Cost Of Water Will Rise In San Diego

Water rates are going up again in the city of San Diego. It's becoming a familiar fact of life for city residents. The average water bill has gone from $43 a month way back in 2007, to $72 a month with the passage of the latest increase.

Yesterday's vote of the San Diego city council to increase rates, generated more than the usual amount of public annoyance. And the dissatisfaction extends beyond the increase itself into how the public was informed of its right to challenge the water rate hike.

Guests

Roger Bailey is the City of San Diego's Director of Public Utilities.

Bianca Garcia is the Water Project Attorney for the Utility Consumer Action Network

Sandra Kerl, deputy general manager San Diego County Water Authority

Read Transcript

MAUREEN CAVANAUGH: Water rates are going up again in the City of San Diego, it's becoming a familiar fact of life for city residents. The average water bill has gone from $43 a month back in 2007 to $72 a month with the passage of the latest increase. Yesterday's vote of the San Diego City Council to increase rates generated more than the usual amount of public annoyance. And the dissatisfaction extends beyond the increase itself, and how the public was informed of its right to challenge the water rate hike. I'd like to welcome my guest, Roger Bailey is the City of San Diego's director of public utilities, good morning, Roger.

BAILEY: Good morning.

MAUREEN CAVANAUGH: Bianca Garcia, is the water project attorney for the utility consumers action network, and Bianca, good morning.

GARCIA: Good morning.

MAUREEN CAVANAUGH: And Sandy Kerl is department general manager of the San Diego County water authority, Sandy thank you for being here.

KERL: Good morning.

MAUREEN CAVANAUGH: Now, we invite our listeners to join the conversation, who do you think about this latest hike in water rates? Can we just expect imported water to get more and more expensive? Did you see the notice the city sent out about the rate increase? Give us a call with your questions, your comments, your number is 1-888-895-5727. That's 1-888-895-KPBS. Rodger, I'd like you to start out by telling us about this water rate hike that the City Council approved last night. How much is it and when does it start?

BAILEY: The adjustment goes into effect, I think it will be some time in March. Now, just to back up a little bit. When our customers hear about rate adjustment, it sometimes is without the context of why we do the things that we do. And one of the things that we need to understand is that the process of getting water to your home is not as simple as it may appear. And you know, as simple as it does appear sometimes, there is a complex process. First, we have to get that water from somewhere.

MAUREEN CAVANAUGH: Yes.

BAILEY: And that water costs us a lot of money, for example, the City of San Diego last year paid a hundred and 51-million dollars just for our water supply. That is not treatment costs, no transportation cost, that's just the product. After we get it from the supplier, we then have to treat that water. And if you have not been to a water treatment plant, it will probably be a good thing at some time to visit one of those facilities because these are very big and complex industrial facilities, and they are very extensive. And so when we look at the issue of water rate adjustment, we need to keep in mind that what we're trying to do is cover our costs. Of the cost of delivering water service to our customers is very high. Because there are some things that we have no control over, like our water supply, we have to purchase that water supply. We have to build the facilities to treat that water, so that is all going in the cost that we actually pass onto our customers.

MAUREEN CAVANAUGH: Certainly. So how much of a water rate hike did the City Council approve yesterday?

BAILEY: Yesterday, what the city did is did an adjustment that would allow us to recover what we anticipate to be an additional $25 million to the enterprise. So what we are trying to do is set the rates so that we can recover what is projected to be 25 million additional dollars.

MAUREEN CAVANAUGH: I think what -- what is confusing to many people is that, you know, we've just finish through a period here in San Diego pretty heavy rainfall, we're technically out of drought conditions issue at least for now, why are -- why is the City of San Diego paying more for water, and therefore why are the ratepayers paying more for their water?

BAILEY: Yeah. And I think that's a very good question. Why do you pay for water when it rains? And the thing that I would say to you is that how much does it rain? And for how long is that supply? When it does rain, it does help our supply. But that's very limited in terms of time and in term it is of supply. And so at the end of the day, we still have to purchase water. When we got the rains a few weeks ago, that was very helpful for us locally. And that's a good thing. But make no mistake about it, are the water that we end up sending to our customers, 90 percent of that is imported. We still need to have that external water source in order to meet our customers' demand.

MAUREEN CAVANAUGH: Bianca Garcia, why is the utility consumer action network opposed to this rate increase?

GARCIA: We just don't buy these several excuses the public utilities department gives for why our rates keep increasing. In fact, we think that the argument that the raising rates are due to the increasing costs of water is misleading. In fact, only 28 percent of the budget goes toward paying for the cost of water. And over half of the increase in water bills over the past four years has actually been to -- due to the expenditures of the public utilities department, not the purchase costs of water.

