DEL MAR — City leaders are beginning the process of setting a new five-year rate schedule for water and wastewater customers, which is set to go into effect in July.
Under Proposition 218, utility agencies must conduct rate studies to forecast future expenditures and determine rates to cover rising costs equally.
Del Mar leaders contracted with HF&H consultants last year to conduct a rate study, the results of which were presented to the City Council on Tuesday. According to HF&H, rate increases of 3% in the first year and 2% each of the following four years are needed to maintain the reserve fund above its minimum recommended balance of $1.2 million.
HF&H Vice President Rick Simonson said these rate increases over the next five years will also help build reserves to manage rising costs for operations and other expenditures in the future.
“The city has this opportunity to implement smaller rate increases in the near term and then use its existing reserves in the future to help reduce the burden to ratepayers as those costs catch up with the revenues,” Simonson said.
Notices about the proposed rate increases will now be issued to residential and commercial customers, and the council will set specific rates during a public hearing in May. The new rates will then go into effect on July 1.
Del Mar customers are charged bi-monthly for water and wastewater, with a fixed service charge based on their meter size. For residential customers with a ⅝-inch meter (the most common size), their current bi-monthly water service fee of around $88 would increase gradually to $96 by 2028.
Additional commodity charges, set at $6.22 for single-family residential customers, would increase to $6.78 over the next five years.
For wastewater rates, rates for single-family homes with a ⅝-inch meter will increase from around $127 to $153 over five years.
Councilman Dave Druker reminded residents on Tuesday that new rates are not being adopted yet and that they could be lower than what was proposed in the study.
“We are not deciding what the rates are tonight; we can decide those later. This is the maximum we will be able to charge for the next five years, starting in July,” Druker said.
Because Del Mar does not have its own water supply or filtration plant, a large portion of its water and wastewater costs go toward paying other agencies for these services. Del Mar buys raw water from the San Diego County Water Authority for around $2.1 million annually and contracts with the city of San Diego to treat and transport the water.
For wastewater, the city pays the San Elijo Wastewater Joint Powers Authority, the San Diego Metropolitan Wastewater System for treatment services, and the cities of Solana Beach and San Diego for transportation services.
Del Mar plans to invest around $2.5 million in wastewater capital projects and $2.1 million in water enterprise capital projects within five years.
