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7.A. - Page 57 <br /> 2.11 Projected Rate Increases <br /> Table W5 shows projected overall rate increases needed to meet the City's annual revenue <br /> requirements. Projected rate increases are phased in as gradually as possible. <br /> Table W5: Proposed Water Rate Adjustments <br /> Projected Water Rate Increases <br /> 2016/17 2017/18 2018/19 <br /> Fixed Charges -11.0% 7.8% 7.8% <br /> Quantity Charges 16.8% 7.8% 7.8% <br /> Total Weighted Increase 4.8% 7.8% 7.8% <br /> Actual impacts to customers' water bills will vary based on customer class and water use due to <br /> proposed modifications to the rate structure. A cost-of-service rate realignment conducted as part <br /> of this rate study results in a reduction in the percentage share of revenue recovery from the City's <br /> fixed service charges coupled with more substantial increases to the City's water quantity charges in <br /> reflection that rate increases are largely being driven by increases in variable costs of service, such <br /> as wholesale water rate increases, and reductions in water demand. <br /> In future years, the City can update the long-term financial projections and re-evaluate future <br /> revenue requirements and rate projections. <br /> 2.12 Water Rate Analysis <br /> The proposed rates developed in this report reflect modifications to the City's water rate structure <br /> designed to conform with the substantive requirements of Proposition 218. Rate structure <br /> modifications are summarized as follows. <br /> These rates have been designed in order to pass the marginal cost of water to those consumers <br /> whose extra use of water forces the utility to incur the costs of water recycling and the City's Water <br /> Resources Management Program that permit the supply of that extra water. <br /> The recycled water program is a capital-intensive means of production of what is effectively new <br /> water that frees up the utility's potable water supplies for use by customers who require potable <br /> water. When a customer transitions from potable water to recycled water, they free up potable <br /> water for use by other customers. The rate structure is designed to pass on the costs of developing <br /> that new water to those customers whose marginal or incremental potable use necessitate the <br /> recycled water program. <br /> B Water Utility Finances& Rates 30 <br /> �'ti Water&Sewer Financial Plans&Rate Studies <br />