Q:      Why is the Neskowin Regional Water District (NRWD) increasing rates again this year after a significant increase in the last fiscal year?

A:       Last year’s increase was critical in addressing a large deficit in the approved budget, due to several factors (see below). As the NRWD has heard from ratepayers, if rate increases must be adopted, smaller, manageable annual increases are much preferred to a large increase necessary after consecutive years of no or low increases well below the Consumer Price Index (CPI) (see detail on CPI below), as compiled by the Bureau of Labor Statistics (BLS). Extreme year-to-year swings in water rates put the integrity of our community water resource at risk, create greater hardship for ratepayers, and make it harder for management to ensure stable operations.

Q:      What is the increase in water rates, effective October 1, 2026, for Neskowin Regional Water District (NRWD) customers?

A:       On September 24, 2026, the NRWD Board of Commissioners (Board) approved a 5.1% increase in rates for the 2026-2027 fiscal year. Importantly, the 5.1% rate increase applies only to the Base Rate, not to Water Usage, which remains at the same rate as in 2025-2026, thereby making the effective rate increase 3.75% across the two fee categories.

           There are two component fees within NRWD rates:

           (1) Maintenance and Fire Suppression Fees, also called the “Base Rate,” which pay for water system maintenance (for example, pipes, pumps, motors, valves, and district buildings); as well as the infrastructure required to provide water for fire suppression (for example, fire hydrants, fire pumps, and large diameter water mains); and

           (2) Water Usage Fees, which pay for general operating costs (for example, employee wages, electricity, and supplies).

           2026-2027 Rates are as follows:

1. Base Rate (Maintenance and Fire Suppression Fees):

Low Volume Users – flat fee of $54.65 per month. [Last year was $52.00 per month.]

           Moderate Volume Users – same as Low Volume Users for usage below 200 gallons per day. For usage between 200 and 400 gallons per day, an additional $4.20 per 1,000 gallons will be charged. [Last year this additional fee was $4.00.]

           High Volume Users – same as Low and Moderate Volume Users for any water usage below 400 gallons per day, and same as Moderate Volume Users for usage between 200 and 400 gallons per day. For usage exceeding 400 gallons per day, a rate of $5.26 per 1,000 gallons will be charged. [Last year this additional fee was $5.00.]

2. Water Usage Fees (WUF) [all remain unchanged from last year.]

            Low Volume Users – $5.00 per 1,000 gallons of water used.

           Moderate Volume Users – same as Low Volume Users for usage below 200 gallons per day. For usage between 200 and 400 gallons per day, charge of $8.00 per 1,000 gallons.

           High Volume Users – same as Low and Moderate Volume Users for any water used below 400 gallons per day. For usage exceeding 400 gallons per day, a rate of $10.00 per 1,000 gallons will be charged.

NOTE:    Average NRWD customer water usage is about 3,000 gallons per month or 9,000 per quarter. Average quarterly water bills last year were $201; and this year, 2026-2027, the average is $209, a quarterly increase of $8.00, or $2.66 a month.

Q:      What’s the process used by the NRWD Board (Board) when it considers a customer rate increase?

A:       The NRWD holds a public hearing for ratepayers to provide comment on the proposed increase. Prior to this hearing, the Board, in consultation with the NRWD’s General Manager (GM), discusses budgetary matters, including current and reasonably foreseeable future expenditures and revenues, at each of its monthly public meetings, in an ongoing effort to better estimate the necessity of potential future water rate increases. Factors that can drive increases include unexpected infrastructure costs, equipment failures, and employee costs. No state or federal funding supports district operations.

           The NRWD Board and its GM are very sensitive to the issue of raising water rates. Last year’s rate increase for the 2025-2026 fiscal year, described below, was unanimously adopted by the Board only after extensive analysis and consultation with the district’s GM, and after at least six public monthly meetings in which the necessity of a rate increase was discussed. Two of these meetings were “rate hearings,” publicly noticed in advance and devoted exclusively to increased rates. Only after this lengthy deliberative process did the Board adopt the rate increase to ensure that customer water needs were met at the highest quality and safety levels. Annual budgets and district costs are also available for public review on the district’s website.

