The Honolulu Board of Water Supply has adopted a more than 50% water rate hike for a majority of its Oahu customers.

The agency’s board of directors Monday voted 5-1, with board member Gene Albano abstaining, to approve a new 5-1/2-year water rate schedule that will see higher rates phased in, with the first 10% increase kicking in Feb. 1 and the next 10% hike to occur July 1.

Increased rates will occur each year thereafter, until fiscal year 2029, and remain in effect until superseded, BWS says.

On July 1, 2025, the rates will rise 9%; 8.5% on July 1, 2026; 8% on July 1, 2027; and 8% on July 1, 2028, BWS says.

The agency’s customer classes — namely, residential, nonresidential and agricultural — will have these same tiered rate increases. However, nonresidential classes, like businesses, and agricultural customers, like farmers, typically pay higher rates due to higher water use, BWS says.

Although tiered residential rates will vary depending on household size and use, BWS says new rates mean the average single-family household — using about 9,000 gallons of water per month and comprising 60% of the agency’s customers — will see their current $60 monthly water bill rise to about $65 per month, starting in 2024.

By 2028 the same single-family household would pay nearly $98 per month — a more than 63% increase over current water bills.

The new rates apply only to water, not sewer rates, BWS says. Wastewater charges are determined by the city Department of Environmental Services as well as the City Council.

Although the possibility of not implementing new rates was briefly raised at the meeting, BWS staffers said deferring higher rates could jeopardize the agency’s ability to supply potable water to the island.

They added that it would also mean using approximately $15 million of the agency’s “working capital” through the 2024 fiscal year, which ends June 30.

“Just keeping that revenue flat, we would be eating into that working capital,” Raelynn Nakabayashi, a BWS executive assistant, told the board. “By next year, though, we’d need to see almost $38 million that would need to be cut from the fiscal year 2025 budget; that would just bring us to zero dollars.”

She added that “the cuts would have to be far deeper,” and “each year it gets progressively harder without” new water rate increases.

“If the board were to decide to defer the rate proposals for 2024, it doesn’t mean that the need for those rate increases or the (need) for new revenue goes away; it just kind of gets kicked down the road,” BWS Manager and Chief Engineer Ernest Lau said. “At some point in the future, when we try to catch up to that, the rate increases might potentially have to be even higher.”

Prior to the vote, members of the public spoke for and against increased water rates.

Among them, resident Natalie Iwasa said, “Water is our most important resource.”

“We need to make sure it’s reliable and sustainable,” Iwasa said. “And I am a bit concerned about the deferred maintenance; if this goes on long term, it could end up costing more in the long run, so I do fully understand the need for increased rates.”

Dr. Jim Anthony — father of board Chair Na‘alehu Anthony — wanted the board to delay action on water rate increases to allow for more community engagement.

“My request is that the board should stop and think about what it is proposed to do, what it is about to do,” Anthony said.

State Rep. Darius Kila, who represents parts of the Leeward Coast including Nanakuli and Maili, opposed the water rate hikes in part due to the related expense of dealing with the Red Hill fuel contamination crisis.

“Personally, and knowing what is at stake, I humbly ask for the reconsideration,” Kila said, adding that poorer people in his district would be hit hard by higher costs for drinking water. “These homes can’t afford a high rate increase, can’t afford the money to go up for their water bill; my community cannot.”

Ultimately, board Vice Chair Kapua‘ala Sproat said new rates were necessary to maintain Oahu’s prime water delivery system.

“This is an incredibly difficult decision but one that I feel like we have to make at this time,” she said.

Meantime, BWS — which is solely funded by ratepayers and receives no funding from property taxes like other city entities — serves 145 million gallons of water per day to 1 million people on Oahu, the agency says.

Its operating expenditures for the current 2024 fiscal year, which began July 1, are about $276.4 million.

The water agency says that during the last rate increase, from 2018 to 2023, it funded 494 capital improvement projects totaling about $769.5 million to replace aging infrastructure including pipes, pumps and new facilities.

But the COVID-19 pandemic, inflation and the agency’s response to the catastrophic fuel leaks at the Red Hill Bulk Fuel Storage facility in 2021 negatively affected its services, BWS says.

As far as Red Hill contamination is concerned, due to the subsequent shutdown of the Halawa Shaft — one of Oahu’s four main water supply shafts — and other nearby wells in Aiea and Halawa, BWS had to replace 17.5 million gallons per day of potable water well pumping capacity.

BWS says its response to the Red Hill fuel spills meant it was forced to implement enhanced water quality testing and protocols, install additional groundwater monitoring wells, temporarily increase reliance upon other water sources to replace lost water production, develop alternative supply wells to make up for lost water production, and evaluate drinking water treatment technology.

But according to Lau, the new water rate hikes were not solely due to the Navy’s fuel contamination crisis.

“Very honestly, we cannot blame the Navy for all of (the) water rate increases,” Lau told reporters during a Nov. 21 news conference. “There are costs in there for Red Hill-related response projects and other operating costs, but the majority of what we’re facing as a utility … is increased costs all over the place.”

According to BWS, new water rate increases will raise about $550 million for the agency.

This additional money will continue to fund operations and maintenance and help pay for 132 capital improvement projects, totaling over $1.26 billion, the agency says. Infrastructure investments include 41 miles of new and replacement water pipelines, which are expected to cost $425 million.

The agency also says it plans to use $399 million to find new sources of drinking water as well as fund the planned Kalaeloa Seawater Desalination plant in West Oahu.

As planned, that facility will produce 1.7 million gallons of fresh water daily and be a new source of fresh water to support the needs of Campbell Industrial Park, BWS says.