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Irrigation rate hikes looming on horizon

South San Joaquin Irrigation District rates are poised to increase in 2025.

Currently, the irrigation fund isn’t covering increasing operational costs.

SSJID has been tapping into non-rate revenues — Tri-Dam Project proceeds as well as property taxes — to cover the shortfall in the actual day-today costs of delivering irrigation water.

The rate hike — which means, for example, the fixed per acre charge will go from the current $38 to $52 when the 2025 irrigation season rolls around — will generate $1 million in additional revenue in 2025.

The losses to the irrigation fund are projected to be $15.6 million in 2024. That shortfall is offset by available non-operating revenues such as the Tri-Dam Project proceeds and property taxes.

Not only is the current revenue versus costs unsustainable, the irrigation sales need to be self-sufficient to allow the district to implement a $191 million capital improvement master plan.

The improvements are needed to ensure the water supply reliability for all District customers, improve the level of service for irrigation customers, and to repair, rehabilitate and replace aging District infrastructure.

In 2023, the district implemented the first rate increase in 23 years.

The flat rate up until last year had been $24 an acre.

The board adopted a five-year rate hike plan in 2023.

Staff prior to Tuesday’s 9 a.m. SSJID meeting for the rate hike discussion, analyzed revenue and costs.

They are recommending the maximum allowed hikes for 2025 adopted from the Proposition 218 study and hearing last year be implemented for 2025.

That five-year plan could ultimately take rates from where they are today in the first-year implementation of the adopted rate plan to as high as:

*$38 flat per acre rate to $70.

*$5 for the volumetric Tier I rate of less than 48 inches per acre feet to $11.75.

*$12.50 for the volumetric Tier 2 rate of more than 48 inches per acre feet to $20.

*$52 minimum charge to $70.

*$70.13 blended charge per acre to $98.40.

Costs to provide irrigation service continue to rise due to regulatory and inflationary pressures in addition to the repair, rehabilitation, and replacement of irrigation infrastructure, some of which was built over 100 years ago.

Cost categories such as administrative, payroll, operations, construction materials, equipment and vehicles, and capital improvements are included in the District’s cost of service analysis.

The actual cost of providing irrigation service far exceeds the revenue generated from irrigation rates billed to and received from customers.

In the last few years, SSJID has had to use irrigation non-rate revenues, general purposes revenues, and money from its reserves, to cover the cost of providing irrigation service. The current business model has been deemed unsustainable.