Visalia Water Rates Increase Starting January 2017

Water’s about to get more expensive in Visalia.

The Visalia City Council voted to approve water rate increases at starting with a less than 1% raise in January of 2017, a 2.5% raise in 2018 and an additional 2.5% hike in 2019.

City documents, formed from a 350-page agreement between the city and Cal Water, state that the total increase would equal 15% over three years. Current residents have already paid 8% of that due to a past increase. New households/businesses that moved into Visalia since 2014 will pay an additional 2%, satisfying an overall 10% revenue increase on top of the above increases that Cal Water has requested.

The new rates were approved at the council’s September 19 meeting, with council voting 4-0 to accept the water rate increases. Councilmember Greg Collins was absent.

The California Public Utilities Commission (CPUC) requires a review of utility rates every three years.

Cal Water initially sought a 34.4% increase over three years — a 26.9% increase in 2017, an additional 3.5% in 2018 and a 2.3% increase in 2019. The desire for capital improvements motivated Cal Water’s proposed increases, said Leslie Caviglia, Visalia’s assistant city manager.

City staff worked with the California Office of Ratepayer Advocates (ORA) to reduce the increase to less than half of what Cal Water originally requested. The city staff members involved with the negotiations and research were Leslie Cavglia, Eric Frost, Kim Loeb, Adam Enis and Nick Macia.

According to the staff report, “The CPUC conducted a public hearing before an Administrative Law Judge on the Visalia rate increase and Selma rate increase on September 8, 2016, in the Visalia Convention Center. About 30 members of the public were present at the hearing including Cal Water and City staff. Based on a query from the judge to the audience, it appeared all members of the public in attendance were from Visalia and none from Selma. Five persons presented testimony. Two indicated they were not opposed to the increase, while the other three indicated opposition.”

According to Caviglia, city staff were able to reduce the increases by providing specific local data and information, including soil types and previous growth trends, enabling Cal Water, ORA and the City of Visalia to negotiate pipe replacement price reductions without compromising the reliability of the water system.

The city also successfully negotiated to reduce another facet of the proposed hikes by taking into account that Visalia residents have paid an 8% Sales Reconciliation Mechanism, a surplus to make up for Cal Water losing revenue from reduced water usage.

According to the staff report, “the elimination of the 8% SRM in 2017 will offset 8% of the revenue requirement increase, and the additional 2% rate increase of the proposed 10% revenue increase for 2017 will be paid by new households and businesses that have come to Visalia since the last rate case (2014).”

As a result of the 8% from the SRM, and 2% from new accounts, most Visalia residents will not pay a 10% increase for the first year. The staff report also pointed out that the actual amount that the bill goes up usually differs from the amount of the revenue that is approved by the CPUC.

Caviglia reported during the city council meeting that Visalia could continue to fight the overall 15% increase or settle now. She said that Bakersfield has decided to continue fighting the rate case further, but that after reading their case, she does not believe they will win.

“While the City of Visalia would be agreeing to the terms of the settlement, the document specifies that the City is not supporting the rate increase,” the staff report reads, “This approach reflects ongoing concerns about the impact of water rate increases on Visalia residents and businesses, but also recognizes that it is unlikely a better settlement can be reached in the CPUC rate setting process.”

Caviglia recommended that the Visalia City Council authorize the city manager to sign the settlement agreement related to the California Water Service rate case pending before the CPUC.

Council Member Amy Shuklian said a 15% increase for some people is “still a big hit to a lot of folks.”

Mayor Steve Nelsen said to continue fighting is futile, and stated that the CPUC process is unnecessarily complicated.

“We are rowing with one paddle in the water until something changes in Sacramento,” Nelsen said.

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