Council sets March hearing on 5.5% County Water Authority pass-through after contentious debate

The City Council on Jan. 14 set a March 4 public hearing to consider a 5.5% pass‑through of recently adopted County Water Authority (CWA) rates, after a heated debate over whether the city should immediately pass CWA's increase on to San Diego ratepayers or press the regional wholesaler to change its contracting and budgeting practices.

PUD staff asked the council to set the hearing and also requested authority to administratively pass through future CWA increases up to 15% per year through 2029; the latter request prompted the strongest objections from council members and the IBA and was not advanced. PUD said the CWA board adopted a roughly 14% increase this year and that the city faces about $6 million of unplanned water‑purchase costs in the remainder of FY25 and a roughly $38 million annual impact if left unaddressed.

Lisa Sly, PUD, illustrated the financial pressure: "The cost of water we purchased from the water authority is also rising ... and it has profound impacts on our finances," she said, asking to notice a 5.5% pass‑through effective May 1 to mitigate a $6 million FY25 gap. PUD said without the pass‑through it would face a roughly $30 million annual shortfall that could force elimination of staff and major reductions in the capital program.

Jordan Moore (IBA) and several council members urged continued pressure on the CWA to "right‑size" long‑term take‑or‑pay contracts and to present a business plan showing how CWA will reduce costs that are being borne by retail customers. Council member Von Wilpert proposed refusing to pay the CWA increase and instead forcing CWA to fix the contractual problem; his motion was not adopted.

The motion to set a public hearing for a 5.5% pass‑through (effective 05/01/2025) passed 6–3, with Council members Foster, Von Wilpert and Moreno voting no. Several council members made clear they oppose a blanket, multi‑year administrative pass‑through; the IBA recommended postponing any multi‑year authority decision until the pending water cost‑of‑service study and to research neighboring agencies' pass‑through practices.

What happens next: Notices will be mailed per Prop. 218 requirements and the council will hold the March 4 hearing. Staff and the IBA will provide additional analyses of CWA budgets, pass‑through structure, and potential limits, and City 10 representatives will continue pressing the CWA for programmatic changes.

Representative impact: For the average single‑family resident, PUD estimated the 5.5% pass‑through would add about $4.70 a month to a current average bill of ~$86. Without action, PUD warned of depleted reserves, lower days cash‑on‑hand and the risk of deferred CIP causing increased main breaks and system risks.