Economy |

‘A scary scenario’: Water bills in San Jose headed for costly, decade-long spike starting this summer

Residents across San Jose can expect to see their water bills increase in the coming months no matter what company they get their water from — a trend that could continue year after year for the next decade.

Santa Clara Valley Water District, the region’s wholesale water provider, plans to raise its rates by up to 9.6% each year for the next eight years, followed by an 8.7% jump the following two years. The monthly rate increases would equate to an approximate $4.50 to $5.10 increase per month for customers, according to the water district.

The district’s water hikes would take effect July 1, and would be added on top of rate increases imposed by individual water retailers.

“This is not something that we’re taking lightly, however an inaction now could have potentially detrimental effects down the road, especially if drought conditions worsen,” Santa Clara Valley Water Board Chair Tony Estremera said during a public hearing with the San Jose City Council Tuesday night. “It’s imperative, then, that we act now.”

The district, which provides drinking water and flood control to 2 million people in Santa Clara County, opted not to increase customer costs during the 2020-2021 fiscal year due to financial impacts from the COVID-19 pandemic. But now, Estremera says “circumstances have changed.”

The water district claims that the increases are necessary to purchase water during the state’s worsening drought and to complete maintenance and upgrades to its aging infrastructure.

Most notably, the company recently began a decade-long, $576 million effort to tear down and rebuild an aging dam in Santa Clara County’s largest reservoir, the Anderson Reservoir, which was recently drained to allow for a seismic retrofit. The Federal Energy Regulatory Commission concluded early last year that the 240-foot dam, which was built in 1950 and is located east of Highway 101 between Morgan Hill and San Jose, posed too great of a risk of collapse during a major earthquake.

Though federal regulators criticized Valley Water for taking so long to undertake the project, the water district calls this a “major public safety project” of the utmost importance. It will, however, require the water district to rely more on imported water, which will come at a higher price tag, according to  Aaron Baker, chief operating officer of Valley Water.

San Jose Councilmember David Cohen said the proposed water rate increases for San Jose residents over the next decade were “hard to even fathom.”

“Water is a necessity,” he said during the Tuesday night hearing. “This isn’t something that people are choosing or not choosing, so it’s kind of a scary scenario.”

Because Valley Water provides water to the county’s other retailers like San Jose Water and the San Jose Municipal Water System, those companies also have plans to increase rates  to make up for the water district’s increased prices.

For customers of San Jose Municipal Water System, for instance, rates are expected to increase by a total of about $9 per month next year. Approximately 60% of that increase is due to the cost of wholesale water, according to Jack Provenzano, deputy director of San Jose Municipal Water.

On top of the cost increase proposed by Valley Water, San Jose Water plans to hike up water rates for customers by nearly 30% over the next four years. If approved by the California Public Utilities Commission, which regulates privately owned public utilities, customers with a 3/4-inch water meter would see their rates jump from $92.54 a month to $117.25 a month by 2024, according to the company.

Following a public hearing Tuesday night, the San Jose City Council voted unanimously to request that Valley Water consider reducing or eliminating any rate hikes next year and ask city staff to look for ways to lessen future cost burdens, including implementing a relief program for low-income residents.

“I continue to be concerned and I want us to make sure our rates reflect what is happening to our residents,” Councilmember Sylvia Arenas said during the meeting. “We need to continue to be cognizant of the fact that a lot of our families will take a long time to recover economically from this pandemic.”