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HomeMy WebLinkAboutAgenda Packet - EVWD Board of Directors - 05/15/2024BOARD OF DIRECTORS MAY 15, 2024 East Valley Water District was formed in 1954 and provides water and wastewater services to 107,000 residents within the cities of San Bernardino and Highland, and portions of San Bernardino County. EVWD operates under the direction of a 5­member elected Board. GOVERNING BOARD EXECUTIVE MANAGEMENT James Morales, Jr. Chairman of the Board Michael Moore General Manager/CEO Ronald L. Coats Vice­Chairman Brian W. Tompkins Chief Financial Officer Chris Carrillo Governing Board Member Jeff Noelte Director of Engineering & Operations David E. Smith Governing Board Member Kerrie Bryan Director of Administrative Services Phillip R. Goodrich Governing Board Member Patrick Milroy  Operations Manager Vacant Water Reclamation Manager Justine Hendricksen District Clerk Board of Directors Special Meeting & Public Hearing May 15, 2024 ­ 5:30 PM 31111 Greenspot Road, Highland, CA 92346 www.eastvalley.org PLEASE NOTE: Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for public inspection in the District’s office located at 31111 Greenspot Rd., Highland, during normal business hours. Also, such documents are available on the District’s website at eastvalley.org and are subject to staff’s ability to post the documents before the meeting. Pursuant to Government Code Section 54954.2(a), any request for a disability­related modification or accommodation, including auxiliary aids or services, that is sought in order to participate in the above agendized public meeting should be directed to the District Clerk at (909) 885­4900 at least 72 hours prior to said meeting. In order to comply with legal requirements for posting of agenda, only those items filed with the District Clerk by 12:00 p.m. on Wednesday prior to the following Wednesday meeting not requiring departmental investigation, will be considered by the Board of Directors. CALL TO ORDER PLEDGE OF ALLEGIANCE ROLL CALL OF BOARD MEMBERS PUBLIC COMMENTS Any person wishing to speak to the Board of Directors is asked to complete a Speaker Card and submit it to the District Clerk prior to the start of the meeting. Each speaker is limited to three (3) minutes, unless waived by the Chairman of the Board. Under the State of California Brown Act, the Board of Directors is prohibited from discussing or taking action on any item not listed on the posted agenda. The matter will automatically be referred to staff for an appropriate response or action and may appear on the agenda at a future meeting. DISCUSSION AND POSSIBLE ACTION ITEMS a.Consider Adoption of Resolution 2024.08 ­ Updating Water and Wastewater Rates and Charges, Capacity Fees, and Certain Miscellaneous Fees, Public Hearing REPORTS a.General Manager/CEO Report b.Legal Counsel Report c.Board of Directors’ Comments ADJOURN BOARD OF DIRECTORSMAY 15, 2024East Valley Water District was formed in 1954 and provides water and wastewater services to107,000 residents within the cities of San Bernardino and Highland, and portions of SanBernardino County.EVWD operates under the direction of a 5­member elected Board.GOVERNING BOARD EXECUTIVE MANAGEMENTJames Morales, Jr.Chairman of the Board Michael MooreGeneral Manager/CEORonald L. CoatsVice­Chairman Brian W. TompkinsChief Financial OfficerChris CarrilloGoverning Board Member Jeff NoelteDirector of Engineering & OperationsDavid E. SmithGoverning Board Member Kerrie BryanDirector of Administrative ServicesPhillip R. GoodrichGoverning Board Member Patrick Milroy Operations ManagerVacantWater Reclamation ManagerJustine Hendricksen District Clerk Board of Directors Special Meeting & Public Hearing May 15, 2024 ­ 5:30 PM 31111 Greenspot Road, Highland, CA 92346 www.eastvalley.org PLEASE NOTE: Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for public inspection in the District’s office located at 31111 Greenspot Rd., Highland, during normal business hours. Also, such documents are available on the District’s website at eastvalley.org and are subject to staff’s ability to post the documents before the meeting. Pursuant to Government Code Section 54954.2(a), any request for a disability­related modification or accommodation, including auxiliary aids or services, that is sought in order to participate in the above agendized public meeting should be directed to the District Clerk at (909) 885­4900 at least 72 hours prior to said meeting. In order to comply with legal requirements for posting of agenda, only those items filed with the District Clerk by 12:00 p.m. on Wednesday prior to the following Wednesday meeting not requiring departmental investigation, will be considered by the Board of Directors. CALL TO ORDER PLEDGE OF ALLEGIANCE ROLL CALL OF BOARD MEMBERS PUBLIC COMMENTS Any person wishing to speak to the Board of Directors is asked to complete a Speaker Card and submit it to the District Clerk prior to the start of the meeting. Each speaker is limited to three (3) minutes, unless waived by the Chairman of the Board. Under the State of California Brown Act, the Board of Directors is prohibited from discussing or taking action on any item not listed on the posted agenda. The matter will automatically be referred to staff for an appropriate response or action and may appear on the agenda at a future meeting. DISCUSSION AND POSSIBLE ACTION ITEMS a.Consider Adoption of Resolution 2024.08 ­ Updating Water and Wastewater Rates and Charges, Capacity Fees, and Certain Miscellaneous Fees, Public Hearing REPORTS a.General Manager/CEO Report b.Legal Counsel Report c.Board of Directors’ Comments ADJOURN BOARD OF DIRECTORSMAY 15, 2024East Valley Water District was formed in 1954 and provides water and wastewater services to107,000 residents within the cities of San Bernardino and Highland, and portions of SanBernardino County.EVWD operates under the direction of a 5­member elected Board.GOVERNING BOARD EXECUTIVE MANAGEMENTJames Morales, Jr.Chairman of the Board Michael MooreGeneral Manager/CEORonald L. CoatsVice­Chairman Brian W. TompkinsChief Financial OfficerChris CarrilloGoverning Board Member Jeff NoelteDirector of Engineering & OperationsDavid E. SmithGoverning Board Member Kerrie BryanDirector of Administrative ServicesPhillip R. GoodrichGoverning Board Member Patrick Milroy Operations ManagerVacantWater Reclamation ManagerJustine HendricksenDistrict ClerkBoard of Directors Special Meeting & Public HearingMay 15, 2024 ­ 5:30 PM31111 Greenspot Road, Highland, CA 92346www.eastvalley.orgPLEASE NOTE:Materials related to an item on this agenda submitted to the Board after distribution of theagenda packet are available for public inspection in the District’s office located at 31111Greenspot Rd., Highland, during normal business hours. Also, such documents are availableon the District’s website at eastvalley.org and are subject to staff’s ability to post thedocuments before the meeting.Pursuant to Government Code Section 54954.2(a), any request for a disability­relatedmodification or accommodation, including auxiliary aids or services, that is sought in orderto participate in the above agendized public meeting should be directed to the District Clerkat (909) 885­4900 at least 72 hours prior to said meeting. In order to comply with legal requirements for posting of agenda, only those items filed with the District Clerk by 12:00 p.m. on Wednesday prior to the following Wednesday meeting not requiring departmental investigation, will be considered by the Board of Directors. CALL TO ORDER PLEDGE OF ALLEGIANCE ROLL CALL OF BOARD MEMBERS PUBLIC COMMENTS Any person wishing to speak to the Board of Directors is asked to complete a Speaker Card and submit it to the District Clerk prior to the start of the meeting. Each speaker is limited to three (3) minutes, unless waived by the Chairman of the Board. Under the State of California Brown Act, the Board of Directors is prohibited from discussing or taking action on any item not listed on the posted agenda. The matter will automatically be referred to staff for an appropriate response or action and may appear on the agenda at a future meeting. DISCUSSION AND POSSIBLE ACTION ITEMS a.Consider Adoption of Resolution 2024.08 ­ Updating Water and Wastewater Rates and Charges, Capacity Fees, and Certain Miscellaneous Fees, Public Hearing REPORTS a.General Manager/CEO Report b.Legal Counsel Report c.Board of Directors’ Comments ADJOURN Agenda Item #a May 15, 20241 Meeting Date: May 15, 2024 Agenda Item #a Public Hearing 1 0 8 2 Special Board Meeting TO: Governing Board Members FROM: General Manager/CEO SUBJECT: Consider Adoption of Resolution 2024.08 - Updating Water and Wastewater Rates and Charges, Capacity Fees, and Certain Miscellaneous Fees, Public Hearing RECOMMENDATION That the Board of Directors adopt Resolution 2024.08 - Updating the Schedule of Water and Wastewater Rates and Charges. BACKGROUND / ANALYSIS On March 13th, 2024, staff presented a summary of findings from a Cost of Service Analysis (COSA) and rate design study prepared by IB Consulting for the District’s three enterprises: water, wastewater collection, and water reclamation. The proposed rate adjustments will take affect next fiscal year and will be reflected in future budgets accordingly. Some key drivers included in the financial plan are: •Declining Water Sales - 15% below sales three years ago; •Inflation - ranged from 4% to 8% over the last three years and increased prices for goods and services; •Power Costs - increased faster than general inflation, projected at 7% for the next three years; and •Capital Improvement Projects - new storage tanks and groundwater wells, and pipeline replacements require increased funding of $5 to $7 million annually for the capital budget. As a result of the Cost of Service Analysis performed by IB Consulting, moderate rate adjustments are proposed for the water and wastewater enterprises over the next three years beginning in July of 2024. The Board authorized staff at the March 13, 2024 meeting to mail notices for the May 15, 2024 hearing at which time the Board would consider adoption of water and wastewater rate adjustments. Approximately 35,400 hearing notices were printed and distributed to District customers and property owners, including residential owner- occupants, residential tenant-occupants and landlords, and commercial-occupants and owners. Notices were also posted in the local newspaper during the two weeks prior to this hearing. Agenda Item #a May 15, 20242 Meeting Date: May 15, 2024 Agenda Item #a Public Hearing 1 0 8 2 In anticipation of the rate hearing scheduled for May 15th, staff has also reviewed and updated certain miscellaneous fees paid by commercial customers for inspection of backflow devices, and for pretreatment inspection and monitoring. A calculation of costs to perform these services disclosed that fees currently being collected do not cover these costs and the fees therefore need to be adjusted. Adjustment of these fees does not require mailing notices to all property owners under Proposition 218, but simply posting notices of a hearing for consecutive weeks in a newspaper of general circulation. The required notices have been placed in the local newspaper, as well as posted on the District’s web site. After mailing out and posting the required notices, all reports and documentation supporting proposed rate and fee adjustments were made available for public inspection for the time required prior to this hearing date. With these prerequisites having been met, staff recommends adoption of attached Resolution 2024.08 updating water and wastewater rates and certain inspection fees related to backflow devices and the District’s pretreatment program. Proposed rate and fee changes are highlighted in the accompanying copy of the District’s Schedule of Water and Wastewater Rates and Charges. AGENCY GOALS AND OBJECTIVES II - Maintain a Commitment To Sustainability, Transparency, and Accountability A. Practice Transparent and Accountable Fiscal Management REVIEW BY OTHERS This agenda item has been reviewed by the Administration, Engineering, and Finance Departments, the Finance & Human Resources Committee, and Legal Counsel. FISCAL IMPACT There is no fiscal impact to the FY 2023-24 budget. All fiscal impacts associated with future budget years will be explained in future budgets. Recommended by: ________________ Michael Moore General Manager/CEO Respectfully submitted: ________________ Brian Tompkins Chief Financial Officer ATTACHMENTS Agenda Item #a May 15, 20243 Meeting Date: May 15, 2024 Agenda Item #a Public Hearing 1 0 8 2 1. Presentation-Public Hearing 2. Presentation- Miscellaneous Fee Update 3. EVWD Resolution 2024.08 4. Exhibit A - Schedule of Water and Wastewater Rates and Charges 5. Exhibit B - Miscellaneous Fee Calculation 6. IB Consulting Rate Study 7. Public Hearing Notice Brian Tompkins, Chief Financial Officer May 15, 2024 PUBLIC HEARING 2 COST-OF-SERVICE RATE STUDY TIMELINE IB Consulting - Developed long- term financial plans - Updated cost-of- service analysis Rate Workshop - Rate workshop with Board of Directors Fall 2023 Jan 2024 Feb 2024 Mar 2024 Prop 218 Rate Notices Apr 2024 May 15th Public Hearing Financial Plans Finalized - Forecasted expenses - Incorporated capital improvement plan - Identified each utility’s revenue requirements Financial Plan Workshops - Financial plan workshops with Finance Committee 3 PROPOSITION 218 PROTEST RECEIVED TO DATE Mailed Prop 218 Notices 45 days prior to Public Hearing Majority protest exists? Board may consider to adopt proposed rates Board may not consider to adopt proposed rates NUMBER PROTEST RECEIVED YES NO 4 FACTORS IMPACTING THE FINANCIAL PLAN Reserve Funding Account for unforeseen risks through well established reservesExpense Projections Account for cost escalations by expense category and any debt obligations Revenue Projections Account for rate revenues, other operating revenues, and non-operating revenues Water Demands Account for expected changes in total water usage, growth, as well as changes in service needs Financial Plan Capital Spending Account for anticipated repair and replacement projects to maintain a safe and reliable system. 5 RATE DRIVERS Rate StudyWater Sales Inflation Power Costs Capital Improvement Projects 6 DISTRICT RATES 7 FY 2025 RATE COMPONENTS Fixed Components Variable Components Account Services Meter Capacity Fire Flow Demand Groundwater Delivery PeakingState Water Project Surface Water Water Efficiency Account Services Flow Chemical Oxygen Demand Total Suspended Solids Water Wastewater & Reclamation Fixed Components Variable Components 8 COST-OF-SERVICE REPORT Proposition 218 Compliance Proposition 218 Requirements •An agency cannot collect revenue beyond what is necessary to provide service •Revenues derived by the charge shall not be used for any purpose other than that for which the charge was imposed •The amount of the fee may not exceed the proportional cost-of-service for the parcel •No charge may be imposed for a service unless that service is actually used or immediately available to the owner of property •A written notice of the proposed charge shall be mailed to the record owner of each parcel at least 45 days prior to the public hearing 9 WATER PROPOSED RATES: FIXED AND VARIABLE Proposed Monthly Fixed Charges Meter Size FY 2025 FY 2026 FY 2027 5/8"$27.52 $29.18 $30.94 3/4"$34.62 $36.70 $38.91 1"$48.83 $51.76 $54.87 1 1/2"$84.35 $89.42 $94.79 2"$126.97 $134.59 $142.67 3"$368.48 $390.59 $414.03 4"$901.23 $955.31 $1,012.63 6"$1,433.98 $1,520.02 $1,611.23 8"$2,854.65 $3,025.93 $3,207.49 10"$4,630.48 $4,908.31 $5,202.81 12"$5,695.98 $6,037.74 $6,400.01 Fixed Charges Volumetric (Variable) Charges 10 WASTEWATER PROPOSED RATES: FIXED AND VARIABLE Fixed Charges Volumetric (Variable) Charges Proposed Monthly Fixed Charges Cust omer Class FY 2025 FY 2026 FY 2027 Single Family $16.70 $17.21 $17.73 Multi-Family $15.48 $15.95 $16.43 Non-Residential Low Strength $10.59 $10.91 $11.24 Medium Strength $10.59 $10.91 $11.24 High Strength $10.59 $10.91 $11.24 Schools & Churches $10.59 $10.91 $11.24 Patton State Hospital $10.59 $10.91 $11.24 Proposed Variable Rates ($/hcf) Cust omer Class FY 2025 FY 2026 FY 2027 Non-Residential Low Strength $0.77 $0.80 $0.83 Medium Strength $0.77 $0.80 $0.83 High Strength $0.77 $0.80 $0.83 Schools & Churches $0.45 $0.47 $0.49 Patton State Hospital $0.44 $0.46 $0.48 11 RECLAMATION PROPOSED RATES: FIXED AND VARIABLE Fixed Charges Volumetric (Variable) Charges Proposed Fixed Charges ($/Month) Cust omer Class FY 2025 FY 2026 FY 2027 Single-Family $29.79 $32.77 $36.05 Multi-Family $25.67 $28.24 $31.07 Non-Residential Low Strength $9.16 $10.08 $11.09 Medium Strength $9.16 $10.08 $11.09 High Strength $9.16 $10.08 $11.09 Schools & Churches $9.16 $10.08 $11.09 Patton State Hospital $9.16 $10.08 $11.09 Proposed Variable Rates ($/hcf) Cust omer Class FY 2025 FY 2026 FY 2027 Non-Residential Low Strength $2.19 $2.41 $2.66 Medium Strength $2.54 $2.80 $3.08 High Strength $3.96 $4.36 $4.80 Schools & Churches $1.29 $1.42 $1.57 Patton State Hospital $1.46 $1.61 $1.78 12 PROPOSED RATE CHANGES – AVERAGE RESIDENTIAL BILL The average home with four residents, using 16 HCF a month, and ¾” meter 13 HISTORY OF WATER RATE INCREASES 0% 5% 10% 15% 20% 25% 30% Change in Single-Family Bills (%) (3/4" Meter using 16 HCF) 14 TYPICAL WASTEWATER RATE COMPARISON $- $10 $20 $30 $40 $50 $60 2021 2022 2023 2024 2025 Si n g l e -Fa m i l y R e s i d e n t i a l Rate with SNRC Rate without SNRC 15 •Open Public Hearing •Receive testimony from District property owners / ratepayers •Close Public Hearing •Determine if a majority protest exist •If no majority protest, the District Board may consider adopting rates PUBLIC HEARING ACTION ITEMS QUESTIONS Brian Tompkins, Chief Financial Officer May 15, 2024 MISCELLANEOUS FEE UPDATE 2 •Miscellaneous Fees listed as exceptions from the Definition of a Tax as defined by Proposition 26 •Charge imposed for specific government service provided directly to the payer that is not provided to those not charged •Charge imposed for reasonable costs to issue licenses and permits, and perform investigations and inspections •A fine, penalty or other monetary charge imposed as a result of a violation of law •A charge imposed as a condition of property development •District Miscellaneous Fees were last updated March 22, 2023 MISCELLANEOUS FEES 3 •Importance of Reviewing Fees •Reflect costs for technical support •Ensure fees cover the actual cost of providing services •Identify services that cannot be categorized on a “lump sum” fee schedule •Ensure adequate deposits are collected to correlate with District costs •Calculation – Sum of: •(Fully burdened hourly rate) × (hours required) •Travel costs •Direct expenses REVIEWING MISCELLANEOUS FEE SCHEDULE 4 FEE CURRENT PROPOSED Initial Backflow Compliance Test $60/per device $145/per device Annual Backflow Administration Fee $15/per device $30/per device PROPOSED CROSS- CONNECTION CONTROL FEES 5 Includes annual permit, inspection, software, and administrative time. PRE-TREATMENT PROGRAM FEES CLASS OF DISCHARGERS CURRENT PROPOSED I $ 2,000 $ 2,210 II $ 1,000 $ 1,210 III $ 150 $ 210 IV $ 500 $ 710 V $ 200 $ 410 VI $ 150 $ 360 QUESTIONS East Valley Water District Resolution 2024.08 Page 1 of 4 RESOLUTION 2024.08 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE EAST VALLEY WATER DISTRICT ESTABLISHING A SCHEDULE OF RATES AND CHARGES FOR THE PROVISION OF WATER AND WASTEWATER SERVICE AND SUPERCEDING RESOLUTION 2023.15 WHEREAS, East Valley Water District (“District”) is a county water district organized and operating pursuant to California Water Code Section 30000 et seq.; and WHEREAS, pursuant to applicable law, including but no limited to Water Code Sections 31024, 31027, and 31101, the District’s Board of Directors adopted Ordinances No. 403 and 404 establishing the rules and regulations for sewer and water services, respectively, by the District; and WHEREAS, Ordinances 403 and 404 provide that Rates and Charges, may be changed from time to time or new rates and charges may be established by resolution of the Board of Directors; and WHEREAS, pursuant to applicable law, including but not limited to Water Code Sections 31007 and 31025, the District’s Board of Directors is authorized to adopt by resolution such rates for the provision of water service and wastewater service by the District to implement the rules and regulations set forth in District Ordinance No. 403 and 404, and to yield an amount sufficient to pay the operating expenses of the District, provide for repairs and depreciation of works owned or operated by the District, pay the interest on any bonded debt, and, so far as possible, provide a fund for the payment of the principal of the bonded indebtedness as it becomes due, and WHEREAS, at the request of the District, IB Consulting, LLC has prepared a Water, Wastewater, Reclamation Rate Study that outlines the need and basis for an adjustment to existing rates to continue to maintain and operate the District’s water, wastewater, and recycled water systems. The Rate Study was presented to the Board of Directors at a duly noticed public meeting on May 15, 2024; and WHEREAS, Section 21080(b) (8) of the Public Resources Code provides that the establishment, modification, structuring, restructuring or approval of rates, tolls, fares, or other charges by public agencies are exempt from the requirements of the California Environmental Quality Act (CEQA) provided that certain findings are made specifying the basis for the claim of exemption; and WHEREAS, The rates and charges established by this resolution qualify as exceptions to the definition of a tax pursuant to Article XIIIC,§ 1 of the Constitution of the State of California; and WHEREAS, the Board of Directors of the District deems it advisable and finds that it would be in the best interest of the District to amend or establish certain rates and charges, consistent with applicable constitutional and statutory requirements; and East Valley Water District Resolution 2024.08 Page 2 of 4 WHEREAS, Article XIIID of the Constitution of the State of California provides that, in imposing or increasing any property-related fee or charge (which term was held by the California Supreme Court in July, 2006, in the case Bighorn-Desert View Water Agency vs. Virjil, to include charges for water delivery), an agency shall provide written notice by mail of the proposed fee or charge to the record owner of each identified parcel upon which the fee or charge is proposed for imposition, the amount basis of calculating, and reason for such proposed fee or charge, and the date, time, and location of a public hearing on the proposed fee or charge to be conducted not less than 45 days after the mailing of said notice, and Government Code Section 53755 provides for such notice to be given by mailing to the address where billing statements are customarily sent by the District; and WHEREAS, said mailed notice was given in compliance with Government Code § 53755, setting Wednesday, May 15, 2024, at the hour of 5:30 p.m. of said day in the Board of Directors Room of the District, 31111 Greenspot Road, Highland, California, as the time and place for a public hearing on the proposed increases in water rates and charges and any proposed new property-related rates and charges set forth in Exhibits “A” and “B” to this resolution; and WHEREAS, at the time set, the duly noticed public hearing was held and all persons interested were given an opportunity to be heard concerning the increases in property-related rates and charges and any proposed new property-related rates and charges; and WHEREAS, this Board of Directors has considered all protests presented to the District by owners of identified parcels against the proposed increases in property-related rates and charges and any proposed new property-related rates and charges; WHEREAS, the District also wishes to establish miscellaneous fees incidental and related to the provision of services for water and wastewater treatment, but which fees and charges are not for property related services as defined by Article XIIID of the Constitution of the State of California and which fees and charges may be established by resolution of the Board of Directors of the District; NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the District as follows: Section 1. It is hereby found and determined that the number of written protests presented to the District against the proposed increases in property-related rates and charges and any proposed new property-related rates and charges has been tabulated and does not constitute a majority of the number of owners of identified parcels. Section 2. It is hereby found and determined that the proposed changes to the Schedule of Rates and Charges are within the purposes set forth in Section 21080(b) of the Public Resources Code including but not by way of limitation, the purposes of (1) meeting operating expenses, (2) purchasing or leasing supplies, equipment or materials, (3) meeting financial reserve needs and requirements, and (4) obtaining funds for capital projects necessary to maintain service within existing areas, and therefore, that such changes are exempt from CEQA. Section 3. It is hereby found and determined that the rates and charges of the District are imposed on the basis of demand as determined by measurements including water metering and East Valley Water District Resolution 2024.08 Page 3 of 4 meter size, acreage or other demand-generation characteristics of properties requesting connection, and cost of service restoration, inspection and other services provided for all fees; that such rates, charges and fees are imposed upon the request for or use of services; and that the water user charges satisfy the criteria and requirements of Water Code Section 370 et seq. relating to allocation-based conservation water pricing. Section 4. It is hereby found and determined that the user charges and fees and regulatory fees established or increased hereby do not produce revenues exceeding the costs reasonably borne in providing the regulation, product or service and/or are used for debt service or qualified capital outlay projects. Section 5. The new and/or revised rate(s), fee(s) and/or charge(s) as set forth in Exhibits “A” and “B” attached to this resolution and by this reference incorporated herein are hereby adopted in conformity with the authority set forth in Section 14.01 of Ordinance 403 and Section 21.01 of Ordinance 404, and the corresponding rate(s), fee(s) or charges(s), if any, as set forth in Ordinances 403 and 404 currently in effect, are hereby superseded and Resolution 2023.15 is hereby rescinded. Staff is directed to incorporate the hereby adopted new and/or revised rate(s), fee(s) and/or charge(s) into Exhibit “A” and “B” attached hereto. Section 6. That the provisions of this Resolution shall be effective July 1, 2024. Section 7. That the Secretary is hereby ordered and directed to post a certified copy of this Resolution in a public place within the District. This Resolution shall take effect as of the 1st day of July 2024. ADOPTED this 15th day of May 2024. ROLL CALL: Ayes: Noes: Absent: Abstain: James Morales, Jr. Board President East Valley Water District Resolution 2024.08 Page 4 of 4 ATTEST: Michael Moore Secretary, Board of Directors May 15, 2024 I HEREBY CERTIFY that the foregoing is a full, true and correct copy of Resolution 2024.08 adopted by the Board of Directors of East Valley Water District at its Regular Meeting held May 15, 2024. Michael Moore Secretary, Board of Directors EXHIBIT “A” EAST VALLEY WATER DISTRICT SCHEDULE OF WATER AND WASTEWATER RATES AND CHARGES UPDATED MAY 15, 2024 i Table of Contents Section 1: Water Service Charges ................................................................... 4 Monthly Water System Charge ..................................................................... 4 Commodity Charges: Potable Water ............................................................ 4 Private Fire Protection Service ..................................................................... 5 1. Commercial Standby Charge ......................................................................... 5 2. Fire Hydrant Flow Test Fee (per fire hydrant) ................................................. 6 Temporary Water Service Connection .......................................................... 6 Monthly Service Charge .................................................................................. 6 1. Commodity Charge ....................................................................................... 6 2. Meter Deposit ............................................................................................... 6 3. Temporary Service Meter Availability Charge (for reading) .............................. 6 4. Unauthorized Use of Water Charge ................................................................ 7 New Account Fees for Water Services .......................................................... 7 1. Security Deposit ........................................................................................... 7 2. Service Initiation Charge ............................................................................... 7 Miscellaneous Water Service Charges and Fees ........................................... 7 1. AMI Opt-Out Fee .......................................................................................... 7 2. Delinquency Charge ...................................................................................... 7 3. Disconnection Notice Charge ......................................................................... 8 4. Meter Test Charge ........................................................................................ 8 5. Returned Payment Fee ................................................................................. 8 6. Service Reconnect Charge (after hours) ......................................................... 8 7. Service Reconnect Charge (business hours) ................................................... 8 Cross-Connection Control ............................................................................. 9 1. Backflow Installation Fee .............................................................................. 9 2. Backflow Inspection Fee (per inspection) ..................................................... 10 3. Initial Backflow Compliance Test (per device) ............................................... 10 ii 4. Backflow Annual Administration Fee (per device) .......................................... 10 5. Annual Backflow Compliance Test (per device) ............................................. 10 Section 2: Wastewater Service Charges ........................................................ 11 Monthly Wastewater Charge ...................................................................... 11 Section 3: Developer Services ....................................................................... 13 Water Capacity and Connection Fees ......................................................... 13 Water Capacity Fees ..................................................................................... 13 Water Connection Fees ................................................................................. 13 Service Installation Benchmark Costs ......................................................... 14 Wastewater Connection Fees ..................................................................... 15 Fire Service Connection Charges ................................................................ 15 Developer Services’ Charges and Fees ....................................................... 16 1. Availability Letter ........................................................................................ 16 2. Construction Inspection Charge (per day or actual cost) ............................... 16 3. Development Agreement (per agreement or actual cost) .............................. 16 4. Development and Engineering Research Fee ($95 per hr; 4-hr min) .............. 16 5. Development Meeting Fee ........................................................................... 16 6. Easement/Quitclaim Processing (per easement) ........................................... 17 7. Fire Hydrant Installation Charge (actual cost or 5% of estimate) ................... 17 8. General Water/Sewer Service Inquiry .......................................................... 17 9. New Construction Chlorination and Flushing Fee ($355 min to actual cost) .... 17 10. Sewer Manhole and Valve Can Deposit ........................................................ 17 11. Special Facility Charge ................................................................................ 17 12. Water Main Extension Charge ...................................................................... 18 13. Water Quality Sampling Fee (per sample) .................................................... 18 14. Water/Sewer Plan Checking Fee (per sheet) ................................................. 18 15. Water System Design Charge ...................................................................... 18 16. Will Serve Letter ......................................................................................... 19 Section 4: Pretreatment Program ................................................................. 20 Penalties for Enforcement Response Plan Discharge Violations ................ 20 iii Penalties for Enforcement Response Plan Monitoring Violations .............. 22 Penalties for Enforcement Response Plan Reporting Violations ................ 23 Penalties for Enforcement Response Plan Permit Violations ..................... 24 Penalties for Enforcement Response Plan Miscellaneous Violations ......... 25 History of Revisions ........................................................................................ 27 4 Section 1: Water Service Charges Monthly Water System Charge The water system charge is the monthly availability charge applicable to all metered water services, and shall apply whether premises served by the meter are occupied. The charges, which vary by meter size, are established at the amounts listed in the table below. RATE EFFECTIVE DATE 1/1/2024 1/1/2025 1/1/2026 1/1/2027 5/8"25.49$ 27.52$ 29.18$ 30.94$ 3/4"32.74$ 34.62$ 36.70$ 38.91$ 1"47.24$ 48.83$ 51.76$ 54.87$ 1 1/2"83.50$ 84.35$ 89.42$ 94.79$ 2"127.00$ 126.97$ 134.59$ 142.67$ 3"243.01$ 368.48$ 390.59$ 414.03$ 4"373.52$ 901.23$ 955.31$ 1,012.63$ 6"736.05$ 1,433.89$ 1,520.02$ 1,611.23$ 8"2,041.16$ 2,854.65$ 3,025.93$ 3,207.49$ 10"2,041.16$ 4,630.48$ 4,908.31$ 5,202.81$ 12"2,041.16$ 5,695.98$ 6,037.74$ 6,400.01$ METER SIZE Commodity Charges: Potable Water Commodity Charges are billed on a per unit basis for water consumption registered by the water service meter. One unit is 100 cubic feet (HCF) of water, which is equal to 748 gallons. 