Water Rate Changes Being Considered For Dublin, San Ramon

Many residents in Dublin and parts of San Ramon could begin paying more for water beginning in next month. Depending upon what directors of the Dublin-San Ramon Services District (DSRSD) decide during their July 2 meeting, water will cost more for some homeowners beginning July 1. Others will be paying less.

Up for debate will be a series of adjustments to water rates and service fees charged for providing potable (drinking) water service to more than 26,000 residential customers. If the adjustments are approved, DSRSD officials estimate the average single-family residential customer will see an annual increase averaging about $40, assuming wholesale water costs don’t rise.

Following a public hearing Tuesday night, directors postponed a vote on the rate adjustments for two weeks.

There are many reasons why water bills are going up here and in many other cities across the state. Water is becoming an increasingly scarce resource due to drought, population growth and other factors.

In California, there are some 935 independent special districts like DSRSD that provide water service to millions of residents.

Created more than 60 years ago, DSRSD began providing drinking water to Dublin residents in 1961 and expanded service to San Ramon’s Dougherty Valley in 2000 when that area – generally encompassing parts of the Gale Ranch and all of the Windermere subdivisions -- began experiencing explosive growth.

DSRSD buys its water from a wholesale supplier and sets its price to residential and other customers based on what it pays for water and how much it costs to operate and maintain its 321 miles of drinking water pipelines, 68 miles of recycled water pipes, and 16 storage reservoirs, including two for recycled water.

DSRSD also provides sewer service to Dublin, a separate section of San Ramon and Pleasanton under contract. Some 22,000 single-family residential wastewater customers pay for that service through annual property tax levies.

Last year DSRSD’s water operations generated $36 million in revenue while incurring $39 million in costs, recording a $3 million operating loss. As water becomes an increasingly more valuable commodity because of its growing scarceness these operating costs are expected to keep rising. A DSRSD study conducted earlier this year projected a 40.4 percent increase in the price it will pay for water over the next five years, an expense that is passed on to customers.

DSRSD spokesperson Sue Stephenson told Patch that as a special district DSRSD is prohibited from making a profit and its rates must be "fair and equitable" for all customers depending upon how much water they use.

For that reason, Stephenson said, the District funds its low income customer assistance program with rental income from telecommunications companies who place cell towers on DSRSD’s reservoirs.

Although DSRSD sells nearly 1 billion gallons of recycled water every year for irrigation and other uses, it’s the 2.9 billion gallons of potable water sold to nearly 26,000 residential, commercial, industrial and institutional account holders that provides the bulk of DSRSD’s water revenue. Each day more than 8 million gallons of potable water flows through DSRSD pipes, about 3.6 million gallons going to single-family residential customers, who annually consume 1.3 billion gallons, or about 45 percent of the total drinking water sold.

Most residential customers don’t read the fine print on their water bills, which break down each component of the overall water use charges. Depending upon usage and location current bills can contain as many as six cost categories.

Water Bills Simplified

What DSRSD’s five directors will consider Tuesday is not an across-the-board rate increase, but rather adjustments to existing component charges. The most significant change is the elimination of the District’s three-tiered water consumption pricing, an action spurred by a Southern California court decision dictating how customers must be charged for the actual amount of water they use.

A unit of water is 100 cubic feet, or 748 gallons. Under the current tiered consumption rates, a residential customer now pays between 57-cents and $1.60 per unit depending upon water usage during a billing period. To bring rates into compliance with the court decision prohibiting tiered pricing, DSRSD proposes to consolidate residential tier-based and commercial seasonal-based consumption rates into a flat $1.30 per unit beginning July 1.

If the proposed rate changes are approved, a typical residential customer will see their fixed water service charges reduced slightly and the tiered water consumption charges consolidated into a single flat rate. Power charges, paid by customers located in areas where water must be pumped uphill to reservoirs, will also be reduced.

Charges for DSRSD’s cost of water will vary depending upon any wholesale price increases. In addition, San Ramon residential water customers can expect to see a new service fee added to property tax bills.

