San Clemente City Council
February 17, 2026

City of
San Clemente
2025 Water Rate Study
Final Report – November 2025
Prepared by: Water Resources Economics, LLC
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November 13, 2025
David Rebensdorf
Public Works Director
City of San Clemente
910 Calle Negocio
San Clemente, CA 92673
Subject: City of San Clemente Water Cost of Service and Rate Study Report Dear Mr. Rebensdorf,
Water Resources Economics, LLC (WRE) is pleased to submit this 2025 Water Cost of Service and Rate Study Report to the City of San Clemente (City). This report documents the results and recommendations of the City’s water rate study. The goal of the study was to develop a five-year schedule of water, recycled water rates, and demand management rates that will sufficiently fund the City’s water and recycled water system expenses, allow the City to meet its financial goals within the study period, and comply with cost-of-service principles.

This study utilized industry-standard rate-setting methodology in accordance with guidelines developed by the American Water Works Association and incorporates guidance provided by the City Council. Our project team has a proven track record of developing fair and equitable water rates for numerous public water agencies in California over the past 25 years. We are confident in our ability to develop sound water rates that satisfy the requirements of Proposition 218.

It has been a pleasure assisting the City, and we appreciate the support provided by yourself, the City Council, and other City staff during this study.

Sincerely,
Sanjay Gaur Hannah Phan
Founder / President Principal Consultant
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TABLE OF CONTENTS

1. Executive Summary 1

1.1 System Overview 1

1.2 Rate Study Overview 1

1.3 Legal Requirements 1

1.4 Rate-Setting Methodology 2

1.5 Additional Information and Disclaimers 2

1.6 Current Water Rates 3

1.7 Financial Plan 4

1.8 Cost-of-Service Analysis 5

1.9 Proposed Potable and Recycled Water Rates 5

1.10 Proposed Demand Management Rates 7

2. Financial Plan 9

2.1 Financial Plan Methodology 9

2.2 Revenues 9

2.3 Operating Expenses 13

2.4 Debt Service 15

2.5 Capital Improvement Plan 15

2.6 Financial Policies 17

2.7 Status Quo Financial Plan 18

2.8 Proposed Financial Plan 25

3. Potable Water Cost-of-Service 33

3.1 Cost-of-Service Methodology 33

3.2 Revenue Requirement 33

3.3 Cost Functionalization 34

3.4 Cost Causation Components 35

3.5 Equivalent Meter Units 40

3.6 Allocation to Cost Components 41

3.7 Unit Cost Calculation 42

4. Potable Water Rates 44

4.1 Rate Design Methodology 44

4.2 Proposed Changes to Rate Structure 44

4.3 Proposed Monthly Fixed Charges 44

4.4 Proposed Variable Charges 46

4.5 Proposed Water Rate Schedule 48

4.6 Customer Impacts 50

5. Recycled Water Cost-of-Service and Rates 51

5.1 Cost-of-Service Methodology 51

5.2 Revenue Requirement 51

5.3 Proposed Monthly Fixed Service Charge 52

5.4 Proposed Consumption Rate 52

5.5 Proposed Recycled Water Rate Schedule 53

6. Demand Management Rates 55

6.1 Rate Design Methodology 55

6.2 Risks Related to Water Shortages 55

6.3 Proposed Demand management Rates 55

6.4 Proposed Demand management Rate Schedule 58

7. Appendices 59

7.1 Financial Plan Appendices 59

7.2 Cost-of-Service Appendices 69

LIST OF TABLES
Table 11: Current Monthly Fixed Water Service Charges (Potable and Recycled) 3 Table 12: Current Consumption Rates 3
Table 13: Proposed Financial Plan Scenario 4
Table 14: Current and Proposed Monthly Fixed Water Service Charge – City Portion (Potable and Recycled) 6 Table 15: Current and Proposed Monthly Fixed Water Service Charge – MWDOC (Potable) 6 Table 16: Current and Proposed Consumption Rates (Potable and Recycled) 7 Table 17: Proposed Single Family Customer Impacts (Year 1) 7 Table 18: Proposed Demand Management Rates 8
Table 21: Current Monthly Fixed Water Service Charge (Potable and Recycled) 10 Table 22: Current Consumption Rates 10
Table 23: Projected Customer Accounts 11
Table 24: Projected Demand Growth 11
Table 25: Projected Customer Water Usage (ccf) 11
Table 26: Calculated Rate Revenues at Current Rates 12
Table 27: Revenue Summary 12
Table 28: Expense Inflationary Assumptions 13
Table 29: Calculated Potable Water Supply Costs 14
Table 210: Operating Expenses Summary 15
Table 211: Existing Debt Service 15
Table 212: Potable Water Capital Project Costs 15
Table 213: Recycled Water Capital Project Costs 16
Table 214: Potable Water Capital Funding Summary 17
Table 215: Recycled Water Capital Funding Summary 17
Table 216: Status Quo Financial Plan Scenario 18
Table 217: Projected Potable Cash Flows (Status Quo Financial Plan) 19 Table 218: Projected Recycled Cash Flows (Status Quo Financial Plan) 20 Table 219: Projected Potable and Recycled Fund Balances (Status Quo Financial Plan) 21 Table 220: Forecasted Potable and Recycled Financial Performance (Status Quo Financial Plan) 22 Table 221: Proposed Water and Recycled Financial Plan Scenario 25 Table 222: Projected Potable Cash Flows (Proposed Financial Plan) 26 Table 223: Projected Recycled Cash Flows (Proposed Financial Plan) 27 Table 224: Projected Potable and Recycled Fund Balances (Proposed Financial Plan) 28 Table 225: Forecasted Potable and Recycled Financial Performance (Proposed Financial Plan) 29 Table 31: FY 2025 Potable Revenue Requirement 34
Table 32: Operating Costs by System Functions 35
Table 33: Capital Expenses by System Functions 35
Table 34: System-Wide Capacity 36
Table 35: System Function Allocation to Cost Components 37 Table 36: Operating Allocation by Cost Component 38
Table 37: Capital Allocation by Cost Component 39
Table 38: Equivalent Meter Units 40
Table 39: Cost-of-Service Allocation by Cost Component (General and Delivery) 41 Table 310: Cost-of-Service Allocation by Cost Component (Final) 42 Table 311: Units of Service Definitions 42
Table 312: Unit Cost by Cost Component 43
Table 41: MWDOC Fixed Charge Unit Cost 45
Table 42: Revenue Neutral Monthly Fixed Water Service Charge – City Portion 45 Table 43: Revenue Neutral Monthly Fixed Water Service Charge – MWDOC 45 Table 44: Proposed Monthly Fixed Water Service Charge (City Portion) After Adjustment 46 Table 45: Proposed Monthly Fixed Water Service Charge (MWDOC) for FY 2026 46 Table 46: MWDOC Variable Supply Unit Cost 47
Table 47: Revenue Neutral Consumption Rates 47
Table 48: Proposed Consumption Rates after Adjustment 48 Table 49: Proposed Revenue Adjustments 48
Table 410: Proposed Monthly Fixed Water Service Charge – City Portion 48 Table 411: Proposed Monthly Fixed Water Service Charge - MWDOC 49 Table 412: Proposed Consumption Rates 49
Table 413: Water Supply Unit Cost in FY 2026 49
Table 414: Proposed Consumption Rates – with Water Supply Unit Cost 49 Table 415: Proposed Single Family Customer Impacts 50
Table 51: FY 2025 Recycled Revenue Requirement 51
Table 52: Revenue Neutral Monthly Fixed Water Service Charge 52 Table 53: Revenue Neutral Monthly Fixed Water Service Charge After Adjustment 52 Table 54: Annual Fixed Service Charge Revenue Calculation 53 Table 55: Revenue Neutral Consumption Rate 53
Table 56: Proposed Consumption Rate after Adjustment 53 Table 57: Proposed Recycled Water Revenue Adjustments 54 Table 58: Proposed Recycled Water Monthly Fixed Water Service Charge 54 Table 59: Proposed Recycled Water Consumption Rate 54
Table 61: Water Usage Reductions 56
Table 62: Variable Revenue Loss by Stage 56
Table 63: Water Supply Cost Differences by Stage 57
Table 64: Demand Management Costs by Stage 57
Table 65: Proposed Revenue Adjustments 58
Table 66: Proposed Demand Management Rates 58
Table 71: Revenues (Detail) 59
Table 72: Expenses (Detail) 60
Table 73: Operating Expenses Allocation (Detailed) 69
Table 74: Capital Expenses (CIP) Allocation (Detailed) 69

LIST OF FIGURES
Figure 21: Potable Revenue Requirements vs. Revenues (Status Quo Financial Plan) 23 Figure 22: Recycled Revenue Requirements vs. Revenues (Status Quo Financial Plan) 23 Figure 23: Potable and Recycled Projected Debt Coverage (Status Quo Financial Plan) 24 Figure 24: Potable and Recycled Projected Fund Balances (Status Quo Financial Plan) 24 Figure 25: Potable Revenue Requirements vs. Revenues (Proposed Financial Plan) 30 Figure 26: Recycled Revenue Requirements vs. Revenues (Proposed Financial Plan) 31 Figure 27: Potable and Recycled Projected Debt Coverage (Proposed Financial Plan) 31 Figure 28: Potable and Recycled Projected Fund Balances (Proposed Financial Plan) 32 Executive Summary
System Overview
The City of San Clemente (City) Utilities Division provides water, recycled water, sewer, storm drain, and solid waste services to a population of approximately 66,250 across 18.45 square miles in Orange County in Southern California. The City’s water system serves roughly 83% of City residents, while some residents are served by other water districts. The boundaries for customers served by the City’s water system are identified on the City’s website. The current water rate structure consists of a monthly fixed water service charge by meter size, and a consumption rate per unit of water for each customer class. The last rate study, completed in 2017, implemented five years of rate adjustments through January 1, 2022.

Rate Study Overview
Public retail water agencies in California typically conduct a cost-of-service study every five years to ensure that customers are appropriately charged for water service and to reestablish the cost-of-service nexus that is required by Proposition 218. The City engaged Water Resources Economics, LLC (WRE) in 2025 to conduct a comprehensive water cost of service and rate study (collectively referred to as this Rate Study) with the following objectives:

Evaluate a five-year financial plan scenario to meet financial targets for Fiscal Year (FY) 2025 to FY 2030.

Conduct a cost-of-service analysis based on the most recent data and customer use characteristics.

Develop a five-year potable and recycled water rate schedule from FY 2026 through FY 2030.

Develop a five-year demand management rate schedule from FY 2026 to FY 2030.

Legal Requirements
Legal considerations relating to retail water rates in California focus heavily on Proposition 218, which was enacted in 1996 and is now reflected in Article XIII C and Article XIII D of the California Constitution. Proposition 218 states that “property related fees and charges” (including retail water rates) may not exceed the proportional cost of providing the service to the customer and may not be used for any purpose other than providing said service. The practical implication is that public retail water agencies in California must demonstrate a sufficient nexus between the costs incurred by the agency to provide water service, and the rates charged to customers. The primary means by which retail water agencies address this requirement is by conducting a “cost-of-service analysis.” Proposition 218 also affects the rate adoption process by requiring agencies to hold a public hearing to adopt rates. The agency must mail public hearing notices to all customers no fewer than 45 days prior to the public hearing. The public hearing notices must clearly show all proposed rate changes, provide information on the public hearing date/time/location, and provide instructions on how customers may protest the proposed rate changes. If a majority of customers submit a protest, the proposed rate changes cannot be adopted.

For comparison, although water connection and capacity fees are not the subject of this Study, they are not subject to the same legal requirements under Proposition 218. Rather, they are subject to the limitations of Proposition 26, which was approved by voters in 2010 and amended provisions of Article XIII A and Article XIII C of the California Constitution. Proposition 26 defines what types of charges are considered a “tax” (which is subject to a two-thirds voter approval) and are not considered as such. Based on the definitions provided by Proposition 26, “a charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government conferring the benefit or granting the privilege” and “a charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product” are not considered “taxes.” As such, water connection and capacity fees are not taxes and do not require two-thirds voter approval; provided that, the calculation of connection and capacity fees must follow cost-of-service principles to prove that the fees charged do not exceed the reasonable costs of connecting new customers to the City’s existing water system. Additionally, connection and capacity fees are subject to procedural requirements under the Mitigation Fee Act (see California Government Code Section 66013).

Rate-Setting Methodology
This study was conducted using industry-standard methodology outlined by the American Water Works Association (AWWA) in its Manual of Water Supply Practices M1: Principles of Water Rates, Fees and Charges, Seventh Edition (M1 Manual). The rate study process includes the following steps:

Financial Plan: Annual revenues and expenses are projected over the rate-setting period to determine the magnitude of rate increases needed to maintain financial sufficiency. Financial policies, such as reserve targets, are also evaluated and updated if necessary.

Cost-of-Service Analysis: Costs are allocated to customers in proportion to use of and burden on the water system. The overall goal is to establish a robust nexus between the costs incurred by an agency and the rates charged to customers, as required by Proposition 218.

Rate Design: The existing rate structure is evaluated, and potential changes are identified. A multi-year proposed rate schedule is then calculated directly from the results of the financial plan and cost-of-service analysis.

Rate Study Documentation: A rate study report is developed to document the proposed rate development process. This provides transparency and enhances legal defensibility in light of Proposition 218 requirements. This document serves as the report for this rate study.

Additional Information and Disclaimers
This report summarizes the data, analyses, processes, and results of the City’s water cost of service and rate study. Some important information to keep in mind when reading the report includes the following:

All study projections are based on the best available data as of June 2025.

All table values are rounded to the nearest digit shown unless stated otherwise. However, all calculations are based on precise values. Attempting to manually recreate the calculations described in this report from the values displayed in tables may therefore produce slightly different results.

All current and proposed rates and charges in this report are shown on a monthly basis.

Current Water Rates
The City’s current water rates include monthly fixed meter charges based on meter sizes and variable charges based on customer class and units of water in hundred cubic feet (ccf). The consumption rates have two components: the water supply charge and the City distribution charge. The water supply charge is the same for all potable water customers.

Table 11 and Table 12 show the current monthly fixed water service charges and consumption rates, respectively.

Table 11: Current Monthly Fixed Water Service Charges (Potable and Recycled) Line
Monthly Fixed Water Service Charge (Potable and Recycled) As of 1/1/2022
1 Up to 1"
$27.41
2 1.5"
$67.72
3 2"
$102.09
4 3"
$211.23
5 4"
$372.08
6 6"
$756.96
Table 12: Current Consumption Rates
Line
Consumption Rates ($/ccf)
As of 1/1/2022
1 Single Family Residential
$5.11
2 Water Supply Charge
$2.94
3 City Distribution Charge
$2.17
4 Multi Family Residential
$4.92
5 Water Supply Charge
$2.94
6 City Distribution Charge
$1.98
7 Commercial
$4.95
8 Water Supply Charge
$2.94
9 City Distribution Charge
$2.01
10 Irrigation
$6.01
11 Water Supply Charge
$2.94
12 City Distribution Charge
$3.07
13 Non-Potable Irrigation
$3.29
Financial Plan
WRE worked closely with City staff and City Council to determine the financial plan scenario that best suits the City’s needs. The results and recommendations of the potable and recycled water rate study are driven by the City’s financial performance, input from City staff, and feedback and direction from City Council.

Factors Affecting Financial Performance
The potable and recycled water funds are both under the water enterprise fund, even though their costs are separated, and their financial performance is evaluated together. The potable and recycled water system’s financial performance is driven by the ability of the current potable and recycled water rates to meet the City’s funding needs. To maintain financial sufficiency, potable and recycled water rates must fully fund operations and maintenance (O&M) costs, capital improvement plan (CIP) expenditures, and any relevant financial policies, which typically include target reserve balances and debt coverage.

The key factors affecting financial performance include:

Debt Coverage Requirements: The City’s existing annual debt service payment is approximately $900k in each year of the study period, and the City is required to meet an annual debt coverage requirement of 110% each year. This means that the City’s net operating revenue (operating revenue less operating expenses) must be at least 110% greater than its annual debt service. Without any revenue adjustments, the City is not expected to meet its debt coverage requirements starting in FY 2026.

Substantial Capital Investment Needs Over the Next Five Years: The cost of planned capital projects over the next five years (FY 2026 through FY 2030) is approximately $21 million, accounting for inflation of project costs over time.

Reserve Policy Targets: The City’s current reserve policy includes targets for operating, capital projects, and debt service reserves. The reserve policy in place allows the City to maintain cash on hand to meet short-term cash flow requirements and to execute CIP projects.

Proposed Revenue Adjustments and Debt Issuances
Overall annual increases in potable and recycled water rate revenues resulting from rate increases are referred to as “revenue adjustments.” WRE worked with City Council and City staff to determine the most appropriate financial plan scenario, which is shown in Table 13.

The proposed financial plan scenario includes five years of revenue adjustments, which are required to meet the debt coverage ratio as well as maintain financial sufficiency and resiliency.

Table 13: Proposed Financial Plan Scenario
Line
Fiscal Year
Effective Date
Revenue Adjustments (Potable and Recycled)
1 FY 2026
2/1/2026

9.5%
2 FY 2027
1/1/2027

3.5%
3 FY 2028
1/1/2028

3.5%
4 FY 2029
1/1/2029

3.5%
5 FY 2030
1/1/2030

3.5%
Cost-of-Service Analysis
A cost-of-service analysis is a technical process used to determine the cost of providing potable and recycled water service to the City’s customers based on each customer’s use of and burden on the water system. Although the financial performance of each service is evaluated together, the cost-of-service analysis is done separately for potable and recycled water service to ensure that customers only pay for costs associated with the specific service they receive. The cost-of-service analysis is the basis of the nexus between the costs incurred by the utility to provide potable and recycled water service, and the potable and recycled water rates charged to customers, which is a requirement of Proposition 218.

Cost-of-Service Methodology
The cost-of-service methodology is based on industry standards set forth by AWWA in its M1 Manual; this rate study utilizes the base-extra capacity method. The overall goal of the cost-of-service analysis is to develop “unit costs,” which provide the basis from which proposed rates are directly calculated from. Note that although the study period spans five years, the cost-of-service analysis is limited to a single representative year referred to as the “test year.” The test year in this study is FY 2025. The key steps in conducting a potable and recycled water cost-of-service analysis are outlined below:

Revenue Requirement Determination: The total rate revenue requirement for the test year is determined based on the results of the proposed financial plan and divided into primary sub-components (operating, capital, etc.).

Cost Functionalization: Operating and capital costs are evaluated and assigned to “functional categories” in the potable and recycled water system (e.g., customer service, water supply, distribution, etc.). This provides a proportional breakdown of system costs by functional category.

Revenue Requirement Allocation to Cost Causation Components: Functionalized costs are allocated to “cost causation components” (e.g., water supply, delivery, conservation, etc.), which is used to attribute customers’ use of the system to the costs incurred by the City.

Unit Cost Development: The rate revenue requirement allocation for each individual cost causation component is divided by the appropriate units of service to establish unit costs for the test year. Unit costs provide the basis from which proposed rates are calculated.

Proposed Potable and Recycled Water Rates
WRE worked closely with the City Council and City staff to determine the most appropriate water rate structure that meets the City’s needs.

Proposed Rate Structure Changes
The main objective was to conduct a comprehensive cost-of-service analysis while maintaining as much of the current rate structures as possible to minimize customer impacts.

