After nearly a decade of steadily rising water rates, the Crescenta Valley Water District is poised to raise them again, this time by 8.9%. The move comes as the agency struggles with the high cost of importing water and the looming consequences of deferred maintenance and capital improvements.
Utility officials last week laid out plans to hike water rates by 8.9% on July 1, 2013, and to raise the sewer rate by 8.2% later this summer. The board of directors plans to meet on Tuesday to finalize the plans and schedule a public hearing on the rate proposals.
The proposed rate changes would come after the utility imposed an 8.2% rate hike on Jan. 1, with another 3.1% bump scheduled to take effect on July 1. And in fiscal year 2010-11, rates increased 8.3%.
It's a common refrain for a small water district dependent on expensive imports and an infrastructure that requires power-hungry pumping stations for hilly terrain.
The Metropolitan Water District of Southern California has embarked on a series of rate increases for wholesale water shipments to local water districts, which typically are passed on to customers in one form or another by their member utilities. Crescenta Valley, though, does not directly deal with Metropolitan, instead dealing with a “middle man” in the Foothill Municipal Water District.
The sewer rate jump is tied to an anticipated 39% increase in fees the Crescenta Valley Water District pays to Los Angeles Sanitation Department for wastewater treatment.
Compounding matters is an aging infrastructure with deferred maintenance that no longer can be ignored, water officials say.
During the meeting on Tuesday, the board looked at two other options for generating additional revenues. One would have had the district take on a 30-year, $10-million bond, another would have resulted in a 9.9% water rate increase.
But the board is still working to pay off a $10-million bond by 2037, according to district officials.
This year, board members are positioned to go with a lower rate hike, made possible by an anticipated $1.5-million settlement from a lawsuit filed by the district after it had to clean up a gasoline additive that leaked from underground fuel storage tanks.
More settlements may be reached in the future, said District Engineer David Gould.
Board member James Bodnar said using the settlement money to soften a rate increase was logical because the $3-million cost for the contamination clean-up was covered by increasing rates.
“Any money that we get from the settlement should go back to pay for the costs that our ratepayers already incurred to offset future costs,” he said.
Board member Ken Putnam said he is concerned that the water district has deferred maintenance and capital projects for several years due to lower-than-expected revenues, which will mean higher construction costs in the end.
He requested that district officials come back on Tuesday with a list of projects that have been put off — including the replacement of meters, pipes and vehicles — so board members can gauge the need to address them.
During the workshop, board members looked at possible future water rate increase estimates, including a 8.2% hike in fiscal year 2014-15 and a 6.7% increase in fiscal year 2015-16. Those could be followed by rate increases averaging about 2.5% through 2021-22.
Sewer rates are projected to jump 8.4% in fiscal year 2013-14, 9.3% in 2014-15 and 8.5% in 2015-16.