In addition, after last year’s rate increase, the Board created a revenue committee made up of five public members who had previously participated in various ways in district budget discussions, and two Board members. This year, the revenue committee has assisted the Board in its deliberations on water usage rates for the 2026-2027 fiscal year.

Q:      Why were the rate increases in the 2025-26 fiscal year so much higher than in recent years?

A:       First, last year’s NRWD rate increase reflected recent inflationary pressures from higher costs for water treatment, maintenance, and infrastructure, the addition of an essential employee several years ago, and normal employee costs. Second, the average increase in base water rates in the last fiscal year addressed the revenue deficit caused by a decline in water usage. 99% of revenues for the NRWD’s general operations come from customer water usage. During the two COVID years, water usage rose to the point that the District did not consider rate increases necessary. When water usage returned to normal, the District lacked the revenues that incremental annual rate increases would have provided. Although collective water usage by NRWD customers fluctuates year to year, its recent trajectory has been downward. For example, total water usage in Neskowin reached a high of 31+ million gallons in fiscal year 2021-2022, but then declined by almost 8% to 28.6 million gallons in 2024-2025.

Q:      Where does the NRWD get its operating funds?

A:       All funds for daily operations come from the NRWD’s more than 800 ratepayers. The district also receives a modest amount of revenue from a contract with a small, nearby water district for operating services (Cascade Head).

Q:      How does the increase in NRWD expenditures and water usage rates compare to national CPI measures, both recently and historically?

A:       Recently, between 2019 and 2026, the CPI measure for water usage costs nationwide significantly outpaced the overall inflation rate by 36%. For comparison, over the same period, the CPI inflation rate for nationwide water usage costs was about the same as the inflation rate for the NRWD’s water usage costs, both averaging between 5% and 6% annually.

           Historically, the CPI measurement of water utility and sewerage maintenance was first introduced in 1952. Since then, the CPI’s measure of water usage costs has dramatically outpaced the overall CPI for all goods and services. According to Bureau of Labor Statistics data, from 1952 to 2026, the overall inflation rate for all goods and services nationwide averaged 3.47% annually, while water usage costs averaged 5.34% annually. The Board and GM have also recently surveyed other comparable regional water districts and found that NRWD water rates fall in the middle of rates for such districts.

Q:       What do other water districts use to inform their annual rate increases and ensure adequate resources to serve customers?

A:      Because there is a specific CPI indicator for water utilities, many districts use it as an important guide to align rate increases with market factors related to water district goods and services, including employee costs. 

Q:      How is the budget for the NRWD set?

A:       Budget adoption occurs only after intensive review of estimated costs and expenses for the upcoming year and after public meetings and discussion. In May of each year, the Board, consisting of its five publicly elected members, appoints five Budget Committee members from residents living in our district who express an interest in participating. Collectively, the district’s Budget Committee deliberate on budget requirements, and then approve an expenditure budget for the upcoming year, beginning on July 1. At a public hearing in June, the elected board adopts a budget based on the Budget Committee’s recommendations, including revenues to cover approved expenses, mostly based on estimated water sales. State of Oregon law sets all the above budget approval steps.

Q:     How does the NRWD ensure that it spends budget funds efficiently and effectively, including procurement and purchasing of goods and services?

A:       Getting the best price for goods and services is a requirement of the NRWD, not only as a public entity but also as the ethical and fiduciary foundation upon which the management of the district is based. Importantly, the NRWD uses all water-usage funds collected from customers only to pay for water distribution, treatment, maintenance, and the personnel needed for that work.

           In addition to the five-member elected Board of Commissioners, which oversees all operations, and a highly skilled and experienced GM, the organization’s financial position and annual spending, revenue, etc., undergo an external audit each year.