5 RATE EFFECTIVE DATE TIERS 1/1/2024 1/1/2025 1/1/2026 1/1/2027 Tier 1 - Indoor Use $ 2.11 $ 2.19 $ 2.33 $ 2.47 Tier 2 - Outdoor Use $ 2.70 $ 2.84 $ 3.02 $ 3.21 Tier 3 - Inefficient Use $ 4.18 $ 4.10 $ 4.35 $ 4.62 The District has three price tiers with increasing rates per unit. The number of units a customer is billed in each tier is determined by their unique water budget. See Section 10 of the District’s Water Regulation and Service Ordinance for an explanation of water budgets. Private Fire Protection Service 1. Commercial Standby Charge The fire service standby charge is the monthly charge assessed per inch diameter of the District fire service meter. Water use through this service is limited to emergency fire requirements only. RATE EFFECTIVE DATE 7/1/2016 1/1/2025 1/1/2026 1/1/2027 5/8"8.78$ 13.75$ 14.58$ 15.46$ 3/4"8.78$ 13.84$ 14.68$ 15.57$ 1"8.78$ 14.01$ 14.86$ 15.76$ 1 1/2" 13.18$ 14.36$ 15.23$ 16.15$ 2"17.57$ 14.71$ 15.60$ 16.54$ 3"26.35$ 15.41$ 16.34$ 17.33$ 4"35.14$ 16.11$ 17.08$ 18.11$ 6"52.70$ 17.51$ 18.57$ 19.69$ 8"70.27$ 18.91$ 20.05$ 21.26$ 10"87.84$ 20.31$ 21.53$ 22.83$ 12"87.84$ 21.71$ 23.02$ 24.41$ METER SIZE 6 2. Fire Hydrant Flow Test Fee (per fire hydrant) The fire flow test charge is a flat rate established to cover the District’s time and effort for testing parts of the water system to obtain fire flow test data and calculate results as requested. The District will charge a one-time fee of $270 to administer fire flow tests. Temporary Water Service Connection A temporary service is available through the use of a fire hydrant. A customer deposit for the temporary service will be required, and all other applicable service charges shall apply. Monthly Service Charge Refer to the schedule of Monthly Water System Charges for three inch (3”) meters. 1. Commodity Charge Commodity charges for temporary services shall be billed at the Tier 3 rates based on the Potable Water Commodity Rates. When available, and feasible, recycled water shall be used for temporary construction uses. The Commodity Charge shall be as follows: AREA RATE / 100 CUBIC FEET Potable Tier 3 Rate 2. Meter Deposit A deposit equal to the replacement cost of the construction meter shall be collected at the time of service application. Currently, the replacement cost is estimated to be $2,700. The deposit will be applied to the closing bill and any remaining amount refunded to the customer. Lost meters will result in forfeiture of the deposit. 3. Temporary Service Meter Availability Charge (for reading) If a hydrant/construction meter is not available for a monthly reading as prescribed by the District, a fee of $100 will be charged for each month the meter is not read in order to cover the cost of correcting billing records. 7 4. Unauthorized Use of Water Charge The unauthorized use of water charge shall be charged to any person, organization or agency for each unauthorized use of District water or for tampering in any manner with any meter belonging to the District where this tampering shall affect the accuracy of such meter. The unauthorized use of water charge is hereby established at the rate of $500 for a first occurrence and $1,000 for each subsequent occurrence. New Account Fees for Water Services The following fees are applicable to all requests for new service, or transfer of an existing account to a new location: 1. Security Deposit A deposit of $150 will be required until a one-year payment history, with fewer than two delinquencies, has been established. The deposit insures payment of minimum District charges. 2. Service Initiation Charge The service initiation charge is a non-refundable charge of $35 per account, which covers the reasonable District costs for initiating water service. Miscellaneous Water Service Charges and Fees 1. AMI Opt-Out Fee This fee covers the cost to manually read the meter and will be charged when a customer requests to Opt-Out; that the District not install an Automated Metering Infrastructure (AMI) meter information unit to serve their property. 2. Delinquency Charge Rates and charges which are not paid on or before the due dates shall be subject to interest charges. Interest will be calculated at a rate of one and one-half percent (1 ½%) on all amounts that remain unpaid at the end of each billing cycle. 8 3. Disconnection Notice Charge The disconnect notice charge is the charge which covers reasonable District costs to notify customers that their water service is subject to impending termination. 4. Meter Test Charge The meter test charge is the charge which covers the District costs for removing, bench testing, and reinstalling the water meter to be tested. 5. Returned Payment Fee A returned payment charge is a charge which covers the reasonable administrative cost and banking charges for processing a returned check, or to respond to a disputed charge where a payment card was fraudulently used to make payment on an account. 6. Service Reconnect Charge (after hours) The service reconnect charge is the charge which covers the reasonable District costs for disconnection and reconnection during non-business hours, of service connections which are in violation of the provisions contained herein. 7. Service Reconnect Charge (business hours) The service reconnect charge is the charge which covers the reasonable District costs for disconnection and reconnection during regular business hours, of service connections which are in violation of the provisions contained herein. 9 Summary of charges/fees for Miscellaneous Water Service: CHARGE OR FEE NAME CHARGE/FEE AMI Opt-Out Fee $13 (per month) Delinquency Charge 1.5% Disconnection Notice Charge $30 Fire Hydrant Flow Test Fee $270 (per fire hydrant) Meter Deposit $2,700 Meter Test Charge $65 Returned Payment Fee $25 Service Initiation Charge $35 (per account) Service Reconnect Charge (after hours)$150 Service Reconnect Charge (business hours)$50 Temporary Service Meter Availability Charge (for reading)$100 Unauthorized Use of Water Charge $500 (first occurrence) Unauthorized Use of Water Charge $1,000 (each subsequent occurrence) Cross-Connection Control In order to prevent water from flowing backward into the District’s water distribution system, a backflow device must be installed by all commercial/irrigation and multi-family customers with four (4) or more units serviced. All backflow devices must be inspected upon installation and tested annually for compliance. Compliance testing may be performed by a certified backflow tester and results shall be submitted to the District. Installation of new backflow prevention assemblies are typically completed by the owner’s contractor, if staff performs the installation, it will be billed at actual cost. 1. Backflow Installation Fee The charge for installation will be based on actual cost to the customer, and will be billed accordingly. 10 2. Backflow Inspection Fee (per inspection) A fee of $145 will be charged for each standard backflow inspection of newly installed backflow prevention devices, in accordance with District Standards, and inspected by District staff. 3. Initial Backflow Compliance Test (per device) A fee of $60 will be charged to the customer for the initial backflow compliance test performed by certified District staff. 4. Backflow Annual Administration Fee (per device) The District shall appoint at least one person trained in cross-connection control to administer and ensure all District standards are met. This backflow annual administration fee will be assessed annually. 5. Annual Backflow Compliance Test (per device) A fee of $5 per month will be charged to the customer when the annual backflow compliance test is performed by certified District staff. The customer will only be billed as a $60 lump sum when District standards regarding the inspection, testing, and maintenance of customer-owned backflow assemblies are not followed. See Section 9 of the District’s Water Regulation and Service Ordinance for an explanation of Inspection, Testing and Maintenance. Summary of charges/fees for Cross-Connection Control: CHARGE OR FEE NAME CHARGE / FEE Backflow Installation Fee actual cost Backflow Inspection Fee $145 (per inspection) Initial Backflow Compliance Test $60 $145 (per device) Annual Backflow Administration Fee $15 $30 (per device) Annual Backflow Compliance Test $145 (per device) 11 Section 2: Wastewater Service Charges Monthly Wastewater Charge Wastewater charges consist of both a Collection (System) component and a treatment component, and include both fixed charges, and charges based on water usage. An explanation of how these charges apply to different customer classes is explained below. A. Residential Customers The collection and treatment charges for residential customers is a monthly fixed charge for each dwelling unit. Accounts with 1-3 dwelling units are classified as single- family residential customers; accounts with 4 or more dwelling units are classified as multi-family residential customers. The fixed monthly charges established for each of these customer classes are displayed in the following table: RATE EFFECTIVE DATE Collection Treatment Collection Treatment Collection Treatment Collection Treatment Single-Family Residential 16.32$ 26.77$ 16.70$ 29.79$ 17.21$ 32.77$ 17.73$ 36.05$ Multi-Family Residential 15.42$ 23.90$ 15.48$ 25.67$ 15.95$ 28.24$ 16.43$ 31.07$ 7/1/20267/1/2024 7/1/2025CURRENT B. Commercial / Non-Residential Customers The collection and treatment charges for non-residential customers consist of monthly fixed charges, assessed per account, and a volumetric charge assessed for each unit of water (HCF) used for the account during the billing period. The volumetric charge varies based on the strength/concentration factors of the wastewater discharged by commercial customers. Customers are assigned to a strength category based on industry standards. 12 Fixed Monthly Charges: RATE EFFECTIVE DATE Collection Treatment Collection Treatment Collection Treatment Collection Treatment 11.84$ 12.41$ 10.59$ 9.16$ 10.91$ 10.88$ 11.24$ 11.09$ 7/1/2025 7/1/2026CURRENT7/1/2024 Volumetric Charges per HCF of Water Usage: RATE EFFECTIVE DATE Collection Treatment Collection Treatment Collection Treatment Collection Treatment 0.41$ 1.11$ 0.77$ 2.19$ 0.80$ 2.41$ 0.83$ 2.66$ 0.54$ 1.76$ 0.77$ 2.54$ 0.80$ 2.80$ 0.83$ 3.08$ 0.54$ 3.92$ 0.77$ 3.96$ 0.80$ 4.36$ 0.83$ 4.80$ 0.66$ 2.06$ 0.44$ 1.46$ 0.46$ 1.61$ 0.48$ 1.78$ 0.41$ 1.11$ 0.45$ 1.29$ 0.47$ 1.42$ 0.49$ 1.57$ 7/1/2025 7/1/2026CURRENT7/1/2024 13 Section 3: Developer Services Water Capacity and Connection Fees Water Capacity Fees A “Capacity Charge” is defined within GC 66013 as a charge for public facilities in existence at the time a charge is imposed or charges for new facilities to be constructed in the future that is of benefit to the person or property being charged. Capacity fees ensure new development pays its fair share to connect to the system and does not cause additional burdens to current customers. Capital and infrastructure costs required to meet new demand/connections should be paid by those creating the cost to be incurred. On July 1 of each year Water Capacity Charges will automatically increase in proportion to the published 12-month increase measured in September each year in the Construction Cost Index, unless the EVWD Board of Directors determines that such an increase shall not be effective for the next succeeding fiscal year, or if the index does not increase or change. Water Connection Fees The water meter connection charge is the charge for installation and materials between the service angle stop and customer connection side within the meter box. Such regular charge shall be paid in advance by the applicant. Cost varies for the requested meter size and type. Service line connections to the main are separate from this fee and would be an additional non-regular charge. Where there is a non-regular charge, the District reserves the right to require the applicant to deposit an amount equal to the estimated cost of such service connection. 14 METER SIZE METER CONNECTION CHARGE 3/4" T-10 8,081$ 930$ 3/4" Mach 10 8,081$ 1,035$ 1"13,468$ 1,100$ 1 1/2"26,935$ 1,495$ 2"43,096$ 1,780$ 3"134,675$ 7,515$ 4"336,687$ 10,030$ 6"538,698$ 15,875$ 8"1,077,396$ 17,360$ 10"1,750,768$ 22,355$ CAPACITY CHARGE Service Installation Benchmark Costs Installation charges will be estimated by the District based on availability of District staff to complete the work-site specific construction conditions and requirements. The costs in the table shown are benchmarks, or cost references to begin from, for a short or long- side service installation based on requested meter size. Permitting, paving/concrete costs, and non-typical conditions are not included and will need to be assessed per connection, on a case-by-case basis. If the applicant elects not to have District staff complete the installation, then an administrative fee of 5% of the estimate will be charged. METER SIZE SHORT SIDE LATERAL LONG SIDE LATERAL 3/4" T-10 6,005$ 11,030$ 3/4" Mach - 10 6,110$ 11,135$ 1"6,035$ 11,060$ 1 1/2"6,420$ 11,445$ 2"6,640$ 11,665$ 3"14,765$ 22,690$ 4"17,210$ 25,135$ 6"22,985$ 30,915$ 8"24,470$ 32,395$ 10"29,465$ 37,390$ 15 Wastewater Connection Fees The sewer service connection charge is the charge for the type and size of service connection desired. Such regular charge shall be paid in advance by the applicant. Where there is no such regular charge, the District reserves the right to require the applicant to deposit an amount equal to the estimated cost of such service connection. The following charges are hereby established and shall be collected at the time of application for sewer connection: CHARGE OR FEE NAME Permit Charge $ 275 per connection Inspection Charge $ 100 per connection (per visit) Capacity Charge $ 8,803 per EDU or portion thereof CHARGE / FEE On July 1 of each year Wastewater Capacity Charges will automatically increase in proportion to the published 12-month increase measured in September each year in the Construction Cost Index, unless the EVWD Board of Directors determines that such an increase shall not be effective for the next succeeding fiscal year, or if the index does not increase or change. Fire Service Connection Charges The fire service charge is the charge for the type and size of fire service connection desired. Such regular charge shall be paid in advance by the applicant. Where there is no regular charge, the District reserves the right to require the applicant to deposit an amount equal to the estimated cost of such service connection. Installation charges will be estimated by the District based on availability of District staff to complete the work and site-specific construction conditions and requirements. If the applicant elects not to have District staff complete the installation then an administrative fee of 5% of the estimate will be charged. 16 Developer Services’ Charges and Fees 1. Availability Letter A fee of $155 will be charged for a water or sewer verification letter inquiry. 2. Construction Inspection Charge (per day or actual cost) Where a customer service connection or facility requires inspection by District personnel, the customer shall be charged for such inspection at the rate of $905 per day. When District personnel are not available, inspection will be performed by third party inspectors retained by the District. The hourly rate for third-party inspectors will be established at the beginning of each third-party inspection assignment. 3. Development Agreement (per agreement or actual cost) A Development Agreement is required whenever a project will include the design and construction of water or sewer facilities which will be dedicated to the District. This $1,375 minimum fee will cover the cost to initiate and execute a Development Agreement with the District. 4. Development and Engineering Research Fee ($95 per hr; 4-hr min) This fee will provide funding for Engineering staff to conduct research of existing accounts, easements, and other development related materials. This would only apply to obtaining information for Developers that is unique to their development area and not general information, such as fee schedules or District design standards. Utility Requests and providing of As-builts or other locating documentation is not included in this fee. This fee also encompasses the District’s time and effort spent on assisting customers who have a requirement to construct water or sewer facilities, which must meet District needs and conform to District standards. 5. Development Meeting Fee (per meeting, after first meeting) This $475 per meeting fee will provide funding for Engineering staff to prepare for and attend, meetings with developers regarding their projects beyond the initial project consultation meeting and set-up. This fee will primarily impact larger, more complex developments which may require multiple coordination meetings with staff. 17 6. Easement/Quitclaim Processing (per easement) A minimum fee of $975 will be charged for review and recordation of each Easement or Quitclaim document. If complexity of the legal document requires more time, legal counsel, or land surveyor counsel, actual costs beyond the minimum will be collected. 7. Fire Hydrant Installation Charge (actual cost or 5% of estimate) Installation charges will be estimated by the District based on availability of District staff to complete the work and site-specific construction conditions and requirements. If the applicant elects not to have District staff complete the installation, an administrative fee of 5% of the estimate will be charged. 8. General Water/Sewer Service Inquiry A fee of $75 will be charged for a Technician’s time for general inquiries for service to a parcel. This inquiry usually arises from realtors and small developers. 9. New Construction Chlorination and Flushing Fee ($355 min to actual cost) A minimum fee of $355 will be charged for new construction disinfection plan review, inspection, and flushing prior to sampling. 10. Sewer Manhole and Valve Can Deposit A refundable deposit of $1,500 per manhole will be charged for each sewer manhole structure shown on the sewer construction plans. A refundable deposit of $500 per valve can will be charged for each valve can shown on the water construction plans. These deposits will be returned when all manholes and valve cans are constructed to final grade by the Developer’s contractor and verified by the District. As an alternative to the manhole and valve can deposit, a guarantee bond may be provided in the same amount as the deposit. The guarantee bond shall contain covenants that are satisfactory to the District. Such bond shall remain in force until all manholes and valve cans are constructed to final grade by the Developer’s contractor and verified by the District. 11. Special Facility Charge A special facility charge shall be required for development of limited service whenever special facilities, including pressure regulators are required. The charge to be made to a developer or owner of land that is considered by the District to be within a limited service area shall be based upon the Developer’s or Landowner’s proportionate share 18 of the cost for the installation of such Special Facility. Such proportionate share to be borne by the developer or landowner shall be based on the percentage of such development to the entire limited service area to be served by the Special Facilities; and the same number of acres or area under normal conditions and the cost of facilities to serve the acreage of area under special conditions at a higher cost. 12. Water Main Extension Charge The water main extension charge is for the construction of a water main extending to the far side of the property to be served. This charge shall be based on the prevailing rates of time and material per District approved plans. The customer shall be responsible to provide the plans and for all applicable Water/Sewer Plan Checking charges described below. 13. Water Quality Sampling Fee (per sample) A fee of $135 will be charged for each water quality sample taken for new construction. 14. Water/Sewer Plan Checking Fee (per sheet) This $800 fee is collected per sheet and is a minimum that will cover up to three in- house plan checks. When District personnel are not available, plan checking will be performed by third-party Engineers retained by the District. The hourly rate and estimate for three plan checks for third-party plan checkers will be established at the beginning of each third-party plan checking assignment. The minimum fee per sheet established can be collected initially to begin plan checking and the Developer will deposit the difference to cover the third-party’s plan check cost to the District. Should more than three plan checks be required, additional funds may be deposited to bill against, and hours will be billed at the Engineering Research Fee or the cost of the third-party Engineer. Plan checking costs shall be paid before plans are returned. 15. Water System Design Charge A water system design charge shall be required for all main extensions, service connections and/or special facilities requiring the preparation of engineering plans and drawings. The water system design charge is hereby established as the fee charged by an Engineering firm of the District’s choosing, plus an additional 10% thereof for the District’s administrative costs. In the event the costs exceed the fees charged, the additional cost will be billed to the customer. 19 16. Will Serve Letter Once a Developer has compiled or met all the items needed to make the request for a Will Serve Letter, per the Development Guidelines and Procedures Handbook, they may request and pay a minimum fee of $575 to review and evaluate the infrastructure needs for a proposed project within the District’s service area. Should additional time be required for reviewing the project information and to prepare the document, the hourly rate established for the Engineering Research Fee shall be assessed in addition to the minimum fee . Summary of charges/fees for Developer Services: CHARGE OR FEE NAME CHARGE / FEE Availability Letter $155 Construction Inspection Charge $905 (per day) or actual cost Development Agreement $1,375 (per agreement; min to actual cost) Development and Engineering Research Fee $95 (flat rate, per 4-hr min) Development Meeting Fee $475 (per meeting, after first meeting) Easement/Quitclaim Processing $975 (per easement) Fire Hydrant Installation Charge actual cost or 5% of estimate General Water/Sewer Service Inquiry Fee $75 New Construction Chlorination and Flushing Fee $355 (min to actual cost) Sewer Manhole and Valve Can Deposit $1,500 (per manhole); $500 (per valve can) Special Facility Charge Based on proportionate share of Developer or Landowner share of the installation of Special Facility Water Main Extension Charge Based on prevailing rates of time and material per District approved plans Water Quality Sampling Fee $135 (per sample) Water/Sewer Plan Checking Fee $800 (per sheet; 3 plan checks) Water System Design Charge actual cost + 10% for administrative costs Will Serve Letter $575 (min fee) 20 Section 4: Pretreatment Program The District performed permit related activities will include permit processing, inspections and monitoring. The following fees are anticipated to cover the annual costs for each class of dischargers for the Pretreatment Program. Class* Annual Fee I User $2,000 $2,210 II User $1,000 $1,210 III User $150 $210 IV User $500 $710 V User $200 $410 VI User $150 $360 *Descriptions of each user type are defined in the East Valley Water District Sewer Regulations and Service Charge Ordinance, definitions section. Penalties for Enforcement Response Plan Discharge Violations The District may assess a penalty against a person or entity in compliance with the requirements of ordinances, and enforcement response plan guidelines. Violation & Circumstances Penalty First Discharge Violation in a 12-month Period - No harm to POTW None Second Discharge Violation in a 12-month Period - No harm to POTW $100 NMP Violation(s) —Does not result in Acute Non- Compliance $100 21 NMP Violation(s) – Acute Non-Compliance $100, $100, $500, $1000, each subsequent violation Any discharge violation(s) that result in Quarterly SNC status $100, $100, $500, each subsequent violation Any discharge violation(s) that result in pass-through, sludge contamination, or interference $1,000 or as determined by District review Dilution of Wastestream — First offense None Dilution of Wastestream — Repeat offense(s) $100 Continuous pH Monitoring indicates noncompliance $100 Septic Waste Discharged at non-authorized site or in noncompliance with limitations at the POTW — First Offense $100 Septic Waste Discharged at non-authorized site or in noncompliance with limitations at the POTW — Repeat Offense(s) $100, $1,000 or as determined by the District Discharge of any prohibited Waste — First Offense $100 Discharge of any prohibited waste — Repeat Offense(s) $100, $100, $1000 or as determined by the District 22 Penalties for Enforcement Response Plan Monitoring Violations The District may assess a penalty against a person or entity in compliance with the requirements of ordinances, and enforcement response plan guidelines. Violation & Circumstances Penalty Failure to sample or resample within required timeframes — Doesn’t result in Acute Non-Compliance None Failure to sample or resample within required timeframes — Results in Acute Non-Compliance $100 Improper Sample Location — First offense None Improper Sample Location — Repeat offense(s) $100, $500 for subsequent violations Improper sample collection or analytical methods — First offense None Improper sample collection or analytical methods — Repeat offense(s) $100, $500 for subsequent violations Failure to monitor for all required pollutants — First offense None Failure to monitor for all required pollutants — Repeat offense(s) $100, $500, $1000 for subsequent violations Failure to properly maintain or operate Flow monitoring or pretreatment equipment — First offense. None Failure to properly maintain or operate Flow monitoring or pretreatment equipment— Repeat offense(s) $100, $500, $1000 for subsequent violations Failure to install required monitoring or flow equipment — First offense. $100 Failure to install required monitoring or flow equipment — Repeat offense(s) $100/day 23 Penalties for Enforcement Response Plan Reporting Violations The District may assess a penalty against a person or entity in compliance with the requirements of ordinances, and enforcement response plan guidelines. Violation & Circumstances Penalty Failure to maintain records or reports as required by permit — First offense None Failure to maintain records or reports as required by permit — Repeat offense(s) $100 Failure to submit records, reports, or correspondence — less than 5 days late None Failure to submit records, reports, or correspondence — between 5 and 45 days late. $100 Failure to submit records, reports, or correspondence — Over 45 days late – Significant Non-Compliance $100, $500, $1000 for subsequent violations Failure to report SMR Discharge violation — First offense None Failure to report SMR Discharge violation — Repeat offense(s) $100 Failure to report Slug Load or spill discharge violation — First offense & no harm None Failure to report Slug Load or spill discharge violation — Repeat offense(s) — No harm $100 Failure to report Slug Load or spill discharge violation – Harm $250, $500, $1000 and $1500 for subsequent violations Failure to submit additional monitoring — First offense None Failure to submit additional monitoring — Repeat offense(s) $100 24 Penalties for Enforcement Response Plan Permit Violations The District may assess a penalty against a person or entity in compliance with the requirements of ordinances, and enforcement response plan guidelines. Violation & Circumstances Penalty Failure to submit permit application or renewal by due date None Failure to submit permit application renewal before current permit expires $100 Failure to submit permit application that results in a permit reclassification $100 Failure to comply with any permit condition of requirement — First offense $100 Failure to comply with any permit condition or requirement — Repeat offense(s) $100, $500, $1000 for subsequent violations Unauthorized or Unpermitted Discharge — first offense — No harm to POTW None Unauthorized or Unpermitted Discharge — Repeat offense(s) — No harm to POTW $100 Unauthorized or Unpermitted Discharge — First offense — Harm to the POTW $100, $500, $1000 depending of severity Unauthorized or Unpermitted Discharge — Repeat offense(s) — Harm to the POTW $100, $500, $1000 or as determined by District review Failure to submit required permit information or any process modification — First offense None Failure to submit required permit information or any process modification — Repeat offense(s) $100 25 Failure to implement any plan required by the permit (i.e. slug load, spill prevention, TOMP, etc.) — First offense $100 Failure to implement any plan required by the permit (i.e. slug load, spill prevention, TOMP, etc.) — Repeat offense(s) $100, $500, $1000 for subsequent violations Penalties for Enforcement Response Plan Miscellaneous Violations The District may assess a penalty against a person or entity in compliance with the requirements of ordinances, and enforcement response plan guidelines. Violation & Circumstances Penalty Denial of entry to perform monitoring or inspections — first offense None Denial of entry to perform monitoring or inspections — Repeat offense(s) $100, $500, $1000 for subsequent violations Spill containment not present or inadequate — First offense None Spill containment not present or inadequate — Repeat offense(s) $100 Spill containment area not properly maintained — First offense None Spill containment area not properly maintained — Repeat offense(s) $100, $500, $1000 for subsequent violations Illegal water softening equipment installed — First offense None Illegal water softening equipment installed — Repeat offense(s) $100, $500, $1000 for subsequent violations 26 Failure to implement Best Management Practices (BMPs) — First offense None Failure to implement Best Management Practices (BMPs) — Repeat offense(s) $100, $500, $1000 for subsequent violations 27 History of Revisions DATE ADOPTED RESOLUTION UPDATED OR RESCINDED REVISION DATE EFFECTIVE 05/15/24 2024.08 2023.15 Update Water Charges 01/01/25 05/15/24 2024.08 2023.15 Update Miscellaneous Fees 07/01/24 05/15/24 2024.08 2023.15 Update Wastewater Charges 07/01/24 10/11/23 2023.15 2023.05 Update Water Capacity Fees 10/11/23 Pass- Through N/A N/A Update Capacity Fees (per Cost Construction Index)07/01/23 03/22/23 2023.05 2021.13 Addition of Pretreatment Program Penalties 04/01/23 Pass- Through N/A N/A Update Capacity Fees (per Cost Construction Index)07/01/22 08/11/21 2021.13 2021.07 Update AMI Opt-Out Fee 09/01/21 Pass- Through N/A N/A Update Capacity Fees (per Cost Construction Index)07/01/21 05/12/21 2021.08 2019.19 Update Water and Wastewater Charges 01/01/22 05/12/21 2021.07 2019.19 Update Miscellaneous and Development Fees 06/01/21 Pass- Through N/A N/A Update Capacity Fees (per Cost Construction Index)07/01/20 12/11/19 2019.19 2019.06 Update Miscellaneous and Capacity Fees 01/01/20 05/22/19 2019.06 2017.07 Update Water Charges 01/01/20 07/11/18 2018.12 2017.01 Update Wastewater Charges 08/12/18 05/24/17 2017.07 2017.01 Update Water Charges 07/01/17 01/25/17 2017.01 2016.05 Update Wastewater Treatment Charges and Renew 5-Year Pass- Through Provision 07/01/17 02/24/16 2016.05 2015.04 Update Wastewater Charges and Miscellaneous Fees 04/01/16 03/25/15 2015.04 2014.32 Implement Water Budget Based Rates 06/01/15 03/25/15 2015.04 Ord 391 Update Wastewater Charges 06/01/15 EAST VALLEY WATER DISTRICT Miscellaneous Fee Calculations May 15, 2024 Update EXHIBIT "B" Initial Backflow Compliance Test (per device) Charge or Fee Name Rate Burden Total Rate Hours / Units Estimated Cost Current Fee Proposed Fee Water Quality Tech (Backflow Certified, Range 37) (hrs) $ 38.30 $ 22.98 61.29$ 0.50 $ 30.64 Water & Wastewater Compliance Supervisor ( Range 49) (hrs) $ 62.61 $ 37.57 100.18$ 0.80 $ 80.14 Equipment $ 10.00 N/A 10.00$ 1.00 $ 10.00 Truck (hrs) $ 38.00 N/A 38.00$ 0.50 $ 19.00 Annual Software Subscription (per device) $ 5.00 N/A 5.00$ 1.00 $ 5.00 $ 144.79 $ 60.00 $ 145.00 Annual Backflow Administration Fee (per device) Charge or Fee Name Rate Burden Total Rate Hours / Units Total Cost Per Test Current Fee Proposed Fee Water Quality Tech (Backflow Certified, Range 37) (hrs) $ 46.56 $ 27.93 74.49$ 0.20 $ 14.90 Water & Wastewater Compliance Supervisor ( Range 49) (hrs) $ 62.61 $ 37.57 100.18$ 0.10 $ 10.02 Equipment $ 10.00 N/A 10.00$ - $ - Truck (hrs) $ 38.00 N/A 38.00$ - $ - Annual Software Subscription (per device) $ 5.00 N/A 5.00$ 1.00 $ 5.00 $ 29.92 $ 15.00 $ 30.00 Exhibit B-1 EAST VALLEY WATER DISTRICT Miscellaneous Fee Calculations May 15, 2024 Update EXHIBIT "B" Pretreatment Program (FOG) Includes annual permit, inspection, software, and administrative time Class Rate + Burden Contracted Inspector Hours Total Rate Rate + Burden Water & Wastewater Compliance Supervisor Hours Estimated Cost Annual Software Subscription per Grease Removal Device $60.00 Estimated Cost of Increase Current Fee Proposed Fee I User $150.00 0.80 $ 120.00 $ 98.00 0.30 $ 29.40 $ 60.00 $ 209.40 $2,000.00 $2,210.00 II User $150.00 0.80 $ 120.00 $ 98.00 0.30 $ 29.40 $ 60.00 $ 209.40 $1,000.00 $1,210.00 III User $ - 0.00 $ - $ - 0.00 $ - $ 60.00 $ 60.00 $ 150.00 $ 210.00 IV User $150.00 0.80 $ 120.00 $ 98.00 0.30 $ 29.40 $ 60.00 $ 209.40 $ 500.00 $ 710.00 V User $150.00 0.80 $ 120.00 $ 98.00 0.30 $ 29.40 $ 60.00 $ 209.40 $ 200.00 $ 410.00 VI User $150.00 0.80 $ 120.00 $ 98.00 0.30 $ 29.40 $ 60.00 $ 209.40 $ 150.00 $ 360.00 Exhibit B-2 IB Consulting, LLC 31938 Temecula Parkway, Suite A #350 Temecula, CA. 92592 Water, Wastewater, Reclamation Rate Study Public Hearing May 15, 2024 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 2 TABLE OF CONTENTS Executive Summary ................................................................................................................................................ 6 Water Utility ........................................................................................................................................................... 10 Financial Plan Overview – Water Utility ................................................................................................................ 14 Proposed Financial Plan – Water Utility ................................................................................................................ 25 Cost-of-Service Analysis – Water Utility ................................................................................................................ 30 Rate Design – Water Utility ................................................................................................................................... 40 Cost-Based Rates – Water Utility .......................................................................................................................... 49 Wastewater Utility .................................................................................................................................................. 51 Financial Plan Overview – Wastewater Utility ....................................................................................................... 