Montecito Water District Rate Evaluation Underway

Extraordinary inflation and opportunities to improve resiliency were key discussion points in Montecito Water District’s Special Board Meeting this week. Directors reviewed a preliminary analysis with Raftelis Financial Consultants in anticipation of adjusting water rates for customers later this year. Rates are revisited every three to five years, and are required to be based on a rigorous cost-of-service analysis. 

Annual rate increases have remained steady at 2.8% since the Board last adopted a rate plan in 2020. While this was consistent with inflation figures at the time, the past three years have brought substantially greater cost increases to nearly every aspect of the business. Inflation has been particularly steep on construction costs and materials essential to the industry, such as steel and pipelines. Due to this, the District does expect to adjust rates more than 2.8% in 2024 to keep pace with rising costs of service and maintain adequate cash reserves. 

“The good news is that water supply is looking secure – strategic planning, investments made over the past decade, ample rain this winter and last, and our customers’ focus on water efficiency has put us in a very good position,” says General Manager Nick Turner. “However, escalating costs surrounding essential services, such as water treatment and delivery, are very real. These combined with the need to maintain and take advantage of opportunities to improve aging infrastructure require an updated rate evaluation.”

Last week’s meeting was the first of several workshops focused on District finances and fiduciary responsibility that will take place in the coming weeks and months, with the goal of having new rates in place by August. New rates are adopted by majority vote of the Board only after there has been a publicly noticed review and input period. Customer outreach will be ongoing throughout the spring and summer, and community members are invited to attend meetings virtually or in-person. Meeting information, including past recordings, is available on the District’s web site: www.montecitowater.com.