,
$20
C ~
$18
2 $16 $14 $12 $10 $8 $6 $4 $2 $0
Figure
1-4
: Water
Projected
Ending
Balances
at
Proposed
Rates
Operat
ing
&
Capit
al Re
se
rve
s
FY
2026
FY
2027
FY
202
8 FY
2029
-
To
ta
l Rese
rves
Mi
nimu
m
Reserve
-
Ta
rget
Rese
rve
1.3.2 . WASTEWATER
UTILITY
FINANCIAL
PLAN
FY
2030
To
determine
the
revenue
requirements
needed
to
fund
the
City
's ongoing
expenses,
Raftelis
projected
the
O&M
costs,
capital
improvement
costs,
and
reserve
requirements
for
the
study
period
between
FY
2026
to
FY
2030.
O&M
expenses
include
salaries
and
benefits,
materials
, services,
supplies
, utilities,
wastewater
treatment,
and
general
administrative
costs
. Treatment
costs
from
the
city
of
San Diego
are
held
constant,
and
the
City
will
pass
through
increases
in
treatment
costs
annually
. From
FY
2026
to
FY
2030,
the
city
plans
to
spend
approximately
$14M
on
capital
expenditures
.
Figure
1-5
through
Figure
1-8
display
the
Wastewater
Utility
Financial
Plan
in
graphical
format
. Figure
1-5
shows
the
proposed
revenue
adjustments
(dark
blue
bars)
of
0.0%
in
the
first
two
years
and
3.0%
annually
for
years
three
to
five
on
the
left
axis
. The
financial
plan
proposes
no
revenue
adjustments
for
wastewater
for
the
first
two
years
of
the study
period
as
reserves
are
sufficient
to
meet
expenses
. The
rate
models
are
based
on
each
revenue
adjustment
going
into
effect
in
January
of
the
corresponding
fiscal
year
. Although
the
graph
shows
anticipated
revenue
adjustments for
the
entire
study
period
, the
City
will
review
and
confirm
the
necessary
revenue
adjustments
each
year
. Over
the
five-year
planning
period,
the
City
does
not
anticipate
issuing
any
debt
for
the
wastewater
utility.
5 CITY
OF
POWAY
33 of
95 November 18, 2025, Item #12
Figure
1-5
: Wastewater
Revenue
Adjustments
Revenue
Adjustments
3.5 %
3.0%
V,
2.5 %
E C1) E '@
2.0 %
~ ci:: C1)
1.5 %
::, C: C1) > C1)
1.0 %
er:
0.5 %
0.0%
FY
2026
FY
2027
FY
2028
FY
2029
FY
2030
■
Revenue
Adjustments
Figure
1-6
graphically
illustrates
the
wastewater
financial
plan,
comparing
existing
and
proposed
revenues
(orange
and
purple
lines,
respectively)
with
projected
expenses
(bars).
The
expenses
are
represented
by
stacked
bars
to
indicate
each
expense
type's
share
of
total
expenses.
The
net
cash
flow
is
shown
in
green.
Reserves
are
used
to
fund
capital
expenditures.
Figure
1-6
: Wastewater
Operating
Financial
Plan
Operating
Financial
Plan
V,
$20
C: ~ ~
$15 $10 $5 $0 -$5
FY
2026
FY
2027
FY
2028
FY
2029
FY
2030
-
Op
erat
in
g
Expens
es
-
Rate
Funded
Cap
ital
-
Net
Cashflow
-
Curr
en
t R
even
ue
-
Propo
sed
Revenue
CITY
OF
POWAY
WATER
AND
WASTEWA
TER
COST
OF
SERVICE
AND
RATE
STUDY
REPORT
6 34
of
95 November 18, 2025, Item #12
Figure
1-7 shows
the
total
cost
of
the
wastewater
capital
projects
and
their
funding sources.
The
total
estimated
water
CIP
for
the
study
period
of
FY
2026
to
FY
2030
is
$14M.
As
shown
by
the
stacked
bars,
the
City
plans
to
fund
its
capital
projects
through
a combination
of
rates/reserves
(green
bars)
and
connection
fees
(orange
bars).
As
shown,
a significant
amount
of
connection
fee
revenue
is
being
utilized
in
FYs
2025
and
2026,
offsetting
a
significant
amount
of
funding
that
otherwise
would
be
required
from
rate
revenue
or
more
expensive
debt
proceeds
.
Figure
1-7
: Wastewater
Capital
Replacement
Plan
and
Funding
Sources
Capital
Funding
Sources
\I)
$4.0
C 0
$3.4
§
$3.5
2 $3.1
$3.0
S2
.7
S2.4
S2.4
$2.5 $2.0 $1.5 $1.0 $0.5 $0.0
-
FY
2026
FY
2027
FY
2028
FY
2029
FY
2030
■
Rates/Reserves
Funded
■
Connection
Fee
Fund
ed
7 CITY
OF
POWAY
35 of95
November 18, 2025, Item #12
Figure 1-8 shows the City's wastewater operating and capital reserve ending balances for each fiscal year after operating and capital costs are funded. As shown, the City will draw down its reserves through the study period to cover capital costs, but will still exceed its reserve targets as indicated by the solid purple line. The targets are defined the same as for the water utility.
"'$18
C
:§ $16
~
$14
$12
$10
$8
$6
$4
$2
$0
FY 2026
Figure 1-8: Wastewater Projected Ending Balances
Operating & Capital Reserves
FY 2027 FY 2028 FY 2029
-Total Reserves -Minimum Reserve -Target Reserve
1.4. Proposed Rates
1.4.1.PROPOSED WATER RATES
FY 2030
The proposed cost of service potable and non-potable rates effective, following adoption in January 2026, are shown below. The rates for subsequent years are increased by the revenue adjustments in Figure 1-1 to arrive at the proposed 5-year rate schedules shown in Table 1-1 and Table 1-2.The rates shown do not include potential increases in water purchase costs from the San Diego County Water Authority, or increases in wholesale recycled water purchase costs from the City of San Diego which will, per Government Code 53 756, be passed through annually in January 2027 and beyond.
CITY OF POWAY
36 of 95
WATER AND WASTEWATER COST OF SERVICE AND RATE STUDY REPORT 8 November 18, 2025, Item #12
Table 1-1: FY 2026-2030 Proposed Water Bimonthly Meter Service Charges
A B C D E F G
Line Meter Current January January January January January Size Charge 2026 2027 2028 2029 2030
1 5/8" $72.69 $81.54 $84.81 $88.21 $91.74 $95.41
2 3/4" $98.27 $113.03 $117.56 $122.27 $127.17 $132.26
3 1" $149.41 $176.03 $183.08 $190.41 $198.03 $205.96
4 11/2" $277.27 $333.52 $346.87 $360.75 $375.18 $390.19 5 2" $430.67 $522.50 $543.40 $565.14 $587.75 $611.26
6 3" $916.53 $1,120.96 $1,165.80 $1,212.44 $1,260.94 $1,311.38 7 4" $1,632.50 $2,002.89 $2,083.01 $2,166.34 $2,253.00 $2,343.12 8 6" $3,345.71 $4,113.23 $4,277.76 $4,448.88 $4,626.84 $4,811.92 9 8" $6,158.49 $7,577.96 $7,881.08 $8,196.33 $8,524.19 $8,865.16 Table 1-2: FY 2026-2030 Proposed Water and Recycled Water Commodity Rates ($/ccf)
A B C D E F
Line Variable Rate
January January January January January
2026 2027 2028 2029 2030
1 Uniform $8.21 $8.54 $8.89 $9.25 $9.62
2 Recycled $6.96 $7.24 $7.53 $7.84 $8.16
3 PSAWR Rebate -$1.94 -$1.97 -$1.97 -$1.97 -$1.97
1.4.2. PROPOSED WASTEWATER RATES
The proposed cost of service wastewater rates effective, following adoption in January 2026, are shown below.
Rates for subsequent years are increased by the revenue adjustments in Figure 1-5 to arrive at the 5-year rate schedules shown in Table 1-3. While there is no rate adjustment for the first year of proposed rates, the rates still change based on the resulting cost-of-service analysis. The rates shown do not include future increases in wastewater treatment costs which will be passed through following adoption in January 2026 and beyond. 9 CITY OF POWAY
37 of95
November 18, 2025, Item #12
Table
1-3: FY
2026
-2030
Proposed
Wastewater
Charges
Customer
Class
Bi-Monthly
Fixed
Charge
All
Customer
Classes
Commodity
Rate
per
cd
of
Wastewater
Residential Single
Family
Residence
Multi-Family
&
Mobile
home
Non-Residential
General
Commercial
Medium-Low Medium Medium-High High Light
Industry
Industrial
Special
User
Government
&
Membership
Organizations
Churches Elementary
School
Secondary
&
High
School
C
ITY
OF
POWAY
38 of95
Current
January
January
January
January January
Charge
2026 2027 2028
2029
2030
$33.13
$33.36
$33.36 $34.37 $35.41 $36.48
$5.46
$5
.30
$5
.30
$5.46
$5.63
$5.80
$6
.85
$6.97 $6.97
$7.18 $7.40
$7.63
$5
.91
$5
.96
$5
.96
$6
.14
$6
.33
$6.52
$6.61
$6.76
$6.76
$6
.97
$7.18
$7.40
$7.42 $7.21
$7.21 $7.43
$7
.66
$7.89
$7.58
$7
.90
$7.90
$8
.14
$8.39 $8.65
$10.44
$10.71
$10.71
$11
.04
$11.38
$11
.73
$6.42
$6.49
$6.49
$6
.69
$6.90
$7
.11
$6
.48
$6.60
$6.60
$6
.80
$7.01 $7.23
$4
.85
$5.94
$5.94
$6
.12
$6
.31
$6.50
$5
.91
$6
.06
$6
.06
$6
.25
$6
.44
$6.64
$5
.98
$6
.12
$6
.12
$6
.31
$6.50
$6
.70
$5
.93
$6.07
$6.07
$6
.26
$6.45
$6.65
WA
TER
AN
D
WA
STEW
A
TER
COST
O
F
SERV
ICE
AND
RA
TE S
TUD
Y R
EPO
RT
10 November 18, 2025, Item #12
2. Study
Background
2.1. System
Overview
The
City
of
Poway
provides
potable
water,
recycled
water,
and
wastewater
service
to
a population
of
over
50,900
.
The
majority
of
water
customers
also
receive
wastewater
service.
Recycled
water
is
provided
to
approximately
212
customers
primarily
located
in
the
South
Poway
Business
Park
. The
City
currently
imports
all
of
its
potable
water
as
raw
water
from
the
San
Diego
County
Water
Authority
(SDCWA)
and
treats
the
water
in
its
own
treatment
plant.
The
City
also
provides
wastewater
collection
service
and
transports
the
wastewater
to
the
San
Diego
Metropolitan
Wastewater
System
(METRO
Joint
Powers
Authority)
for
treatment
and
disposal.
Recycled
water
is
purchased
from
the
City
of
San
Diego.
The
City
currently
charges
potable
water
customers
a fixed
bi-monthly
meter
charge
and
a volumetric
rate
based
on
customer
class.
Single-family
residential
customers
pay
based
on
a three-tier
rate
structure
based
on
units
of
consumption.
All
other
customers
pay
a uniform
volumetric
rate.
Recycled
water
customers
pay
the
same
fixed
bi
monthly
meter
charge and
a uniform
volumetric
rate.
Single
family
wastewater
customers
pay
a uniform
bi
monthly
fixed
service
charge
and
a uniform
volumetric
charge
based
on
the
customer's
winter
water
usage.
All
other
customers
pay
a fixed
uniform
bi-monthly
service
charge
and
a uniform
flow
charge
by
customer
class
based
on
their
wastewater
flow.
The
City
engaged
Raftelis
in
2024
to
conduct
a comprehensive
cost-of-service
water
and
wastewater
rate
study
to
establish
proposed
water
and
wastewater
rates
for
fiscal
years
ending
(FY)
2026
to
FY
2030
. The
primary
project
objectives
of
the
study
include:
1. Develop five-year
financial
plans
for
the
water(including
recycled
water)
and
wastewater
enterprises
through
FY
2030
that
generate
sufficient
revenues
to
fund
the
City's
operating
costs,
debt
obligations,
prudent
reserves,
and
necessary
capital
expenditures
2. Review
and
revise
as
necessary
the
current
water
and
wastewater rate
structures
3. Perform
a
cost-of-service
analysis
to
equitably
allocate
costs
across
customer
classes
in
compliance
with
Proposition
218
4. Propose
equitable
water,
recycled
water,
and
wastewater
rates
for
FY
2026
through
FY
2030
2.2. Legal
Framework
California
Constitution
-Article
XIII
D,
Section
6 (Proposition
218)
Proposition
218,
reflected
in
the
California
Constitution
as
Article
XIII
D,
was
enacted
in
1996
to
ensure
that
rates
and
fees
are
reasonable
and
proportional
to
the
cost
of
providing
service.
The
principal
requirements,
as
they
relate
to
public
water
service,
are
as
follows:
1. A
property
-related
charge
(such
as
water
rates)
imposed
by
a public
agency
on
a parcel
shall
not
exceed
the
costs
required
to
provide
the
property
related
service.
11 CITY
OF
POWAY
39 of95
November 18, 2025, Item #12
2. Revenues
derived
by
the
charge
shall
not
be
used
for
any
purpose
other
than
that
for
which
the
charge
was
imposed
.
3. The
amount
of
the
charge
imposed
upon
any
parcel
shall
not
exceed
the
proportional
cost
of
service
attributable
to
the
parcel.
4. No
charge
may
be
imposed
for
a service
unless
that
service
is
actually
used
or
available
to
the
owner
of
property.
5. A
written
notice
of
the
proposed
charge
shall
be
mailed
to
the
record
owner
of
each
parcel
at
least
45 days
prior
to
the
public
hearing
, when
the
agency
considers
all
written
protests
against
the
charge
.
As
stated
in
the
American
Water
Works
Association's
(A
WW
A)
Principles
of
Water
Rates
, Fees
, and
Charges
:
Manual
of
Water
Supply
Practices
Ml
Sixth
Edition
(Ml
Manual),
"water
rates
and
charges
should
be
recovered
from
classes
of
customers
in
proportion
to
the
cost
of
serving
those
customers."
Raftelis
follows
industry
standard
rate
setting
methodologies
set
forth
by
the
A WW
A
Ml
Manual
and
the
California
regulations
to
ensure
this
study
meets
Proposition
218
requirements
and
establishes rates
that
do
not
exceed
the
proportionate
cost
of
providing
water
services
. Similarly,
Raftelis
follows
the
WEF
Manual
of
Practice
No.
27 to
conduct
cost-of-service
analysis
consistent
with
Proposition
218.
The
California
legislature
recently
enacted
legislation
that
allows
a public
agency
to
designate
a process
for
protesting
proposed
rate
increases
, and
set
a specified
timeline
for
bringing
rate
challenges
, provided
the
agency
has
given the
public
required
certain
notifications.
Those
notifications
can
be
included
in
the
Proposition
218
notice
of
a public
agency
, and
result
in
a limited
time
to
challenge
rates
in
court-as
explained
further
below.
Challenges
to
Rates 1.
Limitation
to
Rate
Challenges
Pursuant
to
California
Government
Cost
Section
53759
, there
is
now
a 120
day
statute
of
limitations
for
judicially
challenging
the
rates
adopted
herein
. All
challenges
to
the
City
's proposed
rates
will
need
to
be
brought
within
120
days
of
Council
adoption,
or
the
effective
date
of
the
new
rates
adopted
herein,
whichever
is
later
.
2. Exhaustion
of
Administrative
Remedies
Pursuant
to
California
Government
Code
Sections
53759
.1 and
53759.2,
a person
or
entity
will
be
prohibited
from
bringing
a judicial
action
or
proceeding
alleging
that
the
proposed
rates
do
not
comply
with
Proposition
218
unless
that
person
or
entity
has
submitted
a written
Objection
to
the
proposed
rates
in
response
to
the
notice.
This
is
known
as
an
Exhaustion
of
Administrative
Remedies
requirement
and
is
separate
from
the
Proposition
218
majority
Protest
process
. The
City's
designated
process
for
filing
written
objections
is
contained
in
the
City's
Proposition
218
Notice
. Written
objections
will
need
to
identify
any
alleged
areas
of
noncompliance,
and
follow
the
City's designated
process
specified
in
the
Proposition
218
Notice.
2.3. Rate-Setting
Methodology
This
rate
study
was
conducted
using
industry-standard
principles
outlined
by
the
A WW
A
Ml
Manual
and
the
WEF
Manual
of
Practice
No
. 27
. The
process
and
approach Raftelis
utilized
in
the
study
to
determine
water
and
wastewater
rates
is
informed
by
the
regulatory
requirements
in
California
(namely,
Proposition
218).
The
resulting
financial
plans,
cost-of-service
analysis,
and
rate
design
process
take
all
factors
into
consideration
and
follow
five
key
steps,
outlined
below
, to
determine
proposed
rates
that
fulfill
the
City's
objectives
, meet
industry
standards,
and
comply
with
relevant
regulations
.
C
ITY
OF
POWAY
WA
TER
A
ND
WAS
TE
WA
TER
COST
OF
SER
VI
C
E
AND
RA
TE S
TUD
Y
REPORT
12 40
of95
November 18, 2025, Item #12
1. Financial
Plan:
The
first
study
step
is
to
develop
multi-year
financial
plans
that
project
the
water
and
wastewater
utilities
revenues,
expenses,
capital
project
financing,
annual
debt
service,
and
reserve
funding
.
The
financial
plans
determine
the
revenue
adjustment,
allowing
the
utility
to
recover
adequate
revenues
to
fund
expenses
and
reserves.
2. Revenue
Requirement
Determination:
After
completing
the
financial
plan,
the
rate-making
process
begins
with
determining
the
revenue
requirement
for
the
test
year,
also
known
as
the
rate-setting
year.
The
test
year
for
this
study
is
FY
2026.
The
revenue
requirement
should
sufficiently
fund
the
utilities
operations
and
maintenance
(O&M)
costs,
annual
debt
service,
capital
improvement
plan
(CIP)
costs,
and
reserve
funding
as
projected
based
on
the
utilities
FY
2026
budget.
3. Cost-of-Service
Analysis:
The
annual
cost
of
providing
water
or
wastewater
service,
or
the
revenue
requirement,
is
then
distributed
to
customer
classes
commensurate
with
their
use
of
and
burden
on
the
water
or
wastewater
system.
A
cost-of-service
analysis
involves
the
following
steps:
a.
Functionalize
costs
-
the
different
components
of
the
revenue
requirement
are
categorized
into
functions
such
as
supply,
transmission
and
distribution
(T&D),
collection,
treatment,
customer
service
and
billing,
etc.
b.
Allocate
to
cost
causation
components
-
the
functionalized
costs
are
then
allocated
to
cost
causation
components
such
as
supply,
base
delivery,
peaking,
etc
. for
water
and
flow
and
strength
characterized
by
chemical
oxygen
demand
and
total
suspended
solids
for
wastewater
.
c.
Develop
unit
costs
-
unit
costs
for
each
cost
causation
component
are
determined
using
units
of
service,
such
as
total
usage,
peaking
units,
equivalent
meters,
number
of
customers,
total
wastewater
loadings,
etc.
for
each
component.
d.
Distribute cost
components
-
the
cost
components
are
allocated
to
each
customer
class
and
tier
using
the
unit
costs
in
proportion
to
their
demand
and
burden
on
the
system.