54 Proposed Financial Plan – Wastewater Utility ...................................................................................................... 61 Cost-of-Service Analysis – Wastewater Utility ...................................................................................................... 65 Rate Design – Wastewater Utility .......................................................................................................................... 69 Reclamation Utility ................................................................................................................................................. 75 Financial Plan Overview – Reclamation Utility ...................................................................................................... 77 Proposed Financial Plan – Reclamation Utility ..................................................................................................... 84 Cost-of-Service Analysis – Reclamation Utility ..................................................................................................... 88 Rate Design – Reclamation Utility ......................................................................................................................... 92 Cost-Based Rate Schedules ................................................................................................................................. 98 Multi-Year Rate Schedules .................................................................................................................................... 99 Appendix A – Water Supply Cost Analysis ......................................................................................................... 102 Appendix B – Capital Improvement Plans ........................................................................................................... 103 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 3 TABLES Table 1: Proposed Water Monthly Fixed Charges ...................................................................................... 7 Table 2: Dedicated Fireline Monthly Fixed Charges ............................................................................................... 7 Table 3: Proposed Water Commodity Charges ...................................................................................................... 7 Table 4: Proposed Wastewater Rates .................................................................................................................... 9 Table 5: Proposed Reclamation Rates ................................................................................................................... 9 Table 6: Accounts by Meter Size ........................................................................................................................... 11 Table 7: FY 2024 Water Monthly Fixed Charges .................................................................................................. 13 Table 8: FY 2024 Dedicated Fireline Monthly Fixed Charges .............................................................................. 13 Table 9: FY 2024 Budget-Based Water Commodity Rates .................................................................................. 13 Table 10: Water Assumptions for Forecasting Revenues ..................................................................................... 15 Table 11: Water Accounts by Meter Size and Firelines by Connection Size ........................................................ 15 Table 12: Water Projected Consumption .............................................................................................................. 16 Table 13: Water Assumptions for Forecasting Expenses ..................................................................................... 16 Table 14: Water Calculated Rate Revenues ......................................................................................................... 17 Table 15: Water Projected Revenues ................................................................................................................... 18 Table 16: Water Projected O&M Expenses .......................................................................................................... 19 Table 17: Water Reserve Requirements and Targets .......................................................................................... 20 Table 18: Water Financial Plan at Existing Rates ................................................................................................. 22 Table 19: Water Reserve Activity at Existing Rates .............................................................................................. 23 Table 20: Proposed Water Financial Plan ............................................................................................................. 26 Table 21: Water Reserve Activity at Proposed Rates ........................................................................................... 27 Table 22: Water Revenue Requirements (FY 2025 – FY 2027) ........................................................................... 31 Table 23: System Demand Allocations Between Delivery and Peaking ............................................................... 35 Table 24: Fire Flow Requirements within District’s Service Area ......................................................................... 35 Table 25: Fire Flow Demand as Percentage of Max Day and Max Hour.............................................................. 36 Table 26: System Peaking Factors and Distribution Basis ................................................................................... 36 Table 27: Water Supply Expense Allocation to Cost Components ....................................................................... 37 Table 28: Water O&M Expense Allocation to Cost Components .......................................................................... 38 Table 29: Water Debt Expense Allocation to Cost Components .......................................................................... 39 Table 30: Water Other Funding to Cost Components ........................................................................................... 39 Table 31: Water FY 2025 Cost-of-Service Requirements ..................................................................................... 39 Table 32: Accounts and Meter Equivalents ........................................................................................................... 40 Table 33: Peaking Factor by Customer Class and Tier ........................................................................................ 41 Table 34: Water Account Services Monthly Unit Rate .......................................................................................... 42 Table 35: Water Meter Capacity Monthly Unit Rate .............................................................................................. 43 Table 36: Fire Flow Demand Allocations .............................................................................................................. 43 Table 37: Fire Flow Demand Revenue Requirement Allocation ........................................................................... 44 Table 38: Potable Meters Fire Flow Demand Monthly Unit Rate .......................................................................... 44 Table 39: Dedicated Fireline Monthly Unit Rate .................................................................................................... 44 Table 40: Water Budget Allocations ...................................................................................................................... 45 Table 41: Water Supply Unit Rates ....................................................................................................................... 46 Table 42: Water Supply Unit Rate by Customer Class and Tier ........................................................................... 46 Table 43: Water Delivery Unit Rate by Customer Class ....................................................................................... 47 Table 44: Water Peaking Unit Rate by Customer Class and Tier ......................................................................... 47 Table 45: Water Efficiency Unit Rate by Tier ........................................................................................................ 48 Table 46: FY 2025 Water Monthly Fixed Charges ................................................................................................ 49 Table 47: FY 2025 Dedicated Fireline Monthly Fixed Charges ............................................................................ 49 Table 48: FY 2025 Water Commodity Rates ........................................................................................................ 50 Table 49: Sewer Units by Customer Class ........................................................................................................... 52 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 4 Table 50: FY 2024 Wastewater Fixed Charges and Commodity Rates ............................................................... 53 Table 51: Wastewater Assumptions for Forecasting Revenues ........................................................................... 54 Table 52: Wastewater Assumptions for Forecasting Expenses ............................................................................ 54 Table 53: Wastewater Calculated Rate Revenues ............................................................................................... 55 Table 54: Wastewater Projected Revenues .......................................................................................................... 55 Table 55: Wastewater Projected O&M Expenses ................................................................................................. 56 Table 56: Wastewater Reserve Requirements and Targets ................................................................................. 57 Table 57: Wastewater Financial Plan at Existing Rates ....................................................................................... 58 Table 58: Wastewater Reserve Activity at Existing Rates .................................................................................... 59 Table 59: Wastewater Proposed Financial Plan ................................................................................................... 61 Table 60: Wastewater Reserve Activity at Proposed Rates ................................................................................. 62 Table 61: Wastewater Revenue Requirements (FY 2025 – FY 2027).................................................................. 65 Table 62: Wastewater O&M Allocation to Cost Components ............................................................................... 67 Table 63: Wastewater Debt Allocation to Cost Components ................................................................................ 68 Table 64: Wastewater Other Funding Allocation to Cost Components................................................................. 68 Table 65: Wastewater FY 2025 Cost-of-Service Requirements ........................................................................... 68 Table 66: Residential Projected Flows .................................................................................................................. 69 Table 67: Non-Residential Flow Return Factor ..................................................................................................... 70 Table 68: FY 2025 Projected Non-Residential Flows ........................................................................................... 70 Table 69: Wastewater Units of Service ................................................................................................................. 71 Table 70: Wastewater Account Service Allocation to Customer Classes ............................................................. 72 Table 71: Wastewater Flow Allocation by Customer Class .................................................................................. 73 Table 72: Wastewater Revenue Requirement by Customer Class ....................................................................... 73 Table 73: Wastewater FY 2025 Residential Flat Monthly Charges ...................................................................... 74 Table 74: Wastewater FY 2025 Non-Residential Fixed Monthly Charges ............................................................ 74 Table 75: Wastewater FY 2025 Non-Residential Commodity Rates .................................................................... 74 Table 76: Reclamation Sewer Units by Customer Class ...................................................................................... 76 Table 77: FY 2024 Reclamation Fixed Charges and Commodity Rates .............................................................. 76 Table 78: Reclamation Assumptions for Forecasting Revenues .......................................................................... 77 Table 79: Reclamation Assumptions for Forecasting Expenses ........................................................................... 77 Table 80: Reclamation Calculated Rate Revenues .............................................................................................. 78 Table 81: Reclamation Projected Revenues ......................................................................................................... 79 Table 82: Reclamation Projected O&M Expenses ................................................................................................ 79 Table 83: Reclamation Reserve Requirements and Targets ................................................................................ 80 Table 84: Reclamation Financial Plan at Existing Rates ...................................................................................... 81 Table 85: Reclamation Reserve Activity at Existing Rates ................................................................................... 82 Table 86: Reclamation Proposed Financial Plan .................................................................................................. 84 Table 87: Reclamation Reserve Activity at Proposed Rates ................................................................................ 85 Table 88: Reclamation Revenue Requirements (FY 2025 – FY 2027)................................................................. 88 Table 89: Reclamation O&M Allocation to Cost Components .............................................................................. 90 Table 90: Reclamation Other Funding Allocation to Cost Components................................................................ 91 Table 91: Reclamation FY 2025 Cost-of-Service Requirements .......................................................................... 91 Table 92: Reclamation Commodity Units of Service ............................................................................................. 92 Table 93: Reclamation Units of Service ................................................................................................................ 92 Table 94: Reclamation Account Service Allocation to Customer Classes ............................................................ 94 Table 95: Reclamation Flow Allocation to Customer Classes .............................................................................. 94 Table 96: COD Allocation to Customer Classes ................................................................................................... 95 Table 97: TSS Allocation to Customer Classes .................................................................................................... 95 Table 98: Reclamation Revenue Requirement by Customer Class ...................................................................... 96 Table 99: Reclamation FY 2025 Residential Flat Monthly Charges ..................................................................... 97 Table 100: Reclamation FY 2025 Non-Residential Fixed Monthly Charges ......................................................... 97 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 5 Table 101: Reclamation FY 2025 Non-Residential Commodity Rates ................................................................. 97 Table 102: Proposed Water Monthly Fixed Charges (FY 2025 – FY 2027) ......................................................... 99 Table 103: Proposed Dedicated Fireline Monthly Charges (FY 2025 – FY 2027) ................................................ 99 Table 104: Proposed Water Commodity Charges (FY 2025 – FY 2027) ........................................................... 100 Table 105: Proposed Wastewater Monthly Fixed Charges (FY 2025 – FY 2027) .............................................. 100 Table 106: Proposed Wastewater Commodity Rates (FY 2025 – FY 2027) ...................................................... 100 Table 107: Proposed Reclamation Monthly Fixed Charges (FY 2025 – FY 2027) ............................................. 101 Table 108: Proposed Reclamation Commodity Rates (FY 2025 – FY 2027) ..................................................... 101 Table 109: Water Supply Costs (FY 2025 – FY 2029) ........................................................................................ 102 Table 110: Water Capital Improvement Plan (FY 2025 – FY 2029) ................................................................... 103 Table 111: Wastewater Capital Improvement Plan (FY 2025 – FY 2029) .......................................................... 104 Table 112: Reclamation Capital Improvement Plan (FY 2025 – FY 2029) ......................................................... 104 FIGURES Figure 1: East Valley Water District Water System ............................................................................................... 10 Figure 2: Water Utility Capital Improvement Plan ................................................................................................. 11 Figure 3: Water Sales ............................................................................................................................................ 12 Figure 4: Financial Plan Key Elements ................................................................................................................. 14 Figure 5: Utility Reserves ...................................................................................................................................... 20 Figure 6: Current Water Operating Financial Position .......................................................................................... 24 Figure 7: Projected Water Ending Reserves at Existing Rates ............................................................................. 24 Figure 8: Proposed Water Operating Position ...................................................................................................... 28 Figure 9: Water Capital Improvement Plan with Funding Sources ....................................................................... 28 Figure 10: Water Proposed Ending Reserves ....................................................................................................... 29 Figure 11: Cost-of-Service Process ...................................................................................................................... 30 Figure 12: Water Cost Components ...................................................................................................................... 32 Figure 13: Water Distribution Basis and Units of Service by Cost Component .................................................... 42 Figure 14: East Valley Water District Wastewater System ................................................................................... 51 Figure 15: Wastewater Capital Improvement Plan ................................................................................................ 52 Figure 16: Wastewater Current Operating Financial Position ............................................................................... 59 Figure 17: Wastewater Projected Ending Reserves at Existing Rates ................................................................. 60 Figure 18: Wastewater Proposed Operating Position ........................................................................................... 63 Figure 19: Wastewater Capital Improvement Plan with Funding Sources ............................................................ 63 Figure 20: Wastewater Proposed Ending Reserves ............................................................................................. 64 Figure 21: Wastewater Cost Components ............................................................................................................ 66 Figure 22: Wastewater Units of Service by Cost Component ............................................................................... 71 Figure 23: Reclamation Capital Improvement Plan ............................................................................................... 75 Figure 24: Reclamation Current Operating Financial Position .............................................................................. 83 Figure 25: Reclamation Projected Ending Reserves at Existing Rates ................................................................ 83 Figure 26: Reclamation Proposed Operating Position .......................................................................................... 86 Figure 27: Reclamation Capital Improvement Plan with Funding Sources ........................................................... 86 Figure 28: Reclamation Proposed Ending Reserves ............................................................................................ 87 Figure 29: Reclamation Cost Components ........................................................................................................... 89 Figure 30: Reclamation Units of Service by Cost Component .............................................................................. 93 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 6 Executive Summary The East Valley Water District (District) periodically reviews its utilities to determine if adjustments are required to continue meeting its operational costs, system improvements, and adequate reserve funding based on the adopted reserve policies. The last cost-of-service study in 2021 set rates through FY 2024. The District recently opened the new Sterling Natural Resource Center wastewater treatment plant (SNRC) in the first quarter of calendar year 2024. The District hired IB Consulting to conduct a comprehensive cost-of-service analysis for its water, wastewater, and reclamation utilities. This Report sets rates from FY 2025 through FY 2027 (Rate Setting Period). Water Utility Updating the water utility’s long-term financial plan and performing a comprehensive cost-of-service analysis is a prudent business practice to ensure the utility can fully fund its revenue needs over the next three fiscal years and beyond. As part of reviewing and updating utility rates, the first step is to conduct a thorough review of the financial health of the utility. Based on the 5-year financial plan (Financial Plan Period), revenues from existing rates sufficiently covers operating expenses for the Rate Setting Period; however, the utility has significant capital projects during this time. The major projects within the District’s Capital Improvement Plan (CIP) over the next five years include the Canal 3 Zone Reservoir, two new wells, and seismic mainline replacement / upgrades, which collectively totals $38.5M. The District has secured grant funds of $19.5M to fund a majority of the seismic mitigation improvements and $4.3M of capacity fees will go towards funding a portion of the two new wells. However, at existing rates, the additional amount of funding needed to cover the remaining CIP will require revenue increases to ensure the CIP moves forward as scheduled and meet the District’s reserve requirements. The District’s water rate structure includes a monthly fixed charge and budget-based commodity rates. Residential customers are on a three-tiered rate structure with budget-based allotments for indoor use and outdoor use. Commercial customers’ budget-based rates are tied to a three-year rolling average of historical use. Based on the updated cost-of-service analysis, fixed revenue recovery will remain at approximately 37% of total revenue. The proposed rate structure is similar to the existing budget-based rate structure with a slight adjustment to the residential Tier 1 indoor allotment. Tier 1 will now reflect 47 gallons per capita per day (gpcd), down from 55 gpcd. This adjustment is in-line with State Senate Bill 1157 (SB 1157), establishing new indoor water efficiency standards of 47 gpcd by January 2025. In addition, SB 1157 sets indoor efficiency target to 42 gpcd by 2030 and we recommend that the indoor target continues to adjust, accordingly. The current commercial rate structure will also be revised to reflect a uniform commodity rate instead of a three- tiered budget-based rate structure. The current rate structure sets tier 1 at 90% of historical water usage, with tier 2 set at the remaining 10%, and any excess usage over tier 2 would be charged the tier 3 rate. However, as commercial customers reduce their water usage, each year’s updated tier 1 allotment is also reduced. Therefore, commercial customers would constantly need to reduce their water usage in perpetuity. The proposed rates derived within this report for water includes three years of adjustments, commencing on January 1, 2025, and July 1, 2024 for wastewater and reclamation. With the proposed rates, the utility will continue to generate positive net income above operating, fully fund its capital projects through a combination of cash on hand, grants, capacity fees, and debt, and meet minimum reserve targets by FY 2027. The recommended rates have been incorporated into a notice and mailed to each customer as part of the Proposition 218 noticing requirements. A Public Hearing is scheduled for May 15, 2024, on the proposed rates identified in Table 1 through Table 3. East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 7 Table 1: Proposed Water Monthly Fixed Charges Table 2: Dedicated Fireline Monthly Fixed Charges Table 3: Proposed Water Commodity Charges1 1 1 hcf = 748.05 gallons. Proposed Monthly Fixed Charges Meter Size FY 2025 FY 2026 FY 2027 5/8" $27.52 $29.18 $30.94 3/4" $34.62 $36.70 $38.91 1" $48.83 $51.76 $54.87 1 1/2" $84.35 $89.42 $94.79 2" $126.97 $134.59 $142.67 3" $368.48 $390.59 $414.03 4" $901.23 $955.31 $1,012.63 6" $1,433.98 $1,520.02 $1,611.23 8" $2,854.65 $3,025.93 $3,207.49 10" $4,630.48 $4,908.31 $5,202.81 12" $5,695.98 $6,037.74 $6,400.01 Revenue Adjustment 6.0%6.0% Proposed Dedicated Fireline Montly Fixed Charges Connection Size FY 2025 FY 2026 FY 2027 5/8" $13.75 $14.58 $15.46 3/4" $13.84 $14.68 $15.57 1" $14.01 $14.86 $15.76 1 1/2" $14.36 $15.23 $16.15 2" $14.71 $15.60 $16.54 3" $15.41 $16.34 $17.33 4" $16.11 $17.08 $18.11 6" $17.51 $18.57 $19.69 8" $18.91 $20.05 $21.26 10" $20.31 $21.53 $22.83 12" $21.71 $23.02 $24.41 Proposed Commodity Rates ($/hcf) Customer Class & Tiers FY 2025 FY 2026 FY 2027 Budget-Based Customers Tier 1 $2.19 $2.33 $2.47 Tier 2 $2.84 $3.02 $3.21 Tier 3 $4.10 $4.35 $4.62 Commercial $2.39 $2.54 $2.70 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 8 Wastewater Utility and Reclamation Utility The wastewater utility previously included the wastewater collection system costs and treatment costs. The District recently opened the SNRC and created a separate utility (enterprise fund) to track revenues and expenses related to treating influent through primary, secondary, and tertiary processes prior to discharge. As such, the wastewater utility tracks revenues and expenses associated only with the wastewater collection system and the reclamation utility tracks revenues and expenses related to the SNRC. The SNRC construction was financed with low interest State Revolving Fund (SRF) loans with annual debt service payments equal to approximately $7.8M, which are likely to commence in FY 2025, but no later than FY 2026. The loan documents specify that the first payment is due within twelve months after the notice of completion. The SNRC came online in the first quarter of 2024. However, the SNRC requires a slow ramp up of accepting influent to ensure the treatment processes are performing as expected before the total wastewater flows of the District’s service area are conveyed to the SNRC. In addition, the SRF debt requirements include the need to establish a debt service reserve, equal to the annual debt payment, before the first payment is due. The debt service reserve will be funded from reimbursements received from the State for the advancement of funds by the District related to the construction of the SNRC, and a $2M grant from the Edison Self-Generation Incentive Program (SGIP). The SNRC will also produce addition revenue sources including credits for onsite power generation, credits to offset groundwater replenishment charge for producing tertiary treated water that may be used to recharge the basin, bulk recycled water sales, and tipping fees for wastewater discharge by haulers. The District’s existing wastewater collection rate structure consists of monthly fixed charges and flow rates. The proposed rates for the wastewater utility and reclamation utility will commence on July 1, 2024, with future adjustments occurring on July 1st of each subsequent fiscal year. With the proposed rates, the wastewater utility and reclamation utility will fund operating, cover planned capital projects, and meet minimum reserve targets. The recommended rates have been incorporated into the notice and mailed to each customer as part of the Proposition 218 noticing requirements. A Public Hearing is scheduled for May 15, 2024, on the proposed rates identified in Table 4 and Table 5. East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 9 Table 4: Proposed Wastewater Rates Table 5: Proposed Reclamation Rates Fixed Charges ($/Month) Customer Class FY 2025 FY 2026 FY 2027 Single Family $16.70 $17.21 $17.73 Multi-Family $15.48 $15.95 $16.43 Non-Residential Low Strength $10.59 $10.91 $11.24 Medium Strength $10.59 $10.91 $11.24 High Strength $10.59 $10.91 $11.24 Schools & Churches $10.59 $10.91 $11.24 Patton State Hospital $10.59 $10.91 $11.24 Commodity Rates ($/hcf) Customer Class FY 2025 FY 2026 FY 2027 Non-Residential Low Strength $0.77 $0.80 $0.83 Medium Strength $0.77 $0.80 $0.83 High Strength $0.77 $0.80 $0.83 Schools & Churches $0.45 $0.47 $0.49 Patton State Hospital $0.44 $0.46 $0.48 Fixed Charges ($/Month) Customer Class FY 2025 FY 2026 FY 2027 Single-Family $29.79 $32.77 $36.05 Multi-Family $25.67 $28.24 $31.07 Non-Residential Low Strength $9.16 $10.08 $11.09 Medium Strength $9.16 $10.08 $11.09 High Strength $9.16 $10.08 $11.09 Schools & Churches $9.16 $10.08 $11.09 Patton State Hospital $9.16 $10.08 $11.09 Commodity Rates ($/hcf) Customer Class FY 2025 FY 2026 FY 2027 Non-Residential Low Strength $2.19 $2.41 $2.66 Medium Strength $2.54 $2.80 $3.08 High Strength $3.96 $4.36 $4.80 Schools & Churches $1.29 $1.42 $1.57 Patton State Hospital $1.46 $1.61 $1.78 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 10 Water Utility Water System Located in the Inland Empire of San Bernardino County (County), the District consists of the entire City of Highland, portions of the City of San Bernardino, and unincorporated areas of the County. The District spans almost 18,000 acres and currently serves a population of around 107,000 through 21,471 meters. Water sources include groundwater, surface water through North Fork water rights, and State Water Project (SWP). All surface water and SWP is treated at Plant 134. Figure 1: East Valley Water District Water System In 2019, a Water Master Plan (Water MP) was completed that identified existing system improvements, near term improvements through FY 2025, and build-out improvements after FY 2025 through FY 2040. Based on the Water MP, the District developed a detailed capital improvement plan through FY 2030. Major projects over the next five years include the Canal 3 Zone Reservoir, two new wells, and seismic mainline replacement / upgrades. The total CIP cost through FY 2030 is $69.4M, of which, $35.1M is scheduled over the Rate Setting Period. The District has secured grant funds of $19.5M to fund the majority of the seismic mitigation improvements and $4.3M of capacity fees will go towards funding a portion of the two new wells. Figure 2 shows the water capital improvement plan through the Financial Plan Period. 301 miles of pipeline 18,000 acres Water Sources Wells, Surface, SWP 21,471 Meters Water System East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 11 Figure 2: Water Utility Capital Improvement Plan Customers The District serves 21,471 active accounts, with approximately 95% of accounts classified as residential. Table 6 provides a summary of accounts by meter size. Table 6: Accounts by Meter Size East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 12 Since the State issued mandatory conservation requirements to combat the effects of the prolonged drought on California’s water supplies, District customers responded by significantly reducing their water consumption. The elimination of the mandatory conservation have allowed sales to rebound slightly but not to the levels of pre-drought usage. Customers have made permanent changes to reduce their consumption and continue to use water more efficiently through budget-based rates. In addition, FY 2023 was a historical wet winter and FY 2024 is trending to reflect a similar water demand profile as FY 2023. Figure 3 shows both historical water sales and projected water sales in acre-feet. Projected water sales assume a small increase in residential water usage accounting for a modest rebound in usage from the two wet winters and new connections. Figure 3: Water Sales As previously mentioned, the existing rate structure consists of a monthly fixed meter charge and a three- tiered budget-based commodity rate structure. Existing monthly fixed charges are identified in Table 7 and Table 8, followed by Table 9 identifying commodity rates by tier. East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 13 Table 7: FY 2024 Water Monthly Fixed Charges Table 8: FY 2024 Dedicated Fireline Monthly Fixed Charges Table 9: FY 2024 Budget-Based Water Commodity Rates Existing Monthly Fixed Charges Meter Size Current Charge 5/8" $25.49 3/4" $32.74 1" $47.24 1 1/2" $83.50 2" $127.00 3" $243.01 4" $373.52 6" $736.05 8" $2,041.16 Existing Dedicated Fireline Monthly Fixed Charges Connection Size Current Charge 5/8" $8.78 3/4" $8.78 1" $8.78 1 1/2" $13.18 2" $17.57 3" $26.35 4" $35.14 6" $52.70 8" $70.27 10" $87.84 12" $87.84 Existing Commodity Rates ($/hcf) Customer Class & Tiers Current Rates All Customers Tier 1 $2.11 Tier 2 $2.70 Tier 3 $4.18 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 14 Financial Plan Overview – Water Utility Financial Planning Financial planning incorporates numerous considerations, including projecting revenues and forecasting expected costs using various inflationary adjustments. Utilities also need to account for changes in water demand driven by variations in weather, water availability, state mandates, growth, and economic factors. In addition, system maintenance and reinvestment, reserves, and debt compliance all influence the revenues needed in future years. Therefore, a comprehensive financial plan reviews the following: 1) Historical water sales and consumption patterns to determine an appropriate level of usage for projecting future water use. 2) Operational costs that may change over the planning period as a result of inflation as well as any new expenditures incurred to meet strategic goals, state mandates, or changes in operations. 