A 10 percent water rate hike proposed by the city of SLO may be hard to swallow in this tough economy. But here’s the bottom line: The city needs the money to pay its share of the Nacimiento Water Project.
This year’s increase has nothing to do with the fact that water consumption is down, due in part to great water conservation efforts. Rather, it’s about paying the bill for Nacimiento.
Without a rate increase, there will not be enough revenue generated to cover next year’s debt payment and operations and maintenance on Nacimiento — around $6.5 million.
The city would then have to dip into the water reserve fund. That’s a risky move, since this is the “rainy day” fund the water department relies on in case of emergencies.
With that in mind, we believe it’s prudent for the city to stick with the rate structure developed back in 2009. That year, the city drew up a long-term plan for gradual increases in water rates that would generate enough to pay for Nacimiento, while keeping up with necessary improvements to the city’s water system.
The 2011 increase was calculated at 10 percent, which translates into an additional $5.20 per month for average customers. The increase for 2012 was set at 9 percent.
But here’s the rub: Since those calculations were made back in 2009, water use has dropped off dramatically.
That’s due to a number of factors:
City residents have stepped up water conservation efforts.
Dorms built by Cal Poly mean fewer students are living in town.
The increase in rainfall resulted in less irrigation.
Hotel occupancy rates have been down on account of the poor economy.
As a result, the city’s water receipts are lower than anticipated. If the lower usage continues, that could mean higher than anticipated rates in future years.
This year, however, the city is sticking with the 2009 plan to raise rates 10 percent now and 9 percent next year.
The city avoided raising rates even higher by cutting the water budget and delaying some capital improvement projects.
The City Council is scheduled to adopt both water and sewer rate increases Tuesday. However, if more than half of the city’s ratepayers protest the fee increases, the city cannot adopt them.
We strongly urge residents not to oppose these increases.
The city showed tremendous foresight when it signed on for the Nacimiento Water Project — an insurance policy, if you will, that will guarantee residents a reliable supply of water even in times of drought.
While rate hikes are never popular — especially in a rotten economy — we believe these increases are a fair price to pay in exchange for that assurance.