(a) Any public agency providing public utility service may impose a fee, including a rate, charge, or surcharge, for any product, commodity, or service provided to a public agency, and any public agency receiving service from a public agency providing public utility service shall pay that fee so imposed. Such a fee for public utility service, other than electricity or gas, shall not exceed the reasonable cost of providing the public utility service.

(b)  A fee, including a rate, charge, or surcharge, for any product, commodity, or service provided to a public agency, shall be determined on the basis of the same objective criteria and methodology applicable to comparable nonpublic users, based on customer classes established in consideration of service characteristics, demand patterns, and other relevant factors.

(c) A public agency providing public utility service shall complete a cost of service study at least once every 10 years that addresses the cost of providing public utility service to public schools. The study shall describe the methodology for the determination of cost responsibility, which may be identified by reference to appropriate industry ratemaking principles, including guidance associated with designing and developing water rates and charges issued by the American Water Works Association or guidance associated with other comparable industry principles recognized by public agencies providing public utility service.

(d) In addition to other notices required pursuant to state law or local ordinance or rule, whenever a public agency that provides public utility service holds a public meeting to establish or increase any rate, charge, surcharge, or fee, that public agency shall provide a written notice of the meeting not less than 60 days prior to the date of the public meeting to any public agency that has filed a written request for such a notice with either the clerk of the governing body or with any other person designated by the governing body to receive these requests.

(e) Upon request of any affected public agency made not less than 30 days prior to the date of the public meeting to establish or increase any rate, charge, surcharge, or fee, a public agency that provides public utility service shall provide the affected public agency with the data and proposed methodology for establishing or increasing the rate, charge, surcharge, or fee. The data and proposed methodology may be provided during a meeting of staff or other representatives of each agency.

(f) This section shall not apply to impositions or increases of capital facilities fees subject to Section 54999.3.

(Added by Stats. 2006, Ch. 866, Sec. 2. Effective January 1, 2007.)