Rate Increase FAQ
Who performed the rate study, and what were its key findings with regard to revenue needs?
The firm Raftelis performed the rate study over approximately six months. They were hired because a rate study is a highly complex undertaking requiring specialized expertise that local water districts do not have on staff. Raftelis is a reputable consulting firm, that has conducted rate studies in large and small districts across the state, including City of Santa Cruz Water Department and Soquel Creek Water District. They relied on SLVWD staff and Board to provide data, insights, and priorities particular to SLVWD, and then conducted their analysis and offered options based on that input.
Raftelis found that, in addition to ongoing cost increases due to inflation and more dramatic cost increases tied to materials and construction, SLVWD is facing specific and substantial short-term and long-term challenges that require increased revenues:
Damage from the CZU fire and 2022-23 winter storms (only partially reimbursed by FEMA)
Watershed protection and fire hardening infrastructure
Long-delayed infrastructure repair and upgrades
Increased state regulatory requirements
Costs associated with state-mandated aquifer protection through the Santa Margarita Groundwater Agency
Rebuilding reserves badly depleted by repair costs from the CZU fire and 2022-23 winter storms
The rate study employed a financial model that accounted for both anticipated annual operating expenses and the essential infrastructure projects identified in SLVWD’s capital improvement plan. In order to meet the revenue requirements, Raftelis recommended rate increases of 10% in each of the next two years, and 7% in each of the remaining three years. (These percentages do not include the current $9.67 fire surcharge, which will end in 2026 and will not be replaced.)
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