4. Rate
Design:
After
allocating the
revenue
requirement
to
each
customer
class,
the
rate
design
and
calculation
process
can
begin
. Rates
do
more
than
simply
recover
costs;
within
the
legal
framework
and
industry
standards,
properly
designed
rates
pass
on
the
cost
of
providing
service
equitably
to
customers
.
This
process
also
includes
a rate impact
analysis
and
sample
customer
bill
impacts
.
5. Administrative
Record
Preparation
and
Rate
Adoption:
The
final
step
in
a rate
study
is
to
develop
the
administrative
record
or
report
in
conjunction
with
the
rate
adoption
process.
The
administrative
record
documents
the study
results
and
presents
the
methodologies,
rationale, justifications,
and
calculations
used
to
determine
the
proposed
rates.
A
thorough
and
methodological
administrative
record
serves
at
least
two
important
functions:
(1)
maintaining
defensibility
of
the
rates,
with
a written
record
that
demonstrates why
the
City
Council
approved
the
proposed
rates
based
upon
the
applicable
cost
of
providing
the
service,
in
a
stringent
legal
environment;
(2)communicating the
rate
adoption
process,
and
cost
justifications
for
the
proposed
rates,
to
customers
and
stakeholders
.
13 CITY
OF
POW
AY
41 of
95 November 18, 2025, Item #12
3. Key Assumptions
The Study uses the City's FY 2026 budget as the base year and the model projects the City's revenue requirements through FY 2030; however, the proposed water and wastewater rates herein are for FY 2026 through FY 2030 and are fully adopted as to each of the next five years on the date the City Council approves the rates described herein.
The City will continue to periodically review rates and take a measured approach with any potential rate adjustments authorized by Government Code§ 53759. Certain cost escalation assumptions and inputs were incorporated into the Study to adequately model expected future costs of the City. These assumptions were based on discussions with and/ or direction from City staff and are presented in Table 3-1 through Table 3-4. Estimated costs of purchasing potable water in CY 2026 from the SDCW A are based on the published rates and recycled water purchase costs from the City of San Diego are based on rates provided by the City of San Diego for CY 2026 through 2029.
Inflation factors for specific expenses, such as salary, benefits, etc., are identified based on expected increases.
Potable and recycled water purchase costs are based on actual costs from the SDCW A and City of San Diego.
Potable costs are increasing by 11.5% from FY 2025 to FY 2026. Recycled water costs from the City of San Diego are increasing by 22.5% during the same time frame. Operating costs that do not fall into one of the specific categories are inflated by the General factor, which is the long-term average inflation factor. Capital costs are expected to be inflated at a slightly higher rate than general inflation given historical and projected inflation for this area.
Table 3-1: Water Key Inflationary Factors
A B C D E F
Line Inflationary Factors FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 General 3.0% 3.0% 3.0% 3.0% 3.0%
2 Salary 5.0% 3.0% 3.0% 3.0% 3.0%
3 Benefits 10.0% 10.0% 10.0% 10.0% 10.0%
4 Power 5.0% 0.0% 0.0% 0.0% 0.0%
5 SDCWA Water Purchases 0.0% 0.0% 0.0% 0.0% 0.0%
6 Recycled Water Purchases 0.0% 0.0% 0.0% 0.0% 0.0%
7 Capital 4.0% 4.0% 4.0% 4.0% 4.0%
Based on input from the City, small increases in account growth are expected for residential accounts in alignment with growth patterns. The demand factor for potable and recycled water represents the change in water consumption per account. The Study assumes that the consumption per account, demand factor, does not change, and the only change in use will result from any growth in accounts.
CITY OF POWAY WATER AND WASTEWATER COST OF SERVICE AND RATE STUDY REPORT 14 42 of95
November 18, 2025, Item #12
Table
3-2
: Water
Key
Revenue
Assumptions
Revenue
Assumptions
FY
2026
FY
2027
FY
2028
FY
2029
FY2030
Account
Growth
Single
Family
Residential
0.5%
0.3%
0.3%
0.3%
0.3%
Multi-Family
Residential
0.1%
0.1%
0.1%
0.1%
0.1%
Landscape
Irrigation
0.0%
0.0%
0.0%
0.0%
0.0%
Non-Residential
0.0%
0.0%
0.0%
0.0%
0.0%
Recycled
0.0%
0.0%
0.0%
0.0%
0.0%
Demand
Factor
Potable
100
.0%
100
.0%
100.0%
100
.0%
100
.0%
Recycled
100
.0%
100
.0%
100.0%
100
.0%
100.0%
Revenue
Escalation
Factors
Non-Inflated
0.0%
0.0%
0.0%
0.0%
0.0%
Non-Rate
Revenues
0.0%
0.0%
0.0%
0.0%
0.0%
Interest
Income
2.0%
2.0%
2.0%
2.0%
2.0%
Table
3-3
: Wastewater
Key
Inflationary
Factors
A
B
C
D
E
F
Line
Inflationary
Factors
FY
2026
FY
2027
FY
2028
FY
2029
FY
2030
1 General
3.0%
3.0%
3.0%
3.0%
3.0%
2 Salary
5.0%
3.0%
3.0% 3.0%
3.0%
3 Benefits
10.0% 10.0% 10.0% 10.0% 10.0%
4 Power
5.0%
5.0%
5.0% 5.0%
5.0%
5 Capital
4.0%
4.0%
4.0%
4.0% 4.0%
Table
3-4
: Wastewater
Key
Revenue
Assumptions
Revenue
Assumptions
FY
2026
FY
2027
FY
2028
FY
2029
FY
2030
Account
Growth
Single
Family
Residential
0.3%
0.3%
0.3%
0.3% 0.3%
Multi-Family
Residential
0.1%
0.1%
0.1%
0.1%
0.1%
Non-Residential
0.0%
0.0%
0.0%
0.0% 0.0%
Revenue
Escalation
Factors
Non-Inflated
0.0%
0.0%
0.0%
0.0%
0.0%
Non-Rate
Revenues
0.0%
0.0%
0.0%
0.0%
0.0%
Interest
Income
2.0%
2.0%
2.0%
2.0% 2.0%
15 C
ITY
O
F P
OWA
Y
43 of95
November 18, 2025, Item #12
4. Water
Rate
Study
4.1. Water
Utility
Financial
Plan
This
section
details
the
development
of
the
five-year
financial
plan
for
the
City's
water
utility
. This
includes
the
determination
of
annual
revenues
required
from
potable
water
and
recycled
water
rates
based
on
annual
cash
flow
projections
. Assumptions
and
inputs
related
to
projected
revenues,
operating
expenses,
and
capital
expenditures
are
clearly
outlined
in
the
following
subsections
.
4.1 .1. EXISTING
RA
TE
STRUCTURE
AND
RA
TES
The
City
bills
every
two
months
(bi
-monthly),
resulting
in
six
total
bills
per
year
for
each
customer.
The
City's
current
rates
went
into
effect
on
January
1,
2025.
The
existing
rate
structure
for
potable
and
recycled
water
consists
of
a bi-monthly
fixed
service
charge
based
on
meter
size.
The
City's
existing
bi-monthly
service
charges
are
shown
below
in
Table
4-1
.
Table
4-1: Exist
ing
Bi-monthly
Water
Meter
Service
Charges
Meter
Size
FY
2025
5/8"
$72.69
3/4"
$98.27
1"
$149.41
11/2"
$277.27
2"
$430.67
3"
$916.53
4"
$1,632.50
6"
$3,345.71
8"
$6,158.49
Additionally,
customers
pay
a commodity
rate
by
customer
class
on
all
water
consumption
. These
rates
are
shown
in
Table
4-2.
Single-Family
Residential
customers
pay
a three-tiered
rate
based
on
consumption
at
each
tier
level
.
All
other
customers
pay
a uniform
rate
per
hundred
cubic
feet
(ccf)
of
water
consumed
. Please
note
that
the
Potable
and
Recycled
rates
for
City
use
are
for
fiscal
year
(FY)
2025
.
CITY
O
F
POWAY
44 of95
Table
4-2: Ex
ist
ing
Bi-monthly
Water
Commodity
Rates
($/ccf)
Customer
Class
Tier
Width
(ccf)
FY
2025
Single
Family
Residential
Tier
1 0-20
$6
.72
Tier
2 21-56
$7
.78
Tier
3 57+
$10
.69
Multi-Family
Residential
Uniform
$6.88
Landscape
Irrigation
Uniform
$9
.41
Non-Residential
Uniform
$7
.29
City
Potable
Usage
Uniform
$7
.29
Recycled
Uniform
$5
.68
WATER
AND
WASTEWATER
COST
OF
SERV
ICE
AND
RA
TE
ST
UD
Y
RE
PORT
16 November 18, 2025, Item #12
4.1.2.ACCOUNT AND USAGE PROJECTIONS
Table 4-3 shows the estimated number of water accounts by meter size for FY 2025 through FY 2030. The projections are based on account data provided by the City for FY 2024. The number of accounts are used to forecast the amount of fixed revenue the City will receive from the bi-monthly meter service charges.
Table 4-3: Potable and Recycled Water Meters
Meter Size FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Potable Water Meters
5/8" 0 0 0 0 0 0
3/4" 11,802 11,861 11,890 11,920 11,950 11,980
1" 1,723 1,732 1,736 1,741 1,745 1,749
11/2" 351 352 353 354 355 356
2" 382 384 385 386 387 388
3" 25 25 25 25 25 25
4" 7 7 7 7 7 7
6" 2 2 2 2 2 2
8" 3 3 3 3 3 3
Total Potable Water Meters 14,295 14,366 14,402 14,438 14,474 14,510 Recycled Water Meters
5/8" 0 0 0 0 0 0
3/4" 3 3 3 3 3 3
1" 102 102 102 102 102 102
11/2" 58 58 58 58 58 58
2" 49 49 49 49 49 49
3" 0 0 0 0 0 0
4" 0 0 0 0 0 0
6" 0 0 0 0 0 0
8" 0 0 0 0 0 0
Total Recycled Water Meters 212 212 212 212 212 212
Table 4-4 projects the potable and recycled water consumption by class for the study period based on FY 2025 usage data.
17 CITY OF POWAY
45 of95
November 18, 2025, Item #12
Customer Class
Single Family Residential
Tier 1
Tier 2
Tier 3
Multi-Family Residential
Landscape Irrigation
Non-Residential
Agricultural
City Potable Usage
Total Potable Usage
Total Potable Usage (AF)
Recycled Water
City Recycled Usage
Total Recycled Usage
Total Recycled Usage (AF)
4.1.3.REVENUES
Table 4-4: Potable and Recycled Water Use by Class (ccf) FY 2025
1,421,427
751,735
481,280
329,021
208,958
520,237
11,092
125,210
3,848,960
8,836
214,824
0 214,824
493
FY 2026
1,367,376
723,149
462,979
316,510
201,012
500,454
10,670
120,449
3,702,599
8,500
214,824
0 214,824
493
FY 2027
1,370,794
724,957
464,136
317,301
201,515
501,705
10,697
120,750
3,711,855
8,521
214,824
0 214,824
493
FY 2028
1,374,221
726,769
465,297
318,095
202,018
502,959
10,723
121,052
3,721,135
8,543
214,824
0 214,824
493
FY 2029
1,377,657
728,586
466,460
318,890
202,523
504,217
10,750
121,355
3,730,438
8,564
214,824
0 214,824
493
FY2030
1,381,101
730,408
467,626
319,687
203,030
505,477
10,777
121,658
3,739,764
8,585
214,824
0 214,824
493
The City's water revenues consist of operating revenues (i.e., water rate revenues), other operating revenues, and non-operating revenues. Projected water rate revenues under existing rates are calculated for the years FY 2025 to FY 2030 by multiplying current rates (Table 4-1 and Table 4-2) by the corresponding units of service (Table 4-3 and Table 4-4).1 Projecting water rate revenues under existing rates is necessary to evaluate the City's projected baseline financial position in the absence of any proposed rate increases.
Table 4-5: Projected Operating Revenues Under Existing Water Rates Operating Revenues
Bimonthly Service Charges
Potable Water
Recycled Water
Commodity Rates
Single Family Residential
Multi-Family Residential
Landscape Irrigation
Non-Residential
Agricultural
City Potable Use
Drought Surcharge
Recycled
City Recycled Use
Total
FY 2025
$9,828,748
$298,024
$19,267,311
$2,115,499
$1,852,861
$3,551,834
$81,065
$854,851
$0
$1,173,818
$0
$39,024,010
FY 2026
$10,484,326
$316,315
$19,764,111
$2,177,589
$1,891,523
$3,648,310
$81,732
$878,073
$0
$1,220,200
$0
$40,462,179
FY 2027
$10,510,537
$316,315
$19,813,522
$2,183,033
$1,896,252
$3,657,430
$81,937
$880,268
$0
$1,220,200
$0
$40,559,494
FY 2028
$10,536,813
$316,315
$19,863,056
$2,188,490
$1,900,992
$3,666,574
$82,141
$882,469
$0
$1,220,200
$0
$40,657,051
1 Fixed charge revenues = [number of meters assessed] x [monthly rate] x [ 6 billing periods].
Volumetric charge revenues= [annual usage in CCF] x [volumetric rate per CCF].
FY 2029
$10,563,155
$316,315
$19,912,713
$2,193,962
$1,905,745
$3,675,740
$82,347
$884,675
$0
$1,220,200
$0
$40,754,852
FY 2030
$10,589,563
$316,315
$19,962,495
$2,199,446
$1,910,509
$3,684,930
$82,553
$886,887
$0
$1,220,200
$0
$40,852,898
CITY OF POWAY
46 of 95
WATER AND WASTEWATER COST OF SERVICE AND RATE STUDY REPORT 18 November 18, 2025, Item #12
Table 4-6 shows a summary of other revenues. Revenues from the sale of raw water to a golf course were projected beyond FY 2026 assuming 1,081 acre-feet per year (AFY) in sales. Treated water sales to the Ramona Municipal Water District (RMWD)are assumed to begin in FY 2029. The RMWD wholesale treatment rate is projected to be $532.51 per acre-foot (AF) in CY 2029, inflated from an estimated FY 2026 rate of$460/ AF, which we reduced from a calculated rate of $496.62 to be conservative. The RMWD water treatment rate, which does not include the SDCWA wholesale raw water purchase costs, was calculated through a separate study recently conducted by Raftelis. The majority of other operating and non-operating revenues were held constant beyond FY 2026.
Table 4-6: Water Projected Other Revenues
Other Revenues FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Raw Water Sales to Golf Course $456,621 $470,852 $470,852 $470,852 $470,852 $470,852 Other Revenues $435,334 $503,373 $503,373 $503,373 $503,373 $503,373 Ramona Revenue $0 $0 $0 $0 $1,863,776 $1,956,965
Total $891,955 $974,225 $974,225 $974,225 $2,838,001 $2,931,190 Table 4-7 shows a revenue summary for the study period based on revenues shown previously in Table 4-5 and Table 4-6. Once again, operating revenues shown in this section reflect projected water rate revenues under existing rates in the absence of any rate increases over the study period.
Table 4-7: Water Revenue Summary
Revenues FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Operating Revenues $39,024,010 $40,462,179 $40,559,494 $40,657,051 $40,754,852 $40,852,898 Other Revenues $891,955 $974,225 $974,225 $974,225 $2;838,001 $2,931,190 Total $39,915,965 $41,436,405 $41,533,719 $41,631,276 $43,592,854 $43,784,088
4.1.4. O&M EXPENSES
The City's operations and maintenance (O&M) expenses, shown in Table 4-8, are based on the FY 2026 City Adopted budget and projected out through FY 2030. The City's projected purchased water and recycled water expenses were calculated over the study period based on the projected water supply and anticipated/ adopted supply rates from SDCW A and the City of San Diego for FY 2026. Fixed and variable potable water purchase charges were held constant for FY 2027 through FY 2030 as these costs will be collected through a pass-through rate. All other O&M expenses were projected beyond FY 2026 by increasing FY 2026 budgeted expenses using the inflationary factors discussed in Table 3-1.
19 CITY OF POWAY
47 of 95
November 18, 2025, Item #12
Table
4-8
: Water
Operating
Expenditures
Summary
Operating
Expenditures
FY
2025
FY2026
FY2027
FY
2028
FY
2029
FY
2030
Water
Purchases
SDCWA
Fixed
Charges
$5,465,436
$6,326,202 $6,717,552 $6,717,552
$6,717,552 $6,717,552
SDCWA
Supply
Charges
$13,640,588 $14,169,124
$14,896,615
$14,932,985
$14,969,445
$15,005,997
City
of
San
Diego
-Recycled
Water
$417,130
$498,539 $631,342
$674,551
$728,228 $780,812
OtherO&M
Legislative
&
Adm
inistrative
$821,527 $624,700
$643,441
$662,744
$682,627
$703
,105
Finance
Services
$1,918
,804
$2
,556,229
$2,632
,916
$2
,711,903
$2,793,260
$2,877,058
Human
Resources
$875,067
$550
,188
$566,694 $583,694
$601,205
$619
,241
Development
Services
$791
,695
$361,232
$372,069
$383
,231
$394,728
$406
,570
Public
Works
$2
,009,135
$2,808
,569
$2,892,826
$2
,979
,611
$3,068,999
$3,161
,069
Treatment
&
Storage
$5,896
,597
$6,212
,293
$6,402,544 $6,601,712
$6,810,389
$7,029
,216
Water
Transmission
& D
istribution
$2,352,150
$2,594,609
$2,710,906 $2,834,487 $2,965,948
$3,105,940
Reclaimed
Water
$696,730
$718,076
$754,383
$792,902 $833,784
$877,186
Total
Operating
Expenditures
$34,884,859 $37,419,761
$39,221,288
$39,875,373 $40,566,164
$41,283,748
4.1 .5. CAPITAL
IMPROVEMENT
PLAN
The
City
has
developed
a capital
improvement
plan
(CIP)
to
address
ongoing
water
system
needs
in
each
year
throughout
the study
period
. Detailed
CIP
expenditures
in
each year
are
shown
at
the
ind
ividual
project
level
in
Table
4-9.
Inflated
project
costs
in
all
years
throughout
the
study
period
were
provided
by
City
staff.
Most
of
the
Clearwell
Replacement
and
Poway
Treated
Water
Facilities
and
Redundant
Pipeline
project
will
be
funded
by
existing
and
future
debt
issuances
.
