Water district for Rancho Santa Fe and Solana Beach continues to move toward rate increases

Santa Fe Irrigation District directors got their first look at a draft “cost of service” study at their meeting on Thursday, Feb. 18, a document that makes the case for rate increases to generate an additional 9 percent in revenue for the district for each of the next three years.

The study analyzed the district’s revenue needs in future years to cover operations, maintenance, capital improvements and other costs. It also offered recommendations for meeting those revenue needs in a way that spreads costs equitably among customers and also meets legal requirements, said district staff at Thursday’s meeting.

While the proposed rate increases would generate 9 percent more revenue each year, the impact on individual customers would vary based on such factors as the amount of water they use and the size of the water line serving their homes. Some customers would see increases greater than 9 percent on their bi-monthly bills, and a small number would actually see their bills decrease.

That’s because, in addition to raising rates, the proposed new rate structure changes the way bills are calculated, shifting a higher percentage of costs onto the so-called fixed portion of customers’ bills, which doesn’t change from month to month based on water use.

The issuance of the draft report is only the first step in a lengthy, legally-mandated process that must occur before rates can be raised. Next month, the board is scheduled to formally accept the cost of service study. A notice of the proposed rate increase will be mailed to district customers in April, and a public hearing will likely be held in May, after which the board could give final approval to the rate plan. Under that scenario, outlined in a district staff report, the earliest that the new, higher rates could take effect would be June 1.

On Oct. 1, the board approved the rate plan by a 3-2 vote, with directors Greg Gruzdowich and Marlene King opposed. If the rate plan is ultimately approved by the board, the panel would have to vote each year on whether to raise rates by a maximum of 9 percent.

The district did not raise rates in 2014 or 2015, instead absorbing rate increases by its wholesale suppliers and using reserves to make up the difference.

District customers saw annual increases on their water bills from 2004 through 2013.

Under the proposed rate plan, customers who use the least amount of water — and those who use the most — would see the highest percentage increases in their bills. Low-end users would be impacted by an increase on the fixed portion of their bill, while high-end users would be impacted by higher water rates. Those who use 150 units of water every two months — just above the district average — would see their bi-monthly bills go up by 10.1 percent the first year, to $680.03, from the current $617.37.

Also at Thursday’s meeting, officials discussed the Santa Fe district’s efforts to cut water use in response to mandates from the state of California, which were issued in 2015 as the statewide drought entered its fourth year, and water supplies reached critical levels in some parts of the state.

In 2015, state water officials ordered local water districts to cut their water use by a range of targets, based on the districts’ per capita consumption of drinking water. Because Santa Fe was at the top end of per-capita water use in California, its reduction target was set at 36 percent. Districts that failed to meet the state- mandated targets faced potential fines of $10,000 per day.

A report on Thursday’s agenda said that between June and January, Santa Fe customers cut their water use by a cumulative average of 35 percent below the base year of 2013. Going forward, the district expects its reduction target to be lowered to 28 percent due to credit for the water produced by the new desalination plant in Carlsbad, which is shared by agencies throughout San Diego County.

In January, the average amount of water used per person each day in the Santa Fe district was 163 gallons, less than half of the amount used in June, when the per-capita figure was 373. In September 2014, residents of the Santa Fe district were using an average of 584 gallons per person per day, according to a state report, which at that time was the highest in California.