The La Cañada Irrigation District has adopted an increase in water rates up to 10% starting January 2024 in its Nov. 14 public hearing meeting at the La Cañada Flintridge Library.
The increase is the result of a change in a five-year rate schedule that runs from 2024-2028. The previous rate schedule ended in 2022.
The district consulted with Raftelis — a company that helps local governments and utilities by providing management consulting expertise — in 2022 to conduct a Water Cost of Service Rate Study to provide an update cost of service analysis and establish proposed five-year rate schedule starting in 2024.
Sudhir Pardiwala, a financial consultant with Raftelis, presented the study to the board and the public.
The current bi-monthly water rate for a 5/8-inch water meter, which is the smallest size and most common among LCID customers, is $63.66, and with the proposed increase, the meter rate will be $69.66 starting in January. Rates increase based on the type of water meter a customer has.
“LCID water rates apply a monthly meter charge based on the size of the meter,” Assistant General Manager Justin Bailey told the Outlook Valley Sun. “As the report indicates, the larger the meter, the larger demand on the distribution system, and the more robust the system design must be to meet that demand at any given time. Hence, the increase in cost as the meter size increases.”
Updated tier rates are also included in the study, and show the appropriate increases.
“Tiers refer to the total volume of water used cumulatively over the billing period and the associated cost as a consumer uses more water,” said Bailey.
Tier 1 is 0-14 units, where a unit represents 100 cubic feet, or 748 gallons. The current rate for Tier 1 is $4.35, and with the increase in 2024, it will be $4.63.
“The increases are varied through the meter sizes and consumption tiers to achieve a 10% revenue increase,” said Bailey. “So, most people’s, or 75% of our customer base, rates are going up closer to 8%.”
Pardiwala said that rate will increase 10% each year for the next five years.
Although there were only about six LCID customers who attended the meeting, the district said that they received as many as 600 letters from customers opposing the increase.
The district said that the cost for capital improvement projects, like the building of a new reservoir and replacing underground pipes, is the main reason for the rate increase.
“So, one of the primary drivers for revenue adjustments also is the capital improvement program, or CIP,” said Pardiwala. “The district has some significant expenditures primarily related to the reservoir project, which has been ongoing for several years. I think we are now in the process of acquiring the land and then actually building the reservoir to take care of some regulatory requirements related to the structural soundness of the reservoir.”
“The status quo financial plan demonstrates that current water rates are insufficient to support the district’s financial needs over the next five years,” reads the study. “To ensure that the district generates sufficient revenues to adequately recover its operating and capital expenses while maintaining cash reserves above the target reserve level throughout the study period, Raftelis recommends 10 percent annual revenue adjustments beginning in 2024.”
Pardiwala said that rates comprise 90% of revenue for the district and that the district designates rates based on a series of factors like supply, base delivery and revenue offset, to name a few.
They also compared the rate LCID has to other companies in the city like the Crescenta Valley Water District, which has the highest rates at $6.38 per 14 units, and Kinneloa Water District, which has the second highest rates at $4.98 for 14 units, according to Pardiwala.
“The Crescenta Valley Water District, which is larger than us, and also has availability of groundwater, their rates and their charges are actually the highest of all of the four agencies that we looked at,” said Pardiwala.
He also presented the possibility of drought rates and what they would be if they were implemented.
For 10% water reduction, the district will increase its rates by 5.7%, 20% of reduction will see a 12.8% increase and 30% will see a 22% increase, to name a few.
“The district actually adopted drought rates in 2018 but did not implement them within time even though we did go through some phases here,” Pardiwala said.
“Therefore, when we reduce usage, we will lose revenues,” he added. “And to make up for those lost revenues, we have to increase the rates.”
Pardiwala did say that drought rates would only come into play during extreme scenarios.
Peter Roses, customer and LCF resident, said: “Water is my most expensive utility, more than any other utility,” he said. “I am very concerned and trying to reduce my water usage and do everything possible to lessen my footprint.”
Roses then asked if the public or board is able to talk with the Foothill Municipal Water District, since that is where LCID buys most of its water and controls how the district increases its rates.
“I’ve only been on this board for 25 years, and our ability to get Foothill to cooperate with us is, I’ll just say, limited,” said LCID President Richard Myers, added that when things are set by Foothill Municipal Water District, they are also set for LCID.
Myers also informed customers that 70% of LCID’s operating costs go to Southern California Edison to pump the water and the Foothill Municipal Water District, and the rest of the money goes to repairs and maintenance for the water district.
Roses also spoke against the drought rate because customers have no control over the situation.
“I just had a sort of an objection to [the drought rate],” said Roses. “I understand the loss of revenues, but when you’re asking all of the customers to pay for a situation, they have no control, I think everybody has to try and tighten their belts a little bit.”
He asked the board to try to hold off on the drought rates and have another public hearing meeting about it, if possible.
“In all these years, we’ve never had to declare a mandatory drought, and that’s what is required for this drought rate,” said Myers.
Resident Donald Razzano also spoke in opposition of the rate increase.
“I oppose this rate hike,” said Razzano. “I’ve been a customer for years. It’s always been a known fact that the water rates here in La Cañada are higher than most water rates around Southern California and in the United States. It seems outrageous to me that you punish customers for doing their part to conserve water during our drought.”
He said that he is a senior citizen and on a fixed income trying to make ends meet, and with the proposed water rate, “It can mean the difference between, for some customers, being forced to decide to pay for their water bill, or buy food, gas, medication or other essential goods.”
The district said that they have already delayed the rate increase by a year because of the continuation of the pandemic in 2022, and why it is necessary now to implement the increase.
Bailey tried to help customers understand that rates might change again as the district moves forward and analyzes water sales.
“But as information is available, there are many more decisions being made,” he said. “And we will, with Raftelis, be revisiting this every year … because we want to be making smart long-term decisions. So, the feedback we receive is very important to us.”
Customers and the public who want to view the study and more on the LCID website can visit lacanadaid.org/service/rates/.
First published in the November 16 print issue of the Outlook Valley Sun.
