SLO ratepayers taking a long hike

June 19, 2014

By JOSH FRIEDMAN

San Luis Obispo city staffers are unaware of the last year in which sewer rates have not increased.

The city has raised sewer rates for at least the past 21 years, and they will go up again next month. Including a 3 percent raise planned to take effect next month, rates have increased by an average of more than 7 percent, over a 22-year span. The average increase in that span is more than twice the rate of inflation.

CalCoastNews asked the city utilities department when the last year was in which rates did not increase. Utilities Services Manager Ron Munds searched through boxes of city council resolutions but could not find the data prior to fiscal year 1993-1994, he said.

Munds said he believes the last year in which the city did not raise sewer rates was in the late 1980s.

Sewer rates increased sharply during the last decade but have been increasing at smaller rates since 2009.

Next month will mark the 11th consecutive year in which San Luis Obispo water rates have increased. Over that span, the city has raised water rates by an average of 9.9 percent a year.

As of July 1, the average residential water user will pay $60.64 a month. The average residential sewer user will pay $69.35 a month.

Residents have grumbled in recent years, particularly at protest hearings, about ongoing rate hikes. But, city staff says the rate hikes are justified and that rates dropped 10 percent in 1999 before remaining steady for four years.

“The rates are high, but we are one of the few communities that has a very secure, reliable water supply because of that investment,” Munds said.

Munds said water rates increased sharply over much of the last decade in order for the city to acquire its share of Nacimiento Pipeline water. Since 2010, water rates have been increasing by decreasing amounts.

Energy costs and regulatory requirements factor heavily into rate increases for both water and sewer services, Munds said. Electrical costs have risen, and the state of California has mandated upgrades to city treatment facilities.

“We have to keep treating to a higher and higher level,” Munds said.

The city upgraded its water treatment facility in 2008 to meet regulatory requirements and is now preparing to renovate its sewage treatment plant to comply with demands of the state and regional water boards. In order to fund the sewer upgrade, the city plans to issue a bond of about $75 million, Munds said.

In addition to that debt, the city has about 25 years of remaining payments to make on its share of the Nacimiento Pipeline. San Luis Obispo currently pays about $6 million annually in pipeline debt service and maintenance.

Recently, the San Luis Obispo City Council has expressed little concern over rising utilities costs and rates. The council approved next month’s rate increases unanimously on June 10 without one word of debate.

A year ago, when the city was restructuring utility rates, only Councilman Dan Carpenter opposed the increases. Carpenter said the council had failed to address high staffing costs, which in turn passed the expenses onto the ratepayers.

The utilities department currently has 61 full time employees. The full time utilities employees make an average base salary of nearly $73,000, according to a payroll chart provided by the human resources department.

Including employee benefits, staffing costs for the utilities department total more than $7 million annually. Munds justified the costs by pointing to the fact that employee pay represents a much smaller portion of overall expenditures for utilities than it does for other departments.

During last year’s rate increase hearing, Mayor Jan Marx said there was nothing the council could do at the time to bring down the rates.

“I know that if it’s possible we will do that,” Marx said. “Right now it’s not possible.”

In addition to arguing for lower employee pay, Carpenter proposed that the city encourage utilities customers to use more water.

The utilities department has long encouraged residents to conserve water, but it raised rates the most last year on those who conserve the most water. Currently, the city only uses about 58 percent of its annual water allotment. Even so, purveyors have oversold most water supplies, and it is unlikely the city has access to as much water as it is allotted.

Utilities director Carrie Mattingly responded to Carpenter’s suggestion of increased consumption by jokingly saying that it would amount to heresy.

The city has remained firm in its support of water conservation. It has also maintained a policy against selling water outside the city limits, which Marx said would promote urban sprawl.

Munds said he expects both water and sewer rates to increase by around 3 percent annually in the foreseeable future.