Water rate increases could be coming to Morro Bay residents to cover water costs. The Central Coast Water Authority, which handles the infrastructure and bond issuance related to the city’s state water supply, sent the city a warning letter on April 8, saying the current rates don’t cover all of water costs and funding for an emergency reserve. The city hasn’t defaulted on state water payments because it has used money from its reserve water fund.
Water authority Executive Director Ray Stokes warned that the shortfall is affecting the water authority’s credit rating outlook, as Moody’s gives the city a negative outlook, and the city is failing to provide enough money for potential emergency needs. There is not a specific deadline for Morro Bay to meet its obligation, but an arbitration ruling could occur after the city meets with the county to discuss the water rates. If water rates are raised, it would be the first time they have been raised since the mid-1990’s.