MAUREEN CAVANAUGH: Not the cost of water. How do water rates in San Diego compare to the rest of the county? The City of San Diego.

GARCIA: Among the largest cities in the nation, actually, low water users in San Diego pay the highest rates. So that's -- there's a problem here.

MAUREEN CAVANAUGH: Now, I why you want to get your response, Roger to what Bianca just said about the fact that a lot of this money is not going to actually pay for water, but rather to your department.

BAILEY: You know, what I would like to do is invite Mrs. Garcia at some time, at her convenience to come in and look at our books and hopefully get a tour of some of our facilities. I just spoke with her a few moments ago, and she has never been to any of our treatment facilities so I think she is speaking without the context of what these things look like. But just to deal with some of the specifics that she just talked about, she says that the water supply that we have costs us only about 28 million -- 28 percent of our costs, and I'm not sure how she comes up with that number. But what we need to keep in mind is that we have a water enterprise, and we have a waste water enterprise, they are two separate funds so when you deal with the costs, you need to deal with water by itself. And when you look at the costs for water, and they are -- compared to the total cost of running that water enterprise, are what you will discover that that cost is about approximate 44 percent of our operating budget. So we spent a hundred and fifty-one million dollars of our water supply, that's a substantial cost, and that's a substantial portion of our operating bottoming. Now, when you compare our city, a large city like us to cities across the country, it makes for good conversation. But it, quite, frankly, is irrelevant. Because you have to look at the conditions in each one of those cities. For example, in Arizona, Phoenix, Glendale, those cities pay way less for water supply than we do. So when you try to compare the cost per unit basis with another city, it's something that sounds good. But the devil is in the details with these things. Our water supply is not free.

MAUREEN CAVANAUGH: Element get Sandy Kerl into this conversation, she's department general manager of San Diego County water authority. And Sandy, how are other water agencies in the county. How are they dealing with the cost hikes that are coming from the metropolitan water districts? Are they dealing with them differently?

GARCIA: Many of the member agencies find themselves in a similar situation to the City of San Diego, which is dealing with the increased cost of water. And I think all agencies are looking at the ways that they can economize and make their operations efficient to be able to minimize the impact of those cost increases onto their ratepayers.

MAUREEN CAVANAUGH: You know, Bianca, helix water district is not passing on the costs to consumers. And of course of the City of San Diego is through this most recent rate hike, and I'm wondering if that's part of your argument against a rate hike of this nature.

GARCIA: Exactly. We believe that the public utilities department has sufficient funds to cover this rate increase and it absorb it and give its customers a break. They have a dredge reserve fund of 15 million that is specifically dedicated to offset rate increases, but they're deciding not to use it. They also have a rate stabilization fund of 20 million. And we also believe that they have over collected from the ratepayers over the past four years due to capital improvement projects coming in under budget, and we just think there's a lot of room for them to tighten their belt as these other water districts are doing, to find other ways to cut costs. The money doesn't have to come from CIP projects it can come from decreasing fringe benefits, for example.

CAVANAUGH: I'm gonna give you a chance to respond. But first I want to let everyone know, we're taking your calls at 1-888-895-5727. If you'd hike to join this conversation. Leonard Croner is on the line from Clairemont, good morning, Leonard, welcome it These Days.

NEW SPEAKER: Good morning, Maureen.

MAUREEN CAVANAUGH: Yes, how can we help you?

NEW SPEAKER: The notice that went out to the San Diego County ratepayers, the front of the notice does not even indicate it relates to water rate increase. The notice is only in English. There were -- there's testimony yesterday, there's a substantial number of Latino people who didn't even know what this notice was all about, and the notice, the procedure under 218 of the California constitution requires ratepayers, more than half of the ratepayers who receive these notices to send a protest notice. Under these circumstances given the elections that take place, regular elections you request never have a candidate elected because you can't get 50 percent of the people turning out to vote. And this procedure with the San Diego City Council meeting on a Monday afternoon instead of during the evening disenfranchises substantial portions of the fixed income and impoverished population. And this water rate increase is a regressive tax, because it impacts hardest on poor people, on elderly, on disabled, on nonspeaking people, and they have to pay these rate increases which they can't afford.

MAUREEN CAVANAUGH: Right. Leonard, let me break down some of your comment asks ask Roger. You know, there was a lot of criticism about the way the notice went out for not only the rate increase, but how to protest if you didn't want this rate increase to go out. It really sort of got bunched in with junk mail and it wasn't -- it wasn't very specific. Do you regret that? That it went out that way or do you defend that mailing?

