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2019 Water, Recycled Water, and Sewer Rate Study Executive Summary <br />increases are being recommended for the next five fiscal years for both enterprises, with the fiscal year <br />(FY) 2019/20 increase scheduled for January 1, 2020, and all subsequent increases at the beginning of <br />each respective fiscal year on July 1. Rate increases for recycled water will be tied to the proposed rate <br />increases for the water enterprise. <br />It is important to note that, while in Year 1 rate revenues across all customer classes will increase on <br />average by 7.0% for the water utility and 3.0% for the sewer utility. However, the proposed rate structure <br />adjustments (discussed further below) will result in single-family residential accounts with average water <br />usage, experiencing an increase of $4.46 per month (or just under ten percent) in their water bill and a <br />decrease of $1.51 per month (or just over twenty one percent) in their sewer bill. Results will vary among <br />different customers due to the proposed rate structure adjustments. To be clear, due to the rate structure <br />adjustments, some customers' bills will increase by more than the average rate revenue adjustment for <br />Year 1, while other customers' bills will increase by less. Starting in Year 2 (FY 2020/21) and continuing <br />thereafter, all customers will experience the same uniform percentage change to their bill. <br />Table ES-1 Proposed Water & Sewer Enterprise Rate Revenue Increases <br />2. Cost -of -Service Analysis (COSA) — Using the revenue requirements from the RSA for FY 2019/20, <br />the Stantec team performed a detailed COSA based upon principles outlined by the AWWA, WEF, and <br />other generally accepted industry practices, in order to determine the proper distribution of costs and <br />corresponding revenue requirements. The purpose of a COSA is to determine the cost of providing water <br />and sewer service so that the revenue requirements of the utility may be equitably collected through <br />rates. The Study employed methods promulgated in AWWA's Manual M1: Principles of Water Rates, <br />Fees, and Charges (M1) for the water and recycled water rates and WEF's Financing and Charges for <br />Wastewater Systems, Manual of Practice No. 27 for the sewer rates. The COSA included the following <br />steps: <br />➢ Step 1: Allocate costs to the appropriate activities/functions <br />➢ Step 2: Allocate the costs assigned to each function to specific system parameters <br />➢ Step 3: Credit non -rate revenue as a reduction of assigned costs <br />➢ Step 4: Distribute resulting costs to customer classes <br />City of Santa Ana Stantec I ES-3 <br />