• 2
  • 4
  • 3
  • 5
  • 1

2021 Water Rate Study

Financial Snapshot The Scotts Valley Water District is working on a new Water and Recycled Water Rate Study that could affect the cost of water service through proposed changes to rate tier structure and water rates for different customer categories. 

Rate Development Process (key dates)
November 4, 2020            Project Kickoff
Spring 2021                      Financial Plan development
June 10, 2021                   Raftelis Presentation 
July 8, 2021                      Rate Study Update
August 12, 2021               Rate Study to be reviewed by the Board
October 14, 2021              Public Hearing
December 2021                New Rates to Become Effective

The District last reviewed and adjusted water rates in 2016. The new study looks at a five-year period ending in 2026 and focuses on the cost of service and fair and equitable rate development. The cost-of-service analysis determines the costs of operating and maintaining the water system, including repair, replacement and upgrades of capital assets, debt service requirements, and maintaining the target level of reserve funding.

Any increase to water rates is necessary to fund aging infrastructure repair, replacement and upgrade needs. Recent rate-funded projects include: 

Water Main Replacement Program
Orchard Run Water Treatment Plant Upgrades, including new technology to improve water taste and smell
MacDorsa Tank Rehabilitation
Well 7A Replacement 
Automated Metering Infrastructure (i-Meter program).

At the direction of the Board, the rate study process began in October 2020. The goals of the study include determining the District's revenue requirements, conducting a cost of service analysis and creating rate models that show a clear nexus between the District's costs and customer rates.

Based on the cost of service study, a 5% revenue increase per year over the next five years is required to continue implementing the infrastructure projects and maintain appropriate target reserve levels.

The legal framework for setting water rates in California is prescribed by Proposition 218. Passed by ballot initiative in 1996, Prop 218 was established to protect taxpayers by limiting the methods by which local governments can exact revenue from them without their consent. Should the Board decide to move forward with a proposed rate increase, District customers will take part in a Prop 218 process that provides opportunities to engage with the District and weigh in on the proposal, including the right to reject the proposal.