Facing public backlash and a reluctance to raise yet another bill on city residents, the San Diego City Council voted 8-1 to delay a decision on a proposal to increase water and wastewater rates dramatically in the next four years.
The item will return on Oct. 28 at 2 p.m. The proposal before the council was to increase water rates by 63% through 2029 and wastewater rates by 31% in the same period.
Dozens of city residents balked at the rate hike β as did council members.
"I've been talking to my constituents and they are not having this," said Councilman Stephen Whitburn. "This is a nonstarter. I want to send this back to staff and I want to see the lowest possible number."
The justification for the increase was largely based on increasing water costs.
"The main driver of the water rate increase is higher costs to purchase water from the San Diego County Water Authority, which are passed on to the city's customers," according to a statement from the city. "Purchasing water from the SDCWA is the second largest individual expense for the entire city of San Diego."
Other reasons for the rate hike include increasing costs of maintenance, increasing energy rates, Pure Water Phase 1 operations and more.
"The city is dedicated to minimizing rate increases for its customers by focusing on long-term financial planning, making strategic infrastructure investments, securing grants and low-interest financing, and maximizing the use of local water resources," the statement read. "However, despite these efforts, periodic rate adjustments are necessary to address critical challenges.
"These include replacing aging infrastructure, addressing rising costs for materials, chemicals, and energy used in the treatment and distribution of water and the collection, conveyance, and treatment of wastewater, and maintaining competitive compensation to attract and retain the skilled staff that keep our system safe and provide excellent customer service."
Councilman Kent Lee on Tuesday said the way the city was going about seeking a rate increase was "eroding public trust," and he blasted Mayor Todd Gloria and his administration for "not meaningfully taking into account" comments by members of the public.
He said he was a no on water rate hikes unless the process could transparently show the need for them, but he also acknowledged the city would have to foot the bill for water from the SDCWA.
A report released Friday by the city's Independent Budget Analyst found that the costs were a bitter pill to swallow, but necessary medicine all the same.
Studies prepared by the Public Utilities Department "demonstrate the need for increased revenues for both systems in order to maintain operations," the IBA report read. "In the current environment of declining water sales and wastewater flows which generate revenue for the systems, this inevitably means increasing rates.
"Without additional revenues to support the system, PUD will need to cut expenses, either through decreased operating costs or lower spending on the Capital Improvements Program. Both of these options come with significant risks and tradeoffs that the council should be aware of prior to making their final decision."
The proposed rate increases would have gone into effect in January. For a 1-inch meter, the monthly water service charge is $46.63. That would have increased to $56.83 in January 2026, $65.08 in January 2027, $72.57 in January 2028 and $80.56 per month in January 2029. Rates all rise at a similar percentage, from the smallest meter sizes (5/8 and 3/4 of an inch) to 16 inches.
"The need to increase rates is driven by a combination of increasing costs to both systems, combined with stagnant sales and flows that require increased costs to be supported by rate increases," the IBA report read. "The wastewater system is in a healthier position due to regular rate increases over the past four years, while the water system is in the most need of financial assistance due to increasing water purchase costs and lower financial buffers due to the lack of regular rate increases prior to 2023.
"As discussed in this report, lower rate revenues will require reductions to operating expenditures, with the most acute impacts occurring within the Water System during FY 2026 and 2027."
