Sonoma Water proposes up to 8.97% wholesale increase; Petaluma staff previews local IWMP and recycled‑water expansions

Sonoma Water told the Petaluma City Council on March 16 that it plans a draft transmission‑system budget of about $78.41 million for the coming year and is proposing wholesale rate increases that range roughly from 8.21% to 8.97% for the contractors that buy water from the Sonoma system. "You can see Petaluma's in the middle column up there at 8.97," Jake Spalding, Sonoma Water's financial services division manager, said during a presentation to the council.

The presentation, introduced by Sonoma Water Deputy Director Dan Herrera, outlined capital work and operating costs driving the increase, including multiyear aqueduct replacements and a mid‑May bond sale the agency expects to price at roughly $33 million to fund current and near‑term capital programs. "We are also going out to bond this year. We are issuing a bond in mid May of this year for about $33,000,000," Spalding said.

Why it matters: Petaluma relies on Sonoma Water for most of its drinking supply, so wholesale rate changes flow through as pass‑throughs to municipal water customers and affect the city's own rate forecasts. In public and council exchanges, city and Sonoma Water staff framed conservation as a key variable: lower delivered volumes reduce fund balances and can intensify upward pressure on rates.

Council members asked detailed questions about demand forecasts and whether the agency's capital plan (including three phased Petaluma aqueduct replacements scheduled in the 2030s) would require sustained high increases. "When we plug in the future needs of the system right now with some assumptions ... we are going to see rate increases in that 10% neighborhood for the next several years," Spalding said as a scenario, then noted long‑range planning and condition assessments could shift timing.

Petaluma staff also used the council meeting to preview the city's Integrated Water Master Plan (IWMP) and the publicly funded Recycled Water Facilities Planning Study. Chelsea Thompson, Petaluma's director of water resources and utilities, said the IWMP evaluates a suite of local supply alternatives rather than relying on a single solution and that staff will return later this year with a full workshop once the draft IWMP is complete. "The results of this study will guide future capital projects, grant funding opportunities, and long term water supply planning," Thompson told the council.

Key technical points and projects identified: - Groundwater and well restoration ranked highly: staff highlighted treatment options such as greensand filtration to bring marginal wells into service. A planning estimate of roughly $1.8 million was offered for a representative well treatment facility used in the analysis. - Aquifer Storage and Recovery (ASR): Petaluma completed a fully grant‑funded ASR pilot. The pilot worked operationally but showed limited recharge capacity at existing sites; a feasibility report was expected in April. - Recycled water expansion: staff summarized recent projects (Adobe Road Phase 1, AMI meter rollout, Rainier & Maria Drive expansions), outreach to potential urban and agricultural users and proposed alignments for urban south and north recycled‑water pipelines. Staff cautioned that agricultural expansions often carry high capital costs and limited potable offset benefits. - Wastewater enterprise needs: staff described the PIPS Parallel Force Main project and a likely replacement of an aging pump station; they proposed an initial $70 million wastewater bond this spring to fund those projects and said the debt service could be supported within the current rate structure.

What the city will do next: Thompson said the city will return with a completed IWMP and more precise numbers — including the updated Urban Water Management Plan results — to quantify projected shortfalls and the supply contribution of candidate projects. Council members requested future presentations to show demand scenarios tied to housing and development forecasts so they could assess tradeoffs between conservation and capital investments.

Representative quote: "We present a draft budget to the technical advisory committee ... the TAC has also voted unanimously to support the rates," Jake Spalding said, adding that rate changes reflect both lower fund balances due to recent sales and significant multiyear capital needs.

The city did not take formal action on rates (Sonoma Water will advance its adoption process with its board in late April), but council members left the briefing with requests for follow‑up detail on the IWMP, modeled gap assessments and the city's planned use of grants and bonds to limit bill impacts.