PUBLIC HEARING FOR PROPOSED FIVE
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YEAR WATER,
RECYCLED WATER, AND WASTEWATER RATES
JANUARY 20, 2026
1 • Indirect Cost Allocation Plan
• Pass-Through Provisions
• Water
• Rate drivers
• Proposed revenue increases
• Wastewater
• Rate drivers
• Proposed revenue increases
• Timeline
• Recommendations
Agenda
2 • Began in Finance workplan for FY 2024-25
• Benefits of a Cost Allocation Plan
• Split costs versus paying for entire positions, departments, or services for each benefiting fund.
• Callout in FY 2025-26 Budget
• Utilize results for water and sewer cost of service studies • Impact to water enterprise = de minimis
• Impact to sewer enterprise = reduction in costs
Indirect Cost Allocation Plan Update
3 • California Government Code 53756 (2009)
• Automatically pass-through wholesale costs after 30-day written notice to customers • Best practice utilized by 21 of 22 water providers in San Diego County (not Poway) • Effective for rates through 2030
• San Diego County Water Authority
• Wholesale water purchase costs outside of Poway’s control • City of San Diego
• Wholesale recycled water purchase costs outside of Poway’s control • San Diego Metro Joint Powers Authority
• Wholesale wastewater treatment cost outside of Poway’s control Pass
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Through Provisions
4 • Recent court rulings have successfully challenged the legal viability of tiered volumetric water rates
• City is recommending a uniform water rate structure as a more equitable and legally defensible structure
• Affirm current rates being compliant with Proposition 218's cost of service principles.
Uniform Volumetric Rate
5 • Wholesale water (SDCWA) and pumping energy (SDGE) costs • Capital Improvement Plan
• Water Infrastructure Program
• Other CIP projects
• Operations and Maintenance Costs
• Meeting debt covenants and payments
• Proposed increases as the result of the Cost-of-Service Study Process • January 2026: 9.9%
• January 2027: 4.0%*
• January 2028: 4.0%*
• January 2029: 4.0%*
• January 2030: 4.0%*
Water Rate Drivers and Proposed Increases
6 * 2027-2030 rates do not include future
pass-through or CPI adjustments
• Largest Rate driver
• Metro Joint Powers Authority Wastewater Treatment and Disposal Costs • Proposed adjustments as the result of the Cost-of-Service Study Process • January 2026: 0%
• January 2027: 0%*
• January 2028: 3.0%*
• January 2029: 3.0%*
• January 2030: 3.0%*
Wastewater Rate Drivers and Proposed Increases
7 * 2027-2030 rates do not include future
pass-through or CPI adjustments
Combined Household Impact
8 Set Public Hearing
Nov, 18, 2025
Mail 218 Notice
By Nov. 21, 2025
Public Hearing
Jan. 20, 2026
Timeline
Y ear 1: Rates
Effective
Jan. 21, 2026
Y ear 2: Rates
Effective
Jan. 1, 2027
Y ear 3: Rates
Effective
Jan. 1, 2028
Y ear 4: Rates
Effective
Jan. 1, 2029
Y ear 5: Rates
Effective
Jan. 1, 2030
• Count public protests to see if a majority protest exists • Consider formal objections and responses to objections • None received
• Open the public hearing to consider input from
interested parties on proposed rates
• Close the public hearing and consider adoption of rates following Council input
Recommendations
10 QUESTIONS?