Utility Committee Agenda and Packet 2019 03 15

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Line No. Table 1-14 Development of 2014 Reclaimed Water Rate Benchmark Reclaimed Water Rate Floor Description Reclaimed Water Rate Ceiling Volumetric Revenue Requirement 1 Base Demand $3,128,664 $3,128,664 2 Maximum Day 1,458,061 1,458,061 3 Maximum Hour 86,766 86,766 4 Total $4,673,491 $4,673,491 Less Wastewater Treatment Specific Costs 5 O&M Expenses ($1,819,089) 6 Capital Costs (240,228) 7 Total ($2,059,317) 8 Net Volumetric Revenue Requirement $2,614,174 9 Billed Reuse Volume, 1000 gallons 1,037,954 1,037,954 10 Reclaimed Water Rate Ceiling, per 1,000 gallons $4.50 $2.52 The City's initial proposed reclaimed water rate has been recommended to be set at $3.38 per thousand gallons. This rate is 75% of the weighted average cost of providing potable water service ($4.50 x 75% = $3.38). The selection of 75% of the potable water service cost is subjective and is based on a policy decision. It will provide customers currently using reclaimed water with a significant discount compared to treated water rates. If other customers seek to use reclaimed water in the future, the City may elect to consider the implementation of a reclaimed water rate based on full cost of service principles. At that time, adjusting from a base initially set at $3.38 per thousand gallons would likely cause less rate shock than having the initial base rate set at $2.52 per thousand gallons. 1.8. Indirect Cost Allocation The City allocates a portion of central services administrative personnel costs to water, wastewater, and stormwater utilities. These "indirect overhead costs" include the estimated time spent working on utility related issues by City executives such as the City Manager and the Finance Director. They also include the cost of personnel associated with City departments that provide services to each utility such as Information 14