EBMUD proposes a plan to address the negative impacts of drought and recession and set the 90-year-old District on a secure path to the future

East Bay Municipal Utility District General Manager Alexander R. Coate presented his rate proposals to the District’s Board of Directors today to support a two year budget plan geared to protect the public’s $14 billion investment in the District’s massive water and wastewater system.

The rate proposal would support 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 over a service area seven times larger than the city of San Francisco. The proposal would also place the District on more stable financial ground on the heels of a drought, declining water sales and the negative impacts of cuts necessitated by years of economic instability.

EBMUD’s proposed 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 proposed total budget of $739.6 million, $595.1 million for water and $144.4 million for wastewater.

To support this budget plan, EBMUD proposed water rates would increase by 9.75 percent in FY 2014, and 9.5 percent in FY 2015. For the typical water EBMUD customer, who averages 246 gallons daily, the increase would be $3.96 more each month in FY 2014 and $4.19 more monthly the following year, FY 2015. Wastewater rates would 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.

If approved by the District’s Board of Directors on June 11, following a public hearing, the FY 2014 rates would be effective July 1, 2013 and FY 2015 rates would be effective July 1, 2014.

“In much of the East Bay for nearly a century now, it has been easy to take good water for granted,” said General Manager Coate. “The pipes and facilities that bring us this great water, some in use before the District was formed more than 90 years ago, must be improved to guarantee the high quality and reliability the District and its customers are accustomed to. At the same time, as we look to the future, we are taking actions to get the District on more stable financial grounds as we emerge from a long period of economic uncertainty.”

EBMUD has recently refinanced much of its debt at lower interest rates which will net District ratepayers $60 million less on their water bills, and adopted a financial plan that is intended to bring more savings by paying more of its bills in cash and avoiding costly interest charges among other things.

But the District was formed to provide water and to that end EBMUD 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.

In recent years, EBMUD made deep cuts across the board to navigate through economic turmoil. Employees chipped in as union members voted two years ago to forgo general raises to assist the District and its ratepayers through tough times. But the cuts were still impactful. The District was unable to replace as many miles of aging pipe as it had hoped. This proposal would lead to significantly more pipe being replaced before it breaks, avoiding catastrophic failures that could lead to major interruptions in service for customers.

Even with the proposed increases, EBMUD water rates would remain among the lowest in the Bay Area. Of 13 area water providers surveyed, EBMUD’s rates would still be lower than 10 of the other water agencies.

“Maintaining reasonable water rates is a high priority of our Board,” said Coate. “Our staff has done a great job of balancing the need to protect our infrastructure and safeguard public health while making every effort to minimize the financial impact on ratepayers.”