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City of Santa Ana, CAI WATER RATE STUDY <br />the four basic functional costs factors, a pro rata share of 0 &M and capital expenses is directly assigned <br />to the fire protection category. <br />Allocation of Operation and Maintenance Expenses <br />Table 15 summarizes the allocation percentages used in Table 16. Table 16 shows the allocation of 0 &M <br />expense to cost functions. Where possible, percentage allocations use data gathered from employee <br />time cards and discussions with staff. Additionally, Black & Veatch reviewed the City's budgeting process <br />to understand budget line items and internal cost allocation schemes with respect to different operating <br />sections within the Water Enterprise. 0 &M costs such as general and administrative expenses (G &A) are <br />distributed to functional cost components based on the average of the other line item costs. <br />The net operation and maintenance expense to be recovered for water sales is derived by deducting <br />funds available from other sources from the total Test Year expense. Net Test Year operation and <br />maintenance expense of $43,348,100 (Table 14, Line 13, Column 1) is shown allocated to the six primary <br />cost components on Line 28. Note that routine capital outlay is excluded from 0 &M expenses as these <br />expenses can be deferred based on the financial state of the enterprise. Allocation of 0 &M expenses to <br />the different functional components uses average time spent by staff executing different services. <br />Expenses incurred because of specific activities are allocated directly to that cost component. <br />Table - 15: Cost of Service Allocation Percentages <br />Base <br />100.0% <br />0.0% <br />0.0% <br />0.0% <br />0.0% <br />0.0% <br />0.0% <br />Max Day <br />66.7% <br />33.3% <br />0.0% <br />0.0% <br />0.0% <br />0.0% <br />0.0% <br />Max Hour <br />50.0% <br />25.0% <br />25.0% <br />0.0% <br />0.0% <br />0.0% <br />0.0% <br />Meters <br />0.0% <br />0.0% <br />0.0% <br />100.0% <br />0.0% <br />0.0% <br />0.0% <br />Billing <br />0.0% <br />0.0% <br />0.0% <br />0.0% <br />100.0% <br />0.0% <br />0.0% <br />Administration <br />32.2% <br />10.0% <br />10.0% <br />20.0% <br />20.0% <br />2.5% <br />5.25% <br />Source of Supply <br />100.0% <br />0.0% <br />0.0% <br />0.0% <br />0.0% <br />0.0% <br />0.0% <br />Pumping Plant <br />50.0% <br />25.0% <br />25.0% <br />0.0% <br />0.0% <br />0.0% <br />0.0% <br />Treatment <br />66.7% <br />33.3% <br />0.0% <br />0.0% <br />0.0% <br />0.0% <br />0.0% <br />T &D <br />52.4% <br />40.0% <br />7.6% <br />0.0% <br />0.0% <br />0.0% <br />0.0% <br />Hydrants <br />0.0% <br />0.0% <br />0.0% <br />0.0% <br />0.0% <br />100.0% <br />0.0% <br />Net Plant <br />58.9% <br />22.8% <br />15.0% <br />1.9% <br />0.1% <br />1.3% <br />0.1% <br />Average <br />80.0% <br />14.9% <br />5.0% <br />0.0% <br />0.0% <br />0.2% <br />0.2% <br />BLACK & VEATCH i Water Rate Study <br />65B -55 <br />43 <br />