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and financial plan, which identified more than $73 <br />million in essential improvements over the next five <br />years to ensure the safety and reliability of <br />Pleasanton's water system. <br />The full rate adjustments are clearly outlined in the <br />Proposition 218 notice and online, so customers can <br />seethe impacts for Years 1-4. <br />The Zone 7 Water Agency sets the wholesale water <br />rates and fixed charges for Pleasanton, and the City <br />is required to pass these charges directly to its <br />customers. In past years, Pleasanton only collected <br />about 32% of Zone 7's fixed costs through fixed <br />charges, with the remainder recovered through <br />variable charges. Under the proposed structure, <br />customers will now cover 100% of Zone 7's fixed <br />charges as a direct pass-through, rather than <br />subsidizing them through consumption -based <br />charges. <br />This change makes the Year 1 fixed charge appear <br />higher because the full cost recovery is being shifted <br />into the fixed portion all at once. However, beginning <br />in Year 2, the Zone 7 fixed charges shown in the City's <br />rate tables increase by no more than 5% per year, <br />consistent with the assumptions in the Water Rate <br />Study and Proposition 218 notice. <br />It is also important to note that these Zone 7 fixed <br />charges cover only Zone 7's wholesale costs to <br />