McGrory Calls for 17.1% Rise in Water Bills : Drought: The rate structure, which could take effect Monday, would reward those who conserve at least 20% and penalize those who don’t.

Seeking to increase city water revenues while also rewarding San Diegans who conserve, City Manager Jack McGrory called Wednesday for a 17.1% water rate increase that would still reduce the bills of many San Diegans who tighten their taps.

In a report to the City Council, which is scheduled to vote on the rate increase Friday, McGrory said the average family that now pays $16.80 a month for water would pay 71 cents less if it conserved 20%. A 30% cutback in water use would result in a $2.61 monthly savings.

If that family did not conserve, however, its bill would shoot up dramatically: from $16.80 to $24.89, or a 48% increase.

“We’re trying to recognize in the billing that, if people save water, they’ll also save on their monthly bill. We think that’s an important strategy,” said McGrory, whose report calls for the rate increase to take effect Monday.

The report recommends a 20% citywide conservation target despite the fact that the Metropolitan Water District, the region’s water wholesaler, this week called for its customers to conserve 31%. The San Diego County Water Authority has in turn adopted a 30% overall cutback goal for its customers, including the city of San Diego.

But McGrory proposes to use stored water that has collected in the city’s reservoirs during the recent rains to offset this discrepancy. If the city’s residents can save 20%, McGrory proposes, the stored water will make up the additional 10% required cutback.

“It’ll be a small part of the overall storage increase we’ve realized during March,” he said.

If the council approves the increase, it will be the first city rate increase since July, 1987. If it rejects it, water officials warn, the city Water Utilities Department will face layoffs and a further reduction in its already pared-down capital improvements fund, which maintains, replaces and repairs the city’s aging water delivery and sewage systems.

The report states: “Absent an increase in rates, total expenses will continue to exceed anticipated revenues, resulting in negative net cash flows and a negative fund balance of some $39.7 million by the end of fiscal year 1993.”

In recent weeks, Mayor Maureen O’Connor has suggested that city water officials have used the drought as an excuse to raise rates. She proposed instead to freeze the current rates for customers who conserve 30% to 49% and to offer rebates for those who cut back 50% or more.

But the report released late Wednesday said the mayor’s proposals--while “appealing”--are impossible during this period of budget tightening. Of the $15.8 million in additional revenues that the proposed 17.1% increase is expected to generate, more than half--or $8.2 million--will go just to offset drought-related revenue losses, the report said.

Even with a 17.1% increase, the report said, capital projects for fiscal year 1992 will have to be scaled back 56%--an original budget of $28.3 million has been reduced to $12.5 million that will be spent only on the highest priority work. Of 31 current projects, more than half have had at least part of their funding deferred.

“In recognition of that fact,” the report said, “the council may wish to consider further increasing rates to generate funding for a greater percentage of necessary projects.”

The report also recommended that the City Council require that the effectiveness of any new rate structure be evaluated every six months, especially in light of the “volatility” of the water situation.

In addition, the report recommended that the city, which now sends its water and sewer bills every 60 days, switch to a monthly billing schedule beginning July 1, 1992. The proposal, an apparent response to Councilman Ron Roberts’ request that customers be informed more frequently how much water they are using, would cost about $1.5 million a year to implement, the report said.

However, that money was not included in the rate increase request, meaning that, if the council decides to adopt a monthly billing schedule, future budgets will have to be increased to accommodate the cost. According to the report, that would amount to an additional 1.4% increase in average revenues at current rates.

The proposed 17.1% increase is significantly less than the one contained in a previous recommendation made late last month, when water officials expected MWD to seek 50% cuts across the board. At that point, McGrory said a 28% increase in average revenue was essential.

But, since rain and snowfall last month improved the statewide water picture, those cuts were scaled back, allowing the city manager’s office to ease off as well.