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�l/ � /� <br /> - ATTACHMENT TWO - <br /> Redwood City Water Enterprise Guiding Principles <br /> Adopted by the City Council - August 1993 <br /> Amended by the City Council Utilities Corrimittee - May 2005 _ <br /> 1. Support water conservation with progressive rate structure <br /> . 2. Set basic service charges equal to fixed costs <br /> 3. Balance revenues and expenditures <br /> 4. Distribute costs equitably across entire water system <br /> 5. Allocate funds for replacement and security of water infrastructure <br /> 6. Maintain an emergency reserve <br /> 7. Continue support of well-planned economic gro�rth <br /> Support water conservation with progressiN� rat� structure � <br /> Under a progressive water conservation rate structure, rates increase i� pricing tier� as a water <br /> customer's use increases (the more water that is used, the more per consumption unit the user <br /> pays). Water conservation rates provide a strong incentive to save water, since additional <br /> increments of water used become more expensive. Furthermore, all water used above the <br /> "lifeline" allotment is charged at the ra�e for the hi�hest amount used during each billing period. <br /> The City's Urban Water Management Pl�n (UWM(�) commits the City to an "active° conserva4ion <br /> program and to use water consc�ra±ion rates as a means to promote and achieve water <br /> conservation goals. <br /> Set basic service charges equal to fixed cos4s <br /> BASIC SERVICE CHARGE <br /> As adopted in 1993, revenues collected via this monthfy, fixed partion of a customer's water bill <br /> are intended to cover all "fixed costs" incurred by operating a�d maintaining the Redwood City <br /> water distribution system. By definition, costs include salaries, benefits, equipment, supplies and <br /> services - all of which are within ths direct policy control of the City Councit. <br /> WATER RATES <br /> Water rates are tied directly to "variable costs" including the purchase of water from the San <br /> Francisco Public Utilities Commission (SFPUC), the cost of energy from PG8�E and any other <br /> costs which are beyond the direct control of the City and City Council. Often, such costs are <br /> described by utilities as "pass through" costs. In addition, Capital investment expenses that <br /> provides for replacement of, and improvements to, the water distribution system are included in <br /> the variable cost category. (See No. 5 below) <br /> Page 1 of 3 <br />