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MARGINAL COST - OPTION 2 <br />2018 Reclaim Energy Cost <br />$31,700 <br />2018 Reclaim Chemical Cost <br />$5,600 <br />2018 Reclaim Marginal Costs <br />$37,300 <br />Percentage of Annual Reclaim Deliveries (10-year Avg) to Sports Complex <br />16.3% <br />Percentage of Annual Reclaim Deliveries (10-year Avg) to Community Park <br />17.6% <br />Percentage of Annual Reclaim Deliveries (10-year Avg) to Golf Course <br />66.1% <br />Sports Complex Flat Rate <br />$6,100 <br />Community Park Complex Flat Rate <br />$6,600 <br />Golf Course Complex Flat Rate <br />$24,600 <br />Having reviewed and discussed both alternatives, Staff prefer the per unit approach of $0.85 per <br />thousand gallons. The main reasons for this preference are: to maintain the incentive to manage <br />and conserve water usage and to recognize the reuse system was built to optimize water rights that <br />allow for reclaim. <br />Reclaim Rate Scale of Equity: <br />The above mentioned rates were combined with other reclaim rate scenarios to develop a visual <br />range demonstrating several characteristics. The far left of the scale represents an extreme and <br />non -defensible policy of offering reclaim water at no charge. On the other end, the full cost of <br />service method that is easily justifiable but not practical nor viable as it exceeds the potable rate <br />and would not be utilized. To make a reclaim rate usable it must be compromised to reach a level <br />below the potable rate. Once this premise is accepted as required, it is clear that the final <br />determination must be based in policy rather than the strict cost of service scenario. <br />Free <br />$0.85 $1.07 $1.34 $2.52 <br />Policy <br />44 <br />Marginal Cost <br />$4.10 <br />$4.50 <br />$15.04 <br />5 <br />• <br />10 <br />4 <br />2014 Rate Study Benchmark - Floor <br />2018 Effluent Lease <br />2018 Raw Water <br />Market (existing) <br />2014 Rate Study Benchmark- Ceiling <br />Cost of Service <br />(Potable, Wastewater, <br />Stormwater, Tap fees) <br />Impacts of Revised Rate: <br />If either of the marginal cost reclaim rates were to be adopted there are negative consequences that <br />are outlined in more detail below. Alternatively, a shift to raw water for one of the largest <br />users/golf course could prove more beneficial from a long term perspective. <br />Reduction in Revenue - With a 79% reduction from the current rate of $4.10 to $0.85, annual <br />revenues are projected to decrease. Further, as a replacement for the marginal charges, the <br />11 <br />