COUNCIL AGENDA PACKET - Laserfiche WebLink

Page 7 of 8 PWAG met with WRE and City staff on April 9, 2025, to review the analysis and potential outcomes and impacts. PWAG recommended seeking City Council approval for a uniform rate structure with 100 percent recovery of Zone 7 fixed fee, and a modified discount program that is limited to qualified low-income households, with no specific discount based on age. PWAG also suggested presenting the 75 percent recovery of Zone 7 fixed fee scenario for comparison and discussion. RECOMMENDATION Staff recommends approving a rate structure that includes uniform consumption-based variable charges for all customer classes and full fixed charge recovery of Zone 7 fixed costs. The uniform consumption-based variable charge is consistent with recent court cases that have ruled against tiered variable charges. The full fixed charge recovery of Zone 7 fixed costs provides stable revenue to the utility, which is especially important during periods of reduced water consumption. The disadvantage of this recommendation is that it has a higher impact on lower water usage customers as compared to higher water usage customers. Alternative An alternative to the recommended rate structure is to reduce the fixed charge recovery of Zone 7 fixed costs from 100 percent to 75 percent. This will slightly reduce the impact on lower water usage customers as compared to higher water usage customers, but will include revenue risk for the City to cover Zone 7 fixed costs, particularly during periods of reduced water consumption. NEXT STEPS Upon direction on the water rate structure and discount program, staff will proceed to the next phase of water rate study. The target schedule and deliverables are as follows: • June 3 - City Council meeting: final water rates, connection fees, drought rates • July 15 - City Council meeting: approve Proposition 218 notice, accept rate study report • July 30 - Last day to mail out public notification of proposed rate changes • October 7 - City Council meeting: Public Hearing to adopt water rates • January 1, 2026 - New rates effective EQUITY AND SUSTAINABILITY As a full-service municipality, the City provides a wide range of services and programs to meet the needs of all community members, including as the City's water retailer. Completing the water rate and connection fee studies will provide information intended to support the fiscal sustainability of the City's water enterprise fund. OUTREACH The City has proactively shared information on water activities and efforts related to the Water System Management Plan and the Water Rate Study, including the Pleasanton Water Open House, a "Let’s Talk Water" questionnaire, press releases, the Pleasanton Pipeline newsletter, social media posts for "Water Wednesdays", continuous updates to the Pleasanton Water webpages, and online portal, bill inserts and similar notices and messaging. The City continues to engage the Pleasanton Water Advisory Group - comprised of residents and businesses who reflect a broad spectrum of community interests and perspectives - to provide input and Page 209 of 249