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LB Water Department proposes increasing water rates to deal with rising costs

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Sean Belk
Staff Writer

As costs for pumping and importing water continue to rise, Long Beach Water Department (LBWD) officials said this week they are proposing to increase water rates for the first time in more than three years.
The Long Beach Board of Water Commissioners discussed the proposal during its meeting on Thursday, May 16. The board will further discuss whether to increase water rates and, if so, by how much, in addition to reforming its budget for capital improvement projects, in coming weeks before taking final action on the LBWD’s budget on June 20.
Under the Long Beach city charter, the LBWD’s budget must be signed off by the Long Beach City Council before Oct. 1.
In order for the water commission to approve a rate increase, however, the LBWD is required to hold a public hearing and notify property owners of the hearing under Proposition 218. If 50 percent plus one of the property owners being levied the increased charge protest the proposal, the rate increase would be invalidated.
The LBWD’s proposal to increase water rates comes just days after the Water Replenishment District of Southern California (WRD) Board of Directors voted unanimously (4-0) to increase its water-pumping assessment rate by 9.9 percent during a public hearing on May 10. (See story on page 1.)
WRD charges nearly 175 pumping-right holders, such as municipal water agencies that are commonly referred to as “pumpers,” for costs incurred for replenishing underground aquifers in the Central and West Coast Basins of southeast Los Angeles County.
Matthew Veeh, LBWD’s director of government and public affairs, said the increase in WRD’s replenishment assessment (RA) rate that goes into effect July 1 will have an impact of $800,000 on the water department’s overall water-fund budget or about a 1-percent increase on LBWD’s revenue requirements.
He added, however, that WRD’s increased rate is only “one piece of the puzzle.”
Long Beach receives its potable water from two main sources: groundwater and imported water, according to the LBWD website.
More than half of the city’s water supply is produced from groundwater wells in Long Beach, since the City owns pumping rights.
The other portion mostly comes from treated surface water purchased from the Metropolitan Water District of Southern California (MWD), which imports water from the Colorado River and northern California to supplement local supplies in parts of Los Angeles, Orange, San Diego, Riverside, San Bernardino and Ventura counties.
Another small portion (15 percent) comes from reclaimed water supplies. LBWD provides both water and sewer services.
However, imported water is two to three times more expensive than groundwater, and Veeh noted that imported-water sources have increased prices as well.
Last year, the MWD Board of Directors approved a two-year spending plan, which includes increasing its wholesale water rate by 5 percent at the beginning of the year and another 5 percent on Jan. 1, 2014.
Veeh said the last time the LBWD increased its rate was for Fiscal Year 2010 that took effect on Oct. 1, 2009, raising the rate by 16 percent. He said LBWD charges different rates to single-family households, multi-family households and commercial-property owners. While each category has a different rate structure, all are charged the same rate increase, he added.
Veeh said rate increases from both WRD and MWD were the two “driving forces” behind the need to increase LBWD’s water rates in 2009, besides rising labor costs and other charges.
WRD Chief Financial Officer Scott Ota, however, said during the public hearing last week that most single-family households in the West Coast and Central Basins of the agency’s 420-square-mile service area only pay an average of about $10 or less per month for WRD-related costs through their water bills.
Therefore, with WRD’s 9.9-percent increase, those households are expected to see their monthly water bills rise by about $1.
Veeh said the average single-family household in Long Beach pays a monthly water bill of about $42.22. According to WRD staff, the average single-family household in Signal Hill pays an average monthly water bill of about $47.
Signal Hill, Cerritos and Downey, along with other cities, however, are involved in a legal dispute against WRD over allegations that the agency failed to comply with Proposition 218. Since a Los Angeles Superior Court judge ruled in favor of the cities in 2011, the cities’ attorneys have deemed that paying WRD’s assessment charges would constitute a “gift of public funds,” and the cities have so far withheld payments in liability accounts until a final judgment is entered by the courts. WRD officials said a total of $18.9 million in payments would be owed to the agency by the end of the year. Tesoro oil company was recently ordered to pay WRD back.
After sending out nearly 800,000 public notices and concluding that a majority protest had not been established, the WRD board approved the RA rate increase, raising the rate from its current $244 per acre-feet of water pumped to $268 per acre-feet of water. A proposal to increase the rate by 22 percent was scrapped.
Steve Myrter, Signal Hill public works director, however, said how much each municipal water utility would be impacted by WRD’s increased rate depends on how much water is imported and how much is pumped from underground aquifers. Each city and pumping-rights holder has its own formula for the percentage of water pumped from underground aquifers versus water purchased from imported-water sources, he said.
In Signal Hill, nearly 95 percent of the City’s water is pumped from underground aquifers, which WRD eventually charges for replenishment. The other 5 percent is purchased from imported sources, Myrter said.
In addition, he said about 26 percent of the City’s water department budget is associated with WRD-related costs, while the rest is primarily associated with purchasing imported water.
If Signal Hill were to pay the WRD assessment, the increase in WRD’s rate would cost the City’s water department an additional $60,000 per year in revenue requirements, increasing Signal Hill’s operational costs to about 30 percent of the budget, Myrter estimates. “Our operating costs go up,” he said. “That’s the bottom line.”
Myrter added that, this fiscal year, the City is required to pay a WRD assessment of more than $490,000. But, with the recently approved rate increase, the new annual WRD costs for Signal Hill are expected to jump to more than $540,000, he said.

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LB Water Department proposes increasing water rates to deal with rising costs