After 20 years without a water rate hike, Morro Bay residents will start paying substantially more for both water and sewer service beginning Wednesday, with rates that will escalate annually over the next five years — roughly doubling by 2019.
The higher rates will show up in September bills.
The city has been falling behind its revenue needs for years, causing the water enterprise fund to run a projected $900,000 deficit this year and making it unable to pay for maintenance and upgrades.
Meanwhile, the aging sewage treatment plant needs to be replaced.
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In addition, the current rates don’t generate enough money for the city to pay off bonds issued for capital improvements and maintain required reserves.
“Our conversation on this started with receiving a letter from the Central Coast Water Authority (dated April 8) saying that we weren’t meeting our debt coverage ratio,” Morro Bay Mayor Jamie Irons said. “We had to take the necessary steps to meet that contractual obligation.”
With the new fiscal year starting Wednesday, water rates are jumping to $50 from $33.20 per month for the average family, while the monthly sewer fees will rise to $55 from $45.59.
By the year 2019, the rates for both services will be about double what they were in 2014-15 — jumping to $75.50 monthly for the average family’s water bill and $83 monthly for sewage treatment service.
The city’s sewer rates were last increased in 2008, with a 5 percent annual five-year escalation clause. Water rates were last increased in 1995.
Irons said the rate increase will allow the city to be prepared for emergencies. He cited a water main break that flooded downtown San Luis Obispo on May 8 as the type of contingency that can happen in any city, and Morro Bay’s system requires ongoing maintenance.
“Like all cities, we want to be set up structurally with our rates to be able to respond to infrastructure needs and maintenance issues,” Irons said. “We’re not structured to make a profit but to provide a service.”
A report by the city’s rate study consultant Bartle Wells Associates cited $10 million in needed upgrades to the city’s water facilities over the next decade, including repairing and improving the 23-year-old desalination plant.
That’s on top of at least $100 million in expenses associated with building a $75 million wastewater treatment plant and a $25 million water reclamation facility, which would recycle water treated by the planned wastewater treatment system. The facilities are separate but part of one system.
“To put it in layman’s terms, the water reclamation system will be like a big filter to further treat the water already treated by the wastewater plant,” City Manager David Buckingham said. “The goal is to do it simultaneously, but we have to gauge the planning of that project and how much we can do at once, and it could be phased in.”
Morro Bay is anticipating higher state water costs because of the implementation of the Bay Delta Conservation Plan, a 50-year plan to restore the Sacramento‐San Joaquin Delta.
The city also needs to spend about $10 million to repair old sewer pipelines over the next decade and $2.3 million in major maintenance and repairs to its existing sewage treatment plant over the next few years.
In addition to approving the new water and sewer rates in May, the Morro Bay City Council approved emergency water shortage rates designed to maintain financial stability during periods of drought and reduced water sales.
The City Council also approved a temporary surcharge if the city needs to use its desalination plant to treat seawater.
The desalination treatment surcharge would be about $9 per month if the state were to supply no water to the city of Morro Bay and the desalination plant was fully operational during that month.