ITEM 24 ATTACHMENT 2 - Laserfiche WebLink

City of Pleasanton 2025 Water Rate Study Water Resources Economics 71 • Meter Maintenance: costs of meter maintenance and replacement • Customer Service: costs related to customer service and billing • Water Supply: costs related to acquiring imported recycled water • Transmission and Distribution (T&D): costs related to the transmission and distribution of recycled water through the City’s recycled water system • General: costs that are not directly attributable to any other functional category • Revenue Offset: miscellaneous revenues that are not generated by specific customer classes or for payment of services provided by the City; these revenues can be used to offset rates at the City’s discretion under Proposition 218 requirements OPERATING COST FUNCTIONALIZATION WRE worked closely with City staff to evaluate and allocate the operating expenses for FY 2025 (Table 2-14) to the most closely associated functional categories within the recycled water system, as shown in Table 5-2. The recycled meter maintenance allocation (Line 1) assumes the same meter cost per equivalent meter as potable water, and similarly, the customer service allocation (Line 2) assumes a similar customer service cost per bill as potable water. The water supply allocation is from Table 2-26 (Line 10), the T&D allocation is based on the portion of the recycled water budget related to compliance costs, and the General allocation is calculated from the difference between total operating expenses in FY 2025 (Table 2-26, Line 13) less allocation to other cost components (Lines 1-4). Table 5-2: Recycled Operating Costs by System Functions Line Cost Functions Operating Expenses Percent of Total 1 Meter Maintenance $8,537 0.4% 2 Customer Service $4,664 0.2% 3 Water Supply $1,181,833 58.2% 4 T&D $365,747 18.0% 5 General $471,146 23.2% 6 Revenue Offset $0 0.0% 7 Total $2,031,926 100.0% CAPITAL ASSET FUNCTIONALIZATION WRE worked with City staff to evaluate and allocate the City’s current capital assets to the most closely associated functional categories within the recycled water system, as shown in Table 5-3. The detailed allocation of the current capital assets to the functional categories is included in the Appendix (Table 8-6). It is standard practice in most water cost-of-service studies to functionalize current capital assets rather than planned CIP costs, since the latter can fluctuate more significantly from year to year. The current capital asset base provides a more stable representation of long-term capital needs and their associated costs. The asset valuation methodology used in this study is Replacement Cost Less Depreciation (RCLD), which takes both inflation and depreciation of the City’s recycled water system into account.