Santa Clara Valley Water District (Valley Water) engaged Raftelis to perform a review of Valley Water’s cost allocation for the rate-setting process for FY 2021 for Valley Water’s Water Utility Enterprise Fund proposed groundwater benefit zones. Valley Water had engaged a water resources consulting firm to analyze hydrologic characteristics of Valley Water’s service territory to assess whether the existing groundwater benefit zones accurately reflect the geographic areas where groundwater users receive comparable benefits from Valley Water’s existing and future groundwater management activities. The results of this analysis and stakeholder input obtained by Valley Water resulted in the Board authorizing Valley Water staff to prepare the survey description for several new proposed groundwater benefit zones and for the calculation of the corresponding groundwater production charges. For the annual rate-setting process, the project managers most familiar with the activities performed had to review each historical allocation factor and make modifications based on the proposed zones. Raftelis assisted Valley Water staff to review the data and reasonableness of the allocation factors developed for each activity for the proposed zones based on a set of criteria, such as the basis of the allocation, the timeframe of the data used to establish the allocation factor, etc. In addition, Raftelis utilized the previously developed rate and financial planning model used annually by Valley Water staff to determine groundwater production charges and expanded the capability of the model to accommodate the new proposed zones. Specifically, this included the ability to allocate operations and maintenance costs, capital costs, and non-rate revenue offsets for each of the three proposed zones.
