Wholesale water rates in San Diego County — a key factor in how much local residents and businesses pay for water — will see the smallest hike in years next January, thanks to recent deals selling off excess local supply.
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Rates will rise 3% in January, about half the 5.8% hike County Water Authority officials estimated before the water-sharing deals reached this spring with two agencies in Riverside County.
The 3% increase, which the water authority board approved Thursday, is far less than previous hikes of 8.3% last January, 14% in January 2025 and 9.5% in January 2024.
Water authority officials said they are predicting 3% annual increases every year through 2032, giving local water agencies the kind of predictability and consistency they’ve craved for years with wholesale rates.
Another factor in the lower and more stable increases is last year’s settlement of long-running litigation between the water authority and the Metropolitan Water District of Southern California.
Board chair Nick Serrano, who represents the city of San Diego, said the relatively small hike comes after years of cost cutting and efforts to generate new revenue.
“While I will never celebrate an increase, I will acknowledge progress when I see it,” Serrano said. “This is the lowest adjustment this authority has brought forward in recent memory.”
Two board members expressed concern the 3% increase is too low, noting that it’s less than recent rates of inflation and is only possible because the water authority shifted its approach to infrastructure maintenance a few years ago from low-risk to moderate-risk.
That shift means the authority tackles capital improvement projects such as repairs to pipelines, aqueducts and other infrastructure in a less proactive and more reactive way in order to save money.
“We switched to a moderate-risk CIP because the board wanted to pull a lever that allowed for rate relief,” said Pierce Rossum, the authority’s financial planning manager.
Gary Arant, who represents the Valley Center Municipal Water District, said the new approach leads to more emergency work, including two aqueduct repairs underway this summer.
“Three percent is wonderful, but are we doing the job?” Arant asked. “I look forward to the analysis of where we would be under the high-reliability approach.”
Jim Madaffer, who represents the city of San Diego, focused his critique of the 3% hike more on inflation.
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“I wonder how responsible this board is being in considering just a 3% rate increase,” said Madaffer, noting that energy costs continue to rise much faster than that. “In truth, we should probably be looking at a rate increase of around 5%.”
Some board members noted that not every local water agency will see only a 3% hike, explaining that agencies that buy treated water from the authority will see larger increases — possibly in the 4.5% range.
Local water agencies typically pass on to their customers any increases in what they pay for wholesale water, but just how much gets passed on can vary widely by local water agency.
“It’s misleading for our particular area and I imagine there are other agencies — it’s not 3% across the board for everybody,” said Princess Norman, who represents the Ramona Municipal Water District.
Teresa Acosta, who represents Carlsbad Municipal Water District, agreed and noted that her district will also see an increase larger than 3% because it also buys all treated water from the authority. But Acosta said 3% is still great news.
“While I know that some agencies are paying more — like mine — it’s still very exciting,” she said. “I remember where we were just a couple years ago and the double digits we were looking at.”
Dan Denham, the authority’s general manager, said the agency has struggled with expressing rate hikes in a way that works well for all the local water agencies it serves.
“We try to homogenize all of these different rates into one number,” said Denham, conceding every method has flaws. “It’s very hard to communicate each agency’s profile.”
Rossum said the 3% hike is a watershed moment for the authority.
“This 3% is not a promise of 3% today and 10% tomorrow — it’s 3% today with the forecasted expectation of continued 3% inflationary increases as we move forward,” he said.
And Rossum tried to assure the board that recent efforts to cut costs at the authority won’t wane just because the water deals have stabilized finances.
“Just because we have the water deals, doesn’t mean we got complacent,” he said. “We continue to keep the belly tight, we continue to be lean.”
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