65B - PROPOSED WATER AND SEWER RATE ADJ

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City of Santa Ana, CA I HEWER RATE STUDY PROPOSED RATE ADJUSTMENTS The initial consideration in the derivation of wastewater rate schedules for utility service is the establishment of equitable charges to the customers commensurate with the cost of providing that service. While the cost of service allocations to customer classes should not be construed as literal or exact determinations, they offer a guide to the necessity for, and the extent of, rate adjustments. Practical considerations sometimes modify rate adjustments by taking into account additional factors such as the extent of change from previous rate levels, existing contracts, and past local policies and practices. Existing Rates A summary of existing wastewater rates was presented earlier in Table 3. The existing rate structure is a commodity -only based rate for all customers. Unmetered customers pay a flat bi- monthly base charge. Proposed Rates The costs of service analysis described in preceding sections of this report provide a basis for the design of rates. At the request of the City, Black & Veatch has examined some alternative cost recovery rate schedules. The purpose of these changes is to increase transparency to ratepayers, as well as to provide funds for specific capital or operating activities. For example, the Sewer Enterprise provides lateral repairs to all customers who request this service. Previously, the City provided this service when funds are available. For this rate study, the City provided the average cost for lateral repairs and the proposed alternative rate schedule includes a specific charge intended to fund this program. In a similar manner, a capital recovery charge, intended to provide dedicated funds to address R &R needs is also being proposed in this study. The rate schedule shown in Table 23 reflects the rates for the entire study period. BLACK & VEATCH I Sewer Rate Study [INTENTIONALLY LEFT BLANK] 65B -208