The City’s current water rate structure includes a monthly service charge based on meter size and a uniform consumption rate per ccf that varies by customer class. After examining the existing rate methodology, given the City’s water supply profile, WRE recommends the City implement a uniform consumption rate for all customer classes to be more consistent with cost-of-service principles. Additionally, to properly pass through Municipal Water District of Orange County (MWDOC)’s cost, who is the City’s main water supplier, WRE recommends the City implement a separate MWDOC monthly service charge based on meter size and pass through supply costs to the variable rate.

WRE proposes no changes to the recycled water rate structure.

Proposed five-Year Potable and recycled water Rate Schedule The proposed five-year potable and recycled water rate schedules in this section are based on the proposed rate structure and methodology changes, the updated cost-of-service analysis, and the proposed revenue adjustments in the five-year period. The rate schedule shows the proposed potable and recycled water rates to be implemented in February 2026 through January 2030. Note that MWDOC potable water supply costs will be billed to customers as pass-through charges. The proposed rates shown for these years may differ depending on changes to MWDOC rates; based on the pass-through provision of MWDOC water supply costs, any additional MWDOC costs will not require an additional Proposition 218 noticing process to be passed through to the City’s customers.

Table 14, Table 15, and Table 16 show the current and proposed City monthly fixed charges for potable water customers, MWDOC monthly fixed charges for potable water customers, variable charges for potable water customers, including MWDOC supply and City costs, monthly fixed charges for recycled water customers, as well as variable charges for recycled water customers, respectively.

Table 14: Current and Proposed Monthly Fixed Water Service Charge – City Portion (Potable and Recycled)
Line
Monthly Fixed Water Service Charge - City Portion (Potable and Recycled) As of 1/1/2022
Effective 2/1/2026
Effective 1/1/2027
Effective 1/1/2028
Effective 1/1/2029
Effective 1/1/2030
1 Up to 1"
$27.41
$27.76
$28.74
$29.75
$30.80
$31.88
2 1.5"
$67.72
$76.67
$79.36
$82.14
$85.02
$88.00
3 2"
$102.09
$118.60
$122.76
$127.06
$131.51
$136.12
4 3"
$211.23
$251.37
$260.17
$269.28
$278.71
$288.47
5 4"
$372.08
$447.03
$462.68
$478.88
$495.65
$513.00
6 6"
$756.96
$1,124.86
$1,164.24
$1,204.99
$1,247.17
$1,290.83
Table 15: Current and Proposed Monthly Fixed Water Service Charge – MWDOC (Potable) Line
Monthly Fixed Water Service Charge - MWDOC (Potable )
Effective 2/1/2026
Effective 1/1/2027
Effective 1/1/2028
Effective 1/1/2029
Effective 1/1/2030
1 Up to 1"
$5.34
Pass-Through Going Forward
2 1.5"
$17.80
3 2"
$28.48
4 3"
$62.30
5 4"
$112.14
6 6"
$284.80
Table 16: Current and Proposed Consumption Rates (Potable and Recycled) Line
Consumption Rates ($/ccf) (Potable and Recycled)
As of 1/1/2022
Effective 2/1/2026
Effective 1/1/2027
Effective 1/1/2028
Effective 1/1/2029
Effective 1/1/2030
1 Single Family Residential
$5.11
$5.31
$5.50
$5.70
$5.90
$6.11
2 Multi Family Residential
$4.92
$5.31
$5.50
$5.70
$5.90
$6.11
3 Commercial
$4.95
$5.31
$5.50
$5.70
$5.90
$6.11
4 Irrigation
$6.01
$5.31
$5.50
$5.70
$5.90
$6.11
5 Recycled Water
$3.29
$3.52
$3.65
$3.78
$3.92
$4.06
Customer Impacts
WRE evaluated the impacts to the Single Family customer class based on the proposed potable water rates for FY 2026.

Table 17 shows the proposed impacts for a Single Family customer with up to 1” meter (the most common meter size within this class) at various levels of monthly usage. For the average Residential customer that uses 10 ccf of water every month, the monthly impact will be $7.69 or 9.8%, which reflects the impact of the cost-of-service analysis, and the 9.5% revenue adjustment applied to FY 2026 rates.

Table 17: Proposed Single Family Customer Impacts (Year 1) Line
Single Family Customer Impacts
ccf
Current Bill
Proposed Bill
Difference ($)
Difference (%)
1 Low Usage
5 $52.96
$59.65
$6.69

12.6%
2 Average Usage
10 $78.51
$86.20
$7.69

9.8%
3 High Usage
20 $129.61
$139.30
$9.69

7.5%
4 Very High Usage
50 $282.91
$298.60
$15.69

5.5%
Proposed Demand Management Rates
The City’s 2020 Urban Water Management Plan (UWMP) consists of six stages of demand management, which all require different levels of usage reduction by the City’s customers. When customers reduce their usage at each stage, the City’s rate revenues from variable charges are directly impacted.

Demand management rates are a tool for the City to effectively respond to water shortage emergencies while maintaining financial sufficiency and operational reliability. These rates are designed to recover the costs of supply reduction, which include the loss of variable revenues and any difference (savings) in water supply costs. These rates are explained in section 6 of this report.

Table 18 shows the proposed demand management rates in each stage for the five-year period, which are incremental charges in addition to the City variable charges shown in Table 16 for all usage.

Table 18: Proposed Demand Management Rates
Line
Shortage Level
Usage Reduction
Effective 2/1/2026
Effective 1/1/2027
Effective 1/1/2028
Effective 1/1/2029
Effective 1/1/2030
1 Level 1
up to 10%
$0.21
$0.22
$0.23
$0.24
$0.25
2 Level 2
up to 20%
$0.46
$0.48
$0.50
$0.52
$0.54
3 Level 3
up to 30%
$0.78
$0.81
$0.84
$0.87
$0.91
4 Level 4
up to 40%
$1.21
$1.26
$1.31
$1.36
$1.41
5 Level 5
up to 50%
$1.81
$1.88
$1.95
$2.02
$2.10
6 Level 6
>50%
$2.71
$2.81
$2.91
$3.02
$3.13
Financial Plan
Financial Plan Methodology
The purpose of a financial plan is to project revenues, expenses, cash flows, reserve balances, and debt coverage over a multi-year period to assess financial sufficiency and performance and to determine the amount of required rate revenue. For this study, the planning period is from FY 2026 through FY 2030; data for FY 2025 are shown when needed to represent actual or budgeted data inputs. The key steps in developing a financial plan for a potable and recycled water enterprise are below:

Revenue Projections: Annual revenues from rates and other miscellaneous sources are projected over the planning period. Rate revenues are projected based on current rates to establish baseline revenues from which the need for additional rate increases can be evaluated.

Expense Projections: Annual expenses are projected over the study period, including O&M expenses, debt service, and CIP costs. CIP funding options (grants, debt, etc.) are also evaluated as part of the financial plan.

Financial Policy Evaluation: Key financial policies include debt coverage requirements and reserve targets. Debt coverage requirements are typically explicitly stated in official agreements on outstanding debt issuances. Reserve targets are typically set by an agency’s elected officials and may need to be periodically evaluated and updated.

Status Quo Financial Plan Projections: Cash flow, reserve balances, and debt coverage are projected over the study period in the absence of additional rate increases (this scenario is called the “status quo”). Projected reserve balances and debt coverage are then compared to the agency’s financial policy requirements and targets. The status quo financial plan provides a baseline to evaluate the need for rate increases.

Proposed Financial Plan Projections: The magnitude and timing of annual proposed revenue increases over the study period are evaluated and determined based on the agency’s financial policies, financial performance, and policy objectives. Proposed rate increases (referred to as “revenue adjustments”) should generate sufficient revenue to recover the agency’s expenses, maintain adequate reserves, and meet all debt coverage requirements. The proposed financial plan determines the total annual rate revenue requirement over the study period.

Revenues
Current Water Rates
The City’s current water rates include monthly fixed meter charges based on meter sizes and variable charges based on customer class and units of water in hundred cubic feet (ccf). The consumption rates have two components: the water supply charge and the City distribution charge. The water supply charge is the same for all potable water customers.

Table 21 and Table 22 show the current monthly fixed water service charges and consumption rates, respectively.

Table 21: Current Monthly Fixed Water Service Charge (Potable and Recycled) Line
Monthly Fixed Water Service Charge (Potable and Recycled) As of 1/1/2022
1 Up to 1"
$27.41
2 1.5"
$67.72
3 2"
$102.09
4 3"
$211.23
5 4"
$372.08
6 6"
$756.96
Table 22: Current Consumption Rates
Line
Consumption Rates ($/ccf)
As of 1/1/2022
1 Single Family Residential
$5.11
2 Water Supply Charge
$2.94
3 City Distribution Charge
$2.17
4 Multi Family Residential
$4.92
5 Water Supply Charge
$2.94
6 City Distribution Charge
$1.98
7 Commercial
$4.95
8 Water Supply Charge
$2.94
9 City Distribution Charge
$2.01
10 Irrigation
$6.01
11 Water Supply Charge
$2.94
12 City Distribution Charge
$3.07
13 Non-Potable Irrigation
$3.29
Customer Accounts and Usage
This section details the customer accounts and water usage for all years of the study, which are referred to as the units of service. Units of service represent the quantity of billing units that are subject to the City’s potable and recycled water rates and charges.

Table 23 shows the projected number of meters for all customers for the study period. City staff provided actual data for FY 2025. Growth in the City is highly variable and the timeline in which growth occurs can vary significantly from planning documents. WRE worked with City staff to determine the most appropriate estimates for customer accounts. Based on the City’s adopted FY 2026 budget, the City is projecting a 3.5% increase in customer accounts in FY 2026 compared to FY 2025. The number of accounts for FY 2027 through FY 2030 is assumed to be the same as FY 2026. The number of metered connections is the unit of service for the City’s monthly fixed charges.

Table 23: Projected Customer Accounts
Line
Customer Accounts
FY 2025
FY 2026
FY 2027
FY 2028
FY 2029
FY 2030
1 Potable Water
2 Up to 1"
15,081
15,615
15,615
15,615
15,615
15,615
3 1.5"
315
326
326
326
326
326
4 2"
762
789
789
789
789
789
5 3"
21 22
22 22
22 22
6 4"
18 19
19 19
19 19
7 6"
10 10
10 10
10 10
8 Total
16,208
16,782
16,782
16,782
16,782
16,782
9 10
Recycled Water
11 Up to 1"
1 1
1 1
1 1
12 1.5"
2 2
2 2
2 2
13 2"
115
119
119
119
119
119
14 3"
7 8
8 8
8 8
15 4"
1 1
1 1
1 1
16 6"
6 6
6 6
6 6
17 Total
132
136
136
136
136
136
Table 24 shows the water demand growth assumptions for the study period. WRE worked with City staff to determine the most appropriate estimates for annual water usage. Based on the City’s adopted FY 2026 budget, the City is projecting a 2% potable water usage decrease in FY 2026 compared to FY 2025. Consumption for FY 2027 through FY 2030 is assumed to be the same as FY 2026.

Table 24: Projected Demand Growth
Line
Demand Growth
FY 2026
FY 2027
FY 2028
FY 2029
FY 2030
1 Potable
-2%
0%
0%
0%
0%
2 Non-Potable
10%
0%
0%
0%
0%
Table 25 shows the projected potable and recycled water usage for each customer class based on the demand growth assumptions (Table 24). City staff provided actual water usage for FY 2025.

Table 25: Projected Customer Water Usage (ccf)
Line
Water Consumption (ccf)
FY 2025
FY 2026
FY 2027
FY 2028
FY 2029
FY 2030
1 Single Family Residential
1,485,734
1,460,466
1,460,466
1,460,466
1,460,466
1,460,466
2 Multi Family Residential
458,565
450,767
450,767
450,767
450,767
450,767
3 Commercial
277,248
272,532
272,532
272,532
272,532
272,532
4 Irrigation
435,612
428,203
428,203
428,203
428,203
428,203
5 Non-Potable Irrigation
339,774
373,417
373,417
373,417
373,417
373,417
6 Total
2,996,933
2,985,385
2,985,385
2,985,385
2,985,385
2,985,385
Revenues from Current Rates
Table 26 shows the calculated potable and recycled water rate revenues for the study period based on the current rates and the projected units of service. The monthly fixed charge revenue for potable water customers (Line 2) is calculated by multiplying the effective monthly fixed charges (Table 21) by the projected potable water meter connections (Table 23) for twelve billing periods. The monthly fixed charge revenue for recycled water customers (Line 3) is calculated by multiplying the effective monthly fixed charges (Table 21) by the projected recycled water meter connections (Table 23) for twelve billing periods.

The variable charge revenue for each customer class (Lines 5-9) is calculated by multiplying the effective combined variable charges (Table 22) by the projected water usage (Table 25) in each year.

Table 26: Calculated Rate Revenues at Current Rates
Line
Calculated Rate Revenues
FY 2025
FY 2026
FY 2027
FY 2028
FY 2029
FY 2030
1 Fixed Charge Revenue
$6,594,065
$6,827,557
$6,827,557
$6,827,557
$6,827,557
$6,827,557
2 Potable Water
$6,378,290
$6,604,141
$6,604,141
$6,604,141
$6,604,141
$6,604,141
3 Recycled Water
$215,775
$223,416
$223,416
$223,416
$223,416
$223,416
4 Consumption Revenue
$13,838,644
$13,603,287
$13,603,287
$13,603,287
$13,603,287
$13,603,287
5 Single Family Residential
$7,592,099
$7,462,979
$7,462,979
$7,462,979
$7,462,979
$7,462,979
6 Multi Family Residential
$2,256,142
$2,217,771
$2,217,771
$2,217,771
$2,217,771
$2,217,771
7 Commercial
$1,372,376
$1,349,035
$1,349,035
$1,349,035
$1,349,035
$1,349,035
8 Irrigation
$2,618,027
$2,573,501
$2,573,501
$2,573,501
$2,573,501
$2,573,501
9 Non-Potable Irrigation
$1,117,857
$1,228,543
$1,228,543
$1,228,543
$1,228,543
$1,228,543
10 11
Total Rate Revenue
$21,550,566
$21,659,387
$21,659,387
$21,659,387
$21,659,387
$21,659,387
Revenue Summary
Table 27 shows the summary of projected revenues for the study period. City staff provided actual revenues for FY 2025 and budgeted revenues for FY 2026; all other years are projected based on the relevant assumptions or calculations. Total potable and recycled water rate revenues (Lines 1-3) are equal to total calculated rate revenues (Table 26, Line 11). The sum of potable water rate revenues (Lines 2 and 3) and recycled water rate revenues (Line 1) is equal to potable and recycled water rate revenues at current rates (Line 11). Other Revenue (Line 4) is not inflated for future years. Interest Earnings (Line 5) is calculated based on ending fund balances and an assumed 2.5% interest rate. A breakdown of revenues by potable and recycled water funds is available in the Appendix (Table 71).

Table 27: Revenue Summary
Line
Revenues
FY 2025
FY 2026
FY 2027
FY 2028
FY 2029
FY 2030
1 Effluent Water Sales
$1,117,857
$1,228,543
$1,228,543
$1,228,543
$1,228,543
$1,228,543
2 Metered Water Sales
$13,838,644
$13,603,287
$13,603,287
$13,603,287
$13,603,287
$13,603,287
3 Fixed Water Service Charge
$6,594,065
$6,827,557
$6,827,557
$6,827,557
$6,827,557
$6,827,557
4 Other Revenue
$1,863,050
$2,055,340
$2,055,340
$2,055,340
$2,055,340
$2,055,340
5 Interest Earnings
$811,420
$750,000
$523,452
$486,150
$452,052
$430,554
6 Total
$24,225,036
$24,464,727
$24,238,179
$24,200,877
$24,166,779
$24,145,281
Operating Expenses
Inflationary Assumptions
WRE worked with City staff to determine the annual inflationary assumptions to apply to the City’s O&M expense budget. City staff provided actual O&M expenses for FY 2025, budgeted expenses for FY 2026, and additional expenses expected during the study period; all other years are projected based on the inflationary assumptions shown in Table 28.

Table 28: Expense Inflationary Assumptions
Line
Inflationary Assumptions
FY 2027
FY 2028
FY 2029
FY 2030
1 General

3.0%

3.0%

3.0%

3.0%
2 Salaries

7.0%

7.0%

7.0%

7.0%
3 Benefits

10.0%

10.0%

10.0%

10.0%
4 Chemicals

8.0%

8.0%

8.0%

8.0%
5 Utilities

4.0%

4.0%

4.0%

4.0%
6 Capital

4.0%

4.0%

4.0%

4.0%
7 General (High)

5.0%

5.0%

5.0%

5.0%
Potable Water Supply Costs
The City’s main source of potable supply is imported water from Metropolitan Water District of Orange County (MWDOC). The cost of purchasing water from MWDOC represents a significant portion, approximately 54%, of the City’s O&M expenses in FY 2025, and can vary depending on water demand each year and the projected fixed and variable rates of MWDOC water.

The annual imported water cost includes an annual fixed charge and variable charge per ccf of imported water. MWDOC rates are set based on the calendar year (CY) so costs are converted to FY basis for projection purposes.

Table 29 shows the calculated MWDOC water supply costs for the study period accounting for these factors. The City provided the purchased water amount for both untreated and treated water for FY 2025 (Lines 1-8). Since there is no demand growth projected for the study period, WRE assumes the same water purchases for FY 2026 through FY 2030.

City staff provided MWDOC fixed and variable charges for CY 2024 through CY 2026, adjusted for the fiscal year. Future years are assumed to be passed through to customers. Total MWDOC water costs for each year (Line 32) are calculated by multiplying total water purchases (Lines 1-8) by the corresponding variable charges (Lines 17-21), plus the annual fixed charges (Lines 11-14). These charges are determined by MWDOC on an annual basis.

