Water Rates
About Pleasanton’s Water Rates
The City of Pleasanton is committed to maintaining an equitable and justifiable rate structure that supports reliable water service and long-term financial sustainability. Pleasanton’s water system is funded by a separate Water Enterprise Fund, which covers all water-related services and infrastructure.
The City purchases 100% of its water from the Zone 7 Water Agency, which charges the City both fixed and variable costs. The city’s utility bills also include applicable city rates for water (both fixed and variable), sewer, irrigation, and recycled water. Sewer rates include local collection charges from the City of Pleasanton, as well as pass-through charges for wastewater treatment from the Dublin-San Ramon District (DSRSD) or City of Livermore.
History of Pleasanton Water Rates
Delivering safe, reliable water requires extensive infrastructure and ongoing maintenance. Over time, the cost of providing water service has increased. To keep pace, the City and Zone 7 Water Agency regularly review their rates in response to rising costs, new regulations, and evolving system requirements.
From 2011 to 2023, while Zone 7 raised its fixed and variable water rates, the City’s water rates were adjusted only for inflation. During this period, the City also provided the first 20 CCF (hundred cubic feet) of water free of charge to all customers.
In 2022, the City discontinued use of its groundwater wells due to concerns about PFAS and began relying entirely on imported water from Zone 7. This shift significantly increased the cost of water. In 2023, the City approved a two-year emergency rate increase to stabilize funding and support critical infrastructure needs. The new rates, a 30% increase and a 12% increase, took effect in 2024 and 2025, respectively.
Water Rate Update – 2025
Like most water providers across California, Pleasanton is facing challenges related to aging infrastructure, stricter regulatory requirements, higher water quality standards, and rising construction costs. Since 2023, the City has taken a strategic, progressive approach to planning for the future of its water system.
Did you know?
Emergency repairs can cost up to 10 times more than proactive infrastructure maintenance and upgrades.
Water Rate Update 2025: Rate-Setting Process
To fund these critical improvements and maintain financial responsibility, the City is implementing a strategic, structured three-step process to ensure its rates reflect the actual cost of service, support long-term investments, and uphold the financial health of the water enterprise fund. In September 2024, the City officially began its rate-setting process by contracting with Water Resources Economics, LLC, to conduct a comprehensive water rate study and develop cost-based, equitable, and legally defensible rates in compliance with Proposition 218 and industry best practices.
Step 1: Water System Management Plan (WSMP)
Status: Adopted January 2025
In January 2025, Pleasanton completed its first long-term water planning document, the Water System Management Plan (WSMP). This document serves as the foundation for completing the 2025 Water Rate Study in a financially and strategically sound manner. The WSMP:
- Outlines all water system assets
- Identifies capital improvement and maintenance needs over the next 20 years
- Guides near-, mid-, and long-term system improvements
- Serves as the foundation for all future rate-setting and financial planning
Step 2: Water Enterprise Financial Analysis & Funding Scenarios
Status: Completed March 2025
In March 2025, the City conducted a financial analysis and identified funding scenarios to establish the financial framework for prioritizing and funding critical water infrastructure projects over the next five years. The analysis included:
- Operational costs, infrastructure needs, and revenue options
- Long-term impacts on financial stability and ratepayers
- Informed a prioritized investment strategy to complete $73 million in Critical Infrastructure Projects in the next five years
The City Council approved the enhanced project delivery model, which takes a balanced approach by accelerating the most critical infrastructure upgrades while minimizing long-term risk to the City. Learn More
Step 3: Water Rate Study & Rate Adoption
Status: In Progress
The final step in the rate-setting process is determining recommended rates and a rate structure that aligns with the needs of the WSMP and the funding priorities outlined in the Financial Analysis and Plan, to ensure rates adequately reflect the City’s cost of service. This step includes:
- A complete cost-of-service analysis and rate study to ensure equity and legal compliance
- Updated connection fees to reflect current infrastructure demands
- Proposed changes to the rates, rate structures, and related fees
- A formal Proposition 218 process for public notification, comment, and adoption
The City will host a formal public hearing to adopt the latest fees in October 2025.
