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Water Rate Cost-of-Service Study Section 5. Rate Design HF&H Consultants, LLC | July 8, 2025 | Page 36 of 53 Section 5. Rate Design The City has historically charged water customers the combination of a fixed Service Charge and a variable Water Use Charge based on metered water use. As previously discussed, this is a common set of charges that is prevalent throughout the water industry. This chapter explains the derivation of the Water Use and Service Charge rates that reflect the projected cost of service. SERVICE CHARGE DESIGN Service Charge rates are fixed rates that are billed each billing period to recover the cost of the service functions. The cost-of-service analysis determines how much of the revenue requirement is attributable to the customer service function. The function has four components – customer services, customer capacity, public fire protection, and private fire protection. Costs attributable to customer services are allocated to customers in proportion to their number of meters. Costs attributable to customer capacity are allocated to customers in proportion to the capacity of their services. Public fire protection costs are allocated to customers in proportion to the number of meters and private fire services. Private fire protection costs are allocated to customers in proportion to the capacity of their services. The sum of the customer service, capacity and public fire protection equals the Service Charge rate per connection. The sum of the customer service, public fire protection, and private fire protection components determines the Fire Service Charge rate per connection. Figure 5-1 and Figure 5-2 lists the units of service corresponding to each of the cost components. The 23,66015 services and 667 private fire services are used for apportioning the customer service and public fire protection cost components. Figure 5-1. Service Charge Units of Service ¹Capacity multiplier assumes 5/8” meter = 1 EMU = 20 gallons per minute. 15 This total includes only potable and recycled water meters. All fire service meters have been excluded. Meter Meter Capacity Size Services Ratings (gpm)1 Multiplier EMUs a b c = b ÷ 20 a * c 5/8" Meters 21,163 20 1.00 21,163 3/4" Meters 187 30 1.50 281 1" Meters 744 50 2.50 1,860 1.5" Meters 456 100 5.00 2,280 2" Meters 799 160 8.00 6,392 3" Meters 225 435 21.75 4,894 4" Meters 72 750 37.50 2,700 6" Meters 7 1600 80.00 560 8" Meters 4 2800 140.00 560 10" Meters 3 4200 210.00 630 23,660 Total EMUs 41,319 ATTY/RESO.0109/CC RESO WATER RATES - EXHIBIT A REV: 11-05-25 MI