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Water district for Rancho Santa Fe, Solana Beach proceeds with proposed rate increase

The Santa Fe Irrigation District is moving forward with a proposal to raise rates for its customers by an average of 9 percent annually over the next three years, beginning in February 2016.

The district’s board of directors approved the rate proposal on a 3-2 vote at its Oct. 1 meeting.

Before the new rates take effect, however, a number of steps must occur: The board will review a final version of the draft rate proposal at its next meeting, on Oct. 15, and then schedule a public hearing, mail out a written notice and receive public comment.

The public hearing is tentatively set for Jan. 21, and if approved, the new rates would be in force on Feb. 1.

The district has commissioned a study of its revenue requirements — called a “cost of service” study — upon which the rate proposal is based.

The proposal calls for a restructuring of how the district charges its roughly 22,000 customers who live in Rancho Santa Fe, Solana Beach and Fairbanks Ranch.

One change is that customers’ bills will carry higher fixed charges, which don’t change based on the amount of water they use. The rate proposal also would change the way customers are charged for their water use, with a graduated scale that raises the cost of water as customers consume more water each month.

Therefore, under the proposal, the specific increases faced by customers would depend on their classification — single family, commercial, multi-family — and the amount of water consumed.

At the Oct. 1 meeting, district staff presented a chart that illustrates the impact of the rate proposal on single-family homes. Customers who use 15 units every two months, which is considered the baseline allowance, would see their bills rise by $4.20 per month, for a bi-monthly bill of $107.36.

Those who use 120 units every two months, the district average, would see their bills rise by $25.84 per month, for a bi-monthly bill of $588.30.

While most customers would see their bills increase, the proposal would actually result in a decrease for a small number of customers. For example, customers who use 55 units every two months would see a monthly decrease of $3.43, for a new bi-monthly bill of $245.72.

The variation in how the rate proposal would affect customers concerned board members Greg Gruzdowich and Marlene King, who voted against the measure. Gruzdowich also suggested that the graduated rate tiers should have a greater effect on the district’s largest consumers, whom he called “super-users.”

General Manager Michael Bardin said the rate proposal and the method used to create it were seen by staff and consultants as legally defensible under state regulations, and a fair way to proportion costs to the district’s customers.

“There is a little pain for everyone,” he said, because fixed charges would be increased for the district’s smallest users, while large users would be hit with higher water rates.

“The majority of folks, their bill is going up,” Bardin said.

The proposal also calls for the creation of “drought” or “water shortage” rates, which would be an additional increase designed to help the district maintain revenue in the face of mandated water conservation. The Santa Fe district is under orders from the state to cut its water use across the board by 36 percent. Because of that decrease in water sales, the district will face a steep drop in revenue.

Jeanne Deaver, administrative manager, said the rate proposal approved by the board Oct. 1 contains provisions that would allow the board to impose drought rates to compensate for lost revenue, based on the corresponding cut in water use. However, the board would have to take a separate action to put the drought rates into effect, in addition to its vote on the overall three-year rate plan.

Under the drought rate proposal, if instituted by the board, per-unit water rates would rise by roughly 50 percent under the district’s mandate to cut use by 36 percent, in addition to the average 9 percent increase contained in the three-year rate proposal.

The district did not raise rates in 2014 or 2015, although rates were increased yearly from 2004 through 2013. Bardin said Thursday that if the proposed rate package is approved, Santa Fe will remain about in the middle of the pack in terms of water rates among San Diego County water agencies.

“We won’t be the most expensive,” he said.

A Santa Fe Irrigation District fact sheet is available at www.sfidwater.org/ratefactsheet.