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ATTACHMENT 6 RAFTELIS Financial Plan Alternative To: Tamara Baptista From: Brian Bass, Lindsay Roth Date: November 2, 2023 Re: Financial Plan Alternative The purpose of this memorandum is to complete a sensitivity analysis to determine if the proposed rate increase for FY 2025 can be revised consistent with the methodology in the Water and Recycled Water Rate Study (Raftelis, August 4, 2023). The alternative presented in this memorandum evaluates different terms for the $61VI loan and aims to achieve the operating reserve target in FY 2027 instead of FY 2026. The study period for the water and recycled water rate study is from FY 2024 through FY 2026 and proposes the following rate increases: 30%, 20%, and 12%. It assumes a $61VI loan in FY 2024 to pay for capital costs with a 5% interest rate over five years. Phase 2 capital costs were not included and were beyond the scope of this engagement. Alternative This alternative consists of a $61VI loan with a 5% interest rate for a twenty-year term. The CIP from the rate study is used without any changes. The operating reserve target is achieved by FY 2027 with the rate increases shown in Table 1 in the first two years of the study period. Thus, the proposed rate increase for FY 2025 could be reduced from 20% to 12% in the original water rate and cost of service model used for the Proposition 218 Notification as provided in the Water and Recycled Water Rate Study. FY 2026 and FY 2027 are not shown in Table 1 because Phase 2 capital costs were not included. Table 1: Alternative Rate Increases Description FY 2024 FY 2025 Rate Increase 30.0% 12.0% 445 S. Figueroa Street,Suite 1925, Los Angeles,CA 90071 www.raftelis.com