The San Diego Water Utilities Department said Wednesday it wants to hike water bills by 26% in July. If approved by the City Council, the rate hike would raise the average family’s bill by $3.37 a month, from $13 to $16.37.
The proposed increase has nothing to do with higher water costs--those are routinely passed on to customers annually. Instead, the hike would cover the increased expenses of operating the water distribution system, including the replacement and maintenance of pipes, water filtration plants and pumping stations.
The department says that if rates don’t go up, it will face a deficit of $3 million in the fiscal year starting in July, a deficit that would expand to $124 million by 1992.
Besides the 26% increase for both residential and industrial water users, the department wants to increase the fees developers pay for hooking up to the water system and, in turn, eliminate the subsidy now provided principally by residential water users to underwrite new growth.
The current water hookup fee paid by residential developers is $290 for each home, apartment, town house or condominium. The proposal seeks to raise that by 77%, to $513 per unit.
Currently, hook-up fees are capped at $5,000, regardless of how many units are attached to an existing water line. The cap, approved by the City Council in 1975, was intended to entice new industry to San Diego.
To make up for lost revenue, council shifted the burden by applying a 1 1/2-cent charge for each 100 cubic feet of water used by consumers.
What has occurred, though, according to a report from the city manager’s office, is that those most benefitting from the $5,000 cap are not industrial users but developers of condominiums and apartments.
Not only is this inconsistent with another City Council policy requiring developers to pay the cost of new growth, but it is unfair to the general ratepayer, who has helped subsidize expansion of existing water lines, according to Dennis Kahlie, a city rate analyst.
“It’s not unusual to see 30 or 40 condo units hooked up to a single (water meter) unit,” said Kahlie. “It seems that it’s more appropriate for new development to pay the full cost.”
Just removing the $5,000 ceiling will generate from $800,000 to $1 million in the next fiscal year, Kahlie said. In all, the proposed rate increase would raise about $22 million in the next fiscal year, with the bulk--about $19 million--coming from residential and industrial water users.
If the City Council approves the higher rates, it would be the first such general rate increase since 1977, when the average family’s monthly water bill was $8.13, according to Kahlie.
Water bills have gone up since then because, says Kahlie, the City Council authorized the water utilities department to annually pass on the cost of buying water from the Metropolitan Water District of Southern California, which buys and distributes water derived from Northern California and the Colorado River.
These pass-on costs have averaged 4% to 5% a year.
The proposed rate increase would cover a variety of capital, operations and personnel costs associated with running the San Diego water system for the next six years, the department said. These include the operation of the city’s nine reservoirs and three water treatment plants, the maintenance of 41 pump stations, 2,400 miles of water mains and 17,000 fire hydrants. In addition, Kahlie said, the new rates would cover the costs of replacing old and deteriorated water meters and mains.
“We don’t like raising rates anymore than anyone likes paying them,” Kahlie said. “We knew we were going to have to do this for some time, but we can’t hold off any longer. We’ve exhausted our reserves and operating costs are going up. Because San Diego is growing, we have a larger system now and more customers to serve.”
The City Council, according to the city manager’s report, was told last spring during a review of water and sewer utilities that an increase in water rates would be necessary by fiscal 1987.
The proposed hike will be discussed next Wednesday by the City Council’s Public Services and Safety Committee.