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supply Pleasanton with treated water. They do not <br />fund Pleasanton's capital improvements or <br />operations, which are recovered separately through <br />the City's rates. Moving to full recovery of Zone 7's <br />fixed costs improves the City's financial stability and <br />reduces risk during periods of low water use. <br />Regarding the rate structure, AB 1827, which took <br />effect on January 1, 2025, clarified that water <br />agencies may include incrementally higher costs in <br />rates when those costs can be demonstrated —for <br />example, when high-volume or peak usage creates <br />identifiable additional expenses for the system. <br />However, AB 1827 did not change the fundamental <br />requirements of Proposition 218: rates must still be <br />proportional to the actual cost of providing service <br />and supported by a cost -of -service analysis. In <br />Pleasanton's case, the City decommissioned its <br />groundwater wells in 2022 and now purchases 100% <br />of its potable water from Zone 7 Water Agency at the <br />same unit cost. Because all water is purchased from <br />the same source at the same cost, the City cannot <br />legally demonstrate a cost difference for higher - <br />volume users. Therefore, a tiered rate structure <br />cannot be justified under Prop 218, even with AB <br />1827. <br />The City has been reviewing its Senior and Low - <br />Income Discount Programs; no changes to the <br />discount programs have been approved. Staff is <br />developing a final recommendation with alternatives <br />