Water Rate Update 2025: Rate-Setting Priorities
The City’s proposed water rate updates aim to achieve the following goals:
- Ensure financial stability and resiliency
- Establish consistent, equitable, and justifiable rates
- Achieve appropriate cost recovery
- Reduce legal and financial risk through compliant rate design
- Maintain affordability through appropriate assistance programs
- Address both short- and long-term infrastructure needs
Water Rate Update 2025: Proposed Water Rates
Last Updated June 3, 2025
Drought Rates & Connection Fees
On June 3, 2025, the City Council will take the latest step regarding Pleasanton’s cost-of-service analysis and rate study. This includes reviewing the latest proposed fixed and variable rates for the City and Zone 7 and considering proposed changes to drought rates and water connection fees. View Staff Report.
1. Proposed Water Rates
The City Council approved recommended changes to its water rate structure during its meeting on May 6, 2025. These changes include implementing uniform consumption-based variable charges for all customers and recovering 100 percent of Zone 7’s fixed costs as pass-through fixed charges.
As a result of these changes, the latest proposed fixed and variable charges for the City and Zone 7 will be presented to the City Council for review:
These rates are only proposed at this time. The City will present its final water rate study report and a proposed Proposition 218 notice for acceptance and approval at the City Council meeting on July 15, 2025. The proposed water rates will then undergo a 60-day review period before being submitted to the City Council for adoption at a public hearing on October 7, 2025, at 7:00 p.m.
Recommendation: None, Informational Only
2. Water Drought Rates
Water shortages occur when the availability of the water supply fails to meet expected customer demand. Such a shortage can arise for various reasons, including an earthquake, a power outage, or an extended drought. In these situations, water usage declines, leading to reduced revenues for the City from variable charges.
Water drought rates, or consumption-based surcharges, serve as tools to effectively respond to water shortage emergencies and recover essential funding necessary to operate and maintain the water system. As outlined in the City’s Water Shortage Contingency Plan, drought rates are implemented in stages for different levels of mandated water usage reduction.
Water drought rates can only be enacted if the City Council declares a water shortage emergency and implements drought rates corresponding to the appropriate stage. They are designed to recover variable revenue loss from reduced usage minus the expected cost savings from decreased variable expenses, such as purchasing less water from Zone 7. These water drought rates represent one of several options available to agencies during a water shortage emergency and are implemented at the discretion of the City.
The City’s current water drought rate structure provides a usage allotment of 10 CCF for all customers every bi-monthly billing period, which is exempt from charges. Based on updated consumption patterns, staff recommends reducing the drought allotment to 8 CCF per bi-monthly period to ensure the total annual usage allotment remains below the annual usage reduction requirement for each water shortage stage.
The Water Drought Rates and Connection Fees Technical Memo and presentation shared with the City Council compare these two allotments, the respective water drought rates for each option, and the proposed bill impacts for single-family customers.
It is important to note that since the City has decided to proceed with 100 percent fixed charge recovery of Zone 7 fixed costs, the proposed water drought rates are lower than the current drought rates, as less variable revenue will now be at risk during water shortage emergencies.
Recommendation: Staff recommends a water drought rate structure with an 8 CCF allotment. This structure accounts for the difficulty of reducing low-end usage during water shortage emergencies while encouraging the reduction of high-end usage to meet necessary conservation targets.
3. Water Connection Fees
Water connection fees are one-time capital charges assessed for new developments to connect to the City’s water system. These fees are used to recover the development’s proportional share of expanding the existing water system to serve the new customers or recoup costs for previously constructed investments to accommodate the new growth and its water needs. Methods for calculating connection fees include:
- Incremental Cost Method – New water users, or developers, pay for the additional capacity and costs required to expand the existing water system to accommodate their development. This method determines the fee by dividing the total cost of water system expansion projects (as estimated in the Water System Management Plan) by the anticipated total increase in future dwelling unit equivalents (DUE) to determine the connection fee per DUE. This method has historically been used by the City to calculate its water connection fees.
