Sonoma Water discusses rate structures amid drought challenges

City staff received high praise during the March 6, 2025, Santa Rosa Board of Public Utilities meeting for their innovative approach to managing water rates. Board members highlighted the importance of transparency in rate manipulation, allowing ratepayers to better understand the complexities behind their bills.

A key discussion point revolved around the challenges posed by water supply issues, including droughts and the impact of the Potter Valley project. Board members expressed concern about the current rate structure and whether it adequately prepares for emergencies, such as drought-induced rate increases. One member questioned if Sonoma Water has embedded funds within its rates to cushion against sudden hikes during water shortages, suggesting that proactive measures could alleviate financial strain on residents.

Sonoma Water representatives clarified that while their budget and rates are governed by a restructuring agreement with eight water contractors, there is no provision for rate stabilization. They explained that they utilize fund balances and capital charges as stabilization tools but cannot adjust rates mid-year. This limitation means that while they maintain reserves for emergencies, the current structure does not allow for the flexibility needed during droughts.

The conversation underscored the difficulty in communicating the relationship between water conservation and rising rates to customers. As residents cut back on usage, revenue declines, leading to potential rate increases. Sonoma Water officials acknowledged the challenge of maintaining compliance with bond covenants while managing reserves, emphasizing the need for careful financial planning.

The meeting concluded with a commitment to explore better strategies for rate management and communication, ensuring that residents are informed and prepared for future water supply challenges.