The end of the legal battle over Long Beach’s long-standing practice of charging fees to its own Water Department to boost its general fund might not lead to lower monthly rates for the city’s ratepayers—but it could result in credits and investments in the city’s water grid.
California’s Supreme Court denied the city’s request to hear its case after an appeals court ruled against the city in December, calling Measure M—and the city’s practice of charging access fees to its Water Department and then transferring those fees into its general fund—unconstitutional. State law prohibits utility providers from charging more than what it costs to provide the service.
The city will now have to pay back $30.8 million to the water department over the next 180 days, with the first $9 million payment due in the next month. Water officials were prepared for this possibility, having developed contingency plans in case the city lost in court. But now the department will have to decide what to do with the money.
Water commissioners will meet Thursday, March 31, to vote on a resolution that could use up to $9 million the department will get back from the city as a credit that will be applied evenly across all customer accounts. The Long Beach Water Department services about 86,500 residential and commercial accounts.
Bob Shannon, a former city attorney who now serves as the president of the Long Beach Water Commission, said Friday that it would be foolish of the commission not to look into providing some kind of relief to ratepayers, “and we won’t be foolish,” he said.
“It’s going to be our job to grant whatever relief we can to the ratepayers. We’re going to seriously consider a credit to ratepayers,” he said. “That’s one thing we could give serious consideration to.”
There is no legal obligation for the department to issue refunds or credits to customers, and Shannon said the board could explore keeping the money to help the department build out its infrastructure.
Long Beach is unique from other cities because it has access to a substantial amount of groundwater. While the department has the right to pump about 60% of its water needs out of the ground, those underground sources currently account for about half of its annual supply.
The department imports about 40% of its water supply, something that is in high demand given the ongoing drought conditions, which has led to price increases that are passed onto customers. (The other 10% of the department’s supply is recycled water.)
Last week, state water officials said that water allocations from the State Water Project, a source of Long Beach’s imported water, would be cut from 15% to 5% as the state prepares for the third year of drought.
The scarcity of imported water and the persistent dry weather is one reason why ending the water transfer fees won’t necessarily translate into lower water bills.
“The more we could use groundwater, the more we can predict cost in the future,” Shannon said.
Long Beach has a goal of getting to 65% groundwater usage to help break its dependence on more expensive imported water and has started an aggressive investment plan to increase its production capacity.
The department budgeted $46.8 million this year for improvements to its water and sewer systems, according to city budget documents. Those plans included replacing old water pipelines, valves and meters but also drilling new local water wells and rehabbing old storage tanks.
A $60 million line of credit was created by the department to help with its multi-year infrastructure investment plan.
Editor’s note: This story has been updated to reflect that Bob Shannon is the president of the Long Beach Water Commission.
In major budget blow, Long Beach must pay back $30.8M after court denies hearing on water, sewer fees