ENCINITAS — Wastewater utility customers in the Encinitas and Cardiff sanitary divisions could face drastic increases in rates over the next five years as the city looks ahead to costly capital improvement projects.
The City Council met for a Dec. 13 workshop to discuss potential rate increases developed by Poway-based engineering services firm Ardurra. The rate study will be formally presented at the end of January and will then go through a 45-day notification process and be subject to public comment before new rates are adopted.
Encinitas is served by three separate wastewater districts — the Encinitas and Cardiff sanitary divisions, both operated by the city government and serving the city’s central and southern/eastern areas, respectively; and the Leucadia Wastewater District, a separate agency serving most of northern Encinitas and the La Costa area in Carlsbad.
Carmen Kasner of Ardurra said the firm calculated proposed new rates based on planned capital improvement projects over the next five years, which total $4.1 million in CSD and $9 million in ESD, the need for the city to maintain crucial reserves, and the rising costs of maintenance work in general.
Since it is difficult to know whether all capital projects will be completed and how much costs will change, Kasner presented two rate increase scenarios for each division — one where 100% of the planned work takes place and another where 75% takes place.
“In order to keep your cash balance close to or above your cash reserve target, these are the kinds of increases we need,” Kasner said.
In the ESD, where rates have not been increased in over a decade, customers could face a whopping 19% increase each year over the next five years. This would increase the average single-family monthly bill from the current $39.24 to $93.68 by 2028.
“Because there hasn’t been a rate increase in so long… getting those back up to a consistent, more equitable rate with CSD, it’s a heavier lift of 19%,” said Kasner.
The lower-cost scenario would start with a 17% increase in the first year and decrease to 10%, with the average monthly bill growing to $76.75 in five years.
CSD customers could face an increase of 15% each year for the next four years and a 10% increase in year five. For a single-family residence, this would increase the average monthly bill from the current $42.50 to $71.11 by 2028.
The lower-cost scenario proposes a 12.5% increase in the first year and 10% over the following four years.
Mayor Tony Kranz said he wished the city had implemented some of these increases earlier on, especially since the need for maintenance is not a surprise.
“We waited too long on this, and that is something that won’t happen again,” Kranz said. “You’d think rates would be set in a way that would allow for an aging system. Hindsight is 20/20, as they say.”
In the absence of a “crystal ball” that can predict future costs, most council members supported the idea of setting rates based on a 100% capital improvement project scenario and doing another rate study in three years to see whether further increases were still needed.
“I think three years at 100% is a good way to not have to read the crystal ball and be wrong,” Councilmember Kelly Hinze said.
Capital improvement projects proposed for CSD include updating old systems, many of which were built in the 1960s, and rehabilitation of the Olivenhain truck sewer and Cardiff pump stations.
In ESD, planned projects include a sewer pipe realignment at Cottonwood Creek and work at the Moonlight Beach pump station, as well as the division’s share of capital costs for improvements in the Leucadia and Encinas wastewater agencies.