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Page 4 of 11 <br />City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.org <br />Figure 2 <br />Cost of Service Analysis and Proposed Rates <br />The revenue requirement analysis in the Study determines the total amount of revenue that must be <br />recovered from rates. The next step in the process is the cost-of-service analysis, which ensures that costs <br />are proportionally allocated to customers based on how they use the system. <br />The current rates for the Service and Water Use Charge rates are dependent on each customer class. The <br />Service Charges are fixed rates that are charged on a dwelling unit basis for single family customers and <br />by meter-size for multi-family and Non-Residential (commercial, municipal, industrial, other, recycled <br />water, and irrigation) customers. The Water Use Charge currently consists of four-tier increasing block <br />rate structure for single family customers and a uniform rate for all other customers. <br />Costs are allocated across four primary service components: <br />Demand-related costs, representing general water use across the customer base. <br />Customer service costs, associated with billing, meter reading, and account management. <br />Capacity-related costs, which reflect the infrastructure required to meet system-wide needs. <br />Fire protection costs, allocated separately to public and private fire service requirements. <br />This approach allows for a simplified rate structure, with costs distributed evenly across all units of water <br />consumption, rather than segmented by usage tiers. By aligning cost allocations with the services <br />delivered and the infrastructure required to support them, a uniform rate structure ensures that rates are <br />equitable and compliant with cost-of-service principles. <br />6.F. - Page 4 of 111 <br />81