County water officials are still whittling down a wholesale water rate hike scheduled for next year by making budget cuts and projecting more robust sales to local water agencies.
A proposed rate increase that began at 18% and was reduced to 12% last month was further reduced to 10.4% Thursday by the leaders of the county water authority.
That will mean smaller increases next year in the water bills of residents and businesses across the county, because local water agencies typically on to their customers any increases in what they pay for outside water.
But just how much gets ed on could vary widely by local water agency for several reasons, including how much water each agency is able to store in reservoirs and underground water basins.
Water authority officials used historical trends Thursday to predict which agencies would see increases of greater than 10.4% and which might see smaller hikes.
The agencies expected to have larger increases are Poway, Lakeside, Del Mar, Olivenhain, San Dieguito and the Santa Fe Irrigation District. Those where smaller increases are predicted are Sweetwater, Vista, Helix, Vallecitos, Valley Center and Yuima.
The other agencies that get water from the authority are expected to face increases very close to 10.4%.
The rate increase won’t become official until the water authority board approves it during a public hearing scheduled for June 26. The hike would take effect Jan. 1.
While 10.4% may look small compared to the initial estimate of 18%, Board Chair Nick Serrano stressed Thursday that it’s still a double-digit jump at a time when people face a variety of other rising costs.
“I continue to have deep concerns about affordability and the real impact these rates have on our ratepayers,” Serrano said.
But he said the board and water authority managers deserve credit for a variety of recent budget cuts that helped limit the rate hike.
“We’ve taken steps to rein in costs, including significant reductions in consultant and lobbying contracts,” said Serrano, suggesting more cuts could be made before the June vote. “I want the public to know there’s more work under way.”
The cuts, which are expected to generate between $5 million and $10 million in savings, include less worker overtime, less money for outside lawyers, less travel and canceling hips in civic groups like chambers of commerce.
Many of those ideas came from a recent board workshop on budget cutting.
“I do appreciate your are listening,” Lindsay Leahy, who represents Oceanside on the water authority board, told authority general manager Dan Denham.
But those cuts couldn’t get the proposed rate hike into single digits because the authority faces a nearly $220 million hole in its $1.9 billion budget. Charging higher rates on water sales, which make up 87% of the authority’s budget, was the only solution, officials said.
Not all of the proposed budgeting moves were praised by the board.
Proposals to raise water rates for some agricultural customers were criticized. And a proposal to stop contributing to a water conservation garden at Cuyamaca College also raised concerns.
Officials said the agricultural hike is a precursor to a complete overhaul in rates for roughly 1,000 farmers who are part of the permanent special agricultural water rate program.
Denham said he plans to bring the board several options for how to handle the water conservation garden, including a restoration of full funding and partial cuts of varying sizes.
The proposed rate hike was endorsed as sound and reasonable by outside consultants Carollo Engineers.
“Carollo confirms the water authority’s existing methodology, cost allocations, rate-setting principles and proposed 2026 rates are reasonable and consistent with the American Water Works Association cost of service principles, board policies and California legal requirements,” the firm said.
The budget cuts come one month after authority officials shrank the proposed rate hike more substantially, based on higher projected water sales to local agencies over the next three years.
The higher sales projections are based partly on the particularly dry winter and spring San Diego has experienced, which has boosted demand for irrigation water from farmers and customers with large lawns.
Higher sales help the finances of the water authority because it is contractually obligated to buy more water than its member agencies typically need, forcing it to raise rates to cover its built-in costs.
A large hike can’t be avoided because of challenges like inflation, employee pay raises, higher rates being charged by the Metropolitan Water District and plans to increase debt payments by selling bonds next year to raise $285 million for needed infrastructure projects.
The proposal calls for a “moderate risk” approach to infrastructure projects, which means the authority is delaying some infrastructure projects it would pursue if finances were strong.
