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Section 1 Introduction 1.3 Overview of Utility Rate Setting Process Rate studies classically have three categories of technical analysis - the development of revenue required from rates, the allocation of costs among billable parameters (cost -of -service analysis) and the design of a rate structure. An overview of the rate -setting analytical steps is shown in Figure 1-1. Compares revenues ofthe utility to its Revenue Requirement Analysis operating and capital costs to determine the adequacy ofthe existing rates to recover costs Allocates the revenue requirements to Cost -of -Service Analysis the various customer classes ofservice in a fair and equitable manner Considers both the level and structure ofthe rate design to collect the Rate -Design Analysis distributed revenue requirements from each class of service Figure 1-1. Overview of Rate Setting Analytical Steps The revenue required from rates is net of non -rate revenues (for example interest earned on fund balances, loan disbursements, revenue from new connections to the wastewater system, lease and rental income, various reimbursements, other charges for services). The allocation of costs is structured so that the revenue required from rates is distributed proportionally for every level of service in a manner that allows the development of unit costs. The rate structure uses the unit costs as a basis for aggregating costs into rates that are applicable to the various customer classes. Rates for residential customer classes (single family and multiple family) are flat rates. The rates are in units of dollars per month. Rates for nonresidential customer classes (commercial and institutional) are variable rates plus a monthly charge per account. The variable rates are in units of dollars per hundred cubic feet of metered water use. Monthly bills for industrial users may be calculated based on the measured flow and loading (of BOD and SS) of each users' wastewater times the unit cost for flow (in $ per million gallons, BOD loading (in $ per thousand pounds, and SS loading (in $ per thousand pounds). Information and data for the development of rates and preparation of this report comes from many documents provided by the City. The list of documents, and the key information and data from each used in this study, are summarized below. City of San Leandro City Council's Adopted Budget Fiscal Years 2018 and 201S Budgets). The City of San Leandro Annual Budget is the most important document the City produces. It outlines the City's spending plan and priorities for two fiscal years, which run from July 1st to June 30th. The city's budget is developed in conjunction with the Mayor, City Manager and all city departments. The budget is then reviewed and approved by the City Council. The result is a budget that closely matches the community's highest priorities each fiscal year. All revenue, expenditure and fund balance data used in the development of wastewater rates and charges in this study were provided by the City. City of San Leandro Fiscal Year 2016-2017 Comprehensive Annual Financial eort ( 7 ). The City of San Leandro VitcC"oive Annual Financial Report shows the financial position and results of the City's operations as represented by the financial activity of its various funds. Utility Billing Systemdata. The City provided billing data from its Utility Billing system for connections. 1-2 I, �h/, Is" c4 ;¢,nlcnl,cin this rvhcel "-Ihlo lY og hc III11IG�MIon" I,+r:;ffcd fllhccinlc4i his uool11 lord,