C
IT
Y O
F
PO
W
A
Y
48 of
95 WA
TER
A
N
D
WAS
TEWA
TER
COST
OF
SERV
IC
E
A
ND
RATE
ST
UD
Y
REPORT
20 November 18, 2025, Item #12
Table
4-9
: Water
Capital
Improvement
Plan
Capital
Improvement
Projects
FY
2026
FY
2027
FY
2028
FY
2029
FY
2030
PWIIP
Clearwell
Replacement
$11,000,
000
$4,231,000
$0
$0
$0
Poway Treated
Water
Facilities
&
Redundant
Pipeline
$1,400,000
$7,500,000
$17,500,000 $17,500,000
$0
Water
Treatment
Plant
WTP
Upgrade
Filters
1-8
$700
,000
$500,000
$0
$0
$0
WTP
Chemical
Tank
Rehab
$100
,000
$875,000
$0
$0
$0
WTP
Filter
Gallery
Upgrades
$0
$0
$25
,000
$100,000
$500
,000
WTP
Washwater
Recovery
Basin
and
Pumping
Station
$0
$0
$25,000
$100,000
$62S
,000
WTP
Electrical/Instrumentation
Upgrades
$0
$50,000
$300
,000 $2,500
,000
$1,000,000
WTP
Sedimentation
Basin
Upgrades
$0
$0
$0
$100,000 $500,000
WTP
Flocculation
Basin
Upgrades
$0
$0
$0
$0
$100,000
Pump
Station
1 Rehabilitation
$0
$0
$25,000
$250,000
$2,000
,000
WTP
Groundwater
Study
$150,000
$0
$0
$0
$0
WTP
Groundwater
Control
Implementation
$0
$200,000
$750
,000
$750,000
$0
Pump
Stations
MCC
Upgrades
(PS
-8,
PS
-9, PS-10
, PS-11
, PS-12)
$400
,000
$400,000
$700
,000
$600,000 $700,000
Pump
Station
No
. 13
MCC
Upgrade
-Old
Coach
$0
$0
$0
$0
$700,000
Pipelines Annual
Water
Valve
Replacement
$315
,000
$330,750
$347,288
$364,652 $382,884
Emergency
Interconnection
#1
(Avenida
La
Valencia)
$250,000
$0
$0
$0
$0
Emergency
Interconnection
#2
(Poway/Springhurst)
$1
,500
,000
$0
$0
$0
$0
Annual
ACP
Water
Main
Replacement
$0
$0
$0
$400,000
$420
,000
Stone
Canyon/Crown
Valley
Steel
Main
Replacement
$1,700,000
$0
$0
$0
$0
Reservoirs
R4
&
R7
Reservoir
Upgrades
$0
$0
$0
$0
$0
R3
Boca
Raton
#1
Rehab/Repair
1.0 MG
(Full
Rehab)
$0
$50,000
$500
,000
$0
$0
R4
Boca
Raton
#2
Rehab/Repair
0.5 MG
(Interior
Only)
$0
$0
$50,000
$500,000
$0
R12
Reservoir
Rehabilitation
(RECYCLED)
$0
$100,000
$1,072,000
$0
$0
RlS
Skyridge
#1
Rehab/Repair
0.5 MG
$0
$50,000
$500,000
$0
$0
R13
Heritage
Rehab/Repair
0.5 MG
$0
$0
$0
$100,000 $750,000
R7
Boulder
Mountain
3 Rehab/Repair
0.2 MG
$0
$0
$0
$75,000
$500
,000
R16
Skyridge
#2
Rehab/Repair
$0
$0
$0
$0
$100
,000
Pressure
Reducing
Stations
Annual
PR
Station
Rehabilitat
ion/Replacement
$0
$500
,000
$525
,000
$551
,250
$578,813
Other Water
Master
Plan
$1,500,000
$0
$0
$0
$0
Total
$17,515,000 $14,136,750
$20,222,288 $23,164,652
· $6,927,884
21 C
ITY
OF
POW
AY
49 of95
November 18, 2025, Item #12
4.1 .6. RECOMMENDED
RESERVE
POLICIES
To
enhance
financial
management
transparency
and
financial
risk
management,
Raftelis
recommends
that
the
Water
Utility
to
maintain
the
following
reserves.
4.1.6.1. Operating
Reserve
The
purpose
of
an
operating
reserve
is
to
provide
working
capital
to
support
the
operation,
maintenance,
and
administration
of
the
utility
. From
a risk
management
perspective,
the
O&M
reserve
supports
the
City
's cash
flow
needs
during
normal
operations
and
also
ensures
that
operations
can
continue
should
significant
events
occur
that
impact
cash
flows
. Operating
reserves
also
provide
a buffer
against
unexpected
increases
in
operating
costs.
As
it is
unlikely
for
a utility
to
perfectly
predict
its
revenues
and
revenue
requirements
for
each
billing
period,
setting
aside
a reserve
to
hedge
the
risk
of
monthly
negative
cash
positions
is
prudent
in
financial
planning.
Another
factor
to
consider
when
creating
a cash
flow
reserve
is
the
frequency
of
billing.
A
utility
that
bills
once
a month
would
require
a lower
minimum
reserve
than
a utility
that
bills
bi-monthly
or
twice
a year
.
Raftelis
recommends
that
the
City
revise
its
current
operating
reserve
target
of
20%
of
operating
expenditures
to
a
minimum
of
90 days
or
25%
of
operating
expenses
and
establish
a target
balance
of
120
days
to
ensure
adequate
working
capital
for
operating
expenses
. The
City
bills
bi-monthly
; thus
120
days
provides
sufficient
working
capital
to
account
for
time
differential
between when
expenses
occur
and
when
revenues
are
collected
. Additionally,
this
accounts
for
revenues
varying
seasonally
while
expenses
remain
relatively
static.
4.1.6.2. Capital
Replacement
Reserve
Adequate
and
timely
capital
replacement
planning
is
a critical
task
to
ensure
reliability
and
sustainability
of
the
water
system.
Capital
reserves
are
used
to
provide
funding
for
capital
expenditures
due
to
the
capital-intensive
nature
of
the
water
system
and
to
provide
a buffer
for
larger
than
anticipated
increases
in
capital
costs
or
emergencies
. The
City
does
not
currently
maintain
a separate
capital
replacement
reserve
. Raftelis
recommends
the
City
adopt
a policy
using
the
estimated
5-year
average
CIP
as
the
target
balance
. In
FY
2026
, this
average
is
$5
.1 million.
4.1.6.3. Recommended
Total
Reserve
Targets
Table
4-10
summarizes
the
proposed
reserve
policies
for
the
City
's water
utility
.
Table
4-10
: Water
Proposed
Reserve
Targets
Reserve
Operating Capital
Replacement
Policy
Minimum
: 90
days
Target:
120
days
5-Y
ear
Average
of
rate-funded
CIP
4.1.7.STATUS
QUO
FINANCIAL
PLAN
Table
4-11
shows
the
operating
cash
flow
detail
for
the
City
during
the
study
period
under
current
rates with
no
adjustments.
As
shown
in
Line
39,
the
City
is
unable
to
meet
its
expenses,
with
particularly
large
deficits
starting
in
FY
2029
through
FY
2030
due
to
increasing
O&M
costs
and
rate
funded
capital
projects.
C
ITY
OF
POWAY
50 of
95 WATER
A
N
D
WASTEW
A
TER
COST
OF
SERV
ICE
AN
D
RATE
STUD
Y
REPORT
22 November 18, 2025, Item #12
Table 4-11: Water Financial Plan under Current Rates
A
Line Revenue
1 Current Rate Revenue
2 Revenue Adjustments
3 Proposed Rate Revenue
4 Other Revenue
5 6
7 8
9 10
11 12
13 14
15 16
17 18
19 20
21 22
23 24
25 26
27 28
29 30
31 32
33 34
35 36
37 38
Fees
Taxes
Grants
Other
Miscellaneous
Raw Water Sales -Contract
Pass-Through Revenue -Contract
Ramona Revenue
Total Other Revenue
Total Revenue
Operating Expenditures
Water Purchases
SDCWA Fixed Charges
SDCWA Supply Charges
City of San Diego -Recycled Water
OtherO&M
Legislative & Administrative
Finance Services
Human Resources
Development Services
Public Works
Treatment & Storage
Water Transmission & Distribution
Reclaimed Water
Extra Ramona Expenses
Total Operating Expenditures
Debt Service & Capital Projects
Water Revenue Bond Series 2021A
Water Revenue Bond Series 2023
Rate Funded Capital Projects
New Proposed Debt
Total Debt Service & Capital Projects
Total Expenses
Net Cashflow
B
FY2026
$40,462,179
$0
$40,462,179
$169,309
$0
$0
$291,064
$43,000
$470,852
$0
$0
$974,225
$41,436,405
$6,326,202
$14,169,124
$498,539
$624,700
$2,556,229
$550,188
$361,232
$2,808,569
$6,212,293
$2,594,609
$718,076
$0
$37,419,761
$752,000
$2,249,825
$5,850,550
$0
$8,852,375
$46,272,136
($4,835,731)
C
FY 2027
$40,559,494
$0
$40,559,494
$169,309
$0
$0
$291,064
$43,000
$470,852
$0
$0
$974,225
$41,533,719
$6,717,552
$14,896,615
$631,342
$643,441
$2,632,916
$566,694
$372,069
$2,892,826
$6,402,544
$2,710,906
$754,383
$0
$39,221,288
$756,200
$2,242,275
$2,272,864
$2,438,175
$7,709,514
$46,930,802
($5,397,083)
D
FY 2028
$40,657,051
$0
$40,657,051
$169,309
$0
$0
$291,064
$43,000
$470,852
$0
$0
$974,225
$41,631,276
$6,717,552
$14,932,985
$674,551
$662,744
$2,711,903
$583,694
$383,231
$2,979,611
$6,601,712
$2,834,487
$792,902
$0
$39,875,373
$754,800
$2,242,525
$2,589,069
$2,438,175
$8,024,569
$47,899,942
($6,268,666)
E
FY 2029
$40,754,852
$0
$40,754,852
$169,309
$0
$0
$291,064
$43,000
$470,852
$0
$1,863,776
$2,838,001
$43,592,854
$6,717,552
$14,969,445
$728,228
$682,627
$2,793,260
$601,205
$394,728
$3,068,999
$6,810,389
$2,965,948
$833,784
$506,943
$41,073,108
$753,000
$2,246,275
$8,315,937
$2,438,175
$13,753,387
$54,826,495
($11,233,641)
F
FY 2030
$40,852,898
$0
$40,852,898
$169,309
$0
$0
$291,064
$43,000
$470,852
$0
$1,956,965
$2,931,190
$43,784,088
$6,717,552
$15,005,997
$780,812
$703,105
$2,877,058
$619,241
$406,570
$3,161,069
$7,029,216
$3,105,940
$877,186
$513,029
$41,796,776
$755,800
$2,243,275
$6,793,999
$2,438,175
$12,231,249
$54,028,025
($10,243,937)
Table 4-12 shows the City's fund balances over the study period under current rates with no adjustments. The operating reserve target is equal to 120 days of operating expenses and the capital reserve target is equal to the 5- year average CiP. The City's operating fund balance (Line 5) wiUnot meet the reserve target (Line 6) in the planning period and, therefore, no funds are transferred to the capital replacement fund (Line 9). 23 CITY OF POWAY
51 of 95
November 18, 2025, Item #12
Table 4-12: Water Projected Fund Balances Under Current Rates
A B C D E F
Line Operating Fund (5100} FY 2026 FY 2027 FY2028 FY2029 FY2030 1 Beginning Balance $11,816,900 $7,158,201 $1,917,156 ($4,240,070) ($15,362,270) 2 Net Cashflow ($4,835,731) ($5,397,083) ($6,268,666) ($11,233,641) ($10,243,937) 3 Interest Income $177,033 $156,037 $111,441 $111,441 $334,322 4 Transfers to Capital Replacement $0 $0 $0 $0 $0
5 Ending Balance $7,158,201 $1,917,156 ($4,240,070) ($15,362,270) ($25,271,885) 6 Target Reserve Balance $12,473,254 $13,073,763 $13,291,791 $13,691,036 $13,932,259 7 Capital Replacement Fund
8 Beginning Balance $8,104,217 $8,504,217 $8,504,217 $8,504,217 $8,504,217 9 Transfers from Operating $0 $0 $0 $0 $0
10 New Debt Proceeds $11,000,000 $11,731,000 $17,500,000 $14,715,164 $0 11 New Grant Proceeds $400,000 $0 $0 $0 $0
12 Debt Funded Capital Projets ($11,000,000) ($11,731,000) ($17,500,000) ($14,715,164) $0 13 Grant Funded Projects ($400,000) $0 $0 $0 $0
14 Ending Balance $8,504,217 $8,504,217 $8,504,217 $8,504,217 $8,504,217 15 Target Reserve Balance $5,164,484 $4,622,979 $4,395,443 $4,463,517 $3,015,512
4.1.8. PROPOSED FINANCIAL PLAN
Balancing the need for the City to meet its revenue requirements while mitigating impacts to ratepayers, Raftelis worked with staff to determine the revenue adjustment schedule in Table 4-13. All revenue adjustments in the rate models are set for January of each calendar year; the City will implement the first revenue adjustment in January 2026 following adoption, and subsequently in January of each fiscal year.
Table 4-13: Water Proposed Revenue Adjustments
CV 2026
January
9.90%
CV 2027
January
4.00%
CV 2028
January
4.00%
CV 2029
January
4.00%
CV 2030
January
4.00%
Table 4-14 incorporates the proposed revenue adjustments into the financial plan. As noted above, the City needs to balance its revenue needs with mitigating rate increases for customers. While the proposed financial plan still shows a deficit in funding for FY 2026, FY 2027 and FY 2029 (Line 39), the City will rely on reserves to fund the balance of expenditures rather than significantly increase its rates in deficit years.
CITY OF POWAY
52 of 95
WATER AND WASTEWATER COST OF SERVICE AND RATE STUDY REPORT 24 November 18, 2025, Item #12
Table
4-14
: Water
Proposed
Financial
Plan
A
Line
Revenue
1 Current
Rate
Revenue
2 Revenue
Adjustments
3 Proposed
Rate
Revenue
4 Other
Revenue
5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 Fees Taxes Grants Other Miscellaneous Raw
Water
Sales
-Contract
Pass-Through
Revenue
-Contract
Ramona
Revenue
Total
Other
Revenue
Total
Revenue
Operating
Expenditures
Water
Purchases
SDCWA
Fixed
Charges
SDCWA
Supply
Charges
City
of
San
Diego
-Recycled
Water
Other
O&M
Legislative
&
Administrative
Finance
Services
Human
Resources
Development
Services
Public
Works
Treatment
&
Storage
Water
Transmission
& D
istribution
Reclaimed
Water
Extra
Ramona
Expenses
Total
Operating
Expenditures
Debt
Service
&
Capital
Projects
Water
Revenue
Bond
Series
2021A
Water
Revenue
Bond
Series
2023
Rate
Funded
Capital
Projects
New
Proposed
Debt
Total
Debt
Service
&
Capital
Projects
Total
Expenses
Net
Cashflow
B
FY
2026
$40,462,179 $2,002,878 $42,465,057
$169,309
$0 $0
$291,064 $43,000 $470,852
$0 $0
$974,225
$43,439,283 $6,326,202 $14,169,124
$498,539 $624,700
$2,556,229
$550,188 $361,232
$2,808,569 $6,212,293 $2
,594,609 $718,076
$0
$37,419,761
$752,000
$2,249,825 $5,850,550
$0
$8,852,375 $46,272,136 ($2,832,853)
C
FY
2027
$40,559,494 $4,906,888 $45,466,381
$169,309
$0 $0
$291,064 $43,000 $470,852
$0 $0
$974,225
$46,440,606 $6,717,552 $14,896,615
$631,342 $643,441
$2,632,916
$566,694 $372,069
$2,892,826 $6,402,544 $2,710,906
$754,383
$0
$39,221,288
$756,200
$2,242,275 $2,272,864 $2,438,175 $7,709,514 $46,930,802 ($490,195) D
FY
2028
$40,657,051 $6,741,720 $47,398,771
$169,309
$0 $0
$291,064 $43,000 $470,852
$0 $0
$974,225
$48,372,996 $6,717,552 $14,932,985
$674,551 $662,744
$2,711,903
$583,694 $383,231
$2,979,611 $6
,601,712
$2,834,487
$792,902
$0
$39,875,373
$754,800
$2,242,525 $2,589,069 $2,438,175 $8,024,569 $47,899,942 $473,054
E
FY
2029
$40,754,852 $8,658,449 $49,413,301
$169,309
$0 $0
$291,064 $43,000 $470,852
$0
$1,863,776 $2,838,001 $52,251,302 $6
,717,552
$14,969,445
$728,228 $682,627
$2,793,260
$601,205 $394,728
$3,068,999 $6,810,389 $2
,965,948 $833,784 $506,943
$41,073,108
$753,000
$2,246,275 $8,315,937 $2,438,175 $13,753,387 $54,826,495 ($2,575,192) F
FY
2030
$40,852,898 $10,660,566 $51,513,464
$169,309
$0 $0
$291,064 $43,000 $470,852
$0
$1,956,965 $2,931,190 $54,444,654 $6,717,552 $15,005,997 $780,812 $703,105
$2,877,058
$619,241 $406,570
$3,161,069 $7,029,216 $3,105,940
$877,186 $513,029
$41,796,776
$755,800
$2,243,275 $6,793,999 $2,438,175 $12,231,249 $54,028,025 $416,629
Table
4-15
shows
the
City's
projected
fund
balances
over
the study
period.
The
operating
reserve
target
is
equal
to
120
days
of
operating
expenses
to
mitigate
against
any
potential
cash
flow
risks
or
unexpected
O&M
costs
. The
capital
reserve
target
is
equal
to
the
5-year
average
CIP
. The
City's
combined
operating
and
capital
fund
balances
will
meet
the
minimum
reserve
levels
beginning
over
the
study
period
under
proposed
rate
adjustments
.
25 C
IT
Y
OF
POWAY
53 of
95 November 18, 2025, Item #12
Table 4-15: Water Projected Fund Balances Under Proposed Rates
A B C D E F
Line Operating Fund (5100) FY 2026 FY 2027 FY 2028 FY2029 FY2030 1 Beginning Balance $11,816,900 $9,171,094 $8,881,599 $9,557,274 $7,176,219 2 Net Cashflow ($2,832,853) ($490,195) $473,054 ($2,575,192) $416,629 3 Interest Income $187,047 $200,700 $202,622 $194,137 $555,858 4 Transfers to Capital Replacement $0 $0 $0 $0 $0
5 Ending Balance $9,171,094 $8,881,599 $9,557,274 $7,176,219 $8,148,706 6 Target Reserve Balance $12,473,254 $13,073,763 $13,291,791 $13,691,036 $13,932,259 7 Capital Replacement Fund
8 Beginning Balance $8,104,217 $8,504,217 $8,504,217 $8,504,217 $8,504,217 9 Transfers from Operating $0 $0 $0 $0 $0
10 New Debt Proceeds $11,000,000 $11,731,000 $17,500,000 $14,715,164 $0 11 New Grant Proceeds $400,000 $0 $0 $0 $0
12 Debt Funded Capital Projets ($11,000,000) ($11,731,000) ($17,500,000) ($14,715,164) $0 13 Grant Funded Projects ($400,000) $0 $0 $0 $0
14 Ending Balance $8,504,217 $8,504,217 $8,504,217 $8,504,217 $8,504,217 15 Target Reserve Balance $5,164,484 $4,622,979 $4,395,443 $4,463,517 $3,015,512 Figure 4-1 through Figure 4-3 display the Financial Plan in graphical format. Figure 4-1 illustrates the operating position of the City, where expenses, inclusive ofreserve funding, are shown by stacked bars; and total revenues at both current rates and proposed rates are shown by the horizontal trend lines. Figure 4-2 summarizes the projected CIP and its funding sources. Figure 4-3 displays the ending total reserve balance for the water utility, including operating and capital funds. The horizontal trend lines indicate the minimum and target reserve balances and the bars indicate ending reserve balance. For the purpose of this study, the Poway Treated Water Facilities & Redundant Pipeline project is primarily funded through issuance of debt in late FY 2026. Costs of this project are unknown at this time but included at the highest estimated cost for planning purposes.
