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Water Rate Study Recommendations <br />September 17, 2019 <br />1 <br />2019 Water Rate Study Drivers <br />Schedule: <br />✓ The previous rate study was completed in 2014 <br />✓ The last adopted rate adjustments were for FY 2019 (last year) <br />Legal: <br />✓ Recent court decisions have "raised the bar" for transparency and cost -to - <br />service requirements for water rates (Prop 218). <br />Rate Structure: <br />✓ Revenue was significantly lower than forecasted during drought years <br />• System Investment Needs: <br />✓ 20% of the water distribution infrastructure is past its useful life <br />✓ 70% of the existing infrastructure will reach its useful life by 2040 <br />✓ A Water Master Plan was developed to identify system deficiencies and <br />develop a capital program 2 <br />N <br />Stantec Consulting & Hildebrand Consultint5B_7 1 <br />EXHIBIT 2 <br />