San Diego water rates to go up in March
Posted by George J Janczyn on December 14, 2010
By now, just about all San Diego city residents should have received a notice of public hearing to be held on January 24, 2011 to discuss a requested water rate increase. The increase is needed to cover the new price of water charged by the San Diego County Water Authority (SDCWA) — the imported water wholesaler supplying the City of San Diego and 23 other member water agencies in the county.
Although SDCWA’s price increase to its member agencies takes effect January 1, 2011, the City’s proposed rate increase would not begin until March 1, so there will be a few months where water rate revenues will be out of sync with what the City has to pay for water. The San Diego Public Utilities Department (PUD) believes it can absorb the difference for a few months, but if the March 1 increase does not take effect, something will have to give.
Many water agencies throughout the county have already approved rate increases for the same reason. In addition, some of them have taken the opportunity to bundle in additional operations and maintenance costs into their rate increases, so they are doing more than simply passing along the increased price of water.
San Diegans are not being asked for those extras. The higher price of the water itself is the only thing residents are being asked to pay for. For single-family residences — the majority of San Diego water customers — the increase will amount to about $0.47 per month. [late clarification: that amount pertains only to the increase in the base fee. The overall increase in the bill can be $3.41 for for up to 14HCF of use — see comments]
Practically speaking, it looks pretty straightforward and non-controversial. But politically there are complications.
For one thing, it is already known that SDCWA will increase the wholesale price of water again in 2012, so San Diego residents will again be asked to approve a “pass-through” rate increase next year.
For another, the City will eventually need to expand its water capital improvement program (to replace overaged water mains, etc.) and cover other higher costs.
The Public Utilities Department has been engaged in longer-term thinking about the water rate structure and the Independent Rates Oversight Committee (IROC) has been monitoring developments and giving feedback on that topic.
To that issue, yesterday the IROC held a special workshop — a presentation from PUD on the framework for the rate setting process. The nearly two-hour presentation by PUD Assistant Director Alex Ruiz went into detail about the many complex issues involved in designing rates. To list a few of the rate drivers: operations and maintenance; pumps, plants, and pipes; bond coverage requirements; rate affordability; current economy; pensions; trust/transparency; taxes; CIP financing; regulations.
The current rate structure was last overhauled via a four-year capital improvement program in 2007. The 2007 program was based on the San Diego Water Cost of Service Rate Study completed in 2006. FY 2011 is the final year for that program and PUD is now gathering information for a new rate review, with a new cost of service study expected to begin in FY 2012.
Mr. Ruiz also briefly characterized ongoing staff discussions about a future revision to the rate structure possibly incorporating some of the techniques used by the Irvine Ranch Water District for taking household needs into account in a rate structure that encourages conservation and penalizes waste.
Meanwhile, City Councilmember Carl DeMaio is campaigning against the increase by introducing tangental arguments that, especially in the City’s current economic malaise, tend to generate emotional responses. Based on a “white paper” he delivered in September, DeMaio makes charges of “empty promises” and “out of control labor costs” and that “flaws and weaknesses” in PUD’s management and the overall rate structure have not been addressed and therefore (as punishment, I guess) this pass-through increase should not be approved until those issues are addressed.
(Incidentally, while observing the IROC workshop I got to wondering if Mr. DeMaio ever attends IROC meetings. IROC’s administrative support person Monica Foster wasn’t sure how many times, but committee member Gail Welch recalled that did he come to one meeting long enough to inform the committee of his priorities as a councilmember.)
Ultimately, the whole rate structure issue can appear to boil down to this dynamic between costs and rates: on the one hand you can total the costs and then calculate what rates should be to pay for them; or you can determine what ratepayers can afford to pay and then decide which costs can be funded with that amount. Somewhere in that mix is the answer.
The immediate rate increase bypasses those difficult issues for the time being. Carl DeMaio’s diversions notwithstanding, the question is simply whether we’re willing to cover the commodity cost of water that the City has to pay SDCWA.
This entry was posted on December 14, 2010 at 1:21 am and is filed under Independent Rates Oversight Committee (IROC), San Diego County Water Authority (SDCWA), Water, Water rates. Tagged: Carl DeMaio, San Diego Public Utilities Department. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.