How Much of a Rate Increase is Needed Now?

On 8/26/09 the Sweetwater Authority, which provides water for western Chula Vista, National City and parts of Bonita will vote on a rate increase. There are three scenarios: 7.1%, which covers employee wage increases (3.3% one time over a 4 year period), increase in water costs, and some infrastructure improvements, 17.8% which adds some new infrastructure, 29.1% which includes a lot of new infrastructure.

The social justice issue is that rate payers who wish to comment before the meeting must do so in writing and include their parcel number on their comments. Renters would have difficulty finding their parcel numbers, as would Mobilehome Owners. Condominium and most single-family homeowners probably don’t know theirs either. This appears to be a way to insure that half of the water payers (around 15,000) in the area could not easily protest in writing as required. At the meeting on 8/26 the chair stated that people actually only had to include enough information (an accurate address) to allow SWA to ascertain their parcel number. He also stated that if one renter protested then this protest is registered for the entire parcel. He said the parcel number is needed to make sure there is only one vote per parcel. It is not clear why parcels have votes, since some parcels have more than one meter and each meter gets a bill rather than each parcel.

Looking at the budget for 2009-2010 it appears the District has almost 40 million dollars in reserves at least 7 million of which are unrestricted. Each 1% increase in rate is about $270,000 dollars. The 3million in extra infrastructure separating 7.1% and 17.8% could come from the reserves. People need to come to the meeting and express their opinions.

It appears that two board members will vote for the 7.1% due to the stresses of the current economic situation upon residents and businesses, while the others intend to go along with the staff recommendation of 17.8% unless the public can sway two of them.

Here is the presentation showing the differences in the three proposed possible increases.

At the meeting on 8/26/09 (click to view handout) the votes were as expected. About 12 people spoke, most complaining about the increase. The General Manager expressed concern about using the reserves for replacing old mains (pipes and mains date to pre 1977 when they were not in great shape). He reported that SWA had 12 main breaks last year while San Diego, which consistently defers maintenance and replacement had 100’s. Clearly replacing them before they break saves water and keeps service consistent. This is why staff wants the 17.8%.

The training supervisor stated that the 3.3% raise for employees was necessary because other water agencies were trying to steal SWA certified employees. Apparently it takes several years of training to become certified and certification is necessary for employment. San Diego lost a number of employees to early retirement and was aggressively trying to replace them.

The main reason an increase is needed is because while in wet years with full reservoirs Sweetwater can provide water to all current customers there has been a 12-year drought. While the Loveland Reservoir is 44% full and Sweetwater is 45% full, this is misleading, because the vast majority of water is water being stored for the San Diego Water Authority. Sweetwater does get paid for storing the water, but must pay when they use the water. It is estimated that Sweetwater only owns one month’s worth of water, which means that they are expecting to have to buy eleven months worth in the coming year—unless there is an El Nino that fills the reservoirs with free rain water. This imported water will cost at least $11 million. Sweetwater will need to pay 13% more next year for this imported water, because they buy raw water. (Treated water now costs 18% more, which is what Otay must buy, and most likely if the drought continues the supplying agencies will increase this fee.)

Sweetwater Authority has to be cautious about providing letters to developers saying that they can supply water to new development. (Otay boasts about never denying a request for a letter saying they can supply water, while importing 100% of their water!) At a certain point this simply will not be true without undependable imported water, which will cost a whole lot more. Perhaps, they need to consider charging a higher rate for new hook-ups under the assumption new users will require imported water always to meet their needs. They probably need to put some kind of conditions on approval, such as if sufficient imported water is not available these new users will be subject to turning off of supply? It does not seem fair or legal that existing residents may have to suffer in the future because of uncontrolled growth.

SWA is doing a lot to try to increase local supply, but even ground water is dependent upon sufficient rain to recharge, and Global Warming is predicting less rain not more for our region.