CITY OF POWAY
54 of95
WATER AND WASTEWATER COST OF SERVICE AND RATE STUDY REPORT 26 November 18, 2025, Item #12
Figure 4-1: Water Operating Financial Plan at Proposed Rates Operating Financial Plan
V\ $60
C
.2
2 $50
$40
$30
$20
$10
$0
-$10
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
-Operating Expenses -Water Purchases -Rate Funded Capital Debt Service -Net Cashflow -Current Revenue -Proposed Revenue
Figure 4-2: Proposed Water Capital Improvement Plan and Funding Source Capital Funding Sources
V> $25.0 $23.2
C
.Q
·-$20.2
2 $20.0 $17.5
$15.0 $14.1
$10.0
$6.9
$5.0
$0.0
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
■ Debt Funded ■ Rates/Reserves Funded ■ Connection Fee Funded 27 CITY OF POWAY
55 of 95
November 18, 2025, Item #12
\I\
$20
C .2
$18
2 $16 $14 $12 $10 $8 $6 $4 $2 $0
CITY
OF
POWAY
56 of
95 Figure
4-3
: Water
Proje
cted
Ending
Balances
at
Proposed
Rates
Operating
&
Capital
Reserves
FY
2026
FY
2027
FY
2028
FY
2029
FY
2030
-
Total
Reserves
-
M
ini
mum
Re
serve
-
Target
Reserve
WATER
AND
WASTEWATER
COST
OF
SERV
ICE
AND
RATE
STUDY
REPORT
28 November 18, 2025, Item #12
4.2. Cost
of
Service
Analysis
4.2.1 . COST
OF
SERVICE
METHODOLOGY
The
first
step
in
the
COS
analysis
process
is
to
determine
the
revenue requirement,
which
is
based
on
the
results
of
the
financial
plan
and
the
proposed
revenue
adjustments
. The
framework
and
methodology
utilized
to
develop
the
COS
analysis
and
to
apportion
the
revenue
requirement
to
each
customer
class
and
tier
is
informed
by
the
processes
outlined
in
the
Ml
Manual.
COS
analyses
are
tailored
specifically
to
meet
the
unique
needs
of
each
water
system
. However,
there
are
four
distinct
steps
in
every
analysis
to
recover
costs
from
customer
classes
in
an
accurate
, equitable,
and
defensible
manner:
1. Cost
fnnctionalization:
O&M
expenses
and
capital
assets
are
categorized
by
their
function
in
the
system.
Functions
include
supply
, treatment,
storage,
distribution,
customer
service,
etc
.
2. Cost
causation
component
allocation:
the
functionalized
costs
are
then
allocated
to
cost
causation
components
based
on
their
burden
on
the
system
. The
cost
causation
components
include
supply,
base
delivery,
peaking,
meter
, customer,
etc.
The
revenue
requirement
is
allocated
according
to
the
cost
causation
components,
resulting
in
the
total
revenue
requirement
for
each
cost
causation
component.
3. Unit
cost
development:
the
revenue
requirement
for
each
cost
causation
component
is
divided
by
the
appropriate
units
of
service
to
determine
the
unit
cost
for
each
cost
causation
component.
4. Revenue
requirement
distribution:
the
unit
cost
is
utilized
to
distribute
the
revenue
requirement
for
each
cost
causation
component
to
customer
classes
and
tiers
based
on
their
individual
service
units
. The
City
's
customer
classes
include
Domestic,
Agricultural,
Commercial,
Irrigation,
Construction,
and
Recycled.
4.2.2.REVENUE
REQU
IREMENT
The
revenue
requirement
for
the
proposed
rates
will
be
based
on
FY
2026,
the
designated
Test
Year.
Table
4-16
shows
the
revenue
requirement
derivation with
the
total
revenue
required
from
rates
. The
totals
shown
in
the
"Operating"
and
"Capital"
columns
are
the
total
O&M
and
capital
revenue
requirements,
respectively,
that
are
to
be
recovered
through
rates
. The
operating
costs
(Line
7)
flow
from
Table
4-8.
The
Debt
Service
category
(Line
13)
represents
both
replacement
capital
projects
(Table
4-9)
and
any
proposed
debt.
Note
there
is
no
new
debt
service
in
FY
2026,
the new
debt
service
payments
will
start
in
FY
2027.
Revenue
offsets
are
composed
of
various
miscellaneous,
non-rate
revenues,
shown
in
Table
4-6.
To
arrive
at
the
rate
revenue
requirement
, we
subtract
these
revenue
offsets
from
the
combined
operating
and
debt
service
costs.
The
net
cash
flow
from
Table
4-14,
Line
39,
is
shown
on
Line
25 as
Adjustment
for
Cash
Balance.
The
adjustment
to
annualize
the
rate increase
(Line
26)
is
due
to
the
mid-year
proposed
revenue
adjustment
occurring
in
late
January
2026,
following
potential
adoption.
These
adjustments
are
then
combined
to
arrive
at
the
total
annual
revenue requirement
from
rates
. This
is
the
amount
that
the
City's
rates
are
designed
to
collect,
for
almost
a full
year,
in
the
"Total"
column
at
Line
28. 29
C
IT
Y
OF
POWAY
57 of
95 November 18, 2025, Item #12
Table
4-16
: Water
Revenue
Requirement
A
B
C
D
Line
Revenue
Requirements
Operating
Capital
Total
1 Operating
Costs
2 SDCWA
Fixed Charges
$6,326,202
$0
$6,326,202
3 SDCWA
Supply
Charges
$14,169,124
$0
$14,169,124
4 City
of
San
Diego
-Recycled
Water
$498,539
$0
$498,539
5 Treatment
&
Storage
$6,212,293
$0
$6,212,293
6 OtherO&M
$10,213,603
$0
$10,213,603
7 Subtotal
Operating
Costs
$37,419,761
$0
$37,419,761
8 Capital
Expenditures
9 Water
Revenue
Bond
Ser
ies
2021A
$0
$752,000
$752,000
10 Water
Revenue
Bond
Series
2023
$0
$2,249,825
$2,249,825
11 Rate
Funded
Capital
Projects
$0
$5,850,550
$5,850,550
12 New
Proposed
Debt
$0
$0
$0
13 Subtotal
Debt
Service
$0
$8,852,375
$8,852,375
14 Total
Revenue
Requirements
$37,419,761
$8,852,375
$46,272,136
15 Less:
Revenue
Offsets
16 Interest
$187,047
$0
$187,047
17 Fees
$169,309
$0
$169,309
18 Taxes
$0
$0
$0
19 Grants
$0
$0
$0
20 Other
$291,064
$0
$291
,064
21 Miscellaneous
$43,000
$0
$43,000
22 Raw
Water
Sales
-Contract
$470,852
$0
$470,852
23 Total
Revenue
Offsets
$974,225
$0
$974,225
24 Less:
Adjustments
25 Adjustment
for
Cash
Balance
$2,832,853
$0
$2,832,853
26 Adjustment
for
Mid-Year
Increase
($2,002,878)
$0
($2,002,878)
27 Total
Adjustments
$829,975
$0
$829,975
28 Total
Revenue
Requirement
from
Rates
$35,615,561
$8,852,375
$44,467,935
4.2.3. FUNCTIO
NALIZATION
AND
ALLOCATION
OF
EXPENSES
After
determining
the
revenue requirement,
the
next
step
of
the
COS
analysis
is
to
allocate
the
O&M
expenses
and
capital
assets
to
the
following
functions
:
l.
Administration
-overhead
costs
associated
with
the
management
of
the utility
2. Billing-
all
customer
billing
costs
·
3. Customer
Service
-
represents
the
costs
associated
with
meter
reading
, billing
and
customer
and
meter
service
4. Supply-
represents
costs
of
procuring
water
supplies
from
SDCW
A
5. Treatment
-
represents
costs
of
water
treatment
6. Transmission
&
Distribution-
represents
costs
pertaining
to
the
City's
water
distribution
system
CITY
OF
POWAY
58 of95
WATER
AN
D
WASTEWATER
COST
OF
SERV
ICE
AND
RATE
STUDY
REPORT
30 November 18, 2025, Item #12
7. Meters -represents costs relating to maintenance and capital costs of water meters as well as a portion of costs related to water system capacity
8. Recycled Water -represents costs related to the City's recycled water system
9. Capital-infrastructure costs
10. General -represents costs for general operational expenses, which cannot be categorized under any of the above
The functionalization of costs allows for the allocation of costs to the cost causation components, which include:
1. Supply-costs associated with procuring water supplies from SDCW A
2. Base Delivery-costs associated with providing water under average conditions
3. Peaking (Max Day and Max Hour)-costs associated with providing water under peak demand conditions
4. Recycled Water -costs associated with the City's recycled water system
5. Treatment -costs associated with treating water for the potable water system
6. Meters -costs associated with purchasing, maintaining, and servicing water meters as well as some costs related to system capacity
7. Customer -costs associated with customer service and billing
8. General-costs that do not have any direct cost causation
4.2.4.PEAKING FACTORS
Water demands vary by season and by time of day. Demands are very high in the summertime because of irrigation demands, and on particularly hot days, the demand shoots up even further. Water systems have to be designed to meet these peak requirements. Components of the water system are therefore oversized compared to the requirement for average demands. For example, reservoirs are designed to meet maximum daily demands, and distribution lines are designed to meet instantaneous peak demands or peak hour demands. If the City's maximum day requirement is 2, reservoirs are designed to be twice as large as required for average consumption. Thus, half the operating and capital costs would be allocated to peaking. Therefore, peaking plays a significant part in the costs of operating and constructing a water system. Part of the costs of this peaking overdesign, which provides capacity in the system, are recovered through meter capacity charges and the remaining through the volumetric commodity rates.
Demonstrating that rates are proportional to the demands and associated costs that customers place on the utility system is critical to ensure that rates are aligned with the intent of Proposition 218 .. Costs recovered through a water utility's fixed meter charge, are allocated by meter size. Variable costs are allocated per the volumetric commodity rate.
Peaking costs are computed for a maximum day and peak hour. The maximum day (max day) demand is the maximum amount of water used in a single day in a year. The peak hour demand is the maximum amount of water used in a single hour on the maximum day. Therefore, extra capacity2 costs include the O&M and capital costs associated with meeting peak customer demand. To identify system costs associated with peaking, it is first required to identify the system max day and max hour requirements. This method is consistent with the A WWA Manual Ml and is widely used in the water industry to perform cost-of-service analyses.
Table 4-17 shows the system-wide peaking factors used to derive the cost component allocation bases for Base Delivery, Max Day, and Max Hour costs. The Base Delivery; or Base use is considered average daily demand over one year, which has been normalized to a factor of 1.00 (Column B, Line 1). The Max Day peaking factor (Line 2) indicates that the Max Day demand is two times greater than the average daily demand. Similarly, the Max Hour peaking factor (Line 3) shows that the Max Hour demand is three times greater than average demand. These 2 The terms extra capacity, peaking and capacity costs are used interchangeably. 31 CITY OF POWAY
59 of95
November 18, 2025, Item #12
factors were determined during the development of the City's 2008 Water Master Plan and are consistent with industry standards for similar sized agencies.
The percentage allocations of costs are calculated using the equations outlined.
The Base allocation is 1/ 1 x 100%= 100%
The Max Day allocation are calculated as follows:
» Base Delivery: 1 / 2 x 100% = 50%
» Max Day: (2 -1) / 2 x 100% = 50%
The Max Hour allocations are calculated as follows:
» Base Delivery: 1 / 3 x 100% = 33%
» Max Day: (2 -1) / 3 x 100% = 33%
» Max Hour: (3 -2) / 3 x 100% = 33%
The Average Max Day/ Max Hour allocation averages the Max Day and Max Hour allocations to Base, Max Day, and Max Hour, respectively, and is used to allocate the cost of transmission and distribution assets, which are not identified separately.
Table 4-17: System Peaking Factors
A B C D E F
Line Allocation Factor System Base Max Day Max Hour Total Peaking 1 Base 1.00 100% 0% 0% 100%
2 Max Day 2.00 50% 50% 0% 100%
3 Max Hour 3.00 33% 33% 33% 100%
4 Average Max Day/Max Hour 42% 42% 17% 100%
4.2.5.ALLOCATION OF COSTS
As detailed in Section 4.2.1, functionalizing costs allows us to better distribute costs to the cost causation components. Table 4-18 shows the functional categories used in this study in Column A. Column B identifies the chosen rationale for distributing these functionalized costs to the cost causation components. These allocations are based on the design of the various facilities or functions. For example, all costs allocated to the Administration function (Column A, Line 1) are all initially allocated to the General cost causation components (Column L, Line 1). Line 9 shows the distribution of Capital costs based on the City's total current asset value distributed to the relevant cost allocations.
CITY OF POWAY WATER AND WASTEWATER COST OF SERVICE AND RATE STUDY REPORT 32 60 of95
November 18, 2025, Item #12
Table 4-18: Functionalized O&M Cost Distributions to Cost Causation Factors O'I A B C D E F ... G H I J K L M
0 Line Function .... Rationale Supply Base Delivery Max Day Max Hour Treatment Meter Customer Recycled Offset General Total U) 1 Administration General 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 100% U1 2 Billing Customer 0% 0% 0% 0% 0% 60% 40% 0% 0% 0% 100% 3 Customer Service Customer 0% 0% 0% 0% 0% 0% 100% 0% 0% 0% 100% 4 Supply Supply 100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100%
5 Production Max Day 0% 50% 50% 0% 0% 0% 0% 0% 0% 0% 100% 6 Transmission & Distribution Max Hour 0% 33% 33% 33% 0% 0% 0% 0% 0% 0% 100% 7 Treatment Treatment 0% 0% 0% 0% 100% 0% 0% 0% 0% 0% 100% 8 General General 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 100%
9 Capital Capital 1% 25% 26% 8% 32% 3% 0% 1% 0% 3% 100% 10 Recycled Recycled 0% 0% 0% 0% 0% 0% 0% 100% 0% 0% 100% 11 Meters 0% 0% 0% 0% 0% 100% 0% 0% 0% 0% 0%
Using Table 4-18 as a guide, all of the operating costs are then allocated based on their related function's cost allocation distribution. Table 4-19 shows first the percentage distributions, then dollar allocations of each O&M cost. 3 3 CITY OF POWAY
November 18, 2025, Item #12
Table 4-19: Water O&M Cost Allocations
0\ A B C D E F G H I J K L M
N
0 Line O&M Allocation Function Supply Base Delivery Max Day Max Hour Treatment Meter Customer Recycled Offset General Total ....
SDCWA - MWD Readiness-to-Serve Charge \D 1 50% 0% 0% 0% 0% 50% 0% 0% 0% 0% 100% u, 2 SDCWA - MWD Capacity Charge 0% 0% 0% 100% 0% 0% 0% 0% 0% 0% 100% 3 SDCWA - Supply Reliability Charge 50% 0% 0% 0% 0% 50% 0% 0% 0% 0% 100% 4 SDCWA - Customer Service Charge 50% 0% 0% 0% 0% 0% 50% 0% 0% 0% 100% 5 SDCWA - Storage Charge 50% 0% 0% 0% 0% SO% 0% 0% 0% 0% 100% 6 SDCWA - Infrastructure Access O,arge 0% 0% 0% 0% 0% 100% 0% 0% 0% 0% 100% 7 Transportation Fixed 50% 0% 0% 0% 0% 50% 0% 0% 0% 0% 0% SDCWA Supply Charges Supply 100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 9 City of San Diego - Recycled Water Recycled 0% 0% 0% 0% 0% 0% 0% 100% 0% 0% 100% 10 Legislative & Administrative Administration 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 100% 11 Finance Services Billing 0% 0% 0% 0% 0% 60% 40% 0% 0% 0% 100% 12 Human Resources Administration 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 100% 13 Development Services Capital 1% 25% 26% 8% 32% 3% 0% 1% 0% 3% 100% 14 Public Works General 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 100% 15 Treatment & Storage Treatment 0% 0% 0% 0% 100% 0% 0% 0% 0% 0% 100% 16 Water Transmission & Distribution Transmission & Distribution 0% 33% 33% 33% 0% 0% 0% 0% 0% 0% 100% 17 Reclaimed Water Recycled 0% 0% 0% 0% 0% 0% 0% 100% 0% 0% 100% 18 O&M Allocation Function Supply Base Delivery Max Day Max Hour Treatment Meter Customer Recycled General Total 19 SDCWA - MWD Readiness-to-Serve Charge S123,216 so so so so S123,216 so so so so S246,432 20 SDCWA - MWD Capacity Charge so so so S331,656 so so so so so so S331,656 21 SDCWA - Supply Reliability Charge S647,907 so so so so S647,907 so so so so Sl,295,814 22 SDCWA - Customer Service Charge $392,202 $0 $0 $0 $0 $0 $392,202 $0 $0 $0 S7B4,404 23 SDCWA - Storage Charge $900,081 $0 $0 $0 $0 $900,081 $0 $0 $0 $0 $1,800,162 24 SDCWA - Infrastructure Access O,arge $0 $0 $0 $0 $0 $951,408 $0 $0 $0 $0 $951,408 25 Transportation Fixed $458,163 $0 $0 $0 $0 $458,163 $0 $0 $0 $0 $916,326 26 SDCWA Supply Charges Supply $14,169,124 $0 $0 $0 $0 $0 $0 so $0 $0 $14,169,124 27 City of San Diego - Recycled Water Recycled $0 $0 $0 $0 $0 $0 so $498,539 $0 $0 $498,539 28 Legislative & Administrative Administration $0 $0 $0 $0 $0 $0 $0 $0 $0 $624,700 $624,700 29 Finance Services Billing $0 $0 $0 $0 $0 $1,533,737 $1,022,492 $0 $0 $0 $2,556,229 30 Human Resources Administration $0 $0 $0 $0 $0 $0 $0 $0 $0 $550,188 $550,188 31 Development Services Capital $3,566 S91,487 $92,287 $27,177 $117,015 Sll,194 $1,634 $4,791 $0 $12,081 $361,232 32 Public Works General $0 $0 $0 $0 $0 $0 $0 $0 $0 S2,808,569 $2,808,569 33 Treatment & Storage Treatment $0 $0 $0 $0 $6,212,293 $0 $0 $0 $0 $0 $6,212,293 34 Water Transmission & Distribution Transmission & Distribution $0 SB64,870 $864,870 $864,870 $0 $0 $0 $0 $0 $0 $2,594,609 35 Reclaimed Water Re£icled $0 $0 $0 $0 $0 $0 $0 $718,076 $0 $0 $718,076 36 Total O&M Expenses $16,694 ,260 $956,357 $957,157 $1,223,702 $6,329,308 $4,625,706 $1,416,328 $1,221,406 $0 $3,995,538 $37,419,761 37 O&M Allocation 45% 3% 3% 3% 17% 12% 4% 3% 0% 11% 100% CIT Y OF POW AY WA TER AN D WA STEW A TER COST OF SERVICE AN D R A TE STUDY REPORT 34 November 18, 2025, Item #12
O'I
w
0 ....
ID u,
Table 4-20 distributes the functionalized capital asset values to cost causation factors similar to Table 4-18. For example, Storage costs are allocated according to Max Day rationale because storage is constructed to meet base and peak day demand. Contrastingly, other costs, such as Meter, Recycled, General and Administrative costs are allocated 100% to their relevant cost causation factor . Table 4-21 shows the resulting percentage and dollar allocations of the different capital assets. Capital costs are allocated based on the system assets because capital costs are incurred to refurbish and replace system assets. Using system assets takes a longer-term view of the allocations of capital costs and provides a consistent allocation of costs from year-to year even if the capital costs associated with different types of system assets change every year. In valuing the assets, we utilized the replacement cost of the assets.