3) Multi-year system improvement needs, and scheduling based on priority. This review also considers available funding sources to complete projects such as pay-as-you-go (PAYGO), grants, loans, and debt financing. 4) Satisfy debt service coverage ratio requirements based on SRF loans and bond covenants (120%). 5) Reserve funding to meet adopted reserve policies, including any adjustments to the policies. The goal is to generate adequate cash on hand to mitigate financial risks related to operating cashflow needs, unexpected increases in expenses, shortages in system reinvestment, and mitigating potential system failures. Figure 4 illustrates the key elements when developing a long-term financial plan. Figure 4: Financial Plan Key Elements East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 15 Financial Planning Assumptions Developing a long-term financial plan requires an understanding of the utility's financial position by evaluating existing revenue streams, ongoing expenses, how those expenses will change over time, existing debt coverage requirements, and reserve policies. With these considerations, certain assumptions are required for projecting revenues, expenses, and expected ending fund balances. Table 10 identifies assumptions used for forecasting revenues. Table 11 details the number of accounts by meter size and the number of firelines by connection size. Table 12 identifies the projected water usage and Table 13 identifies assumptions used for forecasting expenses over the Rate Setting Period. Table 10: Water Assumptions for Forecasting Revenues Table 11: Water Accounts by Meter Size and Firelines by Connection Size Revenue Forecasting Key Assumptions FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Revenue Escalation Reserve Interest 2.0% 2.0% 2.0% 2.0% 2.0% Total Accounts 21,471 21,471 21,471 21,471 21,471 Dedicated Firelines 272 272 272 272 272 Water Sales (hcf) 6,819,427 6,854,377 6,874,703 6,895,130 6,915,659 Meters and Firelines Customer Accounts FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Meter Size 5/8" 3,479 3,479 3,479 3,479 3,479 3/4" 13,066 13,066 13,066 13,066 13,066 1" 4,235 4,235 4,235 4,235 4,235 1 1/2" 276 276 276 276 276 2" 303 303 303 303 303 3" 63 63 63 63 63 4" 24 24 24 24 24 6" 12 12 12 12 12 8" 13 13 13 13 13 10" - - - - - 12" - - - - - Total Meters 21,471 21,471 21,471 21,471 21,471 Dedicated Firelines FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Meter Size 3/4" 1 1 1 1 1 1" 2 2 2 2 2 1 1/2" 1 1 1 1 1 2" - - - - - 3" - - - - - 4" 49 49 49 49 49 6" 144 144 144 144 144 8" 60 60 60 60 60 10" 15 15 15 15 15 12" - - - - - Total Dedicated Firelines 272 272 272 272 272 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 16 Table 12: Water Projected Consumption 2 Table 13: Water Assumptions for Forecasting Expenses 2 1 Acre Foot (AF) = 435.6 hcf or 325,851 gallons Projected Waer Sales Consumption by Customer Class FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Single-Family Tier 1 2,143,266 2,153,982 2,164,752 2,175,576 2,186,454 Tier 2 1,417,451 1,424,538 1,431,661 1,438,819 1,446,013 Tier 3 484,096 486,516 488,949 491,394 493,851 Subtotal Single-Family Consumption (hcf) 4,044,813 4,065,036 4,085,362 4,105,789 4,126,318 Multi-Family Tier 1 900,608 909,614 909,614 909,614 909,614 Tier 2 282,948 285,777 285,777 285,777 285,777 Tier 3 289,234 292,126 292,126 292,126 292,126 Subtotal Multi-Family Consumption (hcf) 1,472,790 1,487,517 1,487,517 1,487,517 1,487,517 Commercial Tier 1 525,910 525,910 525,910 525,910 525,910 Tier 2 37,615 37,615 37,615 37,615 37,615 Tier 3 137,830 137,830 137,830 137,830 137,830 Subtotal Commercial Consumption (hcf) 701,355 701,355 701,355 701,355 701,355 Irrigation Tier 1 - - - - - Tier 2 406,658 406,658 406,658 406,658 406,658 Tier 3 193,811 193,811 193,811 193,811 193,811 Subtotal Irrigation Consumption (hcf) 600,469 600,469 600,469 600,469 600,469 Total Consumption (hcf) 6,819,427 6,854,377 6,874,703 6,895,130 6,915,659 Expense Forecasting Key Assumptions Source:FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Expenditure Escalation Benefits 5.0% 5.0% 5.0% 5.0% 5.0% Capital Construction ENR 20-City 5-Year Average 3.9% 3.9% 3.9% 3.9% 3.9% Energy Costs 7.0% 7.0% 7.0% 7.0% 7.0% General Costs CPI - LA (BLS) 5-Year Average 3.9% 3.9% 3.9% 3.9% 3.9% Insurance 7.0% 7.0% 7.0% 7.0% 7.0% Salaries 7.0% 5.0% 5.0% 5.0% 5.0% East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 17 Current Financial Position Revenues Based on the forecasting assumptions, fixed revenues were calculated by multiplying the existing fixed charges (Table 7 and Table 8) by the account data by meter size and firelines by connection size (Table 11) over twelve billing periods. Commodity revenues were calculated using the existing consumption rates (Table 9) and projected total water sales (Table 12). Table 14 shows the calculated rate revenues through the Rate Setting Period. Commodity revenues also considers the percentage of water usage that occurs in the first 6 months of the fiscal year versus the second 6 months because rates are adjusted midyear on January 1st. Table 15 summarizes calculated rate revenues and other non-rate revenues, with future projections rounded to the nearest thousands. Other Operating Revenues include penalties and service activation fees. Non- Operating revenues include interest earnings and miscellaneous revenue. Table 14: Water Calculated Rate Revenues Calculated Rate Revenue Fixed Revenue FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Total Water Fixed Charges $10,052,289 $10,052,289 $10,052,289 $10,052,289 $10,052,289 Dedicated Fireline Charges $178,608 $178,608 $178,608 $178,608 $178,608 Total Fixed Revenue $10,230,897 $10,230,897 $10,230,897 $10,230,897 $10,230,897 Usage Characteristics % of usage at prior rate 57.0% 57.0% 57.0% 57.0% 57.0% % of usage at current rate 43.0% 43.0% 43.0% 43.0% 43.0% Commodity Revenue FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Single-Family Tier 1 $4,522,291 $4,544,902 $4,567,627 $4,590,465 $4,613,418 Tier 2 $3,827,118 $3,846,253 $3,865,485 $3,884,811 $3,904,235 Tier 3 $2,023,521 $2,033,637 $2,043,807 $2,054,027 $2,064,297 Single-Family Variable Revenue $10,372,930 $10,424,792 $10,476,918 $10,529,304 $10,581,950 Multi-Family Tier 1 $1,900,283 $1,919,286 $1,919,286 $1,919,286 $1,919,286 Tier 2 $763,960 $771,598 $771,598 $771,598 $771,598 Tier 3 $1,208,998 $1,221,087 $1,221,087 $1,221,087 $1,221,087 Multi-Family Variable Revenue $3,873,241 $3,911,970 $3,911,970 $3,911,970 $3,911,970 Commercial Tier 1 $1,109,670 $1,109,670 $1,109,670 $1,109,670 $1,109,670 Tier 2 $101,561 $101,561 $101,561 $101,561 $101,561 Tier 3 $576,129 $576,129 $576,129 $576,129 $576,129 Commercial Variable Revenue $1,787,360 $1,787,360 $1,787,360 $1,787,360 $1,787,360 Irrigation Tier 1 $0 $0 $0 $0 $0 Tier 2 $1,097,977 $1,097,977 $1,097,977 $1,097,977 $1,097,977 Tier 3 $810,130 $810,130 $810,130 $810,130 $810,130 Irrigation Variable Revenue $1,908,107 $1,908,107 $1,908,107 $1,908,107 $1,908,107 Total Commodity Revenue $17,941,637 $18,032,228 $18,084,355 $18,136,740 $18,189,387 Total Rate Revenue $28,172,534 $28,263,125 $28,315,252 $28,367,637 $28,420,284 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 18 Table 15: Water Projected Revenues Projected Revenues Revenue Summary FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Water Sales Water Fixed Charges $10,052,000 $10,052,000 $10,052,000 $10,052,000 $10,052,000 Dedicated Fireline Charges $179,000 $179,000 $179,000 $179,000 $179,000 Commodity Revenue $17,942,000 $18,032,000 $18,084,000 $18,137,000 $18,189,000 Subtotal Water Sales $28,173,000 $28,263,000 $28,315,000 $28,368,000 $28,420,000 Other Operating Revenue Penalties $450,000 $450,000 $450,000 $450,000 $450,000 Initiation of Service $42,000 $42,000 $42,000 $42,000 $42,000 Subtotal Other Operating Revenue $492,000 $492,000 $492,000 $492,000 $492,000 Non-Operating Revenue Interest Income $138,000 $124,000 $127,000 $130,000 $134,000 Miscellaneous Revenue $20,000 $20,000 $20,000 $20,000 $20,000 Subtotal Non-Operating Revenue $158,000 $144,000 $147,000 $150,000 $154,000 Total Revenues $28,823,000 $28,899,000 $28,954,000 $29,010,000 $29,066,000 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 19 Expenses The FY 2024 budget was used as the baseline expenses of the utility and adjusted in subsequent years based on the escalation factors shown in Table 13. Table 16 provides projected Operational & Maintenance (O&M) costs through FY 2029. Each expense category includes detailed line-item expenditures that were discussed with staff to determine the appropriate escalation factor to use for forecasting future cost increases. Detailed calculations of water supply costs are incorporated under Appendix A. Table 16: Water Projected O&M Expenses Projected Expenses O&M Expenses FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Fixed Water Supply Costs Surface Water - Assessments $117,000 $117,000 $117,000 $117,000 $117,000 Variable Water Supply Costs Surface Water $262,000 $262,000 $262,000 $262,000 $262,000 State Water Project $346,000 $346,000 $346,000 $346,000 $346,000 Groundwater $2,330,000 $2,348,000 $2,358,000 $2,369,000 $2,379,000 Subtotal Variable Water Supply Costs $2,938,000 $2,956,000 $2,966,000 $2,977,000 $2,987,000 Water Supply Costs $3,055,000 $3,073,000 $3,083,000 $3,094,000 $3,104,000 Operating Expenses Governing Board $269,000 $281,000 $294,000 $308,000 $322,000 General Administration $1,013,000 $1,060,000 $1,109,000 $1,160,000 $1,214,000 Human Resources $1,815,000 $1,929,000 $2,050,000 $2,180,000 $2,317,000 Public Affairs $952,000 $995,000 $1,040,000 $1,086,000 $1,136,000 Conservation $721,000 $752,000 $784,000 $817,000 $852,000 Finance & Accounting $998,000 $1,047,000 $1,097,000 $1,151,000 $1,207,000 Information Technology $1,265,000 $1,320,000 $1,378,000 $1,438,000 $1,501,000 Customer Service $1,375,000 $1,440,000 $1,508,000 $1,579,000 $1,654,000 Meter Services $311,000 $326,000 $342,000 $359,000 $377,000 Engineering $1,054,000 $1,102,000 $1,151,000 $1,203,000 $1,258,000 Water Production $2,254,000 $2,357,000 $2,465,000 $2,577,000 $2,695,000 Groundwater Replenishment $351,000 $351,000 $351,000 $351,000 $351,000 Utilities - Pumps & Boosters $762,000 $819,000 $879,000 $944,000 $1,013,000 Water Treatment $739,000 $774,000 $810,000 $847,000 $887,000 Water Quality $576,000 $603,000 $631,000 $660,000 $690,000 Maintenance Admin $445,000 $467,000 $491,000 $516,000 $543,000 Water Maintenance $3,246,000 $3,396,000 $3,553,000 $3,717,000 $3,889,000 Facilities Maintenance $1,061,000 $1,110,000 $1,162,000 $1,216,000 $1,273,000 Fleet Maintenance $641,000 $674,000 $708,000 $745,000 $783,000 Subtotal Operating Expenses $19,848,000 $20,803,000 $21,803,000 $22,854,000 $23,962,000 Debt Service Existing Debt $2,601,000 $2,192,000 $1,759,000 $1,760,000 $1,759,000 New/Proposed Debt $0 $0 $0 $0 $0 Subtotal Debt Service $2,601,000 $2,192,000 $1,759,000 $1,760,000 $1,759,000 Total Expenses $25,504,000 $26,068,000 $26,645,000 $27,708,000 $28,825,000 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 20 Reserves Figure 5: Utility Reserves Established reserves include Operating Reserve, Replacement Reserve, Emergency Reserve, Rate Stabilization Reserve, and Capacity Fee Reserve. Reserves help mitigate risks to the utility by ensuring sufficient cash is on hand for daily operations and to fund annual system improvements. Reserves also help smooth rates and mitigate rate spikes due to emergencies or above-average system costs. As part of this rate study, the District revised its reserve policies by adjusting the capital replacement reserve and emergency reserve minimum and targets requirements, and eliminating the rate stabilization reserve. Funds within the rate stabilization reserve were transferred to the capital replacement reserve. The revised adopted reserve policies identify the function of each reserve and Table 17 summarizes the minimum reserve requirements and the ideal funding targets of each reserve. Table 17: Water Reserve Requirements and Targets Reserve Minimum Requirement Reserve Target Operating 90 days of operating costs 120 days of operating costs Capital Replacement 2 years of 5-year CIP average 5 years of planned capital Emergency 1.0% of Assets 2.0% of Assets Rate Stabilization - - Capacity Fee - - The beginning FY 2024 total water reserve balance (July 1, 2023) equaled approximately $17.9M. OPERATING RESERVE Provides ongoing cash for daily operations and expenses of utility RATE STABILIZATION Focused on offsetting revenue variances from commodity fluctuations. Commodity charges are established in the rate process based on recent and historical usage trends. Fluctuations occur when situations vary from these trends REPLACEMENTRESERVE Provides funding for system improvements. Ensures system reinvestment occurs without delays or deferments. Also provides assurance when awarding construction contracts and matching funds when applying for grants EMERGENCY RESERVE Mitigates risk due to system failures. These occurrences are typically separate from capital plan East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 21 Water Financial Outlook at Existing Rates Calculating revenue using existing rates and projecting expenses helps determine the current financial health of the utility. Revenues from existing rates can cover operating expenses through FY 2029, but with limited net income to go towards capital spending and maintaining healthy reserves. Only a portion of the system’s capital replacement needs can be funded with projected net operating income, grants, and capacity fees, resulting in the use of reserves to cover the remaining capital costs, which is not sustainable long-term. Table 18 forecasts existing revenues and expenses through the Rate Setting Period. Table 19 identifies reserve transfers and activity for the Operating, Capital Replacement, Emergency, Rate Stabilization, and Capacity Fee Reserves, with projected FY 2025 starting reserve balances shown for each reserve. East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 22 Table 18: Water Financial Plan at Existing Rates Financial Plan at Existing Rates Revenue Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Water Sales Water Fixed Charges Table 15 $10,052,000 $10,052,000 $10,052,000 $10,052,000 $10,052,000 Dedicated Fireline Charges $179,000 $179,000 $179,000 $179,000 $179,000 Commodity Revenue $17,942,000 $18,032,000 $18,084,000 $18,137,000 $18,189,000 Total Water Sales $28,173,000 $28,263,000 $28,315,000 $28,368,000 $28,420,000 Other Operating Revenue Penalties Table 15 $450,000 $450,000 $450,000 $450,000 $450,000 Initiation of Service $42,000 $42,000 $42,000 $42,000 $42,000 Subtotal Other Operating Revenue $492,000 $492,000 $492,000 $492,000 $492,000 Non-Operating Revenue Interest Income Table 15 $138,000 $124,000 $127,000 $130,000 $134,000 Miscellaneous Revenue $20,000 $20,000 $20,000 $20,000 $20,000 Subtotal Non-Operating Revenue $158,000 $144,000 $147,000 $150,000 $154,000 Total Revenues $28,823,000 $28,899,000 $28,954,000 $29,010,000 $29,066,000 O&M Expenses Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Fixed Water Supply Costs Surface Water - Assessments Table 16 $117,000 $117,000 $117,000 $117,000 $117,000 Variable Water Supply Costs Surface Water Table 16 $262,000 $262,000 $262,000 $262,000 $262,000 State Water Project $346,000 $346,000 $346,000 $346,000 $346,000 Groundwater $2,330,000 $2,348,000 $2,358,000 $2,369,000 $2,379,000 Subtotal Variable Water Supply Costs $2,938,000 $2,956,000 $2,966,000 $2,977,000 $2,987,000 Water Supply Costs $3,055,000 $3,073,000 $3,083,000 $3,094,000 $3,104,000 Operating Expenses Governing Board Table 16 $269,000 $281,000 $294,000 $308,000 $322,000 General Administration $1,013,000 $1,060,000 $1,109,000 $1,160,000 $1,214,000 Human Resources $1,815,000 $1,929,000 $2,050,000 $2,180,000 $2,317,000 Public Affairs $952,000 $995,000 $1,040,000 $1,086,000 $1,136,000 Conservation $721,000 $752,000 $784,000 $817,000 $852,000 Finance & Accounting $998,000 $1,047,000 $1,097,000 $1,151,000 $1,207,000 Information Technology $1,265,000 $1,320,000 $1,378,000 $1,438,000 $1,501,000 Customer Service $1,375,000 $1,440,000 $1,508,000 $1,579,000 $1,654,000 Meter Services $311,000 $326,000 $342,000 $359,000 $377,000 Engineering $1,054,000 $1,102,000 $1,151,000 $1,203,000 $1,258,000 Water Production $2,254,000 $2,357,000 $2,465,000 $2,577,000 $2,695,000 Groundwater Replenishment $351,000 $351,000 $351,000 $351,000 $351,000 Utilities - Pumps & Boosters $762,000 $819,000 $879,000 $944,000 $1,013,000 Water Treatment $739,000 $774,000 $810,000 $847,000 $887,000 Water Quality $576,000 $603,000 $631,000 $660,000 $690,000 Maintenance Admin $445,000 $467,000 $491,000 $516,000 $543,000 Water Maintenance $3,246,000 $3,396,000 $3,553,000 $3,717,000 $3,889,000 Facilities Maintenance $1,061,000 $1,110,000 $1,162,000 $1,216,000 $1,273,000 Fleet Maintenance $641,000 $674,000 $708,000 $745,000 $783,000 Subtotal Operating Expenses $19,848,000 $20,803,000 $21,803,000 $22,854,000 $23,962,000 Debt Service Existing Debt Table 16 $2,601,000 $2,192,000 $1,759,000 $1,760,000 $1,759,000 Total Expenses $25,504,000 $26,068,000 $26,645,000 $27,708,000 $28,825,000 Net Operating $3,319,000 $2,831,000 $2,309,000 $1,302,000 $241,000 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 23 Table 19: Water Reserve Activity at Existing Rates Figure 16 illustrates the operating position of the utility, where O&M expenses are identified with the dashed red trendline and total revenues at existing rates are shown by the horizontal black trendline. The bars represent the amount of net operating income available for capital spending and reserve funding. Reserves Activity at Existing Rates Operating Reserve Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Beginning Balance $6,150,822 $6,288,658 $6,427,726 $6,570,000 $6,832,110 Net Operating Table 18 $3,319,000 $2,831,000 $2,309,000 $1,302,000 $241,000 Direct Transfer from/(to) Emergency Reserve $0 $0 $0 $0 $0 Transfers from/(to) Capital Replacement Reserve ($3,181,164) ($2,691,932) ($2,166,726) ($1,039,890) $0 Ending Balance $6,288,658 $6,427,726 $6,570,000 $6,832,110 $7,073,110 Capital Replacement Reserve Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Beginning Balance $11,088,387 $10,428,895 $9,201,137 $5,583,350 ($2,598,716) Plus: Transfers from/(to) Operating Reserve Line 4 $3,181,164 $2,691,932 $2,166,726 $1,039,890 $0 Reclamation Loan Payments $0 $0 $0 $375,000 $375,000 New Debt Proceeds $0 $0 $0 $0 $0 Capacity Fee Funding Line 36 $2,700,000 $1,300,000 $0 $0 $0 Grant Funding $4,000,000 $6,500,000 $6,500,000 $2,500,000 $0 Less: CIP ($10,753,699) ($11,914,046) ($12,430,894) ($12,096,956) ($9,880,996) Transfers from/(to) Emergency Reserve $0 $0 $0 $0 $0 Subtotal Capital Replacement Reserve $10,215,852 $9,006,780 $5,436,969 ($2,598,716) ($12,104,711) Interest Earnings $213,042 $194,357 $146,381 $0 $0 Ending Balance $10,428,895 $9,201,137 $5,583,350 ($2,598,716) ($12,104,711) Emergency Reserve Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Beginning Balance $695,624 $709,537 $723,728 $738,202 $752,966 Direct Transfers from/(to) Operating Reserve $0 $0 $0 $0 $0 Transfers from/(to) Capital Replacement Reserve Line 18 $0 $0 $0 $0 $0 Subtotal Emergency Reserve $695,624 $709,537 $723,728 $738,202 $752,966 Interest Earnings $13,912 $14,191 $14,475 $14,764 $15,059 Ending Balance $709,537 $723,728 $738,202 $752,966 $768,025 Capacity Fee Reserve Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Beginning Balance $4,097,423 $1,452,371 $168,419 $171,787 $175,223 Capacity Fee Receipts $0 $0 $0 $0 $0 Transfers (to) Capital Replacement Reserve ($2,700,000) ($1,300,000) $0 $0 $0 Subtotal Capacity Fee Reserve $1,397,423 $152,371 $168,419 $171,787 $175,223 Interest Earnings $54,948 $16,047 $3,368 $3,436 $3,504 Ending Balance $1,452,371 $168,419 $171,787 $175,223 $178,727 Total Ending Balance $18,879,460 $16,521,009 $13,063,339 $5,161,583 ($4,084,849) East Valley Water District – Water, Wastewater, and Reclamation Rate Study Figure 6: Current Water Operating Financial Position With the capital improvement plan reflecting over $57M in spending over the Financial Plan Period, as shown in Figure 2, reserves will be utilized to cover the remaining capital expenses to ensure necessary projects continue to move forward as scheduled. Figure 7 reflects the projected ending balances of reserves after operating and capital projects are funded. By FY 2029, reserves are depleted, and funding would not be available for ongoing system improvements at existing rates. Figure 7: Projected Water Ending Reserves at Existing Rates East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 25 Proposed Financial Plan – Water Utility From the financial outlook at existing rates, a proposed financial plan is developed to fund the multi-year revenue requirements, while meeting debt covenants and reserve requirements. Table 20 forecasts existing revenues, with annual revenue adjustments, and expenses through the Financial Plan Period. However, FY 2028 and FY 2029 are not part of the Rate Setting Period and will not be included as part of the proposed rates within the Proposition 218 Notice. In addition, $12M of capital cost is expected to be debt-financed through a bond issue in FY 2027. However, the specific terms of the bonds and timing of issuance will be determined by the District’s financial advisor as IB Consulting are not municipal financial advisors. Table 21 identifies the projected FY 2025 total starting balances for the Operating, Capital Replacement, Emergency, and Capacity Fee reserves, activity within each reserve (including net income transfer from Table 20, transfers between reserves, and annual CIP), and projected ending balances for each fiscal year. East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 26 Table 20: Proposed Water Financial Plan Proposed Financial Plan Revenue Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Water Sales Water Fixed Charges Table 15 $10,052,000 $10,052,000 $10,052,000 $10,052,000 $10,052,000 Dedicated Fireline Charges $179,000 $179,000 $179,000 $179,000 $179,000 Commodity Revenue $17,942,000 $18,032,000 $18,084,000 $18,137,000 $18,189,000 Total Water Sales $28,173,000 $28,263,000 $28,315,000 $28,368,000 $28,420,000 Additional Revenue (from revenue adjustments): Fiscal Year Revenue Adjustment Effective Month # of Months Effective FY 2025 6.0% January 6 $845,000 $1,695,000 $1,698,000 $1,702,000 $1,705,000 FY 2026 6.0% January 6 $898,000 $1,800,000 $1,804,000 $1,807,000 FY 2027 6.0% January 6 $954,000 $1,912,000 $1,915,000 FY 2028 6.0% January 6 $1,013,000 $2,030,000 FY 2029 6.0% January 6 $1,076,000 Total Additional Revenue $845,000 $2,593,000 $4,452,000 $6,431,000 $8,533,000 Projected Rate Revenue $29,018,000 $30,856,000 $32,767,000 $34,799,000 $36,953,000 Other Operating Revenue Penalties Table 15 $450,000 $450,000 $450,000 $450,000 $450,000 Initiation of Service $42,000 $42,000 $42,000 $42,000 $42,000 Subtotal Other Operating Revenue $492,000 $492,000 $492,000 $492,000 $492,000 Non-Operating Revenue Interest Income Table 15 $138,000 $124,000 $127,000 $132,000 $138,000 Miscellaneous Revenue $20,000 $20,000 $20,000 $20,000 $20,000 Subtotal Non-Operating Revenue $158,000 $144,000 $147,000 $152,000 $158,000 Total Revenues $29,668,000 $31,492,000 $33,406,000 $35,443,000 $37,603,000 O&M Expenses Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Fixed Water Supply Costs Surface Water - Assessments Table 16 $117,000 $117,000 $117,000 $117,000 $117,000 Variable Water Supply Costs Surface Water Table 16 $262,000 $262,000 $262,000 $262,000 $262,000 State Water Project $346,000 $346,000 $346,000 $346,000 $346,000 Groundwater $2,330,000 $2,348,000 $2,358,000 $2,369,000 $2,379,000 Subtotal Variable Water Supply Costs $2,938,000 $2,956,000 $2,966,000 $2,977,000 $2,987,000 Water Supply Costs $3,055,000 $3,073,000 $3,083,000 $3,094,000 $3,104,000 Operating Expenses Governing Board Table 16 $269,000 $281,000 $294,000 $308,000 $322,000 General Administration $1,013,000 $1,060,000 $1,109,000 $1,160,000 $1,214,000 Human Resources $1,815,000 $1,929,000 $2,050,000 $2,180,000 $2,317,000 Public Affairs $952,000 $995,000 $1,040,000 $1,086,000 $1,136,000 Conservation $721,000 $752,000 $784,000 $817,000 $852,000 Finance & Accounting $998,000 $1,047,000 $1,097,000 $1,151,000 $1,207,000 Information Technology $1,265,000 $1,320,000 $1,378,000 $1,438,000 $1,501,000 Customer Service $1,375,000 $1,440,000 $1,508,000 $1,579,000 $1,654,000 Meter Services $311,000 $326,000 $342,000 $359,000 $377,000 Engineering $1,054,000 $1,102,000 $1,151,000 $1,203,000 $1,258,000 Water Production $2,254,000 $2,357,000 $2,465,000 $2,577,000 $2,695,000 Groundwater Replenishment $351,000 $351,000 $351,000 $351,000 $351,000 Utilities - Pumps & Boosters $762,000 $819,000 $879,000 $944,000 $1,013,000 Water Treatment $739,000 $774,000 $810,000 $847,000 $887,000 Water Quality $576,000 $603,000 $631,000 $660,000 $690,000 Maintenance Admin $445,000 $467,000 $491,000 $516,000 $543,000 Water Maintenance $3,246,000 $3,396,000 $3,553,000 $3,717,000 $3,889,000 Facilities Maintenance $1,061,000 $1,110,000 $1,162,000 $1,216,000 $1,273,000 Fleet Maintenance $641,000 $674,000 $708,000 $745,000 $783,000 Subtotal Operating Expenses $19,848,000 $20,803,000 $21,803,000 $22,854,000 $23,962,000 Debt Service Existing Debt Table 16 $2,601,000 $2,192,000 $1,759,000 $1,760,000 $1,759,000 Total Expenses $25,504,000 $26,068,000 $27,532,000 $28,595,000 $29,712,000 Net Operating $4,164,000 $5,424,000 $5,874,000 $6,848,000 $7,891,000 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 27 Table 21: Water Reserve Activity at Proposed Rates The proposed financial plan also includes debt financing of $12M to fund a new well and reservoir. The debt issuance offers a means to finance system improvements over the useful life of the assets while providing inter-generational equity between existing customers and future customers that will both benefit from these improvements. Figure 8 identifies the operating position based on the proposed financial plan, and Figure 9 and Figure 10 show the capital plan with funding sources and projected ending reserve balances, respectively. Reserves Activity at Proposed Rates Operating Reserve Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Beginning Balance $6,150,822 $6,288,658 $6,427,726 $6,788,712 $7,050,822 Net Operating Table 20 $4,164,000 $5,424,000 $5,874,000 $6,848,000 $7,891,000 Direct Transfer from/(to) Emergency Reserve $0 $0 $0 $0 $0 Transfers from/(to) Capital Replacement Reserve ($4,026,164) ($5,284,932) ($5,513,014) ($6,585,890) ($7,615,575) Ending Balance $6,288,658 $6,427,726 $6,788,712 $7,050,822 $7,326,247 Capital Replacement Reserve Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Beginning Balance $11,088,387 $11,282,345 $12,690,586 $24,164,720 $21,985,588 Plus: Transfers from/(to) Operating Reserve Line 4 $4,026,164 $5,284,932 $5,513,014 $6,585,890 $7,615,575 Reclamation Loan Payments $0 $0 $0 $375,000 $375,000 New Debt Proceeds $0 $0 $12,000,000 $0 $0 Capacity Fee Funding Line 36 $2,700,000 $1,300,000 $0 $0 $0 Grant Funding $4,000,000 $6,500,000 $6,500,000 $2,500,000 $0 Less: CIP ($10,753,699) ($11,914,046) ($12,430,894) ($12,096,956) ($9,880,996) Transfers from/(to) Emergency Reserve $0 $0 ($472,890) $0 $0 Subtotal Capital Replacement Reserve $11,060,852 $12,453,230 $23,799,816 $21,528,654 $20,095,167 Interest Earnings $221,492 $237,356 $364,904 $456,934 $420,808 Ending Balance $11,282,345 $12,690,586 $24,164,720 $21,985,588 $20,515,975 Emergency Reserve Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Beginning Balance $695,624 $709,537 $723,728 $1,215,821 $1,240,137 Direct Transfers from/(to) Operating Reserve $0 $0 $0 $0 $0 Transfers from/(to) Capital Replacement Reserve Line 18 $0 $0 $472,890 $0 $0 Subtotal Emergency Reserve $695,624 $709,537 $1,196,618 $1,215,821 $1,240,137 Interest Earnings $13,912 $14,191 $19,203 $24,316 $24,803 Ending Balance $709,537 $723,728 $1,215,821 $1,240,137 $1,264,940 Capacity Fee Reserve Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Beginning Balance $4,097,423 $1,452,371 $168,419 $171,787 $175,223 Capacity Fee Receipts $0 $0 $0 $0 $0 Transfers (to) Capital Replacement Reserve ($2,700,000) ($1,300,000) $0 $0 $0 Subtotal Capacity Fee Reserve $1,397,423 $152,371 $168,419 $171,787 $175,223 Interest Earnings $54,948 $16,047 $3,368 $3,436 $3,504 Ending Balance $1,452,371 $168,419 $171,787 $175,223 $178,727 Total Ending Balance $19,732,910 $20,010,458 $32,341,040 $30,451,770 $29,285,889 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 28 Figure 8: Proposed Water Operating Position Figure 9: Water Capital Improvement Plan with Funding Sources East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 29 Figure 10: Water Proposed Ending Reserves East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 30 Cost-of-Service Analysis – Water Utility Cost-of-Service Process The next step in developing rates is to perform a cost-of-service analysis. It is important to understand how costs are incurred to determine the most appropriate way to recover these costs. The following graphic summarizes the cost-of-service process. Through this process, costs incurred are allocated to customers and tiers based on their proportional share. As a result, the proposed rates are cost-based and reflect the costs incurred to provide service to customers. Figure 11: Cost-of-Service Process Revenue Requirements The revenue requirements and proposed rates identified within this report are derived for the Rate Setting Period. With FY 2025 as the first year of the proposed rate schedule, revenue requirements are determined for FY 2025 and used for the cost-of-service. Revenue requirements include O&M expenses, debt service, available offsets from non-rate revenues, annual net income, and any mid-year adjustments if rates are implemented after the start of the fiscal year. The mid-year adjustment annualizes the proposed revenue adjustment to account for the time elapsed before new rates take effect to connect to the annual units of service used within this report for deriving rates. Funding the capital plan and replenishing reserves to meet or exceed the minimum reserve requirement is achieved over the Rate Setting Period. The results of the financial plan analysis are summarized in Table 22 and represent the revenue required from rates for FY 2025 through FY 2027. East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 31 Table 22: Water Revenue Requirements (FY 2025 – FY 2027) Rate Setting Period FY 2025 FY 2026 FY 2027 Revenue Requirements Total Total Total Water Supply Costs Surface Water - Assessments $117,000 $117,000 $117,000 Surface Water $262,000 $262,000 $262,000 State Water Project $346,000 $346,000 $346,000 Groundwater $2,330,000 $2,348,000 $2,358,000 Total Water Supply Costs $3,055,000 $3,073,000 $3,083,000 Operating Expenses Governing Board $269,000 $281,000 $294,000 General Administration $1,013,000 $1,060,000 $1,109,000 Human Resources $1,815,000 $1,929,000 $2,050,000 Public Affairs $952,000 $995,000 $1,040,000 Conservation $721,000 $752,000 $784,000 Finance & Accounting $998,000 $1,047,000 $1,097,000 Information Technology $1,265,000 $1,320,000 $1,378,000 Customer Service $1,375,000 $1,440,000 $1,508,000 Meter Services $311,000 $326,000 $342,000 Engineering $1,054,000 $1,102,000 $1,151,000 Water Production $2,254,000 $2,357,000 $2,465,000 Groundwater Replenishment $351,000 $351,000 $351,000 Utilities - Pumps & Boosters $762,000 $819,000 $879,000 Water Treatment $739,000 $774,000 $810,000 Water Quality $576,000 $603,000 $631,000 Maintenance Admin $445,000 $467,000 $491,000 Water Maintenance $3,246,000 $3,396,000 $3,553,000 Facilities Maintenance $1,061,000 $1,110,000 $1,162,000 Fleet Maintenance $641,000 $674,000 $708,000 Total Operating Expenses $19,848,000 $20,803,000 $21,803,000 Debt Service Existing Debt $2,601,000 $2,192,000 $1,759,000 New/Proposed Debt $0 $0 $887,000 Total Debt Service $2,601,000 $2,192,000 $2,646,000 Other Funding Revenue Offsets Other Operating Revenue ($492,000) ($492,000) ($492,000) Non-Operating Revenue ($158,000) ($144,000) ($147,000) Total Revenue Offsets ($650,000) ($636,000) ($639,000) Adjustments Reserve Funding $4,164,000 $5,424,000 $5,874,000 Adjustment for Mid-Year Increase $845,000 $898,000 $954,000 Total Adjustments $5,009,000 $6,322,000 $6,828,000 Total Other Funding $4,359,000 $5,686,000 $6,189,000 Revenue Requirement from Rates $29,863,000 $31,754,000 $33,721,000 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 32 Define Cost Components The utility incurs costs to accommodate total water demand that vary throughout the year. Therefore, to determine the most appropriate way to recover the utility’s expenses, cost components are identified to allocate expenses based on how they are incurred. By reviewing the revenue requirements and understanding the utility system, it is appropriate and reasonable to utilize the base-extra capacity methodology outlined in the American Water Works Association M1 Manual. This methodology accounts for utility systems costs to meet revenue needs based on average annual usage and total demand. The cost components shown in Figure 12 reflect the cost components used for this study. Figure 12: Water Cost Components Cost Components: Account Services – Fixed expenses that do not necessarily fluctuate based on usage nor are a function of meter size. Customer call center, billing, and other expenses that are incurred based on having an account. Meter Capacity – Expenses associated with fixed water supply costs, portion of capital, debt, and administration of the system. Fire Flow Demand – Portion of Peaking costs to meet fire flow demand inherent to the water system. Surface Water – Water supply costs from shares in North Folk Water Company. State Water Project – Water supply costs from the purchase of State Water Project water. Groundwater – Energy costs associated with pumping groundwater from the District’s wells. Delivery – Operating and capital expenses of the water system associated with serving customers at a constant average use or average daily demand. These costs tend to vary with the total water used. Peaking – Expenses incurred to meet customer peak demands in excess of average day usage. Water Efficiency – Expenses associated with education, conservation, and rebate programs. Allocate Expenses to Cost Components The analysis herein establishes cost components for developing fixed charges and commodity rates. Total volume and usage patterns of customers and tiers are analyzed to allocate