Chapman, general manager of the Monrovia-based Upper San Gabriel Valley Municipal Water District, said the bad news is, the rate of increase is rising rapidly, meaning it's likely higher water bills are on the horizon for homeowners.
Speaking to more than 340 water managers, educators, business leaders and city officials at a water conference held at the Fairplex Conference Center Tuesday, Chapman said the biggest reason for rising water bills is the Metropolitan Water District of Southern California, which has raised the cost of wholesale water it delivers from the Sacramento and Colorado rivers by 75 percent since 2008. Those two sources of water are used by local agencies to supplement and replenish local supplies in the groundwater basin that lies below the San Gabriel Valley.
"The amount and cost of available imported water is something largely we don't control," Chapman said, referring to MWD's rapid rise in the cost of replenishment water from $238 per acre foot in 2007 to $686 per acre foot today. "Not to throw Metropolitan Water District under the bus ..." he said, creating an awkward pause.
Most water experts said there is nothing anyone can do to stop the rising water bills.
Even when homeowners use less water, that means less revenue to water retailers, sometimes causing them to raise rates to bring in more revenue.
Most water agencies depend on customer sales for 80 percent of their revenues, said Sanjay Gaur, senior manager of Raftelis, a Pasadena-based financial consulting firm hired by public-private water agencies. And retail water agencies can't raise property taxes due to Proposition 13 restrictions, so they raise water rates or add stand-by charges to meet expenditures.
The bigger problem is aging infrastructure. Experts at the U.S. Environmental Protection Agency say cities older than 50 years, like most in the San Gabriel Valley, are entering the Era of Replacement as water systems deteriorate, Gaur said. The cost for new pipes, pumps and reservoirs will hit ratepayers' wallets hard.
The state is attempting to fix the Sacramento-San Joaquin River Delta by building massive tunnels to redirect more water to the Southland - at a cost of billions of dollars. The bond to pay for all of this was taken off the November ballot, leaving the funding and the water supplies in jeopardy.
"The Bay Delta is an immediate and pressing issue," Chapman explained to the group. "And we are part of this. We are at the end of that pipe of the MWD."
Gary Breaux, chief financial officer for MWD, said there's not much MWD can do. "Everyone is angry. What can we do? The fact is, 85 percent of our costs are fixed."
MWD is facing growing costs because of restrictions on the Sacramento-San Joaquin River Delta and infrastructure costs.
Others at the conference said publicly owned utilities, instead of for-profit water companies, can be a solution. Golden State Water Co., for example, is in a pitched battle with customers in Claremont and a sliver of Walnut over large rate hikes after the company's parent, San Dimas-based American States Water Co., posted a net income of $15.1 million for the third quarter ending June 30. The for-profit water company attributed $300,000 in recent profits to new rate increases.
The city of Claremont is considering buying out Golden State and running their own public utility, according to Brian Bowcock, a member of the Three Valleys Municipal Water District board. The price could be as high as $80 million, said Claremont Councilman Sam Pedroza.
Claremont would need to float a bond to pay for the water rights and the infrastructure. Although residents would not see lower rates immediately, they may eventually, once initial costs are paid down, Pedroza said.
Bowcock is in favor of the plan. He says Claremont water rates are 84 percent higher than La Verne's. He said the only reason for that is the profits Golden State must pay to shareholders.
"If I were starting a new city today, I would go with a public entity rather than a private water company. Because of the profit margins they are looking for," Bowcock said.
Golden State has defended its rate increases, saying they were approved by the state Public Utility Commission. Some of the money raised goes toward capital improvements. "Golden State Water Co.'s rates reflect only the cost to provide the service and maintain the water system," company spokesman Mitch Zak said.
"We understand there is a cost of providing water. We just don't agree with the rate of those increases," Pedroza said.
Gaur said public utilities do a better job of keeping rates lower, because they are local and accountable to residents. But often, public utilities practice deferred maintenance, only to experience major repairs 30 years later.
"Yes, public agencies keep costs lower than private but is that right? The public is mining the system. Then in 10 years you have a huge liability," Gaur said.
Local expert Ken Manning, general manager of the Main San Gabriel Basin Watermaster, said the region's best asset is the underground basin, which can serve as storage for additional water. By using more local water, and by recharging recycled water into the ground and allowing the Earth's natural rocks and sediment to further cleanse it of impurities, the basin can become the most reliable and inexpensive source of water.