‘Stop the bleeding’: Pleasanton proposes big rate increases to keep water program afloat

The city of Pleasanton is proposing significant water rate hikes to avoid insolvency and keep up with water system maintenance and operation costs.

Water rates in Pleasanton could go up 30% this year under a proposed plan that would also raise rates and additional 20% in 2025 and another 12% in 2026.

The proposed increases — the first of which would be effective Nov. 1 — address what officials have described as the dire state of the city’s water enterprise fund, which is meant to be sustained by ratepayers but hasn’t kept up with water delivery and maintenance costs. The fund is at risk of becoming insolvent by 2025 as reserves are drawn down, according to the city.

“It really is designed to stop the bleeding,” Pleasanton City Manager Gerry Beaudin told the City Council at its meeting Tuesday. “We have a systemic issue that we need to address.”

Beaudin characterized the rate plan as the city playing catch-up after not raising water rates for the past three years. Before that, from 2015 to 2020, rates were adjusted only to keep up with inflation and have not been enough to maintain aging infrastructure and plan for anticipated water supply expenses connected to city groundwater wells that have been found to be contaminated with PFAS, or “forever chemicals.”

The chemicals have been used in products such as firefighting foam and some nonstick cookware for decades and, according to the U.S. Environmental Protection Agency, may be linked to harmful health effects.

Officials say the proposed increase would amount to about a $33 increase for a typical single-family residential ratepayer on the water portion of their bimonthly utility bill in the first year. According to a city staff report, a single-family residential customer who currently pays about $1,110 in annual water charges, or $92.50 a month, would pay about $1,560 annually, or $130 a month, under the proposal.

The city manager noted that Pleasanton ranks at the bottom of the list for rates charged by water agencies in the region. According to the staff report, Pleasanton’s residential water users pay hundreds of dollars less in annual charges than those in Livermore and Dublin.

No changes have been recommended to the city’s tiered, usage-based rate structure for single-family residences. And no changes have been recommended to the commercial and multi-family residence rate structures.

The council voted 4-1 to move forward with the proposal, starting a rate-setting process that will include a 45-day protest period and culminate in a public hearing Sept. 19 when the rate plan could be adopted. Notices of the proposed rate increases are scheduled to go out to ratepayers beginning Aug. 5 and also will include proposed sewer rate increases tied to inflation over the next three years.

The first sewer rate increase would be 5.3% effective Nov. 1, and result in about a $1.47 increase on a single-family residential ratepayer’s bimonthly bill.

Vice Mayor Jack Balch — who acknowledged a need for more revenue to shore up the city’s water fund but questioned underlying cost assumptions guiding the yearslong plan — was the sole no vote.

“I think we could look at alternatives that would help the community with the rate increase but also achieve the goals,” Balch said at the meeting, suggesting there could be lower water rate increases in the near term while still addressing the city’s need to stabilize the city’s water program and build its reserves.

Few Pleasanton residents spoke to the proposed rate increases at the City Council meeting Tuesday, though some raised concerns about the steep rise in rates and continued to push for a culture of water conservation.

Pleasanton normally purchases 80% of its potable water from the regional Zone 7 Water Agency, with the remaining 20% supplied by the city’s groundwater wells, according to the city. The city is studying myriad water supply alternatives after its wells tested for PFAS, which could result in the construction of new wells or treatment facilities, or other options that could see the city buying 100% of its water from the Zone 7 water wholesaler and building the necessary infrastructure to support the move. That study is expected to be completed in September.

In 2020, Pleasanton began developing a plan for a PFAS treatment and wells rehabilitation project that was tagged with a preliminary estimated cost of about $46 million, according to the city. The City Council last year pressed pause on that project because of the associated costs and directed staff to look into potentially less costly options to make up the 20% of water supplied by city wells.

Mayor Karla Brown said the city has a commitment to its residents to provide clean, safe and reliable drinking water, and it’s at risk of falling behind on that commitment.

“This city — and I was part of it — made a mistake by not instituting rates back a few years ago. Three years with no rate increases is exactly how we’ve created this problem,” Brown said, adding, “We need to stop the bleed or start repairing the fact that we have a repair and replacement fund that’s not sustainable.”