Table 29: Calculated Potable Water Supply Costs
Line
Water Purchase Cost
FY 2025
FY 2026
FY 2027
FY 2028
FY 2029
FY 2030
1 MWDOC Purchase Water
2 Untreated Purchase (AF)
1,101
1,101
1,101
1,101
1,101
1,101
3 Jul - Dec
536
536
536
536
536
536
4 Jan - Jun
565
565
565
565
565
565
5 Treated Purchase (AF)
5,997
5,997
5,997
5,997
5,997
5,997
6 Jul - Dec
3,407
3,407
3,407
3,407
3,407
3,407
7 Jan - Jun
2,590
2,590
2,590
2,590
2,590
2,590
8 Total MWDOC Purchase Water (AF)
7,098
7,098
7,098
7,098
7,098
7,098
9 10
MWDOC Rates
11 Readiness-to-Serve Charge
$767,479
$877,002
$877,002
$877,002
$877,002
$877,002
12 Capacity Charge
$223,453
$233,961
$233,961
$233,961
$233,961
$233,961
13 Retail Meter Charge
$14.75
$15.25
$15.25
$15.25
$15.25
$15.25
14 Choice Services Charge
$39,301
$35,346
$35,346
$35,346
$35,346
$35,346
15 16
Untreated Full Service
17 Jul - Dec
$903
$912
$984
$984
$984
$984
18 Jan - Jun
$912
$984
$984
$984
$984
$984
19 Treated Full Service
20 Jul - Dec
$1,256
$1,395
$1,528
$1,528
$1,528
$1,528
21 Jan - Jun
$1,395
$1,528
$1,528
$1,528
$1,528
$1,528
22 23
MWDOC Calculated Cost
24 Readiness-to-Serve Charge
$767,479
$877,002
$877,002
$877,002
$877,002
$877,002
25 Capacity Charge
$223,453
$233,961
$233,961
$233,961
$233,961
$233,961
26 Retail Meter Charge
$239,068
$255,925
$255,925
$255,925
$255,925
$255,925
27 Choice Services Charge
$39,301
$35,346
$35,346
$35,346
$35,346
$35,346
28 29
Untreated Cost
$999,563
$1,045,094
$1,083,679
$1,083,679
$1,083,679
$1,083,679
30 Treated Cost
$7,892,256
$8,710,298
$9,163,416
$9,163,416
$9,163,416
$9,163,416
31 32
Total MWDOC Cost
$10,161,120
$11,157,627
$11,649,329
$11,649,329
$11,649,329
$11,649,329
33 Fixed Cost
$1,230,001
$1,366,888
$1,366,888
$1,366,888
$1,366,888
$1,366,888
34 Choice Services Charge
$39,301
$35,346
$35,346
$35,346
$35,346
$35,346
35 Variable Cost
$8,891,818
$9,755,393
$10,247,095
$10,247,095
$10,247,095
$10,247,095
Operating Expense Summary
Table 210 shows the summary of O&M expenses for the study period. City staff provided actual expenses for FY 2025 and budgeted expenses for FY 2026; expenses for other years are projections. Purchased water expenses (Line 3) include MWDOC expenses from Table 29 (Line 32) plus additional water purchases from Trabuco Canyon Water District. The City’s Water Reclamation Plant provides treated wastewater to secondary standards as the supply source for Recycled Water. Costs for further treatment of the wastewater from secondary to tertiary level for distribution for irrigation purposes is funded by the Water Fund. All other expenses are inflated based on the assumptions in Table 28. Detailed operating expense projections by potable and recycled water funds are included in the Appendix (Table 72).

Table 210: Operating Expenses Summary
Line
Expenses
FY 2025
FY 2026
FY 2027
FY 2028
FY 2029
FY 2030
1 Water Administration
$1,758,510
$2,281,800
$2,384,188
$2,492,452
$2,607,008
$2,728,306
2 Water Production
$2,313,400
$3,157,138
$3,300,973
$3,453,207
$3,614,443
$3,785,335
3 Purchased Water
$10,895,590
$11,900,240
$12,299,150
$12,331,641
$12,365,757
$12,401,578
4 Transmission/Distribution
$3,506,990
$4,680,630
$4,947,083
$5,231,758
$5,536,067
$5,861,543
5 Water Conservation
$269,470
$502,970
$524,894
$548,043
$572,502
$598,364
6 Water Reclamation
$1,349,520
$1,766,370
$1,868,588
$1,977,794
$2,094,522
$2,219,351
7 Total
$20,093,480
$24,289,148
$25,324,876
$26,034,894
$26,790,299
$27,594,477
Debt Service
Table 211 shows the City’s existing annual debt service for the study period. The City has existing debt service payments on one outstanding loan totaling approximately $900k each year.

Table 211: Existing Debt Service
Line
Debt Service
FY 2025
FY 2026
FY 2027
FY 2028
FY 2029
FY 2030
1 Recycled SRF Loan
$900,602
$900,602
$900,602
$900,602
$900,602
$900,602
Capital Improvement Plan
Capital Improvement Projects
Table 212 and Table 213 show the City’s potable and recycled water planned CIP, respectively; project costs are inflated based on the Capital factor (Table 28, Line 6). The total 6-year CIP cost is $23.4 million for potable water and $449k for recycled water.

Table 212: Potable Water Capital Project Costs
Line
Potable Capital Projects (Inflated)
FY 2025
FY 2026
FY 2027
FY 2028
FY 2029
FY 2030
1 AC Pipe Replacement Northwest 308 Zone
$82,095
$4,705,277
$0
$0
$0
$0
2 Blanco Pump Station Rehabilitation
$0
$520,000
$0
$0
$0
$0
3 Calle Real Pump Station Rehabilitation
$4,372
$3,120,000
$0
$0
$0
$0
4 Calle Vallarta PRS
$0
$364,000
$0
$0
$0
$0
5 Cathodic Protection System Improvements
$31,124
$208,035
$0
$0
$0
$0
6 City-wide Copper Service Replacements
$0
$520,000
$0
$0
$0
$0
7 Costero Risco PRS Rehabilitation
$20,831
$694,887
$0
$0
$0
$0
8 Dead End Water System Improvements
$40,536
$9,843
$0
$0
$0
$0
9 El Levante PRS Rehabilitation
$10,266
$353,324
$0
$0
$0
$0
10 JRWSS Agency Projects
$720,283
$1,179,641
$1,317,565
$1,765,732
$1,182,642
$849,456
11 Major Street Maintenance Program
$0
$0
$0
$0
$0
$0
12 Meter Replacements
$96,303
$66,245
$108,160
$112,486
$134,534
$139,915
13 Pico Booster Pump Station Pump Replacement
$55,997
$0
$0
$0
$0
$0
14 Pico/Presidio DIP Replacement (Albertsons)
$847,086
$580,657
$0
$0
$0
$0
15 Pump Station & Reservoir Pavement Rehab
$87,000
$4,128
$0
$0
$0
$0
16 Reata Pump Station Rehabilitation
$370
$82,663
$0
$0
$0
$0
17 Reservoir 5A Replacement
$29,219
$114,537
$0
$0
$0
$0
18 Reservoir No 4 Exterior Coating
$221,617
$0
$0
$0
$0
$0
19 Sodium Hypochlorite Tank Replacement
$51,578
($37,823)
$0
$0
$0
$0
20 Valve Replacement Program
$96,153
$138,483
$0
$0
$0
$0
21 Water Distribution Insert Valve Program
$0
$31,200
$0
$0
$0
$0
22 Water System Air-Vac Replacement Program
$0
$26,000
$0
$0
$0
$0
23 Water System Rehabilitation
$358,199
$251,473
$378,560
$393,702
$409,450
$425,829
24 Well Water Quality System Improvement
$27,022
$474,680
$0
$0
$0
$0
25 Total
$2,780,051
$13,407,249
$1,804,285
$2,271,921
$1,726,626
$1,415,199
26 27
CIP Execution Rate
100%
100%
100%
100%
100%
100%
28 Executed Capital Projects
$2,780,051
$13,407,249
$1,804,285
$2,271,921
$1,726,626
$1,415,199
Table 213: Recycled Water Capital Project Costs
Line
Recycled Capital Projects (Inflated)
FY 2025
FY 2026
FY 2027
FY 2028
FY 2029
FY 2030
1 Recycled Water Storage Bay Rehab
$0
$208,000
$0
$0
$0
$0
2 Recycled Water Alum Chem System Replace
$15,480
$225,557
$0
$0
$0
$0
3 Total
$15,480
$433,557
$0
$0
$0
$0
4 5
CIP Execution Rate
100%
100%
100%
100%
100%
100%
6 Executed Capital Projects
$15,480
$433,557
$0
$0
$0
$0
Capital Expense Summary
Table 214 and Table 215 show the potable water and recycled water capital funding sources, respectively. Debt funded CIP (Line 2) pertains to all CIP that is funded by any proposed debt issuances. All other project costs will be funded by grants (Line 1) or water rates and reserves (Line 3).

Table 214: Potable Water Capital Funding Summary
Line
Potable Capital Financing Plan
FY 2025
FY 2026
FY 2027
FY 2028
FY 2029
FY 2030
1 Grant Funded
$66,250
$0
$0
$0
$0
$0
2 Debt Funded
$0
$0
$0
$0
$0
$0
3 Rate Funded
$2,713,801
$13,407,249
$1,804,285
$2,271,921
$1,726,626
$1,415,199
4 Total
$2,780,051
$13,407,249
$1,804,285
$2,271,921
$1,726,626
$1,415,199
Table 215: Recycled Water Capital Funding Summary
Line
Recycled Capital Financing Plan
FY 2025
FY 2026
FY 2027
FY 2028
FY 2029
FY 2030
1 Grant Funded
$0
$0
$0
$0
$0
$0
2 Debt Funded
$0
$0
$0
$0
$0
$0
3 Rate Funded
$15,480
$433,557
$0
$0
$0
$0
4 Total
$15,480
$433,557
$0
$0
$0
$0
Financial Policies
Reserve Policy
The City’s reserve policy maintains cash on hand to meet short-term cash imbalances, execute CIP projects, and for emergencies. The City currently has an adopted reserve policy that consists of an emergency reserve, which is recommended to protect funds during periods of economic downturn, other unanticipated expenses, or emergency expenses that could not be reasonable foreseen, with a target equal to 12% of annual operating expenses, a depreciation reserve target equal to three years of CIP, and a debt service reserve equal to one year of debt service. The reserve target for the study period ranges from approximately $9.4 to $21.8 million in the City’s reserve funds.

WRE proposes that the City modifies its reserve policy to the following to be more in line with industry standards:

Operating Reserve: 25% of annual operating expenses to cover unexpected expenses or seasonal fluctuations Capital Projects Reserve: 5-year rolling average of annual CIP to fund unexpected capital expenses that may arise Emergency Reserve: $2 million, which is the cost of replacing a major asset in case of failure during an emergency Debt Service Reserve: one year of debt service per debt agreement Debt Coverage Requirement
The City’s debt coverage requirement is 110% of annual debt service. To meet coverage requirements, net operating revenues (revenues less operating expenses) must be 110% or more of annual debt service.

Status Quo Financial Plan
Status Quo Financial Plan Scenario
Table 216 shows the status quo financial plan scenario, which assumes no revenue adjustments and no proposed debt issuances. This scenario is used to evaluate the ability of the current potable and recycled water rates to meet the City’s financial targets and to determine the need for revenue adjustments.

Table 216: Status Quo Financial Plan Scenario
Line
Fiscal Year
Effective Date
Revenue Adjustments (Potable and Recycled)
1 FY 2026
2/1/2026

0.0%
2 FY 2027
1/1/2027

0.0%
3 FY 2028
1/1/2028

0.0%
4 FY 2029
1/1/2029

0.0%
5 FY 2030
1/1/2030

0.0%
Status Quo Cash Flow Projections
Table 217 and Table 218 show the cash flow projections for the status quo financial plan for potable water and recycled water funds, respectively. Revenues (Lines 1-7) are from Table 27. Operating expenses (Lines 9-15) are from Table 210. Net operating revenue (Line 17) is equal to the difference between total revenues (Line 7) and total expenses (Line 15). Debt service (Lines 19-22) is from Table 211. Rate funded CIP (Line 25) is calculated from total CIP (Table 214, Line 3, and Table 215, Line 3). The status quo scenario assumes no new debt; all CIP is expected to be rate or grant funded. Net cash flow (Line 28) is equal to the net operating revenue (Line 17) less debt service (Line 22) and rate funded CIP (Line 26). Grant proceeds, debt proceeds, grant funded CIP and debt funded CIP are not included in the cash flow projections.

The net operating revenue in this scenario is negative starting at the end of FY 2027 for potable and FY 2026 for recycled water funds, meaning that the City’s current revenues are not sufficient to fund its operating expenses. The net cash flow in the status quo scenario is negative for all years of the planning period, meaning that the City’s current revenues are not sufficient to fund its debt service and annual CIP.

Table 217: Projected Potable Cash Flows (Status Quo Financial Plan) Line
Potable Cash Flow Projections
FY 2025
FY 2026
FY 2027
FY 2028
FY 2029
FY 2030
1 Revenues
2 Rate Revenues at Existing Rates
$20,216,934
$20,207,428
$20,207,428
$20,207,428
$20,207,428
$20,207,428
3 Revenue Adjustments
$0
$0
$0
$0
$0
$0
4 Miscellaneous Revenues
$249,420
$282,000
$282,000
$282,000
$282,000
$282,000
5 All Other Revenues
$1,411,740
$1,597,640
$1,597,640
$1,597,640
$1,597,640
$1,597,640
6 Interest Income
$811,420
$750,000
$470,842
$359,849
$228,734
$85,555
7 Subtotal - Revenues
$22,689,514
$22,837,068
$22,557,910
$22,446,917
$22,315,802
$22,172,624
8 9
Operating Expenses
10 Water Administration
$1,758,510
$2,281,800
$2,384,188
$2,492,452
$2,607,008
$2,728,306
11 Water Production
$2,313,400
$3,157,138
$3,300,973
$3,453,207
$3,614,443
$3,785,335
12 Purchased Water
$10,895,590
$11,900,240
$12,299,150
$12,331,641
$12,365,757
$12,401,578
13 Transmission/Distribution
$3,506,990
$4,680,630
$4,947,083
$5,231,758
$5,536,067
$5,861,543
14 Water Conservation
$269,470
$502,970
$524,894
$548,043
$572,502
$598,364
15 Subtotal - Operating Expenses
$18,743,960
$22,522,778
$23,456,288
$24,057,100
$24,695,777
$25,375,125
16 17
Net Revenue
$3,945,554
$314,290
($898,378)
($1,610,183)
($2,379,975)
($3,202,502)
18 19
Debt Service
20 Existing Debt
$0
$0
$0
$0
$0
$0
21 Proposed Debt
$0
$0
$0
$0
$0
$0
22 Subtotal - Debt Service
$0
$0
$0
$0
$0
$0
23 24
Capital Projects
25 Rate Funded CIP
$2,713,801
$13,407,249
$1,804,285
$2,271,921
$1,726,626
$1,415,199
26 Subtotal - Capital Projects
$2,713,801
$13,407,249
$1,804,285
$2,271,921
$1,726,626
$1,415,199
27 28
Net Cash Flow
$1,231,752
($13,092,959)
($2,702,663)
($3,882,104)
($4,106,601)
($4,617,701)
Table 218: Projected Recycled Cash Flows (Status Quo Financial Plan) Line
Recycled Cash Flow Projections
FY 2025
FY 2026
FY 2027
FY 2028
FY 2029
FY 2030
1 Revenues
2 Rate Revenues at Existing Rates
$1,333,632
$1,451,959
$1,451,959
$1,451,959
$1,451,959
$1,451,959
3 Revenue Adjustments
$0
$0
$0
$0
$0
$0
4 SMWD RW Sale Revenue
$0
$0
$0
$0
$0
$0
5 Other Governmental Revenues
$125,080
$169,000
$169,000
$169,000
$169,000
$169,000
6 Subtotal - Revenues
$1,458,712
$1,620,959
$1,620,959
$1,620,959
$1,620,959
$1,620,959
7 8
Operating Expenses
9 Water Reclamation
$1,349,520
$1,766,370
$1,868,588
$1,977,794
$2,094,522
$2,219,351
10 MF/RO Additional Cost
$0
$0
$0
$0
$0
$0
11 Subtotal - Operating Expenses
$1,349,520
$1,766,370
$1,868,588
$1,977,794
$2,094,522
$2,219,351
12 13
Net Revenue
$109,192
($145,411)
($247,629)
($356,835)
($473,563)
($598,393)
14 15
Debt Service
16 Existing Debt
$900,602
$900,602
$900,602
$900,602
$900,602
$900,602
17 MF/RO Debt
$0
$0
$0
$0
$0
$0
18 Proposed Debt
$0
$0
$0
$0
$0
$0
19 Subtotal - Debt Service
$900,602
$900,602
$900,602
$900,602
$900,602
$900,602
20 21
Capital Projects
22 Rate Funded CIP
$15,480
$433,557
$0
$0
$0
$0
23 Subtotal - Capital Projects
$15,480
$433,557
$0
$0
$0
$0
24 25
Net Cash Flow
($806,890)
($1,479,571)
($1,148,231)
($1,257,437)
($1,374,166)
($1,498,995)
Status Quo Fund Balance Projections
Table 219 shows the fund balance projections for the status quo financial plan. Based on the sources (revenues) and uses (operating expenses, debt service, and capital expenditures) of funds, the City’s fund balances will be negative by the end of FY 2030. At the end of the study period, the City’s fund balances will be approximately -$494,000 in FY 2030, from a starting balance of approximately $34.3 million in FY 2025. This represents a net loss of approximately $34.8 million in six years.

Table 219: Projected Potable and Recycled Fund Balances (Status Quo Financial Plan) Line
Fund Balance Projections
FY 2025
FY 2026
FY 2027
FY 2028
FY 2029
FY 2030
1 Combined Beginning Fund Balance
$34,292,690
$34,717,552
$20,093,944
$16,243,049
$11,103,508
$5,622,741
2 3
Sources of Funds
4 Rate Revenues
$21,550,566
$21,659,387
$21,659,387
$21,659,387
$21,659,387
$21,659,387
5 Revenue Adjustments
$0
$0
$0
$0
$0
$0
6 Non-Rate Revenues
$1,786,240
$2,048,640
$2,048,640
$2,048,640
$2,048,640
$2,048,640
7 Grant Proceeds
$66,250
$0
$0
$0
$0
$0
8 Debt Proceeds
$0
$0
$0
$0
$0
$0
9 Interest Income
$811,420
$698,922
$470,842
$359,849
$228,734
$85,555
10 Subtotal - Sources of Funds
$24,214,476
$24,406,949
$24,178,869
$24,067,876
$23,936,761
$23,793,582
11 12
Uses of Funds
13 Operating Expenses
$20,093,480
$24,289,148
$25,324,876
$26,034,894
$26,790,299
$27,594,477
14 Debt Service
$900,602
$900,602
$900,602
$900,602
$900,602
$900,602
15 Grant Funded CIP
$66,250
$0
$0
$0
$0
$0
16 Debt Funded CIP
$0
$0
$0
$0
$0
$0
17 Rate Funded CIP
$2,729,281
$13,840,806
$1,804,285
$2,271,921
$1,726,626
$1,415,199
18 Subtotal - Uses of Funds
$23,789,614
$39,030,557
$28,029,763
$29,207,417
$29,417,528
$29,910,279
19 20
Ending Balances
$34,717,552
$20,093,944
$16,243,049
$11,103,508
$5,622,741
($493,955)
Status Quo Financial Performance
The City’s financial performance is evaluated based on the reserve targets and debt coverage requirements, as shown in Table 220. Under the status quo financial plan, the City will not meet its debt coverage requirements from FY 2026 to FY 2030 and will not meet its existing reserves target in FY 2026, FY 2029 and FY 2030. The City will not meet the recommended reserves target starting in FY 2028.

