East Bay Municipal Utility District

Oakland, California, United States

Raftelis assisted East Bay Municipal Utility District (District) in conducting comprehensive water and wastewater cost-of-service studies. The last comprehensive cost-of-service studies had been conducted 20 and 15 years prior for the water utility and wastewater utilities, respectively. As part of the study, Raftelis thoroughly examined the District’s cost structure, analyzed customer data, evaluated alternative rate structures, and facilitated policy decisions to develop an equitable rate structure that meets both Proposition 218 requirements and the District’s goals and objectives.

Important policy decisions included: geographical rates to reflect cost differences within the service area, the sunset of the Seismic Improvement Program, determination of the recycled water rate, and the cost allocation of the Supplemental Supply Program. The proposed rates not only retained the current rate structure, which included a fixed monthly charge based on meter size, a three-tier rate structure for single-family customers, and a uniform rate for multi-family and non-residential customers, the individual rates were also realigned to reflect the cost of service.

The District’s rate structure also included a fixed annual charge per dwelling units (up to five dwelling units) for single- and multi-family customers, and per parcel for non-residential customers for wet weather facilities. This rate structure was developed in the late 1980s. Raftelis and District staff evaluated various alternatives for the wet weather facilities charge to ensure equity amongst customer classes. The proposed wet weather facilities charge is based on the average parcel size for each customer class, which has a stronger cost-of-service basis than the current rate structure. The proposed rates were approved after a Public Hearing.

Raftelis also worked closely with the District to review and update its wastewater capacity fees utilizing an equity buy-in approach. This approach was chosen due to the fact that the District’s service area is substantially built-out and the existing treatment plant has sufficient capacity to accommodate new connections. Raftelis utilized the replacement cost less depreciation method of valuing the wastewater system (RCLD) and included the capital reserve balances to account for contributions by existing customers towards future repairs and replacements of the system. In addition, remaining principal on outstanding debt obligations were accounted for by reducing the total system value by the remaining principal obligation. Another component of the study was to develop new procedures for the District when calculating capacity fees for non-residential customers. The existing wastewater capacity fee (WCF) calculation for non-residential customers was complicated, required significant staff time, and required periodic evaluations of a customer’s WCF. Based on a framework established through close collaboration with District staff, Raftelis developed a simplified method of calculating the WCF for non-residential customers based on meter size and an assigned strength category depending on the type of business. This method met the District’s objectives of reducing staff, maintaining equity with its charges, providing transparency to non-residential customers, and minimizing the need for the review of a customer’s WCF.