FROM: Robert Thompson, General Manager
Originator: Wally Ritchie, Director of Finance
SUBJECT:
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ORANGE COUNTY SANITATION DISTRICT WASTEWATER REVENUE PROGRAM RATE STUDY
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GENERAL MANAGER'S RECOMMENDATION
recommendation
RECOMMENDATION: Recommend to the Board of Directors to:
Receive and file the Orange County Sanitation District’s 2026 Wastewater Rates, Fees, and Charges Study completed by HDR Engineering, Inc.
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BACKGROUND
To ensure the appropriate allocation of costs and fees, the Orange County Sanitation District (OC San) engaged an engineering consulting firm, HDR Engineering, Inc., to provide an independent analysis of OC San’s cash flow modeling and a comprehensive cost of service study. The study demonstrates that OC San’s proposed fees are appropriate and reasonable and will support its projected capital and operating requirements.
RELEVANT STANDARDS
• Stable rates based on a validated cost structure which minimizes unforeseen rate increases
PROBLEM
OC San’s Board of Directors approved a five-year rate schedule which expires at the end of fiscal year 2027-28. In addition, OC San is not able to assess regional sewer service fees on customers transferred to OC San as part of the Flow Exchange Agreement with Irvine Ranch Water District until a new rate setting and Proposition 218 process has been completed and adopted.
PROPOSED SOLUTION
Develop a proposed new five-year rate schedule based on the 2026 rate study completed by HDR Engineering, Inc.
TIMING CONCERNS
Based on the 2026 rate study, staff will be proposing a five-year rate schedule, beginning in July 2027.
RAMIFICATIONS OF NOT TAKING ACTION
Sewer service fees will be insufficient to support capital and operating requirements.
PRIOR COMMITTEE/BOARD ACTIONS
March 2026 - Approved a Professional Consultant Services Agreement with HDR Engineering, Inc. to perform a Comprehensive Cost of Service Rate Study, Specification No. CS-2025-711BD, for a total amount not to exceed $254,280; and approved a contingency of $25,428 (10%).
ADDITIONAL INFORMATION
Based on the results of the rate study completed by HDR Engineering, Inc., OC San staff will recommend a five-year revenue program which includes an increase of 3.53 percent for fiscal year 2027-28 (consistent with the prior approved five-year rates) and an increase averaging 4.75 percent annually for fiscal years 2028-29 to 2031-32. Specifically, the Proposed Annual Single Family Residential Fee Schedule is:
Current $397
FY 2027-28 $411
FY 2028-29 $431
FY 2029-30 $451
FY 2030-31 $472
FY 2031-32 $495
CEQA
N/A
FINANCIAL CONSIDERATIONS
The anticipated revenues generated from this action have been incorporated in the Budget for FY 2026-27 and 2027-28.
ATTACHMENT
The following attachment(s) may be viewed on-line at the OC San website (www.ocsan.gov) with the complete agenda package:
• Draft OC San 2026 Wastewater Rates, Fees, and Charges Study
• Presentation