KINGSBURG – Kingsburg residents are likely to see changes to their water bills later this year as the city looks to adjust rates in order to keep up with the cost of providing water service.
In a presentation to the Kingsburg City Council on Feb. 19, Lechowicz and Tseng Municipal Consultants (L&T) reviewed water rate design and increase options that would leave the city with a healthy water enterprise fund balance over the next five years. Council members reached a general consensus on which option they preferred and directed city staff to move forward with finalizing the rate study.
“It’s not always palatable to pay more, but water is the lifeblood, and when you look at what the rates are on a gallon basis, it’s really super inexpensive, even with the rate increases,” Councilmember David Silva said. “I’m not for rate increases, but in order for us to stay sustainable, in order for us to stay viable as a community, we need water, … and if I’m going to use it, I get to pay for it, and the more I use, the more I should probably pay.”
L&T has been working on a 2024-25 water rate study for the city since the council awarded a contract to the firm in September 2024. Water rates were last increased in 2019. It is a best practice for cities to review rates periodically — usually every five years — to keep up with inflation, maintenance needs and expanding infrastructure.
Public Works Director Daniel Galvez said that since the previous water rate increase, “the operations in our water system has completely changed,” mainly due to new reporting and treatment requirements. In 2019, Kingsburg did not chlorinate its water like it does now, it did not have granular activated carbon treatment and did not have to do as much reporting and testing.
Ongoing expenses are currently outpacing revenues in the city’s water enterprise fund by approximately $228,000, and the city has an estimated reserve of $1.2 million. With the option selected by the city council, Kingsburg would end fiscal year 2029-30 without an operating deficit and with a reserve balance of $2.4 million.
As part of the rate study, L&T suggested Kingsburg change its rate design, meaning the way it charges customers for their water usages. Currently, residents pay a base fee regardless of their water usage, and are not charged for their water usage below 11,000 gallons per month. Water utility customers who use more than 11,000 gallons per month are charged per additional 1,000 gallons at a tiered rate.
The proposed rate design would eliminate the inclusion of the first 11,000 gallons in the base fee and instead charge a single rate per 1,000 gallons used. It would not include a tiered structure, so residents would pay the same rate per 1,000 gallons regardless of how much water they use. Residents would still have a base fee as well.
L&T co-founder Alison Lechowicz said this structure is more equitable for residents; currently, those using 10,000 gallons of water per month pay the same as those using 1,000.
The three options presented to the council included the same rate structure but differed in how rates increased over a five-year period. One option also included a hypothetical situation in which the city incurred $2 million in new debt service to help fund capital improvement projects; however, city staff said they feel that is unnecessary at this time.
Council members said they preferred the option that would institute higher rate increases in the first few years over the option that would phase in the rate increases. Although utility customers would feel more of an impact in the first three years, subsequent increases would be significantly less, and the cumulative increase over the five years would be lower as well. Further, the ending reserve balance would be higher.
The option selected by the council proposed to increase rates in a way that would result in an average systemwide revenue increase of 15% the first year, 30% the second year, 20% the third year and 4% in the last two years. The cumulative increase would be 93% over all five years compared to the second option’s 107%. The second option proposed increases of 10% the first year, 30% the second year, 15% in the third and fourth year and 10% in the fifth year.
The exact impact on customers will vary due to the changes in rate design. According to the draft water rate study, the first year revenue increase is intentionally kept low “in order to mitigate rate shock” due to the rate structure change.
Final proposed rate increases will go before the city council at the first or second meeting in March and the legal process to raise rates will begin by the end of the month.
Once the city council receives the final proposed rates, it will need to also approve the initiation of the Proposition 218 process. Prop 218 is a state law that outlines how city-run utilities can set their rates and provides taxpayers with a level of oversight over those costs.
The water rate study is the first step in the process and analyzes how much it costs the city to deliver a utility service to customers. The study is then used to determine how rates should be divided among utility customers to ensure residential, commercial and industrial customers are paying their fair share.
After the results of the study are approved, the city must issue a notice to all utility customers of the potential rate increase at least 45 days before the city council holds a public hearing on the increase. At the hearing, utility customers have the chance to protest the rate increase or send it a written protest to be recorded by the council. If more than half of the utility’s total customers protest the increase, the city council cannot approve it.
