Long Beach Water Department customers are not expected to see a rate increase this year as the department takes a “wait-and-see” approach to the evolving drought situation and inflation that are driving up costs to provide water.
The Board of Water Commissioners met Thursday morning and discussed a preliminary budget proposal for the upcoming fiscal year that starts in October that showed no projected rate increases for either water or sewer services.
Commissioners are expected to approve next year’s budget at the June 23 meeting.
The board voted earlier this month to reduce water rates by 2.54% to align with a court decision stemming from the city’s Measure M lawsuit, and rates should remain at those levels for the start of the new fiscal year.
Not raising rates this year will keep the average residential monthly bill at around $82, according to department projections, but rate increases could come in the following years.
Long Beach water bills have slowly crept up over the last decade. Department data shows that the average monthly bill for residential customers has grown from $61 in 2013 to $84 earlier this year.
State law limits the prices charged to customers to the cost of providing the service, which includes the cost of water and maintaining water infrastructure.
The department’s director of finance, Brandon Walker, said that the water fund is currently below the $30 million minimum reserve it tries to sustain in order to address emergency repairs or to help spare residents from fluctuating water prices.
Walker’s presentation showed potential 8% increases for the 2024, 2025 and 2026 fiscal years to help shrink the roughly $11 million gap that exists. However, department officials were careful to commit to any future rate increases after this next budget.
“That’s not in any way set in stone,” Long Beach Water Department General Manager Chris Garner said.
Garner noted that this year the department is spending a considerable amount of money on capital improvement projects to help bolster its ability to pump cheaper groundwater, something that could help stabilize prices for Long Beach customers by not relying on imported supply.
The department is projecting over $46 million in investments in its water and sewer systems that could include work on water reservoirs, improvements to the groundwater treatment plant, the rehabilitation of existing groundwater wells and the drilling of about a dozen new ones.
Long Beach gets about 60% of its water supply from local wells and that could help insulate customers from increasingly expensive and dwindling imported water supplies from Northern California and the Colorado River.
The future cost of imported water is one factor that could affect water rates in Long Beach. The effect that inflation has had on the cost of materials to improve the city’s water infrastructure and water usage among customers could also play into future monthly costs.
New outdoor watering rules for residential customers are set to go into effect June 1, and a new statewide order prohibits the watering of ornamental laws in commercial areas, and in some cases, in common areas of residential developments.
The move was made by the California State Water Resources Control Board in the hopes of reducing water usage by 10%-to-20% as drought conditions worsen.
Long Beach said it would take a similar education-based approach to commercial customers and any potential violations of the new state order. Gov. Gavin Newsom has warned that even more restrictive rules for personal usage of water could be on the way if reductions are not seen across the state.
Commissioners will meet two more times before potentially voting to approve the new budget. The board is scheduled to meet June 9 and June 23. Both meetings will be held virtually.