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REV: 08-25-2022 RL Deliverables: Consultant shall provide proposed five-year rates, customer bill impacts, and bill comparisons integrated into the 10-year water and recycled water model developed for Task 2b. Task 2e. Drought Rates In order to stabilize rate revenue and ensure sufficient revenue for operations and to complete necessary capital improvements, Consultant shall consider potential rate stabilization factors (or “drought rate factors”) to be used during times of water shortages. Consultant shall develop the rate stabilization multipliers to maintain revenue neutrality during water shortages. Consultant shall develop demand reduction factors, by customer class, which get applied to non-shortage rates in effect at the time the shortage is declared. These factors shall take into consideration the fixed cost component within the volumetric rates that will not change as water use decreases. Consultant analysis shall take into consideration water necessary for health and safety versus more discretionary uses (i.e., water used for irrigation purposes). Consultant shall develop multipliers for each shortage stage in the City’s Water Shortage Contingency Plan so that rates can be increased to offset conservation reductions in each stage, as determined by City Council. The multipliers could be applied when the State or City Council requires its customers to reduce consumption. Consultant shall include drought rates in the public hearing notice so that the City can make revenue neutral adjustments without triggering a full Proposition 218 process. Task 2f. Communicate Results All meetings and presentations described will encompass the results of the water and sewer rate and development fee studies, unless indicated otherwise on the project schedule. All draft deliverables shall be submitted to the Public Works Director or their designee(s) to allow for a minimum two-week review period from City staff. Project Status Meetings Consultant shall provide status updates to City staff to communicate progress on tasks and ensure alignment with staff direction and timing. During the kick-off meeting, Consultant shall establish a day and time for standing 30-minute check-in calls with staff every two weeks. These meetings are intended to obtain staff input and develop solutions that will be accepted by City Council and ratepayers. Preliminary Findings Memorandum Midway through the conduct of the project, Consultant shall document the results of the analysis in a brief memorandum that summarizes: a) any adjustments to existing rate designs, including customer classes; b) the cost-of-service model showing allocation of costs to customer classes; c) any recommended adjustments to existing rates and rate designs, including ideal schedule of years to adopt; and, d) a comparative analysis illustrating Redwood City’s current and proposed rates alongside other neighboring utilities. Presentation to Utilities Sub-Committee ATTY/AGR.2022.318/HF&H Consultants, LLC (Page 17 of 27)