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Water Rate Cost-of-Service Study Section 1. Executive Summary HF&H Consultants, LLC | July 8, 2025 | Page 10 of 53 Figure 1-9. Current and Proposed Fire Service Charge Rates Source: Figure 5-7. Proposed Water Use Charge Rates The City is transitioning from a tiered rate structure to a uniform rate structure for Single Family Residential water customers. This change aligns the residential rate structure with that of all other customer classes, which already pay a uniform rate for water consumption. The move simplifies the billing process, and ensures consistency in how water charges are applied. This adjustment also aligns with cost-of-service principles and recent case law articulating Proposition 218’s requirements for calculating rates and supports transparent rate setting practices consistent with California regulatory standards. 62.3% of the current water rate revenue is generated by the Water Use Charges. Adjustments in FY 2025-26 are recommended to re-align the Water Use Charge rates with the cost-of- service. These adjustments result in a slight increase to 62.6% of the overall rate revenue being generated from the Water Use Charges. Annualized water use of the City’s historically lowest consumption month accounts for nearly 46% of overall rate revenue. Thus, the rates will continue to provide adequate revenue stability, as the revenue from the lowest volume of annual water use provides additional revenue stability to the revenues received via the fixed Service Charges. Summary of Water Use Charge Rates Figure 1-10 summarizes the current and proposed Water Use Charge rates. The proposed rate analysis was derived using FY 2022-23 and FY 2023-24 water demand patterns. More detail is discussed in the Demand Projections section of Section 3 of this report. Additionally, Figure 1-10 illustrates the shift in Single Family Residential water rates from a tiered structure—where unit costs increased with usage—to a uniform structure with a consistent Fire Service FY 2025-26 FY 2026-27 FY 2027-28 Line Size Current Rates eff. 1/1/2026 eff. 1/1/2027 eff 1/1/2028 Bi-monthly Charge per Connection 1"$36.98 $39.94 $42.34 $44.46 2"$73.96 $50.20 $53.22 $55.88 3"$110.94 $73.52 $77.94 $81.84 4"$147.92 $113.76 $120.58 $126.60 6"$221.88 $258.10 $273.58 $287.26 8"$295.84 $507.10 $537.52 $564.40 10"$369.80 $881.62 $934.52 $981.24 12"$443.76 $1,400.70 $1,484.74 $1,558.98 Monthly Charge per Connection 1"$18.49 $19.97 $21.17 $22.23 2"$36.98 $25.10 $26.61 $27.94 3"$55.47 $36.76 $38.97 $40.92 4" $73.96 $56.88 $60.29 $63.30 6" $110.94 $129.05 $136.79 $143.63 8" $147.92 $253.55 $268.76 $282.20 10" $184.90 $440.81 $467.26 $490.62 12" $221.88 $700.35 $742.37 $779.49 ATTY/RESO.0109/CC RESO WATER RATES - EXHIBIT A REV: 11-05-25 MI