expenses proportionately based on total usage and incremental increases in demands placed on the system in comparison to average usage demands. Peak demand is a function of Max Day Demand (Max Day) and Max Hour Demand (Max Hour) placed on the system in comparison to Average Day Demand (Avg Day). The system is configured with distribution and transmission lines ranging in size from 2” diameter to 36” diameter. This system configuration provides fire flow demand inherent to a utility system and accounts for peak water demands generated by how customers use water in excess of Avg Day. Max Day is the maximum amount of water used on a single day of a calendar year. Max Hour reflects the peak hourly use on the system in comparison to Avg Day. East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 33 When allocating expenses to the defined costs components, it is important to have a sound basis as to why an expense was allocated to a certain fixed cost component versus a variable cost component or split between both fixed and variable. The distribution of expenses to the cost components should be straight-forward to ensure the method of apportionment is understandable and easily correlates to how expenses are incurred. A description of each expense category is identified below. Expense Categories: Fixed Water Supply Costs – Fixed costs associated with the North Folk Water Company surface water. Groundwater – Costs associated with electricity. Surface Water – Costs associated with treatment expenses, including energy. State Water Project – Purchased water costs and treatment expenses, including energy. Board of Directors – Board of Director stipends, benefits, supplies, and contract services. General Administration – General and overhead costs, including personnel, contract services, memberships, supplies, and utilities. Human Resources – Oversees personnel related programs. Expenses include personnel, supplies, contract services, utilities, memberships, professional development, and insurance. Public Affairs – Oversees internal and external communication programs. Expenses include personnel, supplies, utilities, and contract services. Conservation – Costs associated with sustainable water use, including personnel, supplies, and advertising. Finance & Accounting – Oversees transparency and oversight of funds. Expenses include personnel, supplies, banking, utilities, and contract service. Information Technology – Costs associated with maintaining technology and software programs. Expenses include personnel, supplies, utilities, and contract service. Customer Service – Costs associated with customer relations and billing. Expenses including personnel, supplies, utilities, contract services, and postage. Meter Service – Oversees monthly meter reading, on-site customer meter-related requests, and customer service assistance. Expenses include personnel, supplies, utilities, and contract service. Engineering – Costs associated with the engineering department, including personnel, supplies, utilities, contract services, and permits. Water Production – Costs associated with groundwater production, except for energy costs of the wells which are part of the Commodity Water Supply Costs. Costs related to the groundwater replenishment charge and energy costs of pumps & boosters are broken out to allocate those costs separately. Water Treatment – Cost of treating all water supplies. Expenses include personnel costs, supplies, and contract services. Water Quality – Costs associated with testing water at sources and within the system. Maintenance Administration – Overhead expenses for field maintenance. Expenses include personnel, supplies, utilities, and memberships. Water Maintenance – Oversees the repair and replacement of the water system and all related equipment. Expenses include personnel, supplies, utilities, contract services, and street services. Facility Maintenance – Costs associated with maintaining facilities. Fleet Maintenance – Costs associated with the fleet department. Expenses include personnel, rentals, vehicles, tools, fuel, supplies, and contract services. East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 34 The District maintains infrastructure and capital improvements that are designed to accommodate total usage and peak demands on the system. This means system facilities are designed and constructed specifically to accommodate peak demand, or to oversize infrastructure to serve both average usage, and peak usage. Constructing such infrastructure, whether specifically dedicated to peak demand or oversized to accommodate peak demand and average use, causes the District to incur additional cost that would not otherwise be incurred if customer usage did not exceed average demand. For example, the treatment plant, storage facilities, and transmission & distribution lines are constructed to not only accommodate average daily demand but also the impacts of peak use on the system. Proposition 218 requires that the District establish rates that represent the proportionate cost-of-service. In addition, the California Court of Appeal has previously held that tiered rates are an appropriate means to allocate infrastructure costs, so that average or lower-than-average water users do not pay for facilities designed to accommodate peak demand. Peaking characteristics are used as a means of allocating the costs of such facilities proportionately to the usage driving the District to incur those costs. System peaking characteristics are used to allocate costs to Avg Day (Delivery) and Max Day / Max Hour (collectively, Peaking). Avg Day is assigned a factor of 1.0 signifying no peaking demands. Max Day is the actual usage during the Max Day event of FY 20223. Max Hour takes the Max Day demand and multiplies it by the Max Hour factor from the Water MP, equal to 2.75. A Max Hour peaking factor of 2.75 means that the system delivers 2.75 times the average daily demand during peak hour. To determine the percentage allocations for Avg Day, Max Day, and Max Hour, the following calculations are used: Avg Day – 10,905 gallons per minute (gpm) based on actual water usage in FY 2022. Average day is calculated by taking the total fiscal year water usage in gallons and converting to usage in gpm, representing no peaking. Max Day – The Max Day event recorded 17,000 gpm. Therefore, Avg Day makes up 64.1% of the Max Day (10,905 / 17,000 = 0.641) and the incremental increase of demand during Max Day (peaking) is 35.9%. Max Hour – The Max Hour peak factor is 2.75, resulting in 46,751 gpm (17,000 gpm x 2.75 = 46,751). Therefore, the Avg Day makes up 23.3% of Max Hour (10,905 / 46,751 = 0.233), and the incremental amount related to peaking associated with Max Hour equals 76.7% (100% - 23.3% = 76.7%). These peaking characteristics and corresponding allocations provide a means to spread costs incurred as a function of serving Max Day and Max Hour proportionately between Delivery and Peaking. Table 23 summarizes the percentage allocations of Delivery and Peaking associated with Avg Day, Max Day, and Max Hour. 3 FY 2022 consumption was used for this analysis, reflecting a typical year as FY 2023 was a historical wet year. East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 35 Table 23: System Demand Allocations Between Delivery and Peaking In addition to Max Day and Max Hour demand, a water system is configured to also accommodate Fire Flow Demand (FFD) for fire suppression with the sizing of pipes, storage facilities and other appurtenant facilities to meet Max Day and Max Hour demand. FFD can be incorporated into this analysis as a component of Max Day and Max Hour. Based on the District’s system requirements within its Water MP, the maximum fire flow needs vary by land use from 1,500 gallons per minute (gpm) for single-family residential up to 3,000 gpm for non-residential. Fire flow requirements were weighted by the corresponding accounts to derive the typical fire flow requirement needed during a probable fire event within the District’s service area. Table 24 derives the weighted fire flow requirement and Table 25 identifies the portion of Max Day and Max Hour associated with fire flow demand by using the fire flow requirement derived in Table 24. Table 24: Fire Flow Requirements within District’s Service Area System Peak Analysis System Peak System Demand Delivery Peaking [A][B] = A ÷ 10,905 [C] = 100% - B Average Day 10,905 gpm 100.0% 0.0% Max Day 17,000 gpm 64.1% 35.9% Max Hour 46,751 gpm 23.3% 76.7% Fire Flow Demand Assumptions FFD by Land Use FFD Duration # of Accounts % of Accounts Weighted Avg FFD Weighted Avg Duration [A] [B] [C] [D] = C as % [E] = A x D [F] = B x D Single-Family 1,500 gpm 2 hours 19,916 92.8% 1,391 gpm 1.86 hours Multi-Family 2,500 gpm 2 hours 484 2.3% 56 gpm .05 hours Commercial 3,000 gpm 3 hours 722 3.4% 101 gpm .10 hours Irrigation 1,500 gpm 2 hours 349 1.6% 24 gpm .03 hours Total 21,471 100.0% 1,573 gpm 2.03 hours East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 36 Table 25: Fire Flow Demand as Percentage of Max Day and Max Hour Table 26 summarizes the percentage allocations between Delivery and Peaking from Table 23, plus the additional allocations when accounting for FFD from Table 25. Table 26: System Peaking Factors and Distribution Basis Fire Flow Demand Analysis Line FFD as a % of System Demand Source Max Day Max Hour #(Conversions) 1 System Demand 2 System Demand 17,000 gpm 46,751 gpm 3 × 60 Minutes 60 60 4 × 24 Hours 24 N/A 5 System Demand (gallons) 24,480,684 2,805,078 6 Fire Flow Demand 7 Weighted Average FFD (gpm)(Table 24 , Column E )1,573 gpm 1,573 gpm 8 × 60 Minutes 60 60 9 Weighted Average FFD (gph) 94,379 94,379 10 × Time Duration (Table 24 , Column F )2.03 1.00 11 Fire Flow Demand (gallons) 191,932 94,379 12 Total Demand (gallons)(Line 5 + Line 11 )24,672,616 2,899,457 13 FFD as % of System Demand (Line 11 ÷ Line 12)0.8% 3.3% System Peak Analysis System Peak FFD Delivery Peaking [A][B][C] = 100% - (A+B) Average Day 0.0% 100.0% 0.0% Max Day 0.0% 64.1% 35.9% Max Hour 0.0% 23.3% 76.7% Max Day + FFD 0.8% 64.1% 35.1% Max Hour + FFD 3.3% 23.3% 73.4% East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 37 Table 27 summarizes the percent allocation of water supply costs and corresponding dollar amounts to the water supply cost components of Meter Capacity, Groundwater, Surface Water, and State Water Project. Fixed water supply costs are assigned to Meter Capacity. Water supply expenses are not reduced by any revenue offsets or increased for reserve funding. Table 27: Water Supply Expense Allocation to Cost Components Cost Components Water Supply Costs Methodology / Allocation Basis Meter Capacity Surface Water State Water Project Groundwater Total Fixed Water Supply Costs Surface Water - Assessments Specific 100.0% 0.0% 0.0% 0.0% 100.0% Variable Water Supply Costs Surface Water Specific 0.0% 100.0% 0.0% 0.0% 100.0% State Water Project Specific 0.0% 0.0% 100.0% 0.0% 100.0% Groundwater Specific 0.0% 0.0% 0.0% 100.0% 100.0% Water Supply Costs Methodology / Allocation Basis Meter Capacity Surface Water State Water Project Groundwater Total Fixed Water Supply Costs Surface Water - Assessments Specific $117,000 $0 $0 $0 $117,000 Variable Water Supply Costs Surface Water Specific $0 $262,000 $0 $0 $262,000 State Water Project Specific $0 $0 $346,000 $0 $346,000 Groundwater Specific $0 $0 $0 $2,330,000 $2,330,000 Total Allocation ($) $117,000 $262,000 $346,000 $2,330,000 $3,055,000 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 38 Table 28 summarizes the percent allocation of O&M Revenue Requirements to the cost components and corresponding expenses in dollars to each cost component. Overhead costs (Human Resources, Public Affairs, Finance & Accounting) and Customer Service were allocated to the fixed components of Account Service and Meter Capacity evenly (50%/50%) as these expenses include general costs incurred for serving total active accounts and costs associated with operating the water system. Table 28: Water O&M Expense Allocation to Cost Components Cost Components Operating Expenses Methodology / Allocation Basis Account Service Meter Capacity Fire Flow Demand Delivery Peaking Water Efficiency Total Governing Board Specific 0.0% 100.0% 0.0% 0.0% 0.0% 0.0% 100.0% General Administration Specific 0.0% 100.0% 0.0% 0.0% 0.0% 0.0% 100.0% Human Resources Specific 50.0% 50.0% 0.0% 0.0% 0.0% 0.0% 100.0% Public Affairs Specific 50.0% 50.0% 0.0% 0.0% 0.0% 0.0% 100.0% Conservation Specific 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 100.0% Finance & Accounting Specific 50.0% 50.0% 0.0% 0.0% 0.0% 0.0% 100.0% Information Technology Specific 0.0% 100.0% 0.0% 0.0% 0.0% 0.0% 100.0% Customer Service Specific 50.0% 50.0% 0.0% 0.0% 0.0% 0.0% 100.0% Meter Services Specific 0.0% 100.0% 0.0% 0.0% 0.0% 0.0% 100.0% Engineering Max Day + FFD 0.0% 0.0% 0.8% 64.1% 35.1% 0.0% 100.0% Water Production Max Day + FFD 0.0% 0.0% 0.8% 64.1% 35.1% 0.0% 100.0% Groundwater Replenishment Average Day 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% 100.0% Utilities - Pumps & Boosters Max Hour + FFD 0.0% 0.0% 3.3% 23.3% 73.4% 0.0% 100.0% Water Treatment Max Day + FFD 0.0% 0.0% 0.8% 64.1% 35.1% 0.0% 100.0% Water Quality Average Day 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% 100.0% Maintenance Admin Average Day 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% 100.0% Water Maintenance Max Day + FFD 0.0% 0.0% 0.8% 64.1% 35.1% 0.0% 100.0% Facilities Maintenance Max Day + FFD 0.0% 0.0% 0.8% 64.1% 35.1% 0.0% 100.0% Fleet Maintenance Average Day 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% 100.0% Operating Expenses Methodology / Allocation Basis Account Service Meter Capacity Fire Flow Demand Delivery Peaking Water Efficiency Total Governing Board Specific $0 $269,000 $0 $0 $0 $0 $269,000 General Administration Specific $0 $1,013,000 $0 $0 $0 $0 $1,013,000 Human Resources Specific $907,500 $907,500 $0 $0 $0 $0 $1,815,000 Public Affairs Specific $476,000 $476,000 $0 $0 $0 $0 $952,000 Conservation Specific $0 $0 $0 $0 $0 $721,000 $721,000 Finance & Accounting Specific $499,000 $499,000 $0 $0 $0 $0 $998,000 Information Technology Specific $0 $1,265,000 $0 $0 $0 $0 $1,265,000 Customer Service Specific $687,500 $687,500 $0 $0 $0 $0 $1,375,000 Meter Services Specific $0 $311,000 $0 $0 $0 $0 $311,000 Engineering Max Day + FFD $0 $0 $8,199 $676,087 $369,714 $0 $1,054,000 Water Production Max Day + FFD $0 $0 $17,534 $1,445,825 $790,640 $0 $2,254,000 Groundwater Replenishment Average Day $0 $0 $0 $351,000 $0 $0 $351,000 Utilities - Pumps & Boosters Max Hour + FFD $0 $0 $24,804 $177,740 $559,457 $0 $762,000 Water Treatment Max Day + FFD $0 $0 $5,749 $474,031 $259,221 $0 $739,000 Water Quality Average Day $0 $0 $0 $576,000 $0 $0 $576,000 Maintenance Admin Average Day $0 $0 $0 $445,000 $0 $0 $445,000 Water Maintenance Max Day + FFD $0 $0 $25,251 $2,082,143 $1,138,606 $0 $3,246,000 Facilities Maintenance Max Day + FFD $0 $0 $8,254 $680,577 $372,169 $0 $1,061,000 Fleet Maintenance Average Day $0 $0 $0 $641,000 $0 $0 $641,000 Total Allocation ($) $2,570,000 $5,428,000 $89,790 $7,549,402 $3,489,807 $721,000 $19,848,000 Operating Expenses Allocation (%) 12.9% 27.3% 0.5% 38.0% 17.6% 3.6% 100.0% East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 39 Debt revenue requirements are shown in Table 29 as a separate section to identify the existing debt obligation of the water utility. However, debt service payments are part of the District’s operating budget. Therefore, Debt Service is allocated based on the operating expense percentages derived at the bottom of Table 28. Table 29: Water Debt Expense Allocation to Cost Components Table 30 summarizes the percent allocation of Other Funding to the cost components and corresponding expenses in dollars to each cost component. Other Funding includes revenue offsets from both Other Operating Revenues and Non-Operating Revenues, Capital / Reserve Funding, and Mid-Year Adjustments. All line items were allocated to the cost components proportionately based on O&M percentages derived in Table 28. Table 30: Water Other Funding to Cost Components Table 31 summarizes the total revenue requirement derived in Table 22 by cost component. Table 31: Water FY 2025 Cost-of-Service Requirements Cost Components Debt Service Methodology / Allocation Basis Account Service Meter Capacity Fire Flow Demand Delivery Peaking Water Efficiency Total Existing Debt O&M Allocation 12.9% 27.3% 0.5% 38.0% 17.6% 3.6% 100.0% New/Proposed Debt O&M Allocation 12.9% 27.3% 0.5% 38.0% 17.6% 3.6% 100.0% Debt Service Methodology / Allocation Basis Account Service Meter Capacity Fire Flow Demand Delivery Peaking Water Efficiency Total Existing Debt O&M Allocation $336,788 $711,317 $11,767 $989,319 $457,325 $94,484 $2,601,000 New/Proposed Debt O&M Allocation $0 $0 $0 $0 $0 $0 $0 Total Allocation ($) $336,788 $711,317 $11,767 $989,319 $457,325 $94,484 $2,601,000 Cost Components Other Funding Methodology / Allocation Basis Account Service Meter Capacity Fire Flow Demand Delivery Peaking Water Efficiency Total Revenue Offsets Other Operating RevenueO&M Allocation 12.9% 27.3% 0.5% 38.0% 17.6% 3.6% 100.0% Non-Operating Revenue O&M Allocation 12.9% 27.3% 0.5% 38.0% 17.6% 3.6% 100.0% Adjustments Reserve Funding O&M Allocation 12.9% 27.3% 0.5% 38.0% 17.6% 3.6% 100.0% Adjustment for Mid-Year IncreaseO&M Allocation 12.9% 27.3% 0.5% 38.0% 17.6% 3.6% 100.0% Other Funding Methodology / Allocation Basis Account Service Meter Capacity Fire Flow Demand Delivery Peaking Water Efficiency Total Revenue Offsets Other Operating Revenue O&M Allocation ($63,706) ($134,551) ($2,226) ($187,138) ($86,507) ($17,872) ($492,000) Non-Operating Revenue O&M Allocation ($20,458) ($43,210) ($715) ($60,097) ($27,781) ($5,740) ($158,000) Adjustments Reserve Funding O&M Allocation $539,172 $1,138,764 $18,838 $1,583,823 $732,142 $151,262 $4,164,000 Adjustment for Mid-Year IncreaseO&M Allocation $109,414 $231,089 $3,823 $321,405 $148,574 $30,696 $845,000 Total Allocation ($) $564,421 $1,192,093 $19,720 $1,657,993 $766,428 $158,345 $4,359,000 FY 2025 Revenue Requirements Revenue Requirement Account Service Meter Capacity Fire Flow Demand Surface Water State Water Project Groundwater Delivery Peaking Water Efficiency Total Water Supply Costs $0 $117,000 $0 $262,000 $346,000 $2,330,000 $0 $0 $0 $3,055,000 Operating Expenses $2,570,000 $5,428,000 $89,790 $0 $0 $0 $7,549,402 $3,489,807 $721,000 $19,848,000 Debt Service $336,788 $711,317 $11,767 $0 $0 $0 $989,319 $457,325 $94,484 $2,601,000 Other Funding $564,421 $1,192,093 $19,720 $0 $0 $0 $1,657,993 $766,428 $158,345 $4,359,000 COS Requirements $3,471,209 $7,448,410 $121,277 $262,000 $346,000 $2,330,000 $10,196,714 $4,713,561 $973,830 $29,863,000 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 40 Rate Design – Water Utility Develop Units of Service Unit rates for each cost component are derived by spreading the corresponding revenue requirements over appropriate units of service (distribution basis). This approach provides a clear connection between costs incurred and the proportionate share attributable to each customer class, corresponding tier, and customer account. When designing rates, the most critical component is to connect costs to the proposed rates, resulting in a rate structure that is cost-based and in compliance with Proposition 218. The previous section summarized costs by expense category and then allocated the expenses to cost components based on how each cost is incurred. The next step in designing rates is to allocate each cost component to customers in relation to their use of the system and facilities. The method of apportionment considers each customer’s share of system costs and is reflected by the units of service used to equitably distribute the cost components to each customer account. The distribution basis varies by cost component and includes total accounts, Meter Equivalents (MEs), which reflect demand placed on the system based on meter size, total water sales, usage by tier, and usage weighted by peaking for each customer class and tier. Each meter size was assigned an equivalency factor using the flow characteristics of a 3/4” meter, equal to 30 gpm. The District’s meter inventory was reviewed, and the specifications of the meters were provided for determining the safe operating yield (gpm), for each meter size. The safe maximum operating flow capacity for each meter size was divided by the safe operating flow capacity of the 3/4” meter (30 gpm) to determine the equivalent meter ratio. The Capacity Ratio represents the potential flow through each meter size compared to the flow through a 3/4” meter to establish parity between meter sizes. Total MEs are determined by multiplying the number of meters by the Capacity Ratio and then multiplying the result by 12 billing periods. Table 32 summarizes the units of service related to total Accounts and MEs. Table 32: Accounts and Meter Equivalents Fixed Units by Customer Class and Meter Size Line Meter Size EVWD Capacity (gpm)EVWD Ratio Potable Accounts Dedicated Firelines Potable + Firelines Potable Meter Equivalents #[A][B] = A ÷ 30 [C] [D] [E] = C + D [F] = B x C 1 5/8" 20 0.67 3,479 0 3,479 2,319 2 3/4" 30 1.00 13,066 1 13,067 13,066 3 1" 50 1.67 4,235 2 4,237 7,058 4 1 1/2" 100 3.33 276 1 277 920 5 2" 160 5.33 303 0 303 1,616 6 3" 500 16.67 63 0 63 1,050 7 4" 1,250 41.67 24 49 73 1,000 8 6" 2,000 66.67 12 144 156 800 9 8" 4,000 133.33 13 60 73 1,733 10 10" 6,500 216.67 - 15 15 - 11 12" 8,000 266.67 - - - - 12 Total 21,471 272 21,743 29,563 13 Annual Units (Line 12 x 12 billing periods) 257,652 3,264 260,916 354,756 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 41 Total usage and peaking factors must be calculated for each customer class and tier to derive the units of service for allocating commodity costs. As part of this rate study and cost-of-service, commercial accounts will be adjusted to a uniform commodity rate instead of budget-based rates based on historical use. The current rate structure sets Tier 1 at 90% of historical water usage, with Tier 2 set at the remaining 10%, and any excess usage over Tier 2 would be charged the Tier 3 rate. However, as commercial customers reduce their water usage, each year’s Tier 1 allotment is updated to reflect 90% of the new historical average. As commercial customers achieve reduction in water usage to stay within Tier 1, the updated water budget for each subsequent year would continuously decrease as water efficiency is achieved. Therefore, it is not practical to require commercial customers to continuously reduce their usage in perpetuity. The rate structure for commercial customers should either be adjusted to set water budgets based on unique water efficiency standards for each type of use or switch to a uniform rate and each commercial account pays their fair share of cost based on total water usage. For budget-based rate customers, each account receives unique water budget allotments for Tier 1 and Tier 2. Tier 1 is associated with indoor use (Indoor Water Budget or IWB) and Tier 2 is associated with irrigable area (Outdoor Water Budget or OWB); the two tiers combined is an account’s Total Water Budget (TWB). To determine the peaking factor for each tier, IWB are set to a peak of 1.0 as indoor use is not considered peaking and is within Avg Day. The average use per account for each tier, during the peak month (July), is then compared to the total base water allotment in Tier 1, equal to 8 hcf. Commercial has a uniform rate, and the peaking factor is derived by taking the customer class’s usage per account during the max month of July divided by average annual usage per account. Table 33 provides the projected usage for FY 2025, broken out by customer class and tier, and weighted peak for each tier and customer class. Table 33: Peaking Factor by Customer Class and Tier4 4 Peaking factor for commercial was derived by taking average usage per account in July divided by the average annual usage per account (136.496 ÷ 114.721 = 1.19). Projected Usage by Customer Class and Tier Customer Class Tiers Projected Usage Average Usage per Account Peaking Factor Weighted Peak [A] [B][C] = B ÷ Tier 1 [D] = A x C Budget Based Customers Tier 1 IWB 2,413,489 8.00 1.00 2,413,489 Tier 2 OWB 2,544,818 17.61 2.20 5,602,038 Tier 3 > TWB 1,159,766 26.50 3.31 3,842,158 Subtotal Budget Based Customers 6,118,072 11,857,685 Commercial Uniform Uniform 701,355 1.19 834,476 Subtotal Commercial Consumption (hcf) 701,355 834,476 Total Consumption (hcf) 6,819,427 12,692,160 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 42 With the units of service shown in Table 32 and Table 33, the distribution basis can be identified for each cost component. Figure 13 identifies the total revenue requirements by cost component from Table 31 and the corresponding units of service. Figure 13: Water Distribution Basis and Units of Service by Cost Component Using the FY 2025 revenue requirements, the cost-of-service allocates expenses to customers and tiers based on the service demands that each place on the system (cost causation). This ensures that each customer proportionately shares in the financial obligation of the utility. For the following unit rate computations for each cost component, unit rates were rounded up to the nearest penny. Fixed Cost Recovery Account Services Each customer incurs Account Services costs, including dedicated firelines, regardless of the type of land use, meter size, or total amount of water used in a month. These costs should be spread equally across all accounts. This is achieved by using the distribution basis of Total Bills. Total Bills are determined by multiplying the number of accounts by 12 billing periods (Table 32, Line 13 – Column C). Therefore, the revenue requirement for Account Services is apportioned based on the Total Bills to determine the monthly unit cost-of-service shown in Table 34. Table 34: Water Account Services Monthly Unit Rate Account Service Component - Unit Rate Revenue Requirement $3,471,209 ÷ Annual Bills 260,916 Monthly Unit Rate $13.31 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 43 Meter Capacity The Meter Capacity Component includes system-wide operations costs and a portion of debt and capital. The revenue requirement for Meter Capacity is apportioned based on meter size. Larger sized meters can generate a greater demand on the system from the amount of potential water flow that may pass through the meter in gallons per minute (gpm). The revenue requirement for Meter Capacity is apportioned to meter size as represented by total MEs (Table 32, Line 13 – Column D) in Table 35. Table 35: Water Meter Capacity Monthly Unit Rate Fire Flow Demand System fire flow demand revenue requirements are allocated between dedicated firelines and hydrants based on the fire flow demand of all connections. Potable meters recover the portion associated with the fire flow demand of all hydrants for the standby services rendered to all potable accounts for system fire flow capacity. Table 36 identifies all connections by size (in diameter inches) between dedicated firelines and hydrants. The cross-sectional diameter of the line is multiplied by total connections of each size and the result is then raised to the 2.63 power, using the principals of the Hazen-Williams equation for the relative flow potential through pressure conduits, which is a function of the diameter size. Table 37 takes the fire flow demand units of service derived in Table 36 and allocated the FY 2025 cost-of-service fire flow demand revenue requirement between system hydrants and dedicated firelines. Table 38 takes the portion associated with fire flow demand of the water system’s connected hydrants and spreads the cost to potable meters based on MEs. The portion related to dedicated firelines is recovered based on the unit rate per diameter inch derived in Table 39. Table 36: Fire Flow Demand Allocations Meter Capacity Component Unit Rate Revenue Requirement $7,448,410 ÷ Annual ME's (less FL) 354,756 Monthly Unit Rate $21.00 Fire Demand Assumptions Line Dedicate Fire Lines Connections Size of Line Diameter Inches Fire Flow Demand #[A] [B][C] = A × C [D] = A × (B^2.63) 1 System Fire Flow 2.63 2 Public Hydrants 3 1" 7 1 7 7 4 2" 76 2 152 470 6 4" 483 4 1,932 18,508 7 6" 2,456 6 14,736 273,380 9 12" 3 12 36 2,067 10 Subtotal Public Hydrants 3,025 16,863 294,432 11 Dedicated Fire Lines 13 3/4" 1 0.75 1 0.5 14 1" 2 1.00 2 2 15 1 1/2" 1 1.50 2 3 18 4" 49 4.00 196 1,878 19 6" 144 6.00 864 16,029 20 8" 60 8.00 480 14,232 21 10" 15 10.00 150 6,399 23 Subtotal Dedicated Fire Lines 272 1,694 38,543 24 Annual Public Hydrants Line 10 x 12 of billing periods 36,300 202,356 3,533,189 25 Annual Dedicated Fire Lines Line 23 x 12 of billing periods 3,264 20,331 462,515 26 Annual Units 39,564 222,687 3,995,704 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 44 Table 37: Fire Flow Demand Revenue Requirement Allocation Table 38: Potable Meters Fire Flow Demand Monthly Unit Rate Table 39: Dedicated Fireline Monthly Unit Rate Commodity Cost Recovery The remaining cost components are recovered through the commodity rates. The proposed rate structure consists of a three-tiered budget-based rate structure for residential customers and irrigation customers5, with commercial customers adjusting to a uniform rate. A budget-based rate structure is designed to connect the cost of delivering water to the unique water needs of each customer, while encouraging water efficiency. Budget-based tiered allotments define the purpose of each tier and the criteria used to derive each account’s water budget. Irrigation accounts do not receive an indoor budget and are provided an outdoor water budget- based for the irrigation account’s irrigable area. Table 40 summarizes how water budgets are determined by type of account. 5 Irrigation accounts do not have a Tier 1 - IWB and only a Tier 2 - OWB. Fire Flow Demand Revenue Requirement Allocation Firelines Fire Flow Demand % Allocation Revenue Requirement [A] = Table 40 [B] = A as % [C] = Rev Req x B Public Hydrants 3,533,189 88.4% $107,239 Dedicated Firelines 462,515 11.6% $14,038 Total 3,995,704 100.0% $121,277 Public Hydrants Component - Unit Rate Revenue Requirement $107,239 ÷ Annual ME's (less FL)354,756 Monthly Unit Rate $0.31 Dedicated Firelines Component - Unit Rate Revenue Requirement $14,038 ÷ Diameter Inches 20,331 Monthly Unit Rate $0.70 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 45 Table 40: Water Budget Allocations Account Type Water Budgets Water Budget Formulas6 Variance (V) Drought Factor (DF) Residential Tier 1 Budget = IWB Household Size x 55 gpcd x Units x Billing Days 748.05 IWB+VF - Tier 2 Budget = OWB Irrigable SF Area x ET0 x ETAF x 0.623 gallons 748.05 OWB+VF (OWB+VF) x DF Irrigation Tier 1 Budget N/A - - Tier 2 Budget = OWB Irrigable SF Area x ET0 x ETAF x 0.623 gallons 748.05 OWB+VF (OWB+VF) x DF Legend: Household Size: Number of people per household. The District’s policy is to provide adequate water for health and safety needs and minimize customer complaints and requests for variances. As such the default values for a residential household is 4 persons per dwelling. Customers may file a variance request if the Household Size is greater than 4 people. gpcd: Gallons per Capita per Day. Units: Residential dwelling units connected to the account. Billing Days: Number of days between meter reads. Irrigable SF Area: The irrigable area in square feet served by each account’s meter(s). ET0: Evapotranspiration is the sum of evaporation of water from the soil surface plus transpiration (water loss) from the plant/crop itself. ETo is the amount of water used by well-irrigated, mowed grass. ETAF: Evapotranspiration Adjustment Factor is a percentage of ETo based on the amount of water needed for turf during a given month. VF: Additional Water Budget provided to either IWB or OWD based on unique circumstances, which must be approved by the District. Indoor variances may include, but are not limited to, additional persons per household, medical needs, and livestock. Outdoor variances may include, but are not limited to pools and adjustment to ETAF based on type of crop. DF: Percent of Water Budgets during drought conditions. Default percentage is set to 100% during non- drought periods. 0.623: Conversion factor to determine volume in cubic feet of one inch of rain over one square foot. (1 inch = 0.0833 ft 0.0833x1ftx1ft = 0.0833ft3 0.083 ft3 x 7.48 gallons / ft3 = 0.623 gallons) The proposed rate structure is similar to the existing budget-based rate structure with a slight adjustment to the residential tier 1 indoor allotment for residential customers. Tier 1 will now reflect 47 gpcd, reduced down from 55 gpcd. This recommended adjustment is in-line with State SB 1157 efficiency targets to achieve 47 gpcd by January 2025. In addition, the indoor efficiency target is expected to continue to adjust down to 42 gpcd by 2030 and may be slowly incorporated within future rate studies. 