Cost-of-Service Analysis

The District is conducting a comprehensive Cost-of-Service Analysis (COSA) in 2026 to help develop fair and equitable, cost-based rates for water, wastewater, and recycled water services. This analysis helps ensure rates support the District’s day-to-day operations and long-term infrastructure needs.

Why This Analysis Is Required

The approved 2026 Capital Improvement Plan (CIP) anticipates that the District will need to obtain additional debt in 2028 to fund the El Dorado Hills Water Treatment Plant and Silver Lake Dam projects, which are currently estimated at $213 million collectively. Such large capital replacement costs will likely require increased revenue, which will require a new COSA to determine the appropriate rates needed to support the new debt.

In addition, staff recommends engaging in long-range financial planning by incorporating the next ten years of operating and capital needs into the COSA. Extending the planning horizon will allow the District to better implement rate adjustments over time and promote greater rate stability for customers.

What the Analysis Does

The analysis evaluates the cost of providing services and helps establish rates that recover those costs without exceeding them, consistent with Proposition 218. Article XIII D of the California Constitution, commonly known as Proposition 218, establishes the requirements public agencies must follow when considering changes to utility rates (Cal. Const., art. XIII D, § 6).

Archived page: 2023 Cost of Services Analysis and Proposition 218