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2019 Water, Recycled Water, and Sewer Rate Study <br />3. Cost -of -Service Analysis <br />Table 3-3: Allocation of Sewer System to Functional Components <br />Functional Component <br />System Function Utility Account <br />. i - <br />Customer 100.0% <br />Indirect 90.6% 9.4% <br />Staff FTE Allocation 90.0% 10.0% <br />100.0% <br />Table 3-4: Summary of Sewer Cost Functional ization by Budget Category <br />O&M Expenses $4,849,392 $504,244 <br />Capital $3,090,000 $0 <br />Interfund Transfers $281,805 $0 <br />Change in Fund Balance-$786,244 $0 <br />TOTAL: $7,434,954 $504,244 <br />3.1.2 Step 2: Assign Functionalized Costs to Cost Groups <br />Next the costs associated with each functional component were designated to specific Cost Groups in <br />order to create the foundation for developing rates that are directly aligned with the cost to provide service <br />(as required by Proposition 218). <br />Step 2 - Water <br />For the Water Enterprise, the Functionalized expenses are allocated to two cost components: Commodity <br />Costs (which is further designated as either Potable Water or Recycled Water) and Utility Costs (see <br />Table 3-5 for the percent allocations and Table 3-6 for the dollar results). The Potable Water Commodity <br />Costs include all variable operation expenses such as purchased water expenses, water pumping <br />electricity, treatment expenses and some general and administrative (G&A) expenses (see below). The <br />Recycled Water Commodity Cost is strictly the purchase costs of Green Acre recycled water from OCWD. <br />The Utility Costs are all remaining Water Enterprise expenses, which are predominately fixed costs such <br />as salaries, benefits and capital expenses. G&A costs are allocated between the Potable Water <br />Commodity Costs and Utility Costs using the indirect method based on operating expenses. <br />City of Santa Ana Stantec 120 <br />