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Beginning in the new year, Pleasanton residents will see yet another increase in their utility bills following the City Council’s unanimous vote Tuesday to amend the city’s fee schedule and adjust the city’s water, sewer and recycled water rates.
According to the city, 52% of the overall bimonthly water bills will increase by $20 to $40 in the first year depending on how much water customers use. Increases for the three years following 2026 will vary depending on other factors but, in some cases, residents in year four could see the difference jump to over $80 compared to their current bills.
The council also approved the annual cost-of-living adjustment of 2.7% for sewer rates, but the city will look to conduct a separate sewer rate study to determine any other necessary rate adjustments.
While councilmembers said they didn’t enjoy raising the rates, they also acknowledged how aging infrastructure, a financially challenged Water Enterprise Fund and plans to improve the city’s water system are all reasons why the increases were necessary — particularly given that the city has also seen low water rates for decades.
“No one wants to pay more for water rates,” Mayor Jack Balch said during the Oct. 7 council meeting. “But we have to be honest with ourselves and where we are at and where we are going with the (water) system.”
Two years ago, the council at the time adopted emergency rate increases — a 30% increase in 2024 and a 12% increase for 2025 — as a way to address what City Manager Gerry Beaudin said was an underfunded Water Enterprise Fund.
The enterprise fund, which gets most of its revenue from the utility rates, financially supports certain water system related repair and replacement projects but because the city hadn’t increased its rates between 2011 and 2022, the fund was spending more money than it was receiving.
That’s why, after the council adopted the two-year rate increases in 2023, the city began looking at the water system as a whole and at ways it could change the rate structures so that it could replenish the enterprise fund and ensure its stability for the future.
“We are on a path toward stability and a renewed focus on the functionality of our water program,” Beaudin said. “We’re having major failures every week or two with our water program currently … This is a revenue-generating fund, but it’s not a profit center for the city. The money we collect goes back into the system to maintain it.”
Another factor in the city’s decision to pursue new rates was the fact that the city has been dealing with PFAS, or forever chemicals, in the city’s groundwater system which has led to the city having to purchase 100% of its water supply from the Zone 7 Water Agency.
Over the past year, the city has been working with Water Resources Economics — a consultant that had worked with the city to develop the previous rate increases in 2023 — to determine the new rate increase and what the future of the city’s water system should look like in regards to how it generates revenue and how that revenue should be used.
WRE President Sanjay Gaur briefly went over what Balch called an extensive and transparent rate-setting process that started with the consultant conducting a comprehensive water rate study that recommended cost-based and fair rates and connection fees to ensure the Water Enterprise Fund’s long term financial sustainability.
The proposed rates were then presented to the council a couple of times this year before the council accepted the water rate study and settled on the now-adopted rate increases.
One of the goals during the entire process was to also develop a funding plan for the city’s long-term Water System Management Plan costs, which identified more than $73 million in infrastructure, operations and maintenance needs for Pleasanton’s water system and established a financial framework to prioritize and fund future projects.
According to staff, the new rate structure not only helps ensure stable revenue streams for those long term costs, but it also helps ensure immediate funding increases to help address aging infrastructure that needs to be repaired or replaced.
“We don’t have adequate reserves in that account currently and we’re not able to maintain the water distribution infrastructure that the community relies on,” Beaudin added. “So that has a ripple effect for disruptions to our customers but also to the business community … It’s really incumbent upon us to be good stewards of this infrastructure and to invest in it appropriately as we go.”
“Delivering reliable, safe, clean drinking water is a core responsibility that the city has and that’s what this funding allows us to do,” Beaudin added.
Following Tuesday’s vote, the city will now change its water rate structure from a tiered system to a uniformed one where very low water users will see their bill more than double by the end of four years, which several people at the meeting were not happy about.
In addition to one resident who voiced his concerns regarding this topic, Councilmember Julie Testa also said she has heard a lot from the city’s low water users and how the uniformed rate structure will bump their bills up from their current bills of roughly $85 to $115.
“When conservation is our target, our goal, and very large water users now have a big reduction in their water bill, it’s just really hard to see that our lowest water users are getting hit so much more,” Testa said. “I want them to understand that we didn’t do that because we wanted to but we did that because we were required to.”
However, WRE principal consultant Nancy Phan noted as she went over the water bill comparisons regionally that the proposed bills for Pleasanton are the lowest in the region when looking at the bimonthly water bills for low and average water users.
For very high users who use 70 ccf in a single family, 5/8 inch meter, the proposed Pleasanton bills will be more in the middle, with Dublin San Ramon Services District being the highest and Livermore being the lowest.
For recycled water users, the impacts will be a bit different depending on usage level but for the average user, they would be seeing a roughly $170 difference in their bills. The most impacted users would be ones with very high usage of nearly 2,000 ccf — those users would be seeing an almost $490 difference from the current bills to the proposed bills following the approval of the new rate structures.
Drought rates and connection fees were also a large part of the overall rate-setting discussion and final rate structure approval.
Drought rates, according to Phan, are temporary surcharges applied on top of regular water rates during water shortage emergencies like drought, earthquake or situations where they have to limit water use, which would reduce revenues and costs.
Under the new drought rates, average users could see anywhere from a $16 increase to a nearly $30 increase depending on the severity of the drought, with the caveat that if the same customers use less water than before, their bills will actually go down by roughly $20 if they are typically using 24 ccf.
In regards to connection fees that developers pay to the city when building new projects — which require the build out of new water system connections — Pleasanton’s current fee is $2,177 but thanks to the newly-adopted structure, Pleasanton will be increasing its fee to $5,269 which is on par with Livermore’s $5,462 fee but much lower than Dublin’s, which is over $15,000.
During the meeting, a handful of residents voiced their opposition to the new rates citing issues such as fixed incomes for seniors and the overall impact these increases will have on rate payers.
Residents had until the close of the public hearing of the water rates item to submit a written protest but after the public hearing closed, the city only tallied a total of 19 written protests.
Testa said that while she doesn’t like the fact that the city has had to raise its rates, she thought it was important to mention how even with the previous two years of increases and the newly adopted ones, Pleasanton continues to have lower rates compared to other Tri-Valley cities.
“We have to keep a healthy Water Enterprise and the priority being to make sure that we have quality and available water for our community and that requires us to really reinforce our enterprise system with these funds,” Testa said.
Councilmember Craig Eicher added that the city needs a healthy, well-run system and he felt obligated to take care of the community through these difficult, but necessary, rate increases in order to address current water infrastructure improvements for the city’s water system as well as future projects.
“The sustainability of what we have with our current rates is just not feasible,” Eicher said. “I’m not an advocate of raising fees, I’m not an advocate of putting additional burdens onto our community when it’s not absolutely necessary. However, in this case, I think (WRE) have made an extremely compelling argument to increase rates … I think this is a very reasonable plan and some reasonable rates moving forward, still putting us below what our neighboring cities are paying in water rates.”
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