March 5, 2015

Santa Margarita Water District Directors Approve Rate Adjustment

Santa Margarita Water District directors on Wednesday approved the District’s first extensive rate adjustment since 2009. 

The primary changes come in customers’ base rates, or fixed charges. Until Wednesday’s action, customer’s fixed charges were only covering about 40 percent of the District’s fixed charges, with water sales making up the other 60 percent. 

The approval moves SMWD toward collecting 100 percent of its fixed costs – maintenance, operations and administration -- with its fixed charges while the per-unit cost of water decreases. The average residential customer’s bill will increase $2.55, from $69.01 to $71.56 when the new rates take effect March 10. 

Several other factors led Directors to consider the rate adjustments to remain fiscally responsible to ratepayers. The District buys potable (drinking) water from the Metropolitan Water District of Southern California (MWD), which in January increased its charges by 5 percent with more increases are expected. Additionally, the District is exploring and investing in new projects to provide locally controlled sources of water that increase reliability and ensure the use of every drop is maximized through recycling. 

The action also takes the first steps of implementing “water budgets,” which allot specific amounts of water per home to encourage conservation. Those who use more water move up in the tiers – with “1” being the most efficient and “5” being the least. Customers who use more water place greater demands on the District’s water system and scarce resources and therefore pay a higher cost per unit of water. 

Because of the time and cost of the rate studies required under Prop. 218, Directors approved stepped increases through 2019. The Board also authorized use of rate stabilization reserve funds of $6 million ($3 million in 2015 and $3 million in 2016) to help soften the increase in sewer charges. For the water rate adjustments, the Board authorized use of $3.1 million refunded by MWD when District employees caught a billing error by MWD. That money will be split $1.9 million in 2015 and $1.2 million in 2016. 

SMWD has a culture of keeping internal costs as low as possible. Through a variety of on-going initiatives, SMWD has decreased its operating costs by $1.1 million a year. SMWD services some 498 meter connections per employee, compared to an industry average of 333. 

More information on the rate adjustment can be found under the “Water and Sewer Rates” section of the District's website.

Santa Margarita Water District is the second-largest in Orange County, serving more than 165,000 people in Coto de Caza, Ladera, Rancho Santa Margarita and parts of Mission Viejo and San Clemente. 

SMWD is currently closed

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