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<br />WATER RATE STUDY I City of Santa Ana, CA
<br />COST OF SERVICE ALLOCATIONS
<br />The revenue requirements to be derived from rates and charges for water service are summarized in
<br />Lines 1 through 13 of Table 13. 14 analyzing the Water Enterprise's cost of service for allocation to
<br />customer classes, the annual revenue requirements for FY 18/19 and Scenario 1 were selected as the
<br />Test Year requirements to demonstrate the development of cost of service water rates. In determining
<br />the cost of service to be met from charges for water service, we deduct income received from other
<br />sources that not subject to rate adjustments from the total revenue requirements. As a result, the total
<br />cost of service to be recovered from rates is shown on Line 13, Column 3.
<br />Table -14: Total Costs to be Recovered from Rates — Scenario 1
<br />Functional Cost Components
<br />In developing an equitable rate structure, revenue requirements are allocated to the various customer
<br />classifications according to the cost of service rendered. Allocations of these requirements to customer
<br />classes of water should take into account water flow, the number of customers, and other relevant
<br />factors.
<br />Customers are classified to reflect groups of customers with similar service requirements who can be
<br />served at similar cost. Each class represents a particular type of service requirement. For the purposes of
<br />65B -52
<br />NOVEMBER 2014
<br />Column Reference
<br />[1]
<br />[2]
<br />[3]
<br />Revenue Requirements
<br />1
<br />O &M Expenses (Table 11, Line 13)
<br />25,588,500
<br />0
<br />25,588,500
<br />2
<br />Water Purchase (Table 11, Line 14)
<br />21,770,700
<br />0
<br />21,770,700
<br />3
<br />Debt Service
<br />0
<br />3,586,400
<br />3,586,400
<br />4
<br />Transfers (Table 11, Lines 189 20)
<br />0
<br />9,064,700
<br />9,064,700
<br />5
<br />Routine Capital (Table 11, Line 15)
<br />0
<br />1,156,900
<br />1,156,900
<br />6
<br />Subtotal
<br />$47,359,200
<br />$13,808,000
<br />$61,167,200
<br />Less Revenue Requirements met from Other Sources
<br />7
<br />Other Operating Revenue (Table 11, Line 9)
<br />1,528,400
<br />0
<br />1,528,400
<br />8
<br />Interest Income (Table 11, Line 10)
<br />139,600
<br />0
<br />139,600
<br />9
<br />Subtotal
<br />$1,668,000
<br />$0
<br />$1,668,000
<br />Adjustments
<br />10
<br />Annual Cash Fund Balance (Table 11, Line 23)
<br />2,343;100
<br />0
<br />2,343,100
<br />11
<br />Annual Rate Increase (Table 11, Line 7)
<br />0
<br />0
<br />0
<br />12
<br />Subtotal
<br />$2,343,100
<br />$0
<br />$2,343,100
<br />13
<br />Cost of Service to be Recovered from Rates
<br />$43,348,100
<br />$13,808,000
<br />$57,156,100
<br />Functional Cost Components
<br />In developing an equitable rate structure, revenue requirements are allocated to the various customer
<br />classifications according to the cost of service rendered. Allocations of these requirements to customer
<br />classes of water should take into account water flow, the number of customers, and other relevant
<br />factors.
<br />Customers are classified to reflect groups of customers with similar service requirements who can be
<br />served at similar cost. Each class represents a particular type of service requirement. For the purposes of
<br />65B -52
<br />NOVEMBER 2014
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