FROM: Robert Thompson, General Manager
Originator: Wally Ritchie, Director of Finance
SUBJECT:
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COMPREHENSIVE COST OF SERVICE RATE STUDY, SPECIFICATION NO. CS-2025-711BD
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GENERAL MANAGER'S RECOMMENDATION
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RECOMMENDATION:
A. Approve 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
B. Approve a contingency of $25,428 (10%).
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BACKGROUND
Since 2002, the Orange County Sanitation District (OC San) has completed a rate study every five years to determine customers' fair and equitable share of collection, treatment, and disposal costs, developed an accurate rate model, and established a new five-year rate schedule which ensures full cost recovery and supports Proposition 218 notifications.
For the 2026 rate study, staff has requested a comprehensive rate study on all fees and charges including annexation fees and urban runoff fees.
This comprehensive rate study allocates costs to Flow, Biochemical Oxygen Demand (BOD), and Total Suspended Solids (TSS) for the purpose of billing different customer classes, including high flow and high strength dischargers.
RELEVANT STANDARDS
* Ensure the public's money is wisely spent
* Stable rates, no large unforeseen rate increases
PROBLEM
OC San's current five-year rate schedule will end as of June 30, 2028. To assess rates on the newly incorporated customers under the IRWD Agreement, approved in 2025, a new rate study and resulting rate schedule needs to be adopted by the OC San Board of Directors.
PROPOSED SOLUTION
Approve the Professional Consultant Services Agreement with HDR Engineering, Inc. to complete a comprehensive cost of service rate study to establish the next five-year rate schedule.
TIMING CONCERNS
To meet the legal requirements of Proposition 218 so the new Ordinances are adopted and the rate s...
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