San Diego City Ratepayers Overbilled For Industrial Wastewater

Speaker 1: 00:01 A San Diego city audit has revealed that residents and businesses have been improperly charged tens of millions of dollars in fees to cover industrial wastewater services. The audit also exposed that the businesses responsible for the industrial waste water have not been charged for their share for decades here. To tell us more about this new revelation is Jeff McDonald, a member of the investigative reporting team at the San Diego union Tribune. Jeff, thanks for being with us. Thanks for having me. This is sort of reminiscent of the revelation back in 2018, that thousands of San Diego city customers were being dramatically overcharged in their water bills. Do we have any idea at this point, how much San Diego residential rate pairs might have paid to cover for industrial polluters? Speaker 2: 00:45 Well, yes. The city audit found that a rate payers have been spending more than $3 million a year, uh, for at least a, the entirety of 2010 to 2019. So they documented $33 million worth of over billings. Uh, at the same time they say these over billings have persisted for years. Uh, even prior to that, they have not adjusted the rates since 1984. Speaker 1: 01:08 What kind of industrial wastewater are we talking about here? And what kind of businesses should have been paying fees and did not? Speaker 2: 01:14 Oh, various, uh, institutions, uh, hospitals, laboratories manufacturers, metal fabricators. So some of the largest employers in San Diego County, uh, which may or may not be part of the reason that they weren't being asked to pay more by the mayor's office. This, uh, this is an issue that the auditors first brought forward in 2013 and the city agreed to implement a series of recommendations at that time. But, uh, those, uh, recommendations were never implemented. Speaker 1: 01:46 So what reason does the public utilities department give for not enforcing those fees on the industry's responsible, even though, as you say that the audit uncovered it back in 2013, Speaker 2: 01:56 Their response to these city auditor, the current officials note that they have that the office, uh, this is the, uh, city, uh, public utilities department has performed several fee studies. It's a complicated issue. Uh, the methodology that each of the studies that the city contracted for, uh, were called into question and the city just never got its act together. It's interesting to note that the senior leadership at the public utilities department has changed dramatically since the, uh, overbilling scandal from two years ago. Uh, the new director has been on board just since last year. Speaker 1: 02:33 Yeah. And does the audit suggest that the industrial wastewater was not properly processed or is it simply a fee issue? Speaker 2: 02:42 It's simply a fee issue. There's no allegation or finding in the audit that the actual work of the wastewater, uh, department was, was not being compromised anyway. So that's not the issue. The issue is who's paying to, uh, further treat this contaminated water. These are, these are discharges that are contaminated with things like benzene and other carcinogens that can really affect people's health. So it's hugely important work that the department is charged with performing. This is just a matter of who's paying for that work. And the industries that are polluting this water are, um, being under assessed by the city and have been for you. Speaker 1: 03:21 Right? The auditor's report also said the city may have been breaking a state law by charging homeowners and businesses more than the cost of their wastewater service. What what's that law? And what's the implications for the city? Speaker 2: 03:34 Well, that's proposition two 18. You might remember, was passed by California voters in the 1990s. Now that was a tax reform measure that had a number of elements. One of those key elements is that municipalities cannot pass along costs to consumers, a with the new taxes, without a vote of the people. But another element of that ballot proposition stated that municipalities could not impose new fees on consumers that were not directly related to the cost of delivering that service. So if you're being charged X amount of dollars for water, then you can only be charged what it costs to deliver the water. Same thing goes with the sewer, which is the other half of the public utilities department. They do water and sewer for the city of San Diego. If you're being charged for your sewer service, which we all are, you can only be charged amounts that are equal to the cost of delivering that service. Now proposition two 18 imposes that it's not clear that the city was complying with that because they're charging homeowners and business owners costs that were incurred by thrill users and industrial polluters. So that's the, um, the potential legal violation there. Speaker 1: 04:46 Got it. So now I guess the bottom line is for San Diego city rate payers who do pay some of the highest water rates in the country, what impact could fixing this error or mistake have on rates in the future? Speaker 2: 05:00 Well, presumably they will drop once the city completes its latest fee study and a new schedule is approved by the city council and implemented by the mayor's office. This is what they said they would do seven years ago when the mayor was the chairman of the audit committee. And this was first brought to his attention. But as I said, and what the auditor noted is that nothing's happened in the past seven years. So this was pretty remarkable for the auditor to come back and revisit the same issue because of lack of implementation of the recommendations the city had already agreed to do it. Speaker 1: 05:32 Jeff, thanks very much for your reporting. Speaker 2: 05:34 You bet have a great day.