Table 4-20: Functionalized Capital Cost Distributions to Cost Causation Factors
A B C D E F G H I J K L M
Line Function Rationale Supply Base Delivery Max Day Max Hour Treatment Meter Customer Recycled Offset General Total 1 Storage Max Day 0% SO% 50% 0% 0% 0% 0% 0% 0% 0% 100%
2 Pumping Max Hour 0% 33% 33% 33% 0% 0% 0% 0% 0% 0% 100% 3 Pipelines Avg. Max Day/Hour 0% 42% 42% 17% 0% 0% 0% 0% 0% 0% 100% 4 Fire Hydrants Fire 0% 0% 33% 67% 0% 0% 0% 0% 0% 0% 100% 5 Treatment Treatment 0% 0% 0% 0% 100% 0% 0% 0% 0% 0% 100% 6 Administration Customer Service 0% 0% 0% 0% 0% 0% 100% 0% 0% 0% 100% 7 Meters Meter 0% 0% 0% 0% 0% 100% 0% 0% 0% 0% 100%
8 Equipment Avg. Max Day/Hour 0% 42% 42% 17% 0% 0% 0% 0% 0% 0% 100% 9 Production Supply 100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 10 General General 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 100% 11 Recycled Recycled 0% 0% 0% 0% 0% 0% 0% 100% 0% 0% 100% 35 CITY OF P O WAY
November 18, 2025, Item #12
Table 4-21 : Water Capital Cost Allocations
O'I A B C D E F
.i:,. G H I J K L M
0 Line Capital Asset Allocation Function Supply Base Delivery Max Day .... Max Hour Treatment Meter Customer Recycled Offset General Total \0
U1 1 General General 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 100% 2 Land & Easement General 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 100% 3 Pumping Pumping 0% 33% 33% 33% 0% 0% 0% 0% 0% 0% 100% 4 Source Of Supply Production 100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 5 Transmission & Distribution Pipelines 0% 42% 42% 17% 0% 0% 0% 0% 0% 0% 100% 6 Treatment Plant Treatment 0% 0% 0% 0% 100% 0% 0% 0% 0% 0% 100% 7 Recycled Recycled 0% 0% 0% 0% 0% 0% 0% 100% 0% 0% 100% 8 Storage Storage 0% 50% 50% 0% 0% 0% 0% 0% 0% 0% 100%
9 Meters Meters 0% 0% 0% 0% 0% 100% 0% 0% 0% 0% 100%
10 Fire Fi re Hydrants 0% 0% 33% 67% 0% 0% 0% 0% 0% 0% 100% 11 Administration Administration 0% 0% 0% 0% 0% 0% 100% 0% 0% 0% 100% 12 Buildings & Improvements General 0% 0% 0% 0% 0% 0% 0% 0% 0% 100% 100% 13 Equipment Equipment 0% 42% 42% 17% 0% 0% 0% 0% 0% 0% 100% 14 Capital Asset Allocation Function Supply Base Delivery Max Day Max Hour Treatment Meter Customer Recycled Offset General Total 15 General General $0 $0 $0 $0 $0 $0 $0 $0 $0 $6,216,964 $6,216,964 16 Land & Easement General $0 $0 $0 $0 $0 $0 $0 $0 $0 $28,791 $28,791 17 Pumping Pumping $0 $6,010,773 $6,010,773 $6,010,773 $0 $0 $0 $0 $0 $0 $18,032,319 18 Source Of Supply Production $2,791,345 $0 $0 $0 $0 $0 $0 $0 $0 $0 $2,791,345 19 Transmission & Distribution Pipelines $0 $33,234,512 $33,234,512 $13,293,805 $0 $0 $0 $0 $0 $0 $79,762,829 20 Treatment Plant Treatment $0 $0 $0 $0 $91,588,947 $0 $0 $0 $0 $0 $91,588,947 21 Recycled Recycled $0 $0 $0 $0 $0 $0 $0 $3,750,314 $0 $0 $3,750,314 22 Storage Storage $0 $30,625,198 $30,625,198 $0 $0 $0 $0 $0 $0 $0 $61,250,395 23 Meters Meters $0 $0 $0 $0 $0 $8,761,294 $0 $0 $0 $0 $8,761,294 24 Fire Fire Hydrants $0 $0 $626,508 $1,272,001 $0 $0 $0 $0 $0 $0 $1,898,509 25 Administration Administration $0 $0 $0 $0 $0 $0 $1,279,112 $0 $0 $0 $1,279,112 26 Buildings & Improvements General $0 $0 $0 $0 $0 $0 $0 $0 $0 $3,209,814 $3,209,814 27 Equipment Equipment $0 $1,737,367 $1,737,367 $694,947 $0 $0 $0 $0 $0 $0 $4,169,680 28 Total Capital Assets $2,791,345 $71,607,850 $72,234,358 $21,271,526 $91,588,947 $8,761,294 $1,279,112 $3,750,314 $0 $9,455,569 $282,740,313 29 Capital Asset Allocation 1% 25% 26% 8% 32% 3% 0% 1% 0% 3% 100% The goal of allocating the costs and asset values in Table 4-19 and Table 4-21 is to allocate the total O&M costs and capital assets to the different cost causation components. This results in a percentage distribution shown in the last line of Table 4-19 and Table 4-21. Table 4-22 summarizes those cost allocations.
Table 4-22: Water Cost Allocation Distribution Summary
A B C D E F G H I J K L M
Line Function Rationale Supply Base Delivery Max Day Max Hour Treatment Meter Customer Recycled Offset General Total 1 O&M O&M Expenses 45% 3% 3% 3% 17% 12% 4% 3% 0% 11% 100% 2 Capital Capital Assets 1% 25% 26% 8% 32% 3% 0% 1% 0% 3% 100% CITY OF POW AY WA TER AN D WA ST EWA TE R COST OF SERVICE AN D RA TE STUD Y REPORT 3 6 November 18, 2025, Item #12
4.2.6. UNITS OF SERVICE
This subsection describes the next step in the COS analysis, which is to determine the appropriate units of service to be used to calculate the unit costs for each cost causation component.
4.2.6.1. Equivalent Meters
To allocate meter-related costs appropriately, the concept of equivalent meters needs to be understood. By using equivalent meters instead of a straight meter count, the analysis accounts for the fact that larger meters impose greater demands on the system and are more expensive to install, maintain, and replace than smaller meters.
Equivalent meters are used in calculating meter service costs.
Equivalent meters are based on meter hydraulic capacity. Equivalent meters represent the potential demand on the water system in terms of the base or smallest meter size. A ratio of hydraulic capacity is calculated by dividing large meter capacities by the base meter capacity. The capacity ratio is calculated using the meter capacity in gallons per minute (gpm) provided in the A WW A Ml Manual Principles of Water Rates, Fees and Charges (7th Edition).
The base meter is the smallest meter, in this case, a 3/ 4-inch meter. The actual number of meters by size is multiplied by the corresponding capacity ratio to calculate equivalent meters. Table 4-23 and Table 4-24 show the equivalent meters for FY 2026 for potable and recycled water service, respectively.
Table 4-23: Potable Water Equivalent Meters1
A B C D E
Potable Meter Size Capacity AWWARatio
Number of Equivalent
Line (gpm) Meters Meters
1 3/4" 30 1.00 11,861 11,861
2 1" 50 1.67 1,732 2,886
3 11/2" 100 3.33 352 1,175
4 2" 160 5.33 384 2,047
5 3" 350 11.67 25 295
6 4" 630 21.00 7 148
7 6" 1300 43.33 2 88
8 8" 2400 80.00 3 242
9 Total Potable Meters 14,366 18,741
1 The number of accounts for the ¾"Potable Water meters includes l" residential fire accounts. 37 CITY OF POWAY
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November 18, 2025, Item #12
Table 4-24: Recycled Water Equivalent Meters
A B C D E
Line Recycled Meter Size Capacity
AWWARatio
Number of Equivalent
(gpm) Meters Meters
1 3/4" 30 1.00 3 3
2 1" 50 1.67 102 170
3 11/2" 100 3.33 58 193
4 2" 160 5.33 49 261
5 3" 350 11.67 0 0
6 4" 630 21.00 0 0
7 6" 1300 43.33 0 0
8 8" 2400 80.00 0 0
9 Total Recycled Meters 212 628
4.2.6.2. Units of Service
A primary goal of the study is to proportionately distribute costs to each cost causation parameter. To accomplish this, we calculate unit costs for each cost causation component. The first step in this process is to calculate the total number of service units demanded for each cost causation component. This is shown in Table 4-25. The total equivalent meters are from Table 4-23 and Table 4-24.
Table 4-25: Derivation of Cost Causation Component Units of Service
A B C D
Annual Use Number of Number of
Line Customer Class Equivalent (hcf) Customers
Meters
1 Potable Use 3,702,599 18,741 14,366
2 Recycled Water 214,824 628 212
4.2.7.ALLOCATION OF REVENUE REQUIREMENTS TO COST CAUSATION
COMPONENTS
Table 4-26 shows the cost causation component unit cost derivations. The operating revenue requirement shown in Column L, Line 1 is equal to the operating revenue requirement (Line 22) in Table 4-16. The operating revenue requirement is allocated to the cost causation components using the resulting O&M allocation from Table 4-22.
Similarly, the capital revenue requirement in Column L, Line 2 is equal to the capital revenue requirement (Line 22) in Table 4-16 and is allocated to the cost causation factors per Table 4-22. General costs, shown on Line 5, which cannot be tied to a specific function, are redistributed in proportion to the resulting allocations of the other cost causation components except for Supply. Half the treatment costs are reallocated to Max Day in Line 6 since treatment facilities are designed for Max Day and a portion of Max Hour and Max Day costs are redistributed to the Meter component in Line 7 to cover fixed costs. The fixed portion of the rate revenue is 28.3% compared to the existing 26%.
The total adjusted cost of service in Table 4-26, Line 8, is divided by the relevant units of service in Line 9 to calculate the unit cost (Line 11). For example, the unit cost for the Base Delivery component is determined by dividing the total base delivery cost by total potable water use in hcf (HCP= hundred cubic feet= one unit= 748
CITY OF POWAY
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WATER AND WASTEWATER COST OF SERVICE AND RATE STUDY REPORT 38 November 18, 2025, Item #12
gallons), while annual Customer costs are divided by the estimated number of bills in each year (total number of customers in Table 4-25 times six bills per year). These unit costs will next be used to distribute the cost causation components to the customers .
39 CITY OF POWAY
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November 18, 2025, Item #12
O'I Table 4-26: Water Unit Cost Calculation
00 0 A · B C D E F G H I J K L .....
\D Line Cost Allocation Supply Base Delivery Max Day Max Hour Treatment Meter Customer Recycled Offset General Total u, 1 Operating Revenue Requirement $15,889,343 $910,246 $911,007 $1,164,701 $6,024,140 $4,402,677 $1,348,039 $1,162,516 $0 $3 ,802,892 $35,615,561 2 Capital Revenue Requirement $87,395 $2,241,985 $2,261,600 $665,995 $2,867,577 $274,309 $40,048 $117,419 $0 $296,046 $8,852,375 3 Revenue Offsets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
4 Total Cost of Service $15,976,738 $3,152,231 $3,172,608 $1,830,696 $8,891,717 $4,676,986 $1,388,087 $1,279,935 $0 $4,098,938 $44,467,935 5 Allocation of General Cost $0 $529,709 $533,133 $307,635 $1,494,187 $785,933 $233,258 $215,084 $0 -$4,098,938 $0 6 Allocation of Treatment to Max Day $0 $0 $5,192,952 $0 -$5,192,952 $0 $0 $0 $0 $0 $0 7 Allocation of Peak to Meter $0 $0 -$4,449,347 -$1,069,165 $0 $5,518,512 $0 $0 $0 $0 $0 8 Total Adjusted Cost of Service $15,976,738 $3,681,940 $4,449,347 $1,069,165 $5,192,952 $10,981,431 $1,621,345 $1,495,019 $0 $0 $44,467,935 9 Unit of Service 3,702,599 3,702,599 3,702,599 3,702,599 3,702,599 116,214 87,469 214,824 10 Unit hcf hcf hcf hcf hcf equiv. meter/yr bills/yr hcf 11 Unit Cost $4.32 $0.99 $1.20 $0.29 $1.40 $94.49 $18.54 $6.96 12 Unit hcf hcf hcf hcf hcf equiv. meter/2- per bimonthly hcf mo bill CIT Y OF PO WAY WA TER AN D WA STE WA TER C OST OF SER V IC E AN D RAT E STUD Y R EPORT 40 November 18, 2025, Item #12
4.3. Water Rate Development
This section includes the calculation of rates and the results of the study. Rates and charges are designed for the study period, FY 2026 to FY 2030. Rates and charges in the rate model are assumed to be implemented in January 2026 and subsequently in January of each fiscal year.
4.3.1. DERIVATION OF PROPOSED 8I-MONTHL Y FIXED CHARGE
Table 4-27 shows the derivation of the bi-monthly fixed charge, which represents the Meter and Customer cost components determined in Table 4-26. This charge accounts for the fact that even when a customer does not use any water, the City incurs fixed costs related to maintaining the ability to serve each connection.
Meter Component
The meter component consists of costs to the City that vary based on meter size. It reflects the fact that larger meters have the potential to demand more capacity compared to smaller meters. The potential capacity demanded is proportional to the potential flow through each meter size as established by the A WW A hydraulic capacity ratios, which are shown in the "Capacity Ratio" column of Table 4-27. The ratios show the potential flow through each meter size compared to the flow through a 3/ 4-inch meter. The Meter capacity component for larger meters is scaled up using the A WW A capacity ratios shown in the "Capacity Ratio" column. Allocating capacity costs by meter size is a common way to equitably recover a portion of the fixed cost of operating the utility.
Customer
The customer component recovers costs associated with meter reading, customer billing and collection as well as customer service costs. These costs are the same for all meter sizes as it costs the same to provide billing and customer services to a small meter as it does a larger meter.
The Meter and Customer components from Table 4-27, Columns C and D, are combined to form the proposed charge by meter size. The difference between proposed FY 2026 and current fixed charges are also shown.
Table 4-27: Derivation of the Bi-monthly Fixed Charges
A B C D E F G
Capacity Proposed Current Difference
Line Meter Size Meter Customer
Ratio Charge Charge ($)
1 3/4" 1.00 $94.49 $18.54 $113.03 $98.27 $14.76
2 1" 1.67 $157.49 $18.54 $176.03 $149.41 $26.62
3 11/2" 3.33 $314.98 $18.54 $333.52 $277.27 $56.25
4 2" 5.33 $503.96 $18.54 $522.50 $430.67 $91.83
5 3" 11.67 $1,102.42 $18.54 $1,120.96 $916.53 $204.43
6 4" 21.00 $1,984.35 $18.54 $2,002.89 $1,632.50 $370.39 7 6" 43.33 $4,094.69 $18.54 $4,113.23 $3,345.71 $767.52 8 8" 80.00 $7,559.42 $18.54 $7,577.96 $6,158.49 $1,419.47
4.3.2.DERIVATION OF PROPOSED COMMODITY RATES
Proposed commodity rates are comprised of unit costs for the Supply, Base Delivery, Peaking, and Treatment cost causation components. Unit costs from Table 4-26 are used to calculate volumetric rates. The proposed commodity rates are uniform rates. All customer classes will pay the same rate for each unit of water used. Additionally, because recycled water customers are a homogenous class using water for irrigation, the recycled volumetric rate is 41 CITY OF POWAY
69 of 95
November 18, 2025, Item #12
comprised
solely
of
the
recycled
water
unit
cost.
All
other
volumetric
rates
are
comprised
of
the
other
cost
causation
component
unit
costs
listed
above
.
4.3.2.1. Recycled
Water
Unit
Rates
Recycled
water
customers
pay
the
same
bi-monthly
meter
service
charges
as
potable
water
customers,
as
they
occasionally
use
the
potable
water
system
when
recycled
water
is
unavailable.
Table
4-28
shows
the
calculation
of
the
recycled
water
commodity
rate.
The
total
revenue
requirement
(Line
1)
is
divided
by
the
total
recycled
water
consumption
(Line
2)
to
arrive
at
the
proposed
CY
2026
rate
in
Line
3. 4.3
.2.2.
Table
4-28
: Recycled
Water
Commodity
Rate
Calculation
Line No. 1
Total
Recycled
Water
Revenue
Requirement
2 Total
Recycled
Water
Consumption
3 Proposed
CY
2026
Recycled
Water
Commodity
Rate
PSAWR
Unit
Rate
Reduction
CY
2026
$1,495,019
214,824
$6.96
Table
4-30
shows
the
calculation
of
the
credits
received
by
certain
agricultural
customers
. PSA
WR
customers
do
not
have
to
pay
the
supply
reliability
charge
or
the
storage
costs
from
SDCW
A.
Additionally,
they
only
have
to
pay
for
the supply
rate
from
MWD
and
avoid
the
higher
costs
of
the
SDCW
A
untreated
rate
.
Table
4-29
Calculation
of
PSAWR
Rates
FYE
2025
FYE
2026
FYE
2027
FYE
2028
FYE
2029
FYE
2030
Supply
Reliability
Monthly
Charge
,,
$139,790
$111,311
$111
,311
$111,
311
$111
,311
$111
,311
Poway
Supply
Reliability
Charge
$1,677,480
$1,506,606
$1
,335
,732
$1
,335,732
$1
,335,732
$1,335
,732
Poway
5 yr
average
of
non
-ag
del
ive
ries
per
SDCWA
(AF)
9,188
9,188
9,188
9,188
9,188
9,188
PSAWR
avoided
cost
per
AF
$182
.57
$163.98
$145
.38
$145.38
$145.38
$145
.38
Supply
Reliability
Charge
avoided
cost
per
HCF
$0.42
$0.38
$0
.33
$0.33
$0.33
$0
.33
Storage Monthly
Charge
,,
$104,658
$160,237
$160,237
$160,237
$160,237
$160,237
Poway
Storage
Charge
$1,255,896
$1,589,370
$1,922,844
$1
,922
,844
$1,922,844
$1,922,844
Poway
3 yr
average
of
non-ag
deliver
ies
per
SDCWA
(AF)
,,
9,188
9,188 9,188
9,188
9,188
9,188
PSAWR
avoided
cost
per
AF
$136
.69
$172.98
$209.28
$209
.28
$209
.28
$209.28
Storage
Charge
avoided
cost
per
HCF
$0
.31
$0.40
$0
.48
$0.48
$0.48
$0.48
Supply
Cost
SDCWA
M&I
Melded
Untreated
Rate
per
AF
$1,355
$1,490
$1,490
$1
,490
$1,490
$1
,490
MWD
supply
rate
(PSAWR
supply
rate)
per
AF
$912
$984
$984 $984
$984
$984
PSAWR
avoided
Supply
cost
$443
$506
$506 $506
$506
$506
Supply
avoided
cost
per
HCF
$1
.02
$U6
$1
.16
$1
.16
$1.16
$1.16
~otal
Gredlt
i!er,
HCF.
$1.97
$1
,97
$197
1 C
ITY
OF
POWAY
70 of95
WATER
AND
WASTEWA
TER
COST
OF
SERVICE
AND
RATE
STUDY
REPORT
42 November 18, 2025, Item #12
Table
4-30
shows
the
proposed
CY
2026
volumetric
rates
per
ccf.