6 The denominator of 748.05 is the number of gallons in one hcf of water. East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 46 Water Supply The District receives water from three different water supply sources. Table 41calculates the unit rate for each source of water based on the revenue requirement and corresponding units of service. For each water supply, the units of service directly correlate to the amount of water production from each source, after accounting for water loss of 8.3%. Detailed calculations of water supply costs are incorporated under Appendix A. Table 41: Water Supply Unit Rates With the three primary water sources of Surface Water, State Water Project, and Groundwater to serve current water demand, a water supply unit rate must be determined for each customer class and tier. Each customer class receives a proportionate share of Surface Water and State Water Project based on their percentage of total water usage. Groundwater is then used to cover the remaining demand of each customer class. Error! Reference source not found. summarizes the amount of water - by source - used to serve total water demand for each customer class and tier. For customers on tiered budget-based rates, Tier 1 water demand is more than what can be served by Surface Water and State Water Project. Therefore, Tier 1 is a blended rate of all three water sources, and Tier 2 and Tier 3 are served 100% by groundwater. Commercial customers’ water supply rate is a blended rate of all three water supplies, reflecting their pro rata share of each water supply based on percentage of total water usage (10.3%). Table 42 summarizes the water supply costs by customer class and tier, and corresponding unit rates. Table 42: Water Supply Unit Rate by Customer Class and Tier Development of Water Supplies - Effective Unit Cost (hcf) Water Supplies Production / Purchases Water Loss Net Water Supply Available Supply (hcf) Revenue Requirement Effective Unit Cost [A] = Acre Feet [B][C] = A × (1-B) [D] = C × 435.6 [E][F] = E ÷ D Surface Water 3,950 8.3% 3,622 1,577,809 $262,000 $0.17 State Water Project 1,800 8.3% 1,651 719,001 $346,000 $0.48 Groundwater 11,322 8.3% 10,383 4,522,617 $2,330,000 $0.52 Water Supply Allocation to Customer Classes / Tier & Unit Rate Development Projected Usage % Allocation Surface Water State Water Project Groundwater Projected Usage Revenue Requirement Unit Rate (hcf) (hcf) (hcf) (hcf) (hcf) ($/hcf) [A] [B] = A as % [C] = AS × B [D] = AS × B [E] = AS × B [F] = Sum of (Unit Rates × AS Usage)[G] = F ÷ A Available Supply (AS) 1,577,809 719,001 4,522,617 Effective Unit Cost ($/hcf) $0.17 $0.48 $0.52 Budget Based Customers Tier 1 2,413,489 1,415,536 645,055 352,898 2,413,489 $727,278 $0.31 Tier 2 2,544,818 - - 2,544,818 2,544,818 $1,311,061 $0.52 Tier 3 1,159,766 - - 1,159,765 1,159,765 $597,498 $0.52 Subtotal Budget Based Customers 6,118,072 89.7% 1,415,536 645,055 4,057,481 6,118,072 $2,635,837 Commercial Uniform 701,355 162,272 73,947 465,136 701,355 $302,163 $0.44 Subtotal Commercial 701,355 10.3% 162,272 73,947 465,136 701,355 $302,163 Total 6,819,427 100.0% 1,577,809 719,001 4,522,617 6,819,427 $2,938,000 Customer Class & Tier East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 47 Delivery Delivery costs are incurred based on the total volume of water produced and delivered to customers at a constant average demand throughout the year. Therefore, the revenue requirement for Delivery is apportioned based on projected total water usage to determine the unit cost-of-service, irrespective of customer class and tier, as shown in Table 43. Table 43: Water Delivery Unit Rate by Customer Class Peaking Peaking costs are incurred not only based on the total volume of water produced and delivered but also as a function of the peaking characteristics of tiers. Therefore, the revenue requirement for Peaking is allocated to each customer class and tier based on the Weighted Peaking derived in Table 33. Table 44 allocates the Peaking revenue requirement and derives unit rates for each customer class and tier. Table 44: Water Peaking Unit Rate by Customer Class and Tier Delivery Allocation to Customer Classes Customer Class Projected Usage % Allocation Revenue Requirement Unit Rate [A] [B] = A as % [C] = Rev Req x B [D] = C ÷ A Budget Based Customers 6,118,072 89.7% $9,148,016 $1.50 Commercial 701,355 10.3% $1,048,698 $1.50 Total 6,819,427 100.0% $10,196,714 Peaking Allocation to Customer Class and Tiers Customer Class & Tier Projected Usage Weighted Peak % Allocation Revenue Requirement Unit Rate [A] [B] [C] = B as a % [D] = Rev Req × C [E] = D ÷ A Budget Based Customers Tier 1 2,413,489 2,413,489 20.4% $896,311 $0.38 Tier 2 2,544,818 5,602,038 47.2% $2,080,461 $0.82 Tier 3 1,159,766 3,842,158 32.4% $1,426,884 $1.24 Subtotal Budget Based Customers 6,118,072 11,857,685 100% $4,403,657 Commercial Uniform 701,355 834,476 100.0% $309,904 $0.45 Subtotal Commercial 701,355 834,476 100% $309,904 Total 6,819,427 12,692,160 $4,713,561 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 48 Water Efficiency Water Efficiency revenue requirements are recovered over water usage in Tier 3 as water efficiency programs and incentives are aimed to mitigate inefficient water usage in Tier 3. Therefore, as usage in tier 3 reduces, the Water Efficiency revenue requirements adjust accordingly. Table 45 summarizes how Water Efficiency cost allocation to Tier 3 and corresponding unit rate. Table 45: Water Efficiency Unit Rate by Tier Water Efficiency Allocation to Tiers Customer Class & Tier Projected Usage Weighted Usage % Allocation Revenue Requirement Unit Rate [A][C] = A × B [D] = C as a % [E] = Rev Req x D [F] = E ÷ A Budget Based Customers Tier 1 2,413,489 - 0.0% $0 $0.00 Tier 2 2,544,818 - 0.0% $0 $0.00 Tier 3 1,159,766 1,159,766 100.0% $973,830 $0.84 Subtotal Budget Based Customers6,118,072 1,159,766 100% $973,830 Commercial Uniform 701,355 - 0.0% $0 $0.00 Total 6,819,427 1,159,766 $973,830 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 49 Cost-Based Rates – Water Utility Proposed Monthly Fixed Charges The proposed monthly fixed charges for FY 2025 are shown in Table 46, reflecting the combined charges of Account Services, Meter Capacity, and Fire Flow Demand. Meter Capacity and Fire Flow Demand charges increase with the size of the meter in relation to the Capacity Factors. Table 47 provides the proposed monthly dedicated fireline charge by size of connection. Table 46: FY 2025 Water Monthly Fixed Charges Table 47: FY 2025 Dedicated Fireline Monthly Fixed Charges Proposed Monthly Fixed Charges Meter Size EVWD Ratio Account Service Meter Capacity Fire Flow Demand Fixed Charges [A] [B] = $13.31 [C] = A × $21.00 [D] = A × $0.31 [E] = B + C + D 5/8" 0.67 $13.31 $14.00 $0.21 $27.52 3/4" 1.00 $13.31 $21.00 $0.31 $34.62 1" 1.67 $13.31 $35.00 $0.52 $48.83 1 1/2" 3.33 $13.31 $70.00 $1.04 $84.35 2" 5.33 $13.31 $112.00 $1.66 $126.97 3" 16.67 $13.31 $350.00 $5.17 $368.48 4" 41.67 $13.31 $875.00 $12.92 $901.23 6" 66.67 $13.31 $1,400.00 $20.67 $1,433.98 8" 133.33 $13.31 $2,800.00 $41.34 $2,854.65 10" 216.67 $13.31 $4,550.00 $67.17 $4,630.48 12" 266.67 $13.31 $5,600.00 $82.67 $5,695.98 Proposed Dedicated Fireline Montly Fixed Charges Connection Size Size of Line Account Service Meter Capacity Fire Flow Demand Fireline Charge [A] [B] = $13.31 [C] = N/A [D] = A × $0.70 [E] = B + C + D 5/8" 0.63 $13.31 $0.00 $0.44 $13.75 3/4" 0.75 $13.31 $0.00 $0.53 $13.84 1" 1.00 $13.31 $0.00 $0.70 $14.01 1 1/2" 1.50 $13.31 $0.00 $1.05 $14.36 2" 2.00 $13.31 $0.00 $1.40 $14.71 3" 3.00 $13.31 $0.00 $2.10 $15.41 4" 4.00 $13.31 $0.00 $2.80 $16.11 6" 6.00 $13.31 $0.00 $4.20 $17.51 8" 8.00 $13.31 $0.00 $5.60 $18.91 10" 10.00 $13.31 $0.00 $7.00 $20.31 12" 12.00 $13.31 $0.00 $8.40 $21.71 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 50 Proposed Commodity Charges by Tier The proposed commodity rates for FY 2025 are shown in Table 48, reflecting the combined rates of Water Supplies, Delivery, Peaking, and Water Efficiency. Table 48: FY 2025 Water Commodity Rates Proposed Commodity Rates ($/hcf) Customer Class & Tiers Tiers Water Supply Delivery Peaking Water Efficiency Commodity Rates [A] [B] [C] [D]E = A + B + C + D Budget Based Customers Tier 1 IWB $0.31 $1.50 $0.38 $0.00 $2.19 Tier 2 OWB $0.52 $1.50 $0.82 $0.00 $2.84 Tier 3 > TWB $0.52 $1.50 $1.24 $0.84 $4.10 Commercial Uniform Uniform $0.44 $1.50 $0.45 $0.00 $2.39 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 51 Wastewater Utility Wastewater System The wastewater system serves an area of almost 18,000 acres, through 213 miles of pipeline, 4,400 manholes, 7 siphons, and 5 diversion structures. The collection system historically conveyed wastewater flows to the City of San Bernardino but has recently transitioned to conveying wastewater flows the new Sterling Natural Resource Center (SNRC). This study includes the projected operational costs of the SNRC as well as an annual capital reinvestment appropriation. Figure 14: East Valley Water District Wastewater System In 2019, the District completed a Wastewater Master Plan (Wastewater MP) that identified existing system improvements, near term improvements through FY 2025, and build-out improvements after FY 2025 through FY 2040. Based on the Wastewater MP, the District developed a detailed capital improvement plan through FY 2030. The District has consistently reinvested in its collection system with annual mainline replacement of $200,000 and annual capital outlay of $260,000. Figure 15 shows the District’s capital plan through FY 2029, which accounts for inflation in future years. 213 miles of pipeline 18,000 acres Flow - 5.86 MGD 19,631 Accounts Wastewater System East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 52 Figure 15: Wastewater Capital Improvement Plan Customers The District serves approximately 30,989 sewer units, which includes total residential dwelling units and non- residential accounts. Table 49 provides a summary of sewer units by customer class. Table 49: Sewer Units by Customer Class The current wastewater rate structure consists of monthly fixed charges and commodity rates for Non- Residential customers. Existing charges and rates are identified in Table 50. Annual Fixed Units of Service Customer Class Sewer Units Single Family 19,428 Multi-Family 10,913 Non-Residential Low Strength 413 Medium Strength 73 High Strength 85 Schools & Churches 76 Patton State Hospital 1 Total 30,989 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 53 Table 50: FY 2024 Wastewater Fixed Charges and Commodity Rates Fixed Charges ($/Month) Customer Class Existing Single Family $16.32 Multi-Family $15.42 Non-Residential Low Strength $11.84 Medium Strength $11.84 High Strength $11.84 Schools & Churches $11.84 Patton State Hospital $11.84 Commodity Rates ($/hcf) Customer Class Existing Non-Residential Low Strength $0.41 Medium Strength $0.54 High Strength $0.54 Schools & Churches $0.41 Patton State Hospital $0.66 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 54 Financial Plan Overview – Wastewater Utility Financial Planning Assumptions Developing a long-term financial plan requires an understanding of the utility’s financial position by evaluating existing revenue streams, ongoing expenses, how those expenses will change over time, existing debt requirements, new strategic objectives, and reserve policies. With these considerations, certain assumptions are required for projecting revenues, expenses, and expected ending fund balances. Table 51 identifies assumptions used for forecasting revenues and Table 52 identifies assumptions used for forecasting increases in expenses through FY 2024. Table 51: Wastewater Assumptions for Forecasting Revenues Table 52: Wastewater Assumptions for Forecasting Expenses Revenue Forcasting Key Assumptions FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Revenue Escalation Reserve Interest 2.0% 2.0% 2.0% 2.0% 2.0% Account Growth Single Family 0.0% 0.0% 0.0% 0.0% 0.0% Multi-Family 1.0% 1.0% 0.0% 0.0% 0.0% Non-Residential 0.0% 0.0% 0.0% 0.0% 0.0% Customer Sewer Units FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Customer Class Single Family 19,428 19,428 19,428 19,428 19,428 Multi-Family 10,913 11,022 11,022 11,022 11,022 Non-Residential Low Strength 413 413 413 413 413 Medium Strength 73 73 73 73 73 High Strength 85 85 85 85 85 Schools & Churches 76 76 76 76 76 Patton State Hospital 1 1 1 1 1 Total Customer Sewer Units 30,989 31,098 31,098 31,098 31,098 Non-Residential Consumption FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Low Strength 202,777 202,777 202,777 202,777 202,777 Medium Strength 74,000 74,000 74,000 74,000 74,000 High Strength 198,237 198,237 198,237 198,237 198,237 Schools & Churches 150,994 150,994 150,994 150,994 150,994 Patton State Hospital 163,645 163,645 163,645 163,645 163,645 Total Non-Residential Consumption (hcf) 789,653 789,653 789,653 789,653 789,653 Expense Forecasting Key Assumptions Source:FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Expenditure Escalation Benefits 5.0% 5.0% 5.0% 5.0% 5.0% Capital Construction ENR 20-City 5-Year Average 3.9% 3.9% 3.9% 3.9% 3.9% Energy Costs 7.0% 7.0% 7.0% 7.0% 7.0% General Costs CPI - LA (BLS) 5-Year Average 3.9% 3.9% 3.9% 3.9% 3.9% Insurance 7.0% 5.0% 5.0% 5.0% 5.0% Salaries 7.0% 5.0% 5.0% 5.0% 5.0% East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 55 Current Financial Position Revenues Based on the revenue forecasting assumptions, fixed revenues were calculated by multiplying existing fixed charges (Table 50) by Sewer Units (Table 51) over twelve billing periods. Commodity revenues were calculated using the commodity rates (Table 50) and non-residential water usage (Table 51). Table 53 shows the calculated revenues for the Financial Plan Period. Table 54 summarizes calculated rate revenues (rounded to thousands) and other non-rate revenues. Table 53: Wastewater Calculated Rate Revenues Table 54: Wastewater Projected Revenues Calculated Rate Revenue Fixed Revenue FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Collection Fixed Charges Single Family $3,804,780 $3,804,780 $3,804,780 $3,804,780 $3,804,780 Multi-Family $2,019,342 $2,039,511 $2,039,511 $2,039,511 $2,039,511 Non-Residential Low Strength $58,679 $58,679 $58,679 $58,679 $58,679 Medium Strength $10,372 $10,372 $10,372 $10,372 $10,372 High Strength $12,077 $12,077 $12,077 $12,077 $12,077 Schools & Churches $10,798 $10,798 $10,798 $10,798 $10,798 Patton State Hospital $142 $142 $142 $142 $142 Total Collection Fixed Charges $5,916,189 $5,936,358 $5,936,358 $5,936,358 $5,936,358 Total Fixed Revenue $5,916,189 $5,936,358 $5,936,358 $5,936,358 $5,936,358 Commodity Revenue FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Collection Commodity Revenue Non-Residential Low Strength $83,139 $83,139 $83,139 $83,139 $83,139 Medium Strength $39,960 $39,960 $39,960 $39,960 $39,960 High Strength $107,048 $107,048 $107,048 $107,048 $107,048 Schools & Churches $61,908 $61,908 $61,908 $61,908 $61,908 Patton State Hospital $108,006 $108,006 $108,006 $108,006 $108,006 Total Collection Commodity Revenue $400,060 $400,060 $400,060 $400,060 $400,060 Total Commodity Revenue $400,060 $400,060 $400,060 $400,060 $400,060 Total Rate Revenue $6,316,249 $6,336,418 $6,336,418 $6,336,418 $6,336,418 Projected Revenue Revenue Summary FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Rate Revenue Collection Fixed Charges $5,916,000 $5,936,000 $5,936,000 $5,936,000 $5,936,000 Collection Commodity Revenue $400,000 $400,000 $400,000 $400,000 $400,000 Subtotal Rate Revenue $6,316,000 $6,336,000 $6,336,000 $6,336,000 $6,336,000 Other Operating Revenue $60,000 $60,000 $60,000 $60,000 $60,000 Non-Operating Revenue $31,000 $27,000 $28,000 $29,000 $31,000 Subtotal Wastewater $6,407,000 $6,423,000 $6,424,000 $6,425,000 $6,427,000 Total Revenues $6,407,000 $6,423,000 $6,424,000 $6,425,000 $6,427,000 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 56 Expenses The FY 2024 budget was used as the baseline expenses of the utility and adjusted in subsequent years based on the escalation factors shown in Table 52. Table 55 provides projected Operational & Maintenance (O&M) costs through FY 2029 (rounded to thousands). Each expense category includes detailed line-item expenditures that were discussed with staff to determine the appropriate escalation factor to use for forecasting how costs will increase over time. Table 55: Wastewater Projected O&M Expenses Projected Expenses O&M Expenses FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Operating Expenses Governing Board $116,000 $121,000 $126,000 $132,000 $138,000 General Administration $434,000 $454,000 $475,000 $497,000 $520,000 Human Resources $601,000 $631,000 $661,000 $694,000 $727,000 Public Affairs $408,000 $427,000 $446,000 $466,000 $487,000 Finance & Accounting $428,000 $449,000 $471,000 $493,000 $517,000 Information Technology $503,000 $525,000 $548,000 $573,000 $598,000 Customer Service $719,000 $752,000 $787,000 $823,000 $861,000 Engineering $405,000 $424,000 $443,000 $463,000 $485,000 Maintenance Admin $50,000 $52,000 $55,000 $58,000 $61,000 Wastewater Collection $837,000 $876,000 $917,000 $960,000 $1,005,000 Facilities Maintenance $638,000 $667,000 $699,000 $731,000 $766,000 Fleet Maintenance $161,000 $169,000 $177,000 $187,000 $196,000 Subtotal Operating Expenses $5,300,000 $5,547,000 $5,805,000 $6,077,000 $6,361,000 Debt Service Existing Debt $271,997 $270,466 $273,500 $271,124 $268,334 Total Expenses $5,571,997 $5,817,466 $6,078,500 $6,348,124 $6,629,334 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 57 Reserves The Wastewater utility incorporates similar revised reserves policies as the water utility. These robust reserves help mitigate risks to the utility by ensuring sufficient cash is on hand for daily operations and to fund annual system improvements. In addition, these reserves help smooth rates and mitigate rate spikes due to emergencies or above-average system costs. The most revised reserve policies identify the function of each reserve and Table 56 summarizes the minimum reserve requirements and the ideal funding targets of each reserve. Table 56: Wastewater Reserve Requirements and Targets Reserve Minimum Requirement Reserve Target Operating 90 days of operating costs 120 days of operating costs Capital Replacement 2 years of 5-year CIP average 5 years of planned capital Emergency 1.0% of Assets 2.0% of Assets Rate Stabilization - - Capacity Fee The beginning FY 2024 reserve balance (July 1, 2023) equaled approximately $1.8M. Financial Outlook at Existing Rates Calculating revenue using existing rates and projecting expenses helps determine the current financial health of the utility. Revenues from existing rates are sufficient to fund O&M through FY 2028, but a slight deficit is projected by FY 2029. Only a portion of planned capital spending can be funded with projected net operating income resulting in the use of reserves to cover the remaining capital costs. Table 57 forecasts existing revenues and expenses through the Financial Plan Period. Table 58 identifies reserve transfers and reserves activity, with projected FY 2025 starting reserve balances shown for each reserve. East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 58 Table 57: Wastewater Financial Plan at Existing Rates Financial Plan at Existing Rates Revenue Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Rate Revenue Collection Fixed Charges Table 54 $5,916,000 $5,936,000 $5,936,000 $5,936,000 $5,936,000 Collection Commodity Revenue $400,000 $400,000 $400,000 $400,000 $400,000 Total Rate Revenue $6,316,000 $6,336,000 $6,336,000 $6,336,000 $6,336,000 Other Operating Revenue Table 54 $60,000 $60,000 $60,000 $60,000 $60,000 Non-Operating Revenue $31,000 $27,000 $28,000 $29,000 $31,000 Subtotal Wastewater $91,000 $87,000 $88,000 $89,000 $91,000 Total Revenues $6,407,000 $6,423,000 $6,424,000 $6,425,000 $6,427,000 O&M Expenses Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Operating Expenses Governing Board Table 55 $116,000 $121,000 $126,000 $132,000 $138,000 General Administration $434,000 $454,000 $475,000 $497,000 $520,000 Human Resources $601,000 $631,000 $661,000 $694,000 $727,000 Public Affairs $408,000 $427,000 $446,000 $466,000 $487,000 Finance & Accounting $428,000 $449,000 $471,000 $493,000 $517,000 Information Technology $503,000 $525,000 $548,000 $573,000 $598,000 Customer Service $719,000 $752,000 $787,000 $823,000 $861,000 Engineering $405,000 $424,000 $443,000 $463,000 $485,000 Maintenance Admin $50,000 $52,000 $55,000 $58,000 $61,000 Wastewater Collection $837,000 $876,000 $917,000 $960,000 $1,005,000 Facilities Maintenance $638,000 $667,000 $699,000 $731,000 $766,000 Fleet Maintenance $161,000 $169,000 $177,000 $187,000 $196,000 Subtotal Operating Expenses $5,300,000 $5,547,000 $5,805,000 $6,077,000 $6,361,000 Debt Service Existing Debt Table 55 $271,997 $270,466 $273,500 $271,124 $268,334 Total Expenses $5,571,997 $5,817,466 $6,078,500 $6,348,124 $6,629,334 Net Operating $835,003 $605,535 $345,500 $76,876 ($202,334) East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 59 Table 58: Wastewater Reserve Activity at Existing Rates Figure 16 illustrates the operating position of the utility, where O&M expenses are identified with the dashed red trendline and total revenues at existing rates are shown by the horizontal black trendline. The bars represent the amount of net operating income available, with grey bars reflecting positive net operating income for capital spending and reserve funding and red bars reflecting an operating deficit absorbed by reserves. Figure 16: Wastewater Current Operating Financial Position Reserve Activity Operating Reserve Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Beginning Balance $1,317,273 $1,373,917 $1,434,444 $1,498,808 $1,565,291 Transfers (Net Operating)Table 57 $835,003 $605,535 $345,500 $76,876 ($202,334) Direct Transfers from/(to) Emergency Reserve $0 $0 $0 $0 $0 Transfers to Capital Replacement Reserve ($778,359) ($545,008) ($281,135) ($10,393) $0 Ending Balance $1,373,917 $1,434,444 $1,498,808 $1,565,291 $1,362,957 Capital Replacement Reserve Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Beginning Balance $723,573 $1,041,617 $1,111,672 $897,230 $384,913 Plus: Transfers from/(to) Operating Reserve $778,359 $545,008 $281,135 $10,393 $0 Less: CIP ($477,792) ($496,272) ($515,468) ($535,405) ($580,293) Transfers to Emergency Reserve $0 $0 $0 $0 $0 Subtotal Capital Replacement Reserve $1,024,140 $1,090,353 $877,340 $372,218 ($195,380) Interest Earnings $17,477 $21,320 $19,890 $12,694 $0 Ending Balance $1,041,617 $1,111,672 $897,230 $384,913 ($195,380) Emergency Reserve Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Beginning Balance $0 $0 $0 $0 $0 Direct Transfers from/(to) Operating Reserve $0 $0 $0 $0 $0 Transfers from Capital Replacement Reserve $0 $0 $0 $0 $0 Subtotal Emergency Reserve $0 $0 $0 $0 $0 Interest Earnings $0 $0 $0 $0 $0 Ending Balance $0 $0 $0 $0 $0 Capacity Fee Reserve Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Beginning Balance $3,169,482 $3,232,871 $3,297,529 $3,363,479 $3,430,749 Capacity Fee Receipts $0 $0 $0 $0 $0 Transfers (to) Capital Replacement Reserve $0 $0 $0 $0 $0 Subtotal Capacity Fee Reserve $3,169,482 $3,232,871 $3,297,529 $3,363,479 $3,430,749 Interest Earnings $63,390 $64,657 $65,951 $67,270 $68,615 Ending Balance $3,232,871 $3,297,529 $3,363,479 $3,430,749 $3,499,364 Ending Balance $5,648,405 $5,843,645 $5,759,518 $5,380,952 $4,666,941 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 60 Figure 17 reflects the projected ending balances of reserves after operating and capital projects are funded through FY 2029. Reserves are below the minimum target for each year of the Financial Plan Period. Figure 17: Wastewater Projected Ending Reserves at Existing Rates East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 61 Proposed Financial Plan – Wastewater Utility From the financial outlook at existing rates, a proposed financial plan is developed to fund the multi-year revenue requirements, while meeting debt covenants and reserve requirements. Table 59 forecasts existing revenues, with annual revenue adjustments, and expenses through the Financial Plan Period. However, FY 2028 and FY 2029 are not part of the Rate Setting Period and will not be included as part of the proposed rates within the Proposition 218 Notice. Table 60 identifies the projected FY 2025 total starting balances for the Operating, Capital, Emergency, and Capacity Fee reserves, activity within each reserve (including net income transfer from Table 59, transfers between reserves, and annual CIP), and projected ending balances for each fiscal year. Table 59: Wastewater Proposed Financial Plan Proposed Financial Plan Revenue Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Rate Revenue Collection Fixed Charges Table 54 $5,916,000 $5,936,000 $5,936,000 $5,936,000 $5,936,000 Collection Commodity Revenue $400,000 $400,000 $400,000 $400,000 $400,000 Total Rate Revenue $6,316,000 $6,336,000 $6,336,000 $6,336,000 $6,336,000 Additional Revenue (from revenue adjustments): Fiscal Year Revenue Adjustment Effective Month FY 2025 3.0% July $189,000 $190,000 $190,000 $190,000 $190,000 FY 2026 3.0% July $195,000 $195,000 $195,000 $195,000 FY 2027 3.0% July $201,000 $201,000 $201,000 FY 2028 3.0% July $207,000 $207,000 FY 2029 3.0% July $213,000 Total Additional Revenue $189,000 $385,000 $586,000 $793,000 $1,006,000 Projected Rate Revenue $6,505,000 $6,721,000 $6,922,000 $7,129,000 $7,342,000 Other Operating Revenue Table 54 $60,000 $60,000 $60,000 $60,000 $60,000 Non-Operating Revenue $31,000 $27,000 $28,000 $29,000 $31,000 Subtotal Wastewater $91,000 $87,000 $88,000 $89,000 $91,000 Total Revenues $6,596,000 $6,808,000 $7,010,000 $7,218,000 $7,433,000 O&M Expenses Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Operating Expenses Governing Board Table 55 $116,000 $121,000 $126,000 $132,000 $138,000 General Administration $434,000 $454,000 $475,000 $497,000 $520,000 Human Resources $601,000 $631,000 $661,000 $694,000 $727,000 Public Affairs $408,000 $427,000 $446,000 $466,000 $487,000 Finance & Accounting $428,000 $449,000 $471,000 $493,000 $517,000 Information Technology $503,000 $525,000 $548,000 $573,000 $598,000 Customer Service $719,000 $752,000 $787,000 $823,000 $861,000 Engineering $405,000 $424,000 $443,000 $463,000 $485,000 Maintenance Admin $50,000 $52,000 $55,000 $58,000 $61,000 Wastewater Collection $837,000 $876,000 $917,000 $960,000 $1,005,000 Facilities Maintenance $638,000 $667,000 $699,000 $731,000 $766,000 Fleet Maintenance $161,000 $169,000 $177,000 $187,000 $196,000 Subtotal Operating Expenses $5,300,000 $5,547,000 $5,805,000 $6,077,000 $6,361,000 Debt Service Existing Debt Table 55 $271,997 $270,466 $273,500 $271,124 $268,334 Total Expenses $5,571,997 $5,817,466 $6,078,500 $6,348,124 $6,629,334 Net Operating $1,024,003 $990,535 $931,500 $869,876 $803,666 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 62 Table 60: Wastewater Reserve Activity at Proposed Rates Reserve Activity Operating Reserve Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Beginning Balance $1,317,273 $1,373,917 $1,434,444 $1,498,808 $1,565,291 Transfers (Net Operating)Table 59 $1,024,003 $990,535 $931,500 $869,876 $803,666 Direct Transfers from/(to) Emergency Reserve $0 $0 $0 $0 $0 Transfers to Capital Replacement Reserve ($967,359) ($930,008) ($867,135) ($803,393) ($734,327) Ending Balance $1,373,917 $1,434,444 $1,498,808 $1,565,291 $1,634,630 Capital Replacement Reserve Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Beginning Balance $723,573 $1,060,837 $1,520,126 $1,905,713 $2,214,496 Plus: Transfers from/(to) Operating Reserve $967,359 $930,008 $867,135 $803,393 $734,327 Less: CIP ($477,792) ($496,272) ($515,468) ($535,405) ($580,293) Transfers to Emergency Reserve ($169,970) $0 $0 $0 $0 Subtotal Capital Replacement Reserve $1,043,169 $1,494,572 $1,871,794 $2,173,702 $2,368,529 Interest Earnings $17,667 $25,554 $33,919 $40,794 $45,830 Ending Balance $1,060,837 $1,520,126 $1,905,713 $2,214,496 $2,414,360 Emergency Reserve Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Beginning Balance $0 $171,670 $175,104 $178,606 $182,178 Direct Transfers from/(to) Operating Reserve $0 $0 $0 $0 $0 Transfers from Capital Replacement Reserve $169,970 $0 $0 $0 $0 Subtotal Emergency Reserve $169,970 $171,670 $175,104 $178,606 $182,178 Interest Earnings $1,700 $3,433 $3,502 $3,572 $3,644 Ending Balance $171,670 $175,104 $178,606 $182,178 $185,821 Capacity Fee Reserve Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Beginning Balance $3,169,482 $3,232,871 $3,297,529 $3,363,479 $3,430,749 Capacity Fee Receipts $0 $0 $0 $0 $0 Transfers (to) Capital Replacement Reserve $0 $0 $0 $0 $0 Subtotal Capacity Fee Reserve $3,169,482 $3,232,871 $3,297,529 $3,363,479 $3,430,749 Interest Earnings $63,390 $64,657 $65,951 $67,270 $68,615 Ending Balance $3,232,871 $3,297,529 $3,363,479 $3,430,749 $3,499,364 Ending Balance $5,839,295 $6,427,202 $6,946,607 $7,392,713 $7,734,175 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 63 Figure 18 identifies the operating position based on the proposed financial plan. Figure 19 and Figure 20 show the capital plan with funding sources and projected ending reserve balances, respectively. Figure 18: Wastewater Proposed Operating Position Figure 19: Wastewater Capital Improvement Plan with Funding Sources East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 64 Figure 20: Wastewater Proposed Ending Reserves East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 65 Cost-of-Service Analysis – Wastewater Utility Cost-of-Service Process Similar to updating water rates, the next step in developing wastewater rates is to perform a cost-of-service analysis. Through this process, costs incurred are allocated to customer classes based on their proportional share. As a result, the proposed rates are cost-based and reflect the costs incurred to provide service to customers. Revenue Requirements FY 2025 revenue requirements were used for the cost-of-service analysis. Revenue requirements include O&M expenses, debt service, available revenue offsets, non-rate revenues, annual net income, and any mid- year adjustments if rates are implemented after the start of the fiscal year. The proposed revenue adjustments and corresponding rates accumulate the necessary funding over the Rate Setting Period to fund O&M, capital projects, and comply with minimum reserve requirements. The results of the financial plan analysis are summarized in Table 61 and represent the revenue required from rates. Table 61: Wastewater Revenue Requirements (FY 2025 – FY 2027) Rate Setting Period FY 2025 FY 2026 FY 2027 Revenue Requirements Total Total Total Operating Expenses Governing Board $116,000 $121,000 $126,000 General Administration $434,000 $454,000 $475,000 Human Resources $601,000 $631,000 $661,000 Public Affairs $408,000 $427,000 $446,000 Finance & Accounting $428,000 $449,000 $471,000 Information Technology $503,000 $525,000 $548,000 Customer Service $719,000 $752,000 $787,000 Engineering $405,000 $424,000 $443,000 Maintenance Admin $50,000 $52,000 $55,000 Wastewater Collection $837,000 $876,000 $917,000 Facilities Maintenance $638,000 $667,000 $699,000 Fleet Maintenance $161,000 $169,000 $177,000 Total Operating Expenses $5,300,000 $5,547,000 $5,805,000 Debt Service Existing Debt $271,997 $270,466 $273,500 Proposed Debt $0 $0 $0 Total Debt Service $271,997 $270,466 $273,500 Other Funding Revenue Offsets Other Operating Revenue ($60,000) ($60,000) ($60,000) Non-Operating Revenue ($31,000) ($27,000) ($28,000) Total Revenue Offsets ($91,000) ($87,000) ($88,000) Adjustments Reserve Funding $1,024,003 $990,535 $931,500 Adjustment for Mid-Year Increase $0 $0 $0 Total Adjustments $1,024,003 $990,535 $931,500 Total Other Funding $933,003 $903,535 $843,500 Revenue Requirement from Rates $6,505,000 $6,721,000 $6,922,000 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 66 Define Cost Components The District’s wastewater costs-of-service requirements were allocated to cost components and then to customers classes utilizing a cost causation approach endorsed by the Water Environment Federation (WEF) rate setting manual Financing and Charges for Wastewater Systems (MOP 27). The utility incurs costs to accommodate total flow demand by different customer classes. Therefore, to determine the most appropriate way to recover the utility’s expenses, cost components are identified and used to allocate expenses based on how they are incurred. Through review of the revenue requirements and based on an understanding of the wastewater collection system, the cost-of-service allocation documented in this report is based on total sewer units and flow (volume influent in hcf). Using this approach, revenue requirements are allocated to the different customer classes proportionate to their use of the wastewater collection system. The cost components shown in Figure 21 are used within the cost-of-service analysis. Figure 21: Wastewater Cost Components Account Services – Fixed expenses associated with the collection system that do not necessarily fluctuate based on flow. Administration and other overhead costs that are incurred based on having an account. In addition, includes a portion of debt and reserves. Collection Flow – Expenses associated with the District’s collection system related to total flow demand. These costs include Engineering, maintenance costs, a portion of debt and system reinvestment. Allocate Expenses to Cost Components When allocating expenses to the defined costs components, it is important to have a sound basis as to why an expense was allocated to a certain fixed cost component versus a variable cost component or split between both fixed and variable. The distribution of expenses to the cost components should be straight-forward to ensure the method of apportionment is understandable and easily correlates to how expenses are incurred. A description of each expense category is identified below. Expense Categories: Governing Board – Board of Director stipends, benefits, supplies, and contract services. General Administration – General and overhead costs, including personnel, contract services, memberships, supplies, and utilities. Human Resources – Oversees personnel related programs. Expenses include personnel, supplies, contract services, utilities, memberships, professional development, insurance. Public Affairs – Oversees internal and external communication programs. Expenses include personnel, supplies, utilities, and contract services. East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 67 Finance & Accounting – Oversees transparency and oversight of funds. Expenses include personnel, supplies, banking, utilities, and contract service. Information Technology – Costs associated with maintaining technology and software programs. Expenses include personnel, supplies, utilities, and contract service. Customer Service – Costs associated with customer relations and billing. Expenses including personnel, supplies, utilities, contract services, and postage. Engineering – Costs associated with the engineering department, including personnel, supplies, utilities, contract services, and permits. Debt – Outstanding loans and debt obligations. Maintenance Administration – Overhead expenses for field maintenance. Expenses include personnel, supplies, utilities, and memberships. Wastewater Collection – Oversees the repair and replacement of the collection system and all related equipment. Expenses include personnel, supplies, utilities, and contract services. Facility Maintenance – Costs associated with maintaining facilities. Fleet Maintenance – Costs associated with the fleet department. Expenses include personnel, rentals, vehicles, tools, fuel, supplies, and contract services. Table 62 summarizes the percent allocation of O&M expenses to the cost components and corresponding dollar amounts. Table 62: Wastewater O&M Allocation to Cost Components Cost Components Operating Expenses Methodology / Allocation Basis Account Services Flow Total Governing Board Fixed 100.0% 0.0% 100.0% General Administration Fixed 100.0% 0.0% 100.0% Human Resources Fixed 100.0% 0.0% 100.0% Public Affairs Fixed 100.0% 0.0% 100.0% Finance & Accounting Fixed 100.0% 0.0% 100.0% Information Technology Fixed 100.0% 0.0% 100.0% Customer Service Fixed 100.0% 0.0% 100.0% Engineering Variable 0.0% 100.0% 100.0% Maintenance Admin Variable 0.0% 100.0% 100.0% Wastewater Collection Variable 0.0% 100.0% 100.0% Facilities Maintenance Variable 0.0% 100.0% 100.0% Fleet Maintenance Variable 0.0% 100.0% 100.0% Operating Expenses Methodology / Allocation Basis Account Services Flow Total Governing Board Fixed $116,000 $0 $116,000 General Administration Fixed $434,000 $0 $434,000 Human Resources Fixed $601,000 $0 $601,000 Public Affairs Fixed $408,000 $0 $408,000 Finance & Accounting Fixed $428,000 $0 $428,000 Information Technology Fixed $503,000 $0 $503,000 Customer Service Fixed $719,000 $0 $719,000 Engineering Variable $0 $405,000 $405,000 Maintenance Admin Variable $0 $50,000 $50,000 Wastewater Collection Variable $0 $837,000 $837,000 Facilities Maintenance Variable $0 $638,000 $638,000 Fleet Maintenance Variable $0 $161,000 $161,000 Total Allocation ($) $3,209,000 $2,091,000 $5,300,000 Operating Expenses Allocation (%) 60.5% 39.5% 100.0% East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 68 The Debt Service revenue requirements are shown as a separate section to identify the existing debt obligation of wastewater – collections; however, debt