Laserfiche WebLink
City of Pleasanton <br />2025 Water Rate Study <br /> <br />Water Resources Economics <br />70 <br />5. RECYCLED WATER COST-OF-SERVICE AND RATES <br />5.1 COST-OF-SERVICE METHODOLOGY <br />The cost-of-service methodology used for the recycled water system is the same as for the potable water <br />system. The cost-of-service analysis is “revenue neutral,” meaning that the resulting cost-of-service <br />based rates collect the same amount of revenue as the City expects to collect in FY 2025. The revenue <br />neutral unit costs determine revenue neutral rates, which are then adjusted based on the proposed <br />financial plan increases to arrive at the proposed recycled water rates for four years. All values presented <br />in this section pertain to FY 2025 and are revenue neutral unless stated otherwise. <br /> <br />5.2 REVENUE REQUIREMENT <br />The total rate revenue requirement for the test year, FY 2025, is based on the financial plan projections <br />(Table 2-26) and is allocated between the Operating, Capital, and Revenue Offset components, as shown <br />in Table 5-1. The Operating revenue requirement consists of operating expenses (Line 2; from Table 2-26, <br />Line 13) and adjustments for cash from reserves (Line 13; from Table 2-26, Line 22). The Capital revenue <br />requirement includes debt service (Line 3; from Table 2-26, Line 20). The Revenue Offset revenue <br />requirement reduces the overall revenue requirement by the miscellaneous non-rate revenues (Lines 8- <br />10; from Table 2-26, Line 4). The total revenue requirement (Line 19) is equal to the amount of rate <br />revenue collected in FY 2025 (Table 2-26, Line 2). <br /> <br />Table 5-1: FY 2025 Recycled Revenue Requirement <br />Line FY 2025 Revenue Requirement Operating Capital Rev. Offset Total <br />1 Revenue Requirements <br />2 Operating Expenses $2,031,926 $0 $0 $2,031,926 <br />3 Debt Service $0 $434,895 $0 $434,895 <br />5 Subtotal $2,031,926 $434,895 $0 $2,466,821 <br />6 <br />7 Revenue Offsets <br />8 Non-Rate Revenue $0 $0 ($9,500) ($9,500) <br />9 Interest Income $0 $0 $0 $0 <br />10 Subtotal $0 $0 ($9,500) ($9,500) <br />11 <br />12 Adjustments <br />13 Cash to/(from) Reserves ($163,677) $0 $0 ($163,677) <br />15 Subtotal ($163,677) $0 $0 ($163,677) <br />16 <br />17 Total - Revenue Requirement $1,868,249 $434,895 ($9,500) $2,293,644 <br /> <br />5.3 COST FUNCTIONALIZATION <br />FUNCTIONAL CATEGORY DEFINITIONS <br />After determining the revenue requirement, the next step in the cost-of-service analysis is to allocate the <br />City’s costs into various functional categories. These categories represent the main functions of the <br />City’s recycled water system and include: