The Tri-City area has some of the lowest water and drought fees in the region, and officials with the Alameda County Water District say it’s time for them to increase.
Next week, on Feb. 9, the Alameda County Water District Board of Directors is set to vote on whether to raise its water rates by 4% for each of the next two years, which would amount to the average bimonthly residential water bill increasing from $132.48 to $137.78. The increase is expected to generate $5 million annually for the district.
“I can tell you no one likes water rate increases,” Ed Stevenson, general manager of the Alameda County Water District, said at a virtual community meeting Jan. 26. “Staff doesn’t like them, certainly our board doesn’t like them and we know with 100% certainty that our customers don’t necessarily like them. But there are things that we need to do to ensure that we are providing services that our customers rely on.”
The water district is a public agency so rates are set based on the cost of providing service to about 345,000 people in Fremont, Newark and Union City rather than making a profit, Stevenson said. Of the revenue that is generated from the rate increases, 38% is set to go toward paying and providing benefits to district staff, 26% is set to go toward capital projects, 20% toward buying water, and 15% is set to go toward operations and maintenance costs that don’t include paying staff, said Jonathan Wunderlich, the district’s director of finance and administration.
Costs are increasing primarily because of capital improvement projects, such as the proposed regional $1.25 billion Los Vaqueros Reservoir Expansion project, and increasing labor costs, which Stevenson said is the main driver of the increase.
“As you know, labor in the Bay Area is pretty expensive,” he said.
The current union contract for employees included a 3.25% cost-of-living increase in 2022 and 2023 and a 3.14% increase in 2024, which is still lower than the rising cost of living. The annual inflation rate was 6.5% in December.
As modest as they are, Stevenson said the increases are driving up the cost of providing water service.
Even with the rate increases, Alameda County Water District would still be the 10th most affordable water district of the 30 districts surveyed in the Bay Area, Wunderlich said.
Keeping costs down
The district is trying to keep rates down through a variety of long-standing practices, such as teaming up with other agencies to increase buying power and reduce costs, and new initiatives, such as installing solar panels to reduce power costs and replacing manually-read water meters with new automatically-read water meters. Those water meters are expensive, but will pay for themselves in 10 years, Stevenson said.
One of the main ways Stevenson said the district manages costs is by relying on a variety of water sources — 40% is local water from the Alameda Creek watershed while another 40% is bought from the Sacramento-San Joaquin River Delta through the State Water Project. The remaining 20% is bought from the Hetch Hetchy Reservoir through the San Francisco Public Utilities Commission and mixed with locally produced groundwater.
“It’s one of the reasons why we’re among the lowest-water-cost agencies in the Bay Area,” Stevenson said, “because we do have that diversity that others don’t have.”
However, importing water has become expensive. The cost of buying water from San Francisco went up by 16% in just the past year, Stevenson said, with more increases expected in the future.
Despite the recent rain and snowfall, the water district is still in a drought emergency and asking residents to reduce their water use by 15%. That also includes paying a drought surcharge fee, which is set to go up by 4%, to offset the loss of fees the district would otherwise generate from residents’ and businesses’ use of water.
“We’re probably still a couple months away from really knowing if this winter will provide enough precipitation overall to get us to where we can rescind that requirement,” Wunderlich said.
Gov. Gavin Newsom recently announced the Department of Water Resources is increasing the water allocation to 29 public water agencies from 5% to 30% thanks to the recent winter storms.
“That’s great,” Wunderlich said. “We’ll take all the water we can get, but a one-time increase to 30% of our state water supplies is not, by itself, enough.”
The district board declared the water emergency Dec. 9 based on several factors, including that the state and San Francisco Public Utilities Commission, which provide 60% of the Tri-City’s water supply in a typical year, are in declared drought emergencies. The state emergency requires urban water suppliers declare at least a Level 2 emergency, which restricts the wasteful use of water.
The typical residential customer consumes 16 units of water — a unit is 100 cubic feet or about 748 gallons of water — during a billing cycle. If they don’t reduce their water use, their bimonthly bill would go up from $137.78 to $150.90, assuming the rate increases are approved.
“Of course, with the surcharge,” Wunderlich said, “it’s not the district’s interest that you continue using the same amount of water and pay more. What we want is for customers to be able to cut back their water use and not experience an increase in their water bill. So if you are able to cut back that 15% … your bill stays essentially the same.”
The public hearing for the rate increases is set for 6 p.m. Feb. 9 at 43885 South Grimmer Boulevard in Fremont.