- Buy-in Method – This method recovers the historical costs of infrastructure investments in proportion to the amount of built capacity, some of which is available for new growth. Under this method, the fee is calculated by dividing the current value of the water system by the current number of DUEs to determine the cost per DUE.
- Hybrid Method – This method is typically used when the existing water system has some capacity to serve new growth, but additional expansion is also needed to accommodate the new development. The fee is calculated by determining the buy-in and incremental cost method fees and adding them together. Revenues from the buy-in component are transferred to the water enterprise fund, while revenues from the incremental component are allocated to the CIP expansion fund.
Recent water conservation trends have reduced the burden on the City’s existing water system from current water customers, creating excess capacity for future growth. However, as identified in the Water System Management Plan, parts of the water system require expansion to accommodate new development, particularly regarding water supply transmission and storage. Therefore, staff recommends using the hybrid method to determine connection fees.
The City is also recommending an annual increase in the water connection fee based on the Consumer Price Index. As the City updates its water system planning in future years, the costs of capacity improvements to support growth and the value of the water system may change. The adequacy of the connection fee will be monitored and adjusted as needed.
Recommendation: Staff recommends calculating the connection fee using the hybrid method. The recommended connection fee is $5,269 per dwelling unit equivalent (DUE) with annual increases based on the Consumer Price Index.
Previous Update on April 29, 2025
Water Rate Structure Changes & Preliminary Rates
On May 6, 2025, the City Council reviewed the initial results of Pleasanton’s cost-of-service analysis and rate study, along with preliminary recommendations for updating the City’s water rate structure. The following changes to the City’s rate structure and rates were considered:
1. Uniform Consumption-Based Variable Rate for All Customers
The City currently uses a tiered rate structure for single-family customers. Tiered consumption-based variable charges, or rates, have historically been a standard rate structure used by water agencies to promote water conservation and maintain affordability for lower water users. Over the past three years, several court cases in California have addressed the legality, primarily focusing on their compliance with Proposition 218 requirements that:
- Rates must be proportional to the cost of service
- Revenue cannot exceed the funds required to provide the service
- No user should pay more than their proportional share
- Agencies must demonstrate the cost basis for each tier
Recommendation: Adopt a uniform rate structure for all customers to achieve greater consistency and reduce legal risk.
2. Full Cost Recovery of Zone 7 Fixed Costs
Consumption-based variable charges represent the portion of a water bill that changes based on a customer’s water usage. Pleasanton has two variable charges: Zone 7 variable charges (related to City water supply purchases from Zone 7) and City variable charges (related to City’s delivery of water to customers). Common variable costs include the volume of water purchased, energy costs for water pumping, and water treatment.
Fixed charges represent the portion of the water bill that is charged to customers regardless of their water consumption. Fixed charges are consistent and depend on meter size. Pleasanton has two fixed charges: City and Zone 7. City fixed costs include meter maintenance, meter reading, and repair and replacement. Zone 7’s fixed costs to the City are determined by Zone 7. Common fixed costs include system maintenance, staffing, regulatory compliance, and infrastructure upgrades.
The City’s current rate structure charges customers only 32% of Zone 7’s fixed costs, with the remaining expenses covered through the variable rate. However, this creates uncertainty and financial risk for the City, as water consumption depends on various factors, including annual rainfall, drought conditions, and changes in customer behavior.
The City Council will be presented with options illustrating potential rates for 75% and 100% Zone 7 Fixed cost recovery. Before the 2024 emergency rate increase, the City had only charged a variable Zone 7 rate. Starting in 2024, the City began to collect a fixed charge to reduce its financial risk and began stabilizing its cost recovery.
Recommendation: Proceed with the 100% Zone 7 fixed cost recovery to establish revenue stability and reduce risk.
