Long Beach utility customers will likely see their bills increase this year after the Utilities Commission approved a 9% increase for water usage during a special meeting Monday morning.
The increase would add about $5.13 to the average single-family household’s bill starting Oct. 1, which is when the city’s new fiscal year starts.
The rates, though, are subject to a public hearing that is tentatively scheduled for the last week of August. A majority of accountholders would have to object to the rate increase to block it from going forward.
If a majority of accountholders don’t object, the City Council is expected to approve the department’s budget and the new rates along with the city’s budget sometime in September.
The vote was part of the commission’s approval of the budget for water, sewer and gas. There are no proposed increases for sewer or gas services.
Department officials said increasing rates was necessary to help fund projects that will provide access to cheaper groundwater to residents in the future, and also to build up the department’s emergency reserves, which are currently a fraction of the roughly $30 million the department set as a goal for emergency repairs and operations.
Commissioners voted against a staff recommendation to raise rates by 10%, saying they were uncomfortable with a double-digit rate increase for customers, some of whom may still be dealing with economic struggles brought about by pandemic income loss.
Brandon Walker, the Utilities Department’s director of finance, said Monday’s vote was the most recent tough decision that the commission would have to make after it both opted to freeze fines and shutoffs during the pandemic, something that has affected the financial health of the department, and voted to send over $30 million back to ratepayers in 2022.
“It’s kind of cheesy, but it could allow our children and grandchildren to pay an affordable rate in the future,” Walker said of increasing rates to help fund the department’s ability to access more groundwater.
The department is starting an ambitious few years of improving groundwater infrastructure, something that has been made more expensive by persistent inflation.
But department officials believe projects that could shore up existing wells and potentially establish new ones to make West and North Long Beach less reliant on increasingly expensive imported water could be beneficial to customers in the long run.
The vote was held during a special meeting Monday after the commission deferred acting on the budget last week because of a last-minute request from city hall to help fund the city’s Climate Action and Adaptation Plan, which was adopted in August.
Utilities Department General Manager Chris Garner said that that the city asked multiple departments for about $837,000 for the CAAP in the coming fiscal year, and the water utility’s share was $139,000.
That figure is being reevaluated, according to Garner, and could be smaller by the time the council adopts the full budget in September.
Regardless of how much the Utilities Department must pay toward the CAAP, water rates are protected by state law from rising above what it costs a utility provider to deliver the service, though that includes the costs of the infrastructure and projects that go toward providing water.
To comply with that law, the city will have to identify how it’s going to spend the money it gets from higher rates—and how it benefits water ratepayers.
As for funding the CAAP, Deputy City Attorney Rich Anthony said the uses for those funds could range from repairs to the department’s trucks made at the city-owned fleet facility to investments in water storage or other drought resiliency projects the city is looking to construct. But whatever it is, Anthony said there would have to be clear link between the funds put toward the CAAP and how water customers benefit from it.
Another undetermined element of the budget is how much the department will transfer out of its gas fund to the city’s general fund at the end of the year. While the Measure M litigation stopped similar transfers from the water and sewer funds, gas was exempted from a court ruling that said the water and sewer fund transfers were unconstitutional.
The transfer can be as large 12% of the revenue in the gas fund, and currently the department is budgeting for about $13.9 million, or 10%. Department officials said the transfer won’t happen until the end of the next fiscal year and could be bigger or smaller depending on how the year plays out.
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