Supply,
Base
Delivery
, Peaking,
and
Treatment
unit
rates
are
directly
from
Table
4-26
. The
Recycled
Water
volumetric
rate
was
established
in
Table
4-28.
The
differences
between
proposed
FY
2026
and
current
volumetric
rates
are
also
shown
. All
rates
are
rounded
up
to
the
nearest
cent.
Table
4-30
: Derivat
ion
of
the
Commodity
Rates
($/ccf)
A
B C
D
E
F
G
H
Line
Customer
Class
Supply
Base
Peaking
Treatment
Proposed
Current
Difference
Difference
Delivery
Rate Rate
($)
(%)
1 Potable
Usage
$4
.32
$0.99 $1.49 $1.40
$8
.21
N/A
2 Recycled
Water
$6
.96
$0
.00
$0
.00
$0.00
$6
.96
$5
.68
$1.28
22 .5%
3 PSAWR
Rebate
{$1
.94}
{$1.75}
4.3.3 . PROPOSED
WATER
RATE
SCHEDULE
The
proposed
rates
der
ived
in
Table
4-27
and
Table
4-30
are
increased
annually
by
the
proposed
revenue
adjustments
shown
in
Table
4-13
. The
resulting
proposed
rates
for
the
study
period
are
provided
in
Table
4-31
and
Table
4-32.
Table
4-31
: CY
2026-2030
Proposed
Water
Bi
-monthly
Meter
Service
Charges
A B
C D
E F
G
Line
Meter
Current
January January
January January
January
Size
Charge
2026
2027
2028
2029 2030
1 3/4"
$98.27
$113.03 $117.56
$122.27 $127.17
$132.26
2 1"
$149.41
$176.03 $183.08
$190.41
$198.03
$205.96
3 11/2"
$277.27
$333.52
$346.87
$360.75 $375.18
$390.19
4 2"
$430.67 $522.50
$543.40
$565.14
$587.75
$611.26
5 3"
$916.53
$1,120
.96
$1,165.80
$1,212.44 $1,260.94
$1,311.38
6 4"
$1,632
.50
$2,002.89
$2,083
.01
$2,166.34
$2,253.00
$2,343.12
7 6"
$3,345
.71
$4,113.23
$4,277
.76
$4,448.88
$4,626.84
$4,811.92
8 8"
$6,158.49 $7,577.96
$7,881.08
$8,196.33
$8,524.19
$8,865.16
Table
4-32
: CY
2026
-2030
Proposed
Water
Commodity
Rates
A
B
C
D
E F
Line
Variable
Rate
January January
January January
January
2026
2027
2028
2029
2030
1 Uniform
$8.21
$8.54
$8.89 $9.25 $9.62
2 Recycled
$6.96
$7
.24
$7.53
$7.84
$8
.16
3 PSAWR
Rebate
-$1.94 -$1.97
-$1.97 -$1.97 -$1.97
4.4. Bill
Impacts
Figure
4-4
shows
the
impacts
of
the
proposed
rates
on
a hypothetical
Single-Family
Residential
customer
with
a
3/4"
meter
at
different
usage
levels.
Figure
4-5
shows
the
impacts
on
a hypothetical
Non-Residential
customer
with
a
l"
meter
and
different
levels
of
consumption
.
43 C
ITY
OF
POWAY
71 of
95 November 18, 2025, Item #12
$2,500
$2,000
$1,500
$1,000
$500
$0
■ Current Bill
■ Proposed Bill -Uniform
Impact($) -Uniform
Impact(%)-Uniform
$900
$700
s~oo
$500
$400
$300
$200
S100
so
• Current Bill
• Proposed Bill -Uniform
Impact($)• Uniform
Impact(%) -Uniform
CITY OF POWAY
72 of 95
Figure 4-4: Single-Family Residential Water Bill Impact Analysis SFR Impacts at Different Usage Levels -3/4" Meter -3-Tiered $lfiS.,1f195.l3
$165.47 $302.69 $364.93 $512.75 $983.11
lOunils 29 units 37 units 56 units 100 units
$165.47 $302.69 $364.93 $512.75 $983.11
$195.13 $351.12 $416.80 $572.79 $934.03
$29.66 S48.43 $51.87 $60.04 -$49.08
17.9% 16.0% 14.2% 11.7% -5.0%
Figure 4-5: Non-Residential Water Bill Impact Analysis
7 eel
s200.4,1
$233.50
$33.06
16.5%
Non-Residential Impacts at Different Usage Levels -1" Meter siavr,
13 ccf
$244.18
$282.76
$38.58
15.8%
$340.23
20ccf
$295.21
$340.23
$45.02
15.3%
$391.70
27 ecf
$346.24
$397. 70
$S1.46
14.9%
$44fi.9fi
33ccf·
S389.98
$446.96
$S6.98
14.6%
$1,517.61
150 units
$1,517.61
$1,344.53
·$173.08
-11.4%
$611.16
S3 ecf
$535.78
$611.16
$75.38
ld.1%
si,os2.11
$2,052.11
200 units
$2,052.11
$1,755.03
-$297.08
-14.5%
SOccf
$732.61
$832.83
$100.22
13.7%
WATER AND WASTEWATER COST OF SERVICE AND RATE STUDY REPORT 44 November 18, 2025, Item #12
4.5. Largest Ten Percent of Users
Recent regulatory changes detailed in AB 755 passed in 2023 and codified in Water Code, §§ 390 & 390. l require us to identify the costs to serve the largest 10 percent of the users in the City. Proposition 218 requires rates that allocate costs of service proportionately, not specially imposed rates for the top 10% of consumers regardless of actual cost of service. Rates are required to be based upon cost of service to the parcel regardless of volume of use.
In FY 2024, the City had 14,452 accounts; the top 10% of users represent 1,432 accounts and approximately 47.9% of total annual water use. These large users are primarily non-residential, irrigation, and multi-family accounts. As detailed previously in the report, the City sells purchased raw water from the SDCWA (single source) and treats this water at the City 's treatment plant; therefore, there are no incremental costs associated with water supply so as to justify differential rates for similarly situated customer classes. All users within the City pay a volumetric rate based on their water consumption. Our professional judgment is that the proposed rate structure is an efficient, proportional, and fair way to allocate the City's costs among those who create those costs. All water customers in the City's system pay rates that allocate costs of service proportionately to the amount of water usage, resulting in larger bills for higher use-but based upon the same cost per HCP for all users. 45 CITY OF POWAY
73 of 95
November 18, 2025, Item #12
5. Wastewater Rate Study
5.1. Wastewater Utility Financial Plan
This section details the development of the five-year financial plan for the City's wastewater utility. This includes the determination of annual revenues required from wastewater rates based on annual cash flow projections.
Assumptions and inputs related to projected revenues, operating expenses, and capital expenditures are clearly outlined in the following subsections.
5.1.1.EXISTING RATE STRUCTURE AND RATES
The City bills every two months (bi-monthly), resulting in six total bills per year for each customer. The City's current rates went into effect on January I, 2025. The existing rate structure for wastewater customers consists of a uniform bi-monthly fixed service charge for all customers. The City's existing bi-monthly service charges are shown below in Table 5-1.
Table 5-1: Existing Bi-monthly Wastewater Service Charges Customer Class
All Customer Classes
FY 2025
$33.13
Additionally, all customers pay a commodity rate by customer class. These rates are shown in Table 5-2. Single Family Residential (SFR) customers pay a uniform volumetric charge based on the customer's average winter water usage determined by taking 85% of the lowest winter water use averaged over the last three years capped at 24 ccfbi-monthly. Most other customers pay a uniform volumetric charge per unit of wastewater flow estimated as 85% of the customers' bi-monthly lowest winter water use, averaged over the preceding three-year period.
CITY OF POWAY
74 of 95
Table 5-2: Existing Bi-monthly Commodity Rates ($/ccf wastewater) Customer Class
Single Family Residential
Single Family Residential
Non-Residential, Multi-Family, & Mobile Home
General Commercial
Medium-Low
Medium
Medium-High
High
Light Industry
Industrial Special User
Government & Membership Organizations
Multi-Family & Mobile home
Churches
Elementary School
Secondary & High School
FY 2025
$5.46
$5.91
$6.61
$7.42
$7.58
$10.44
$6.42
$6.48
$4.85
$6.85
$5.91
$5.98
$5.93
WATER AND WASTEWATER COST OF SERVICE AND RATE STUDY REPORT 46 November 18, 2025, Item #12
5.1.2.ACCOUNT AND USAGE PROJECTIONS
Table 5-3 shows the estimated number of wastewater accounts by customer class for FY 2025 through FY 2030.
The projections are based on account data provided by the City for FY 2024. The number of accounts is used to forecast the amount of fixed revenue the City will receive from the bi-monthly service charges.
Table 5-3: Wastewater Accounts
Customer Class FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Single Family Residential 11,698 11,727 11,757 11,786 11,816 11,845 Non-Residential, Multi-Family, & Mobile Home 857 859 861 864 866 868 Total Customer Acounts 12,555 12,587 12,618 12,650 12,681 12,713 Table 5-4 projects the billed wastewater flow by class for the study period based on FY 2024 data.
Table 5-4: Billed Wastewater Flow by Class (ccf)
Customer Class FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Single Family Residential
Single Family Residential 133,584 133,918 134,253 134,588 134,925 135,262 Total Number of Accounts 133,584 133,918 134,253 134,588 134,925 135,262 Non-Residential, Multi-Family, & Mobile Home
General Commercial 126,547 126,864 127,181 127,499 127,818 128,137 Medium-Low 60,485 60,637 60,788 60,940 61,092 61,245
Medium 6,339 6,355 6,371 6,387 6,403 6,419
Medium-High 2 2 2 2 2 2
High 31,158 31,235 31,314 31,392 31,470 31,549
Light Industry 45,529 45,642 45,756 45,871 45,986 46,100 Industrial Special User 19,462 19,511 19,560 19,609 19,658 19,707 Government & Membership Organizations 40,690 40,792 40,894 40,996 41,099 41,201 Multi-Family & Mobile home 206,630 207,146 207,664 208,183 208,704 209,226 Churches 10,600 10,626 10,653 10,680 10,706 10,733
Elementary School 5,353 5,366 5,379 5,393 5,406 5,420
Secondary & High School 4,810 4,822 4,834 4,846 4,858 4,871 Total Billed Wastewater Flow (ccf) 557,605 558,999 560,397 561,798 563,202 564,610
5.1.3.REVENUES
The City's wastewater revenues consist of operating revenues (i.e., wastewater rate revenues), other operating revenues, and non-operating revenues. Projected wastewater rate revenues under existing rates are calculated for FY 2025 to FY 2030 (Table 5-5) by multiplying current rates (Table 5-1 and Table 5-2) by the corresponding units of service (Table 5-3 and Table 5-4). 3 Projecting wastewater rate revenues under existing rates is necessary to evaluate the City's projected baseline financial position in the absence of any proposed rate increases. The FY 2025 fixed charges represent 23% of the total rate revenue.
3 Fixed charge revenues= [number of accounts] x [bi-monthly rate] x [ 6 billing periods].
Volumetric charge revenues= [annual flow in CCF] x [volumetric rate per CCF]. 47 CITY OF POWAY
75 of 95
November 18, 2025, Item #12
Table 5-5: Projected Operating Revenues Under Existing Wastewater Rates Operating Revenues FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Bi-Monthly Service Charges
Single-Family Residential $2,280,437 $2,331,172 $2,336,999 $2,342,842 $2,348,699 $2,354,571 Non-Residential, Multi-Family $167,086 $170,803 $171,230 $171,658 $172,087 $172,518 Bi-Monthly Flow Charges
Single Family Residential $4,292,054 $4,387,152 $4,398,120 $4,409,116 $4,420,138 $4,431,189 Non-Residential, Multi-Family $3,601,338 $3,683,578 $3,692,787 $3,702,018 $3,711,274 $3,720,552 Total $10,340,914 $10,572,705 $10,599,136 $10,625,634 $10,652,198 $10,678,829 Table 5-6 shows a summary of other revenues. The other operating and non-operating revenues were projected beyond FY 2026 budgeted amounts by holding them constant through FY 2030 Table 5-6: Projected Other Wastewater Revenues
Other Revenue FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Fees $100,000 $109,038 $109,038 $109,038 $109,038 $109,038 Other $1,155,198 $605,949 $605,949 $605,949 $605,949 $605,949 Total Other Revenue $1,255,198 $714,987 $714,987 $714,987 $714,987 $714,987 Table 5-7 shows a revenue summary for the study period based on revenues shown previously in Table 5-5 and Table 5-6. Once again, operating revenues shown in this table reflect projected wastewater rate revenues under existing rates in the absence of any rate increases over the study period.
Table 5-7: Wastewater Revenue Summary at Current Rates
Revenues FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Operating Revenues $10,340,914 $10,572,705 $10,599,136 $10,785,019 $11,136,341 $11,499,107 Other Revenue $1,255,198 $714,987 $714,987 $714,987 $714,987 $714,987 Total $11,596,112 $11,287,692 $11,314,123 $11,500,006 $11,851,328 $12,214,094
5.1.4. O&M EXPENSES
The City's operations and maintenance (O&M) expenses, shown in Table 5-8, are based on the FY 2026 City budget and projected out through FY 2030. O&M expenses were projected beyond FY 2026 by increasing FY 2026 budgeted expenses using the inflationary factors discussed in Table 3-1. Increases in treatment costs from San Diego are not inflated but increase only with growth. These costs will be passed through to customers annually.
CITY OF POWAY
76 of95
WATER AND WASTEWATER COST OF SERVICE AND RATE STUDY REPORT 48 November 18, 2025, Item #12
Table 5-8: Wastewater Operating Expenditures Summary
Operating Expenditures FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Legislative & Administrative $343,213 $21,715 $22,366 $23,037 $23,728 $24,440 Finance Services $1,184,043 $677,304 $697,623 $718,551 $740,108 $762,311 Human Resources $267,919 $93,934 $96,752 $99,655 $102,645 $105,724 Development Services $102,391 $432,051 $445,013 $458,363 $472,114 $486,278 Public Works $1,800,164 $1,939,713 $1,997,905 $2,057,842 $2,119,577 $2,183,165 Treatment $4,381,379 $4,580,421 $4,591,872 $4,603,352 $4,614,860 $4,626,397 Wastewater Disposal $1,760,438 $1,665,925 $1,721,002 $1,777,941 $1,836,806 $1,897,665 Wastewater Collection $1,566,702 $1,718,677 $1,770,797 $1,824,500 $1,879,834 $1,936,850 Total Operating Expenditures $11,406,249 $11,129,741 $11,343,330 $11,563,241 $11,789,673 $12,022,830
5.1.5. CAPITAL IMPROVEMENT PLAN
The City has developed a capital improvement plan (CIP) to address ongoing wastewater system needs in each year throughout the study period. Detailed CIP expenditures in each year are shown at the individual project level in Table 5-9. Project costs throughout the study period were provided by City staff.
Table 5-9: Wastewater Capital Improvement Plan
Capital Improvement Projects FY2026 FY2027 FY2028 FY2029 Annual Replacement/Rehabilitation
Annual Sewer Line Repair Replace $350,000 $367,500 $385,875 $405,169 Annual Sewer Manhole Rehabilitation $150,000 $157,500 $165,375 $173,644 Lift Stations
LS-1 Old Coach Capacity Analysis & Upgrade (MP CAP-10} $0 $50,000 $150,000 $750,000 LS-1 Old Coach Generator Replacement $0 $0 $30,000 $350,000 LS-3 Camino De Valle Upgrades $45,000 $150,000 $750,000 $250,000 LS-3 Camino De Valle MCC Rebuild $50,000 $125,000 $550,000 $0 Gravity Main/Capacity Upsize
Butterfield Trail Sewer Upsize (MP CAP-02) $1,250,000 $1,000,000 $0 $0 Sagewood Drive Sewer Upsize-Orchard Bend to Martincoit (MP CAP-04) $0 $0 $200,000 $1,250,000 Rios Road Sewer Replacement (MP CAP-OS) $0 $0 $0 $200,000 Powers Road Sewer Replacement Design (MP CAP-06} $200,000 $1,000,000 $500,000 $0 Studies
Treatment Plant Sludge Discharge Study $50,000 $0 $0 $0 Infiltration & Inflow Study (Bundle w/Sewer Master Plan Update) $0 $75,000 $0 $0 Sewer Master Plan Update $350,000 $175,000 $0 $0
Total $2,445,000 $3,100,000 $2,731,250 $3,378,813
5.1.6. RECOMMENDED RESERVE POLICIES
To enhance financial management transparency and financial risk management, Raftelis recommends the Wastewater Utility maintain the following reserves.
5.1.6.1. Operating Reserve
FY 2030
$425,427
$182,326
$250,000
$0
$0
$0
$0
$0
$1,500,000
$0
$0
$0
$0
$2,357,753
The purpose of an operating reserve is to provide working capital to support the operation, maintenance, and administration of the utility. From a risk management perspective, the O&M reserve supports the City's cash flow needs during normal operations and additionally ensures that operations can continue should there be significant events that impact cash flows. It also provides a buffer against unexpected increases in operating costs. As it is unlikely for a utility to perfectly predict the revenues and revenue requirements for each billing period, a reserve set 49 CITY OF POWAY
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aside to hedge the risk of monthly negative cash positions is prudent in financial planning. Another factor to consider when creating a cash flow reserve is the frequency of billing. A utility that bills once a month would require a lower minimum reserve than a utility that bills bi-monthly or twice a year.
Raftelis recommends that the City revise its current operating reserve target of 20% of operating expenditures to a minimum of 90 days or 25% of operating expenses and establish a target balance of 120 days to ensure adequate working capital for operating expenses. The City bills bi-monthly; thus 120 days provides sufficient working capital to account for the time differential between when expenses occur and when revenues are collected. Additionally, this accounts for revenues varying seasonally while expenses remain relatively static.
5.1.6.2. Capital Replacement Reserve
Adequate and timely capital replacement planning is a critical task to ensure reliability and sustainability of the wastewater system. Capital reserves are used to provide funding for capital expenditures due to the capital intensive nature of the wastewater system and to provide a buffer for larger than anticipated increases in capital costs or emergencies. The City does not currently maintain a separate capital replacement reserve. Raftelis recommends the City adopt a policy using the estimated 5-year average CIP as the target balance. In FY 2026, this average is about $2.8 million.
5.1.6.3. Recommended Total Reserve Targets
Table 5-10 summarizes the proposed reserve policies for the City's wastewater utility.
Table 5-10: Wastewater Proposed Reserve Targets
Reserve
Operating
Capital Replacement
Policy
Minimum: 90 days
Target: 120 days
5-Y ear Average CIP
5.1.7.STATUS QUO FINANCIAL PLAN
Table 5-11 shows the operating cash flow detail for the City during the study period under current rates with no adjustments. As shown in Line 19, the City is unable to meet its operating expenses in FY 2028 due to increasing O&M costs. Typically, reserves should not be used to fund operating expenses; rate revenues will need to be supplemented through revenue adjustments in 2028. Capital costs will be mostly funded from existing reserves.
