What’s At Stake In San Diego Water Rate Vote
Monday, November 16, 2015
What's At Stake In San Diego Water Rate Vote
David Alvarez, councilman, city of San Diego
Lani Lutar, executive director, Water Reliability Coalition
The San Diego City Council is set to vote Tuesday on a big water rate increase. But why is the increase necessary, and what will happen if it's rejected?
The San Diego City Council is set to vote Tuesday on five water rate increases that would occur between January 2016 and July 2019, ultimately raising rates by 41 percent above their current levels. Here are answers to some basic questions on the proposal.
• Why is the rate increase necessary?
The common thread connecting all the reasons for the rate increase is California's drought, which is in its fourth year.
Broken down into specifics, a primary reason for the increase is San Diego's dependence on outside sources of water. The city imports 85 percent to 90 percent of its water from the San Diego County Water Authority, which in turn buys most of its water from the Metropolitan Water District of Southern California. Those wholesalers have increased their water rates recently, and the city's rate increase would pass on those added costs to local water customers.
Two large-scale projects to increase San Diego's water independence are currently underway. The first is the Carlsbad desalination plant, which is expected to come online before the end of the year. The plant was constructed by a private company, but the company is expect to recoup its investment by charging some of the highest water rates on the market — which will be passed onto ratepayers across San Diego County. The second project is San Diego's Pure Water recycling program, which turns sewage into potable water. The program aims to provide a third of the city's drinking water by 2035, and the city has to pay for new infrastructure to meet that goal.
The most confounding reason behind the rate increase is the state-mandated conservation. About 80 percent of the water department's costs are fixed — these include staff salaries, water treatment chemicals, electricity and infrastructure maintenance — but most of the city's revenue fluctuates depending on how much water people consume. So when people use less water, the city makes less money and is forced to raise its rates. Councilman David Alvarez has been one of the most skeptical critics of the rate increase, saying the proposal essentially punishes water customers for conserving. He has suggested increasing the water rates only for the highest users, instead.
• Why does the water department get most of its money from water sales? Isn't that unstable?
Believe it or not, the system is actually designed to incentivize conservation. Most water departments charge a "base fee" that doesn't change month-to-month, along with a "volumetric fee," which depends on water usage. Having a lower base fee and a higher volumetric fee means water customers can make a bigger dent in their water bills when they cut back on usage. In fact, those who have conserved water in San Diego have likely seen significant reductions on their water bills.
The state of California encourages this kind of system by offering grants and loans to city water departments that use it. But Brent Eidson, deputy director of external affairs for the San Diego Public Utilities Department, said the state recently relaxed this requirement, and city staffers have promised to reevaluate the rate structure. They plan to present the City Council with a study of alternatives by June 2017.
• What will happen if the rate increase is rejected?
City staffers give a dismal outlook if the City Council decides to keep the rates as they are. Water quality would remain the department's first priority, said Public Utilities Department Director Halla Razak, and all other non-essential spending would have to be gradually halted.
Water Rate Fact Sheet
The San Diego Public Utilities Department compiles a number of details, facts and figures on the proposed water rate increase.
To view PDF files, download Acrobat Reader.
The water department says it would be forced to reduce staff, which would in turn affect its ability to serve its customers. It says it would also have to suspend the Pure Water program, as well as the installation of "smart meters," which help customers monitor their usage.
Fiscal consequences could include dipping into the city's general fund to cover the water department's costs, which could then put the city at risk of a downgrade by credit rating agencies. But perhaps the worst consequence of not raising water rates would be the continued deterioration of San Diego's pipelines. Some of the city's pipes are 100 years old, Razak said, and breakages are not uncommon. They result in tremendous water waste, and repairing the pipes after they break is far more costly than replacing them in advance.
• What if the water department ends up with more money than it needs?
The department plans on commissioning two independent audits of its finances as the rate increases are implemented. If those audits determine that the rate increases were excessive, city staffers may propose halting the future rate increases, or lowering the rates to their previous levels. The process of raising water rates can be long and politically difficult, so staffers have presented the maximum rates they expect to be necessary to avoid asking for another rate increase in the future.
• Where can I watch the council meeting?
You can watch the meeting via the City TV website. Public comment on the rate proposal is scheduled for the City Council's morning session, which begins at 10 a.m. The council vote is scheduled for the afternoon session, which begins at 2 p.m.
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