BAILEY: Well, you know, obviously when we have something as sensitive as doing a rate adjustment, it's gonna generate a lot of energy on either side of that issue. To the extent that there were concerns about the notice itself, I certainly would like to say that we will continue to try to find ways in which we can make everybody happy. That's a difficult thing to do. The reality is is that this notice has been modified time and again since we have started this 218 process. And with the counsel's input, we redesigned the notice to reflect what it is today. So it's not because we have not tried to incorporate all of the concerns. At the end of the day, I think it's gonna be a very difficult thing to make everybody happy on these things. Now, to address a few things from the caller. He indicated that the notice did not specifically identify the purpose up front. And I'm looking at a copy of this notice here, and it says the San Diego City Council will hold a public hearing to consider a proposed water rate increase as a result of an increase by the county water authority for the wholesale water costs of water of that's up front. That's on the front page of that. So to the extend that there are concerns certainly we'll try to improve but some of the things that I'm hearing here doesn't bear resemblance to the facts. Regarding the issue of regressive tax, what I would simply say is this: We have an inverted rate structure. What that means is that to the extent you use more, then you will gradually pay more. And so the folks -- we have three blocks in our structure, and the lowest block has a different rate, a lower rate, than the highest block. And what that simply means is that if you use less water, you will be paying a lower rate than someone who use more water based upon the block structure is that we have.

MAUREEN CAVANAUGH: Uh-huh. Let me get a response from Bianca, because I saw you shaking your head. You don't go along with this inverted water rate structure?

GARCIA: Our water rate structure actually punishes those who use lower amounts of water. Per unit of water -- well, given the huge base fee, low water users pay more per unit of water, once the whole bill is combined.

MAUREEN CAVANAUGH: I see.

GARCIA: So it's -- it doesn't encourage conservation, the more water you use, the less you're paying per unit of water.

MAUREEN CAVANAUGH: We have to take a short break, and when we return, we'll take more of your phone calls. Of I'll get Sandy to talk to us about the [check] and what the status of that lawsuit is about, and continue to take your calls and comments. 1-888-895-5727 or you can go on-line at KPBS.org/These Days. You're listening to These Days on KPBS.

MAUREEN CAVANAUGH: [check] with the utility consumer action network, and Sandy Kerl, department general manager with the San Diego County water authority, we're talking about the fact that water rates are going up again in the City of San Diego, the San Diego City Council voted to increase rates again yesterday. We're taking your calls, the number, 1-888-895-5727. Or on line at KPBS.org/These Days. Of let's go to the phones immediately. Zane is calling from San Diego. Good morning, Zane, welcome to These Days.

NEW SPEAKER: Good morning, thank you. My question is, it seems like the tiering system is askew. Now, I could have it wrong but I've just sort of heard rumor that the -- sort of the block system that he was talking about, is if a person has a larger family home, a larger square footage or a larger yard, then they sort are are under the same tiering system than a person who has a smaller home and a smaller yard, and maybe one person in the home. So if they use, you know, one unit of water, and it costs X amount of dollars, and they sort of stay below it, below the tiering system, then they get a benefit, even if they're wasting water. But a person who has -- [check] and they are very conservative but go over the unit get penalized on that tiering system.

MAUREEN CAVANAUGH: Well, are thank you for that comment, Zane, and Mario is calling from San Diego. Good morning, Mario, welcome to These Days. Mario, are you with us?

NEW SPEAKER: Yes, yes, here I am.

MAUREEN CAVANAUGH: Hi issue Mario. Welcome to These Days. How can we help you?

NEW SPEAKER: I just wanted to make a comment. I just came back to my house about six months ago. Before I used to pay $44 a month in water, and now I'm paying a hundred dollars a month, it's a hundred dollars every two months, actually and now we get an increase of $6. I was reading in the paper the other day that the average consumer pays 60 some dollars a month. Well, this is not true, you know, this is it a house with two people, we conserve water, we don't water our grass, and yet we're paying $200 every two months. This is -- you know, it's more extensive than everything else I have. I pay more in water than electricity and everything else.

MAUREEN CAVANAUGH: Mario, thank you for your comment. Thanks for the call. Upon Sandy, I want to get in because we don't have an awful lot of time in this segment, and I do want to get in the fact that as the metropolitan water district pass on, its higher cost of water to the San Diego County water authority. Of the water authority passes it on to member agencies, just like the city water authority, and of course that's where we get the reality hike. That's the terminology that we're hearing, that's how the rate increase happens. But now the county water authority is engaged in a lawsuit against the metropolitan water district. And why is that?

KERL: Well, metropolitan water district is our main supply of water. And at the water authority, we've been very aggressive at monitoring their costs. Of and we have sued metropolitan water district in an attempt to stop what we believe to be illegal over charges that San Diego County ratepayers are paying more than $30 million annually in what we believe to be illegal chargers of so we have aggressively gone after it and filed suit.

