Santa Rosa water rates likely to rise for next five years

Santa Rosa is poised to hike water rates by a total of nearly 14 percent over the next five years and to do away with higher rates for heavy water users following a statewide challenge to the legality of such usage tiers.

Under the package of changes heading to the City Council on Tuesday, the average resident will see their bills increase by 2.9 percent each of the next three years and then 2.6 percent each of the remaining two years.

If all the increases go into effect between 2016 and 2020, it means the average household will see its water and sewer bill increase from $125.26 in January to about $143.88 by 2020.

The increases are slightly lower than in past years. In 2014, the council approved increases of 3.3 percent for 2014 and 3.4 percent for 2015.

But the length of the term is new. For decades the city has revisited its water and sewer rates every two years. But the decision was made this time to seek rate increases for each of the next five years, with the understanding that the city’s water department would need to annually convince the Board of Public Utilities and the City Council that the increase is merited.

David Guhin, director of Santa Rosa Water, said the long-term rate increases will give the department a better ability to plan for and manage through the increasingly variable precipitation patterns the state is experiencing.

“I feel confident that over the next five years with a cost of living increase we can have a resilient system,” Guhin said.

He noted that the annual rate increases are modest compared to cities around the state that have sharply increased rates to make up for lost revenue from sharply lower water sales due to the drought.

Santa Rosa is not immune from such shortfalls. Revenue from water sales is $4 million lower than two years ago because of the city’s successful conservation efforts, Guhin said. The city has been able to avoid drought-related rate increases by drawing down reserves, he said.

By approving five years’ worth of increases instead of two, however, the city and its customers will have greater visibility into future costs and the city will save money by not having to go through the process of formally notifying the public and holding rate setting hearings, according to the rate study prepared by the city’s consultant, Bob Reed.

The other significant change is the elimination of the higher water prices for large water users.

Currently the city has four usage tiers ranging from $4.95 per 1,000 gallons for the lowest water users to more than double that, $10.68 per 1,000 gallons, for those using more than 22,000 gallons per month.

The tiers are designed to provide a financial incentive to those who conserve and penalize those who don’t. Such tiered rates are widely considered a crucial conservation tool.

But a court ruling earlier this year that cast doubt on the legality of tiered water rates in San Juan Capistrano has caused cities around the state to rethink their rate structures.

Instead of four residential rates, the city is now proposing two. And instead of three irrigation tiers, there will now be two. In both cases the costs are not profoundly higher in the second tier, meaning the financial incentive to conservation is largely disappearing.

Beginning in January, the lowest residential rate will now be $5.25 per 1,000 gallons. That rate will apply up to the sewer cap, a threshold pegged to estimates of how much water goes into the sewer system. It is calculated for each home and based on average winter water use.

The second tier will be just 89 cents higher per 1,000 gallons, or $6.14 per 1,000 gallon.

Irrigation tiers will similarly have just two tiers, $5.29 per 1,000 gallons under 125 percent of the city’s allocated budget, and $1.41 more for anything over that amount. The current highest use irrigation tier is $10.68 per 1,000 gallons.

“I’m disappointed,” Guhin said in the change in tiers. “We just had an effective conservation tool taken away from us.”

But he expressed confidence that the city will be able to find ways to continue to encourage conservation. Guhin noted that the city had tiered rates for years, but residents only stepped up to significantly reduce consumption when the drought required it of them.

He noted that the city still also has the ability during times of severe drought to ration water. Water managers will continue to closely monitor conservation levels and if they need to find other methods of education and outreach, they will, he said.

A number of other changes to rates are baked into Tuesday’s proposal, which has been in the works for more than a year. The changes are the result of a comprehensive rate study, the first in 15 years.

Some of the other changes include shifting the ratio of fixed charges to usage charges, giving customers who conserve water slightly more control over their monthly bills. There are also changes to the wastewater rate categories for some types of businesses. While most businesses will be unaffected, small wineries will see their rates decrease by 16 percent and mortuaries will see theirs increase 13 percent.

The public hearing takes place sometime after 5 p.m. Tuesday at City Hall. The increase can only be blocked by ratepayers if a majority of the more than 56,000 account holders protest in writing by Tuesday. Emails are not accepted.

You can reach Staff Writer Kevin McCallum at 521-5207 or kevin.mccallum@pressdemocrat.com. On Twitter @srcitybeat.