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City of Morgan Hill Comprehensive Water Report
Page D8
Conversely, the majority of the water operation costs for delivering high quality drinking
water in the City are fixed costs, which only vary slightly based on actual water
consumption. Variable costs fluctuate on the amount of water used and they include the
groundwater production charge paid to the Santa Clara Valley Water District (District),
electricity used to pump water from wells, and chemical costs used to treat water at the
source.
% of
Total Cost
Fixed Cost:
Personnel
23.8%
Supplies
10.8%
Capital (Meters, Machinery, Equipment )
7.3%
Debt Service
14.9%
Internal Services (Building, Fleet, IT, General Administration)
5.3%
Transfers Out (to General Fund, Environmental Programs, General
Plan Update)
5.5%
Total Fixed Cost
67.6%
Variable Cost:
Electricity
7.2%
Groundwater Production
24.9%
Supplies (11% of total)
0.3%
Total Variable Cost
32.4%
Total Cost
100.0%
The groundwater production charge (water extraction fee) the City pays to the District is
one of the largest expenses for the Water Operation Fund. As shown on the graph below,
the charges have significantly increased over the last ten years.
16%
68%
84%
32%
0%
50%
100%
Revenue
Expenditure
Revenue and Cost
Fixed vs. Variable
Variable
Fixed