OAKLAND, June 11, 2013
EBMUD Board of Directors approves plan for rate increases necessary to set secure path to the future
The East Bay Municipal Utility District Board of Directors approved a biennial rate proposal Tuesday that will support a two-year budget geared to protect the public’s $14 billion investment in the District’s massive water and wastewater system.
The rate action supports a budget that places a stronger focus on maintaining and upgrading pipes (over 4,200 miles) and related facilities and operations in five counties extending from the bay to the Sierra crest, providing water reliability for a service area seven times larger than the city of San Francisco. The plan will place the District on more stable financial ground on the heels of cuts necessitated by declining water sales after a statewide drought that was followed by several years of national economic instability.
In recent years, EBMUD made deep cuts across the board to navigate through economic turmoil. Employees chipped in as union members voted to forgo general raises to assist the District and its ratepayers through tough times. The savings were impactful but the District has been unable to replace as many miles of aging pipe as warranted. The new two-year budget will lead to significantly more pipe being replaced before it breaks, avoiding catastrophic failures that could lead to major interruptions in service for customers.
EBMUD’s total budget for water and wastewater for FY 2014 is $713.5 million, $585.1 million for the water system and $128.4 million for wastewater and FY 2015 a total budget of $739.6 million, $595.1 million for water and $144.4 million for wastewater.
To support this budget, the Board approved an increase in water rates of 9.75 percent in FY 2014 and 9.5 percent in FY 2015. For the typical water EBMUD customer, averaging 246 gallons daily, the increase will be $3.96 more monthly in FY 2014 and $4.19 more monthly the following year, FY 2015. Wastewater rates will increase by 9 percent in FY 2014 and 8.5 percent in FY 2015, representing an increase to the average wastewater customer of a little more than a dollar a month each budget year. The FY 2014 rates will be effective July 1, 2013 and FY 2015 rates will be effective July 1, 2014.
“A week ago, the U.S. Environmental Protection Agency released its assessment of the nation’s water infrastructure needs and listed California as the state with the greatest need of repair, with $44.5 billion needed to fix its aging water system,” noted Andy Katz, president of the EBMUD Board. “Water delivery system reliability is the foremost issue for EBMUD, public health is at stake.”
Acting EPA Administrator Robert Perciasepe said in a statement last week: “The nation’s water systems have entered a rehabilitation and replacement era in which much of the existing infrastructure has reached, or is approaching, the end of its useful life. This is a major issue that must be addressed so that American families continue to have the access they need to clean and healthy water sources.”
Katz concurs and adds, “maintaining the lowest possible water rates during these difficult economic times remains a Board priority. I commend EBMUD’s staff on their efforts to confront these challenging issues with a budget that reinvests in maintaining our aging infrastructure.”
Even with the proposed increases, EBMUD water rates remain among the lowest in the Bay Area. Of 13 area water providers surveyed, EBMUD’s rates are lower than 10 of the other 12 water agencies.
EBMUD is taking strides to secure the financial side of the business as well. The District recently refinanced much of its debt at lower interest rates which will net District ratepayers $60 million in future savings on their water bills, and the budget will pay a greater share of the District’s costs directly from upfront revenue instead of bond funding thus reducing its long-term debt.
EBMUD, created by public vote more than 90 years ago to provide water, has made major strides to serve its customers even during the worst of times. The District has secured a supplemental water supply that was not available during the last drought through a partnership with Sacramento County and the U. S. Bureau of Reclamations and the construction of the Freeport Facility on the Sacramento River. All of these actions, along with appropriately set rates are good news for bond raters, which in turn is good news for EBMUD whose high credit rating holds interest on debt down and saves ratepayers millions.