2008 Water Rate and Fee Study - Lake Havasu City

5.3. Allocation of Costs to Customer ClassesSection 5Cost-of-ServiceThe City currently serves water customers inside and outside the IDD and these accountsare divided into the following seven customer classes• Single family residential• Multi family• Commercial / Industrial• Single family residential irrigation-only• Non-single family residential irrigation-only• RV park• HydrantThe classes group together customers with similar service requirement characteristics andprovide a means for allocating costs to customers. Customers outside the IDD haveadjusted unit cost-of-service based on a ratio of 1.25. This ratio incorporates theadditional revenue customers inside the IDD contribute through property tax payments asa percent of total system IDD property tax payment and water user charge revenues.Class cost-of-service is the product of unit cost-of-service and class units of service.Pages B – 11 through B – 13 summarize the calculation of class cost-of-service andsummary level comparison to the revenue generated under the existing rates by eachcustomer classification.As summarized by page B – 15, commercial / industrial, single family residential, multifamilyand RV park customers are subsidizing non-single family residential and singlefamily residential irrigation only and hydrant customers based on the FY 2009-10 classcost-of-service analyses.Lake Havasu City2008 Water Rate and Fee Study49440145-4