Santa Fe Irrigation District proposes raising rates by 9 percent over three years

The Santa Fe Irrigation District is moving forward with a proposed three-year rate plan that would raise total revenue for the district by 3 percent per year over the next three years, beginning early next year, through rate increases and changes in the district’s rate structure.

The district provides drinking and irrigation water to about 20,000 residents in Rancho Santa Fe, Solana Beach and Fairbanks Ranch. While the overall impact to the district’s bottom line will be a 3 percent revenue increase each year, the impact on individual customers’ bimonthly bills will vary based on the amount of water they use and the size of their water meter.

For example, a customer with a 1-inch meter using 86 units of water (a unit is 748 gallons), will see his or her bimonthly bill decrease from $504.59 to $502.33. A customer with a ¾-inch meter using 24 units of water will see his or her bill increase from $147.36 to $154.55.

The district also proposes to pass along any increases from its water suppliers to customers.

The district’s board of directors voted 4-1, with Director David Petree voting no, at a meeting on Thursday, Nov. 21, to send out a notice of the proposed three-year rate plan to customers. That will begin a 45-day public review period, during which the district will hold a series of informational meetings about the rate plan. A public hearing to take testimony about the plan, and for the board to consider adopting the plan, is tentatively scheduled for Jan. 16.

Members of the Rancho Santa Fe Association, which in late 2018 filed a lawsuit against the district alleging inequities in the district’s current rate structure, attended Thursday’s meeting to protest elements of the proposed new rate plan.

The Association has long contended that the district’s tiered rate structure, under which customers are charged a higher rate for water as their water use goes up, unfairly discriminates against larger water users, and that it effectively results in larger users subsidizing the bills of smaller water users.

Historically, the district’s larger users have come from the eastern portion of the district, including Rancho Santa Fe and Fairbanks Ranch, where lot sizes tend to be larger. Smaller users typically reside in the western portion of the district in the city of Solana Beach, where home lots are smaller.

On Thursday, Greg Gruzdowich, a former water board member and current member of the Association’s water committee, said the new rate plan, which utilizes five tiers of water rates, but also includes a “meter overlay” that allows properties with larger water meters to receive more water at the lower tiered rates, is “moving in the right direction.”

But he said the Association still contends the best and most fair rate plan would include a single uniform rate for all water sold to residential customers.

An analysis of the proposed three-year rate plan by a water rate expert hired by the Association – whose report was sent to the water district before Thursday’s meeting – concluded that the plan is “fundamentally flawed.” Among the objections, according to the report, is that cheaper local water collected in Lake Hodges is allocated to the lower tiers of water use, when actually the district sells a blend of local and imported water from the Colorado River and northern California.

“The proposed user rates are the result of a social engineering or political decision to promote water conservation using the price elasticity of demand principle to lower consumption at higher price levels plus benefitting the smallest (single family) users by charging them less than the actual cost of the commingled water provided to them,” said the report by the Association’s consultant, Cornelis (Kees) W. Corssmit.

Petree, who represents a portion of Solana Beach, said he supports the concept of meter overlays to be fairer to large water users. But he objected to the fact that under the proposed rate plan, some categories of smaller users, such as those with ¾-inch meters using 40 units of water every two months, will see a 9 percent increase in their bimonthly bills, while those using 300 units of water will see an increase of 5 percent.

“How am I going to explain that?” to constituents, Petree said. “I think that’s wrong.”

However, Director Marlene King, who represents the eastern portion of the district, said that over the past several years, larger water users have seen their bills go up by a higher percentage than residents of areas with smaller lots.

And Director Andy Menshek, who also represents part of Solana Beach, said he will focus on the district’s relatively low rates compared to other districts when talking to his constituents. A series of charts compiled by district staff for Thursday’s meeting showed that after the proposed rate increase, the district’s bimonthly bills for several different classifications of customers will still rank in the bottom one-fifth of the county’s 25 local water agencies.

In the coming weeks, the district plans to reach out to its customers regarding the proposed rate plan through a series of informational meetings. The first session is planned for 6 p.m. on Dec. 11 at the La Colonia Community Center in Solana Beach.

Notice of additional meetings will be posted on the district’s website.

For those who object to the proposed rate plan, the district is including a protest form in its mailing to customers. If the district receives protest forms from a majority of its 6,500 customers, the rate plan will not go forward. Protest forms must be submitted by mail or in person to the district office by the date of the Jan. 16 public hearing.