Metropolitan Adopts Two-Year Budget to Address Drought, Climate Change While Mitigating Impacts of Rising Costs,...

Budget includes 5 percent annual rate increases over next two years

A two-year budget that strikes a balance between investing in reliable water supplies for Southern California while managing rates to address rising operational costs and reduced revenues due to lower water sales and severe drought was adopted by Metropolitan Water District's Board of Directors.

The board on Tuesday (April 12) unanimously adopted a $1.9 billion budget for fiscal year 2022-23 and a $2.0 billion budget for 2023-24, with associated 5 percent overall rate increases in Metropolitan's wholesale water rates in calendar years 2023 and 2024.

We are in the midst of unprecedented times we face a deepening drought emergency as we emerge from a worldwide pandemic and confront national supply shortages and high inflation, said Metropolitan General Manager Adel Hagekhalil. We must take bold actions today to invest in the future of our region so that we are more resilient to climate change and drought. But we must also limit overall rate increases for our member agencies, which are contending with their own investment needs and affordability concerns.

The plan serves as a transitional budget as the board deliberates a new direction that will guide Metropolitan's future rate structure and potentially a new business model while meeting near-term challenges, such as high inflation and a deepening drought emergency. Future rate increases are expected to be higher, including an anticipated rate increase of 7 percent in 2025.