Readiness To Service Charges
To Our Valued Customers,
This letter is in response to questions from customers, both new and established, regarding the annual “Readiness To Serve” fee that is charged to all customers having water service with Yosemite Spring Park Utility Co., Inc.
To better understand the Readiness To Serve Charge, it is helpful to understand how the Public Utilities Commission (PUC) classifies water companies.
The PUC classifies water companies in one of four categories:
Class A – 10,000 or More Service Connections (customers)
Class B – 2000 to 10,000 Service Connections (customers)
Class C – 500 to 2000 Service Connections (customers)
Class D – 500 or Less Service Connections (customers)
Currently, the Yosemite Spring Park Utility Company is classified as a Class C utility.
Water utilities, like any other business, must be able to cover their daily operational costs, as well as provide some amount of profit to fund additional growth, replace and repair aged or damaged equipment, and meet the financial requirements imposed by new regulations.
In 1986, the PUC recognized that the Class A and Class B utilities have large enough revenue generating base (service connections), to fully fund the operation of the water system, solely on the income derived from the sale of water at what is considered a reasonable rate for the area. Likewise, Class C and Class D utilities do not have this same ability. Therefore Class C and D utilities were seen as much riskier ventures, causing a lower survivability rate and making them less attractive for securing loans for capital improvements.
The Rate Design Policy was placed in effect in 1986 to assist Class C and D utilities with the recovery of fixed costs, which are those costs that do not fluctuate based on the amount of water sold. The PUC determined that Class D utilities would be allowed to recover 100% of their fixed costs through a service charge, or Readiness to Serve Charge, as it is referred to by the PUC. Class C utilities, which have a higher customer base, have been allowed to recover 65% of fixed costs through the same Readiness to Serve Charge.
Without this service charge, the rates that Class C and D utilities would have to charge for water would be much higher, as sales of water alone would not cover the costs of operations, at a rate that would appear to be reasonable to the consumer.
We hope this explanation has satisfactorily answered your questions regarding the Readiness To Serve Fee and it’s reason for being charged. If you have any further questions regarding the Readiness To Serve Fee, or any other aspect related to the Yosemite Spring Park Utility or its operations, please feel free to call at 559-658-7451.