Re: Proposed SCV Water rates are designed to unify the agency and balance the cost of service.
At SCV Water, we are committed to responsible water stewardship and providing service at a reasonable cost. As part of that responsibility, we regularly consider our rates, the cost of operations and the future health of the agency.
As such, SCV Water is considering new rates over the next five years to ensure revenue keeps pace with rising expenses. That isn’t the only reason the agency is considering changes, however.
When SCV Water began operating as a new agency in 2018, it combined three separate agencies that now make up our divisions – Valencia, Santa Clarita and Newhall. Each of these divisions has had its own rates and differing amounts of legacy debt upon joining SCV Water.
Our vision is to unify the divisions into a single agency. As part of that, we looked at different ways of combining the rates into a single rate plan that adequately funds the agency. Our goal was for the rate plan to be fair, allocated equitably across all customers, and to reflect the combined cost of service.
Under the proposed rate changes, the first year is designed to put customers in all divisions on the same footing. For this reason, some water bills will go down, and some will increase. SCV Water will not increase its revenue in that first year. It is the only year where the rate change would differ by division.
In addition to the ongoing cost of service, which would be paid at the same rates by all customers, debt incurred by each agency prior to the creation of SCV Water (legacy debt) would be broken out separately and paid only by customers in that division. This legacy debt is broken out as a separate line item for the Santa Clarita and Valencia divisions. Newhall had the highest rates prior to joining SCV Water, in part as a planned measure to pay down its debt levels faster, which was accomplished in June 2020.
To minimize the impact on customers, SCV Water restructured the loan terms on Valencia Division’s debt, which reduced the monthly payment by cutting the interest rate and extending the repayment period.
We know there is concern about how these changes would affect customers, and we are dedicated to mitigating the impact.
In July, the monthly bill for a Valencia Water Division customer with a ¾-inch meter who uses 18 units of water would increase by $3.99 per month. Santa Clarita Division customers with a ¾-inch meter who use 18 units of water would see a monthly decrease of 2 cents, and Newhall Division customers would see a reduction of $11.24 per month.
Overall, 44% of SCV Water customers would see a decrease in their bill in the first year, with no overall revenue increase for the agency. In years two through five, rate changes would be uniform across all divisions, with annual increases averaging $3.99 a month for a residential customer using 18 billing units of water.
Beyond paying for the water at your tap, rates fund pumping, treatment, testing and billing, as well as replacement and repair of equipment and pipelines. Without maintenance and upgrades, our system would not be able to reliably deliver safe water.
One of the most vital new improvements we are making is the construction of facilities to treat PFAS, common, manmade chemicals from industrial and consumer products such as cookware and carpet that have affected groundwater supplies. Building new facilities is critical to sufficiently addressing the PFAS issue and our ability to continue providing dependable water. Our first new PFAS treatment facility opened in November and others are under construction or in design. While these facilities will assure water quality for our customers, they will cost millions of dollars to build and operate. This is a key driver for the need to increase water rates.
To help ratepayers understand the potential changes, a third-party ratepayer advocate reviewed the rate proposal and made recommendations on behalf of the customers we serve. Public involvement is critical to this process, and we are dedicated to engaging with the community. A notice of public hearing was mailed to all customers explaining the proposed changes and two virtual informational meetings were held. Recordings of these meetings and information can be found at yourscvwater.com/rateplanning.
Customers will find a rate calculator on the site, where they can input water bill data to see how the changes would impact them. Customers can reach out to the ratepayer advocate at [email protected].
Property owners or customers who want to formally object to the proposed changes can send a written protest to SCV Water. California law under Proposition 218 states that written protests must be received. This means that, while we can hear and receive your concerns, SCV Water cannot accept official protests via email, fax, or verbal comment. The mailed notice provides instructions for how to file a written protest, and a copy of this notice is posted online.
The public is invited to attend a public hearing where the board will hear all protests and consider what action to take on the proposed rate changes. The hearing will be held via Zoom 6:30 p.m. June 15. Details are available at yourscvwater.com/rateplanning.
General Manager, SCV Water