Managing Rates - Guiding Principles
In 1993, the City Council approved and adopted seven guiding principles for
managing the Water Enterprise Fund as summarized below.
- Revenues and Expenditures in Balance. The water fund is self-sustaining.
Revenues derived from customer charges should equal the costs of running
the water system.
- Capital Improvement Program. The capital improvement program will fund
the systematic and efficient replacement/renewal of the water distribution
system. It will also support compliance actions to meet health and safety
- Emergency Reserve Fund. A reserve fund shall be maintained to potentially
address emergency engineering projects and/or the costs of catastrophic or
unforeseen events (e.g., earthquake, drought, regulatory change).
- Basic Service Charge Equal to Fixed Costs. A basic service charge will
cover all fixed costs related to operating or maintaining the water system.
The charge varies with meter size, not water usage. Other costs that vary
with the quantity consumed will be assessed per water unit (hundred cubic
foot) used by customers as recorded by water meters.
- Cost of Service Equity Among Customer Groups. Each customer group is to
pay its fair share of the costs of providing water service. No rate differentials
will be applied to subsidize a customer group.
- Water Conservation Rate Structure. Rates will be structured to encourage
customers to conserve water. Customers will pay higher unit prices for increasing
increments of water use.
- Economic Growth and Development. Promote and support the economic growth
and development throughout the City by prudent water resource planning.