Table 220: Forecasted Potable and Recycled Financial Performance (Status Quo Financial Plan) Line
Financial Performance
FY 2025
FY 2026
FY 2027
FY 2028
FY 2029
FY 2030
1 Existing Reserve Targets
2 Emergency Reserve
$2,411,218
$2,914,698
$3,038,985
$3,124,187
$3,214,836
$3,311,337
3 Depreciation Reserve
$18,440,623
$17,917,012
$5,802,832
$5,413,746
$5,413,746
$5,413,746
4 Debt Service Reserve
$900,602
$900,602
$900,602
$900,602
$900,602
$900,602
5 Combined Reserve Target
$21,752,443
$21,732,313
$9,742,420
$9,438,536
$9,529,185
$9,625,686
6 Combined Reserves
$34,717,552
$20,093,944
$16,243,049
$11,103,508
$5,622,741
($493,955)
7 Meets Target?
Yes
No
Yes
Yes
No
No
8 9
Recommended Reserve Targets
10 Operating Reserve Target
$5,023,370
$6,072,287
$6,331,219
$6,508,724
$6,697,575
$6,898,619
11 Capital Projects Reserve Target
$4,487,834
$4,211,768
$4,211,768
$4,211,768
$4,211,768
$4,211,768
12 Emergency Reserve Target
$2,000,000
$2,000,000
$2,000,000
$2,000,000
$2,000,000
$2,000,000
13 Debt Service Reserve
$900,602
$900,602
$900,602
$900,602
$900,602
$900,602
14 Combined Reserve Target
$12,411,806
$13,184,657
$13,443,589
$13,621,094
$13,809,945
$14,010,989
15 Combined Reserves
$34,717,552
$20,093,944
$16,243,049
$11,103,508
$5,622,741
($493,955)
16 Meets Target?
Yes
Yes
Yes
No
No
No
17 18
Debt Coverage Target
19 Required Debt Coverage
110%
110%
110%
110%
110%
110%
20 Calculated Debt Coverage
450%
19%
-127%
-218%
-317%
-422%
21 Meets Target?
Yes
No
No
No
No
No
Figure 21 and Figure 22 show the comparison of revenues and the revenue requirement for the status quo scenario for potable and recycled water funds, respectively. The stacked bars represent the revenue requirements, or costs: light blue for O&M expenses, dark blue for debt service, and green for rate funded CIP. The City will not be adding to its reserves (grey bars) in this scenario. The current revenue, shown as a solid line, is lower than the revenue requirements, meaning that revenues are insufficient to fund necessary costs.

Figure 21: Potable Revenue Requirements vs. Revenues (Status Quo Financial Plan) Figure 22: Recycled Revenue Requirements vs. Revenues (Status Quo Financial Plan) Figure 23 shows the debt coverage projections in the status quo financial plan. The required debt coverage (dashed black line) is equal to 110%. The City is expected to not meet its debt coverage requirements starting in FY 2026, indicated by the alert coverage (red circles). This may cause the City to be in technical default.

Figure 23: Potable and Recycled Projected Debt Coverage (Status Quo Financial Plan) Figure 24 shows the fund balance projections in the status quo financial plan. The City’s ending balance (green bars) will not meet the existing reserve targets (solid line) beginning in FY 2029 and will not meet the recommended reserve targets (dashed line) beginning in FY 2028.

Figure 24: Potable and Recycled Projected Fund Balances (Status Quo Financial Plan) Proposed Financial Plan
Proposed Financial Plan Scenario
The proposed financial plan includes five years of revenue adjustments, shown in Table 221. These adjustments are needed to meet the City’s debt coverage requirements and were developed based on input from City staff and the City Council. The first year increase of 9.5% is due to the coverage ratio requirement. Without this increase, the City may be in technical default since the net revenue is not 110% of the annual debt service.

Table 221: Proposed Water and Recycled Financial Plan Scenario Line
Fiscal Year
Effective Date
Revenue Adjustments (Potable and Recycled)
1 FY 2026
2/1/2026

9.5%
2 FY 2027
1/1/2027

3.5%
3 FY 2028
1/1/2028

3.5%
4 FY 2029
1/1/2029

3.5%
5 FY 2030
1/1/2030

3.5%
Proposed Cash Flow Projections
Table 222 and Table 223 show the cash flow projections for the proposed financial plan for potable water and recycled water funds, respectively. Revenues (Lines 1-7) are from Table 27. Revenue adjustments (Line 3) are from Table 221. Operating expenses (Lines 9-15) are from Table 210. Net operating revenue (Line 17 and Line 13) is equal to the difference between total revenues (Line 7 and Line 6) and total expenses (Line 15 and Line 11). Debt service (Lines 19-22 and Lines 15-19) is from Table 211. Rate funded CIP (Line 25 and Line 23) is calculated from total CIP (Table 214, Line 3, and Table 215, Line 3). The status quo scenario assumes no new debt; all CIP is expected to be rate or grant funded. Net cash flow (Line 28 and Line 25) is equal to the net operating revenue (Line 17 and Line 13) less debt service (Line 22 Line 19) and rate funded CIP (Line 26 and Line 23). Grant proceeds, debt proceeds, grant funded CIP and debt funded CIP are not included in the cash flow projections.

Table 222: Projected Potable Cash Flows (Proposed Financial Plan) Line
Potable Cash Flow Projections
FY 2025
FY 2026
FY 2027
FY 2028
FY 2029
FY 2030
1 Revenues
2 Rate Revenues at Existing Rates
$20,216,934
$20,207,428
$20,207,428
$20,207,428
$20,207,428
$20,207,428
3 Revenue Adjustments
$0
$799,877
$2,306,931
$3,094,933
$3,910,516
$4,754,644
4 Miscellaneous Revenues
$249,420
$282,000
$282,000
$282,000
$282,000
$282,000
5 All Other Revenues
$1,411,740
$1,597,640
$1,597,640
$1,597,640
$1,597,640
$1,597,640
6 Interest Income
$811,420
$750,000
$523,452
$486,150
$452,052
$430,554
7 Subtotal - Revenues
$22,689,514
$23,636,945
$24,917,451
$25,668,151
$26,449,636
$27,272,266
8 9
Operating Expenses
10 Water Administration
$1,758,510
$2,281,800
$2,384,188
$2,492,452
$2,607,008
$2,728,306
11 Water Production
$2,313,400
$3,157,138
$3,300,973
$3,453,207
$3,614,443
$3,785,335
12 Purchased Water
$10,895,590
$11,900,240
$12,299,150
$12,331,641
$12,365,757
$12,401,578
13 Transmission/Distribution
$3,506,990
$4,680,630
$4,947,083
$5,231,758
$5,536,067
$5,861,543
14 Water Conservation
$269,470
$502,970
$524,894
$548,043
$572,502
$598,364
15 Subtotal - Operating Expenses
$18,743,960
$22,522,778
$23,456,288
$24,057,100
$24,695,777
$25,375,125
16 17
Net Revenue
$3,945,554
$1,114,167
$1,461,163
$1,611,050
$1,753,859
$1,897,140
18 19
Debt Service
20 Existing Debt
$0
$0
$0
$0
$0
$0
21 Proposed Debt
$0
$0
$0
$0
$0
$0
22 Subtotal - Debt Service
$0
$0
$0
$0
$0
$0
23 24
Capital Projects
25 Rate Funded CIP
$2,713,801
$13,407,249
$1,804,285
$2,271,921
$1,726,626
$1,415,199
26 Subtotal - Capital Projects
$2,713,801
$13,407,249
$1,804,285
$2,271,921
$1,726,626
$1,415,199
27 28
Net Cash Flow
$1,231,752
($12,293,082)
($343,122)
($660,870)
$27,233
$481,941
Table 223: Projected Recycled Cash Flows (Proposed Financial Plan) Line
Recycled Cash Flow Projections
FY 2025
FY 2026
FY 2027
FY 2028
FY 2029
FY 2030
1 Revenues
2 Rate Revenues at Existing Rates
$1,333,632
$1,451,959
$1,451,959
$1,451,959
$1,451,959
$1,451,959
3 Revenue Adjustments
$0
$57,473
$165,759
$222,379
$280,981
$341,634
4 SMWD RW Sale Revenue
$0
$0
$0
$0
$0
$0
5 Other Governmental Revenues
$125,080
$169,000
$169,000
$169,000
$169,000
$169,000
6 Subtotal - Revenues
$1,458,712
$1,678,432
$1,786,718
$1,843,338
$1,901,940
$1,962,593
7 8
Operating Expenses
9 Water Reclamation
$1,349,520
$1,766,370
$1,868,588
$1,977,794
$2,094,522
$2,219,351
10 MF/RO Additional Cost
$0
$0
$0
$0
$0
$0
11 Subtotal - Operating Expenses
$1,349,520
$1,766,370
$1,868,588
$1,977,794
$2,094,522
$2,219,351
12 13
Net Revenue
$109,192
($87,938)
($81,870)
($134,455)
($192,582)
($256,758)
14 15
Debt Service
16 Existing Debt
$900,602
$900,602
$900,602
$900,602
$900,602
$900,602
17 MF/RO Debt
$0
$0
$0
$0
$0
$0
18 Proposed Debt
$0
$0
$0
$0
$0
$0
19 Subtotal - Debt Service
$900,602
$900,602
$900,602
$900,602
$900,602
$900,602
20 21
Capital Projects
22 Rate Funded CIP
$15,480
$433,557
$0
$0
$0
$0
23 Subtotal - Capital Projects
$15,480
$433,557
$0
$0
$0
$0
24 25
Net Cash Flow
($806,890)
($1,422,097)
($982,472)
($1,035,058)
($1,093,184)
($1,157,361)
Proposed Fund Balance Projections
Table 224 shows the fund balance projections for the proposed financial plan. Based on the sources (revenues, revenue adjustments) and uses (operating expenses, debt service, and capital expenditures) of funds, the City’s fund balances will be approximately $16.2 million at the end of the study.

Table 224: Projected Potable and Recycled Fund Balances (Proposed Financial Plan) Line
Fund Balance Projections
FY 2025
FY 2026
FY 2027
FY 2028
FY 2029
FY 2030
1 Combined Beginning Fund Balance
$34,292,690
$34,717,552
$20,962,012
$19,636,417
$17,940,489
$16,874,537
2 3
Sources of Funds
4 Rate Revenues
$21,550,566
$21,659,387
$21,659,387
$21,659,387
$21,659,387
$21,659,387
5 Revenue Adjustments
$0
$857,351
$2,472,690
$3,317,312
$4,191,497
$5,096,278
6 Non-Rate Revenues
$1,786,240
$2,048,640
$2,048,640
$2,048,640
$2,048,640
$2,048,640
7 Grant Proceeds
$66,250
$0
$0
$0
$0
$0
8 Debt Proceeds
$0
$0
$0
$0
$0
$0
9 Interest Income
$811,420
$709,639
$523,452
$486,150
$452,052
$430,554
10 Subtotal - Sources of Funds
$24,214,476
$25,275,017
$26,704,169
$27,511,489
$28,351,576
$29,234,859
11 12
Uses of Funds
13 Operating Expenses
$20,093,480
$24,289,148
$25,324,876
$26,034,894
$26,790,299
$27,594,477
14 Debt Service
$900,602
$900,602
$900,602
$900,602
$900,602
$900,602
15 Grant Funded CIP
$66,250
$0
$0
$0
$0
$0
16 Debt Funded CIP
$0
$0
$0
$0
$0
$0
17 Rate Funded CIP
$2,729,281
$13,840,806
$1,804,285
$2,271,921
$1,726,626
$1,415,199
18 Subtotal - Uses of Funds
$23,789,614
$39,030,557
$28,029,763
$29,207,417
$29,417,528
$29,910,279
19 20
Ending Balances
$34,717,552
$20,962,012
$19,636,417
$17,940,489
$16,874,537
$16,199,117
Proposed Financial Performance
Table 225 shows the forecasted financial performance for the proposed financial plan. Under this plan, the City will meet its reserve targets and debt coverage requirements in all years of the study.

Table 225: Forecasted Potable and Recycled Financial Performance (Proposed Financial Plan) Line
Financial Performance
FY 2025
FY 2026
FY 2027
FY 2028
FY 2029
FY 2030
1 Existing Reserve Targets
2 Emergency Reserve
$2,411,218
$2,914,698
$3,038,985
$3,124,187
$3,214,836
$3,311,337
3 Depreciation Reserve
$18,440,623
$17,917,012
$5,802,832
$5,413,746
$5,413,746
$5,413,746
4 Debt Service Reserve
$900,602
$900,602
$900,602
$900,602
$900,602
$900,602
5 Combined Reserve Target
$21,752,443
$21,732,313
$9,742,420
$9,438,536
$9,529,185
$9,625,686
6 Combined Reserves
$34,717,552
$20,962,012
$19,636,417
$17,940,489
$16,874,537
$16,199,117
7 Meets Target?
Yes
No
Yes
Yes
Yes
Yes
8 9
Recommended Reserve Targets
10 Operating Reserve Target
$5,023,370
$6,072,287
$6,331,219
$6,508,724
$6,697,575
$6,898,619
11 Capital Projects Reserve Target
$4,487,834
$4,211,768
$4,211,768
$4,211,768
$4,211,768
$4,211,768
12 Emergency Reserve Target
$2,000,000
$2,000,000
$2,000,000
$2,000,000
$2,000,000
$2,000,000
13 Debt Service Reserve
$900,602
$900,602
$900,602
$900,602
$900,602
$900,602
14 Combined Reserve Target
$12,411,806
$13,184,657
$13,443,589
$13,621,094
$13,809,945
$14,010,989
15 Combined Reserves
$34,717,552
$20,962,012
$19,636,417
$17,940,489
$16,874,537
$16,199,117
16 Meets Target?
Yes
Yes
Yes
Yes
Yes
Yes
17 18
Debt Coverage Target
19 Required Debt Coverage
110%
110%
110%
110%
110%
110%
20 Calculated Debt Coverage
450%
114%
153%
164%
173%
182%
21 Meets Target?
Yes
Yes
Yes
Yes
Yes
Yes
Figure 25 shows the comparison of revenues and the revenue requirement for the proposed scenario for the potable water fund. The stacked bars represent the revenue requirements, or costs: light blue for O&M expenses, dark blue for debt service, and green for rate funded CIP. The City will be adding to its reserves (grey bars) starting in FY 2030 in this scenario. The current revenue, shown as a solid line, is lower than the revenue requirements. The proposed revenue, shown as a dotted line, will equal the revenue requirements by FY 2029, meaning that the City’s revenues are able to sufficiently fund its expenses by FY 2029.

Figure 25: Potable Revenue Requirements vs. Revenues (Proposed Financial Plan) Figure 26 shows the comparison of revenues and the revenue requirement for the proposed scenario for the recycled water fund. In this scenario, recycled water revenues are insufficient to fund its expenses in all years of the planning period.

Figure 26: Recycled Revenue Requirements vs. Revenues (Proposed Financial Plan) Figure 27 shows the debt coverage projections in the proposed financial plan. The required debt coverage (dashed black line) is equal to 110%. The City is expected to meet its debt coverage requirements for all years of this scenario.

Figure 27: Potable and Recycled Projected Debt Coverage (Proposed Financial Plan) Figure 28 shows the fund balance projections in the proposed financial plan. The City’s ending balance (green bars) will meet the recommended reserve targets (dashed line) in all years of this scenario and will meet the existing reserve targets (solid line) in all years except FY 2026 of this scenario.

Figure 28: Potable and Recycled Projected Fund Balances (Proposed Financial Plan) Potable Water Cost-of-Service
Cost-of-Service Methodology
A cost-of-service analysis was conducted to allocate the proposed FY 2025 rate revenue requirement to customers in proportion to use of and burden on the City’s potable water system. The overall goal of the cost-of-service analysis is to develop “unit costs,” which provide the basis from which proposed rates are directly calculated from. Note that although the study period spans five years, the cost-of-service analysis is limited to a single representative year referred to as the “test year.” The test year in this study is FY 2025.

The cost-of-service analysis is “revenue neutral,” meaning that the resulting cost-of-service based rates collect the same amount of revenue as the City expects to collect in FY 2025. The revenue neutral unit costs determine revenue neutral rates, which are then adjusted based on the proposed financial plan increases to arrive at the proposed potable water rates for five years. All values presented in this section pertain to FY 2025 and are revenue neutral unless stated otherwise.

The key steps in conducting a water cost-of-service analysis are outlined below:

Revenue Requirement Determination: The total rate revenue requirement for the test year is determined based on the results of the proposed financial plan and divided into primary sub-components (operating, capital, etc.).

Cost Functionalization: Operating and capital costs are evaluated and assigned to “functional categories” in the water system (e.g., customer service, supply, distribution, etc.). This provides a proportional breakdown of system costs by functional category.

Revenue Requirement Allocation to Cost Causation Components: Functionalized costs are allocated to “cost causation components” (e.g., water supply, base delivery, max day, etc.), which is used to attribute customers’ use of the system to the costs incurred by the City.

Unit Cost Development: The rate revenue requirement allocation for each individual cost causation component is divided by the appropriate units of service to establish unit costs for the test year. Unit costs provide the basis from which proposed rates are calculated.

Revenue Requirement
The total rate revenue requirement for the test year, FY 2025, is based on the financial plan projections (Table 222) and is allocated between the Operating, Capital, and Revenue Offset components, as shown in Table 31. The Operating revenue requirement consists of operating expenses (Line 2; from Table 222, Line 15) and interest income (Line 10; from Table 222, Line 6). The Capital revenue requirement includes debt service (Line 3; from Table 222, Line 22), rate funded CIP (Line 4; from Table 222, Line 26), and adjustments for cash from reserves (Line 14; from Table 222, Line 28). The Revenue Offset revenue requirement reduces the overall revenue requirement by the miscellaneous non-rate revenues (Line 8; from Table 222, Line 4), and other non-rate revenues (Line 9; from Table 222, Line 5) . The total revenue requirement (Line 18) is equal to the amount of rate revenue collected in FY 2025 (Table 222, Line 2).

Table 31: FY 2025 Potable Revenue Requirement
Line
FY 2025 Revenue Requirement
Operating
Capital
Rev. Offset
Total
1 Revenue Requirements
2 Operating Expenses
$18,743,960
$18,743,960
3 Debt Service
$0
$0
4 Rate Funded CIP
$2,713,801
$2,713,801
5 Subtotal - Revenue Requirements
$18,743,960
$2,713,801
$0
$21,457,761
6 7
Revenue Offsets
8 Miscellaneous Revenues
($249,420)
($249,420)
9 All Other Revenues
($1,411,740)
($1,411,740)
10 Interest Income
($811,420)
($811,420)
11 Subtotal - Revenue Offsets
($811,420)
$0
($1,661,160)
($2,472,580)
12 13
Adjustments
14 Cash to/(from) Reserves
$1,231,752
$1,231,752
15 Revenue Adjustment Annualization
$0
16 Subtotal - Adjustments
$0
$1,231,752
$0
$1,231,752
17 18
Total - Revenue Requirement
$17,932,540
$3,945,554
($1,661,160)
$20,216,934
Cost Functionalization
Functional Category Definitions
After determining the revenue requirement, the next step in the cost-of-service analysis is to allocate the City’s costs into various functional categories. These categories represent the main functions of the City’s water system and include:

Meter Maintenance: costs of meter maintenance and replacement Customer Service: costs related to customer service and billing Water Supply: costs related to acquiring water from MWDOC Pumping: costs relating to pumping water to higher elevations Storage: costs related to water storage facilities (such as reservoirs and tanks) Transmission and Distribution (T&D): costs related to the transmission and distribution of water through the City’s water system Conservation: costs related to the City’s water conservation program General: costs that are not directly attributable to any other functional category Revenue Offset: miscellaneous revenues that are not generated by specific customer classes or for payment of services provided by the City; these revenues can be used to offset rates at the City’s discretion under Proposition 218 requirements Operating Cost Functionalization
WRE worked closely with City staff to evaluate and allocate the operating expenses for FY 2025 (Table 210) to the most closely associated functional categories within the water system, as shown in Table 32. The detailed allocation of the operating costs to the functional categories is included in the Appendix (Table 73).

Table 32: Operating Costs by System Functions
Line
Cost Function
Operating Expenses
Percent of Total
1 Meter Maintenance
$0

0.0%
2 Customer Service
$1,230,957

6.6%
3 Water Supply
$10,895,590

58.1%
4 Pumping
$1,156,700

6.2%
5 Storage
$1,156,700

6.2%
6 Transmission & Distribution
$3,506,990

18.7%
7 Conservation
$269,470

1.4%
8 General
$527,553

2.8%
9 Revenue Offset
$0

0.0%
10 Total
$18,743,960
100.0%
Capital Asset Functionalization
WRE worked with City staff to evaluate and allocate the City’s current capital expenses to the most closely associated functional categories within the water system, as shown in Table 33. The detailed allocation of the current capital expenses to the functional categories is included in the Appendix (Table 74).

