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<br />ATTACHMENT TWO <br /> <br />88 <br />Page 5 <br /> <br />Redwood City Water Enterprise Guiding Principles <br />Adopted by the City Council - August 1993 <br />Amended by the City Council Utilities Committee - May 2005 <br />Adopted by the City Council via Resolution 14648, June 6.2005 <br /> <br />1. Support water conservation with progressive rate structure <br /> <br />2. Set basic service charges equal to fixed costs <br /> <br />3. Balance revenues and expenditures <br /> <br />4. Distribute costs equitably across entire water system <br /> <br />5. Allocate funds for replacement and security of water infrastructure <br /> <br />6. Maintain an emergency reserve <br /> <br />7. Continue support of well-planned economic growth <br /> <br />Support water conservation with progressive rate structure <br /> <br />Under a progressive water conservation rate structure, rates increase in pricing tiers 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 rate for the highest amount used during each billing period. <br /> <br />The City's Urban Water Management Plan (UWMP) commits the City to an "active" conservation <br />program and to use water conservation rates as a means to promote and achieve water <br />conservation goals. <br /> <br />Set basic service charges equal to fixed costs <br /> <br />BASIC SERVICE CHARGE <br />As adopted in 1993, revenues collected via this monthly, fixed portion of a customer's water bill <br />are intended to cover all "fixed costs" incurred by operating and maintaining the Redwood City <br />water distribution system. By definition, costs include salaries, benefits, equipment, supplies and <br />services - all of which are within the direct policy control of the City Council. <br /> <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 PG&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 /> <br />Page 1 of 3 <br />