The City Council voted Tuesday to start the public review process to consider increasing water and sewer rates.
The vote followed a study that showed that during the past five years, the city was undercharging water customers, capturing only 87% of the costs associated with purchasing water from Zone 7.
Enterprise operations such as water and sewer are supposed to be fully-funded by ratepayers, not by taxpayers.
Even wit the proposed increases, Pleasanton will continue to have the lowest combined water and sewer rates in the Bay Area.
Due to the ongoing drought, state mandates to reduce potable water consumption by 20% per capita over the next five years, and the need to replace and repair aging infrastructure, water and sewer rates will likely increase in October by 6% and 3% respectively.
Seniors, who currently receive a 20% discount on their water bills, will receive a 15% discount going forward, if the proposal passes. There will be no change for Pleasanton's income-eligible residents, who will continue to see the full 30% discount they currently receive.
These proposals, which were given a thumbs-up Tuesday by the City Council, will be discussed at neighborhood and other meetings in the next two months before going before the council again Oct. 6 for a final vote.
Emily Wagner, retired finance director who has stayed on to handle revisions to the city's water policies and other financial issues, said the higher rates are needed to offset water and sewer costs not fully covered by ratepayers.
If fully implemented, bills will increase on average $5.37 per month for water and sewer rates effective Oct. 15. Seniors will receive a 15% discount, but only if their water consumption does not exceed 20Ccf in a bi-monthly billing period.
Even though some water customers experienced a surcharge during the drought if they exceeded their allowable limit, Pleasanton has only been routinely charging its customers 87.5% of the cost of purchased water from Zone 7, which provides drinking water to the city.
"While the city has been able to absorb these increases, by not passing through 100% of the Zone 7 rate, this is now placing a significant strain on the city's water enterprise, which over the years has not been, nor should be, reliant on the General Fund to operate," Wagner said.
To meet a state requirement that any utility that has an annual cost of living increase in its utility rates review those rates every five years, the city hired HDR Engineering, Inc. to undertake a comprehensive water and sewer rate study.
The study showed that not only is the city falling behind on meeting its 100% ratepayer funding of its water and sewer collection system, it charges far less that neighboring cities for the same services.
For customers using 20 Ccf of water during a typical bi-monthly billing period, Pleasanton users would pay $65.62, compared to $81.92 in Livermore and $97.94 in Dublin.
For those using 40 Ccf, considered moderate consumption, Pleasanton ratepayers would pay $120.78, while Livermore customers pay $160.22 and Dublin $170.36.
For high users at 60 Ccf, Pleasanton ratepayers would pay $180.43, with Livermore at $265.90 and Dublin at $247.96.
Bi-monthly sewer bills show Pleasanton customers would pay$77.28, compared to $86.76 in Livermore and a lower rate of $63.73 in Dublin.
Wagner said the staffing, chemicals and electrical costs are higher than Dublin's due to charges associated with pumping Pleasanton sewerage to the Dublin San Ramon Services District treatment plant on Stoneridge Drive next to I-680.
Although the proposed 6.7% rate increase will help Pleasanton achieve a 100% pass-through to cover its operating costs, council members recommended doing more to encourage greater conservation. Councilman Jerry Pentin won support with his proposal to reduce the current 20% discount for residents at least 65 years old to 15%, although the 30% discount given to low-income residents will stay.
The council also endorsed a proposal to lower the allowable consumption to qualify for the senior and income-eligible discounts from 40Ccf to 20, which Wagner said the national average consumption is 23Ccf. A 100 cubic foot of water, Ccf, equates to 748 gallons. A residential customer who uses 30 Ccf of water during a typical 60-day billing period is consuming 22,440 gallons.
At Wagner's request, the council also reviewed suggested additional drought rates that could be assessed only upon additional Council action, if the drought continues and cutbacks in water consumption fail to meet operating expense requirements at the city's water department. Drought rates and their implementation will be discussed in the future when there's a need for additional revenue.