North Marin Water District considers new Novato rate plan

Under the proposal, the median single-family home will have an increase of about 8.5% starting in July.

With the cost of imported water continuing to climb, the North Marin Water District is proposing to explicitly pass on a portion of the tab to its Novato ratepayers for the first time.

A new rate study suggests that the district needs to increase its revenue by 8.5% in the next fiscal year to cover rising charges from Sonoma Water, its wholesale water supplier, and to continue its capital projects.

Under a proposed plan, the median single-family home will have an increase of about 8.5%, or about $9.54, starting in July.

The district is also proposing a “pass-through” provision starting in the 2025-26 fiscal year that will allow officials to modify rates to reflect the fluctuating charges from the wholesale water provider.

Any wholesale water cost increases will be “passed through” to customers to ensure the district does not overcharge or undercharge its customers, said Tony Williams, the district’s general manager.

If the pass-through provision is approved, ratepayers will be notified in advance of any changes on their bill, he said.

Williams said the district maintains an approximate asset value of $330 million, which includes pipelines, pumps, reservoirs and more. It’s expensive to maintain and upgrade the infrastructure, and the district is doing it without issuing loans or bonds, he said.

The district conducted an extensive cost-of-service analysis for water purchase, treatment and delivery, facility replacement and upgrades, daily operations, and many other factors to arrive at the proposed rate plan.

“The current cost-of-service analysis has resulted in modest updates to the rate structure, which ensures that each class of customer will continue to pay their fair and proportional share of costs,” Williams said. “These changes to the rates will result in billing changes that will vary by customer depending on the size of their meter and the amount of water that they use.”

Last week, the district board accepted the study and directed staff to prepare a notice for a public hearing set for June 18 to consider the proposed rate plan.

In addition to climbing costs for wholesale water, the impact of inflation and other factors have influenced the rate discussion.

Last year, the district increased its rates by 9.5%, a bump that raised the median residential bimonthly bill by about $12. That was about 3% higher than the previous three years.

A forecast trend of costs outpacing revenue led the district to study its rate structure one year ahead of schedule. Hildebrand Consulting was hired for $60,000 in October to produce the report.

The district serves about 60,000 residents in the greater Novato area as well as about 1,800 residents in areas of western Marin. The district sets different rates for Novato and western Marin because they are served by different water supply systems.

The district receives about 75% of its water from Russian River imports through Sonoma Water, with the remainder coming from its Stafford Lake reservoir.

Last year, the Sonoma Water board voted to increase its wholesale water rates, particularly for Marin’s two largest agencies, North Marin and the Marin Municipal Water District.

This year’s proposed increase for the North Marin Water District is 11.74%. Rate increases have been 6.5% on average over the past 10 years, said Andrea Rodriguez, spokesperson for Sonoma Water.

“The past two years have been higher than previous years due to three years of historic drought, state mandated conservation measures which led to low water deliveries, revenue shortfalls, and depleted reserves,” Rodriguez said.

The 2022-23 fiscal year was the lowest water sales year in the past 30 years for the agency, Rodriguez said.

“Sonoma Water’s fully volumetric rate structure means that water deliveries are the biggest determining factor in annual rate increases,” Rodriguez said. “Total water demand growth for the past 10 years is negative. Due to our fully volumetric rate structure, if water deliveries continue to decline, rate increases will rise.”

Rodriguez said the Sonoma Water board is expected to vote on the proposed water transmission budget and rates at its April 16 meeting.

The North Marin Water District does not import water to western Marin, so it does not expect to change its rate plan for those customers, Williams said.

The Marin Municipal Water District also increased rates last year, in part for similar reasons. The district approved a four-year rate plan that increased the median single-family home rate by about 20%.

In July, MMWD customers will see another increase that is dependent on three variables: meter size, water use and customer class — for example, single-family residential, multi-family or commercial.

A typical single-family home customer will have a 12% increase on the water bill, said Jessie Underhill, spokesperson for MMWD. Customers will first see this increase on the bimonthly bill they receive in September or October, Underhill said.

To help customers most accurately estimate what rate increase they can expect based on their use and meter size, the MMWD provides a rate calculator at marinwater.org/2023RateSetting.

North Marin’s water rates are expected to be discussed at district budget and rates review session at the board’s June 4 meeting. A public hearing is set for 4 p.m. June 18 at the district’s temporary headquarters at 100 Wood Hollow Drive in Novato. More information is at NMWD.org.