service payments are part of the District’s operating budget. Therefore, Debt Service is allocated based on the operating expense percentages derived at the bottom of Table 62. Table 63 identifies the percent allocation of the debt expense to the cost components, and corresponding debt expense in dollars. Table 63: Wastewater Debt Allocation to Cost Components Other Funding includes other operating revenues, non-operating reserves, and reserve funding. All items under "Other Funding" are allocated based on O&M percentages derived in Table 62. Table 64 summarizes the percent allocation to the cost components and the corresponding amounts in dollars. Table 64: Wastewater Other Funding Allocation to Cost Components Table 65 summarizes the wastewater revenue requirements for FY 2025. Table 65: Wastewater FY 2025 Cost-of-Service Requirements Cost Components Debt Service Methodology / Allocation Basis Account Services Flow Total Existing Debt O&M Allocation 60.5% 39.5% 100.0% Proposed Debt O&M Allocation 60.5% 39.5% 100.0% Debt Service Methodology / Allocation Basis Account Services Flow Total Existing Debt O&M Allocation $164,686 $107,310 $271,997 Proposed Debt O&M Allocation $0 $0 $0 Total Allocation ($) $164,686 $107,310 $271,997 Cost Components Other Funding Methodology / Allocation Basis Account Services Flow Total Revenue Offsets Other Operating Revenue O&M Allocation 60.5% 39.5% 100.0% Non-Operating Revenue O&M Allocation 60.5% 39.5% 100.0% Adjustments Reserve Funding O&M Allocation 60.5% 39.5% 100.0% Other Funding Methodology / Allocation Basis Account Services Flow Total Revenue Offsets Other Operating Revenue O&M Allocation ($36,328) ($23,672) ($60,000) Non-Operating Revenue O&M Allocation ($18,770) ($12,230) ($31,000) Adjustments Reserve Funding O&M Allocation $620,005 $403,998 $1,024,003 Total Allocation ($) $564,907 $368,096 $933,003 FY 2025 Revenue Requirements Revenue Requirement Account Services Flow Total Operating Expenses $3,209,000 $2,091,000 $5,300,000 Debt Service $164,686 $107,310 $271,997 Other Funding $564,907 $368,096 $933,003 COS Requirements $3,938,593 $2,566,407 $6,505,000 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 69 Rate Design – Wastewater Utility Develop Units of Service Residential customer flows were projected using expected indoor use for Single-Family and Multi-Family based on a gpcd basis. Single-Family pph are based on the Department of Finance E-5 report for 2023, reflecting 3.34 pph and Multi-Family was set 80% or 2.67 pph to account for the smaller dwellings and average household size. Treated flows for the most recently completed fiscal year (FY 2023) was used to determine the amount of flow generated by residential customers and non-residential customers. Residential projected flows were based on 47 gpcd for indoor use. Taking the product of the average household size, 47 gpcd, and the number of residential units, results in total projected flows of 1.49M hcf and 0.66M hcf for Single-Family and Multi-Family, respectively, as shown in Table 66. Table 66: Residential Projected Flows Non-residential customer flows were determined by estimating flow return factors for non-residential customers. To determine the appropriate flow return factors, we used the amount of total influent treated at the Wastewater Plant for FY 2023 and reduced the total treated flow by the projected amount from residential, less infiltration/inflow (known as I/I, which is a measure of the amount of water that enters the collection system that is not sewage, such as stormwater or groundwater that infiltrates into the collection system). The remainder is the estimated amount generated by non-residential customers. However, Patton Hospital (Patton) has a flow meter which allows us to determine a specific return factor for Patton by comparing the metered flow as a percentage of their water usage (Patton return factor = 45.9%). Residential Flow Projections Single-Family FY 2023 Assumptions Gallons per capita per day (GPCD) 47 Proejcted indoor return factor 100.0% Net Flow GPCD 47 × People per household (Residential) 3.34 × Number of Dwelling Units 19,428 Projected Residential Flow 3,049,733 GPD Annual Residential Flow in gallons (× 365) 1,113,152,418 Converted to HCF (÷ 748.05) 1,488,072 Multi-Family FY 2023 Assumptions Gallons per capita per day (GPCD) 47 Proejcted indoor return factor 100.0% Net Flow GPCD 47 × People per household (Multi-Family) 2.67 × Number of Dwelling Units 10,805 Projected Residential Flow 1,356,902 GPD Annual Residential Flow in gallons (× 365) 495,269,173 Converted to HCF (÷ 748.05) 662,080 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 70 In addition, Schools & Churches do not have all their landscape areas and fields on separate irrigation meters. As a result, from our review of their average winter water use versus the average monthly water use over 12 months, a return factor of 47% was derived for Schools & Churches. The 2023 winter was a very wet season, limiting the need to irrigate, and primarily reflects indoor water usage. The calculated return factor for Schools & Churches means a significant amount of these account’s water usage is associated with outdoor needs, such as fields, which do not contribute as influent to the treatment plant. For the remaining non-residential customers, the return factor was determined by taking the total treated flow less I/I, less projected residential flows, less Patton, and less Schools & Churches, and comparing the result to their total water usage. Table 67 provides the calculations used to derive the amount of projected flow expected to be generated by non-residential customers. Table 67: Non-Residential Flow Return Factor With the return factor calculated in Table 67, projected wastewater flows for FY 2025 can be derived for each non-residential customer class by applying the calculated return factors to their respective water usage. Applying the return factors to the non-residential water usage, generates a total projected flow of 525,650 hcf as shown in Table 68. Table 68: FY 2025 Projected Non-Residential Flows Plant Flow Analysis Line #Flow Assumptions (HCF) FY 2023 1 Total Flow 2,859,293 2 Less: Inflow and Infiltration (I&I)5.0%(142,965) 3 Flow from Customers 2,716,329 4 Less Projected Single Family Flow (1,488,072) 5 Less Projected Multi-Family Flow (662,080) 6 Less Projected Schools & Churches Flow (70,967) 7 Less Patton Metered Flows (75,080) 8 Projected Non-Residential Flows 420,129 9 10 Non-Residential Return Factor Calculation FY 2023 11 FY 2023 Non-Residential Water Usage 525,726 12 Return Factor (Line 8 ÷ Line 11) 79.9% Flows with Return Factors Customer Class Return Factor FY 2025 Non-Residential Water Usage (hcf) FY 2025 Projected Flow (hcf) [A] [B] [C] = (A×B) Non-Residential Low Strength 79.9% 202,777 162,047 Medium Strength 79.9% 74,000 59,136 High Strength 79.9% 198,237 158,419 Schools & Churches 47.0% 150,994 70,967 Patton State Hospital 45.9% 163,645 75,080 Subtotal Non-Residential 789,653 525,650 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 71 Unit rates for the cost components are derived by identifying the units of service for each cost component (distribution basis). The distribution basis varies by cost component and includes total sewer units and projected flow. Table 69 summarizes the fixed and commodity units of service. Table 69: Wastewater Units of Service With the units of service shown in Table 69, the distribution basis can be identified for each cost component. Figure 22 identifies the total revenue requirements by cost component from Table 65 and the corresponding units of service. Figure 22: Wastewater Units of Service by Cost Component Annual Units of Service Customer Class Sewer Units Annual Sewer Units FY 2025 Non- Residential Water Usage Projected Flow (hcf) Single Family 19,428 233,136 1,488,072 Multi-Family 10,913 130,956 668,698 Subtotal Residential 30,341 364,092 2,156,770 Non-Residential Low Strength 413 4,956 202,777 162,047 Medium Strength 73 876 74,000 59,136 High Strength 85 1,020 198,237 158,419 Schools & Churches 76 912 150,994 70,967 Patton State Hospital 1 12 163,645 75,080 Subtotal Non-Residential 648 7,776 789,653 525,650 Total 30,989 371,868 789,653 2,682,420 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 72 Allocate to Customer Class Using the FY 2025 revenue requirements, the cost-of-service allocates expenses to customer classes based on the service demands that each place on the system (cost causation). Using this approach provides a clear connection between costs incurred and the proportionate share attributable to each customer class. When designing rates, the most critical component is to connect costs to the proposed rates, resulting in a rate structure that is cost-based and in compliance with Proposition 218. In the previous section, costs were summarized by expense category and allocated to cost components based on how each cost is incurred. The next step in designing rates is to allocate each cost component to customers in relation to their use of the system and facilities. This ensures that each customer proportionately shares in the financial obligation of the wastewater utility. For the following unit rate computations for each cost component. Fixed Cost Recovery Account Services Account Services costs are spread equally across all accounts / dwelling units. This is achieved by using the distribution basis of Annual Sewer Units. Therefore, the revenue requirement for Account Services is apportioned based on the Annual Sewer Units to determine the monthly unit cost-of-service shown in Table 70. Table 70: Wastewater Account Service Allocation to Customer Classes Flow The cost associated with maintenance of the collection system and a portion of capital reinvestment and reserve funding. Flow is a function of total volume conveyed through the collection system and does not vary based on the type or strength concentration of influent. Therefore, the revenue requirement for Flow is apportioned to each customer class based on their percentage of total projected flow as summarized within Table 71. Account Services Allocation to Customer Classes Customer Class Annual Sewer Units % Allocation Revenue Requirement Unit Rate [A] [B] = A as a % [C] = A x B [D] = C x A Single Family 233,136 62.7% $2,469,231 $10.60 Multi-Family 130,956 35.2% $1,387,004 $10.60 Non-Residential Low Strength 4,956 1.3% $52,491 $10.60 Medium Strength 876 0.2% $9,278 $10.60 High Strength 1,020 0.3% $10,803 $10.60 Schools & Churches 912 0.2% $9,659 $10.60 Patton State Hospital 12 0.0% $127 $10.60 Total 371,868 100.0% $3,938,593 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 73 Table 71: Wastewater Flow Allocation by Customer Class Collectively, the total allocation of costs associated with Account Services and Flow (Total Revenue Requirement) derives the cost of providing service to each customer class. However, given that residential customers exhibit a fairly constant amount of wastewater flows per month, the total residential Revenue Requirement may be recovered as flat monthly charges. For non-residential customer classes, commodity rates are derived for the flow component by dividing the total allocated cost by total water usage as wastewater commodity costs are recovered over metered water usage because flows are not metered (except for Patton). Table 72 summarizes the combined Revenue Requirement by customer class. Table 73 and Table 74 derives the monthly flat rates for residential customer classes and fixed monthly charges for non-residential customers, respectively. Table 75 derives the commodity rates for Non-Residential customer classes. Table 72: Wastewater Revenue Requirement by Customer Class Flow Allocation to Customer Classes Customer Class Projected Flow (hcf)% Allocation Revenue Requirement [A] [B] = A as a % [C] = A x B Single Family 1,488,072 55.5% $1,423,714 Multi-Family 668,698 24.9% $639,777 Non-Residential Low Strength 162,047 6.0% $155,039 Medium Strength 59,136 2.2% $56,579 High Strength 158,419 5.9% $151,568 Schools & Churches 70,967 2.6% $67,898 Patton State Hospital 75,080 2.8% $71,833 Total 2,682,420 100.0% $2,566,407 Allocated Revenue Requirements Customer Class Account Services Flow Total Single Family $2,469,231 $1,423,714 $3,892,944 Multi-Family $1,387,004 $639,777 $2,026,781 Non-Residential Low Strength $52,491 $155,039 $207,530 Medium Strength $9,278 $56,579 $65,857 High Strength $10,803 $151,568 $162,371 Schools & Churches $9,659 $67,898 $77,557 Patton State Hospital $127 $71,833 $71,960 Total $3,938,593 $2,566,407 $6,505,000 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 74 Table 73: Wastewater FY 2025 Residential Flat Monthly Charges Table 74: Wastewater FY 2025 Non-Residential Fixed Monthly Charges Table 75: Wastewater FY 2025 Non-Residential Commodity Rates Proposed Monthly Flat Charges Customer Class Annual Sewer Units Account Services Flow Total Revenue Requirement Total Monthly Flat Charge [A] [B] [C] [D] = B + C [E] = D ÷ A Single Family 233,136 $2,469,231 $1,423,714 $3,892,944 $16.70 Multi-Family 130,956 $1,387,004 $639,777 $2,026,781 $15.48 Proposed Monthly Fixed Charges Customer Class Annual Billing Units Account Services Total Monthly Fixed Charge [A] [B] [C] = B ÷ A Non-Residential Low Strength 4,956 $52,491 $10.59 Medium Strength 876 $9,278 $10.59 High Strength 1,020 $10,803 $10.59 Schools & Churches 912 $9,659 $10.59 Patton State Hospital 12 $127 $10.59 Proposed Commodity Rates ($/hcf) Customer Class Non-Residential Water Usage (hcf) Flow Total Commodity Rates ($/hcf) [A] [B] [C] = B ÷ A Non-Residential Low Strength 202,777 $155,039 $0.77 Medium Strength 74,000 $56,579 $0.77 High Strength 198,237 $151,568 $0.77 Schools & Churches 150,994 $67,898 $0.45 Patton State Hospital 163,645 $71,833 $0.44 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 75 Reclamation Utility Reclamation System The SNRC construction was financed with low interest State Revolving Fund (SRF) loans with annual debt service payments equal to approximately $7.8M, which are likely to commence in FY 2025, but no later than FY 2026. The loan documents specify that the first payment is due within twelve months after the notice of completion. The SNRC came online in the first quarter of 2024. However, the SNRC requires a slow ramp up of accepting influent to ensure the treatment processes are performing as expected before the total wastewater flows of the District’s service area are conveyed to the SNRC over the next few months. The District developed a detailed capital improvement plan through FY 2030 for its Reclamation utility. Given that the SNRC is a new treatment plant, the CIP includes minor annual equipment and capital outlay needs and the periodic replacement of Diffusers and UV Lamps (scheduled in FY 2028). Figure 23 shows the District’s capital plan through FY 2029, which accounts for inflation in future years. Figure 23: Reclamation Capital Improvement Plan Customers As mentioned within the Wastewater section of this report, the District serves approximately 30,989 sewer units, which includes total residential dwelling units and non-residential accounts. Table 76 provides a summary of sewer units by customer class. East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 76 Table 76: Reclamation Sewer Units by Customer Class The current wastewater rate structure consists of monthly fixed charges and commodity rates for non- residential customers. Existing charges and rates are identified in Table 77. Table 77: FY 2024 Reclamation Fixed Charges and Commodity Rates Annual Fixed Units of Service Customer Class Sewer Units Single Family 19,428 Multi-Family 10,913 Non-Residential Low Strength 413 Medium Strength 73 High Strength 85 Schools & Churches 76 Patton State Hospital 1 Total 30,989 Fixed Charges ($/Month) Customer Class Existing Single-Family $26.77 Multi-Family $23.90 Non-Residential Low Strength $12.41 Medium Strength $12.41 High Strength $12.41 Schools & Churches $12.41 Patton State Hospital $12.41 Commodity Rates ($/hcf) Customer Class Existing Non-Residential Low Strength $1.11 Medium Strength $1.76 High Strength $3.92 Schools & Churches $1.11 Patton State Hospital $2.06 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 77 Financial Plan Overview – Reclamation Utility Financial Planning Assumptions Developing a long-term financial plan requires an understanding of the utility’s financial position by evaluating existing revenue streams, ongoing expenses, how those expenses will change over time, existing debt requirements, new strategic objectives, and reserve policies. With these considerations, certain assumptions are required for projecting revenues, expenses, and expected ending fund balances. Table 78 identifies assumptions used for forecasting revenues and Table 79 identifies assumptions used for forecasting increases in expenses through FY 2029. Table 78: Reclamation Assumptions for Forecasting Revenues Table 79: Reclamation Assumptions for Forecasting Expenses Revenue Forcasting Key Assumptions FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Revenue Escalation Reserve Interest 2.0% 2.0% 2.0% 2.0% 2.0% Account Growth Single Family 0.0% 0.0% 0.0% 0.0% 0.0% Multi-Family 1.0% 1.0% 0.0% 0.0% 0.0% Non-Residential 0.0% 0.0% 0.0% 0.0% 0.0% Customer Sewer Units FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Customer Class Single Family 19,428 19,428 19,428 19,428 19,428 Multi-Family 10,913 11,022 11,022 11,022 11,022 Non-Residential Low Strength 413 413 413 413 413 Medium Strength 73 73 73 73 73 High Strength 85 85 85 85 85 Schools & Churches 76 76 76 76 76 Patton State Hospital 1 1 1 1 1 Total Customer Sewer Units 30,989 31,098 31,098 31,098 31,098 Non-Residential Consumption FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Low Strength 202,777 202,777 202,777 202,777 202,777 Medium Strength 74,000 74,000 74,000 74,000 74,000 High Strength 198,237 198,237 198,237 198,237 198,237 Schools & Churches 150,994 150,994 150,994 150,994 150,994 Patton State Hospital 163,645 163,645 163,645 163,645 163,645 Total Non-Residential Consumption (hcf) 789,653 789,653 789,653 789,653 789,653 Expense Forecasting Key Assumptions Source:FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Expenditure Escalation Benefits 5.0% 5.0% 5.0% 5.0% 5.0% Capital Construction ENR 20-City 5-Year Average 3.9% 3.9% 3.9% 3.9% 3.9% Energy Costs 7.0% 7.0% 7.0% 7.0% 7.0% General Costs CPI - LA (BLS) 5-Year Average 3.9% 3.9% 3.9% 3.9% 3.9% Insurance 7.0% 5.0% 5.0% 5.0% 5.0% Salaries 7.0% 5.0% 5.0% 5.0% 5.0% East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 78 Current Financial Position Revenues Based on the revenue forecasting assumptions, fixed revenues were calculated by multiplying Sewer Units (Table 76) by existing fixed charges (Table 77) over twelve billing periods. Commodity revenues were calculated using the commodity rates (Table 77) and non-residential water usage (Table 78). Table 80 shows the calculated revenues for the Financial Plan Period. Table 81 summarizes calculated rate revenues (rounded to thousands) and other operating and non-operating revenues. The SNRC will produce recycled water that the District will use to recharge the water basin, which will generate credits to offset the groundwater replenishment assessment expense within the Water Utility. In addition, the District plans to sell recycled water in bulk to West Valley Water Basin for recharge and generate tipping fees from haulers disposing of septage and commercial discharge (such as restaurants). Table 80: Reclamation Calculated Rate Revenues Calculated Rate Revenue Fixed Revenue FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Treatment Fixed Charge Single-Family $6,241,051 $6,241,051 $6,241,051 $6,241,051 $6,241,051 Multi-Family $3,129,848 $3,161,110 $3,161,110 $3,161,110 $3,161,110 Non-Residential Low Strength $61,504 $61,504 $61,504 $61,504 $61,504 Medium Strength $10,871 $10,871 $10,871 $10,871 $10,871 High Strength $12,658 $12,658 $12,658 $12,658 $12,658 Schools & Churches $11,318 $11,318 $11,318 $11,318 $11,318 Patton State Hospital $149 $149 $149 $149 $149 Total Treatment Fixed Charge $9,467,399 $9,498,660 $9,498,660 $9,498,660 $9,498,660 Total Fixed Revenue $9,467,399 $9,498,660 $9,498,660 $9,498,660 $9,498,660 Commodity Revenue FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Treatment Commodity Rate Non-Residential Low Strength $225,082 $225,082 $225,082 $225,082 $225,082 Medium Strength $130,240 $130,240 $130,240 $130,240 $130,240 High Strength $777,089 $777,089 $777,089 $777,089 $777,089 Schools & Churches $167,603 $167,603 $167,603 $167,603 $167,603 Patton State Hospital $337,109 $337,109 $337,109 $337,109 $337,109 Total Treatment Commodity Rate $1,637,124 $1,637,124 $1,637,124 $1,637,124 $1,637,124 Total Commodity Revenue $1,637,124 $1,637,124 $1,637,124 $1,637,124 $1,637,124 Total Rate Revenue $11,104,523 $11,135,784 $11,135,784 $11,135,784 $11,135,784 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 79 Table 81: Reclamation Projected Revenues Expenses The FY 2024 budget was used as the baseline expenses of the utility and adjusted in subsequent years based on the escalation factors shown in Table 79. Table 82 provides projected Operational & Maintenance (O&M) costs through FY 2029 (rounded to thousands). Each expense category includes detailed line-item expenditures that were discussed with staff to determine the appropriate escalation factor to use for forecasting how costs will increase over time. Expenses include the SRF debt used to construct the SNRC, with the first payment due in FY 2026, equal to $7.8M annually. Table 82: Reclamation Projected O&M Expenses Projected Revenue Revenue Summary FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Rate Revenue Treatment Fixed Charge $9,467,000 $9,499,000 $9,499,000 $9,499,000 $9,499,000 Treatment Commodity Rate $1,637,000 $1,637,000 $1,637,000 $1,637,000 $1,637,000 Subtotal Rate Revenue $11,104,000 $11,136,000 $11,136,000 $11,136,000 $11,136,000 Other Revenue Bulk / Sales to SB $1,038,000 $1,038,000 $1,038,000 $1,038,000 $1,038,000 Other Operating Revenue $2,183,000 $2,724,000 $2,724,000 $2,724,000 $2,724,000 Non-Operating Revenue $111,000 $201,000 $239,000 $224,000 $156,000 Subtotal Bulk / Sales to SB $3,332,000 $3,963,000 $4,001,000 $3,986,000 $3,918,000 Total Revenues $14,436,000 $15,099,000 $15,137,000 $15,122,000 $15,054,000 Projected Expenses O&M Expenses FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Operating Expenses Human Resources - Reclamation $600,000 $624,000 $648,000 $673,000 $699,000 Water Reclamation Labor and Benefits $1,520,000 $1,596,000 $1,676,000 $1,759,000 $1,847,000 Materials and Supplies $1,597,000 $1,660,000 $1,724,000 $1,791,000 $1,861,000 Treatment $2,885,000 $2,998,000 $3,114,000 $3,235,000 $3,361,000 Utilities $1,879,000 $2,011,000 $2,152,000 $2,302,000 $2,463,000 SB Detachment Costs $700,000 $700,000 $700,000 $700,000 $700,000 Facilities Maintenance - Reclamation $608,000 $637,000 $666,000 $697,000 $730,000 Subtotal Operating Expenses $9,789,000 $10,226,000 $10,680,000 $11,157,000 $11,661,000 Debt Service Existing Debt $0 $7,800,000 $7,800,000 $7,800,000 $7,800,000 Interfund Loans $0 $0 $0 $375,000 $375,000 Subtotal Debt Service $0 $7,800,000 $7,800,000 $8,175,000 $8,175,000 Total Expenses $9,789,000 $18,026,000 $18,480,000 $19,332,000 $19,836,000 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 80 Reserves The Reclamation utility incorporates similar revised reserve policies as the water utility and wastewater utility. However, the SRF loans require a debt reserve to be established, equal to the annual debt payment, before the first payment is due. The District will fund the debt reserve through reimbursements from previously advanced funding for the construction of the SNRC and grant funds from the SCE SGIP ($2M). These robust reserves help mitigate risks to the utility by ensuring sufficient cash is on hand for daily operations and to fund annual system improvements. In addition, these reserves help smooth rates and mitigate rate spikes due to emergencies or above-average system costs. The revised reserve policies identify the function of each reserve and Table 83 summarizes the minimum reserve requirements and the ideal funding targets of each reserve. Table 83: Reclamation Reserve Requirements and Targets Reserve Minimum Requirement Reserve Target Operating 90 days of operating costs 120 days of operating costs Replacement 2 years of 5-year CIP average 5 years of planned capital Emergency 1.0% of Assets 2.0% of Assets Debt Reserve $7.8M $7.8M Rate Stabilization - - The beginning FY 2024 reserve balance (July 1, 2023) equaled approximately $50,000. Financial Outlook at Existing Rates Calculating revenue using existing rates and projecting expenses helps determine the current financial health of the utility. Revenues from existing rates are sufficient to fund O&M through FY 2025, but a significant deficit is projected by FY 2026 as the SRF loan payments commence. There is limited net income to cover planned capital spending resulting in the use of reserves to cover the remaining capital costs. However, the District will receive additional reimbursements from the State for the advancement of funds for the construction of the SNRC, as well as grant reimbursements. Table 84 forecasts existing revenues and expenses through the Financial Plan Period. East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 81 Table 85 identifies reserve transfers and activity, with projected FY 2025 starting reserve balances shown for each reserve. Table 84: Reclamation Financial Plan at Existing Rates Financial Plan at Existing Rates Revenue Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Rate Revenue Treatment Fixed Charge Table 81 $9,467,000 $9,499,000 $9,499,000 $9,499,000 $9,499,000 Treatment Commodity Rate $1,637,000 $1,637,000 $1,637,000 $1,637,000 $1,637,000 Total Rate Revenue $11,104,000 $11,136,000 $11,136,000 $11,136,000 $11,136,000 Bulk / Sales to SB Table 81 $1,038,000 $1,038,000 $1,038,000 $1,038,000 $1,038,000 Other Operating Revenue $2,183,000 $2,724,000 $2,724,000 $2,724,000 $2,724,000 Non-Operating Revenue $111,000 $201,000 $239,000 $224,000 $156,000 Subtotal Bulk / Sales to SB $3,332,000 $3,963,000 $4,001,000 $3,986,000 $3,918,000 Total Revenues $14,436,000 $15,099,000 $15,137,000 $15,122,000 $15,054,000 O&M Expenses Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Operating Expenses Human Resources - Reclamation Table 82 $600,000 $624,000 $648,000 $673,000 $699,000 Water Reclamation Labor and Benefits $1,520,000 $1,596,000 $1,676,000 $1,759,000 $1,847,000 Materials and Supplies $1,597,000 $1,660,000 $1,724,000 $1,791,000 $1,861,000 Treatment $2,885,000 $2,998,000 $3,114,000 $3,235,000 $3,361,000 Utilities $1,879,000 $2,011,000 $2,152,000 $2,302,000 $2,463,000 SB Detachment Costs $700,000 $700,000 $700,000 $700,000 $700,000 Facilities Maintenance - Reclamation $608,000 $637,000 $666,000 $697,000 $730,000 Subtotal Operating Expenses $9,789,000 $10,226,000 $10,680,000 $11,157,000 $11,661,000 Debt Service Existing Debt Table 82 $0 $7,800,000 $7,800,000 $7,800,000 $7,800,000 Interfund Loans $0 $0 $0 $375,000 $375,000 Subtotal Debt Service $0 $7,800,000 $7,800,000 $8,175,000 $8,175,000 Total Expenses $9,789,000 $18,026,000 $18,480,000 $19,332,000 $19,836,000 Net Operating $4,647,000 ($2,927,000) ($3,343,000) ($4,210,000) ($4,782,000) East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 82 Table 85: Reclamation Reserve Activity at Existing Rates Figure 24 illustrates the operating position of the utility, where O&M expenses are identified with the dashed red trendline and total revenues at existing rates are shown by the horizontal black trendline. The bars represent the amount of net operating income available, with grey bars reflecting positive net operating income for capital spending and reserve funding and red bars reflecting an operating deficit absorbed by reserves. Reserve Activity at Existing Rates Operating Reserve Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Beginning Balance $3,913,644 $3,218,301 $5,084,301 $1,741,301 ($2,468,699) Transfers (Net Operating)Table 84 $4,647,000 ($2,927,000) ($3,343,000) ($4,210,000) ($4,782,000) SRF Reimbursements $0 $4,793,000 $0 $0 $0 Direct Transfers from/(to) Emergency Reserve $0 $0 $0 $0 $0 Direct Transfers from/(to) Debt Service Reserve ($2,660,000) $0 $0 $0 $0 Transfers to Capital Replacement Reserve ($2,682,342) $0 $0 $0 $0 Ending Balance $3,218,301 $5,084,301 $1,741,301 ($2,468,699) ($7,250,699) Capital Replacement Reserve Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Beginning Balance $817,583 $1,713,859 $1,366,761 $1,224,328 ($125,824) Plus: Transfers from/(to) Operating Fund $2,682,342 $0 $0 $0 $0 Less: CIP ($155,802) ($377,599) ($168,087) ($1,350,152) ($906,707) Transfers to Emergency Reserve ($1,655,329) $0 $0 $0 $0 Subtotal Capital Replacement Reserve $1,688,795 $1,336,260 $1,198,674 ($125,824) ($1,032,531) Interest Earnings $25,064 $30,501 $25,654 $0 $0 Ending Balance $1,713,859 $1,366,761 $1,224,328 ($125,824) ($1,032,531) Emergency Reserve Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Beginning Balance $0 $1,671,882 $1,705,320 $1,739,426 $1,774,215 Direct Transfers from/(to) Operating Reserve $0 $0 $0 $0 $0 Transfers from Capital Replacement Reserve $1,655,329 $0 $0 $0 $0 Subtotal Emergency Reserve $1,655,329 $1,671,882 $1,705,320 $1,739,426 $1,774,215 Interest Earnings $16,553 $33,438 $34,106 $34,789 $35,484 Ending Balance $1,671,882 $1,705,320 $1,739,426 $1,774,215 $1,809,699 Capacity Fee Reserve Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Beginning Balance $31,954 $32,593 $33,245 $33,910 $34,588 Capacity Fee Receipts $0 $0 $0 $0 $0 Transfers (to) Capital Replacement Reserve $0 $0 $0 $0 $0 Transfers (to) Debt Service Reserve $0 $0 $0 $0 $0 Subtotal Capacity Fee Reserve $31,954 $32,593 $33,245 $33,910 $34,588 Interest Earnings $639 $652 $665 $678 $692 Ending Balance $32,593 $33,245 $33,910 $34,588 $35,280 Debt Service Reserve Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Beginning Balance $5,148,000 $7,808,000 $7,808,000 $7,808,000 $7,808,000 Direct Transfers from/(to) Operating Reserve $2,660,000 $0 $0 $0 $0 Transfers from/(to) Capacity Fee Reserve $0 $0 $0 $0 $0 Ending Balance $7,808,000 $7,808,000 $7,808,000 $7,808,000 $7,808,000 Ending Balance $14,444,636 $15,997,628 $12,546,966 $7,022,281 $1,369,749 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 83 Figure 24: Reclamation Current Operating Financial Position Figure 17 reflects the projected ending balances of reserves after operating and capital projects are funded through FY 2029. Reserves are below the minimum target for each year of the Financial Plan Period. Figure 25: Reclamation Projected Ending Reserves at Existing Rates East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 84 Proposed Financial Plan – Reclamation Utility From the financial outlook at existing rates, a proposed financial plan is developed to fund the multi-year revenue requirements, while meeting debt covenants and reserve requirements. Table 86 forecasts existing revenues, with annual revenue adjustments, and expenses through the Financial Plan Period. However, FY 2028 and FY 2029 are not part of the Rate Setting Period and will not be included as part of the proposed rates within the Proposition 218 Notice. Table 87 identifies the reserve transfers and activity within each reserve, and projected ending balances for each fiscal year. Table 86: Reclamation Proposed Financial Plan Proposed Financial Plan Revenue Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Rate Revenue Treatment Fixed Charge Table 81 $9,467,000 $9,499,000 $9,499,000 $9,499,000 $9,499,000 Treatment Commodity Rate $1,637,000 $1,637,000 $1,637,000 $1,637,000 $1,637,000 Total Rate Revenue $11,104,000 $11,136,000 $11,136,000 $11,136,000 $11,136,000 Additional Revenue (from revenue adjustments): Fiscal Year Revenue Adjustment Effective Month FY 2025 10.0% July $1,110,000 $1,113,000 $1,113,000 $1,113,000 $1,113,000 FY 2026 10.0% July $1,224,000 $1,224,000 $1,224,000 $1,224,000 FY 2027 10.0% July $1,347,000 $1,347,000 $1,347,000 FY 2028 8.0% July $1,185,000 $1,185,000 FY 2029 8.0% July $1,280,000 Total Additional Revenue $1,110,000 $2,337,000 $3,684,000 $4,869,000 $6,149,000 Projected Rate Revenue $12,214,000 $13,473,000 $14,820,000 $16,005,000 $17,285,000 Bulk / Sales to SB Table 81 $1,038,000 $1,038,000 $1,038,000 $1,038,000 $1,038,000 Other Operating Revenue $2,183,000 $2,724,000 $2,724,000 $2,724,000 $2,724,000 Non-Operating Revenue $111,000 $201,000 $248,000 $276,000 $280,000 Subtotal Bulk / Sales to SB $3,332,000 $3,963,000 $4,010,000 $4,038,000 $4,042,000 Total Revenues $15,546,000 $17,436,000 $18,830,000 $20,043,000 $21,327,000 O&M Expenses Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Operating Expenses Human Resources - Reclamation Table 82 $600,000 $624,000 $648,000 $673,000 $699,000 Water Reclamation Labor and Benefits $1,520,000 $1,596,000 $1,676,000 $1,759,000 $1,847,000 Materials and Supplies $1,597,000 $1,660,000 $1,724,000 $1,791,000 $1,861,000 Treatment $2,885,000 $2,998,000 $3,114,000 $3,235,000 $3,361,000 Utilities $1,879,000 $2,011,000 $2,152,000 $2,302,000 $2,463,000 SB Detachment Costs $700,000 $700,000 $700,000 $700,000 $700,000 Facilities Maintenance - Reclamation $608,000 $637,000 $666,000 $697,000 $730,000 Subtotal Operating Expenses $9,789,000 $10,226,000 $10,680,000 $11,157,000 $11,661,000 Debt Service Existing Debt Table 82 $0 $7,800,000 $7,800,000 $7,800,000 $7,800,000 Interfund Loans $0 $0 $0 $375,000 $375,000 Subtotal Debt Service $0 $7,800,000 $7,800,000 $8,175,000 $8,175,000 Total Expenses $9,789,000 $18,026,000 $18,480,000 $19,332,000 $19,836,000 Net Operating $5,757,000 ($590,000) $350,000 $711,000 $1,491,000 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 85 Table 87: Reclamation Reserve Activity at Proposed Rates Reserve Activity at Proposed Rates Operating Reserve Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Beginning Balance $3,913,644 $3,218,301 $5,926,356 $6,075,616 $6,355,726 Transfers (Net Operating)Table 86 $5,757,000 ($590,000) $350,000 $711,000 $1,491,000 SRF Reimbursements $0 $4,793,000 $0 $0 $0 Direct Transfers from/(to) Emergency Reserve $0 $0 $0 $0 $0 Direct Transfers from/(to) Debt Service Reserve ($2,660,000) $0 $0 $0 $0 Transfers to Capital Replacement Reserve ($3,792,342) ($1,494,945) ($200,740) ($430,890) ($1,325,301) Ending Balance $3,218,301 $5,926,356 $6,075,616 $6,355,726 $6,521,425 Capital Replacement Reserve Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Beginning Balance $817,583 $2,834,959 $4,020,178 $4,133,561 $3,287,777 Plus: Transfers from/(to) Operating Fund $3,792,342 $1,494,945 $200,740 $430,890 $1,325,301 Less: CIP ($155,802) ($377,599) ($168,087) ($1,350,152) ($906,707) Transfers to Emergency Reserve ($1,655,329) $0 $0 $0 $0 Subtotal Capital Replacement Reserve $2,798,795 $3,952,305 $4,052,830 $3,214,299 $3,706,371 Interest Earnings $36,164 $67,873 $80,730 $73,479 $69,941 Ending Balance $2,834,959 $4,020,178 $4,133,561 $3,287,777 $3,776,313 Emergency Reserve Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Beginning Balance $0 $1,671,882 $1,705,320 $1,739,426 $1,774,215 Direct Transfers from/(to) Operating Reserve $0 $0 $0 $0 $0 Transfers