Residents who pay monthly water and wastewater bills to the city of Morgan Hill will get a chance to voice their questions and concerns about proposed rate hikes directly to their elected officials at a Jan. 20 public hearing.
The Morgan Hill City Council, which approved the public review process for the rate increases over the next five years in December, will hear from the public before voting on the plan at the 7 p.m. meeting at council chambers, 17555 Peak Ave. By state law, the council cannot give final approval for the new rates until after the public hearing.
According to Proposition 218 notices sent to about 13,000 city utility customers in December, the average monthly utility bill for a single-family residential customer would go up steadily from the current rate of $90.13 to $121.24 in 2020 if the council gives approval. Each year would see a collective increase in water and wastewater rates of at least 4.5 percent, with the largest increase of 9 percent happening in 2018. The bulk of the increase is attributed to water rates, as sewer rates alone are proposed to go up only 2 percent each year from 2017 to 2020.
City staff and consultants have cited a number of key reasons to justify the rate increases. With the state in the fourth year of an historic drought, customers have heeded the call to cut their water usage by at least 30 percent from previous years. That means the city gets less revenue for the utility fund, while the city’s costs to deliver the services continue to climb, according to city staff.
Another reason for the rate hike proposal is a legal one: state courts determined last year that cities can no longer use tiered rate schedules, which charge customers more per unit of water if they surpass certain levels of usage. Morgan Hill has used such a system for decades, but has been advised by its attorneys to end that practice.
The most controversial aspect of the city’s proposal is to charge about 3,000 ratepayers in the hillsides a surcharge to pay for electricity costs associated with pumping water to higher elevations. At two council meetings in December, residents of the Jackson Oaks and Holiday Lakes Estates communities lined up to tell councilmembers that such a proposal is unfair.
Gordon Siebert, the only city councilmember who lives in the hillsides, would have to pay the surcharge if the plan is approved. At the Dec. 5 meeting, he joined his colleagues in supporting the proposal. He said before the state court decision striking down tiered rates, the costs to pump water into the hills were covered by customers who used higher volumes of water. But that practice is over, and he sees the surcharge as a fair way to cover those costs.
“The surcharge seems fair for me, to follow the lead of other water agencies in similar circumstances to pump the water up the hill. That’s a cost the people on the valley floor do not incur. There’s an awful lot of change due to the state court decision,” Siebert said.
If approved, the rate increases would kick in April 1, and then on Jan. 1 of each subsequent year until 2020. A previously scheduled and budgeted rate increase kicked in Jan. 1 as well.
The proposed water rates include a monthly fixed cost based on the size of each customer’s meter, plus a “volumetric” charge that would increase from $1.87 per unit (100 cubic feet of water) in 2016 to $2.57 by 2020.
The rates are subject to a public review process, which includes the 13,500 customers’ opportunity to mail back their protests if they choose to, as well as the Jan. 20 public hearing.
If more than 50 percent of ratepayers formally protest the proposal, the city cannot enact the new rates. Protests must be written and submitted by mail to a City Hall address listed on the notice. The “owner or customer of record of a parcel subject” to the proposed new rates may protest. Only one written protest will be counted per parcel.
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The final draft of the city’s “Comprehensive Water and Wastewater Rate Study” can be viewed on the city’s website at morganhill.ca.gov. The document explains the finances behind City Hall’s proposal to raise the rates annually over the next five years, and the purpose of a “zonal surcharge” for customers who reside in hillsides and in lower elevations, where water and wastewater need to be pumped uphill.
