West County Wastewater advances 12% annual rate hikes to cash-fund $63m CIP

West County Wastewater advances 12% annual rate hikes to cash-fund $63m CIPThe California utility is opting for a 'pay-as-you-go' funding strategy to avoid long-term debt, driving steep near-term rate increases to support aging infrastructure and rising operational costs.

The Board of Directors authorized Proposition 218 notices for a five-year rate plan featuring 12% annual increases through 2031.

The rate hikes will support a $63 million capital improvement program, including upgrades to the utility's treatment plant and gravity sewer networks.

By selecting a 'pay-as-you-go' approach, the district aims to fund capital projects without issuing new debt, saving on long-term interest.

The utility is concurrently managing rising operational expenses, approving a $1.2 million mid-year budget increase for chemicals required by a new solids handling process.

West County Wastewater District (WCW) in California has initiated the Proposition 218 process for a five-year sewer rate plan that will raise rates by 12% annually from fiscal year 2027 through 2031. The Board of Directors voted unanimously on March 4 to issue notices to property owners, setting a public hearing for June 3, 2026. Developed by Bartle Wells Associates, the rate plan utilizes a "pay-as-you-go" (PAYGO) funding strategy. By relying entirely on cash revenues rather than issuing new debt, the district aims to fund a $63 million capital improvement program (CIP) while meeting target reserves. Michael DeGroot, vice president at Bartle Wells Associates, noted that while the PAYGO approach requires higher upfront impacts, it results in lower long-term costs compared to a debt-financed alternative, which would have required 8% annual increases over a 10-year period. The $63 million CIP covers extensive upgrades, including the Plant Process Program, Gravity Sewer Program, Facilities Program, and a $5 million match for a Living Levee project. The financial plan accounts for projected construction cost inflation of 20% in 2027 due to tariffs, followed by 5% annual inflation thereafter. Under the proposed schedule, the fixed annual rate for a single-family residential user will rise from the current $815 to $912 in the first year, eventually reaching $1,435 by fiscal year 2031. Commercial and industrial users will see corresponding increases in volumetric, biochemical oxygen demand (BOD), and total suspended solids (TSS) charges. The rate increases are also driven by escalating operational and maintenance costs. During the same meeting, the board approved a mid-year budget amendment that included a $1.2 million increase in wastewater treatment expenses. Finance Manager Maria Bagley attributed this hike to the cost of new polymer chemicals required for the solids handling treatment process associated with the district's ongoing Clean and Green project. The district also faces existing debt service obligations, including a 2015 State Revolving Fund loan and a 2021 revenue bond, alongside $1.4 million in annual pension liability repayments. Board members acknowledged the steep impact on ratepayers but emphasized the necessity of proactive maintenance and the long-term financial prudence of avoiding extended debt.