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2. Related to the above is more granular data -a histogram or statistical distribution -of the city's water customers (all types) by their usage. 3. Data-driven price-setting decisions will benefit from understanding the trend in water consumption by tiers and customer types. I created the table below based on the data in the city's 2022 comprehensive financial report. It shows the declining trend in water consumption over ten years, even as accounts have increased. This means per-customer consumption has decreased. Hence, the city's reliance on recovering most of its costs using variable revenues will force it to regularly and significantly increase volumetric rates and penalize instead of rewarding residents for conserving. Operating indicator Capital Asset ntdicator Year Utility Bills New Water Gallons New Sewer Water Pumping Sanitary Storm Generated Connections Delnered Connections Mains Capaaty Sewers Sewers (in million (?Ales) (RMlllon (Miles) (Miles) gallons/day) Gallons/Day) 2013 127,955 88 14.8 136 324 31 2S7 194 2014 128,277 71 1 14.2 231 327 1 31 257 194 2015 134559 124 10.8 285 329 31 2S8 194 2016 134,741 99 10.9 374 329 31 258 194 2017 123,571 54 111 79 314 31 259 194 2018 134,405 42 11.8 83 331 31 259 194 2019 133,007 7S 122 98 327 31 260 195 2020 1 133.015 56 13.1 64 360 31 258 243 20Q1 141,594 37 13.3 S1 378 31 258 1% 2022 137,409 19 120 19 381 31 261 196 As promised, I am attaching two documents: 1. A recent Raftelis report I highlight for creative and innovative recommendations consistent with sound economic analysis of their client utility(The Metropolitan Water District of Southern California).Although we have established templates and frameworks for rate studies, we are not constrained by any legacy decision to solve Pleasanton's needs. 2. Here is a link to the classic Beecher-Mann paper on cost allocation for utilities: https://ipu.msu.edu/wp- content/uploads/2016/12/Beecher-Mann-Cost-Allocation-Rate-Design-90-17-Dec-90-1 pdf I've included two relevant paragraphs from the Executive summary I referred to in our call. Cost allocation is inexact: no single correct approach or method exists. Much depends on the criteria used by analysts. All cost studies involve judgments and should be viewed as a starting point. The choice of a cost allocation approach depends largely on utility management objectives and regulatory policy considerations. In the context of increasing pressure on water rates, a comparison of fully allocated (also known as fully distributed or embedded) cost analysis and marginal-cost analysis is warranted. Fully allocated and marginal-cost calculations both can provide decisionmakers with useful benchmarks for ratemaking as well as planning. These methods can produce divergent results. As a method of compromise. fully allocated costs can be used to determine revenue requirements while marginal costs can be used to design rates. Incremental least-cost analysis is proposed in this report as a marginal-cost 5