Water Rate Debate: Increase Approved, Decisions Delayed

After extensive debate, San Diego’s water importer, which relies heavily on purchasing water from outside the county, opted to slightly increase rates and delay the more significant proposed rate hike until next month.

The reason for this decision is that many representatives from local water districts (33 in total) were uneasy with how San Diego, the region’s largest and most influential water purchaser, planned to mitigate larger rate increases. San Diego, possessing the authority to enforce its will, decided to pause.

Here’s the background: The San Diego County Water Authority initially suggested a 22% rate increase for January 1 due to various factors. This was later reduced to 18%, still a substantial rise compared to past water price hikes. While consumer water rates at homes and businesses wouldn’t necessarily increase by this much, local water districts would still need to handle these rate hikes.

Subsequently, the Water Authority secured a $19 million federal grant to help reduce the proposed increase to about 15%.

However, this was still unsatisfactory for the city of San Diego. Mayor Todd Gloria, through his deputy chief of staff and vice chair of the Water Authority board, Nick Serrano, pushed for a 14% rate hike instead. This prompted the Water Authority General Manager, Dan Denham, and his finance team to reevaluate their strategy.

Later that day, Denham’s team reported that they could offer a 14% rate increase, but it would require using $9 million from their emergency funds, which only held $25 million. This plan would violate the board’s cash-on-hand policy, deplete the emergency reserves, and further damage the Water Authority’s already fragile credit rating.

This proposal caused hesitation among board members. The general consensus was to abandon the push for a 14% increase. San Diego’s representatives relented, and the board went into recess.

Upon returning, San Diego’s Board Director, Fern Steiner, proposed a different approach. She suggested approving a 4% increase to ensure the Water Authority could pay its obligations to the Metropolitan Water District of Southern California, which is crucial for San Diego’s water supply. The board agreed to handle the remaining issues at their next meeting on July 25.