Escondido council orders billing corrections, approves 14-month backbilling plan after utility error

The Escondido City Council on Sept. 17 approved a package of corrections to residential wastewater bills after staff disclosed a programming error that shifted the billing baseline away from the 2022–23 winter water-use period.

The council voted 5-0 to credit customers who had been overbilled, to lock the 2022–23 winter water-use period for calculating wastewater charges through the current rate cycle, and to recover underbilled amounts by backbilling affected customers over 14 months with a $10-per-unit monthly surcharge.

City staff told council the error came after the city adopted new utility rates in 2023 that relied on an unusually wet 2022–23 winter as the billing baseline. Chris McKinney, the staff presenter, said the billing system continued to update winter averages annually instead of holding the 2022–23 baseline. "The system was not programmed to account for that, and so the computer system did what computer systems do," McKinney said, describing the mistake as human error in system setup.

Why it matters: staff said 24,526 residential accounts were affected in various ways. About 13,000 accounts were overbilled; the city will return roughly $2.5 million to those customers. About 10,500 accounts were underbilled; if the council recovers the full underbilled amount the wastewater fund would collect about $2.95 million. Staff told council that failing to collect those funds would create a near-term budget shortfall for the wastewater fund that could delay capital projects and raise future rates.

How bills are calculated: Utilities staff explained that residential wastewater charges are estimated using winter water use and a return factor that accounts for water that does not enter the sewer system (irrigation, pool fills, etc.). The 2023 cost-of-service study recommended using the single 2022–23 winter baseline for the five-year rate period because that winter’s sustained rainfall reduced outdoor irrigation and made the winter period a closer proxy for wastewater return.

Staff proposals and exceptions: McKinney walked council through a three-part corrective approach: credit accounts that were overcharged (a legal requirement); lock the 2022–23 winter baseline for billing through the rate period; and pursue backbilling for undercharged customers. He asked council to exempt about 1,000 flagged accounts temporarily from automatic corrections while staff completes case-by-case analysis. Those accounts include new accounts, accounts with recorded zero winter use, accounts with leaks, and accounts that hit capped maximums during the baseline period. McKinney said staff will apply the smallest reasonable replacement value in cases of missing or faulty winter data (for example, a local district average or an intervening-year winter use) to minimize customer charges.

Collection mechanics and customer relief: Council directed staff to begin corrected billing in October and to start the backbilling surcharge in January 2026 after a grace period. Under the approved plan, customers would see their corrected monthly bill and, beginning in the repayment period, an additional surcharge of $10 per unit per month until the individual account’s backbilled balance is paid. Council members asked staff to offer flexible payment plans and to waive penalties while customers are working with the city. McKinney said customers will have options to pay off balances immediately or to negotiate alternative plans.

Financial context and next steps: McKinney said returning overcharges will not harm the fund but that unrecovered underbilling would constitute a true loss and could require delaying wastewater capital projects. He also said staff contracted outside support to analyze affected accounts and will present standardized procedures at an upcoming utilities subcommittee. Councilmembers asked staff to prioritize customer communications; staff said bill inserts, a web FAQ and customer-service staffing will be used.

Quote: "If you choose to back bill 14 months into the past, that would recover the entire $2,950,000," McKinney told the council, summarizing staff's estimate of underbilling recovery amounts.

Ending: Councilmembers emphasized the error was unacceptable and asked staff to improve billing controls and monitoring. City staff said a utilities subcommittee will get periodic updates; an initial subcommittee meeting is scheduled for Oct. 21, 2025.