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Table 5-11: Wastewater Financial Plan under Current Rates A
Line Revenue
1 Current Rate Revenue
2 Revenue Adjustments
3 Proposed Rate Revenue
4 Other Revenue
5 Fees
6 Other
7 Total Other Revenue
8 Total Revenue
9 Operating Expenditures
10 Legislative & Administrative
11 Finance Services
12 Human Resources
13 Development Services
14 Public Works
15 Treatment
16 Wastewater Disposal
17 Wastewater Collection
18 Total Operating Expenditures
19 Net Operating Revenue
20 Debt Service & Capital Projects
21 Rate Funded Capital Projects
22 New Proposed Debt
23 Total Capital
24 Total Expenses
25 Net Cashflow
B
FY 2026
$10,572,705
$0
$10,572,705
$109,038
$605,949
$714,987
$11,287,692
$21,715
$677,304
$93,934
$432,051
$1,939,713
$4,580,421
$1,665,925
$1,718,677
$11,129,741
$189,863
$600,000
$0
$600,000
$11,729,741
($442,049)
C
FY 2027
$10,599,136
$0
$10,599,136
$109,038
$605,949
$714,987
$11,314,123
$22,366
$697,623
$96,752
$445,013
$1,997,905
$4,591,872
$1,721,002
$1,770,797
$11,343,330
$157,951
$807,270
$0
$807,270
$12,150,600
($836,477)
D
FY 2028
$10,625,634
$0
$10,625,634
$109,038
$605,949
$714,987
$11,340,621
$23,037
$718,551
$99,655
$458,363
$2,057,842
$4,603,352
$1,777,941
$1,824,500
$11,563,241
-$29,207
$2,657,115
$0
$2,657,115
$14,220,356
($2,879,735)
E
FY 2029
$10,652,198
$0
$10,652,198
$109,038
$605,949
$714,987
$11,367,185
$23,728
$740,108
$102,645
$472,114
$2,119,577
$4,614,860
$1,836,806
$1,879,834
$11,789,673
-$222,620
$3,304,492
$0
$3,304,492
$15,094,165
($3,726,980)
F
FY 2030
$10,678,829
$0
$10,678,829
$109,038
$605,949
$714,987
$11,393,816
$24,440
$762,311
$105,724
$486,278
$2,183,165
$4,626,397
$1,897,665
$1,936,850
$12,022,830
-$422,488
$2,283,247
$0
$2,283,247
$14,306,076
($2,912,261)
Table 5-12 shows the City's fund balances over the study period under current rates with no adjustments. The operating reserve target is equal to 120 days of operating and the capital reserve target is equal to the 5-year average CIP. The City has adequate funds to meet its target reserves. 51 CITY OF POWAY
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Table 5-12: Wastewater Projected Fund Balances Under Current Rates
A B C D E F
Line Operating Fund (5200) FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Beginning Balance $17,353,596 $14,280,309 $13,610,479 $10,880,476 $7,271,692 2 Net Cashflow ($442,049) ($836,477) ($2,879,735) ($3,726,980) ($2,912,261) 3 Interest Income $171,326 $166,646 $149,732 $118,195 $86,181 4 Transfers from (to) Captial Replacement ($2,802,563) $0 $0 $0 $0 5 Ending Balance $14,280,309 $13,610,479 $10,880,476 $7,271,692 $4,445,612 6 Target Reserve Balance $3,709,914 $3,781,110 $3,854,414 $3,929,891 $4,007,610 7 Capital Replacement Fund FYE 2026 FYE 2027 FYE 2028 FYE 2029 FYE 2030 8 Beginning Balance $0 $2,802,563 $2,802,563 $2,802,563 $2,802,563 9 Transfers from Operating $2,802,563 $0 $0 $0 $0
10 New Grant Proceeds $600,000 $0 $0 $0 $0
11 Grant Funded Capital ($600,000) $0 $0 $0 $0
12 New Debt Proceeds $0 $0 $0 $0 $0
13 Debt Funded Capital Projets $0 $0 $0 $0 $0
14 Ending Balance $2,802,563 $2,802,563 $2,802,563 $2,802,563 $2,802,563 15 Target Reserve Balance $2,802,563 $2,501,191 $2,375,201 $2,069,661 $2,206,644
5.1.8. PROPOSED FINANCIAL PLAN
Balancing the need for the City to meet its revenue requirements while mitigating increases to ratepayers' bills, Raftelis worked with staff to determine the revenue adjustment schedule in Table 5-13. All revenue adjustments in the rate model are set for January of each year. The City will implement the first revenue adjustment in January 2028 and subsequently in January of each fiscal year.
Table 5-13: Wastewater Proposed Revenue Adjustments
FY 2026
January
0.0%
FY 2027
January
0.0%
FY 2028
January
3.0%
FY 2029
January
3.0%
FY 2030
January
3.0%
Table 5-14 incorporates the proposed revenue adjustments into the financial plan. As noted above, the City needs to balance its revenue needs with minimizing rate increases for customers. While the proposed financial plan still shows a negative net cashflow (Line 24), the City's wastewater reserves exceed the proposed target. The City will rely on reserves to fund the balance of expenditures rather than significantly increase its rates in deficit years.
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Table 5-14: Wastewater Proposed Financial Plan
A B C D E F
Line Revenue FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
1 Current Rate Revenue $10,572,705 $10,599,136 $10,625,634 $10,652,198 $10,678,829 2 Revenue Adjustments $0 $0 $159,385 $484,142 $820,278
3 Proposed Rate Revenue $10,572,705 $10,599,136 $10,785,019 $11,136,341 $11,499,107 4 Other Revenue
5 Fees $109,038 $109,038 $109,038 $109,038 $109,038
6 Other $605,949 $605,949 $605,949 $605,949 $605,949
7 Total Other Revenue $714,987 $714,987 $714,987 $714,987 $714,987 8 Total Revenue $11,287,692 $11,314,123 $11,500,006 $11,851,328 $12,214,094 9 Operating Expenditures
10 Legislative & Administrative $21,715 $22,366 $23,037 $23,728 $24,440 11 Finance Services $677,304 $697,623 $718,551 $740,108 $762,311 12 Human Resources $93,934 $96,752 $99,655 $102,645 $105,724 13 Development Services $432,051 $445,013 $458,363 $472,114 $486,278 14 Public Works $1,939,713 $1,997,905 $2,057,842 $2,119,577 $2,183,165 15 Treatment $4,580,421 $4,591,872 $4,603,352 $4,614,860 $4,626,397 16 Wastewater Disposal $1,665,925 $1,721,002 $1,777,941 $1,836,806 $1,897,665 17 Wastewater Collection $1,718,677 $1,770,797 $1,824,500 $1,879,834 $1,936,850 18 Total Operating Expenditures $11,129,741 $11,343,330 $11,563,241 $11,789,673 $12,022,830 19 Net Operating Revenue $189,863 $157,951 -$29,207 -$63,236 $61,655 20 Debt Service & Capital Projects
21 Rate Funded Capital Projects $600,000 $807,270 $2,657,115 $3,304,492 $2,283,247 22 New Proposed Debt $0 $0 $0 $0 $0
23 Total Capital $600,000 $807,270 $2,657,115 $3,304,492 $2,283,247 24 Total Expenses $11,729,741 $12,150,600 $14,220,356 $15,094,165 $14,306,076 25 Net Cashflow ($442,049} ($836,477} ($2,720,350} ($3,242,837} ($2,091,982} Table 5-15 shows the City's projected fund balances over the study period. The operating reserve target is equal to 120 days of operating expenses to mitigate against any potential cash flow risks or unexpected O&M costs. The capital reserve target is equal to the 5-year average CIP. Under the recommended plan, the City will draw down its current reserves to fund operating and capital costs but will meet the 5-year financial reserve targets. 53 CITY OF POWAY
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Table 5-15: Wastewater Projected Fund Balances Under Proposed Rates
A B C D E F
Line Operating Fund (5200) FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 1 Beginning Balance $17,353,596 $14,280,309 $13,610,479 $11,040,657 $7,920,038 2 Net Cashflow ($442,049) ($836,477) ($2,720,350) ($3,242,837) ($2,091,982) 3 Interest Income $171,326 $166,646 $150,529 $122,218 $96,766 4 Transfers from (to) Captial Replacement ($2,802,563) $0 $0 $0 $0 5 Ending Balance $14,280,309 $13,610,479 $11,040,657 $7,920,038 $5,924,822 6 Target Reserve Balance $3,709,914 $3,781,110 $3,854,414 $3,929,891 $4,007,610 7 Capital Replacement Fund FYE 2026 FYE 2027 FYE 2028 FYE 2029 FYE 2030 8 Beginning Balance $0 $2,802,563 $2,802,563 $2,802,563 $2,802,563 9 Transfers from Operating $2,802,563 $0 $0 $0 $0
10 New Grant Proceeds $600,000 $0 $0 $0 $0
11 Grant Funded Capital ($600,000) $0 $0 $0 $0
12 New Debt Proceeds $0 $0 $0 $0 $0
13 Debt Funded Capital Projets $0 $0 $0 $0 $0
14 Ending Balance $2,802,563 $2,802,563 $2,802,563 $2,802,563 $2,802,563 15 Target Reserve Balance $2,802,563 $2,501,191 $2,375,201 $2,069,661 $2,206,644 Figure 5-1 through Figure 5-3 display the Financial Plan in graphical format. Figure 5-1 illustrates the operating position of the City, where expenses, inclusive of reserve funding, are shown by stacked bars; and total revenues at both current rates and proposed rates are shown by the horizontal trend lines. Figure 5-2 summarizes the projected CIP and its funding sources (100% Rates/Reserves funded). Figure 5-3 displays the ending total reserve balance for the wastewater utility, inclusive of operating and capital funds. The horizontal trend lines indicates the minimum and target reserve balances and the bars indicate ending reserve balance. No new debt is proposed to be issued as part of the proposed five-year financial plan. It should be noted that reserves are being drawn down to fund capital expenses every year.
Figure 5-1: Wastewater Operating Financial Plan at Proposed Rates Operating Financial Plan
"' $20
C
-~
2 $15
$10
$5
$0
-$5
FY 2026 FY 2027 FY 2028 FY 2029 FY 2030
-Operating Expenses -Rate Funded Capital -Net Cashflow
-current Revenue -Proposed Revenue
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Figure 5-2: Proposed Wastewater Capital Improvement Plan and Funding Source Capital Funding Sources
S4.0 "' • C
0 $3.4
§ $3.5
$3.1 2
$3.0 $2.7
$2.4
$2.5
$2.0
$1.5
$1.0
$0.5
$0.0
FY 2026 FY 2027 FY 2028 FY 2029
■ Rates/Reserves Funded ■ Connection Fee Funded
Figure 5-3: Projected Ending Wastewater Reserves at Projected Rates V", $18
C
0 § $16
2 $14
$12
$10
$8
$6
$4
$2
$0
FY 2026
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Operating & Capital Reserves
FY 2027 FY 2028 FY 2029
-Total Reserves -Minimum Reserve -Target Reserve
$2.4
FY 2030
FY 2030
November 18, 2025, Item #12
5.2. Wastewater Cost of Service Analysis
5.2.1.COST OF SERVICE (COS) METHODOLOGY
The first step in the COS analysis process is to determine the revenue requirement, which is based on the results of the wastewater financial plan and the proposed revenue adjustments. The framework and methodology utilized to develop the COS analysis and to apportion the revenue requirement to each customer class and tier is informed by the processes outlined in the WEF Manual of Practice 27.
COS analyses are tailored specifically to meet the unique needs of each wastewater system. However, there are four distinct steps in every analysis to recover costs from customer classes in an accurate, equitable, and defensible manner:
1. Cost functionalization: O&M expenses and capital assets are categorized by their function in the system.
Functions include wastewater collection, disposal, treatment, administration, pumps, equipment, etc.
2. Cost causation component allocation: the functionalized costs are then allocated to cost causation components based on their burden on the system. The cost causation components include flow, chemical oxygen demand (COD), total suspended solids (TSS), customer, and general. The revenue requirement is allocated according to the cost causation components and results in the total revenue requirement for each cost causation component.
3. Unit cost development: the revenue requirement for each cost causation component is divided by the appropriate units of service to determine the unit cost for each cost causation component.
4. Revenue requirement distribution: the unit cost is utilized to distribute the revenue requirement for each cost causation component to customer classes and tiers based on their individual service units. The City's customer classes include Residential, Commercial (based on strength), Industrial and Schools.
5.2.2. REVENUE REQUIREMENT
The revenue requirement for the proposed rates will be based on FY 2026, designated the Test Year. Table 5-16 shows the revenue requirement derivation with the total revenue required from rates. The totals shown in the "Operating" and "Capital" columns are the total O&M and capital revenue requirements, respectively, that are to be recovered through rates. The operating costs (Line 6) flow from Table 5-8. The Debt Service category (Line 10) represents both replacement capital projects (Table 5-9) and any proposed debt. Revenue offsets are composed of various miscellaneous, non-rate revenues, shown in Table 5-6. To arrive at the rate revenue requirement, we subtract these revenue offsets from the combined operating and debt service costs. The adjustments for cash balance represent the drawdown of reserves and the adjustment to annualize the rate increase (Line 18) is due to the mid-year proposed revenue adjustment occurring in late January 2026 following potential adoption. These are then combined to arrive at the total annual revenue requirement from rates. This is the amount that the City's rates are designed to collect, for a full year, in the "Total" column at Line 20.
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Table 5-16: Wastewater Revenue Requirement
A B C D
Line Revenue Requirements Operating Capital Total
1 Operating Costs
2 Treatment $4,580,421 $0 $4,580,421
3 Wastewater Disposal $1,665,925 $0 $1,665,925
4 Wastewater Collection $1,718,677 $0 $1,718,677
5 Other O&M $3,164,718 $0 $3,164,718
6 Subtotal Operating Costs $11,129,741 $0 $11,129,741
7 Capital Expenditures
8 Rate Funded Capital Projects $0 $600,000 $600,000
9 New Proposed Debt $0 $0 $0
10 Subtotal Debt Service $0 $600,000 $600,000
11 Total Revenue Requirements $11,129,741 $600,000 $11,729,741 12 Less: Revenue Offsets
13 Fees $109,038 $0 $109,038
14 Other $605,949 $0 $605,949
15 Total Revenue Offsets $714,987 $0 $714,987
16 Less: Adjustments
17 Adjustment for Cash Balance $442,049 $0 $442,049
18 Adjustment for Mid-Year Increase $0 $0 $0
19 Total Adjustments $442,049 $0 $442,049
20 Total Revenue Requirement from Rates $9,972,705 $600,000 $10,572,705 21 Less Treatment Costs $5,392,284 $600,000 $5,992,284
5.2.3. MASS BALANCE
A cost of service analysis requires that costs be assigned to customers in proportion to their loadings. Customers are divided into different classes as shown in Table 5-2. Since measurement of wastewater flow is expensive and prone to errors, wastewater flow is not measured for most customers.
To determine wastewater flow for residential customers, a mass balance analysis is done by taking the total flow and strength of the wastewater influent into the METRO plant and reducing that by the wastewater loadings of the City's non -residential customers and inflow and infiltration (I&I). A small quantity of wastewater is estimated to result from I&I, which is water that enters the collection system during rain-related events, run-off, etc. I&I is estimated to be 2% of the total influent.
Multi-family and mobile home customers' wastewater flow is calculated based on 75% of bi-monthly water use for accounts without a landscape meter and 85% of bi-monthly water use for accounts with a landscape meter. Non residential customers' wastewater flow is calculated based on 75%, 85%, or 90% of bi-monthly water use depending on customer class. Wastewater flow for schools is estimated based on using 75% or 85% of the water use from the March/ April billing period. Residential flow can be estimated after reducing the total wastewater influent by I&I and estimated non-residential wastewater flow.
Table 5-17 shows the total annual units of flow and strength for each customer class based on the results of the mass balance analysis. Non-residential loadings for COD andTSS in pounds per year (lbs/year) were calculated 57 CITY OF POWAY
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based on wastewater flow and sewage strength classifications provided by City staff for different user classifications (e.g., car washes, hotels, restaurants, etc.). Multi-Family and mobile home loadings for COD and TSS in pounds per year (lbs/year) were calculated based on wastewater flow and the residual residential strength of 485 and 198 mg/I of COD and TSS, respectively. The estimated Single-Family residential wastewater flow was derived by subtracting the Multi-Family and mobile home flow from the Net Residential flow. The estimated Single-Family residential wastewater flow is 44 gallons per capita per day (GPCD) . The residential strength calculated in the mass balance analysis is 485 and 198 mg/I of COD and TSS, respectively.
Table 5-17: Mass Balance Analysis
A B C D E F
Line Flow (mgd) COD (mg/L) TSS (mg/L) Flow(cd) COD (lbs/year) 1 Total Plant Influent 2.85 461 185 1,390,616 4,001,212 2 Less: 1&1 0.06 so 25 27,814 8,681
3 Net Plant Influent 2.79 411 160 1,362,801 3,992,531
4 Non-Residential
5 General Commercial 0.260 288 102 126,864 227,823
6 Medium-Low 0.124 470 195 60,637 177,873
7 Medium 0.013 694 194 6,355 27,550
8 Medium-High 0.000 1,945 127 2 24
9 High 0.064 1,681 543 31,235 327,827
10 Light Ind us try 0.094 337 169 45,642 96,172
11 Industrial Special User 0.040 337 169 19,511 41,112
12 Government & Membership Organizations 0.084 217 83 40,792 55,273 13 Churches 0.022 295 148 10,626 19,592
14 Elementary School 0.041 221 85 20,123 27,763
15 Secondary & High School 0.049 223 85 24,033 33,412
16 Subtotal Non-Residential Flow 0.79 429 162 385,821 1,034,420 17 Net Residential Flow 2.00 485 198 976,981 2,958,110
18 Single Family Residence 1.58 771,343 2,335,616
19 Multi-Family & Mobile home 0.42 205,638 622,495
5.2.4.FUNCTIONALIZATION AND ALLOCATION OF EXPENSES
After determining the revenue requirement, the next step of the COS analysis is to allocate the O&M expenses and capital assets to the following functions:
I. Legislative &Administration -City overhead costs associated with the management of the utility
2. Finance Services -costs associated with customer services, finance, and support services
3. Human Resources -City overhead costs associated with human resources
4. Wastewater Collection -costs of collecting wastewater
5. Public W odes -costs associated with operations and maintenance of the utility
6. Wastewater Disposal-costs of transporting wastewater to METRO
7. Treatment -represents costs of wastewater treatment
The functionalization of costs allows for the allocation of costs to the cost causation components, which include:
I. Flow -costs associated with the amount of wastewater flow entering the collection system
2. COD -the costs associated with the amount of organic compounds in wastewater. Higher strength wastewater is more costly to treat.
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3. TSS -costs associated with the amount of suspended solids in wastewater. Higher suspended solids are also more costly to treat.
4. Customer -costs associated with customer service and billing
5. General-costs that do not have any direct cost causation
5.2.5.ALLOCATION OF COSTS
As detailed in Section 5.2.1, functionalizing costs allows us to better distribute costs to the cost causation components. Table 5-18 shows the function categories used in this study in Column A. Columns B through F show the cost causation components. Allocation of treatment costs is based on the allocation of those costs provided by the City of San Diego. Table 5-18 shows first the percentage distributions, then dollar allocations of each O&M cost. The O&M allocation without treatment is calculated separately because the revenue requirement for treatment will have its own unit costs for Flow, COD, and TSS.
