Residents upset as Carlsbad hikes water rates

CARLSBAD — Residents spoke and sent letters en masse but to no effect as water rate increases were approved by the City Council on Tuesday.

Mayor Matt Hall, though, stressed the action was unavoidable and the average 4.85 percent rate increases were limited as the Carlsbad Municipal Water District dipped into its reserve fund to ease the cost hike.

City Finance Manager Aaron Beanan reported to the council the rate increase is due to a massive spike from the Metropolitan Water District of Southern California, which hit customers with a 12.1 percent increase. The rate increases trickled down to the San Diego County Water Authority, which will raise costs by 5.89 percent, and the CMWD.

CMWD purchases imported water from the SDCWA, who buys water from the MWD.

Hall said a “smoothing” concept is being applied to ease the burden on customers.

“It’s a long-term financial plan to smooth rates,” he said. “There is a lot of conversation about why rates are going up.”

Complicating matters is the ongoing lawsuit filed by SDCWA against MWD for overcharging for deliveries from the MWD’s Colorado Aqueduct. SDCWA entered into an agreement with the Imperial Irrigation District to purchase some of IID’s share of the Colorado River.

SDCWA won in court in 2015 when it challenged rates for 2011-14, but the MWD appealed and the matter is in the State Court of Appeals. Should SDCWA win again, the MWD can appeal to the State Supreme Court, which would add several more years of litigation and rate increases to water customers throughout the county.

According to media reports, the MWD owes SDCWA $243 million plus interest.

The SDCWA filed its fourth lawsuit against MWD in April alleging the 2017 and 2018 rates violate California state law. The suit also alleges the MWD ignored the judge’s ruling and approved rates “using the same illegal methodology.”

According to the SDCWA, it estimates MWD overcharges are expected to be more than $134 million for 2017-18 and for the eight years contest about $524 million, which does not account for interest, court costs and attorney’s fees.

Beanan said the city’s share of the money from any settlement or court-mandated action is estimated to be 3.8 percent.

Hall, though, said the city would spend $2 million of its reserves from the water operating fund to limit the rate increases, while the SDCWA tab will be $20 million.

“It’s an ongoing issue with the Met for several years,” the mayor said. “The rates aren’t fair … and they are still not using appropriate rates.”

Beanan and Councilman Keith Blackburn said it is illegal for the city to use funds from the General Fund account to offset any increases or limit the rate hike.

Still, 137 resident protest letters were filed with the city and numerous individuals spoke out against the increase on Tuesday. However, the council felt it had no other option other than to approve the rate increase.

As for the increases, Tier 1 customers will see a $0.31 increase, while Tier 2 will decrease by $0.11 and Tier 3 users will increase $0.06 based on usage patterns. In total, water rates will increase by about $5 per month.

The city conducted a cost of service study and requested the CMWD fall in line with industry standards for its revenue, which consists of 30 percent from fixed rate funds and 70 percent of rate per unit of water used. Currently, the city collects 27 percent from fixed rates and 73 percent from rate per unit.

Potable water sales for the CWMD, meanwhile, have dropped 23 percent since Fiscal Year 2013-14.

Even with the increases, CMWD has the sixth lowest potable water cost in the county.

As for recycled water, those prices will rise by four percent in 2017-18.

Wastewater, meanwhile, will not incur any increases and remains the lowest water cost of any entity in the county.