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<br /> <br /> 4-1 <br />Use of contents on this sheet is subject to the limitations specified at the end of this document. <br />Section 4 <br />Cost of Service Analysis <br />The total amount of revenue required from rates is allocated between amounts to be recovered from the <br />billable parameters of flow, BOD, SS and accounts/units. Allocation is accomplished by the development <br />of percentage allocations among the four parameters. The four parameters and the allocations are <br />based on principles and methodology found in the State of California Revenue Program Guidelines. The <br />use of these industry standard principles and methods ensures that revenue requirements are equitably <br />recovered from classes of customers in proportion to the cost of serving those customers. <br />The general cost of service process includes the following steps: <br />1. Identification of annual revenue requirements; <br />2. Allocation of annual revenue requirements to billable parameters; <br />3. Development of unit costs of service for each billable parameter; and <br />4. Distribution of costs to customer classes. <br />Annual revenues required from rates were identified in Section 3. Development of unit costs of service <br />and distribution of costs to customer classes is presented in this section. <br />4.1 Billable Parameters <br />The billable parameters are flow, BOD, SS and accounts/units. Each of the billable parameters is <br />described below. <br />Flow. Flow is the rate at which wastewater is discharged to the sanitary sewer. Units of measure include <br />gallons per day (gpd), million gallons per day (mgd). Flow is often expressed in terms of volume. Volume <br />units of measure include hundred cubic feet (hcf) and million gallons. The two terms are used <br />interchangeably with their corresponding unit of measure. For example, average monthly wastewater <br />discharge for a customer could be expressed as a volume of 6 hcf or a flow of 148 gpd. <br />BOD. BOD is an acronym for Biochemical Oxygen Demand. BOD is one of the two primary contaminants <br />removed during the treatment process. <br />SS. SS is an acronym for Suspended Solids. SS is one of the two primary contaminants removed during <br />the treatment process. <br />Account/Billing Unit. The source of the wastewater discharge with a connection (direct or indirect) to the <br />sanitary sewer. Dwelling units in multiple family dwellings are connected to the sanitary sewer through <br />an account with a direct connection to the sanitary sewer. Account/Dwelling Unit charges are based on <br />costs of serving every account regardless of the flow or strength (BOD and SS levels) of wastewater <br />discharge. <br />105