Table 5-18: Wastewater O&M Cost Allocations
A B C D E F G
Line O&M Allocation Flow COD TSS Customer General Total 1 Legislative & Administrative 0% 0% 0% 50% 50% 100%
2 Finance Services 0% 0% 0% 50% 50% 100%
3 Human Resources 0% 0% 0% 0% 100% 100%
4 Development Services 100% 0% 0% 0% 0% 100%
5 Public Works 100% 0% 0% 0% 0% 100%
6 Treatment 48% 28% 24% 0% 0% 100%
7 Wastewater Disposal 100% 0% 0% 0% 0% 100%
8 Wastewater Collection 50% 0% 0% 50% 0% 100%
9 O&M Allocation Flow COD TSS Customer General Total
10 Legislative & Administrative $0 $0 $0 $10,857 $10,857 $21,715 11 Finance Services $0 $0 $0 $338,652 $338,652 $677,304 12 Human Resources $0 $0 $0 $0 $93,934 $93,934
13 Development Services $432,051 $0 $0 $0 $0 $432,051
14 Public Works $1,939,713 $0 $0 $0 $0 $1,939,713
15 Treatment $2,198,602 $1,282,518 $1,099,301 $0 $0 $4,580,421 16 Wastewater Disposal $1,665,925 $0 $0 $0 $0 $1,665,925 17 Wastewater Collection $859,339 $0 $0 $859,339 $0 $1,718,677 18 Total O&M Expenses $7,095,630 $1,282,518 $1,099,301 $1,208,848 $443,444 $11,129,741 19 O&M Allocation 64% 12% 10% 11% 4% 100%
20 O&M Less Treatement $4,897,028 $0 $0 $1,208,848 $443,444 $6,549,320 21 O&M Allocation Less Treatment 75% 0% 0% 18% 7% 100%
Table 5-19 distributes the functionalized capital asset values to cost causation factors similar to Table 5-18 and shows the resulting percent and dollar allocations of the different capital assets. Capital ~osts are allocated based on the system assets because capital costs are incurred to refurbish and replace system assets. Using system assets takes a longer-term view of the allocations of capital costs and provides a consistent allocation of costs from year-to-year even if the capital costs associated with different types of system assets change every year. Since the City's assets are all related to the collection system they are all allocated to flow. 59 CITY OF POWAY
87 of 95
November 18, 2025, Item #12
Table
5-19
: Wastewater
Capital
Cost
Allocations
A
B
C
D
E
F
G
Line
Capital
Asset
Allocation
Flow
COD
TSS
Customer
General
Total
1 General
100%
0%
0%
0%
0%
100%
2 Land
&
Easement
100%
0%
0%
0%
0%
100%
3 Pumps
100%
0%
0%
0%
0%
100%
4 Collection
&
Transmission
100
%
0%
0%
0%
0%
100%
5 Treatment
100%
0%
0%
0%
0%
100%
6 Administrat
ion
100%
0%
0%
0%
0%
100%
7 Buildings
&
Improvements
100%
0%
0%
0%
0%
100%
8 Equipment
100%
0%
0%
0%
0%
100%
9 Capital
Asset
Allocation
Flow
COD
TSS
Customer
General
Total
10 General
$0
$0
$0
$0
$0
$0
11 Land
&
Easement
$76,797
$0
$0
$0
$0
$76
,797
12 Pumps
$1,319,836
$0
$0
$0
$0
$1,319,836
13 Collection
&
Transmiss
ion
$4,980,658
$0
$0
$0
$0
$4,980,658
14 Treatment
$3,462
$0
$0
$0
$0
$3,462
15 Adm
inistration
$0
$0
$0
$0
$0
$0
16 Buildings
&
Improvements
$0
$0
$0
$0
$0
$0
17 Equipment
$645,128
$0
$0
$0
$0
$645
,128
18 Total
Capital
Assets
$7,025,883
$0
$0
$0
$0
$7,025,883
19 Capital
Asset
Allocation
100%
0%
0%
0%
0%
100%
The
goal
of
allocating
the
costs
and
asset
values
in
Table
5-18
and
Table
5-19
is
to
allocate
the
total
O&M
costs
and
capital
assets
to
the
different
cost
causation
components.
This
results
in
a percent
distribution
shown
in
the
last
line
each
of
Table
5-18
and
Table
5-19
. Table
5-20
summarizes
those
cost
allocations
.
Table
5-20
: Wastewater
Cost
Allocation
Distribution
Summary
A
B
C D
E
F
G
H
Line
Function
Rationale
Flow
COD
TSS
Customer
General
Total
1 O&M
Less
Treatement
O&M
Expenses
75%
0%
0%
18%
7%
100%
2 Capital
Capital
Assets
100%
0%
0%
0%
0%
100%
C
IT
Y
OF
POWAY
88 of95
WATER
AND
WASTEWATER
COST
O
F
SERV
ICE
AND
RATE
STUDY
REPORT
60 November 18, 2025, Item #12
5.2.6. UNITS OF SERVICE
Table 5-21 shows the flow, strength, and accounts data for all customer classes. The Flow, COD, and TSS data are derived from the mass balance in Table 5-17. The residential and non-residential customer units in Lines 2 through 16 are from Table 5-3 and Table 5-4.
Table 5-21: Wastewater Customer Class Data
A B C D E F
Line Customer Class Flow (ccf} COD TSS Customer Bills (lbs/year) (lbs/year) Units 1 Residential
2 Single Family Residence 771,343 2,335,616 954,275 11,727 70,364 3 Multi-Family & Mobile home 205,638 622,495 254,336 165 990 4 Subtotal Residential 976,981 2,958,110 1,208,611 11,892 71,354 5 Non-Residential
6 General Commercial 126,864 227,823 80,732 318 1,908
7 Medium-Low 60,637 177,873 73,872 135 810
8 Medium 6,355 27,550 7,715 14 84
9 Medium-High 2 24 2 0 0
10 High 31,235 327,827 105,904 61 366
11 Light Industry 45,642 96,172 48,086 60 360
12 Industrial Special User 19,511 41,112 20,556 7 42
13 Government & Membership Organizations 40,792 55,273 21,259 32 192 14 Churches 10,626 19,592 9,796 37 222
15 Elementary School 20,123 27,763 10,678 19 114
16 Secondary & High School 24,033 33,412 12,753 5 30
17 Subtotal Non-Residential 385,821 1,034,420 391,353 688 4,128 18 Total 1,362,801 3,992,531 1,599,964 12,580 75,483
5.2.7.ALLOCATION OF REVENUE REQUIREMENTS TO COST CAUSATION
COMPONENTS
Table 5-22 shows the allocation of revenue requirements from Table 5-16 to the cost causation components unit cost derivations. The operating revenue requirement shown in Column G, Line 1 is equal to the operating revenue requirement (Line 21) in Table 5-16. The operating revenue requirement is allocated to the cost causation components using the resulting O&M allocation less treatment from Table 5-20. Similarly, the capital revenue requirement in Column G, Line 2 is equal to the capital revenue requirement (Line 21) in Table 5-16 and is allocated to the cost causation factors per Table 5-20. General costs, shown on Line 4, which cannot be tied to a specific function, are redistributed in proportion to the resulting allocations of the other cost causation components.
The total adjusted cost of service (Line 5) is divided by the relevant units of service from Table 5-21 in Line 6 to calculate the unit cost (Line 8). For example, the unit cost for the Flow component is determined by dividing the total flow cost by total estimated wastewater flow in ccf while annual Customer costs are divided by the estimated number of bills in each year (number of customers times six bills per year): These unit costs will next be used to distribute the cost causation components to the customer classes.
San Diego METRO treatment costs, which will be passed through to customers, are shown separately so that pass through of increases in these costs in future years can be readily accomplished. 61 CITY OF POWAY
89 of95
November 18, 2025, Item #12
Table 5-22: Wastewater Unit Cost Calculation
A
Line
1 Operating Cost
2 Capital Cost
3 Total Cost of Service
4 Allocation of General Costs
5 Adjusted Cost of Service
6 Units of Service
7 Units
8 Unit Cost
9 Units
10 Treatment
11 Treatment Cost
12 Total Revenue Requirement
13 14 Unit Cost
15 Combined Unit Cost
16 CITY OF POWAY
90 of95
B
Flow
$4,031,894
$600,000
$4,631,894
$300,527
$4,932,421
1,362,801
ccf
$3.62
ccf
$2,198,602
$1.61
ccf
$5.23
ccf
C D E F G
COD TSS Customer General Total
$0 $0 $995,287 $365,103 $5,392,284
$0 $0 $0 $0 $600,000
$0 $0 $995,287 $365,103 $5,992,284
$0 $0 $64,576 ($365,103) $0
$0 $0 $1,059,863 $0 $5,992,284
3,992,531 1,599,964 75,483
lbs/yr lbs/yr bills/yr
$0.00 $0.00 $14.04
lbs/yr lbs/yr bill
$1,282,518 $1,099,301 $0 $0 $4,580,421
$10,572,705
$0.32 $0.691
lbs/yr lbs/yr :
$0.32 $0.69 $14.04
lbs/yr lbs/yr bill
WATER AND WASTEWATER COST OF SERVICE AND RATE STUDY REPORT 62 November 18, 2025, Item #12
1.0 ....
0 ....
1.0 u,
5.2.8 . DISTRIBUTION OF COST CAUSATION COMPONENTS
The final step in the cost of service analysis is to distribute the cost causation components to the user classes using the unit costs derived in Table 5-22, thereby arriving at the cost to serve each customer class. Table 5-23 shows the cost allocation to each class. To derive the cost to serve each class, the unit costs from Table 5-22 are multiplied by the service units shown in Table 5-21 for each customer class. For example, the flow costs for General Commercial usage are calculated by multiplying the flow unit cost by that class' wastewater flow. Similarly, the Customer costs are derived by multiplying the Customer unit cost by the total number of bills by class in each year. Similar calculations yield the total cost to serve each user class, as shown in the last column of Table 5-23. We have now calculated the cost to serve each user class and can proceed to derive rates that collect the cost to serve each class.
Table 5-23 : Allocation of Costs to Customer Classes
A B C D E F
Line Customer Class Flow COD TSS Customer Total
1 Residential
2 Single Family Residence $4,036,144 $750,268 $655,662 $987,997 $6,430,072 3 Multi-Family & Mobile home $1,076,026 $199,964 $174,749 $13,901 $1,464,639 4 Non-Residential
s General Commercial $663,830 $73,183 $55,469 $26,791 $819,273 6 Medium-Low $317,288 $57,138 $50,756 $11,373 $436,555
7 Medium $33,255 $8,850 $5,301 $1,179 $48,585
8 Medium-High $11 $8 $1 $3 $22
9 High $163,443 $105,308 $72,765 $5,139 $346,655
10 Light Industry $238,829 $30,893 $33,039 $5,055 $307,816 11 Industrial Special User $102,094 $13,206 $14,123 $590 $130,013 12 Government & Membership Organizations $213,449 $17,755 $14,607 $2,696 $248,507 13 Churches $55,604 $6,293 $6,731 $3,117 $71,745
14 Elementary School $105,297 $8,918 $7,337 $1,601 $123,152 15 Secondary & High School $125,754 $10,733 $8,762 $421 $145,670 16 Subtotal Non-Residential $2,018,853 $332,286 $268,890 $57,965 $2,677,994 17 Total COS $7,131,023 $1,282,518 $1,099,301 $1,059,863 $10,572,705 6 3 CIT Y OF POW A Y
November 18, 2025, Item #12
5.3. Wastewater Rate Development
This section includes the calculation of wastewater rates and the results of the study. Rates and charges are designed for the study period, 2026 to2030. Rates and charges in the rate model are assumed to be implemented in January of each year; the City will implement the first revenue adjustment in January 2026 and subsequently in January of each fiscal year.
5.3.1.DERIVATION OF PROPOSED Bl-MONTHLY FIXED CHARGE
TABLE 5-24 shows the derivation of the uniform bi-monthly fixed charge for all customer classes except for schools. More than 50% of the costs of the wastewater utility are fixed; however, the costs are also dependent on the size of the system which is designed for flow. Therefore, to ensure costs are covered for both the fixed portion and the flow portion, the City will keep the revenue collected from fixed charges at approximately 24%. The bi monthly fixed charge was calculated by multiplying the total cost of service for the Single-Family residential customers (Column B) by 37% fixed revenue percentage (Column C) to arrive at the amount of revenue to be collected by the fixed charge (Column D). The fixed charge allocation was then divided by the annual number of Single-Family residential bills (Column E) to arrive at the bi-monthly fixed charge (Column F). All customers will incur the same fixed charge covering a portion of the fixed costs of the wastewater system.
TABLE 5-24: Derivation of the Wastewater Bi-monthly Fixed Charge A
Line Customer Class
1 Single-Family Residential
CITY OF POWAY
92 of 95
B C D E F
cos Fixed Fixed Bills Bimonthly
Revenue Charge Fixed
$10,572,705 36.5% $2,346,976 70,364 $33.36
WATER AND WASTEWATER COST OF SERVICE AND RATE STUDY REPORT 64 November 18, 2025, Item #12
U)
w
0 ....
U)
u,
5.3.2. DERIVATION OF PROPOSED COMMODITY RA TES
Table 5-25 shows the derivation of the proposed bi-monthly commodity rates. The commodity rate for each customer class is calculated using the cost of service by customer class from Table 5-23 and the proposed bi-monthly fixed charge from TABLE 5-24. First , the bi-monthly fixed charge (Column C) is multiplied by the number of annual bills (Column D) from Table 5-21 for each customer class to arrive at the total amount of fixed revenue generated for each customer class (Column E). Next, the amount of fixed revenue for each customer class (Column E) is subtracted from the total cost of service by customer class (Column B) to arrive at the variable charge allocation in Column F. The last step in calculating the commodity charge is to divide the variable charge allocation (Column F) by the wastewater flow for each customer class in Column G to arrive at the volumetric commodity rate shown in Column H based on wastewater flow.
Table 5-25: Derivation of the Wastewater Commodity Rates ($/ccf)
A B C D E F G H
Line Customer Class cos Bimonthly Bills Fixed Variable Wastewater Commodity Fixed Revenue Charge Flow Rate (per
1 Residential
2 Single Family Residence $6,430,072 $33.36 70,364 $2,347,355 $4,082,716 771,343 $5.30 3 Multi-Family & Mobile home $1,464,639 $33.36 990 $33,026 $1,431,612 205,638 $6.97 4 Non-Residential
5 General Commercial $819,273 $33.36 1,908 $63,651 $755,622 126,864 $5.96 6 Medium-Low $436,555 $33.36 810 $27,022 $409,534 60,637 $6.76 7 Medium $48,585 $33.36 84 $2,802 $45,783 6,355 $7.21
8 Medium-High $22 $33.36 0 $6 $16 2 $7.90
9 High $346,655 $33.36 366 $12,210 $334,445 31,235 $10.71 10 Light Industry $307,816 $33.36 360 $12,010 $295,807 45,642 $6.49 11 Industrial Special User $130,013 $33.36 42 $1,401 $128,612 19,511 $6.60 12 Government & Membership Organization ! $248,507 $33.36 192 $6,405 $242,102 40,792 $5.94 13 Churches $71,745 $33.36 222 $7,406 $64,339 10,626 $6.06 14 Elementary School (ADA) $123,152 $0.00 114 $0 $123,152 20,123 $6.12 15 Secondary & High School (ADA) $145,670 $0.00 30 $0 $145,670 24,033 $6.07 65 CI TY OF PO WAY
November 18, 2025, Item #12
5.3 .3. PROPOSED WASTEWATER RATE SCHEDULE
\0 The proposed rates derived in TABLE 5-24 and Table 5-25 are increased annually by the proposed revenue adjustments shown in Table 5-13. The .,:,. resulting proposed rates for the study period are provided in Table 5-26. The rates are all rounded up to the nearest cent to ensure adequate cost 0 .... \0 u,
recovery .
Table 5-26 : CY 2026-2030 Proposed Bi-monthly Wastewater Charges
A B C D E F G
Customer Class Current January January January January January Line Charge 2026 2027 2028 2029 2030
1 Bi-Monthly Fixed Charge
2 All Customer Classes $33.13 $33.36 $33.36 $34.37 $35.41 $36.48 3 Commodity Rate per cd of Wastewater
4 Residential
5 Single Family Residence $5.46 $5 .30 $5.30 $5.46 $5.63 $5.80 6 Multi-Family & Mobile home $6.85 $6.97 $6 .97 $7.18 $7.40 $7.63 7 Non-Residential
8 General Commercial $5.91 $5.96 $5.96 $6.14 $6.33 $6.52 9 Medium-Low $6.61 $6.76 $6 .76 $6.97 $7.18 $7.40
10 Medium $7.42 $7 .21 $7.21 $7.43 $7.66 $7.89
11 Medium-High $7.58 $7.90 $7.90 $8.14 $8.39 $8.65
12 High $10.44 $10 .71 $10 .71 $11.04 $11.38 $11.73
13 Light Industry $6.42 $6.49 $6.49 $6.69 $6 .90 $7.11
14 Industrial Special User $6.48 $6.60 $6.60 $6.80 $7.01 $7.23 15 Government & Membership Organizations $4.85 $5.94 $5.94 $6.12 $6.31 $6 .50 16 Churches $5.91 $6.06 $6.06 $6.25 $6.44 $6.64
17 Elementary School $5.98 $6 .12 $6.12 $6.31 $6 .50 $6.70 18 Secondary & High School $5.93 $6.07 $6.07 $6.26 $6.45 $6.65 CI TY OF PO WAY WA TE R AN D WAS TE WA TE R COST OF SER VICE AN D RA TE STUD Y R EP ORT 66 November 18, 2025, Item #12
5.4. Bill Impacts
Figure 5-4 shows the impacts of the proposed rates on a hypothetical Single-Family Residential customer at different usage levels. Figure 5-5 shows the impacts on a hypothetical Non-Residential customer with a l" meter and different usage levels.
Figure 5-4: Single-Family Residential Wastewater Bill Impact Analysis SFR Impacts at Different Usage Levels
5180
5160
$140
S 1.20
5100
sso
$60
II
$40
520
so
S cci 12 ccf 19 ccf 26ccf 37 eel 50 ccf 60ccf
■ Current Bill 560.43 $98.65 S136.87 S164.17 $164.17 $164.17 $164.17 ■ Proposed Bill 559.86 $96.% $134.06 $160.56 $160.56 $160.56 $160.56 Impact ISi ·S0.57 ·Sl.69 -$2.81 -S3.Gl -$3.Gl -$3.61 ·$3.61 Impact 1%) -0.9% -1.7% -2.1% -2.2% -2.2% -2,2% -2.2%
Figure 5-5: Non-Residential Wastewater Bill Impact Analysis Non-Residential Impacts at Different Usage Levels -1" Meter
52.500
$2,000
Si.500
$1,000
II
$500
II II so
--•• II II II
7ccf i6ccf 2Sccf 35 ccf 49ccf 67 ccf 80 ccf 133 ccf 200 ccf 267 ccf ■ Current Bill 586.19 5154.41 $222.63 $298.43 5404.55 $540.99 5639.SJ S1,0,11 27 51,549.13 $2,056.99 ■ Proposed Bill 588.66 5159.76 $230.86 $309.86 $,120.% 5562 66 $665.36 $1,084.06 $1,613.36 $2,142.66 lmpan !$) S2.47 S5.35 58.23 Si1.tl3 S 15.91 S21.67 $25.83 q2.79 $64.23 $85.67 Impact{%} 2.9% 3.5% 3.7% 3.8% 3.9% ,1.0% :t.O¾ 4.1% 1l.]% 4.2% 67 CITY OF POWAY
95 of95