from Capital Replacement Reserve $1,655,329 $0 $0 $0 $0 Subtotal Emergency Reserve $1,655,329 $1,671,882 $1,705,320 $1,739,426 $1,774,215 Interest Earnings $16,553 $33,438 $34,106 $34,789 $35,484 Ending Balance $1,671,882 $1,705,320 $1,739,426 $1,774,215 $1,809,699 Capacity Fee Reserve Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Beginning Balance $31,954 $32,593 $33,245 $33,910 $34,588 Capacity Fee Receipts $0 $0 $0 $0 $0 Transfers (to) Capital Replacement Reserve $0 $0 $0 $0 $0 Transfers (to) Debt Service Reserve $0 $0 $0 $0 $0 Subtotal Capacity Fee Reserve $31,954 $32,593 $33,245 $33,910 $34,588 Interest Earnings $639 $652 $665 $678 $692 Ending Balance $32,593 $33,245 $33,910 $34,588 $35,280 Debt Service Reserve Report Source FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Beginning Balance $5,148,000 $7,808,000 $7,808,000 $7,808,000 $7,808,000 Direct Transfers from/(to) Operating Reserve $2,660,000 $0 $0 $0 $0 Transfers from/(to) Capacity Fee Reserve $0 $0 $0 $0 $0 Ending Balance $7,808,000 $7,808,000 $7,808,000 $7,808,000 $7,808,000 Ending Balance $15,565,736 $19,493,099 $19,790,513 $19,260,306 $19,950,716 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 86 Figure 18 identifies the operating position based on the proposed financial plan. Figure 19 and Figure 20 show the capital plan with funding sources and projected ending reserve balances, respectively. Figure 26: Reclamation Proposed Operating Position Figure 27: Reclamation Capital Improvement Plan with Funding Sources East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 87 Figure 28: Reclamation Proposed Ending Reserves East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 88 Cost-of-Service Analysis – Reclamation Utility Cost-of-Service Process Similar to updating water and wastewater rates, the next step in developing reclamation rates is to perform a cost-of-service analysis. Through this process, costs incurred are allocated to customer classes based on their proportional share. As a result, the proposed rates are cost-based and reflect the costs incurred to provide service to customers. Revenue Requirements FY 2025 revenue requirements were used for the cost-of-service analysis. Revenue requirements include O&M expenses, debt service, available revenue offsets, non-rate revenues, annual net income, and any mid- year adjustments if rates are implemented after the start of the fiscal year. The proposed revenue adjustments and corresponding rates accumulate the necessary funding over the Rate Setting Period to fund O&M, capital projects, and comply with minimum reserve requirements. The results of the financial plan analysis are summarized in Table 88 and represent the revenue required from rates. Table 88: Reclamation Revenue Requirements (FY 2025 – FY 2027) Rate Setting Period FY 2025 FY 2026 FY 2027 Revenue Requirements Total Total Total Operating Expenses Human Resources - Reclamation $600,000 $624,000 $648,000 Water Reclamation Labor and Benefits $1,520,000 $1,596,000 $1,676,000 Materials and Supplies $1,597,000 $1,660,000 $1,724,000 Treatment $2,885,000 $2,998,000 $3,114,000 Utilities $1,879,000 $2,011,000 $2,152,000 SB Detachment Costs $700,000 $700,000 $700,000 Facilities Maintenance - Reclamation $608,000 $637,000 $666,000 Total Operating Expenses $9,789,000 $10,226,000 $10,680,000 Debt Service Existing Debt $0 $7,800,000 $7,800,000 Interfund Loans $0 $0 $0 Total Debt Service $0 $7,800,000 $7,800,000 Other Funding Revenue Offsets Bulk / Sales to SB ($1,038,000) ($1,038,000) ($1,038,000) Other Operating Revenue ($2,183,000) ($2,724,000) ($2,724,000) Non-Operating Revenue ($111,000) ($201,000) ($248,000) Total Revenue Offsets ($3,332,000) ($3,963,000) ($4,010,000) Adjustments Reserve Funding $5,757,000 ($590,000) $350,000 Adjustment for Mid-Year Increase $0 $0 $0 Total Adjustments $5,757,000 ($590,000) $350,000 Total Other Funding $2,425,000 ($4,553,000) ($3,660,000) Revenue Requirement from Rates $12,214,000 $13,473,000 $14,820,000 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 89 Define Cost Components The District’s reclamation costs-of-service requirements were allocated to cost components and then to customers classes utilizing a cost causation approach endorsed by the Water Environment Federation (WEF) rate setting manual Financing and Charges for Wastewater Systems (MOP 27). The utility incurs costs to accommodate total flow demand and various strength concentrations of influent generated by different customer classes. Therefore, to determine the most appropriate way to recover the utility’s expenses, cost components are identified and used to allocate expenses based on how they are incurred. Through review of the revenue requirements and based on an understanding of the new SNRC, the cost-of-service allocation documented in this report is based on total accounts, flow (volume influent in hcf), and the strength characteristics of the District’s customer classes. Strength loading factors for chemical oxygen demand (COD) and total suspended solids (TSS) are identified by customer class7. Using this approach, revenue requirements are allocated to the different customer classes proportionate to their use of the reclamation treatment facilities. Figure 29: Reclamation Cost Components Account Services – Fixed expenses that do not necessarily fluctuate based on flow or strength concentrations associated with the new SNRC. These costs include personnel costs, departmental expenses, and facility maintenance. Flow – Expenses associated with the total volume of influent treated at the SNRC. These costs include treatment, utilities, and materials. COD – Expenses incurred to treat COD related processes at the SNRC. TSS – Expenses incurred to treat TSS at the SNRC. Allocate Expenses to Cost Components When allocating expenses to the defined costs components, it is important to have a sound basis as to why an expense was allocated to a certain fixed cost component versus a variable cost component or split between both fixed and variable. The distribution of expenses to the cost components should be straight-forward to ensure the method of apportionment is understandable and easily correlates to how expenses are incurred. A description of each expense category is identified below. 7 Based on the LACSD 2007 update sampling East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 90 Expense Categories: Human Resources – Insurance for the SNRC. Labor and Benefits – Personnel costs associated with the operations of the SNRC. Materials and Supplies – Materials and supplies related the SNRC, including chemicals. Treatment – Costs related to contract services for operating the SNRC as part of treatment plant coming online in 2024. Utilities – Energy Costs associated with operating the SNRC and appurtenant facilities. SB Detachment Costs – Costs related to the detaching from the City of San Bernardino treatment facility. Facility Maintenance – Costs associated with maintaining the SNRC facilities. Table 89 summarizes the percent allocation of O&M expenses to the cost components and corresponding dollar amounts. The percentages identified for the “Treatment” allocation were based on discussions with District staff. Based on the District Engineer’s experience and direct knowledge with the SNRC construction, the treatment plant and associated costs are primarily a function of treating COD and TSS. Based on the treatment plant processes, 20% of cost incurred is to move flow and 80% is associated with the actual treatment processes. Therefore, 20% is assigned to flow with 40% to both COD and TSS Table 89: Reclamation O&M Allocation to Cost Components Cost Components Operating Expenses Methodology / Allocation Basis Account Services Flow COD TSS Total Human Resources - Reclamation Fixed 100.0% 0.0% 0.0% 0.0% 100.0% Water Reclamation Labor and Benefits Fixed 100.0% 0.0% 0.0% 0.0% 100.0% Materials and Supplies Treatment 0.0% 20.0% 40.0% 40.0% 100.0% Treatment Treatment 0.0% 20.0% 40.0% 40.0% 100.0% Utilities Specific 0.0% 100.0% 0.0% 0.0% 100.0% SB Detachment Costs Treatment 0.0% 20.0% 40.0% 40.0% 100.0% Facilities Maintenance - Reclamation Fixed 100.0% 0.0% 0.0% 0.0% 100.0% Capital Outlay - Reclamation Fixed 100.0% 0.0% 0.0% 0.0% 100.0% Operating Expenses Methodology / Allocation Basis Account Services Flow COD TSS Total Human Resources - Reclamation Fixed $600,000 $0 $0 $0 $600,000 Water Reclamation Labor and Benefits Fixed $1,520,000 $0 $0 $0 $1,520,000 Materials and Supplies Treatment $0 $319,400 $638,800 $638,800 $1,597,000 Treatment Treatment $0 $577,000 $1,154,000 $1,154,000 $2,885,000 Utilities Specific $0 $1,879,000 $0 $0 $1,879,000 SB Detachment Costs Treatment $0 $140,000 $280,000 $280,000 $700,000 Facilities Maintenance - Reclamation Fixed $608,000 $0 $0 $0 $608,000 Total Allocation ($) $2,728,000 $2,915,400 $2,072,800 $2,072,800 $9,789,000 Operating Expenses Allocation (%) 27.9% 29.8% 21.2% 21.2% 100.0% East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 91 Other Funding includes other operating revenues, non-operating reserves, and reserve funding. All items under "Other Funding" are allocated based on O&M percentages derived in Table 89. Table 90 summarizes the percent allocation to the cost components and the corresponding amounts in dollars. Table 90: Reclamation Other Funding Allocation to Cost Components Table 91 summarizes the reclamation revenue requirements for FY 2025. Table 91: Reclamation FY 2025 Cost-of-Service Requirements Cost Components Other Funding Methodology / Allocation Basis Account Services Flow COD TSS Total Revenue Offsets Bulk / Sales to SB O&M Allocation 27.9% 29.8% 21.2% 21.2% 100.0% Other Operating Revenue O&M Allocation 27.9% 29.8% 21.2% 21.2% 100.0% Non-Operating Revenue O&M Allocation 27.9% 29.8% 21.2% 21.2% 100.0% Adjustments Reserve Funding O&M Allocation 27.9% 29.8% 21.2% 21.2% 100.0% Adjustment for Mid-Year Increase O&M Allocation 27.9% 29.8% 21.2% 21.2% 100.0% Other Funding Methodology / Allocation Basis Account Services Flow COD TSS Total Revenue Offsets Bulk / Sales to SB O&M Allocation ($289,270) ($309,141) ($219,794) ($219,794) ($1,038,000) Other Operating Revenue O&M Allocation ($608,359) ($650,150) ($462,246) ($462,246) ($2,183,000) Non-Operating Revenue O&M Allocation ($30,655) ($32,761) ($23,292) ($23,292) ($110,000) Adjustments Reserve Funding O&M Allocation $1,604,083 $1,714,275 $1,218,821 $1,218,821 $5,756,000 Total Allocation ($) $675,799 $722,223 $513,489 $513,489 $2,425,000 FY 2025 Revenue Requirements Revenue Requirement Account Services Flow COD TSS Total Operating Expenses $2,728,000 $2,915,400 $2,072,800 $2,072,800 $9,789,000 Other Funding $675,799 $722,223 $513,489 $513,489 $2,425,000 COS Requirements $3,403,799 $3,637,623 $2,586,289 $2,586,289 $12,214,000 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 92 Rate Design – Reclamation Utility Develop Units of Service Wastewater flows for each customer class were derived within the Wastewater section of this report. However, with costs associated with treatment plant operations and processes, the strength of discharge from the various customer classes should also be considered. Unit rates for the cost components are derived by identifying the units of service for each cost component (distribution basis). The distribution basis varies by cost component and includes sewer units, projected flow, weighted COD and weighted TSS, and non-residential water usage for deriving the final commodity unit rates per hcf. Table 92 derives the commodity units of service for each cost component. Strength concentrations are weighted by total flow in Million Gallons (MG) to develop COD units of service (Weighted COD) and TSS units of service (Weighted TSS). Table 93 summarizes all units of service, including sewer units, water usage, projected flow, Weighted COD, and Weighted TSS. Table 92: Reclamation Commodity Units of Service Table 93: Reclamation Units of Service Variable Units of Service (Flow, Weighted COD, Weighted TSS) Customer Class FY 2025 Projected Flow (hcf) Conversion Factor (HCF to MG) COD (ppm) TSS (ppm) Weighted COD Weighted TSS [A] = Table 69 [B] [C] [D] [E] = (AxBxC) [E] = (AxBxD) Single-Family 1,488,072 0.075% 562 272 625,884 302,682 Multi-Family 668,698 0.075% 562 272 281,255 136,017 Subtotal Residential 2,156,770 907,139 438,698 Non-Residential Low Strength 162,047 0.075% 513 150 62,184 18,183 Medium Strength 59,136 0.075% 515 271 22,787 11,982 High Strength 158,419 0.075% 1,258 434 149,101 51,404 Schools & Churches 70,967 0.075% 513 150 27,233 7,963 Patton State Hospital 75,080 0.075% 518 268 29,073 15,075 Subtotal Non-Residential 525,650 290,378 104,608 Total 2,682,420 1,197,517 543,306 Reclamantion Units of Service Customer Class Annual Sewer Units FY 2025 Non-Residential Water Usage (hcf) FY 2025 Projected Flow (hcf) Weighted COD Weighted TSS [A] [B] [C] [D] [E] Single-Family 233,136 1,488,072 625,884 302,682 Multi-Family 130,956 668,698 281,255 136,017 Non-Residential Low Strength 4,956 202,777 162,047 62,184 18,183 Medium Strength 876 74,000 59,136 22,787 11,982 High Strength 1,020 198,237 158,419 149,101 51,404 Schools & Churches 912 150,994 70,967 27,233 7,963 Patton State Hospital 12 163,645 75,080 29,073 15,075 Total 371,868 789,653 2,682,420 1,197,517 543,306 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 93 With the units of service shown in Table 93, the distribution basis can be identified for each cost component. Figure 30 identifies the total revenue requirements by cost component from Table 91 and the corresponding units of service. Figure 30: Reclamation Units of Service by Cost Component Allocate to Customer Class Using the FY 2025 revenue requirements, the cost-of-service allocates expenses to customer classes based on the service demands that each place on the system (cost causation). Using this approach provides a clear connection between costs incurred and the proportionate share attributable to each customer class. When designing rates, the most critical component is to connect costs to the proposed rates, resulting in a rate structure that is cost-based and in compliance with Proposition 218. In the previous section, costs were summarized by expense category and allocated to cost components based on how each cost is incurred. The next step in designing rates is to allocate each cost component to customers in relation to their use of the system and SNRC. This ensures that each customer proportionately shares in the financial obligation of the Reclamation utility. For the following unit rate computations for each cost component, unit rates were rounded up to the nearest penny. Fixed Cost Recovery Account Services Account Services costs are spread equally across all accounts / dwelling units. This is achieved by using the distribution basis of Annual Sewer Units. Therefore, the revenue requirement for Account Services is apportioned based on the Annual Sewer Units to determine the monthly unit cost-of-service shown in Table 94. East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 94 Table 94: Reclamation Account Service Allocation to Customer Classes Flow The cost associated with processing the total volume of influent conveyed to the SNRC, including utility expenses, and portions of treatment, materials, and SB detachment costs. Therefore, the revenue requirement for Flow is apportioned to each customer class based on their percentage of total projected flow as summarized within Table 95. Table 95: Reclamation Flow Allocation to Customer Classes Account Services Allocation to Customer Classes Customer Class Annual Sewer Units % Allocation Revenue Requirement Unit Rate [A] [B] = A as % [C] = Rev Req x B [D] = C ÷ A Single-Family 233,136 62.7% $2,133,951 $9.16 Multi-Family 130,956 35.2% $1,198,673 $9.16 Non-Residential Low Strength 4,956 1.3% $45,363 $9.16 Medium Strength 876 0.2% $8,018 $9.16 High Strength 1,020 0.3% $9,336 $9.16 Schools & Churches 912 0.2% $8,348 $9.16 Patton State Hospital 12 0.0% $110 $9.16 Total 371,868 100.0% $3,403,799 Flow Allocation to Customer Classes Customer Class FY 2025 Projected Flow (hcf) % Allocation Revenue Requirement [A] [B] = A as a % [C] = Rev Req x B Single-Family 1,488,072 55.5% $2,017,971 Multi-Family 668,698 24.9% $906,820 Non-Residential Low Strength 162,047 6.0% $219,752 Medium Strength 59,136 2.2% $80,195 High Strength 158,419 5.9% $214,832 Schools & Churches 70,967 2.6% $96,238 Patton State Hospital 75,080 2.8% $101,816 Total 2,682,420 100.0% $3,637,623 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 95 COD COD costs relate to the treatment process of breaking down organic material in wastewater. Higher COD strengths require increased costs and longer periods of treatment time prior to discharging effluent into waterways. Therefore, the revenue requirement for COD is apportioned based on Weighted COD for each customer class as shown in Table 96. Table 96: COD Allocation to Customer Classes TSS TSS costs relate to the treatment process of removing solids from wastewater through settling, screening, and filtering. Higher TSS strengths require increased costs and additional filtration to treat and remove the high levels of TSS prior to discharging effluent into waterways. Therefore, the revenue requirement for TSS is apportioned based on Weighted TSS for each customer class as shown in Table 97. Table 97: TSS Allocation to Customer Classes COD Allocation to Customer Classes Customer Class Weighted COD % Allocation Revenue Requirement [A] [B] = A as a % [C] = Rev Req x B Single-Family 625,884 52.3% $1,351,728 Multi-Family 281,255 23.5% $607,429 Non-Residential Low Strength 62,184 5.2% $134,299 Medium Strength 22,787 1.9% $49,213 High Strength 149,101 12.5% $322,015 Schools & Churches 27,233 2.3% $58,815 Patton State Hospital 29,073 2.4% $62,789 Total 1,197,517 100.0% $2,586,289 TSS Allocation to Customer Classes Customer Class Weighted TSS % Allocation Revenue Requirement [A] [B] = A as a % [C] = Rev Req x B Single-Family 302,682 55.7% $1,440,850 Multi-Family 136,017 25.0% $647,478 Non-Residential Low Strength 18,183 3.3% $86,556 Medium Strength 11,982 2.2% $57,039 High Strength 51,404 9.5% $244,699 Schools & Churches 7,963 1.5% $37,906 Patton State Hospital 15,075 2.8% $71,761 Total 543,306 100.0% $2,586,289 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 96 Collectively, the total allocation of costs associated with Account Services, Flow, COD, and TSS (Total Reclamation Revenue Requirement) derives the cost of providing service to each customer class. Similar to Wastewater, the total residential revenue requirement is recovered as flat monthly charges. For non- residential customer classes, commodity rates are derived for the flow, COD, and TSS components by dividing the total allocated cost of each commodity cost component by total water usage. Non-residential customers are not being overcharged by being billed based on water usage. All commodity costs were apportioned proportionately as a function of projected flow. Using water usage to recover the allocated cost reduces the unit rate because there are more units of water to charge versus flow, which is not metered. Table 98 summarizes the combined Revenue Requirement by customer class. Table 99 and Table 100 derives the monthly flat rates for residential customer classes and fixed monthly charges for non-residential customers, respectively. Table 101 derives the commodity rates for non-residential customer classes. Table 98: Reclamation Revenue Requirement by Customer Class Allocated Revenue Requirements Customer Class Account Services Flow COD TSS Total Single-Family $2,133,951 $2,017,971 $1,351,728 $1,440,850 $6,944,500 Multi-Family $1,198,673 $906,820 $607,429 $647,478 $3,360,399 Non-Residential Low Strength $45,363 $219,752 $134,299 $86,556 $485,971 Medium Strength $8,018 $80,195 $49,213 $57,039 $194,465 High Strength $9,336 $214,832 $322,015 $244,699 $790,882 Schools & Churches $8,348 $96,238 $58,815 $37,906 $201,308 Patton State Hospital $110 $101,816 $62,789 $71,761 $236,476 Total $3,403,799 $3,637,623 $2,586,289 $2,586,289 $12,214,000 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 97 Table 99: Reclamation FY 2025 Residential Flat Monthly Charges Table 100: Reclamation FY 2025 Non-Residential Fixed Monthly Charges Table 101: Reclamation FY 2025 Non-Residential Commodity Rates Proposed Monthly Fixed Charges Customer Class Annual Sewer Units Account Services Flow COD TSS Total Revenue Requirement Total Monthly Fixed Charge [A] [B] [C] [D] [E] [F] = B+C+D+E [G] = F ÷ A Single-Family 233,136 $2,133,951 $2,017,971 $1,351,728 $1,440,850 $6,944,500 $29.79 Multi-Family 130,956 $1,198,673 $906,820 $607,429 $647,478 $3,360,399 $25.67 Proposed Monthly Fixed Charges Customer Class Annual Billing Units Account Services Total Monthly Non-Residential Low Strength 4,956 $45,363 $9.16 Medium Strength 876 $8,018 $9.16 High Strength 1,020 $9,336 $9.16 Schools & Churches 912 $8,348 $9.16 Patton State Hospital 12 $110 $9.16 Proposed Variable Rates ($/hcf) Customer Class Non-Residential Water Usage (hcf)Flow COD TSS Flow COD TSS Total Variable Rates ($/hcf) [A] [B] [C] [D] [E] = B ÷ A [F] = C ÷ A [G] = D ÷ A [H] = E + F + G Non-Residential Low Strength 202,777 $219,752 $134,299 $86,556 $1.09 $0.67 $0.43 $2.19 Medium Strength 74,000 $80,195 $49,213 $57,039 $1.09 $0.67 $0.78 $2.54 High Strength 198,237 $214,832 $322,015 $244,699 $1.09 $1.63 $1.24 $3.96 Schools & Churches 150,994 $96,238 $58,815 $37,906 $0.64 $0.39 $0.26 $1.29 Patton State Hospital 163,645 $101,816 $62,789 $71,761 $0.63 $0.39 $0.44 $1.46 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 98 Cost-Based Rate Schedules Cost-of-Service and Proposed Rate Schedules The comprehensive cost-of-service analysis and rate development meet the requirements of Proposition 218 and identify the cost components that make up the proposed water, wastewater, and reclamation fixed charges and commodity rates. Proposition 218 requires the following conditions: 1. An agency cannot collect revenue beyond what is necessary to provide service. Each long-term financial plan identifies the District's revenue requirements for the respective utility, including operating expenses, capital improvement programs, debt, and reserves. 2. Revenues derived by the charge shall not be used for any other purpose other than that for which the charge was imposed. The District's water, wastewater – collections, and reclamation utilities are analyzed as separate business enterprises to track revenues and expenses and do not fund services other than those necessary for the provision of water, wastewater – collections, and treatment at SNRC, respectively. 3. The amount of the fee may not exceed the proportional cost-of-service for the parcel. The comprehensive cost-of-service analysis, updated fixed charges, and commodity rates reflect each customer's fair share of water, wastewater – collections, and reclamation costs, respectively. Through this updated analysis, each customer will pay the proportional cost of providing service to that parcel. 4. No charge may be imposed for a service unless that service is actually used or immediately available to the owner of the property. Only properties that are actually receiving utility service or have service immediately available to them are required to pay the fixed and commodity charges described in this study. 5. A written notice of the proposed charge shall be mailed to the record owner of each parcel at least 45 days prior to the public hearing. Notices were mailed to each affected parcel at least 45 days prior to the May 15, 2024, Public Hearing. The proposed rate schedules for FY 2025 through FY 2027 are shown in the following section. If a majority protest does not exist at the May 15th Public Hearing, the Board may adopt the rates. The Water utility first rate adjustment will occur on January 1, 2025, and every January 1st thereafter for each subsequent fiscal year. The Wastewater and Reclamation utilities first rate adjustments will occur on July 1, 2024, and every July 1st thereafter for each subsequent fiscal year. East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 99 Multi-Year Rate Schedules Water Table 102 through Table 103 provide the three-year fixed charge schedule over the Rate Setting Period for monthly fixed charges, dedicated firelines, and commodity rates. For FY 2026 and FY 2027, the revenue adjustments are applied across-the-board to the cost-of-service rates derived for FY 2025 (rounded up to the next whole penny) to maintain the proportionality of the cost allocations between customers derived within this updated cost-of-service analysis. Table 102: Proposed Water Monthly Fixed Charges (FY 2025 – FY 2027) Table 103: Proposed Dedicated Fireline Monthly Charges (FY 2025 – FY 2027) Revenue Adjustment: 6.0% 6.0% Proposed Monthly Fixed Charges Meter Size FY 2025 FY 2026 FY 2027 5/8" $27.52 $29.18 $30.94 3/4" $34.62 $36.70 $38.91 1" $48.83 $51.76 $54.87 1 1/2" $84.35 $89.42 $94.79 2" $126.97 $134.59 $142.67 3" $368.48 $390.59 $414.03 4" $901.23 $955.31 $1,012.63 6" $1,433.98 $1,520.02 $1,611.23 8" $2,854.65 $3,025.93 $3,207.49 10" $4,630.48 $4,908.31 $5,202.81 12" $5,695.98 $6,037.74 $6,400.01 Revenue Adjustment 6.0% 6.0% Proposed Dedicated Fireline Montly Fixed Charges Connection Size FY 2025 FY 2026 FY 2027 5/8" $13.75 $14.58 $15.46 3/4" $13.84 $14.68 $15.57 1" $14.01 $14.86 $15.76 1 1/2" $14.36 $15.23 $16.15 2" $14.71 $15.60 $16.54 3" $15.41 $16.34 $17.33 4" $16.11 $17.08 $18.11 6" $17.51 $18.57 $19.69 8" $18.91 $20.05 $21.26 10" $20.31 $21.53 $22.83 12" $21.71 $23.02 $24.41 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 100 Table 104: Proposed Water Commodity Charges (FY 2025 – FY 2027) Wastewater Table 105 through Table 106 provide the three-year fixed charge schedule and commodity rates over the Rate Setting Period, respectively. For FY 2026 and FY 2027, the revenue adjustments are applied across- the-board to the cost-of-service rates derived for FY 2025 (rounded up to the next whole penny) to maintain the proportionality of the cost allocations between customers derived within this updated cost-of-service analysis. Table 105: Proposed Wastewater Monthly Fixed Charges (FY 2025 – FY 2027) Table 106: Proposed Wastewater Commodity Rates (FY 2025 – FY 2027) Revenue Adjustment 6.0% 6.0% Proposed Commodity Rates ($/hcf) Customer Class & Tiers FY 2025 FY 2026 FY 2027 All Customers Tier 1 $2.19 $2.33 $2.47 Tier 2 $2.84 $3.02 $3.21 Tier 3 $4.10 $4.35 $4.62 Commercial $2.39 $2.54 $2.70 Revenue Adjustment: 3.0% 3.0% Fixed Charges ($/Month) Customer Class FY 2025 FY 2026 FY 2027 Single Family $16.70 $17.21 $17.73 Multi-Family $15.48 $15.95 $16.43 Non-Residential Low Strength $10.59 $10.91 $11.24 Medium Strength $10.59 $10.91 $11.24 High Strength $10.59 $10.91 $11.24 Schools & Churches $10.59 $10.91 $11.24 Patton State Hospital $10.59 $10.91 $11.24 Revenue Adjustment: 3.0% 3.0% Commodity Rates ($/hcf) Customer Class FY 2025 FY 2026 FY 2027 Non-Residential Low Strength $0.77 $0.80 $0.83 Medium Strength $0.77 $0.80 $0.83 High Strength $0.77 $0.80 $0.83 Schools & Churches $0.45 $0.47 $0.49 Patton State Hospital $0.44 $0.46 $0.48 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 101 Reclamation Table 107 through Table 108 provide the three-year fixed charge schedule and commodity rates over the Rate Setting Period, respectively. For FY 2026 and FY 2027, the revenue adjustments are applied across- the-board to the cost-of-service rates derived for FY 2025 (rounded up to the next whole penny) to maintain the proportionality of the cost allocations between customers derived within this updated cost-of-service analysis. Table 107: Proposed Reclamation Monthly Fixed Charges (FY 2025 – FY 2027) Table 108: Proposed Reclamation Commodity Rates (FY 2025 – FY 2027) Revenue Adjustment: 10.0% 10.0% 10.0% Fixed Charges ($/Month) Customer Class FY 2025 FY 2026 FY 2027 Single-Family $29.79 $32.77 $36.05 Multi-Family $25.67 $28.24 $31.07 Non-Residential Low Strength $9.16 $10.08 $11.09 Medium Strength $9.16 $10.08 $11.09 High Strength $9.16 $10.08 $11.09 Schools & Churches $9.16 $10.08 $11.09 Patton State Hospital $9.16 $10.08 $11.09 Revenue Adjustment: 10.0% 10.0% 10.0% Commodity Rates ($/hcf) Customer Class FY 2025 FY 2026 FY 2027 Non-Residential Low Strength $2.19 $2.41 $2.66 Medium Strength $2.54 $2.80 $3.08 High Strength $3.96 $4.36 $4.80 Schools & Churches $1.29 $1.42 $1.57 Patton State Hospital $1.46 $1.61 $1.78 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 102 Appendix A – Water Supply Cost Analysis Water supply costs were calculated through the following analysis. The surface water assessment was set as an annual fixed cost. The unit costs of each water supply ($/hcf) were identified for each water supply, with rates held constant as any increases to the unit rates would be captured through the pass-through of the Government Code. The water loss percentage, equal to 8.3%, was applied to the water billings/sales to derive the total amount of water needed to meet customer demand. The amount of each water supply needed to meet the total demand was determined by first using the lowest cost water supply (Surface Water), followed by State Water Project, and Groundwater covering the remainder of demand. The District expects to have access to 3,950 AF of surface water annually over the Rate Setting Period and 1,800 AF of State Water Project. In order to calculate the total variable purchase water costs for each fiscal year, the total volumes of each water supply (AF) were multiplied by the corresponding commodity unit rates ($/AF). Table 109 summarizes water supply costs over the Financial Plan Period Table 109: Water Supply Costs (FY 2025 – FY 2029) Calculated Water Supply Costs Fixed Water Costs FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Fixed Water Supply Costs Surface Water - Assessments $117,000 $117,000 $117,000 $117,000 $117,000 Water Supply Rates ($/AF) FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Variable Rates ($/AF) Surface Water $66 $66 $66 $66 $66 State Water Project $192 $192 $192 $192 $192 Groundwater $206 $206 $206 $206 $206 Source of Water Supplies (AF) FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Water Sales (AF)15,655 AF 15,735 AF 15,782 AF 15,829 AF 15,876 AF Water Loss % 8.3% 8.3% 8.3% 8.3% 8.3% Water Demand/Production 17,072 AF 17,160 AF 17,211 AF 17,262 AF 17,313 AF Surface Water 3,950 AF 3,950 AF 3,950 AF 3,950 AF 3,950 AF State Water Project 1,800 AF 1,800 AF 1,800 AF 1,800 AF 1,800 AF Groundwater 11,322 AF 11,410 AF 11,461 AF 11,512 AF 11,563 AF Variable Water Supply Costs FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Variable Water Supply Costs Surface Water $262,417 $262,417 $262,417 $262,417 $262,417 State Water Project $346,383 $346,383 $346,383 $346,383 $346,383 Groundwater $2,329,579 $2,347,582 $2,358,052 $2,368,574 $2,379,148 Subtotal Variable Water Supply Costs $2,938,379 $2,956,382 $2,966,852 $2,977,374 $2,987,948 Water Supply Summary Water Supply Costs FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Fixed Water Supply Costs Surface Water - Assessments $117,000 $117,000 $117,000 $117,000 $117,000 Variable Water Supply Costs Surface Water $262,000 $262,000 $262,000 $262,000 $262,000 State Water Project $346,000 $346,000 $346,000 $346,000 $346,000 Groundwater $2,330,000 $2,348,000 $2,358,000 $2,369,000 $2,379,000 Subtotal Variable Water Supply Costs $2,938,000 $2,956,000 $2,966,000 $2,977,000 $2,987,000 Total Water Supply Costs $3,055,000 $3,073,000 $3,083,000 $3,094,000 $3,104,000 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 103 Appendix B – Capital Improvement Plans The Detailed Capital Improvement Plans for each utility are identified in Table 110 through Table 112. Table 110: Water Capital Improvement Plan (FY 2025 – FY 2029) Key Assumptions Inflation FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Capital Inflation 3.9% 3.9% 3.9% 3.9% 3.9% Cumulative Inflationary Factor 103.9% 107.9% 112.1% 116.4% 120.9% Water Capital Improvement Plan Project Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Water System Canal 3 Zone Reservoir $0 $0 $0 $1,000,000 $5,000,000 New Well 01 - Lower/Inter/Upper $2,700,000 $1,300,000 $0 $0 $0 New Well 02 - Lower/Inter/Upper $0 $500,000 $2,500,000 $3,000,000 $0 Reservoir Rehabilitation $650,000 $650,000 $0 $1,000,000 $1,100,000 Main Replace - Seismic Mitigation $5,000,000 $5,000,000 $5,000,000 $0 $0 AMI Meter Upgrades $0 $200,000 $200,000 $0 $0 Plant 134 Membranes $0 $320,000 $320,000 $320,000 $0 Plant 134 Process Improvements $130,000 $0 $0 $0 $0 Seismic Upgrades $0 $2,500,000 $2,500,000 $2,500,000 $0 Subtotal Water System $9,780,000 $10,470,000 $11,520,000 $10,820,000 $9,100,000 Equipment Control Valve Replacements $25,000 $25,000 $25,000 $25,000 $25,000 Switch Gear Replacements $50,000 $50,000 $50,000 $50,000 $50,000 SCADA Upgrades $30,000 $30,000 $30,000 $30,000 $30,000 Well Rehabiliation, Repairs, Inspections $220,000 $220,000 $220,000 $220,000 $220,000 Replace booster pumps $30,000 $30,000 $30,000 $30,000 $30,000 Replace Pick Up Trucks $126,000 $126,000 $126,000 $126,000 $126,000 Dump Trucks $16,000 $16,000 $16,000 $16,000 $16,000 Water Truck $7,500 $7,500 $7,500 $7,500 $7,500 Hydro Excavator $42,000 $42,000 $42,000 $42,000 $42,000 Misc. Equipment, tools, supplies $300,000 $300,000 $300,000 $300,000 $300,000 Headquarters Equipment $300,000 $300,000 $300,000 $300,000 $300,000 Subtotal Equipment $1,146,500 $1,146,500 $1,146,500 $1,146,500 $1,146,500 Subtotal Water CIP $10,353,250 $11,043,250 $11,093,250 $10,393,250 $8,173,250 Water CIP Total Costs with Inflation $10,753,699 $11,914,046 $12,430,894 $12,096,956 $9,880,996 East Valley Water District – Water, Wastewater, and Reclamation Rate Study Page | 104 Table 111: Wastewater Capital Improvement Plan (FY 2025 – FY 2029) Table 112: Reclamation Capital Improvement Plan (FY 2025 – FY 2029) Key Assumptions Inflation FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Capital Inflation 3.9% 3.9% 3.9% 3.9% 3.9% Cumulative Inflationary Factor 103.9% 107.9% 112.1% 116.4% 120.9% Wastewater Capital Improvement Plan Project Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Wastewater Collection Wastewater Main Rehab $200,000 $200,000 $200,000 $200,000 $200,000 Capital Outlay $260,000 $260,000 $260,000 $260,000 $280,000 Placeholder $0 $0 $0 $0 $0 CIP from Budget $0 $0 $0 $0 $0 Carryforward $0 $0 $0 $0 $0 Subtotal Wastewater CIP $460,000 $460,000 $460,000 $460,000 $480,000 Wastewater CIP Total Costs with Inflation $477,792 $496,272 $515,468 $535,405 $580,293 Key Assumptions Inflation FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Capital Inflation 3.9% 3.9% 3.9% 3.9% 3.9% Cumulative Inflationary Factor 103.9% 107.9% 112.1% 116.4% 120.9% Reclamation Capital Improvement Plan Project Description FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Treatment Plant SNRC - Construction $0 $0 $0 $0 $0 Aeration Basin Diffusers $0 $0 $0 $500,000 $500,000 UV Lamps $0 $0 $0 $150,000 $0 CoGen Engines (2) $0 $0 $0 $250,000 $250,000 Equipment GAC Median Changeouts $0 $200,000 $0 $200,000 $0 Replace Pick Up Trucks $0 $0 $0 $60,000 $0 Capital Outlay $150,000 $150,000 $150,000 $0 $0 Subtotal Reclamation CIP $150,000 $350,000 $150,000 $1,160,000 $750,000 Reclamation CIP Total Costs with Inflation $155,802 $377,599 $168,087 $1,350,152 $906,707