Water rates are set to go up in Pleasanton effective in the coming weeks after the City Council voted to activate new drought rates for all city water customers amid the ongoing supply shortage locally and statewide.
The Stage 2 drought rates, which will add an extra charge across the board based on usage, including 65 cents per unit of water for single-family residential customers, aim to incentivize conservation amid the drought while also serving to help shore up the city's struggling water utility fund that is down more than $3 million in revenue this fiscal year, city officials said.
"Where we are now, I just don't think we really have a lot of choice," Councilmember Kathy Narum said toward the end of the discussion at the March 15 council meeting. "I don't like it. I wish it would rain ... I think this is one of those things where, you know, begrudgingly I'm going to support it."
"We do absolutely have to keep ourselves financially healthy," Mayor Karla Brown added. "The rates, in the example from staff, show ... you reduce 15% and in this tough time your bill is virtually the same. We understand people are on a budget, and so is the city. And we've got PFAS and we've got a lot of water projects coming up."
"We're in a drought. Everybody's going to use less water. We're going to turn the faucet off more. We're going to water less. We're going to take shorter showers. And 15% is reasonable to achieve," Brown said. "Let's hope we get some rain because the next phase is going to be much more painful."
The vote to enact Stage 2 drought rates was 4-1, with Councilmember Julie Testa in dissent.
"It seems really unreasonable to say conserve and we're going to penalize you and charge you more -- and we're going to be looking at these other future increases," Testa said, referring to the results of the city's water and sewer rate studies due out later this year. "I'm not comfortable with this."
Councilmember Jack Balch also voiced apprehension about imposing drought rates across the board, specifically as it pertains to low water users who have already conserved greatly, but he ultimately sided with the majority in the end.
Back in October, council members declared a Stage 2 water shortage and mandated city users reduce their potable water usage by 15% during the drought, but they held off on imposing any drought rates or excess use penalties at that time.
Heavy rainfall and snow statewide in late 2021 helped the region with local supply and some water reservoir recovery, but significantly low precipitation in the early months of 2022 has added new strain to water supply sources, city officials told the council.
Additionally, Pleasanton water customers met or exceeded the 15% reduction target in October through December, but usage ticked up to 8% above the baseline target in January, the last full month with data available, according to city staff.
The city's water department is down $3.2 million in revenue this fiscal year compared to budget estimates, due in part to the 15% water conservation, putting significant pressure on the water utility's budget.
There is also a need to maintain consistent funding in the water department, along with retaining adequate reserve levels, for when the city soon seeks bonds to help pay for high-cost infrastructure projects around its groundwater wells and per- and polyfluoroalkyl substances (PFAS) contamination, officials said.
"We're going to need to have a reserve to meet the bond covenants if we issue bonds to finance the PFAS and the drilling of the new well and everything. And if we don't keep the reserves up at this point, we're going to have to have a bigger raise to meet the bond covenants when we get to that point," Narum said.
Imposing drought rates across the board -- rather than doing excess-use penalties that target only customers who fail to reduce usage by 15% or more, which do have enforcement and administrative costs -- would be the best strategy to shore up the water fund budget and reserves, city staff said.
"The purpose of the drought rates is to help keep the city's utility financially sustainable during a drought or water shortage emergency. Drought rates help offset the revenue impacts of decreased consumption while also providing an additional incentive to conserve water and discourage wasteful or inefficient water use through pricing," city officials said in their staff report to the council.
The Stage 2 drought water rates will add an extra charge of 65 cents per unit (centum cubic feet, or CCF) of water for single-family residential and irrigation customers, and 62 cents per unit for commercial and multifamily customers.
They are scheduled to take effect on May 1, with the first charge appearing on the customer's ensuing bimonthly bill.