Water bills could rise 15%

Rate hikes put off since 1995 are now needed as costs rise, says the water board

Water customers may see their bills go up by as much as 15 percent this summer if rate increases are approved by the Board of Water Supply.

The board is looking at possible rate increases of 10 percent to 15 percent as early as July 1, and then smaller increases in each of the next four years.

Board spokeswoman Su Shin said rising costs and flat revenues are the reasons for the proposed new rates.

CURRENT RATES A typical single-family home currently pays this much for water: » $3.70 flat billing charge » $1.77 per 1,000 gallons up to 13,000 gallons » $2.12 per 1,000 gallons for 13,001 to 30,000 gallons » $3.18 per 1,000 gallons above 30,000 gallons Source: Board of Water Supply

"So basically, at this point, all indications point to the fact that we'll need to raise rates this calendar year. What we don't have nailed down yet is the percentage," Shin said.

The typical residential customer could see bills climb about $2.50 to $3.70 a month this year, she said.

The last time the board increased rates was in 1995. Since then it has deferred implementing previously approved increases.

The Board of Water Supply is a semi-autonomous agency run by a seven-member board of directors. The board approves rate increases.

The first public hearing on the proposed rate hike is slated for May 15. If approved, the rate increase would go into effect sometime between July 1 and Oct. 1.

Shin said a rate study is nearly complete. The final study will be forwarded to the directors to help them determine the new rates.

"What does it actually cost to deliver water to our customers, keep our infrastructure repaired and replaced? And looking at what we're charging our customers, is that enough? If it's not enough, then how much do we need to be charging them in order to recover our costs?" Shin listed as criteria used to determine rate changes. "Once the rate study is complete, we'll have more firm numbers."

The rate hike would be across the board, and would include categories such as apartment dwellers and non-residential customers.

The board approved a schedule of rate hikes in the early 1990s, but in 1995 it began deferring implementation.

"In 1995 the board said that we don't believe we need those," Shin said, adding that the board had put off increases each year since.

Under the existing rate structure, approved more than 11 years ago, a 13 percent rate increase is scheduled to go into effect July 1, Shin said.

"But what we're looking to do now, though, is that we don't want to base the increases on a study done in the 1990s, because the cost of doing business is dramatically different now."

Shin said the new rate study will give the agency the current financial information it needs to propose a new schedule of rates and charges.

Revenues have remained steady, at about $100 million to $110 million a year, she said. But costs have increased "dramatically," with annual operating costs since 1999 rising by $30 million.

And maintenance costs are expected to rise.

Emergency road repaving for water-main breaks is expected to jump to $2.8 million by June 30, the end of the fiscal year, nine times the cost 11 years ago.

Electricity rose by 34 percent between fiscal years 1995 and 2005, to $13.6 million. And personnel costs over the past two years, not including benefits, have risen about $5 million to a projected $31 million.

Fuel costs for fleet vehicles rose 94 percent between fiscal years 1996 and 2005.

Shin said the agency runs the risk of hurting its credit rating without the rate increase.

A downgrade of the agency's bond rating could cost more in the long run, if it led to the Board of Water Supply paying higher interest rates on bonds for the ever-increasing cost of construction projects.

"We're supposed to collect enough revenue to deliver water to our customers and make sure we have a safe and reliable water system," Shin said.