Table 33: Capital Expenses by System Functions
Line
Cost Function
Capital Expenses (CIP)
Percent of Total
1 Meter Maintenance
$657,643

2.8%
2 Customer Service
$0

0.0%
3 Water Supply
$501,702

2.1%
4 Pumping
$6,654,452

28.4%
5 Storage
$470,257

2.0%
6 Transmission & Distribution
$15,070,900

64.4%
7 Treatment
$0

0.0%
8 Conservation
$0

0.0%
9 General
$50,379

0.2%
10 Revenue Offset
$0

0.0%
11 Total
$23,405,332
100.0%
Cost Causation Components
Cost Component Definitions
While the functional categories represent the costs of system functions, cost causation components represent the reasons for why and how those costs are incurred within the system (thus, cost causation). Cost causation components will be referred to as cost components in this report. The next step of the cost-of-service analysis is to allocate the Operating, Capital, and Revenue Offsets in the functional categories between the cost components, most of which directly correspond to a single functional category.

The cost components in this study include the following:

Meter: directly corresponds to the Meter Maintenance functional category Customer: directly corresponds to the Customer Service functional category Water Supply: directly corresponds to the Water Supply functional category Delivery: costs associated with delivering and distributing water to customers Conservation: directly corresponds to the Conservation functional category Revenue Offset: directly corresponds to the Revenue Offset functional category General: directly corresponds to the General functional category System-Wide Maximum Capacity Factors
System-wide maximum capacity factors for the City’s water system, shown in Table 34, are used to allocate costs associated with the Pumping, Storage, and Transmission & Distribution (T&D) functional categories to the Base, Max Day, and Max Hour cost components. Maximum capacity factors represent the ratio of maximum to average water demand over the course of one year for the entire system. This provides a basis to identify costs incurred to provide water service during average demand conditions and to provide additional capacity during maximum demand conditions.

City staff provided the average day, maximum day, and maximum hour demand capacity factors, which are normalized based on average day demand (meaning that the average day demand is always equal to 1.00).

The percentage allocations to the Base, Max Day, and Max Hour cost components based on the average day, maximum day, and maximum demand capacity factors are calculated as follows:
• Average day demand is allocated entirely to Base
• Max day demand is allocated proportionately to Base and Max Day • Max hour demand is allocated proportionately to Base, Max Day, and Max Hour • Average of max day/ hour is the average of max day demand and max hour demand Table 34: System-Wide Capacity
Line
System-Wide Capacity Factor
Capacity Factor
Base
Max Day
Max Hour
Total
1 Average Day Demand

1.00 100%
0%
0%
100%
2 Max Day Demand

1.80 56%
44%
0%
100%
3 Max Hour Demand

2.70 37%
30%
33%
100%
4 Average of Max Day/Hour
46%
37%
17%
100%
Cost Component Allocation Factors
Table 35 shows the factors used to allocate the functionalized costs to the cost components. For the cost components that directly correlate to a functional category (Meter, Customer, Water Supply, Conservation, Revenue Offset, and General), the functionalized costs are allocated entirely to the matching cost component. Pumping and Storage are sized based on maximum day demand and are allocated to Base and Extra Capacity cost components (Table 34, Line 2). T&D is sized based on the average of max day/ hour demand and is allocated to the Base and Extra Capacity cost components where Extra Capacity is equal to the sum of max day and max hour cost components (Table 34, Line 4).

Table 35: System Function Allocation to Cost Components Line
Cost Function
Meter
Customer
Water Supply
Base
Extra Capacity
Conservation
Rev. Offset
General
Total
1 Meter Maintenance
100%
0%
0%
0%
0%
0%
0%
0%
100%
2 Customer Service
0%
100%
0%
0%
0%
0%
0%
0%
100%
3 Water Supply
0%
0%
100%
0%
0%
0%
0%
0%
100%
4 Pumping
0%
0%
0%
56%
44%
0%
0%
0%
100%
5 Storage
0%
0%
0%
56%
44%
0%
0%
0%
100%
6 Transmission & Distribution
0%
0%
0%
46%
54%
0%
0%
0%
100%
7 Conservation
0%
0%
0%
0%
0%
100%
0%
0%
100%
8 General
0%
0%
0%
0%
0%
0%
0%
100%
100%
9 Revenue Offset
0%
0%
0%
0%
0%
0%
100%
0%
100%
Operating Cost Component Allocation
Table 36 shows the operating cost allocation by cost component. The functionalized operating expenses from Table 32 are allocated based on the cost component allocation factors in Table 35. The operating allocation (Line 11) is derived from the total operating expenses by cost component (Line 10) and represents the proportion of the Operating revenue requirement that will be allocated to each cost component.

Table 36: Operating Allocation by Cost Component
Line
Operating Expenses
Meter
Customer
Water Supply
Base
Extra Capacity
Conser-vation
Rev. Offset
General
Total
1 Meter Maintenance
$0
$0
$0
$0
$0
$0
$0
$0
$0
2 Customer Service
$0
$1,230,957
$0
$0
$0
$0
$0
$0
$1,230,957
3 Water Supply
$0
$0
$10,895,590
$0
$0
$0
$0
$0
$10,895,590
4 Pumping
$0
$0
$0
$642,611
$514,089
$0
$0
$0
$1,156,700
5 Storage
$0
$0
$0
$642,611
$514,089
$0
$0
$0
$1,156,700
6 Transmission & Distribution
$0
$0
$0
$1,623,606
$1,883,384
$0
$0
$0
$3,506,990
7 Conservation
$0
$0
$0
$0
$0
$269,470
$0
$0
$269,470
8 General
$0
$0
$0
$0
$0
$0
$0
$527,553
$527,553
9 Revenue Offset
$0
$0
$0
$0
$0
$0
$0
$0
$0
10 Total - Operating
$0
$1,230,957
$10,895,590
$2,908,829
$2,911,561
$269,470
$0
$527,553
$18,743,960
11 Operating Cost Allocation

0.0%

6.6%

58.1%

15.5%

15.5%

1.4%

0.0%

2.8%
100.0%
Capital Cost Component Allocation
Table 37 shows the capital cost allocation by cost component. The functionalized capital expenses from Table 33 are allocated based on the cost component allocation factors in Table 35. The capital allocation (Line 11) is derived from the total capital expenses by cost component (Line 10) and represents the proportion of the Capital revenue requirement that will be allocated to each cost component.

Table 37: Capital Allocation by Cost Component
Line
Capital Expenses (CIP)
Meter
Customer
Water Supply
Base
Extra Capacity
Conser-vation
Rev. Offset
General
Total
1 Meter Maintenance
$657,643
$0
$0
$0
$0
$0
$0
$0
$657,643
2 Customer Service
$0
$0
$0
$0
$0
$0
$0
$0
$0
3 Water Supply
$0
$0
$501,702
$0
$0
$0
$0
$0
$501,702
4 Pumping
$0
$0
$0
$3,696,918
$2,957,534
$0
$0
$0
$6,654,452
5 Storage
$0
$0
$0
$261,254
$209,003
$0
$0
$0
$470,257
6 Transmission & Distribution
$0
$0
$0
$6,977,269
$8,093,632
$0
$0
$0
$15,070,900
7 Conservation
$0
$0
$0
$0
$0
$0
$0
$0
$0
8 General
$0
$0
$0
$0
$0
$0
$0
$50,379
$50,379
9 Revenue Offset
$0
$0
$0
$0
$0
$0
$0
$0
$0
10 Total - Capital
$657,643
$0
$501,702
$10,935,440
$11,260,169
$0
$0
$50,379
$23,405,332
11 Capital Cost Allocation

2.8%

0.0%

2.1%

46.7%

48.1%

0.0%

0.0%

0.2%
100.0%
Equivalent Meter Units
The costs for certain system functions are based on the capacity requirements related to that function. For example, meter-related costs are allocated based on meter capacity, which is defined by the safe maximum operating capacity of each meter size. This section describes and defines capacity requirements and allocations relating to water meters, private fire lines, customer water usage, and fire protection.

Costs related to meter capacity increase based on meter size. Therefore, equivalent meter units are calculated to provide a basis from which to allocate costs in proportion to meter size. Equivalent meter calculations are shown in Table 38.

Equivalent meters are calculated based on meter capacity ratios, which represent the safe operating capacity of a water meter relative to the base meter size. For this study, the base meter size is a 1” meter, which is the most common meter size in the City’s system. Capacity in gallons per minute (gpm) is derived from the AWWA M1 Manual. The meter ratio for a 1 1/2” meter is 3.33, which means that the capacity of a 1 1/2” meter is 3.33 times that of a 1” meter.

The number of meters in each meter size is from Table 23. Equivalent meters are calculated by multiplying the meter counts by the meter ratio in each size. The number of bills are equal to the number of meters multiplied by 12.

Table 38: Equivalent Meter Units
Line
Meter Size
Safe Operating Capacity (gpm)
Meter Ratio
Number of Meters
Equivalent Meters
Number of Bills
1 Up to 1"
30 1.00
15,081
15,081
180,971
2 1.5"
100

3.33 315
1,050
3,779
3 2"
160

5.33 762
4,066
9,149
4 3"
350

11.67 21
247
254
5 4"
630

21.00 18
387
221
6 6"
1,600

53.33 10
540
122
7 Total
16,208
21,371
194,496
Allocation to Cost Components
Preliminary Cost-of-Service Allocation and General Reallocation Table 39 shows the preliminary cost-of-service allocation prior to any adjustments and the adjusted cost-of-service allocations after the General cost reallocation. The Operating costs (Line 1) are equal to the total Operating revenue requirements (Table 31, Line 18) allocated to each cost component based on the Operating allocation (Table 36 , Line 11). The Capital costs (Line 2) are equal to the total Capital revenue requirements (Table 31, Line 18) allocated to each cost component based on the Capital allocation (Table 37, Line 11). The Revenue Offsets (Line 3) are equal to the total Revenue Offset requirements (Table 31, Line 18). Note that the total cost-of-service (Line 4) is equal to the total rate revenue requirement for FY 2025 (Table 31, Line 18).

The next step is to reallocate General costs (Line 5) based on the proportion of costs in each cost component (except General and Revenue Offset, which is restricted to specific revenues only) in the preliminary allocation. The total revenue requirement (Line 6) stays the same after the General cost reallocation.

The final step is to reallocate the Extra Capacity cost component to the Meter cost component to maintain the current fixed revenue recovery. The Extra Capacity cost represents the fixed cost of the system that relates to providing extra capacity for customers. For example, the size of the distribution system is dependent on the total capacity of the customer demands.

Table 39: Cost-of-Service Allocation by Cost Component (General and Delivery) Line
Revenue Requirement
Meter
Customer
Water Supply
Base
Extra Capacity
Conser-vation
Rev. Offset
General
Total
1 Operating Costs
$0
$1,177,669
$10,423,923
$2,782,906
$2,785,521
$257,805
$0
$504,715
$17,932,540
2 Capital Costs
$110,862
$0
$84,574
$1,843,442
$1,898,183
$0
$0
$8,493
$3,945,554
3 Revenue Offsets
($1,661,160)
($1,661,160)
4 Total - COS (Initial)
$110,862
$1,177,669
$10,508,498
$4,626,348
$4,683,704
$257,805
($1,661,160)
$513,208
$20,216,934
5 General Cost Allocation
$2,663
$28,289
$252,426
$111,130
$112,508
$6,193
($513,208)
$0
6 Total - COS (General)
$113,525
$1,205,958
$10,760,923
$4,737,478
$4,796,211
$263,997
($1,661,160)
$0
$20,216,934
7 Reallocation to Meter Charge
$4,796,211
($4,796,211)
$0
8 Total - COS (Final)
$4,909,736
$1,205,958
$10,760,923
$4,737,478
$0
$263,997
($1,661,160)
$0
$20,216,934
Final Cost-of-Service Allocation
Table 310 shows the final cost-of-service allocation based on the adjustments for General and Extra Capacity from the prior report tables. The Meter and Customer components add up to approximately 30% of the total costs. The Delivery cost component is the sum of the Base and Extra Capacity components in Table 39.

Table 310: Cost-of-Service Allocation by Cost Component (Final) Line
Cost Component
Final Allocation
1 Meter
$4,909,736
2 Customer
$1,205,958
3 Water Supply
$10,760,923
4 Delivery
$4,737,478
5 Conservation
$263,997
6 Rev. Offset
($1,661,160)
7 Total
$20,216,934
Unit Cost Calculation
Units of Service Definitions
The appropriate units of service are then established for each cost component based on cost causation, which is shown in Table 311. Cost components to be recovered by the fixed charges are assigned units of service based on the number of equivalent meters (Table 38) and customers (sum of meter counts from Table 38). Cost components to be recovered by the consumption charges are assigned units based on annual usage in ccf.

Table 311: Units of Service Definitions
Line
Cost Component
Units of Service Definition
Units of Service
Units
1 Meter
Equivalent meters x 12 mo.
256,452
equiv. meter
2 Customer
Meter count x 12 mo.
194,496
bills
3 Water Supply
Annual usage in ccf
2,657,159
ccf
4 Delivery
Annual usage in ccf
2,657,159
ccf
5 Conservation
Annual usage in ccf
2,657,159
ccf
6 Rev. Offset
Annual usage in ccf
2,657,159
ccf
Unit Cost by Cost Component
Table 312 shows the calculation of unit costs by each cost component. The final cost-of-service allocation (Table 310) is divided by the units of service (Table 311) for each cost component to derive the unit cost. These unit costs will determine the cost-of-service by customer class.

Table 312: Unit Cost by Cost Component
Line
Cost Component
Final Allocation
Units of Service
Unit Cost
Units
1 Meter
$4,909,736
256,452
$19.14
equiv. meter
2 Customer
$1,205,958
194,496
$6.20
bills
3 Water Supply
$10,760,923
2,657,159
$4.05
ccf
4 Delivery
$4,737,478
2,657,159
$1.78
ccf
5 Conservation
$263,997
2,657,159
$0.10
ccf
6 Rev. Offset
($1,661,160)
2,657,159
($0.63)
ccf
Potable Water Rates
Rate Design Methodology
A five-year proposed water rate schedule was developed based on the results of the proposed financial plan and cost-of-service analysis. The key steps in developing the proposed rate schedule are outlined below:

Rate Structure Evaluation: The existing rate structure is evaluated, and any proposed changes are identified. Proposed rate structure changes are typically intended to address specific policy objectives or to improve legal defensibility.

Test Year Rate Development: Rates are calculated for the proposed rate structure for the cost-of-service test year (FY 2025). Rate calculations directly incorporate the unit costs developed in the cost-of-service analysis. The test year rates are revenue neutral, then are increased based on the proposed financial plan revenue adjustments. Although total rate revenues in the first year of adjustments (FY 2026) are designed to increase by the proposed revenue adjustment percentage (9.5% in FY 2026), the proposed percentage increase to each rate/charge varies due to the updated cost-of-service allocations.

Five-Year Rate Schedule Development: Proposed rates for the full five-year period are calculated by increasing the cost-of-service rates by the proposed annual revenue adjustment percentages from the proposed financial plan.

Proposed Changes to Rate Structure
The main objective of the rate study was to conduct a comprehensive cost-of-service analysis while maintaining as much of the current water rate structure as possible to minimize customer impacts. The City’s current rate structure includes monthly fixed meter charges based on meter sizes and variable charges based on customer class and units of water in ccf. The consumption rates have two components: the water supply charge and the City distribution charge. The water supply charge is the same for all potable water customers.

After examining the existing rate methodology, given the City’s water supply profile, WRE recommends the City implement a uniform consumption rate for all customer classes to be more consistent with cost-of-service principles. Additionally, WRE recommends recovering MWDOC fixed costs in the City’s monthly fixed charges, thus increasing financial and rate stability for the City and allowing for more accurate pass-through of MWD costs.

Proposed Monthly Fixed Charges
MWDOC fixed supply cost
Table 41 shows the calculation of MWDOC fixed charge unit cost. MWDOC fixed costs are billed to the City regardless of imported water purchases. The total MWDOC fixed charge is equal to the MWDOC fixed charge in FY 2025 (Line 1; from Table 29, Line 33). Based on input from City staff and City Council, the City will collect 100% of MWDOC fixed costs (Line 2) on the monthly fixed charges. This will enhance revenue stability for the City and reduce the City’s financial risk related to MWDOC water supply in case of decreased future water consumption. This change will also increase fixed revenue recovery to approximately 36% and ensure for more accurate pass-through of MWDOC costs.

The total MWDOC fixed charge cost (Line 3) is calculated by multiplying the MWDOC fixed cost in FY 2025 (Line 1) by the percentage of MWDOC fixed costs to be recovered by fixed charges (Line 2). The unit cost (Line 5) is calculated by dividing the total cost (Line 3) by the units of service for meters (Line 4; from Table 311, Line 1).

Table 41: MWDOC Fixed Charge Unit Cost
Line
MWDOC Fixed Charge
Value
1 MWDOC Total Fixed Charge
$1,230,001
2 Reallocated to Meter Charges
100%
3 Reallocated MWDOC Fixed Charge
$1,230,001
4 Equivalent meters
256,452
5 Unit cost ($/equiv. meter)
$4.80
Revenue Neutral Rates
Table 42 shows the revenue neutral monthly fixed charge calculations. The Meter and Customer unit costs are from Table 312 (Lines 1-2). Table 43 shows the MWDOC Fixed Charge calculation. The MWDOC unit cost is from Table 41 (Line 5). Meter and MWDOC Fixed Charge unit costs are multiplied by the meter capacity ratio; Customer costs do not vary based on meter size and thus are the same for all meter sizes. The revenue neutral rate represents the cost-of-service analysis for FY 2025 but does not include the proposed revenue adjustments for the first year of rates in FY 2026.

Table 42: Revenue Neutral Monthly Fixed Water Service Charge – City Portion Line
Meter Size
Meter Ratio
Meter Charge
Customer Charge
Revenue Neutral Rate
1 Up to 1"

1.00 $19.14
$6.20
$25.35
2 1.5"

3.33 $63.82
$6.20
$70.02
3 2"

5.33 $102.11
$6.20
$108.31
4 3"

11.67 $223.36
$6.20
$229.56
5 4"

21.00 $402.04
$6.20
$408.24
6 6"

53.33 $1,021.06
$6.20
$1,027.26
Table 43: Revenue Neutral Monthly Fixed Water Service Charge – MWDOC Line
Meter Size
Meter Ratio
MWDOC Fixed Charge
Revenue Neutral Rate
1 Up to 1”

1.00 $4.80
$4.80
2 1.5”

3.33 $15.99
$15.99
3 2”

5.33 $25.58
$25.58
4 3”

11.67 $55.96
$55.96
5 4”

21.00 $100.72
$100.72
6 6”

53.33 $255.80
$255.80
Proposed Rates with Adjustment
Table 44 shows the proposed City monthly fixed charges for FY 2026 based on the revenue neutral rate (Table 42) adjusted by the proposed revenue adjustment of 9.5% in the first year (Table 221) and rounded up to the nearest cent.

