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<br /> <br />Water Rate Cost-of-Service Study <br />Section 1. Executive Summary <br /> <br /> <br />HF&H Consultants, LLC | July 8, 2025 | Page 12 of 53 <br />The Drought Rates calculated are equal to the rates that would have been produced through <br />the cost-of-service analysis, if projected water usage was reduced to levels required in <br />shortage conditions. For each stage, the drought rates are calculated by lost revenue from <br />water sales net of any savings from reductions in demand-related costs (e.g. water <br />purchases). <br />The procedure8 for calculating Drought Rates corresponding to each cutback stage is provided <br />in Section 5 of this study. The Drought Rates only apply to Water Use Charge rates and not <br />to Service Charge rates, which are independent of water demand. Revenue from Service <br />Charge rates is not influenced by water demand and is therefore unaffected by conservation <br />or fluctuations in customer demand. <br />Figure 1-11. Drought Rates ($/HCF) <br /> Source: Figure 5-12. <br /> <br /> <br />8 Accompanying Figure 5-11 of this study. <br />Demand Surcharge <br />Stage Reduction FY 2025-26 FY 2026-27 FY 2027-28 <br />0 0% $0.00 $0.00 $0.00 <br />1 10% $0.38 $0.40 $0.42 <br />2 20% $0.85 $0.90 $0.95 <br />3 30% $1.45 $1.54 $1.62 <br />4 40% $2.25 $2.39 $2.51 <br />5 50% $3.38 $3.58 $3.76 <br />6 60% $5.07 $5.37 $5.64 <br />ATTY/RESO.0109/CC RESO WATER RATES - EXHIBIT A <br />REV: 11-05-25 MI