San Luis Obispo will hold off water pipeline replacement and other maintenance to make up for lost water revenue, and it proposes rate increases to pay for the city’s share of the Nacimiento Water Project.
A 10 percent increase in water rates is being proposed for July, followed by a 9 percent increase in 2012 — which totals nearly 20 percent because of compounding.
Those increases were expected in 2009 as the city was calculating how to pay for San Luis Obispo’s share of the Nacimiento project.
At the same time, the city plans to cut its water fund by $4.5 million, nearly a fourth, because of declining revenue through 2012-13, Utilities Director Carrie Mattingly said.
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Revenue has declined because people are simply using less water, said Gary Henderson, San Luis Obispo’s water division manager.
In 2009-10, water use was down 8 percent compared to the year before, equaling a $1.5 million loss in water sales for the city, Henderson said.
That loss in revenue is projected in the fund’s balance through 2012-2013.
The cuts being made to offset the decline in revenue include a deferral of pipeline replacements, three fewer employees and two other positions left unfilled, Mattingly said.
The drop in water use is attributed to various factors, including more rain than normal, less irrigation and people removing grass in their yards to save money. The slowed economy is also a factor.
The Tribune previously reported that residents’ conservation efforts were driving the rate increases this coming year. However, it’s the future rate increases starting in 2013-2014 that will be impacted by the loss of revenue because city officials cut elsewhere the next two years to make up the difference.
Future rate increases will likely need to be made to offset declining revenue because capital improvement projects such as replacing aged pipelines can only be deferred for so long, city officials said.
Those projected increases are 8 percent in 2013-14 and 7 percent in 2014-15, Mattingly said, but they might change if water revenue goes up.
The city will begin making its first full payment for its share of Nacimiento water, now the city’s main water source, in 2011-12 at an annual cost of $6 million for 30 years. At that time, the Nacimiento project will represent 37 percent of the water fund’s annual $17.6 million budget. Those costs are incorporated into the rate increase being proposed by the city now.
An average local household uses about 6,732 gallons or nine billing units of water a month, according to city figures.
The water bill for that household, 2.3 people on average, is $52.13 a month. It would go up to $57.33 in July and to $62.53 in 2012.
Sewer rates will also increase. A 7 percent rate increase is being proposed to begin in July and a 6 percent increase is proposed for 2012. Because of compounding, the total increase will be 13.54 percent.
The San Luis Obispo Utilities Department is holding extended office hours and online assistance from 5 to 7 p.m. Tuesday and June 7 to answer questions and concerns about the proposed increases. The Utilities Department is at 879 Morro St. in downtown San Luis Obispo.
WATER RATES HEARING
The San Luis Obispo City Council has scheduled a public hearing on the proposed water and sewer rate increases at 7 p.m. June 14 at City Hall, 990 Palm St. in San Luis Obispo.