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Pleasanton council backs staff plan to recover Zone 7 fixed costs, collapses tiered rates
Summary
After lengthy debate about equity and legal risk, the council directed staff to pursue a rate structure that passes 100% of Zone 7 fixed charges through on the fixed portion of Pleasanton bills and collapse tiered rates to a uniform consumption-based variable charge; staff will return with further analysis of senior and low-income discount options.
The Pleasanton City Council voted May 6 to move forward with staff’s recommended water-rate approach: collapse multi-tier residential rates into a single uniform consumption-based rate and recover 100% of Zone 7 fixed costs on the city’s fixed charge, while asking staff to present follow-up analysis on senior and low-income discounts.
Sanjay, a consultant assisting the city’s water study, and Nancy detailed two scenarios: a 100% recovery of Zone 7 fixed costs collected on the fixed charge (staff’s preferred option) and a 75% alternative. Staff explained the recommendation is intended to increase revenue stability for the water enterprise, reduce exposure to drought-driven revenue shortfalls and meet capital needs (staff cited a $73 million CIP fund supported partially by a proposed $35 million debt issuance).
Under the 100% proposal staff presented, the combined bimonthly fixed charge for a 5/8-inch meter would rise to about $58.33, with an associated change in the commodity (variable) charge; the council was told the proposed revenue schedule would include two years of 15% revenue increases followed by two years of 8% increases. Staff emphasized legal constraints from recent court decisions and Proposition 218 precedent that make tiered rates harder to defend unless each tier has a clear cost basis.
Councilmembers debated equity: several expressed concern that very low water users (many of them seniors) would see proportionally larger increases, and proposed phased approaches or targeted subsidies to soften the impact. Staff said the low-income discount (verified through PG&E CARE or similar enrollment) could be preserved and that the senior discount — which covers roughly 3,200 customers historically and costs the general fund about $300,000 — might be restructured or phased, subject to council direction.
In a final motion, Council Member Gatos moved to accept staff’s recommendation to pass through 100% of Zone 7 fixed costs and collapse tiers while asking staff to return with more detailed options for senior and low-income assistance; Vice Mayor Nybert seconded and the motion carried on roll call.
The city will present final rate tables and a Prop 218 notice in coming weeks, with a public hearing planned in October and an anticipated January 1 implementation if adopted.
