CITY COUNCIL REGULA MEETING AGENDA PACKET _Revised_ 6-2-26

Page 2 of 15 RECOMMENDATION Approve the proposed sewer rate structure, sewer rates, and updated sewer connection fees needed to implement the Rate Study Financial Plan’s Scenario 1 – Maintain, including: 1. Update the sewer rates for condominium and multifamily homes to be the same, consistent with DSRSD methodology; 2. Revise the sewer rate methodology for commercial and industrial customers to align with DSRSD by providing one collection rate regardless of business classification; and 3. Continue differentiating between non-submetered and submetered Pleasanton Unified School District customers. BACKGROUND The City owns and operates a sewer collection system consisting of approximately 253 miles of gravity sewers, 4.9 miles of force mains, eight siphons, 11 active pump stations, and approximately 21,000 service connections. Average dry-weather flow is approximately 6 million gallons per day (MGD). The City has agreements with the Dublin San Ramon Services District (DSRSD) and the City of Livermore, for the Ruby Hill service area, for wastewater treatment and is a member of the Livermore-Amador Valley Water Management Agency (LAVWMA) for disposal of treated wastewater. The City also has an agreement with Alameda County, which allows sewage flows from the County’s Castlewood Service Area to be conveyed through the City’s collection system for treatment at DSRSD. Historically, the City has relied on Consumer Price Index (CPI) increases to raise sewer revenue. This approach has not generated the resources needed to adequately maintain and rehabilitate aging infrastructure or keep up with increasing operational and regulatory demands. As a result, operating costs have been withdrawing from the sewer enterprise fund balance every year. With aging infrastructure experiencing higher failure rates and increasing regulatory requirements, it is very important that the City establish a justifiable sewer rate that supports the system's critical infrastructure needs in the coming years and meets State regulatory requirements for managing the sanitary sewer system. On June 17, 2025, the City Council approved the City’s 2025 Sewer System Management Plan (SSMP), a living document required by the State Water Resources Control Board (SWRCB) that provides the framework for managing the sewer program. The SSMP identified the need for the City to establish a complete and comprehensive sewer management program that supports required operations and maintenance (O&M), repair and replacement (R&R), and capital improvement program (CIP) projects to meet the minimum State requirements for effective sewer system management and to maintain compliance with all sanitary sewer regulatory requirements. As required in the SSMP, the City developed a long-term sewer CIP identifying critical infrastructure needs over the next 20 years, which the City Council approved on November 4, 2025. To support financial sustainability during SSMP implementation, the City retained a utility rate consulting firm, Water Resources Economics, LLC (WRE), to prepare the 2026 Sewer Rate Study. The Rate Study will develop cost-based, fair, and legally defensible sewer rates and connection fees that adequately fund the sewer program. Page 339 of 617