Long Beach Water Department customers will be seeing a small decrease in their monthly bills after the city’s water commission voted Wednesday to lower rates after the city’s legal defeat over transferring excess revenue from the department into its general fund.
The 2.54% decrease will result in a savings of about $2 per month for most residential customers for the rest of the fiscal year that ends in September. Lauren Gold, the department’s public information officer, said the reduction will result in a loss of about $3 million for the department.
The new rates are expected to go into effect starting June 1, after the City Council approves the rate change.
“This was the right thing to do for our ratepayers, and it honors the court’s decision,” Commissioner Gloria Cordero said in a statement. “I look forward to further discussions on the pending Measure M matters, as well as our future department budget, in the coming weeks.”
Reduced rates will be in place at least through September, but whether rates are further reduced, or increased, after that will be decided in the coming months as the department crafts its 2023 budget.
The department had been transferring about $9 million annually into the general fund under Measure M, which was approved by voters in 2018.
But that practice of charging fees to the department to access city-owned water and sewer pipes with the revenue generated being transferred to the city was deemed unconstitutional by a California appeals court in December and the state Supreme Court declined to take up the case, effectively ending the city’s appeal in March.
A California law known as Proposition 218 limits utility providers in the state from charging more than what it costs to provide the service.
Now, a total of $30.8 million will be transferred back to the department by September under the terms of the ruling and the department has already voted to return at least $9 million of that money to ratepayers in the form of bill credits.
Those credits will be applied equally to the city’s roughly 86,500 residential and commercial accounts and would amount to about $100 per account.
What the commission will do with future rates and the remaining $21.8 million is still to be decided. The commission is meeting May 12 in the first of four budget workshops where it will discuss what it might do with the remaining money it will receive from the city in September.
Department officials have said that the funds could be used to invest in the city’s water infrastructure, including a number of groundwater wells that have allowed the city to stave off some of the more stringent drought rules that have been put in place in other parts of Los Angeles County. But the commission has not ruled out returning some or all of it to the ratepayers.
The appeals court’s ruling said that transferring the fees to the general fund was unconstitutional and the city attorney’s office initially held that the ruling only applied to the transfer, not the collection of the fees and that the department could continue to collect them to invest in water infrastructure.
However, the department said it reassessed its initial interpretation of the ruling over the past month and concluded that it should reduce water rates.
The May 12 budget workshop could shed more light on the direction the commission wants to take with future rates. It will also vote on increasing water restrictions in the city due to persistent drought conditions. The restrictions will likely limit the number of outdoor watering days to twice a week.
Budget workshops are scheduled for May 26, June 9 and June 23 leading up to the commission’s adoption of water rates and the next fiscal year’s budget that starts Oct. 1.
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