The Sonoma County Water Agency is proposing to use $6.6 million, more than half its reserve fund, to prevent drought-related conservation measures from causing steep rate hikes for more than 600,000 customers in Sonoma and Marin counties.
Two key Water Agency advisory panels passed a non-binding resolution Monday calling on the agency's municipal water system contractors to ask their customers to cut residential water use by at least 20 percent to preserve the dwindling supply in Lake Sonoma, the region's main reservoir.
As of Monday morning, the reservoir was down to about 65 percent of its normal capacity. Without significant rainfall or major conservation efforts, the reservoir is less than a year away from the point at which the agency would be forced by the state to ration water to the cities downstream, engineers say.
But that conservation effort could have a perverse effect on water rates, causing them to go up. Rates are set by a simple calculation, agency Administrative Services Manager Michael Gossman said, dividing the costs of operations every year by the amount of water sold. Selling less water saves little on operational costs, meaning each gallon sold must become more expensive to pay the bills.
Previous dry spells have led to such rate hikes, causing "consternation and angst" among ratepayers, who were surprised to find their conservation efforts rewarded only by higher bills, Cotati Public Works Director Damien O'Bid said.
In the face of a record-setting drought, the Water Agency decided to head off that possibility this time by using some of its reserves to subsidize the lost revenue from water conservation.
In this unusual situation, "we thought it was prudent to go to the reserves," agency General Manager Grant Davis said at the joint meeting Monday of the Water Advisory Committee and the Technical Advisory Committee in Santa Rosa.
Before the drought, Gossman said, the agency had been projecting wholesale rate hikes of about 4.38 percent to its municipal water customers in the 2014-15 budget, which the cities might pass on to local ratepayers. But the agency now expects to see water deliveries drop about 10 percent in response to the drought, including the cut in residential use recommended by the two panels Monday.
Using the normal rate calculation, that would force a rate hike of up to 13 percent, Gossman said.
"That was a bit steep and it would be pretty hard for people to handle," he said.
Dipping into the reserve fund will lead to a projected wholesale rate increase of only 3.19 percent to 3.6 percent for most of its municipal contractors, he said.
The agency supplies water to more than 600,000 residents and businesses in Santa Rosa, Windsor, Rohnert Park, Cotati, Petaluma, Sonoma and water districts in Sonoma Valley and Marin County.
The Water Advisory Committee will consider the proposed budget in early April. It will come before the county Board of Supervisors, which oversees the Water Agency, for final approval by April 30. The new rates would go into effect after July 1.
Water managers are scrambling to save water after 2013 turned out to be the driest year on record in California, with just 8.71 inches falling in Santa Rosa the entire year, about one quarter of the normal rainfall.
Lake Mendocino, which supplies cities north of Lake Sonoma, is down to just 36 percent of its normal capacity. The agency has secured state permission to drop flows in the upper Russian River to the lowest possible level to preserve what little is left in the reservoir.