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6.4.A. - Page 1 <br /> RE PO RT <br /> To the Honorable Mayor and City Council <br /> From the Cit Mana er <br /> June 24, 2013 <br /> SUBJECT <br /> Approval of Water Utility Service Rates and Charges <br /> RECOMMENDATION <br /> Waive Second Reading and Adopt an Ordinance Amending Redwood City Municipal <br /> Code Section 38.5 (Water Service Charge). <br /> BACKGROUND <br /> The City's Water Fund is an "Enterprise" fund, which by law must be self-sustaining. All <br /> expenditures must be directly related to operations, maintenance, system repair and <br /> replacement. Revenues must be segregated from other municipal funds and uses and <br /> cannot be commingled with other activities. The Water Fund is completely separate <br /> from the City's General fund. <br /> The Water fund is sustained by water related charges collected through customer utility <br /> bills. The Utilities Bill has two components related to water charges. These are: <br /> • Water Service Charge: <br /> The Water Service Charge is a fixed, monthly basic service charge that provides <br /> the financial support for the operations and maintenance of the City's water <br /> system, i.e., salaries, benefits, equipment, supplies, and services. The City <br /> Council's Guiding Principles for the Water Enterprise Fund state that fixed costs <br /> and basic service charge revenue shell be in balance. <br /> • Variable Usage Rates: <br /> The Variable Usage Rates are based on the principle of rewarding conservation <br /> and the methodology "the more you use, the more you pay." It has been in <br /> existence since the drought of 1989 to promote water conservation. This <br /> component provides the financial support for the purchase of wholesale water <br /> from the San Francisco Regional Water System, electrical power from PG&E, <br /> capital improvements, the City's water conservation programs, and the City's <br /> recycled water bond payment. <br />