Table 44: Proposed Monthly Fixed Water Service Charge (City Portion) After Adjustment Line
Meter Size
Revenue Neutral Rate
Proposed FY 2026 Rate (w/ 9.5% Adj.)
Current Rate
Difference ($)
Difference (%)
1 Up to 1"
$25.35
$27.76
$27.41
$0.35

1.3%
2 1.5"
$70.02
$76.67
$67.72
$8.95

13.2%
3 2"
$108.31
$118.60
$102.09
$16.51

16.2%
4 3"
$229.56
$251.37
$211.23
$40.14

19.0%
5 4"
$408.24
$447.03
$372.08
$74.95

20.1%
6 6"
$1,027.26
$1,124.86
$756.96
$367.90

48.6%
Table 45 shows the proposed MWDOC monthly fixed charges based on the fixed charges from Table 29, Line 33 divided by the equivalent meters from Table 41, Line 4.

Table 45: Proposed Monthly Fixed Water Service Charge (MWDOC) for FY 2026 Line
Meter Size
Revenue Neutral Rate
Proposed FY 2026 Rate
Current Rate
1 Up to 1"
$4.80
$5.34
$0.00
2 1.5"
$15.99
$17.80
$0.00
3 2"
$25.58
$28.48
$0.00
4 3"
$55.96
$62.30
$0.00
5 4"
$100.72
$112.14
$0.00
6 6"
$255.80
$284.80
$0.00
Proposed Variable Charges
The variable charge calculations include the MWDOC Variable Supply, Delivery, Conservation, and Revenue Offset components, which are detailed in this section.

MWDOC Variable Supply Cost
Table 46 shows the calculation of MWDOC variable supply unit cost. The total MWDOC water supply cost (Line 1) is equal to the cost-of-service allocation to the Water Supply cost components (Table 312, Line 3). The portion of cost recovered by fixed charges (Line 2) is from Table 41 (Line 3). The net MWDOC variable cost (Line 3) is calculated by subtracting the MWDOC cost recovered by fixed charges (Line 2) from the total MWDOC water supply cost (Line 1). The unit cost (Line 5) is calculated by dividing the net MWDOC variable cost (Line 3) by units of service for water supply (Line 4; from Table 312, Line 3). The MWDOC variable supply unit cost is charged to all customer classes equally.

Table 46: MWDOC Variable Supply Unit Cost
Line
FY 2025
1 Total Water Supply Cost
$10,760,923
2 Less Reallocated to Fixed Meter Charges
($1,230,001)
3 Net Water Supply Cost
$9,530,923
4 Total Consumption (ccf)
2,657,159
5 Water Supply Unit Cost ($/ccf)
$3.59
Delivery Cost
The Delivery unit cost of $1.78 per ccf is from Table 312 (Line 4) and is charged to all customer classes equally.

Conservation Cost
The Conservation unit cost of $0.10 per ccf is from Table 312 (Line 5) and is charged to all customer classes equally.

Revenue Offset
The Revenue Offset unit cost is a credit of of $0.63 per ccf is from Table 312 (Line 6) and is offsetting rates for all customer classes equally.

Revenue Neutral Rates
Table 47 shows the revenue neutral variable charges for all classes, based on the MWDOC Variable Supply unit cost from Table 46, Delivery, Conservation, and Revenue Offset unit costs. The revenue neutral rate represents the cost-of-service analysis for FY 2025 but does not include the proposed revenue adjustments for the first year of rates in FY 2026.

Table 47: Revenue Neutral Consumption Rates
Line
Customer Class
Annual Use (ccf)
Water Supply
Delivery
Conservation
Revenue Offset
Revenue Neutral Rate
1 Single Family Residential
1,485,734
$3.59
$1.78
$0.10
($0.63)
$4.84
2 Multi Family Residential
458,565
$3.59
$1.78
$0.10
($0.63)
$4.84
3 Commercial
277,248
$3.59
$1.78
$0.10
($0.63)
$4.84
4 Irrigation
435,612
$3.59
$1.78
$0.10
($0.63)
$4.84
Proposed Rates with Adjustment
Table 48 shows the proposed variable charges for FY 2026 based on the revenue neutral rate (Table 47) adjusted by the proposed revenue adjustment of 9.5% in the first year (Table 221) and rounded up to the nearest cent.

Table 48: Proposed Consumption Rates after Adjustment
Line
Customer Class
Revenue Neutral Rate
Proposed FY 2026 Rate (w/ 9.5% Adj.)
Current Rate
Difference ($)
Difference (%)
1 Single Family Residential
$4.84
$5.31
$5.11
$0.20

3.9%
2 Multi Family Residential
$4.84
$5.31
$4.92
$0.39

7.9%
3 Commercial
$4.84
$5.31
$4.95
$0.36

7.3%
4 Irrigation
$4.84
$5.31
$6.01
($0.70)
-11.6%
Proposed Water Rate Schedule
Proposed five-Year Revenue Adjustments
Table 49 shows the revenue adjustments for the five-year period and their effective date based on the proposed financial plan (Table 221).

Table 49: Proposed Revenue Adjustments
Line
Fiscal Year
Effective Date
Revenue Adjustments (Potable and Recycled)
1 FY 2026
2/1/2026

9.5%
2 FY 2027
1/1/2027

3.5%
3 FY 2028
1/1/2028

3.5%
4 FY 2029
1/1/2029

3.5%
5 FY 2030
1/1/2030

3.5%
Proposed five-Year Potable Water Rate Schedule
The proposed five-year potable water rate schedules are based on the proposed rate methodology changes, the updated cost-of-service analysis, and the proposed revenue adjustments (Table 49) in the five-year period. The proposed rates for FY 2027, FY 2028, FY 2029 and FY 2030 were calculated by increasing the FY 2026 rates by the revenue adjustments, rounded up to the nearest cent. Table 410, Table 411, and Table 412 show the proposed monthly fixed charges, including both City and MWDOC components, respectively, and consumption charges. The City will pass-through any MWDOC rate increases starting in 1/1/2027.

Table 410: Proposed Monthly Fixed Water Service Charge – City Portion Line
Monthly Fixed Water Service Charge - City Portion (Potable and Recycled) Effective 2/1/2026
Effective 1/1/2027
Effective 1/1/2028
Effective 1/1/2029
Effective 1/1/2030
1 Up to 1"
$27.76
$28.74
$29.75
$30.80
$31.88
2 1.5"
$76.67
$79.36
$82.14
$85.02
$88.00
3 2"
$118.60
$122.76
$127.06
$131.51
$136.12
4 3"
$251.37
$260.17
$269.28
$278.71
$288.47
5 4"
$447.03
$462.68
$478.88
$495.65
$513.00
6 6"
$1,124.86
$1,164.24
$1,204.99
$1,247.17
$1,290.83
Table 411: Proposed Monthly Fixed Water Service Charge - MWDOC Line
Monthly Fixed Water Service Charge - MWDOC (Potable )
Effective 2/1/2026
Effective 1/1/2027
Effective 1/1/2028
Effective 1/1/2029
Effective 1/1/2030
1 Up to 1"
$5.34
Pass-Through Going Forward
2 1.5"
$17.80
3 2"
$28.48
4 3"
$62.30
5 4"
$112.14
6 6"
$284.80
Table 412: Proposed Consumption Rates
Line
Consumption Rates ($/ ccf)
Effective 2/1/2026
Effective 1/1/2027
Effective 1/1/2028
Effective 1/1/2029
Effective 1/1/2030
1 Single Family Residential
$5.31
$5.50
$5.70
$5.90
$6.11
2 Multi Family Residential
$5.31
$5.50
$5.70
$5.90
$6.11
3 Commercial
$5.31
$5.50
$5.70
$5.90
$6.11
4 Irrigation
$5.31
$5.50
$5.70
$5.90
$6.11
Table 413 shows the formula to calculate future MWDOC cost pass-through, starting in 1/1/2027. This calculation mirrors that of Table 46. Line 1 shows the projected total water supply cost in FY 2026 (from Table 210, Line 3). Line 2 shows the projected fixed meter charges to be collected in FY 2026 (from Table 29, Line 33). Line 3 is the net water supply cost. Line 4 is the projected potable water consumption in FY 2026 (from Table 25, Lines 1-4). The unit cost (Line 5) is calculated by dividing the net MWDOC variable cost (Line 3) by units of service for water supply (Line 4).

Table 413: Water Supply Unit Cost in FY 2026
Line
FY 2026
1 Total Water Supply Cost
$11,900,240
2 Less Reallocated to Fixed Meter Charges
($1,366,888)
3 Net Water Supply Cost
$10,533,352
4 Total Consumption (ccf)
2,611,968
5 Water Supply Unit Cost ($/ccf)
$4.03
Table 414 shows the assumed water supply unit cost for the planning period. Any future increases in MWDOC cost will be pass-through to the customers using the same calculation to derive the $4.03 per ccf unit cost.

Table 414: Proposed Consumption Rates – with Water Supply Unit Cost Line
Consumption Rates ($/ ccf)
Effective 2/1/2026
Effective 1/1/2027
Effective 1/1/2028
Effective 1/1/2029
Effective 1/1/2030
1 All Customer Classes
$5.31
$5.50
$5.70
$5.90
$6.11
2 Water Supply Unit Cost
$4.03
$4.03
$4.03
$4.03
$4.03
3 City Delivery Cost
$1.28
$1.47
$1.67
$1.87
$2.08
Customer Impacts
Single Family Customer Impacts
Table 415 shows the proposed impacts for a Single Family customer with up to 1” meter (the most common meter size within this class) at various levels of monthly usage. For the average Residential customer that uses 10 ccf of water every month, the monthly impact will be $7.69 or 9.8%, which reflects the impact of the cost-of-service analysis, and the 9.5% revenue adjustment applied to FY 2026 rates.

Table 415: Proposed Single Family Customer Impacts
Line
Single Family Customer Impacts
ccf
Current Bill
Proposed Bill
Difference ($)
Difference (%)
1 Low Usage
5 $52.96
$59.65
$6.69

12.6%
2 Average Usage
10 $78.51
$86.20
$7.69

9.8%
3 High Usage
20 $129.61
$139.30
$9.69

7.5%
4 Very High Usage
50 $282.91
$298.60
$15.69

5.5%
Recycled Water Cost-of-Service and Rates
Cost-of-Service Methodology
The cost-of-service methodology used for the recycled water system is the same as for the potable water system. The cost-of-service analysis is “revenue neutral,” meaning that the resulting cost-of-service based rates collect the same amount of revenue as the City expects to collect in FY 2025. The revenue neutral unit costs determine revenue neutral rates, which are then adjusted based on the proposed financial plan increases to arrive at the proposed recycled water rates for five years. All values presented in this section pertain to FY 2025 and are revenue neutral unless stated otherwise.

Revenue Requirement
The total rate revenue requirement for the test year, FY 2025, is based on the financial plan projections (Table 223) and is allocated between the Operating, Capital, and Revenue Offset components, as shown in Table 51. The Operating revenue requirement consists of operating expenses (Line 2; from Table 223, Line 11). The Capital revenue requirement includes debt service (Line 3; from Table 223, Line 19), rate funded CIP(Line 4; from Table 223, Line 23), and adjustments for cash from reserves (Line 14; from Table 223, Line 25). The Revenue Offset revenue requirement reduces the overall revenue requirement by the miscellaneous non-rate revenues (Lines 8-10; from Table 223, Lines 4-5). The total revenue requirement (Line 18) is equal to the amount of rate revenue collected in FY 2025 (Table 223, Line 2).

Table 51: FY 2025 Recycled Revenue Requirement
Line
FY 2025 Revenue Requirement
Operating
Capital
Rev. Offset
Total
1 Revenue Requirements
2 Operating Expenses
$1,349,520
$1,349,520
3 Debt Service
$900,602
$900,602
4 Rate Funded CIP
$15,480
$15,480
5 Subtotal - Revenue Requirements
$1,349,520
$916,082
$0
$2,265,602
6 7
Revenue Offsets
8 Miscellaneous Revenues
($125,080)
($125,080)
9 All Other Revenues
$0
$0
10 Interest Income
$0
$0
11 Subtotal - Revenue Offsets
$0
$0
($125,080)
$0
12 13
Adjustments
14 Cash to/(from) Reserves
($806,890)
($806,890)
15 Revenue Adjustment Annualization
$0
16 Subtotal - Adjustments
$0
($806,890)
$0
($806,890)
17 18
Total - Revenue Requirement
$1,349,520
$109,192
($125,080)
$1,333,632
Proposed Monthly Fixed Service Charge
Currently, the City charges the same monthly fixed charges to both potable and recycled water customers. To avoid disruptions to customers’ rates WRE proposed that the City retains the current rate policy. Thus, recycled water customers will be charged the same monthly fixed charges as potable water customers. However, recycled water customers will not be charged the MWDOC monthly fixed charges because they do not use MWDOC water.

Table 52 shows the revenue neutral monthly fixed water service charge. The revenue neutral rate represents the cost-of-service analysis for FY 2025 but does not include the proposed revenue adjustments for the first year of rates in FY 2026.

Table 52: Revenue Neutral Monthly Fixed Water Service Charge Line
Meter Size
Meter Ratio
Meter Charge
Customer Charge
Revenue Neutral Rate
1 Up to 1"

1.00 $19.14
$6.20
$25.35
2 1.5"

3.33 $63.82
$6.20
$70.02
3 2"

5.33 $102.11
$6.20
$108.31
4 3"

11.67 $223.36
$6.20
$229.56
5 4"

21.00 $402.04
$6.20
$408.24
6 6"

53.33 $1,021.06
$6.20
$1,027.26
Table 53 shows the proposed monthly fixed charges for FY 2026 based on the revenue neutral rate (Table 52) adjusted by the proposed revenue adjustment of 9.5% in the first year (Table 221) and rounded up to the nearest cent.

Table 53: Revenue Neutral Monthly Fixed Water Service Charge After Adjustment Line
Meter Size
Revenue Neutral Rate
Proposed FY 2026 Rate (w/ 9.5% Adj.)
Current Rate
Difference ($)
Difference (%)
1 Up to 1"
$25.35
$27.76
$27.41
$0.35

1.3%
2 1.5"
$70.02
$76.67
$67.72
$8.95

13.2%
3 2"
$108.31
$118.60
$102.09
$16.51

16.2%
4 3"
$229.56
$251.37
$211.23
$40.14

19.0%
5 4"
$408.24
$447.03
$372.08
$74.95

20.1%
6 6"
$1,027.26
$1,124.86
$756.96
$367.90

48.6%
Proposed Consumption Rate
The recycled water consumption rate is calculated by dividing the net revenue requirement, after subtracting the fixed monthly charge revenue from the total revenue requirement by the total recycled water usage.

Table 54 shows the total recycled water fixed revenue calculation. The annual fixed charge revenue is calculated by multiplying the revenue neutral rate (from Table 52) by the number of meters (from Table 23) times 12 months.

Table 54: Annual Fixed Service Charge Revenue Calculation Line
Meter Size
Revenue Neutral Rate
Number of Meters
Annual Fixed Charge Revenue
1 Up to 1"
$25.35
1 $280
2 1.5"
$70.02
2 $1,547
3 2"
$108.31
115
$149,594
4 3"
$229.56
7 $20,292
5 4"
$408.24
1 $4,511
6 6"
$1,027.26
6 $68,105
7 Total
$244,330
Table 55 shows the revenue neutral recycled water consumption rate calculation. First, the fixed charge revenue (Line 3; from Table 54, Line 7) is subtracted from the total revenue requirement (Line 1; from Table 51, Line 18) to arrive at the net revenue requirement (Line 4). The net revenue requirement (Line 4) is divided by the total recycled water usage (Line 5, from Table 25) to arrive at the recycled water consumption rate per ccf. The revenue neutral rate represents the cost-of-service analysis for FY 2025 but does not include the proposed revenue adjustments for the first year of rates in FY 2026.

Table 55: Revenue Neutral Consumption Rate
Line
Revenue Neutral Consumption Rate
FY 2025
1 Total Revenue Requirement
$1,333,632
2 3
Less: Fixed Charge Revenue
($244,330)
4 Net Revenue Requirement
$1,089,303
5 6
Total RW Usage (ccf)
339,774
7 8
RW Consumption Rate ($/ccf)
$3.21
Table 56 shows the proposed variable charges for FY 2026 based on the revenue neutral rate (Table 55) adjusted by the proposed revenue adjustment of 9.5% in the first year (Table 221) and rounded up to the nearest cent.

Table 56: Proposed Consumption Rate after Adjustment
Line
Class
Revenue Neutral Rate
Proposed FY 2026 Rate (w/ 9.5% Adj.)
Current Rate
Difference ($)
Difference (%)
1 Recycled Water
$3.21
$3.52
$3.29
$0.23

7.0%
Proposed Recycled Water Rate Schedule
Proposed five-year revenue adjustments
Table 57 shows the revenue adjustments for the five-year period and their effective date based on the proposed financial plan (Table 221).

Table 57: Proposed Recycled Water Revenue Adjustments
Line
Fiscal Year
Effective Date
Revenue Adjustments (Potable and Recycled)
1 FY 2026
2/1/2026

9.5%
2 FY 2027
1/1/2027

3.5%
3 FY 2028
1/1/2028

3.5%
4 FY 2029
1/1/2029

3.5%
5 FY 2030
1/1/2030

3.5%
Proposed five-year recycled water rate schedule
The proposed five-year recycled water rate schedules are based on the proposed rate methodology changes, the updated cost-of-service analysis, and the proposed revenue adjustments (Table 57) in the five-year period. The proposed rates for FY 2027, FY 2028, FY 2029 and FY 2030 were calculated by increasing the FY 2026 rates by the revenue adjustments, rounded up to the nearest cent. Table 58 and Table 59 show the proposed recycled water monthly fixed charges and consumption rate, respectively.

Table 58: Proposed Recycled Water Monthly Fixed Water Service Charge Line
Monthly Fixed Water Service Charge
Effective 2/1/2026
Effective 1/1/2027
Effective 1/1/2028
Effective 1/1/2029
Effective 1/1/2030
1 Up to 1"
$27.76
$28.74
$29.75
$30.80
$31.88
2 1.5"
$76.67
$79.36
$82.14
$85.02
$88.00
3 2"
$118.60
$122.76
$127.06
$131.51
$136.12
4 3"
$251.37
$260.17
$269.28
$278.71
$288.47
5 4"
$447.03
$462.68
$478.88
$495.65
$513.00
6 6"
$1,124.86
$1,164.24
$1,204.99
$1,247.17
$1,290.83
Table 59: Proposed Recycled Water Consumption Rate
Line
RW Consumption Rate ($/ccf)
Effective 2/1/2026
Effective 1/1/2027
Effective 1/1/2028
Effective 1/1/2029
Effective 1/1/2030
1 All Customers
$3.52
$3.65
$3.78
$3.92
$4.06
Demand Management Rates
Rate Design Methodology
In addition to the base water rates developed in the prior sections of the report, demand management rates were developed to be implemented during water shortage emergencies. The key steps in determining the demand management rates are as follows:

Evaluate Financial Risks: The City faces revenue risks when government-mandated usage cutbacks reduce the City’s variable charge revenues.

Determine Cost Impact: The cost impact is dependent upon the water shortage condition. Constrained water supply results in higher costs to purchase water for the City to meet its customer demand. Demand management emergencies result in lost revenues from variable charges when customers use less water.

Calculate Demand Management Rates: The resulting cost impact is then used to calculate demand management rates, to be implemented during shortage emergencies and which vary based on stages (from the City’s 2020 Urban Water Management Plan (UWMP)).

