The Morning Report
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If you live in the city of San Diego and think water is expensive now, just wait.
The city’s water department plans to increase rates by more than 40 percent in the next five years.
By July 2020, a unit of water that today costs $4.36 will cost $6. Customers also pay meter fees, which will also rise.
So what’s driving the soaring rates? This is awkward but … you’re part of the problem. You and a bunch of other factors. Let’s run through them.
You can blame yourself for saving too much water.
The price hikes are driven – ironically enough – by the cutbacks San Diegans are making because of the drought. If the city is selling less water, then the city has to charge more for each drop it sells.
The city sold about 76 million units of water in 2014. Each unit is about 750 gallons. Next year, the city only expects to sell 64 million units because of water-use restrictions mandated by the state.
Gordon Hess, vice chairman of the Rates Oversight Committee, said he worries the city’s five-year plan is based on long-term projections that could be wrong.
“In the outer years, do we still need those rate increases?” he said. “Those may or may not be needed if sales rebounded or we get a wetter year.”
Hess wants the city to check in two years to make sure the rate increases are still justified.
You can blame Gov. Jerry Brown for making you save even more water.
The city, like the rest of San Diego County water agencies, expects to have almost all the water it needs to meet consumer demand – even if everyone uses as much water as they used last year. But the water agencies’ hands are tied by the state’s drought restrictions.
Don Billings, a former chairman of the city’s Independent Rates Oversight Committee, told the City Council this week it needs to file a lawsuit against the state so the city doesn’t have to conserve water.
“A significant portion of the requested rate increase can be called the Jerry Brown tax,” he said. “This tax is the amount of new revenues required to replace the revenues that are lost because the governor will not let San Diego use the water that it has carefully and expensively assured would be available even today in the fourth year of the drought.”
Those careful and expensive efforts involve efforts by the San Diego County Water Authority, the regional water importer from which the city buys about 92 percent of its water. The Water Authority helped build a desalination plant that will open this fall and has secured new supplies of water from the Colorado River –supplies that other water agencies outside of San Diego don’t have access to.
Billings has made his pitch to other local water agencies across the county in recent weeks. So far, no one seems to have much interest in such a lawsuit.
You can blame the city for building stuff.
The decline in sales is not the only reason for the increases.
The city is working to upgrade its pipelines. Lee Ann Jones-Santos, a deputy director in the city water department, said the city has been replacing aging pipelines over the past seven or eight years and had to upgrade its main treatment plant. In the next five years, pipeline costs alone will total over $400 million.
The city is also asking for $354 million in the next five years to fund the first part of a $2.85 billion multi-part project to make wastewater drinkable. That project, known as Pure Water, is eventually expected to provide one-third of the city’s water.
You can blame the regional Water Authority for paying more for new water.
Another driver is costs passed along by the County Water Authority. The Water Authority is passing along rate increases tied, in part, to the opening of a new desalination plant in Carlsbad. The Water Authority also has to increase rates when it is selling less water.
Next year, the city expects higher rates to collect about $404 million from customers, an increase of about $19 million compared with what would happen if rates were held flat, according to an analysis by the independent budget analyst.
About $225 million next year goes right to the Water Authority. Its rate increases will cost the city an additional $12 million compared with last year.
What Will Go Up (and Probably Never Come Down)
Currently, there are two types of rates customers pay. The city charges a fixed cost based on the size of each person’s water meter – determined by home size – and a separate fee based on how much water they use. The cost of each unit of water also varies. Customers currently pay $3.89 for each of the first four units they use, but start to pay $8.77 per unit after they’ve used 19 units in a two-month period.
The typical single-family home uses about 12 units of water per month.
The City Council is set to vote on the rate increase in November that would take effect next year. The water department plans to offer people a chance to weigh in on the increase with a series of public hearings.
The cost of a unit of water would go up twice next year – in January by 9.8 percent and then 6.9 percent in July. That January increase alone will be the largest single increase to city water rates since 2010. Before that, most customers paid $3 or less for a unit of water.
A Better Way?
A few members of the City Council expressed concern that the water department’s rate increase plan raises rates on everybody, including the people using the least water – people who may be going to great lengths to save water or who are of modest means.
“Everybody is going to see their water rates increase, but those who are doing the right thing and those who are using minimal amounts of water – there’s no reason I believe that they should be seeing an increase in their water rates,” Councilman David Alvarez said last week.
Councilman Chris Cate wants the city to study what would happen if the water department relied more on meter fees and less on how much water it sells. He suspects that would create more stability in rates during a drought, when the amount of water being sold might keep falling.
The vast majority of customers’ water bills are based on how much water they buy, but the vast majority of the city’s expenses don’t change from year to year. Cate’s idea could prompt a short-term spike in rates for people using the least water right now, but would prevent them from facing jarring rate increases in the future, even as they use less and less water.
“It’s a little more transparent because you’re going to be more honest with the user about the cost of the water,” Cate said.
The Equinox Center, a local think tank that focuses on water policy, is also pushing for a structural overhaul.
Stephen Heverly, the center’s managing director, said he favors a rate plan that assigns people a per capita amount of water to use. Such a system might take into account the number of people in a household, the lot size, perhaps the size of people’s yards.
He contrasted this with the state’s cuts, which he called “reactionary” because they are simply designed to make people use less water, rather than coming up with a system designed around using an appropriate amount.
“They are just trying to ensure we are conserving to get through this drought, but say this continues, I think we just need a little more planning” he said.