65B - PROPOSED WATER AND SEWER RATE ADJ

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48 WATER RATE STUDY I City of Santa Ana, CA The cost of service responsibility for base costs varies with the volume of water requirements and may be distributed to customer classes on that basis. Extra - capacity costs are those costs associated with meeting peak rates of water use, and are distributed to customer classes based on their respective system capacity requirements in excess of average requirement rates. Customer costs, which consist of meter related costs, billing, collection and accounting costs, are allocated based on the number of equivalent meters and bills. Private fire protection costs are allocated on the basis of equivalent fire hydrants. The estimated units of service for the various customer classifications are shown below. Estimates of test year annual water requirements, shown in Column 1, are based on the projections of total water sales from Table 4. Average daily use of all water sales, which is simply , Column 1 divided by 365 days, is presented in Column 2. Columns 3 Meter Size EM through 8 represent the estimated maximum day and peak hour 5/8" x 3/4" 1.00 capacity factors for each customer class. - -- 3/4" 1.50 In the overall rate setting process there is a need to establish a base - -- 1" 2.50 level of cost for which the cost of larger customers can be measured. _ 1.5" 5.00 Customer - related meter and service costs are allocated based on the 2" _8.00 number of equivalent 5/8" meters because the 518" meter is the most 3" 15.00 prevalent meter size found in many water utilities. Included in the development of meter cost ratios is the direct cost of the various categories of labor involved in the installation, fringe benefit related overheads and other appropriate administrative overheads applicable to the labor costs, all direct materials and supplies costs, and the cost of equipment used in the installation. 4" 25.00 6" 50.00 8" 80.00 10" 115.00 12" 165.00 Generally, equivalent meter cost ratios should be used when assigning elements of costs specifically related to meters among the various sizes of meters used by the customer in the system. The Water's base meter size is a %" meter, so the equivalent meter ratios use the base unit of a '' %" meter. The equivalent meter ratios used in this study are shown to the right. Customer billing and accounting costs are distributed to classes based on number of bills for each customer class in Columns 9 through 11. Direct charges for fire protection are found in Column 12 and those for reclaimed water are in Column 13. In accordance with M1 standards and typical engineering design, the provision of the maximum hour component addresses peak system needs, in addition to those posed by fire protection requirements. To the extent possible, actual system and billing data by customer class to derive maximum day capacity factors. Generating maximum hour data can be time consuming and may not be readily available. For the purposes of the analyses, we used a peak hour to average day ratio of 1.5 to calculate the maximum hour capacity factor. As a check on the validity of our assumptions, we calculated a diversity ratio for the system. This ratio is a measure of the total non - coincidental to coincidental demand. Based on the projections for FY 18/19, the max day ratio of non - coincidental to coincidental demand is 1.26 and the max hour ratio is 1.12. The calculated system diversity ratio is within the typical range of 1.10 to 1.40. \• • NOVEMBER 2014