Risks Related to Water Shortages
Water Shortage Emergencies
The City’s UMWP includes six stages of water shortages, which all require a different level of usage reduction from the City’s customers. When customers reduce their usage in each stage, the City’s rate revenues from variable charges are directly impacted. When water shortage emergencies occur, especially during more severe stages, the amount of lost revenue can significantly impact the City’s ability to meet its operating, capital, and reserve requirements.

Demand management rates are a tool for the City to effectively respond to water shortage emergencies while maintaining financial sufficiency and operational reliability. Demand management rates are designed to recover the costs of water shortages, which include loss of variable revenues and cost differences (savings) from purchased water supply changes.

Proposed Demand management Rates
Usage Reductions by Water Shortage Stage
Table 61 shows the projected water usage reductions in each water shortage stage by customer class (Line 5). The total usage reduction (Line 1) for each stage is based on the City’s UWMP. The total usage reduction in each stage is applied to the total usage for each customer class equally. For example, in Stage 1, Single Family, Multi-Family, Commercial/ Industrial, and Potable Irrigation are expected to reduce their class usage by 10%.

Table 61: Water Usage Reductions
Line
Demand Management Rates
Normal
Level 1
Level 2
Level 3
Level 4
Level 5
Level 6
1 Usage Reduction
0%
up to 10%
up to 20%
up to 30%
up to 40%
up to 50%
>50%
2 3
Total Water Consumption (ccf)
2,611,968
2,611,968
2,611,968
2,611,968
2,611,968
2,611,968
2,611,968
4 Required Reduction
0%
10%
20%
30%
40%
50%
60%
5 Reduction in Water Consumption (ccf)
0 261,197
522,394
783,590
1,044,787
1,305,984
1,567,181
Variable Revenue Loss
Table 62 shows the estimated variable revenue loss by stage based on the proposed variable charges for FY 2026 (from Table 412). The proposed FY 2026 variable charge (Line 2) is multiplied by the estimated reduction in usage in each stage (Table 61, Line 5) to determine the reduction in rate revenue by stage (Line 3).

Table 62: Variable Revenue Loss by Stage
Line
Variable Revenue Loss
Normal
Level 1
Level 2
Level 3
Level 4
Level 5
Level 6
1 Reduction in Water Consumption (ccf)
0 261,197
522,394
783,590
1,044,787
1,305,984
1,567,181
2 Proposed Water Rate FY 2026
$5.31
$5.31
$5.31
$5.31
$5.31
$5.31
$5.31
3 Reduction in Rate Revenue
$0
$1,386,955
$2,773,910
$4,160,865
$5,547,819
$6,934,774
$8,321,729
Water Supply Cost Savings
Table 63 shows the calculation of water supply costs for each stage. The water supply cost differences in this section do not assume an increase to the MWDOC variable cost of water.

The total reduction in consumption in each stage (Line 1) is from Table 61 (Line 5). The MWDOC variable charge (Line 2; from Table 29, Lines 20-21) is the FY 2026 rate. The MWDOC variable cost savings (Line 4) is calculated by multiplying the reduction in consumption (Line 1) by the MWDOC variable charge (Line 3). The City will see cost savings in each stage since MWDOC represents 100% of the City’s water supply.

Note that the water supply cost differences do not assume any change to MWDOC variable costs; demand management rates are designed to recover the costs of each stage, with all other costs being equal.

Table 63: Water Supply Cost Differences by Stage
Line
Water Purchase Cost Savings
Normal
Level 1
Level 2
Level 3
Level 4
Level 5
Level 6
1 Reduction in Water Consumption (ccf)
0 261,197
522,394
783,590
1,044,787
1,305,984
1,567,181
2 MWDOC Variable Rate ($/AF)
$1,528
$1,528
$1,528
$1,528
$1,528
$1,528
$1,528
3 MWDOC Variable Rate ($/ccf)
$3.51
$3.51
$3.51
$3.51
$3.51
$3.51
$3.51
4 Total Savings
$0
($916,227)
($1,832,455)
($2,748,682)
($3,664,910)
($4,581,137)
($5,497,365)
Demand management Costs
Table 64 shows the water shortage costs by stage, which includes the variable revenue loss (Table 62) and supply cost savings (Table 63). The total cost of each water shortage stage (Line 3) represents the costs that the proposed demand management rates are designed to recover. Revised water consumption (Line 5) is from Table 61 (difference between Line 3 and Line 5). The unit cost for each stage (Line 7) is calculated by dividing the total demand management costs (Line 3) by the potable water usage (Line 5) in each stage.

Table 64: Demand Management Costs by Stage
Line
Demand Management Costs
Normal
Level 1
Level 2
Level 3
Level 4
Level 5
Level 6
1 Reduction in Rate Revenue
$0
$1,386,955
$2,773,910
$4,160,865
$5,547,819
$6,934,774
$8,321,729
2 Savings in Water Purchase Cost
$0
($916,227)
($1,832,455)
($2,748,682)
($3,664,910)
($4,581,137)
($5,497,365)
3 Total Costs
$0
$470,727
$941,455
$1,412,182
$1,882,910
$2,353,637
$2,824,365
4 5
Revised Water Consumption (ccf)
2,611,968
2,350,771
2,089,574
1,828,377
1,567,181
1,305,984
1,044,787
6 7
Demand Management Rate ($/ccf)
$0.00
$0.21
$0.46
$0.78
$1.21
$1.81
$2.71
Proposed Demand management Rate Schedule
Proposed Five-Year Revenue Adjustments
Table 65 shows the revenue adjustments for the five-year period and their effective date based on the proposed financial plan (Table 221).

Table 65: Proposed Revenue Adjustments
Line
Fiscal Year
Effective Date
Revenue Adjustments (Potable and Recycled)
1 FY 2026
2/1/2026

9.5%
2 FY 2027
1/1/2027

3.5%
3 FY 2028
1/1/2028

3.5%
4 FY 2029
1/1/2029

3.5%
5 FY 2030
1/1/2030

3.5%
Proposed Five-Year Water Shortage Rate Schedule
Table 66 shows the proposed demand management rates in each stage for the five-year period, which are incremental charges in addition to the variable charges shown in Table 412. The proposed rates for FY 2027, FY 2028, FY 2029 and FY 2030 were calculated by increasing the FY 2026 rates by the revenue adjustments, rounded up to the nearest cent.

Table 66: Proposed Demand Management Rates
Line
Shortage Level
Usage Reduction
Effective 2/1/2026
Effective 1/1/2027
Effective 1/1/2028
Effective 1/1/2029
Effective 1/1/2030
1 Level 1
up to 10%
$0.21
$0.22
$0.23
$0.24
$0.25
2 Level 2
up to 20%
$0.46
$0.48
$0.50
$0.52
$0.54
3 Level 3
up to 30%
$0.78
$0.81
$0.84
$0.87
$0.91
4 Level 4
up to 40%
$1.21
$1.26
$1.31
$1.36
$1.41
5 Level 5
up to 50%
$1.81
$1.88
$1.95
$2.02
$2.10
6 Level 6
>50%
$2.71
$2.81
$2.91
$3.02
$3.13
Appendices
Financial Plan Appendices
Table 71: Revenues (Detail)
Line
Revenues (Detailed)
Number
FY 2025
FY 2026
FY 2027
FY 2028
FY 2029
FY 2030
1 Nonbusiness Licenses & Permits
32300
2 Water Acreage Fees
32375
$10,560
$6,700
$6,700
$6,700
$6,700
$6,700
3 4
State Grants
33400
5 Other State Grant
33490
$66,250
$0
$0
$0
$0
$0
6 7
Other Governmental Revenues
33900
8 M.W.D. Reclaimed Water Credit
33910
$125,080
$169,000
$169,000
$169,000
$169,000
$169,000
9 SMWD - Recycled Water System
33921
$0
$0
$0
$0
$0
$0
10 11
General Govt Service Charges
34100
12 Late Payment Charges
34180
$0
$200,000
$200,000
$200,000
$200,000
$200,000
13 14
Health Service Charges
34400
15 Effluent Water Sales
34430
$1,117,857
$1,228,543
$1,228,543
$1,228,543
$1,228,543
$1,228,543
16 17
Water Service Charges
34800
18 Metered Water Sales
34810
$13,838,644
$13,603,287
$13,603,287
$13,603,287
$13,603,287
$13,603,287
19 Fixed Water Service Charge
34811
$6,594,065
$6,827,557
$6,827,557
$6,827,557
$6,827,557
$6,827,557
20 Hydrant Meter Water Sales
34815
$59,240
$25,000
$25,000
$25,000
$25,000
$25,000
21 Water Application Fee
34818
$40,120
$65,000
$65,000
$65,000
$65,000
$65,000
22 Backflow Testing Admin Fees
34826
$46,910
$46,000
$46,000
$46,000
$46,000
$46,000
23 Hydrant Meter Rentals
34830
$23,890
$26,000
$26,000
$26,000
$26,000
$26,000
24 Turn On/Reconnection Fee
34835
$3,270
$20,000
$20,000
$20,000
$20,000
$20,000
25 Water Posting Fee
34836
$5,400
$69,000
$69,000
$69,000
$69,000
$69,000
26 Meter Installation Fees
34840
$70,590
$30,000
$30,000
$30,000
$30,000
$30,000
27 Exemption Application Fees
34850
$0
$1,000
$1,000
$1,000
$1,000
$1,000
28 29
Interest Earnings
36100
30 Investment Earnings
36110
$811,420
$750,000
$523,452
$486,150
$452,052
$430,554
31 32
Other Revenues
36800
33 Work Orders
36810
$0
$2,000
$2,000
$2,000
$2,000
$2,000
34 Miscellaneous Income
36850
$11,740
$13,000
$13,000
$13,000
$13,000
$13,000
35 Other Agency (JRWSS) Revenue
36858
$1,400,000
$1,382,640
$1,382,640
$1,382,640
$1,382,640
$1,382,640
36 37
Total Revenues
$24,225,036
$24,464,727
$24,238,179
$24,200,877
$24,166,779
$24,145,281
Table 72: Expenses (Detail)
Line
Expenses (Detailed)
Number
FY 2025
FY 2026
FY 2027
FY 2028
FY 2029
FY 2030
1 WATER ADMINISTRATION
2 Personnel
41000
$488,860
$685,210
$739,424
$798,059
$861,485
$930,107
3 Salaries, Regular Full Time
41010
$304,830
$458,780
$490,895
$525,257
$562,025
$601,367
4 Premium Overtime - Regular
41320
$120
$1,000
$1,070
$1,145
$1,225
$1,311
5 Accrued Leave Payoff
41350
$12,560
$12,620
$13,503
$14,449
$15,460
$16,542
6 Assignment Pay
41460
$110
$0
$0
$0
$0
$0
7 Auto Allowance
41530
$1,930
$4,200
$4,494
$4,809
$5,145
$5,505
8 Phone Allowance
41535
$0
$290
$310
$332
$355
$380
9 Bilingual Pay
41715
$210
$0
$0
$0
$0
$0
10 FICA
41951
$17,790
$25,160
$27,676
$30,444
$33,488
$36,837
11 Medicare
41954
$4,630
$6,660
$7,326
$8,059
$8,864
$9,751
12 State Disability Insurance
41957
$3,650
$5,710
$6,281
$6,909
$7,600
$8,360
13 A.D.& D. Insurance
41958
$60
$90
$99
$109
$120
$132
14 Long Term Disability Insurance
41959
$1,150
$1,220
$1,342
$1,476
$1,624
$1,786
15 State Unemployment Insurance
41961
$680
$1,010
$1,111
$1,222
$1,344
$1,479
16 Workers Compensation Ins.
41963
$8,630
$9,190
$10,109
$11,120
$12,232
$13,455
17 Life Insurance
41965
$950
$1,000
$1,100
$1,210
$1,331
$1,464
18 Medical Insurance
41967
$53,310
$62,580
$68,838
$75,722
$83,294
$91,623
19 San Clemente Retirement Prem.
41975
$29,920
$45,330
$49,863
$54,849
$60,334
$66,368
20 Retirement Premium (Legacy)
41976
$22,530
$19,730
$21,703
$23,873
$26,261
$28,887
21 Retirement Prem-Calpers (UAL)
41977
$22,860
$24,140
$26,554
$29,209
$32,130
$35,343
22 Deferred Compensation
41981
$2,940
$6,500
$7,150
$7,865
$8,652
$9,517
23 24
Supplies
42000
$19,280
$21,070
$21,702
$22,353
$23,024
$23,714
25 Office Supplies
42010
$3,230
$4,260
$4,388
$4,519
$4,655
$4,795
26 Postage
42030
$680
$750
$773
$796
$820
$844
27 Data Processing Supplies
42050
$1,230
$2,130
$2,194
$2,260
$2,328
$2,397
28 Medical Supplies
42130
$580
$700
$721
$743
$765
$788
29 Office Furniture/Equipment (Non-Cap)
42380
$890
$1,600
$1,648
$1,697
$1,748
$1,801
30 Clothing And Uniforms
42410
$9,930
$9,500
$9,785
$10,079
$10,381
$10,692
31 Other Operating Supplies
42490
$2,740
$2,130
$2,194
$2,260
$2,328
$2,397
32 33
Contractual Services
43000
$513,330
$672,090
$692,478
$713,487
$735,136
$757,444
34 Printing And Binding
43050
$660
$13,500
$13,905
$14,322
$14,752
$15,194
35 Travel And Training
43060
$4,840
$5,070
$5,222
$5,379
$5,540
$5,706
36 Property Insurance
43120
$106,440
$133,000
$136,990
$141,100
$145,333
$149,693
37 Electricity
43330
$27,110
$22,570
$23,473
$24,412
$25,388
$26,404
38 Water
43340
$3,270
$4,840
$4,985
$5,135
$5,289
$5,447
39 Maintenance Of Buildings
43410
$0
$2,250
$2,318
$2,387
$2,459
$2,532
40 Maintenance Of Improvements
43420
$0
$1,120
$1,154
$1,188
$1,224
$1,261
41 Maint. Of Computer Software
43456
$44,590
$68,020
$70,061
$72,162
$74,327
$76,557
42 Contracted Custodial Services
43480
$18,720
$29,030
$29,901
$30,798
$31,722
$32,674
43 Answering Service
43565
$3,110
$5,370
$5,531
$5,697
$5,868
$6,044
44 Other Legal Services
43640
$0
$17,250
$17,768
$18,301
$18,850
$19,415
45 Other Professional Services
43690
$39,700
$26,100
$26,883
$27,689
$28,520
$29,376
46 Rental Of Uniforms
43750
$4,880
$8,580
$8,837
$9,103
$9,376
$9,657
47 Other Contractual Services
43890
$260,010
$335,390
$345,452
$355,815
$366,490
$377,484
48 49
Other Charges
44000
$88,910
$95,670
$98,590
$101,600
$104,702
$107,899
50 Dues And Subscriptions
44110
$1,340
$7,840
$8,075
$8,317
$8,567
$8,824
51 Licenses And Permits
44260
$83,400
$82,830
$85,315
$87,874
$90,511
$93,226
52 Depreciation
44800
$4,170
$5,000
$5,200
$5,408
$5,624
$5,849
53 54
Interdepartmental Charges
46000
$648,130
$807,760
$831,993
$856,953
$882,661
$909,141
55 Insurance Charges
46030
$434,150
$520,980
$536,609
$552,708
$569,289
$586,368
56 Postage Charges
46050
$3,650
$4,380
$4,511
$4,647
$4,786
$4,930
57 Duplicating Charges
46060
$2,390
$2,870
$2,956
$3,045
$3,136
$3,230
58 Information Technology Charges
46080
$52,080
$62,500
$64,375
$66,306
$68,295
$70,344
59 Communications Charges
46110
$15,290
$18,350
$18,901
$19,468
$20,052
$20,653
60 Fleet Rental Charges
46130
$14,920
$17,900
$18,437
$18,990
$19,560
$20,147
61 Charges From Weed Abatement
46320
$0
$25,000
$25,750
$26,523
$27,318
$28,138
62 General Fund Overhead Charges
46510
$125,650
$155,780
$160,453
$165,267
$170,225
$175,332
63 64

WATER PRODUCTION
65 Personnel
41000
$809,870
$932,820
$1,007,458
$1,088,255
$1,175,734
$1,270,468
66 Salaries, Regular Full Time
41010
$394,680
$518,760
$555,073
$593,928
$635,503
$679,989
67 Regular Overtime
41310
$0
$250
$268
$286
$306
$328
68 Premium Overtime - Regular
41320
$100,900
$70,000
$74,900
$80,143
$85,753
$91,756
69 Accrued Leave Payoff
41350
$8,200
$10,700
$11,449
$12,250
$13,108
$14,026
70 Assignment Pay
41460
$23,430
$21,760
$23,283
$24,913
$26,657
$28,523
71 FICA
41951
$32,120
$31,710
$34,881
$38,369
$42,206
$46,427
72 Medicare
41954
$7,520
$7,380
$8,118
$8,930
$9,823
$10,805
73 State Disability Insurance
41957
$5,950
$5,710
$6,281
$6,909
$7,600
$8,360
74 A.D.& D. Insurance
41958
$70
$90
$99
$109
$120
$132
75 Long Term Disability Insurance
41959
$1,410
$1,760
$1,936
$2,130
$2,343
$2,577
76 State Unemployment Insurance
41961
$1,140
$1,140
$1,254
$1,379
$1,517
$1,669
77 Workers Compensation Ins.
41963
$23,160
$23,310
$25,641
$28,205
$31,026
$34,128
78 Life Insurance
41965
$880
$1,070
$1,177
$1,295
$1,424
$1,567
79 Medical Insurance
41967
$85,680
$106,750
$117,425
$129,168
$142,084
$156,293
80 San Clemente Retirement Prem.
41975
$38,730
$51,250
$56,375
$62,013
$68,214
$75,035
81 Retirement Premium (Legacy)
41976
$53,450
$46,810
$51,491
$56,640
$62,304
$68,535
82 Retirement Prem-Calpers (UAL)
41977
$32,550
$34,370
$37,807
$41,588
$45,746
$50,321
83 84
Supplies
42000
$11,021,340
$12,082,930
$12,488,960
$12,528,916
$12,570,862
$12,614,902
85 Chemical Supplies
42150
$14,680
$32,790
$35,413
$38,246
$41,306
$44,610
86 Laboratory Supplies
42170
$23,400
$27,720
$28,552
$29,408
$30,290
$31,199
87 Protective Supplies
42280
$8,010
$8,960
$9,229
$9,506
$9,791
$10,085
88 Educational Material
42360
$850
$1,340
$1,380
$1,422
$1,464
$1,508
89 Small Tools And Equipment
42390
$12,640
$10,660
$10,980
$11,309
$11,648
$11,998
90 Other Operating Supplies
42490
$55,670
$51,220
$52,757
$54,339
$55,969
$57,649
91 Other Maintenance Supplies
42590
$10,500
$50,000
$51,500
$53,045
$54,636
$56,275
92 Purchased Water
42610
$10,895,590
$11,900,240
$12,299,150
$12,331,641
$12,365,757
$12,401,578
93 94
Contractual Services
43000
$1,112,250
$1,712,618
$1,764,825
$1,818,630
$1,874,085
$1,931,239
95 Travel And Training
43060
$2,790
$5,020
$5,171
$5,326
$5,485
$5,650
96 Electricity
43330
$17,260
$82,800
$86,112
$89,556
$93,139
$96,864
97 Refuse Collection Service
43350
$0
$5,150
$5,305
$5,464
$5,628
$5,796
98 Maintenance Of Auto Equipment
43440
$110
$5,150
$5,305
$5,464
$5,628
$5,796
99 Maintenance Of Operating Equip
43450
$34,250
$36,980
$38,089
$39,232
$40,409
$41,621
100
Maint. Of Other Facilities
43470
$1,018,670
$1,468,498
$1,512,553
$1,557,930
$1,604,667
$1,652,807
101
Other Professional Services
43690
$2,360
$8,760
$9,023
$9,293
$9,572
$9,859
102
Rental Of Equipment
43730
$0
$7,000
$7,210
$7,426
$7,649
$7,879
103
Other Contractual Services
43890
$36,810
$93,260
$96,058
$98,940
$101,908
$104,965
104
105
Other Charges
44000
$5,810
$17,350
$17,871
$18,407
$18,959
$19,528
106
Dues And Subscriptions
44110
$360
$2,350
$2,421
$2,493
$2,568
$2,645
107
Licenses And Permits
44260
$5,450
$15,000
$15,450
$15,914
$16,391
$16,883
108
109
Interdepartmental Charges
46000
$259,720
$311,660
$321,010
$330,640
$340,559
$350,776
110
Information Technology Charges
46080
$60,100
$72,120
$74,284
$76,512
$78,807
$81,172
111
Fleet Rental Charges
46130
$48,260
$57,910
$59,647
$61,437
$63,280
$65,178
112
General Fund Overhead Charges
46510
$151,360
$181,630
$187,079
$192,691
$198,472
$204,426
113
114