3. Modified Senior Discount Program & Retain Qualified Low-Income Program
The City currently offers a 20 percent discount on water and sewer rates for single-family residents who qualify as a “senior” (age 65 or older) and a 30 percent discount for residents who qualify as a low-income family (those who qualify for PG&E, PacBell, or cable television discounts through either the California Department of Economic Opportunity or the Social Security Administration). Residents cannot apply for both discounts. The City also currently limits both programs to a discount only if the water customer’s bi-monthly water consumption is less than or equal to 30 CCF maximum usage. These discount programs are funded through the City’s General Fund and are not, and are not permitted to be, funded by rates. The senior discount program currently has approximately 3,200 enrolled customers and costs the General Fund approximately $300,000 per year. The low-income program currently has approximately 225 enrolled customers and costs the General Fund approximately $36,000 per year.
Recommendation: Maintain the low-income discount program with maximum bi-monthly water consumption of less than 30 CCF. However, staff recommends discontinuing the senior discount program as seniors can still qualify as a low-income family if they show proof of participation in existing State or Federal Programs such as Supplemental Security Income (SSI), Medi-Cal, CalFresh, PG&E CARE or FERA Program, or low-income property tax exemptions through the County Assessor’s Office. These are third-party verified programs that require minimal resources from the City.
Outcome
The City Council approved the recommended rate structure at the May 6, 2025 meeting, which included uniform consumption-based variable charges for all customer classes (as opposed to a tiered rates structure) and Zone 7 fixed costs being 100 percent recovered as pass-through fixed charges to customers (as opposed to a portion of Zone 7 fixed costs recovered as variable charges). While the City Council did discuss potential changes to the City’s existing discount programs, no changes were made at this time, and this item was postponed for future discussion. Read more.
Next Steps: Proposed Timeline & Activities
| Date | Milestone |
| May 6, 2025 | City Council Meeting: Review of Cost-of-Service Analysis and Recommended Rates and Rate Structure Agenda Report |
| June 3, 2025 | City Council Meeting: Final Water Rates, Connection Fees, Drought Rates |
| July 15, 2025 | City Council Meeting: Approve Prop 218 Notice, Accept Rate Study Report |
| July 30, 2025 | Last Day to Mail Out Public Hearing Notices – 45 Day Comment Period |
| October 7, 2025 | City Council Public Hearing and Potential Adoption |
| January 1, 2026 | New Rates Take Effect |
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Additional Rate Information
Water Rate Update 2025
- Agenda Report & City Council Presentation – May 6, 2025
- Water Rate Design Analysis Technical Memo – May 6, 2025
- Current rate information (as of January 1, 2025) can be found here.
Current Water Rate Information
Water Rate Update 2023
Links to 2023 Rate Change Materials currently available on water rate page
- Pleasanton Water Rates Frequently Asked Questions (updated 10/5/23)
- Detailed information on the rate increases can be found in the City’s agenda report from the November 7, 2023 City Council meeting (item #17).
- Public Hearing Notice – A Public Hearing Notice was sent to all Pleasanton addresses in early August 2023.
- A press release with additional information.
- Final Water and Recycled Water Rate Study report.
- Current rate information (as of January 1, 2025) can be found here.
Water and Sewer Rate Archive
- 2024 Rate Notification Inserts SEWER DSRSD 07-01-24
- 2024 Rate Notification Inserts SEWER Livermore 07-01-24
- 2024 Rate Notification Inserts Water
- 2024 Rate Notification Inserts SEWER DSRSD 01-01-24
- 2024 Rate Notification Inserts SEWER Livermore 01-01-24
- 2023 Rate Notification Inserts Water
- 2023 DSRSD Sewer Rate Sheet
- 2023 City of Livermore Sewer Rate Sheet
- 2022 Water Rates Notification
- 2022 City of Livermore Sewer Rate Sheet
- 2022 DSRSD Sewer Rate Sheet
- 2021 City of Livermore Sewer Rate Notification
- 2021 DSRSD Wastewater Rate
- 2020 City of Livermore Sewer Rate
- 2020 DSRSD Wastewater Rate Notification
- 2020 Water Rates