HomeMy WebLinkAbout2024-06-20; Utilities Rate Setting Update (Districts-All); Gomez, PazCouncil/Board Memo -Utilities Rate Setting Updat e (Districts -All)
June 20, 2024
Page 2
blended into the CMWD fixed and variable rates charged to customers. The Water
Authority represents over 60% of the CMWD water operating budget. When Water
Authority rates go up, those rates would automatically increase on customer bills up to a
pre-determined cap.
The structural billing change to show the pass-through charges would allow the CMWD
customers to see on their bills the rate impact of the Water Authority separately from CMWD
operational and capital improvement costs. This would provide more transparency for ratepayers
and demonstrate how rising costs to purchase water are outside of the direct control of the
CMWD Board.
Changing the rate structure requires additional work for our contractor and brings a complex
demand on the Information Technology and Finance Departments to adjust the utility billing
system . Several neighboring water agencies already show pass-through charges on their utility
bills.
San Diego County Water Authority
The Water Authority has and continues to see significant water demand reductions due to water
reuse projects, conservation and the recent rains as well as higher costs due to inflation and
pass-through charges from the Metropolitan Water District. These factors cause volatility in the
rates charged to the CMWD.
The increases over the next two years are expected to be significantly higher than in the past and
are difficult to predict. The Water Authority Board of Directors is currently considering rate
increases between 10% and 20% for calendar year 2025.
Encina Wastewater Authority
The wastewater treatment costs from the Encina Wastewater Authority are about 30% of the
wastewater operating budget. Unlike the water pass-through charges, the cost to treat
wastewater would continue to be folded into the wastewater charge on customer utility bills that
also include wastewater collection and capital projects. The fiscal year 2024-25 operating budget
that the Encina Wastewater Authority will pass on to Carlsbad wastewater customers will be a
13% increase from the prior year and a driver for Carlsbad wastewater rates.
Next Steps
Staff will continue to work with the consultant to review the updated financial models, weighing
options for rate increases to recommend to the City Council and the CMWD Board.
Simultaneously, the cost-of-service reports will be prepared, and a date will be set for the City
Council and the CMWD Board to hear the staff proposal and set the public hearing.
Council/Board Memo -Utilities Rate Setting Update (Districts -All)
June 20, 2024
Page 3
This public hearing is expected to be set for late 2024 or early 2025. Staff will finalize the
Proposition 218 mailer, which would be mailed prior to the public hearing for rate increases that
would come into effect around March 2025, similar to the timing in 2022.
cc: Geoff Patnoe, Assistant City Manager/ Assistant Executive Manager
Cindie McMahon, City Attorney/General Counsel
Gary Barberio, Deputy City Manager, Community Services
Laura Rocha, Deputy City Manager, Administrative Services
Gina Herrera, Assistant City Attorney/ Assistant General Counsel
Maria Callander, Information Technology Director
Zach Korach, Finance Director
Dave Padilla, Interim Utilities Director/Interim General Manager
Kristina Ray, Communication & Engagement Director
Shoshana Aguilar, Senior Management Analyst