Los Osos facing 5 years of sewer rate hikes — and bills of nearly $200 a month
Sewer rates in Los Osos would rise in each of the next five years for a total increase of 19% by 2024-25, under a plan proposed by the county.
San Luis Obispo County officials say the Los Osos wastewater system, administered by the county, currently has an annual service shortfall of $400,000.
Sewer rates now cost the average ratepayer with a single-family home $167.22 per month.
The proposed scaled increase for those ratepayers would look like this:
▪ a 6.24% increase to $177.64 per month starting July 2020
▪ a 6.83% increase to $189.79 per month in fiscal year 2021
▪ annual increases of 3% to cover inflation in each of the following three years, reaching a total of about $199 per month by 2024-25.
Multi-family homes, commercial and mobile home parks would face different scales of increases.
“We haven’t changed the rates and charges in 10 years,” said county Supervisor Bruce Gibson, whose district covers Los Osos. “And we’ve been in operation now for about four years (since the construction of the new wastewater treatment plant). Simply put, we aren’t able to cover all of our service costs. These are the facts.”
Los Osos public forum on sewer rates scheduled
The county will host a community forum Jan. 16 at 7 p.m. in the Multipurpose Room at Monarch Grove Elementary School to provide the public with information about the proposed rate increases, which are expected to be formally discussed at a Board of Supervisors meeting in March or April.
Gibson said that low-interest state and federal loans have helped reduce the overall cost of the facility. But the cost projections are in line with original estimates.
“(The Los Osos CSD project’s) initial estimates (before the county took over) were that single-family households would have to pay about $200 per month, and we were able to get those low-interest loans to help keep costs down,” Gibson said. “But now, we’re at the need for the $200 (by 2024-25), the original estimate.”
County officials say multiple factors are contributing to the need for rate increases, including costs related to equipment and labor, increased compensation for staff, and lower flow rates that have reduced sewer revenues.
The fixed costs related to the sewer construction financing aren’t part of the proposed hikes. Ratepayers are responsible for paying about $25,000 per household, which can either be paid in a lump sum or through a regular payment plan.
The board’s direction to pursue the new rates would initiate a Proposition 218 vote, allowing residents to protest the increases. A majority vote among customers would be necessary to stop the hikes, otherwise they could be adopted.
How SLO County assesses wastewater flow
Since the county doesn’t measure wastewater flows directly, it approximates household wastewater flows into the sewer plant from indoor water use in the months of January and February when outdoor irrigation is generally lowest to extrapolate a rough 12-month usage.
The county has had to pull from its reserves to cover costs for wastewater treatment, and the budget gaps are unsustainable without increases, Gibson said.
Sewage treatment spending includes chemicals, utilities, fuel, electricity, testing, pumps, maintenance, and other needs.
The first two years of proposed increases are designed to make up for operations budget shortfalls. The 3% annual increases in the next three years would cover inflation.
After five years, a new vote on any rate increases would be necessary under state law, county officials said.
SLO County proposal likely to face some opposition
Los Osos resident Julie Tacker, who has long been involved in sewer issues in the community, said the county “missed the mark on how low the consumption of water would be.”
“I’m disappointed because I think it could have been better managed,” Tacker said.
“They didn’t anticipate that people’s reductions in (flows) means they aren’t getting revenue they need to operate the system,” Tacker added. “They also didn’t anticipate how little water would come through the plant. The flow is low, and the concentrations (of sewage) are high. It’s a very delicate balancing act for the operators.”
Tacker cited other issues such as a $9.95 million settlement the county reached with ARB Inc., one of the contractors for the Los Osos wastewater collection system project, for “damages regarding disagreements in the execution of project work.”
County officials say they made the estimates based on water-use projections, which is an imperfect process, but now the actual data has informed their budget needs.
“We made both customer usage and cost estimates in 2010 to run the system,” said John Diodati, interim director for public works. “Now that we’ve been running the plant, we have actual data and need to re-calibrate our rate to align with those real usage numbers and costs.”
The lawsuit doesn’t materially impact the rates, Diodati said, and the county hasn’t made a payment yet on the principal of its plant loan financing, which it has refinanced to include the settlement costs.
“Regardless of the settlement, we assessed the rates based on the operational needs,” he said.
Low-income ratepayers eligible for discount
Low-income residents can qualify for a discount of up to 20%, similar to a program operated through PG&E.
The Los Osos community consists of 4,360 single-family homes, 703 multi-family homes, 509 mobile homes and 91 non-residential (commercial) facilities, Diodati said.
The treatment system also is reclaiming water for irrigation use at locations such as Sea Pines Golf Course. In addition, the county is working with San Luis Coastal Unified School District to arrange for treated water to be used on school fields.
Treated wastewater also is allowed to filter into the community’s groundwater supply, helping to dilute nitrates in the upper aquifer.
Eventually, Gibson said, reclaimed water could go to potable uses, if the state law allows and methods for treatment can ensure the water is safe.
Correction: This story has been changed to reflect SLO County supervisor Bruce Gibson’s quote on initial project cost projections, as well as details on the rate discount, commercial facilities in Los Osos, and consumption calculations.
This story was originally published January 9, 2020 at 4:45 AM.
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