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5/21/2025 <br />Connection Fee Methodology <br />21 <br />Equity Buy-In <br />Method <br />•Agencies with <br />additional capacity <br />in existing system <br />•New customers <br />“buy in” to system <br />that existing <br />customers built <br />Incremental Cost <br />Method <br />•Agencies that are <br />adding capacity to <br />future system <br />•New customers pay <br />for capital projects <br />that are built to <br />serve growth <br />Hybrid <br />Method <br />•Agencies that have <br />both existing and <br />future capacity <br />•New customers pay <br />a portion to buy in <br />and a portion to <br />build new capacity <br />WRE recommends the Hybrid Method for the City of Pleasanton <br />Connection Fee Methodology <br />•Buy-In Component <br />•Determine asset value of existing water system (based on RCLD* methodology) and <br />units of service related to existing customers (equivalent meters) <br />•Revenues from buy-in component are transferred to water enterprise fund to benefit <br />existing customers (can be used to offset future rates) <br />•Incremental Component <br />•Determine cost of expanding future system and units of service that the expansion <br />projects can accommodate <br />•Revenues from incremental component can only be used to fund expansion -related <br />CIP that benefits future growth <br />22 <br />*Replacement Cost Less Depreciation <br />21 <br />22 <br />Page 215 of 226