Item 08 - Water and Sewer Rate Adjustments

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Table 3. Current Variable Water Rates Tier 1 $2.60 Tier 2 $5.87 Recycled $2.55 Proposed Water Rates RDN proposes the following rate and revenue adjustments to accomplish the City's financial goals of capital and reserve funding as well as maintaining debt service coverage requirement. To achieve the proposed financial plan, RDN recommends that the City raise water revenues by 9.0 percent in May of 2026, 9.0 percent in July of 2027, 9.0 percent in July of 2028, 9.0 percent in July of 2029, and 8.0 percent in July of 2030. Table 4. Proposed Revenue Adjustments 2026 to 2030 Revenue Adjustment 9.0% 9.0% 9.0% 9.0% 8.0% Costs were allocated equitably between all customers during the cost of service analysis. Costs of providing water service are allocated to each customer class based on two factors: (a) the specific services and costs they cause the City to incur; and (b) the proportional share attributable to the meter size based on that meter's potential demand on the system. The rates for each meter size represent an equitable portion of the total cost of service for each class allocated to the respective meter based on the calculations shown in the Cost of Service Analysis. Variable rates are based on the available sources of water supply and reflect the City's water portfolio limitations. The tier 1 width for each meter represents the equitable allocation of groundwater based on the increased capacity paid for by larger meters. The City will implement rate adjustments on May 1st of 2026 and then on July 1st of successive years. The proposed rates which result from these adjustments are shown in Table 5, Table 6, and Table 7. City of Santa Ana - 2026 Water and Sewer Rate Study I: