Watsonville eyes utility rate hikes that would raise a typical family’s bills 22% over five years

Quick Take:

The Watsonville City Council on Tuesday is set to consider rate increases for water, sewage and solid waste. If moved forward by the council, the rate increases would undergo a 45-day public notice period leading to a May 25 hearing and final vote.

Watsonville is considering utility rate hikes that would raise the monthly bill of a typical family household from $167 to $203 over the next five years, an increase of about 22%.

Affecting residents’ water, wastewater and solid waste bills, the proposal to move the rate increases forward will be reviewed by the Watsonville City Council at its Tuesday meeting.

It calls for wastewater rates to increase by 7.5% annually through 2026; water rates by 1% each year; and solid waste by 7.5% for the first three years, then 5% annually thereafter. Changes to the city’s water pricing structure could offset some of the cost increase for customers with less usage.

The funds, city officials say, are needed to get out ahead of looming deficits driven by critical projects, market changes and new state regulations.

Without a rate hike, city officials say Watsonville’s wastewater program faces a structural deficit that would drain its reserves by 2026 as several improvement projects converge. Reserve funds for its solid waste program would be depleted by 2024.

The wastewater treatment plant is in need of nearly $40 million in critical capital improvements over the next decade that “if neglected, could prove catastrophic,” according to a staff report. Those projects include new and rebuilt pump stations and comprehensive overhaul of its electrical infrastructure.

Watsonville’s water infrastructure has more than $100 million in improvements planned over the next three decades — including construction of a new reservoir by Airport Boulevard, and three new chromium treatment plants soon to be mandated by state law.

Consideration of fee increases comes at the recommendation of Raftelis Financial Inc., a consultant hired by the city to conduct a revenue requirements study for its utilities. The study was completed in February.

Solid waste costs are being driven by market changes, increased costs to haul to a regional landfill, and new state requirements to diver waste and offer organics recycling to many residents and businesses.

Moving the increases forward would open up a 45-day public notice period during which ratepayers could send written protests to the council. A public hearing, and a city council vote to approve the changes, would follow May 25.

If approved, the new fee schedule would take effect in July.