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ATTACHMENT FOUR <br /> 7.A. - Page 13 <br /> Redwood City Water Enterprise Guiding Principles <br /> Adopted by the City Council -August 1993 <br /> Amended by the City Council Utilities Committee - May 2005 <br /> Adopted by the City Council via Resolution 14648, June 6, 2005 <br /> 1. Support water conservation with progressive rate structure <br /> 2. Set basic service charges equal to fixed costs <br /> 3. Balance revenues and expenditures <br /> 4. Distribute costs equitably across entire water system <br /> 5. Allocate funds for replacement and security of water infrastructure <br /> 6. Maintain an emergency reserve <br /> 7. Continue support of well-planned economic growth <br /> Support water conservation with progressive rate structure <br /> Under a progressive water conservation rate structure, rates increase in pricing tiers as a water <br /> customer's use increases (the more water that is used, the more per consumption unit the user <br /> pays). Water conservation rates provide a strong incentive to save water, since additional <br /> increments of water used become more expensive. Furthermore, all water used above the <br /> "lifeline" allotment is charged at the rate for the highest amount used during each billing period. <br /> The City's Urban Water Management Plan (UWMP) commits the City to an "active" conservation <br /> program and to use water conservation rates as a means to promote and achieve water <br /> conservation goals. <br /> Set basic service charges equal to fixed costs <br /> BASIC SERVICE CHARGE <br /> As adopted in 1993, revenues collected via this monthly, fixed portion of a customer's water bill <br /> are intended to cover all "fixed costs" incurred by operating and maintaining the Redwood City <br /> water distribution system. By definition, costs include salaries, benefits, equipment, supplies and <br /> services - all of which are within the direct policy control of the City Council. <br /> WATER RATES <br /> Water rates are tied directly to "variable costs" including the purchase of water from the San <br /> Francisco Public Utilities Commission (SFPUC), the cost of energy from PG&E and any other <br /> costs which are beyond the direct control of the City and City Council. Often, such costs are <br /> described by utilities as "pass through" costs. In addition, Capital investment expenses that <br /> provides for replacement of, and improvements to, the water distribution system are included in <br /> the variable cost category. (See No. 5 below) <br /> Page 1 of 3 <br />