           Because the district lacks the economies of scale a larger entity might enjoy with more ratepayers, the costs of the NRWD and other smaller coastal water authorities must be spread over a smaller base. Along with other national increases in goods and services and inflation, costs have risen above historical run rates in recent years. Whether it’s healthcare, eggs, meat, transportation, or a replacement part for the water plant filtration system, prices for many goods and services have risen faster than in recent years for all Neskowin and Oregon consumers.

           Procurement: The NRWD follows public procurement requirements for competitive bids when purchasing goods and services at certain levels, including for example, district vehicles when replacing older, unreliable trucks. Our GM knows many of the suppliers of water plant parts and equipment and works to ensure the lowest cost and best value. Purchases are made when necessary to protect the integrity of our water system and prevent losses from larger failures.

           Employees: The NRWD runs with the minimum number of employees needed to meet all basic requirements for safe, clean water and routine maintenance, and to handle extraordinary situations, such as major neighborhood line breaks or system integrity problems requiring construction skills. Employee pay rates are set based on employee experience, position and market assessment, years of experience, and diversity of duties within a broad job description, which in a larger organization would be filled by several professionals.

Q:      Why can’t the NRWD issue a bond to get more funding for the budget rather than increasing the rates for consumers?

A:       Issuing state bonds can certainly be a viable option to raise funding. A few things to consider before using this approach: it is roughly a 2-3 year process, from development and submission to the state, to multiple approvals, to alignment with an election (getting it on the ballot), to actual funding. The district pays the debt service on any bonds, using ratepayer revenues, until the bonds are paid off. Sometimes the state covers or partially forgives some of the debt service on the bonds for public entities. The NRWD has generally considered that bond funding is best used for future, longer-term, and more expensive infrastructure projects. This gives the district and its ratepayers time to plan for such projects, including funding, well in advance of construction or implementation.

Q:      What is the Capital Improvement Fund and how does the NRWD use it?

A:       The Capital Improvement Fund in the NRWD budget is used for necessary infrastructure that expands or protects district resources, reservoirs, piping systems, culverts, major equipment replacement if catastrophic failure occurs, and other physical assets. For example, a major project involving new and larger piping systems to ratepayers’ homes in South Beach, replacing a failing section, cost roughly a million dollars and took fifteen months to complete, requiring multiple contractors and hundreds of hours of district employee time.

Q:       Have there been recent planned or emergency upgrades to the NRWD water infrastructure that had significant impacts on budget resources?

A:       The district has made several recent upgrades to our water system, including a major upgrade in South Beach, among other improvements throughout the NRWD. Along with regular maintenance, the NRWD has worked hard to ensure efficiency throughout the district and the highest-quality water supply possible.

Q:       Are there other risks that the NRWD considers when determining the need for a healthy reserve fund?

A:       Other potential impacts on the district’s water supply that present potential risks – and a need for emergency financial resources — involve the district’s watershed and natural disasters (e.g., landslides, wildfires, earthquakes, droughts, etc.). The impacts are particularly concerning for the NRWD, which serves more than 800 residential and commercial accounts and relies exclusively on Hawk Creek as its drinking water source. Hawk Creek flows are highly sensitive to local rainfall patterns. Emergency reserves are critical to manage the impacts of these risks more quickly for members of our community.

Q:      Does the NRWD’s efforts to own and/or control land surrounding the Hawk Creek watershed impact the current budget?

A:       No. To date, the vast majority of funds to purchase land in the watershed to protect Neskowin’s water have come from donations and grants. Grants have also funded appraisals and management plans. The NRWD continues to purchase additional watershed land above our catchment at the Water Plant, using donor funds and grants. The catchment is about two miles east of Neskowin Village. These land purchases help ensure the safety of the water supply from impacts from land use, such as pollutants that affect supply and costs of water purification and distribution.

Thank you for helping us keep Neskowin’s water district going strong.