City considers water rate spike for San Diegans

Posted at 5:29 PM, Sep 15, 2015
and last updated 2015-09-15 20:29:17-04

The City Council Tuesday took no action on the politically sticky issue of whether to raise water rates for San Diegans, which clears the way for a public hearing -- and possible decision -- on Nov. 17.

The city's Public Utilities Department has suggested increasing rates to customers by 9.8 percent beginning in January, and an additional 6.9 percent next July 1. The plan is based on a cost of service study.

The proposed hikes would balance a combination of lower revenues as customers reduce consumption amid the drought, and higher expenses. Among the extra costs cited by the department:

-- the climbing price of importing water from the main water wholesaler in Southern California, the Metropolitan Water District, via the San Diego County Water Authority;

-- the high cost of water received from the Carlsbad desalination plant, which is scheduled to begin deliveries this fall;

-- the implementation of the city's program to recycle water into drinking water;

-- replacing aging infrastructure; and

-- installing high-tech water meters.

Another problem, according to PUD Director Halla Razak, is that under the current rates, the city would fall behind on funding its debt service, which would send a bad signal to credit rating agencies.

A residential customer whose monthly bill is now around $36 would see a hike to a little over $39, according to a city report. Customers now paying $71 would see their bills go above $77.

The department's proposal also includes possible rate hikes in 2017, 2018 and 2019, based on projections of future costs for imported water, which makes up 85 percent of the city's total.

Councilman Chris Cate said the current rate structure fails to reward customers for conservation and isn't a reliable source of funding for Water Utilities.

"We're heavily reliant upon people using water to fund our system," Cate said.

In a late-August memo to the council, Razak said the city is represented on a state working group that's trying to design rate structures that are fair for customers who conserve water.

The council wasn't required to take action to schedule the public hearing, but could have voted the proposal down or suggested a different formula. According to council President Sherri Lightner, notices of the public
hearing will be mailed out by Oct. 3.

The City Council last voted to raise water rates in November 2013, when the hike was more than 7 percent. However, a department presentation says the average monthly bill of $70.81 is below the average of the various water districts in San Diego County, which is just over $78.