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Posted on: April 20, 2017

Water Rates Cost Allocation Updates

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     A recent vote by the Poway City Council that changes how the city allocates water costs won’t affect current rates, but it is expected to have a positive impact when the city sets water rates in 2018. During the January public water rate hearing, questions were raised about how the city allocates overhead costs to water and whether certain general fund revenues could be redirected to the water fund to help reduce Poway water rates. Council called for a review to see what action could be taken.

     At the April 4 City Council meeting staff presented an overview of the cost allocation model and presented several recommendations to reduce costs to the water fund beginning next fiscal year. The City Council unanimously approved the following changes that will be incorporated into the Fiscal Year 2017-18 budget including:

  • Distribution of energy cost savings from the approved solar energy facility to the water fund;
  • Reimbursement to the water fund for water used at city facilities at the raw water cost;
  • Update cost allocation of staff for water conservation activities (time/support costs previously allocated to the water fund would be absorbed into the general fund).

     Despite these changes, water rates will likely continue to rise, but the final amount will be lower due the Council action. In discussing water rates at the April 4 meeting, the City Council acknowledged that the problem seems to be less about the rates Poway charges it customers and more about the high rates the city must pay to buy its water.

     Though the net impact of the changes for the average water customer is projected to be minimal when water rates are set in 2018, councilmembers found value in going through the review. It showcased the efficiency in which the city runs its water utilities and that the city’s cost allocation structure is fair, legal and sustainable.

View the April 4 council meeting...
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