Utilities brace for rate hikes

GLENDALE — The cost of water could go up yet again as local water officials take a wait-and-see approach to a Metropolitan Water District of Southern California decision last week to increase the amount it will charge utilities in 2009 for imported water by 14.3%.

The effect of the rate increase is expected to vary widely depending on how much local water utilities import from the wholesale supplier, and will take effect little more than a year after Glendale and Crescenta Valley agencies successfully passed customer rate hikes to cope with their own rising costs.

Metropolitan’s board of directors on March 11 passed the rate increase in response to the rising cost of procuring water from Central and Northern California, where supplies have become severely constricted.

“We’re trying to do what’s necessary to protect and ensure the supplies we do have,” said Bob Muir, spokesman for the Metropolitan Water District.

The regional wholesale water supplier has had to dip into its own cash reserves to help fund new, and more expensive, water shipments from the Central Valley as statewide allotments get cut. A federal court order in August protecting the Sacramento-San Joaquin Delta’s endangered delta smelt fish slashed Metropolitan’s water shipment by 30%, according to the agency.

And a prolonged drought continues to produce anemic shipments from the Colorado River, the second-largest water source for Metropolitan, while water officials say below-average rainfall over the last two years has begun to starve local supplies, prompting countywide calls for conservation.

The trickle-down effect of the rate increase won’t begin to be felt until Jan. 1, when the higher charges take effect, local water officials said.

Officials in Glendale, which imports 70% of its water from Metropolitan, likely won’t know if rates need to be adjusted until May 2009, when they have had time to measure effects on the rate stabilization fund — a Glendale Water & Power account created to temper the effects of wholesale rate fluctuations, said Peter Kavounas, water systems administrator for the utility.

The stabilization fee is adjusted administratively to deflect the impact of wholesale costs to the utility, and is not related to the base water rates that the City Council approved in December. Those customer rates will rise 35% over the next three years and restore depleted cash reserves for the water department.

Water officials wouldn’t make a recommendation for an increase, if one is deemed necessary, that would go to the stabilization fund until July 2009 at the earliest, Kavounas said.

“The whole idea is to avoid adjustments if at all possible,” he said.

While the stabilization fund adjustment would not require City Council approval in Glendale, any rate increase for the Crescenta Valley Water District — which gets about 40% of its water from the Metropolitan Water District — would trigger another public hearing process, said Christy Scott, a program specialist for the water utility.

Water officials there probably won’t start to pursue any recommendations to the water district’s board of directors until late fall, she said. Cash reserves and steps taken by its supply intermediary — the Foothill Municipal Water District — would be major factors in determining how to respond to Metropolitan’s rate hike, Scott said, adding that “most likely, it will be passed on to our customers.”

Crescenta Valley Water District customers saw their rates rise slightly last month after the board of directors approved a new tiered billing structure that would charge one rate up to a set limit of consumption and charge a higher rate for users who cross the base threshold.

Officials for both local utilities are trumpeting their voluntary water conservation messages as a potential way to lessen the impact of Metropolitan’s rate hike.

Crescenta Valley users have reduced their consumption an average of 6.5%, Scott said. Glendale Water & Power customers reduced their water use 9.2% in January compared to the same period last year, according to a city report.

Both utilities have been pressing their customers to buy more efficient appliances, reduce yard irrigation and use brooms instead of hoses when cleaning sidewalks.

“Every drop we conserve is less water we purchase from [Metropolitan],” Kavounas said.

— Staff writer Jeremy Oberstein contributed to this report.

 JASON WELLS covers City Hall. He may be reached at (818) 637-3235 or by e-mail at jason.wells@latimes.com.