Study: water rates to increase

Water agencies across the state are proud of their customers for meeting mandatory water cutbacks. They are, however, looking at new ways of offsetting the costs associated with the mandatory water conservation. The solution: increasing the price of water.

According to a study by Fitch, 78 percent of utilities said they plan on implementing rate adjustments on tap in the next year, while some have already begun.

“The persistence of this drought has begun to outstrip the tools utilities typically use to manage the state’s hydrological cycles,” said Kathryn Materson, senior director at Fitch. “Despite constitutional considerations and legal scrutiny of water rates, rate increases remain one of the most valuable tools utilities have in the face of greater conservation and lower revenues.”

Based on Fitch’s survey, the median water rate increase in 2016 is expected to be around five percent, while individual water utility rates will increase between zero and 31 percent.

In order to offset smaller amounts of revenues,

• 52 percent cut operating expenditures
• 46 percent will use financial reserves
• 37 percent will divert from their planned capital spending
• 2 percent said they will consider debt service restructuring
• None plan to limit new customer growth