Why Sonoma Water rates are rising even with widespread conservation

After widespread conservation efforts led to a drop in water deliveries and revenue, the Sonoma County Water Agency voted to increase rates last week to address aging and seismically unsound infrastructure.

On April 18, Sonoma Water’s board of directors approved a 9.42% to 10.56% rate increase for the water it wholesales to nine local municipalities, including the city of Sonoma and Valley of the Moon Water District. Officials estimate it will amount to a $2 to $3 increase on customer’s monthly bills.

Local customers largely heeded conservation requirements directed by the state following California’s driest three-year stretch in recorded history. That meant Sonoma Water made fewer deliveries, causing a drop in revenue, finance manager Jake Spaulding told the Sonoma City Council at its March meeting.

“This year, we are using $1.5 million of our prudent reserve to cover anticipated revenue shortfalls, because deliveries are coming in significantly under budget from the previous year,” Spaulding said, referring to the deliveries it makes to customers. “Right now, we’re forecasting a revenue shortfall of $4 million to $6 million.”

The agency expects to pass additional rate increases of 9% to 10% annually for the next five years, Sonoma Water Finance Manager Lynne Rosselli said. Those cost hikes will affect its nine wholesale customers, which will each determine how much to pass on to customers.

City of Sonoma water users should expect an increase in rates in line with the 10% this year, according to Director of Public Works Mike Berger. The impact on Valley of the Moon Water District’s customers in the unincorporated Sonoma Valley is still unclear, VOMWD general manager Matt Fullner said.

The proposed rate increase “exceeded the assumptions made in our budget setting process” according Fullner.

“The district’s rate plan had assumed an annual increase of 5.6% to wholesale rates on average. This nearly 5% delta will have a much smaller impact to district customers, because our wholesale purchases, while substantial, are only part of our total expenses,” Fullner wrote in an email. “We have not yet made final determinations for how this will be accommodated.”

Due to its infrastructure, Sonoma Valley residents pay more per acre foot of water than customers in Santa Rosa or Petaluma Valley, according to maps from Sonoma Water. An acre-foot of water in Santa Rosa costs $1,173, or $1,162 in Petaluma, while Sonoma Valley water users pay $1,348 per acre-foot.

But if less water is being used, why are customers paying more?

If customers had failed to conserve appropriately, the agency would be required to seek out other sources of water, which can be a costly endeavor.

“Each water and wastewater customer has avoided the costs of acquiring, delivering and treating additional water supplies that would have been necessary had they not conserved,” Sonoma Water Communications Manager Andrea Rodriguez said. “When everyone does their part to conserve, the entire community benefits from lower rates in the long term, sustainable water supplies and healthier watersheds.”

But it’s not only less demand that has caused Sonoma Water to propose higher rates.

The water utility is also planning capital improvement projects to address aging infrastructure and new initiatives. These include $6.34 million for hazard mitigation, $5.94 million to increase the resiliency of infrastructure and $9.78 million for environmental conservation systems.

“This year, similar to last year, we have a heightened need for infrastructure repairs and upgrades so that we can continue to maintain the system and reliably operate it 24/7,” Spaulding said. “Most of our facilities are 45-65 years old.”

Additionally, like other water wholesalers in the Bay Area, the agency attempted to keep its rates steady in the face of a turbulent economy during the pandemic.

“We've maintained our rates during COVID-19 with very small incremental rates there knowing everyone's situation and the economy,” Rodriguez said. “But unfortunately, now is the time where we've got to prepare for a larger increase.”

Contact Chase Hunter at chase.hunter@sonomanews.com and follow @Chase_HunterB on Twitter.