West Basin board pushes back on rate hikes amid flat sales and rising MWD costs

West Basin board pushes back on rate hikes amid flat sales and rising MWD costsDuring its initial FY 2026-27 budget workshop, the West Basin Municipal Water District board scrutinized a proposed 6% increase in operating expenditures, directing staff to target a 0% rate increase after noting that local water rates have skyrocketed over the past two decades.

Staff presented Reliability Service Charge (RSC) scenarios ranging from a 0% to 6% increase over the current $321 per acre-foot.

Director Desi Alvarez urged a 0% increase, arguing that the district's rates have jumped from $30 in 2000 to $321 today, far outpacing inflation.

The board agreed to revise potable water sales assumptions down from 83,200 acre-feet to 80,000 acre-feet to reflect flat long-term demand trends.

The district's proposed $70.9 million operating budget represents a 6% increase, driven by a 49% spike in unfunded pension liabilities, election costs, and recycled water operations.

West Basin Municipal Water District is facing structural budget pressures for Fiscal Year 2026-27, driven by rising imported water costs, flat sales, and surging pension obligations. However, board members signaled strong resistance to passing those costs onto ratepayers during the district's first budget workshop on March 5, 2026. Chief Financial Officer Wendy O'Kelley presented a structurally tight $70.9 million proposed operating budget, representing a 6% increase over the current year. The jump is largely fueled by a 49% increase in the district's Unfunded Accrued Liability (UAL) for pensions, higher election administration costs, and contractual increases for recycled water operations. Meanwhile, operating revenues are projected to grow by just 2%. A major external pressure remains the Metropolitan Water District of Southern California (MWD), which is projecting an 8.5% overall rate increase for 2026, alongside new treatment charges. Despite these rising costs, West Basin directors pushed back against staff scenarios that modeled up to a 6% increase in the district's Reliability Service Charge (RSC), currently set at $321 per acre-foot. Director Desi Alvarez strongly advocated for a 0% increase, pointing to the historical trajectory of the district's pricing. "In 2002, the West Basin rate was $30... $321 today," Alvarez said. "That's much, much more than CPI increases... At some point, we need to think about affordability. Not everybody that pays for all of their utilities can afford them." The General Manager acknowledged the affordability concerns but defended the current costs, noting that the water industry and regulatory landscape have changed drastically since 2000, requiring significant investments in conservation, advocacy, and capital improvement projects. Further complicating the revenue picture is the district's flat water demand. O'Kelley initially presented a budget assumption of 83,200 acre-feet for potable water sales. However, Alvarez successfully recommended adjusting the assumption down to 80,000 acre-feet to better reflect recent flat trends, a revision supported by the board. Recycled water sales are budgeted conservatively at 34,341 acre-feet, down from the previous year's assumption of 34,988 acre-feet, reflecting operational variability and a recent shutdown at the barrier facility. Staff will return with a refined budget and detailed rate proposals at a second workshop scheduled for April 2, incorporating the board's direction to target flat rates and updated sales volumes.