Average Fontana water customers will pay $25.51 more per quarter, a 43 percent increase over current costs, according to a state Public Service Commission rate order issued Tuesday.
Residential customers paying $58.62 quarterly for 7,000 gallons of water will pay $84.13 for the same volume when the new rates take effect in mid-December. Water bills reflecting the new rates will be mailed in April, said Scott Vilona, village treasurer.
The rate increase follows the first comprehensive rate application the utility has filed in 10 years and was prompted by a July 2017 Public Service Commission recommendation.
“They told us we needed to file a rate case, which we did, and it was just decided this week,” Vilona said.
Originally built as a three-season resort town, Fontana is growing and adding four-season residences, putting more demand on utility infrastructure not envisioned for year-round use, he said.
“We’re pulling wooden pipes out of the ground. Some of the system was that old,” Vilona said.
In the past several years, the utility has spent $7.2 million to replace aging water mains and needs more revenue to finance long-term borrowing.
The utility received 3 percent overall rate increases in 2011, 2012 and 2016, which the state authorized to keep pace with inflation but won't keep up if the utility takes on more debt.
The new rates push Fontana’s water bills above the state average for similar-sized utilities, according the rate order.
“I don’t expect anyone wants to pay more for water, I’m a customer and I don’t, but when you look around at the problems in Flint, (Mich.) and Puerto Rico, the price of clean water comes at a cost,” Vilona said.
Rates for multi-family, commercial and public authority customers will increase between 35 and 53 percent, depending on the customer category and usage, according to the order.
The Public Service Commission cautions that an individual customer’s bill may not necessarily equal the overall percentage increase associated with its customer class because their water bill will depend on their usage.
The new rates are expected to boost annual revenue by $519,325 to $1.61 million. After total expenses of $1.02 million, the commission project’s the utility would have a net income of $582,363 and a 5 percent rate of return on the value of its infrastructure investment.
Without the higher rates, the PSC project’s the utility would have a net annual income of $63,038 and a 0.54 percent rate of return, which the agency deemed insufficient to meet the utility’s long-term financial needs.