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uniform rate structure for all customers to ensure <br />greater consistency and reduce legal risks. <br />The City's Water Shortage Contingency Plan, <br />required by state law, calls for drought rates to be <br />applied only when the City Council declares a water <br />shortage emergency. These rates are designed to <br />recover lost variable revenues when customers are <br />required to reduce their water use. <br />Under the current plan, customers receive a 10 CCF <br />allotment every two months that is exempt from <br />drought surcharges. Based on updated consumption <br />patterns, staff recommended reducing the allotment <br />to 8 CCF to better align with state -mandated <br />conservation targets and ensure annual usage <br />reductions are met. This change benefits low -use <br />customers, most of whom already use 8 CCF or less <br />and will continue to avoid drought surcharges. More <br />of the responsibility shifts toward higher -use <br />customers. Because Zone 7's fixed costs are now <br />recovered through fixed charges, less variable <br />revenue is at risk. As a result, the proposed drought <br />surcharge rates are lower overall than the current <br />drought rates, even with the reduced 8 CCF <br />allotment. <br />Regarding transparency, all revenues collected <br />through water rates can only be used for water <br />services and cannot exceed the cost of providing <br />those services. This includes daily operations, <br />