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4. Rate Design <br />4. RATE DESIGN 0 <br />The next component of the Study was to evaluate IRCDUS' existing retail rates and rate structure and to <br />provide recommended rates. The following sub -sections present Stantec's review of the IRCDUS' existing <br />rates, supporting rate schedules for the recommended rates, and resulting customer bill impacts. The <br />recommended rates presented herein is intended for implementation on October 1, 2024 (FY 2025), for <br />services provided during the preceding month. Complete rate schedules for retail customers are provided <br />in Appendix C. <br />4.1 RATE STRUCTURE REVIEW <br />Stantec reviewed IRCDUS' existing water and sewer retail rate structures in the context of several aspects, <br />including: <br />• Fair recovery of cost of service and revenue requirements from each system <br />• Conformance to accepted national and local industry practices <br />■ Fiscal stability and recovery of fixed costs through base charges <br />■ Resource conservation and consideration of the impact of current and future water quality and <br />environmental regulations <br />■ Affordability to low and average volume users <br />• Administrative burden and ease of customer understanding <br />Customary practice is a two-part rate structure comprised of both fixed and variable charges. Generally <br />accepted practice in the water industry includes recovery of a portion of the costs of the system in a fixed <br />readiness -to -serve charge. This practice recognizes that utilities have substantial investments in capital <br />related costs and other fixed costs that are incurred year-round to maintain a state of readiness to meet <br />demands of their customers when they occur. <br />4.1.1 Fixed Charges <br />IRCDUS presently has fixed charges for water and sewer service regardless of whether there is any <br />measured water use, which is a service availability charge per account for all retail customers that is scaled <br />by the number of ERUs associated with each connection. A review of local utility fixed or service availability <br />charges indicates use of ERUs or meter size as the basis for scaling fixed charges. This recognizes that <br />customers with more capacity and therefore potential demands place a higher cost burden on a utility which <br />is consistent with IRCDUS' current rate structure. <br />26 <br />• <br />