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May 10, 2011 > Sewer and water rates increase

Sewer and water rates increase

By Abraham Cruz

Milpitas City Council conducted a public hearing at which property owners commented on proposed water and sewer rate increases.

The proposed increases are attributable to several factors. As a full-service city, Milpitas purchases its water from two agencies at wholesale prices - the San Francisco Public Utilities Commission (SFPUC) and the Santa Clara Valley Water District (SCVWD) - and pays for sewage treatment services by the City of San Jose. All three agencies anticipate raising water and sewage costs over several years to fund major rehabilitation projects.

Milpitas purchases 60 percent of its water from the SFPUC, which is projecting a 47.4 percent wholesale water increase this year, including five years of back-to-back double-digit increases. These increases will finance a $4.6 billion Water System Improvement Program (WSIP) to upgrade the seismic reliability of its storage and transmission system. The SFPUC infrastructure is 70 years old and highly vulnerable to earthquake damage which would leave residents without a safe, potable water source anywhere from one to 60 days, or more.

The SCVWD, which supplies the remaining 40 percent of the city's water, proposes a 9.4 percent increase in its water rates. The City of San Jose has a $2.2 billion Plant Master Plan reconstruction program to overhaul its 55-year old sewage treatment plant. The plant serves the cities within Santa Clara County and all are expected to share in the reconstruction costs by paying higher sewage rates. The plant improvements will utilize green technologies to generate energy from waste and remove malodorous, open-air sludge lagoons.

Finally, the Milpitas Public Works Department is also designing and constructing seismic upgrades to its water and sewer systems to ensure continued service in the event of a major earthquake. The improvements alone are estimated to cost $25M; sewer improvements have not been estimated but are expected to cost less.

The cost of water is measured in units of one hundred cubic feet (1hcf), which equals 748 gallons. The average Milpitas single family residence uses 1,150 cubic feet of water per month, averaging a water and sewer bill of about $70 per month. The first annual increase will raise the bill to about $79 per month. While costs are not expected to fall, rate increases are expected to level off by 2015.

If the city does not adopt the proposed water and sewer rate increases, there would be cuts to service improvements to save costs, the need to subsidize the price by reducing spending on other city services, or sale of the utilities, i.e. privatization would result in much higher costs than those proposed by the city.

City staff conducted several community meetings to inform homeowners of the proposed rate increases and where their questions could be answered. At the May 3 Council meeting, although many residents voiced their opposition to the rate increases, the City Clerk received only 523 letters of protest, less than 50 percent (or 8,572) required to block the increases.

Council adopted the water and sewer rate increases which will be effective June 2, 2011.

View the utility rate analysis report, at www.ci.milpitas.ca.gov/_pdfs/council/2011/021511/item_01.pdf or call (408) 586-3348 to request a copy.

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