TRANSMISSION/DISTRIBUTION
115
Personnel
41000
$1,858,750
$2,267,480
$2,448,076
$2,643,502
$2,855,013
$3,083,976
116
Salaries, Regular Full Time
41010
$961,980
$1,286,220
$1,376,255
$1,472,593
$1,575,675
$1,685,972
117
Premium Overtime - Regular
41320
$196,530
$180,000
$192,600
$206,082
$220,508
$235,943
118
Accrued Leave Payoff
41350
$8,230
$14,250
$15,248
$16,315
$17,457
$18,679
119
Assignment Pay
41460
$0
$0
$0
$0
$0
$0
120
FICA
41951
$51,870
$57,920
$61,974
$66,313
$70,954
$75,921
121
Medicare
41954
$74,670
$79,260
$87,186
$95,905
$105,495
$116,045
122
State Disability Insurance
41957
$17,470
$18,450
$20,295
$22,325
$24,557
$27,013
123
A.D.& D. Insurance
41958
$13,910
$14,150
$15,565
$17,122
$18,834
$20,717
124
Long Term Disability Insurance
41959
$180
$230
$253
$278
$306
$337
125
State Unemployment Insurance
41961
$3,060
$3,980
$4,378
$4,816
$5,297
$5,827
126
Workers Compensation Ins.
41963
$2,660
$2,830
$3,113
$3,424
$3,767
$4,143
127
Life Insurance
41965
$56,060
$61,720
$67,892
$74,681
$82,149
$90,364
128
Medical Insurance
41967
$2,390
$2,930
$3,223
$3,545
$3,900
$4,290
129
San Clemente Retirement Prem.
41975
$161,780
$215,540
$237,094
$260,803
$286,884
$315,572
130
Retirement Premium (Legacy)
41976
$94,350
$127,080
$139,788
$153,767
$169,143
$186,058
131
Retirement Prem-Calpers (UAL)
41977
$125,700
$110,080
$121,088
$133,197
$146,516
$161,168
132
133
Supplies
42000
$392,510
$503,610
$525,671
$548,950
$573,528
$599,491
134
Chemical Supplies
42150
$40,190
$139,050
$150,174
$162,188
$175,163
$189,176
135
Protective Supplies
42280
$8,360
$11,730
$12,082
$12,444
$12,818
$13,202
136
Educational Material
42360
$850
$1,130
$1,164
$1,199
$1,235
$1,272
137
Small Tools And Equipment
42390
$19,570
$17,060
$17,572
$18,099
$18,642
$19,201
138
Other Operating Supplies
42490
$158,050
$169,950
$175,049
$180,300
$185,709
$191,280
139
Water Meter Purchase
42495
$0
$2,140
$2,204
$2,270
$2,338
$2,409
140
Painting Supplies
42530
$900
$5,550
$5,717
$5,888
$6,065
$6,247
141
Other Maintenance Supplies
42590
$164,590
$157,000
$161,710
$166,561
$171,558
$176,705
142
143
Contractual Services
43000
$725,060
$1,262,450
$1,306,834
$1,352,809
$1,400,434
$1,449,770
144
Travel And Training
43060
$6,730
$10,300
$10,609
$10,927
$11,255
$11,593
145
Electricity
43330
$523,260
$651,000
$677,040
$704,122
$732,286
$761,578
146
Refuse Collection Service
43350
$0
$72,100
$74,263
$76,491
$78,786
$81,149
147
Landfill Fees
43370
$0
$1,500
$1,545
$1,591
$1,639
$1,688
148
Maintenance Of Landscaping
43425
$28,700
$27,980
$28,819
$29,684
$30,575
$31,492
149
Maintenance Of Auto Equipment
43440
$4,480
$5,870
$6,046
$6,227
$6,414
$6,607
150
Maintenance Of Operating Equip
43450
$4,530
$85,800
$88,374
$91,025
$93,756
$96,569
151
Maint. Of Other Facilities
43470
$590
$8,530
$8,786
$9,049
$9,321
$9,601
152
Other Professional Services
43690
$25,450
$80,270
$82,678
$85,158
$87,713
$90,345
153
Rental Of Equipment
43730
$11,960
$15,000
$15,450
$15,914
$16,391
$16,883
154
Other Contractual Services
43890
$119,360
$304,100
$313,223
$322,620
$332,298
$342,267
155
156
Other Charges
44000
$1,880
$12,550
$12,927
$13,314
$13,714
$14,125
157
Dues And Subscriptions
44110
$710
$3,740
$3,852
$3,968
$4,087
$4,209
158
Property Taxes
44210
$40
$60
$62
$64
$66
$68
159
Licenses And Permits
44260
$1,130
$8,750
$9,013
$9,283
$9,561
$9,848
160
161
Interdepartmental Charges
46000
$528,790
$634,540
$653,576
$673,183
$693,379
$714,180
162
Information Technology Charges
46080
$92,150
$110,580
$113,897
$117,314
$120,834
$124,459
163
Communications Charges
46110
$1,940
$2,330
$2,400
$2,472
$2,546
$2,622
164
Fleet Rental Charges
46130
$184,730
$221,670
$228,320
$235,170
$242,225
$249,492
165
General Fund Overhead Charges
46510
$249,970
$299,960
$308,959
$318,228
$327,774
$337,608
166
167

WATER CONSERVATION
168
Personnel
41000
$118,310
$139,220
$150,232
$162,141
$175,023
$188,960
169
Salaries, Regular Full Time
41010
$76,280
$93,910
$100,484
$107,518
$115,044
$123,097
170
Premium Overtime - Regular
41320
$3,270
$3,050
$3,264
$3,492
$3,736
$3,998
171
Accrued Leave Payoff
41350
$0
$50
$54
$57
$61
$66
172
FICA
41951
$4,890
$5,810
$6,391
$7,030
$7,733
$8,506
173
Medicare
41954
$1,140
$1,350
$1,485
$1,634
$1,797
$1,977
174
State Disability Insurance
41957
$910
$1,030
$1,133
$1,246
$1,371
$1,508
175
A.D.& D. Insurance
41958
$10
$20
$22
$24
$27
$29
176
Long Term Disability Insurance
41959
$210
$0
$0
$0
$0
$0
177
State Unemployment Insurance
41961
$180
$210
$231
$254
$280
$307
178
Workers Compensation Ins.
41963
$1,180
$1,410
$1,551
$1,706
$1,877
$2,064
179
Life Insurance
41965
$160
$170
$187
$206
$226
$249
180
Medical Insurance
41967
$7,990
$9,040
$9,944
$10,938
$12,032
$13,235
181
San Clemente Retirement Prem.
41975
$7,490
$9,280
$10,208
$11,229
$12,352
$13,587
182
Retirement Premium (Legacy)
41976
$8,420
$7,370
$8,107
$8,918
$9,809
$10,790
183
Retirement Prem-Calpers (UAL)
41977
$6,180
$6,520
$7,172
$7,889
$8,678
$9,546
184
185
Supplies
42000
$6,560
$5,450
$5,614
$5,782
$5,955
$6,134
186
Office Supplies
42010
$290
$540
$556
$573
$590
$608
187
Clothing And Uniforms
42410
$0
$0
$0
$0
$0
$0
188
Other Operating Supplies
42490
$6,270
$4,910
$5,057
$5,209
$5,365
$5,526
189
190
Contractual Services
43000
$71,260
$228,740
$235,602
$242,670
$249,950
$257,449
191
Printing And Binding
43050
$1,660
$4,270
$4,398
$4,530
$4,666
$4,806
192
Travel And Training
43060
$3,120
$3,580
$3,687
$3,798
$3,912
$4,029
193
Other Professional Services
43690
$10,120
$50,250
$51,758
$53,310
$54,910
$56,557
194
Other Contractual Services
43890
$56,360
$170,640
$175,759
$181,032
$186,463
$192,057
195
196
Other Charges
44000
$18,350
$63,570
$65,477
$67,441
$69,465
$71,549
197
Dues And Subscriptions
44110
$2,980
$2,960
$3,049
$3,140
$3,234
$3,332
198
Water Use Efficiency Rebate Program
44785
$10,370
$55,610
$57,278
$58,997
$60,767
$62,590
199
Environmental Sustainability Grant
44786
$5,000
$5,000
$5,150
$5,305
$5,464
$5,628
200
201
Interdepartmental Charges
46000
$54,990
$65,990
$67,970
$70,009
$72,109
$74,272
202
Information Technology Charges
46080
$12,020
$14,420
$14,853
$15,298
$15,757
$16,230
203
Communications Charges
46110
$0
$0
$0
$0
$0
$0
204
Fleet Rental Charges
46130
$16,130
$19,360
$19,941
$20,539
$21,155
$21,790
205
General Fund Overhead Charges
46510
$26,840
$32,210
$33,176
$34,172
$35,197
$36,253
206
207

WATER RECLAMATION
208
Personnel
41000
$533,940
$664,160
$716,829
$773,803
$835,445
$902,150
209
Salaries, Regular Full Time
41010
$303,660
$403,540
$431,788
$462,013
$494,354
$528,959
210
Regular Overtime
41310
$0
$1,200
$1,284
$1,374
$1,470
$1,573
211
Premium Overtime - Regular
41320
$42,860
$35,000
$37,450
$40,072
$42,877
$45,878
212
Accrued Leave Payoff
41350
$4,190
$3,430
$3,670
$3,927
$4,202
$4,496
213
Education Incentive Pay
41410
$40
$50
$54
$57
$61
$66
214
Assignment Pay
41460
$12,740
$15,000
$16,050
$17,174
$18,376
$19,662
215
Phone Allowance
41535
$50
$50
$55
$61
$67
$73
216
Educational Reimbursement
41710
$0
$8,660
$9,526
$10,479
$11,526
$12,679
217
FICA
41951
$22,060
$24,810
$27,291
$30,020
$33,022
$36,324
218
Medicare
41954
$5,170
$5,770
$6,347
$6,982
$7,680
$8,448
219
State Disability Insurance
41957
$4,130
$4,440
$4,884
$5,372
$5,910
$6,501
220
A.D.& D. Insurance
41958
$50
$70
$77
$85
$93
$102
221
Long Term Disability Insurance
41959
$1,040
$1,310
$1,441
$1,585
$1,744
$1,918
222
State Unemployment Insurance
41961
$790
$890
$979
$1,077
$1,185
$1,303
223
Workers Compensation Ins.
41963
$16,190
$17,900
$19,690
$21,659
$23,825
$26,207
224
Life Insurance
41965
$750
$830
$913
$1,004
$1,105
$1,215
225
Medical Insurance
41967
$52,680
$65,180
$71,698
$78,868
$86,755
$95,430
226
San Clemente Retirement Prem.
41975
$29,850
$39,870
$43,857
$48,243
$53,067
$58,374
227
Retirement Premium (Legacy)
41976
$20,180
$17,670
$19,437
$21,381
$23,519
$25,871
228
Retirement Prem-Calpers (UAL)
41977
$17,510
$18,490
$20,339
$22,373
$24,610
$27,071
229
230
Supplies
42000
$290,130
$363,030
$387,362
$413,500
$441,583
$471,763
231
Office Supplies
42010
$140
$320
$330
$339
$350
$360
232
Chemical Supplies
42150
$221,750
$268,830
$290,336
$313,563
$338,648
$365,740
233
Laboratory Supplies
42170
$7,320
$12,740
$13,122
$13,516
$13,921
$14,339
234
Protective Supplies
42280
$0
$2,400
$2,472
$2,546
$2,623
$2,701
235
Small Tools And Equipment
42390
$1,100
$8,840
$9,105
$9,378
$9,660
$9,949
236
Other Operating Supplies
42490
$22,480
$37,900
$39,037
$40,208
$41,414
$42,657
237
Other Maintenance Supplies
42590
$37,340
$32,000
$32,960
$33,949
$34,967
$36,016
238
239
Contractual Services
43000
$413,840
$601,320
$622,400
$644,234
$666,850
$690,276
240
Travel And Training
43060
$1,490
$4,480
$4,614
$4,753
$4,895
$5,042
241
Electricity
43330
$327,350
$304,060
$316,222
$328,871
$342,026
$355,707
242
Refuse Collection Service
43350
$0
$10,300
$10,609
$10,927
$11,255
$11,593
243
Maintenance Of Auto Equipment
43440
$0
$400
$412
$424
$437
$450
244
Maintenance Of Operating Equip
43450
$35,200
$42,820
$44,105
$45,428
$46,791
$48,194
245
Other Professional Services
43690
$25,130
$70,320
$72,430
$74,602
$76,841
$79,146
246
Developers Reimbursements
43691
$0
$50,000
$51,500
$53,045
$54,636
$56,275
247
Rental Of Equipment
43730
$8,450
$6,000
$6,180
$6,365
$6,556
$6,753
248
Other Contractual Services
43890
$16,220
$112,940
$116,328
$119,818
$123,413
$127,115
249
250
Other Charges
44000
$34,050
$44,790
$46,134
$47,518
$48,943
$50,412
251
Dues And Subscriptions
44110
$160
$0
$0
$0
$0
$0
252
Licenses And Permits
44260
$33,890
$44,790
$46,134
$47,518
$48,943
$50,412
253
254
Interdepartmental Charges
46000
$77,560
$93,070
$95,862
$98,738
$101,700
$104,751
255
Information Technology Charges
46080
$8,020
$9,620
$9,909
$10,206
$10,512
$10,827
256
Communications Charges
46110
$30
$40
$41
$42
$44
$45
257
Fleet Rental Charges
46130
$13,620
$16,340
$16,830
$17,335
$17,855
$18,391
258
General Fund Overhead Charges
46510
$55,890
$67,070
$69,082
$71,155
$73,289
$75,488
259
260

TOTAL EXPENSES
$20,093,480
$24,289,148
$25,324,876
$26,034,894
$26,790,299
$27,594,477
Cost-of-Service Appendices
Table 73: Operating Expenses Allocation (Detailed)
Line
Expense Category
FY 2025
Meter Maint.

Customer Service
Water Supply
Pumping
Storage
T&D
Fire Protection
Conser-vation
General
Rev. Offset
Total
1 Water Administration
$1,758,510
0%
70%
0%
0%
0%
0%
0%
0%
30%
0%
100%
2 Water Production
$2,313,400
0%
0%
0%
50%
50%
0%
0%
0%
0%
0%
100%
3 Purchased Water
$10,895,590
0%
0%
100%
0%
0%
0%
0%
0%
0%
0%
100%
4 Transmission/Distribution
$3,506,990
0%
0%
0%
0%
0%
100%
0%
0%
0%
0%
100%
5 Water Conservation
$269,470
0%
0%
0%
0%
0%
0%
0%
100%
0%
0%
100%
Table 74: Capital Expenses (CIP) Allocation (Detailed)
Line
CIP Allocation
Total CIP
Allocation
1 AC Pipe Replacement Northwest 308 Zone
$4,787,372
Transmission & Distribution
2 Blanco Pump Station Rehabilitation
$520,000
Pumping
3 Calle Real Pump Station Rehabilitation
$3,124,372
Pumping
4 Calle Vallarta PRS
$364,000
Pumping
5 Cathodic Protection System Improvements
$239,159
Transmission & Distribution
6 City-wide Copper Service Replacements
$520,000
Transmission & Distribution
7 Costero Risco PRS Rehabilitation
$715,717
Pumping
8 Dead End Water System Improvements
$50,379
General
9 El Levante PRS Rehabilitation
$363,589
Pumping
10 JRWSS Agency Projects
$7,015,319
Transmission & Distribution
11 Major Street Maintenance Program
$0
General
12 Meter Replacements
$657,643
Meter Maintenance
13 Pico Booster Pump Station Pump Replacement
$55,997
Pumping
14 Pico/Presidio DIP Replacement (Albertsons)
$1,427,743
Pumping
15 Pump Station & Reservoir Pavement Rehab
$91,128
Storage
16 Reata Pump Station Rehabilitation
$83,033
Pumping
17 Recycled Water Storage Bay Rehab
$208,000
Excluded
18 Recycled Water Alum Chem System Replacement
$241,037
Excluded
19 Reservoir 5A Replacement
$143,756
Storage
20 Reservoir No 4 Exterior Coating
$221,617
Storage
21 Sodium Hypochlorite Tank Replacement
$13,755
Storage
22 Valve Replacement Program
$234,636
Transmission & Distribution
23 Water Distribution Insert Valve Program
$31,200
Transmission & Distribution
24 Water System Air-Vac Replacement Program
$26,000
Transmission & Distribution
25 Water System Rehabilitation
$2,217,213
Transmission & Distribution
26 Well Water Quality System Improvement
$501,702
Water Supply
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Water Resources Economics / [email protected] / 213-327-4405 Water Resources Economics / [email protected] / 213-327-4405 Water Resources Economics / [email protected] / 213-327-4405 Water Resources Economics
2 www.sanclemente.gov/water-rates
FY 2026 is the year starting July 1, 2025 and ending June 30, 2026.

Although this section is named “Legal Requirements” and discusses Proposition 218 and 26, WRE is not a law firm and does not provide legal advice.

One calendar year runs from January 1st – December 31st.

JWRSS stands for Joint Regional Water Supply System
The City’s current reserve policy is defined within the City’s 2024-25 & 2025-26 Biennial Budget under Fiscal Policy Interest income (Line 6) is different in the status quo financial plan scenario because it is based on projected fund balances. The status quo scenario results in lower fund balances; therefore, the City has less interest income. Table 27 shows the interest income for the proposed financial plan scenario.

1.00/1.80 = 56.0%
(1.80-1.00)/1.80 = 44.0%

1.00/2.70 = 37.0%
(1.80-1.00)/2.70 = 30.0%
(2.70-1.80)/2.70 = 33.0%
The default meter size is 1” and has been upsized from 3/4” to reflect fire flow requirements. Meter ratio is based on a 3/4” flow rate. 2023 Uniform Volumetric Water Rate Study
City of Shasta Lake
Attachment 5
City of San Clemente
2025 Water Cost of Service and Rate Study