• Water Rate Changes Will Add New Service Fee To Tax Bills

Approval of adjustments to DSRSD’s fixed service charges will also result in substantial reductions to what small business and other commercial customers will pay.

Assuming no increase in wholesale water rates, DSRSD estimates a typical single-family residential customer consuming 18 units every two months will see their bi-monthly bills increase by $6.81. However, residential customers consuming more than 18 units will see larger bills. A customer using 40 units of water during summer months, for example, would pay nearly $29 more.

Water Wholesaler Plays Big Role

What Dublin-San Ramon Services District customers ultimately will pay for water is in large part decided by the seven-member board of the Zone 7 Water Agency, a special district created in 1957 that sells wholesale water to DSRSD, Pleasanton, Livermore and the California Water Service Company, a subsidiary of the California Water Service Group, a publicly-traded company providing water in San Jose and several other.

Besides providing treated drinking water and untreated agricultural water, Zone 7 provides flood control and groundwater management services within some 425 square miles of eastern Alameda County.

As one of 29 State Water Supply Contractors, a group that includes the giant Metropolitan Water District of Los Angeles, about 90 percent of the water Zone 7 sells is obtained from California’s State Water Project (SWP), a 700-mile water storage and delivery system composed of reservoirs, aqueducts, power plants and pumping facilities operated by the California Department of Water Resources and financed by water users. One of those reservoirs is Lake Del Valle southeast of Livermore where much of Zone 7’s water is stored. The rest comes from groundwater basins and other sources.

Zone 7 signed a 75-year contract with the state in 1961, an agreement that’s been amended 26 times, most recently in January when it was extended until 2085. Under the contract Zone 7 is allotted 80,619 Acre-feet (26.3 billion gallons) of water annually. An Acre-foot of water is defined as the amount of water needed to cover one acre of surface area to a depth of one foot, a volume equaling 385,851 gallons.

Water Supply Not Guaranteed

But just because Zone 7 is allotted a certain quantity of water, the SWP contract doesn’t guarantee it will receive every drop, which means if supplies from the state aren’t sufficient the water agency must go elsewhere to obtain water.

Valerie Pryor, Zone 7’s general manager, told Patch that over the last decade her Agency received 40,000 Acre-feet, or about half the allotted amount.

Each year Zone 7 is told how much water it will get and how much it will cost based on SWP calculations of its operating expenses and other costs.

For example, Zone 7 will be assessed a portion of the $1 billion spillway reconstruction project at the Oroville Dam which Pryor estimates at around $13.9 million to be paid over several years. Depending on the outcome of the debate on the controversial Water Fix proposal for construction of diversion tunnels under the Bay Delta, Zone 7, and ultimately DSRSD customers, will eventually see some of those costs added to water bills.

During the 2018 fiscal year Zone 7 paid $59.3 million for water from SWP and other sources and for storing water, an increase of 31.4% over the previous year. This expense, coupled with Zone 7’s other operating costs for providing water treatment and maintaining and expanding its own infrastructure, are the basis for setting rates it charges retailers. Last October Zone 7 directors approved increases in its wholesale water rates averaging 6.8% annually through 2022.

Pryor said her agency has provided DSRSD with cost projections for its 2020 fiscal year beginning next month based on bills Zone 7 received from the state. “All years after that are escalated by 10% per year, based on recent trends in SWP costs,” she said.

As a retailer, DSRSD passes wholesale costs along to its customers, identifying them on bi-monthly bills as “Zone 7 Cost of Water.” For DSRSD customers that charge will be $3.48 per unit. For the typical DSRSD residential customer consuming 18 units of water the Zone 7 charge would be about $63 each billing period. Those consuming an additional 10 units, for example, would pay $97.

Under its 30-year year contract with Zone 7, DSRSD may purchase “all water required” to serve its customers. With residential development in its service area continuing at a brisk rate, DSRSD projects annual drinking water consumption will increase an average of 3.4% annually, reaching 3.5 billion gallons by 2024 when the Zone 7 contract expires.