ORANGE COUNTY WATER DISTRICT -2017

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GAP FY 2025-26 Sales Rate, Page 2 of 6, 4/2/2025 2) GAP Sales Rate for FY 2025-26 To obtain the rate, the actual GAP expenses from FY 2023-24 were aggregated and divided by the volume of GAP water sold during the same period. FY 2023-24 is used because FY 2024-25 is still in progress and therefore complete expense and volume sold information is not yet available. The unadjusted sales rate calculated by this method was $983/AF, a $6/AF (-0.62%) decrease from the previous year's implemented rate. The main factors causing the rate to be less than the prediction of$1,019/AF includes a 5.2% increase of total volume of GAP water sold, maintenance and UtiliQuest costs decreased by 27%, and a decrease in deep well supplement value by 23%. To avoid a significant rate drop, a rate stabilization concept was implemented in FY 2021-22. A theoretical stabilization fund was established that can be deposited into and withdrawn from to help stabilize the annual sales rate changes. The GAP sales rate is predicted to increase every year, but the specific conditions of a given year may cause a rate decrease. Consensus among the Retailers and OCWD on March 21, 2022, was to aim for a GAP sales rate increase of 3% per year. The rate stabilization fund is expected to help stabilize future rates during the next few years. It is expected that the current balance of the stabilization fund will be completely withdrawn within the next 5 years. A prediction of the rate stabilization's fund is shown in Table 4 and Figure 1. The predicted future GAP rates utilizing the fund have been included in Table 1. The Retailers and OCWD shall revisit this approach each year to determine its efficacy and the reasonableness of the stabilization fund balance. Description of"Table 2: Rate Calculation" below shows (left to right): • the rate that was implemented for the current year (FY 24-25) • the rate that was predicted for next year (FY 25-26) • the actual rate computation for next year (FY 25-26) • the percentage change between the current year implementation (FY 24-25) and the actual rate computation for next year (FY 25-26) • Notes about the percentage changes • The proposed rate to implement for next year (FY 25-26). "Table 3: AF Sold Details" shows changes in annual meter usage for OCSD and each Retailer. A revision to the future sales rate prediction has been made: • The average of AF sold from 2016-17 through 2023-24 (3,990 AF) is used for prediction. o The value was 4,020 AF in last year's predictions. • While the unit expenses for electricity and chemicals increased more than their prediction assumptions of 10% and 6%, the prediction increases were not changed. It is assumed that the long-term average increases for these items will be less than the currently predicted increases. • Deposit and withdrawal predictions of the rate stabilization fund have been included.