STPUD considering five year rate hike
Now to March: Customer outreach, public workshops.
March: Board selects preferred rate option, sends notices to customers through which they can object.
May: Budget review and approval.
July: Any rate increases take effect.
Five years of water and sewer rate increases could be on the horizon for South Tahoe Public Utility District customers.
Rates could increase anywhere from $1.10 per month to $6.55 per month each year for the next five years, starting in July.
The larger increase is being proposed. But the issue won’t be settled until next spring as the utility district tries to lay out a plan to raise tens of millions of dollars for needed system upgrades without sparking opposition from customers who can vote down any proposed rate increases.
“This is just the first meeting of many in a six-month process to reach a final decision on this,” general manager Richard Solbrig said at a public workshop Thursday.
Several factors are pressuring the district’s rates.
A $21.5 million program to retrofit the water system with meters as required by California law would cause rates to increase by $1.10 per month each year for five years. That’s if the district accepts a no-interest, 20-year loan from the state of California to pay for the work. Costs increase to about $34.5 million if the district has to borrow at a 5 percent interest rate, Solbrig said.
A $4.5 million grant paid to install about 2,500 residential water meters several years ago. But no more grants are in sight to finish the job, which must be completed by 2025. The district has until June to accept the no-interest loan.
“We think that’s about the best we’re going to be able to do,” Solbrig said of the loan, adding that it would then take five to six years to retrofit the last 8,300 residential properties without water meters.
About 10 percent of the district’s water system does not provide adequate fire protection for homes and businesses. That’s because of undersized water lines and other components put in by private utilities the district has acquired over the years, Solbrig said.
The district is targeting $54 million of priority water system improvements. Water rates must increase by $3.30 per month each year to complete the work in 10 years as proposed or by $2.45 per month each year to complete the work in 20 years.
The longer the district goes without making needed water system improvements the greater the chance that a fire will hit an area without adequate protection, Solbrig said.
“We were fortunate (the Angora Fire) hit an area we already upgraded. They never ran out of water. If it hit a couple other areas we would not have been so fortunate, and may have lost more homes.”
The district also wants to complete $41 million of priority sewer upgrades over the next 10 years. That includes replacement of outdated motors, electrical controls, transformers and other components at sewage pumping stations and replacement of backup generators that won’t meet new air quality regulations taking effect in 2020.
If five years of rate increases are approved, the district would be authorized to implement them each July, but could always scale them back if possible in future years, Solbrig said.
Solbrig said the district has been doing what it can to cut costs.
Staffing has been reduced by several positions through attrition. Operations and maintenance spending has been cut by about $2 million a year and health benefit costs were reduced by $900,000 a year by joining an insurance pool with other utilities in California.
The district’s five board members saw the rate options for the first time at Thursday’s workshop and were asked to share their initial reactions by one customer who attended the meeting.
President Eric Schafer said he has been an advocate of small, regular rate increases and that the district owes the community and future generations a reliable utility system.
“There’s a cost to that,” Schafer said. “I’m advocating doing as much as we think we reasonably can.”
Vice President James Jones said he has supported larger rate increases than were approved in the past. With an estimated $1.6 billion of infrastructure, the district must spend $16 million a year to keep up with a 100-year replacement schedule.
“We haven’t been doing that. We have been averaging five to six million a year,” Jones said. “We’ve got a lot of projects out there that have been put off.”
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