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Section 1 Introduction <br /> <br />1-2 <br />Use of contents on this sheet is subject to the limitations specified at the end of this document. <br />1.3 Overview of Utility Rate Setting Process <br />Rate studies classically have three categories of technical analysis – the development of revenue <br />required from rates, the allocation of costs among billable parameters (cost-of-service analysis) and the <br />design of a rate structure. An overview of the rate-setting analytical steps is shown in Figure 1-1. <br />The revenue required from rates is net of non-rate <br />revenues (for example interest earned on fund <br />balances, loan disbursements, revenue from new <br />connections to the wastewater system, lease and <br />rental income, various reimbursements, other <br />charges for services). The allocation of costs is <br />structured so that the revenue required from rates <br />is distributed proportionally for every level of <br />service in a manner that allows the development of <br />unit costs. The rate structure uses the unit costs as <br />a basis for aggregating costs into rates that are <br />applicable to the various customer classes. <br />Figure 1-1. Overview of Rate Setting Analytical Steps <br /> <br />Rates for residential customer classes (single family and multiple family) are flat rates. The rates are in <br />units of dollars per month. Rates for nonresidential customer classes (commercial and institutional) are <br />variable rates plus a monthly charge per account. The variable rates are in units of dollars per hundred <br />cubic feet of metered water use. Monthly bills for industrial users may be calculated based on the <br />measured flow and loading (of BOD and SS) of each users’ wastewater times the unit cost for flow (in $ <br />per million gallons, BOD loading (in $ per thousand pounds, and SS loading (in $ per thousand pounds). <br />1.4 Customer and Financial Data <br />Information and data for the development of rates and preparation of this report comes from many <br />documents provided by the City. The list of documents, and the key information and data from each used <br />in this study, are summarized below. <br />City of San Leandro City Council’s Adopted Budget Fiscal Years 2018 and 2019 (FY18 and FY19 <br />Budgets). The City of San Leandro Annual Budget is the most important <br />document the City produces. It outlines the City’s spending plan and priorities <br />for two fiscal years, which run from July 1st to June 30th. The city’s budget is <br />developed in conjunction with the Mayor, City Manager and all city <br />departments. The budget is then reviewed and approved by the City Council. <br />The result is a budget that closely matches the community's highest priorities <br />each fiscal year. <br />All revenue, expenditure and fund balance data used in the development of <br />wastewater rates and charges in this study were provided by the City. <br />City of San Leandro Fiscal Year 2016-2017 Comprehensive Annual Financial <br />Report (FY17 CAFR). The City of San Leandro Comprehensive Annual <br />Financial Report shows the financial position and results of the City’s operations as represented by the <br />financial activity of its various funds. <br />Utility Billing System data. The City provided billing data from its Utility Billing system for connections. <br /> <br /> <br />Revenue Requirement Analysis <br />Cost-of-Service Analysis <br />Rate-Design Analysis <br />Compares revenues of the utility to its <br />operating and capital costs to <br />determine the adequacy of the existing <br />rates to recover costs <br />Allocates the revenue requirements to <br />the various customer classes of service <br />in a fair and equitable manner <br />Considers both the level and structure <br />of the rate design to collect the <br />distributed revenue requirements from <br />each class of service <br />96