SFID Proposed New Water Rates

Author: Phil Trubey

Date: December 01, 2019

As we reported here over two months ago (includes a 2020 rate calculator), the Santa Fe Irrigation District (SFID) is raising water rates again and has a new, complicated, rate formula. What does this mean for Rancho Santa Fe residents? Here we break it all down.

17 Years of Rate Hikes

To understand the new rates (expected to go into effect with the April 2020 bi-monthly bill), we need to go way back in time to when the SFID charged all their customers the same rate per amount of water used. Up until mid 2006 (over 13 years ago), single family home customers were charged the same rate per amount of water used whether they used a small amount or large amount of water. This changed in 2006 with the introduction of three rate tiers, and changed again in 2016 with the introduction of four tiers.

With the introduction of rate tiers, SFID was able to pass along cost increases to their largest customers while keeping rate increases relatively modest for small customers. 

This chart shows the effect of these rate decisions on a relatively large customer, one that uses an average of 400 HCF per bill (or 200 HCF per month) compared to a typical Solana Beach customer that uses 40 HCF/bill:

In the single rate era before mid 2006, SFID was charging all customers the same price per amount of water used. When they went to a three tier rate structure in mid 2006, blended rates per HCF that customers paid started diverging. In fact, the 40 HCF/bill customer actually got a rate decrease in the move to three tiers while larger customers got an increase. The move to four tiers in 2016 was almost farcical for large customers. Smaller customers (probably over a third of Solana Beach customers) saw their rates decrease yet again, all the way back to year 2010 levels, while larger customers got a huge rate hike. 

This is why the Rancho Santa Fe Association sued the SFID as it was about to impose another rate increase a year ago. On a 3-2 vote, the SFID Board decided one year ago to shelve the rate increase and continue working with a costing consultant to figure out an equitable rate structure.

Their latest price increase proposal doesn't do much to change the inequitable situation. Here's what the next three years of proposed rate increases looks like for the same 400 and 40 HCF/bill single family home customers in the shaded section to the right.

The first year's increase only puts small customers pretty much back to what they were paying from 2013 to 2016. It can't even be considered an increase really. Meanwhile large customers get to pay the highest per unit water rates ever charged by the SFID. Again.

Cost of Service Study (COSS)

As the RSFA pointed out in their lawsuit a year ago, the way the SFID has been inequitably charging larger customers is illegal under CA law which directs utilities to charge each parcel an amount based on its cost of service. In 2018, the SFID had hired a costing consultant and the new five tier rate structure is based on their Cost of Service Study (COSS).

The new rate structure does manage to raise rates for some smaller customers while keeping rates for larger customers relatively unchanged.

But this is after 13 years of unequal rate increases. It's disingenuous and doesn't address RSFA's central point that rates are seriously inequitable now.

The Association is left arguing that the COSS is flawed. Click here to read RSFA's rebuttal against the COSS and why the proposed rate hikes are still unfair.

Unequal Representation

The fundamental problem large Rancho Santa Fe customers have is that the SFID has a lot more small customers (primarily in Solana Beach, which has about three times the population of Rancho Santa Fe) than large ones, which means that large customers have only one and a half of five SFID Board members that represent them. On any SFID Board action, large customer interests will get routinely outvoted.

Which is why the RSFA resorted to a lawsuit, and may do so again, given that the "ballot box" isn't going to address the inequitable rate structure.

Protest Forms

In the latest SFID mailer sent to all SFID customers, they included a handy protest form. I would urge all customers to fill it out, stick it into an envelope and mail it to the SFID. If you've already thrown out their 8 page explanation for the very complicated rate increase, you can download just the protest form here. 

Public Hearing

The SFID will hold a public hearing to consider adopting this rate increase on January 16, 2020 at 8:30am at their offices at 5920 Linea del Cielo. 

Analysis Notes: The above analysis ignores the effects of the four months (two billing cycles) of penalty rates SFID charged in late 2015 to large customers. All rates used in this analysis is for HCF rates only, and does not include meter fixed charges. Also, all rates used herein are for single family homes. The SFID has other rate classes that include agriculture or multi-family. A similar analysis for those rates would show different results. Future rates were calculated assuming a 3/4" service for the 40 HCF/bill customer and a 1" service for the 400 HCF/bill customer.