Lawn watering and rate hikes?

One water retailer anticipates no rate hike

With the rains behind us, a week of high temps, sunshine and Daylight Savings Time upon us, lawn watering in the Santa Clarita Valley has resumed. But, at what cost? The last time ratepayers stopped watering their lawns - heeding the state-wide call to conserve water due to the drought - one of SCV’s water retailers proposed a 25 percent rate hike to recoup lost revenue.

After four months of regular rain, with above normal precipitation levels reported, many SCV lawn sprinklers have been turned off.

Will SCV’s three water retailers raise rates to make up for the water which ratepayers would normally have purchase these past four winter months? Two of the three responded; one anticipates no rate hike.

“We have no idea how the reduced water use of 40 percent will affect that future rate since Valencia’s rates are developed on an annual average water use,” Ken Petersen, general manager of Valencia Water Company told The Signal Monday.

Valencia Water Company announced in May last year that it was considering a 25 percent increase in water rates for at least a year.

The company proposed a “revenue adjustment surcharge” which would have meant a typical Santa Clarita Valley family of four currently paying about $40 a month would pay at least $48.54 while the surcharge is in

effect.

The proposed rate hike was sparked by an unanticipated drop in water usage by ratepayers heeding calls to conserve water.

Valencia Water customers saved more than 4 billion gallons of water since January 2014, Petersen told The Signal a year ago.

That meant about $5 million in revenue lost to the water company. It prompted officials to want to “recover” that revenue loss, which they blame on a “significant drop in water sales caused by increased conservation over the past year.”

Following public objection to the proposed rate hike, Valencia Water Company officials modified their plans.

In September, they approved a rate increase that was reduced from its original proposal of 51.5 cents per 100 cubic feet, or ccf, to 41.2 cents per ccf, meaning the average increase of rates for a home paying $47.02 would now be around $53.43 instead of $55.56.

As a result, Valencia Water introduced a “revenue adjustment surcharge” to make up for the loss.

“The Valencia water’s revenue adjustment surcharge is still applicable today,” Petersen said Monday. “And has only been effective since Oct. 1

“The revenue adjustment may be in place longer due to the last three months of rain,” he said. “At present we are analyzing our future capital programs and future financial requirements for consideration by the VWC Board in the Fall for 2018 rates including any revision or elimination of the revenue adjustment surcharge.

Petersen noted that Valencia Water remains “diligent to operate as efficiently as possible along with providing excellent customer service.”

As for SCV’s other two water retailers - the Santa Clarita Water Division and the Newhall County Water District - only the latter offered insight about the loss of recent water revenue.

“Daylight Savings Time ‘spring forward’ generally signals a return of the irrigation season,” said Steve Cole, general manager of the NCWD.

Cole cited a “couple of interesting facts about this year from a financial standpoint for NCWD.”

“Customer use was higher than projected at the beginning of the fiscal year which helped offset the significant reduction we experienced during the rainy season,” he said Monday.

“We have a ‘Rate Stabilization’ reserve account that balances the difference between the fluctuation during the year,” he said.

“Last year, we proactively put in place a water rate adjustment factor designed to smooth the recovery of the drop in revenues from the previous year.”