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3.10. Unit Cost Derivation After deriving the cost of service by cost component,we then determine the unit cost for each component.The unit cost is derived by dividing the revenue requirement for each cost component by the corresponding units of service. Table 3-16 shows the units of service for each customer class and tier for each cost component. The units of service are derived as follows: Recycled Water: annual recycled water irrigation use Recycled Water Surcharge: annual water use by class and tier Base:annual water use by class and tier Max Day:Max Day extra capacity Max Hour:Max Hour extra capacity Meter:EMUS by customer class Customer:accounts by customer class Zone 7 Fixed: EMUS by customer class Zone 7 Variable: annual water use by class and tier excluding groundwater use Table 3-17 derives the unit cost by cost component.The costs of service(Table 3-15, Line 5)are multiplied by the units of service for each cost component(Table 3-16)to derive the final revenue requirement distribution.Note that the Meter,Customer,and Zone 7 Fixed unit costs are multiplied by bi-monthly billing periods per year to determine the annual cost to serve each class for those components.The final proposed revenue(Column M,Line 11)is equal to the total revenue requirement(Table 3-15,Column M,Line 5),and the final costs in each cost component(Line 10)are equal to their corresponding costs of service(Table 3-15, Columns B through L, Line 5). WATER AND RECYCLED WATER RATE STUDY REPORT 47