District Water Rates to Increase – CVN Article May 18, 2023
Inflation has touched every aspect of all our lives over the past few years, and the costs associated with supplying water to our customers are no different. Like all public water agencies, we must recoup the cost of ensuring high quality, safe and reliable water around the clock and that results in increased water rates. Our staff has received many questions and comments regarding the Proposition 218 notice that was mailed out specifying the proposed water rate increases over the next 3 years, so we wanted to use this opportunity to explain why these increases are necessary to continue to provide safe and reliable drinking water to the community. It is also important to note that our Proposition 218 notice sets the highest rate increases that could be implemented over the next three years. Our staff and Board of Directors are still actively working to tighten our projected budget, so that the final rate increases to be adopted in June may be less than those stated in Proposition 218 notice.
As a public water agency, we review our expenses each year to ensure that we can continue to cover the costs of delivering safe, reliable water to our customers. This year it became apparent that we needed to increase rates to offset the increased expenses, largely driven by inflationary pressures. There are three major factors driving the budget increases for the next Fiscal Year (FY):
- Operational costs for the Cater Water Treatment Plant in Santa Barbara – these costs have significantly increased and account for the majority of the proposed budget increases for FY24 ($874K). We anticipate more modest increases for these costs after the first year in FY25 & 26.
- Employee costs for our invaluable staff, who keep everything running, are also increasing in FY24 due to wage pressure. These costs account for $432K of the proposed budget, increasing by ~$200K over normal years.
- Carpinteria Advanced Purification Project (CAPP). The proposed rate increases over the next three years have also been carefully designed to generate a portion of revenue for this critical facility that will ensure a locally-controlled, drought-proof water supply for the future, which will be completed by 2026. Fortunately, the District has been awarded several grants totaling $27 million, which will cover a significant proportion of the anticipated cost of constructing CAPP. However, some costs still must be recovered through rates. The proposed rates have been designed to generate an additional $500K each year for the next four years to fund the construction and operation of the CAPP project.