MAUREEN CAVANAUGH: What is the status of this lawsuit?

KERL: The status of the lawsuit is that we have filed -- it's in the preliminary stages, I believe that later this year, we will be in court. And hopefully resolving the issue.

MAUREEN CAVANAUGH: And my understand is, I don't want to get too technical about it, but it has to do with that you claim the metropolitan water district is charging you transportation fees as part of the base rate for water; is that right?

KERL: They have taken their supply costs and added to that onto water that we transport through their pipes that we get through the quantification settlement agreement, water from the Colorado riff. They're charging their supply costs disproportionately onto water that isn't even coming from their supplies.

MAUREEN CAVANAUGH: I understand well, I wonder, Roger, why is the city not involved in this law?

BAILEY: Well, the city is certainly involved to the extent that the city is represented to CWA board. Of the city has ten members on the board, I'm one of those. And the CWA does have four members on the MWD board so incorrectly, we are involved in this process. Now, whether or not the city pursues separate legal action is something that the city attorney is looking at, and certainly will brief the council on that issue.

MAUREEN CAVANAUGH: And during the City Council meeting yesterday, councilman Carl DeMaio has claimed that the budget has gone up for the city water department seven percent in the last year, that explains the need for a six percent increase in water rates. What is the connection between increased labor costs and rate increase?

BAILEY: Well, you know, I think that the devil is in the details with these issues, when you really talk about increased costs. Because when you look at our budget, we have cut over the last two years several positions from our operating budget. For the issue to keep coming up time and again is the increased costs of our water supply, for example, last year, we spend 151-million dollars on our water supply. This fiscal year, we are at least projected to spend, a hundred and 87 million on our water supply. When you compare that cost to our additional labor cost, our contract cost, it's very much the biggest proportion of our budget on the water side. So I think it's really easy to dismiss and talk about pension and labor costs without context of what's going on here, and looking at the detail billion, but in fact, the well water cost is a significant driver in our budget.

MAUREEN CAVANAUGH: Now, I'm wondering, Bianca, as I said, there was a lot of talk about the way this was noticed, both the rate increase and the ability for people to oppose the rate increase if they wanted to, what is -- can you suggest, make any suggestions as to how that should be handled in the future?

GARCIA: Definitely, we went to City Council when the notice was -- when they were gonna decide whether to approve this notice. And we argued that the notice should be put into customers' water bills. Of that way, they'll know it's related to water, they'll see it when they open and pay their bill. There will be no question that it's an official document coming from the city.

CAVANAUGH: And Roger, and idea that you're actually gonna be doing that?

BAILEY: You know, we are open to ideas and suggestions, but my -- you know, I've been on this job for the last four months, and my understanding is that in the past, we have done it that way. And so, you know, sometimes you do it the way that someone suggests and then someone has a different reaction. Now, if we can figure a way in which we can make everybody happy in this process, I think that that will be a fantastic thing. And we welcome any ideas, and anything that will improve the process, I certainly welcome it.

MAUREEN CAVANAUGH: Now, as it is, with this -- what many people people was an inadequate kind of a notice about this water rate hike, people -- you got back 13000 people who wanted to be heard in opposition to it. Of so obviously this is not a popular -- and I'm wondering, Roger, when you -- there are other rate hikes proposed for water, what is the city starting to think about in terms of handling these water rate hikes?

BAILEY: Yeah.

MAUREEN CAVANAUGH: Maybe using some of the inflation rate reserves that you have to mitigate the cost of water in San Diego?

BAILEY: Well, you know, I think that when you look at the costs, it's an issue and it's a legitimate issue. And we have to figure out a way in which we can optimize the operation, become more efficient, and then to the extent, reduce costs. But I would simply say that when you look at our operating budget and our total budget, are the bulk of those things are relatively fixed. And they are beyond our control. When you look at our well water supply, that's a significant number, when you look at our debt service that's a significant number. Those numbers don't change because we wish them to change. They're relatively fixed numbers. So we still have to pay for those things.

MAUREEN CAVANAUGH: I want to thank you all. We are out of time. And thank you so much, Sandy Kerl, thanks for speaking with us.

KERL: Thank you.

MAUREEN CAVANAUGH: Bianca Garcia, thank you.

GARCIA: Thank you very much.

MAUREEN CAVANAUGH: And Roger Bailey, thanks again.

BAILEY: Thank you very much.

MAUREEN CAVANAUGH: So many people wanted to join the conversation, we simply did not have time to get you on the air. Please go on-line and comment, KPBS.org/These Days. Coming up, an encore interview with a celebrated crime novelist, James Elroy, that's as These Days continues here on KPBS.