Fairly Pricing Critical Drinking Water, Recycled Water and Wastewater Service

Over 77,000 people rely on the City of Milpitas’ drinking water, recycled water and sewer systems daily, using them for everyday tasks like cooking, bathing, and keeping their families healthy. The City is dedicated to supplying our community with high-quality and reliable water and sewer service.

The City follows best practices and hires independent financial consultants to evaluate the infrastructure, operations and maintenance needs for our drinking water, recycled water and sewer systems. This includes ensuring adequate reserve funds for the service provided by other regional utility agencies and accounting for inflation and how it impacts our budgets.

In 2022, we retained Raftelis to evaluate these factors and recommend rate adjustments for five years which are equitable to customers while ensuring the utilities remain financially healthy. The Raftelis studies demonstrated rate adjustments are necessary to fund more than $91 million in critical capital, operational, and maintenance costs to keep the City’s utility infrastructure functioning well and in compliance with ever-stricter water quality, discharge and environmental regulations. Raftelis ensures adequate reserve funds and the impacts of inflation are included in their analysis.

The proposed rates are adjusted to be fair and equitable and reflect the characteristics of each customer classification. Together, the proposed rates are structured to proportionally recover the cost of providing drinking water, recycled water or sewer service among our various customer classifications. For the average single-family residential customer account, sewer rates are proposed to increase 4 percent and drinking water rates 6.4 percent each year on July 1 from July 1 2023 through and including July 1, 2027.

Please check here for specific information about the proposed recycled water and drinking water and sewer rate adjustments or to see the official notice mailed to every property owner who receives service from the City of Milpitas.

The Prop 218 Notice is available in Spanish, Tagalog, and Vietnamese languages.

2023 Community Workshops

Join us at one of our two community workshops to discuss the proposed rate adjustments.

  • Thursday, February 9, 6-8 p.m.
  • Thursday, February 16, 6-8 p.m.

Location: Milpitas Community Center Auditorium, 457 East Calaveras Blvd., Milpitas, CA 95035

The same presentation will be delivered at each workshop, so there is no need to participate in both.

Drinking water, recycled water and sewer rate adjustment public hearing

The City Council will conduct a public hearing on Tuesday, March 21, 2023 at 7 p.m.

Location: City of Milpitas City Hall, 455 E Calaveras Blvd., Milpitas, CA 95035

City of Milpitas’ proposed 2023-2027 water rate adjustment details

Drinking water/recycled water fact sheet

It’s becoming more expensive to keep up with maintaining our aging drinking water system due to increasing water purchase costs, unanticipated inflation levels and ongoing repair and replacement costs. On average, we deliver 11 million gallons of drinking water per day through over 200 miles of pipes, many of which are beyond their useful life and need to be repaired or replaced. We purchase treated potable water and treated recycled water from outside agencies, which is getting more expensive each year.

For the average single family, drinking water rates will increase 6.4 percent from July 1, 2023 through and including July 1, 2027.

Your water rates pay for:

  • Capital, operational, and maintenance costs to keep the water system functioning efficiently. These things take care of the underground pipes, water tanks, reservoirs, and other system elements we use to deliver your water.
  • Purchasing treated drinking water from outside (wholesale) agencies

Key drivers for proposed 2023-27 water rate increases

  • Replace or rehabilitate water assets and facilities: $16.5 million
  • Detailed water system condition assessment: $2.7 million
  • Replace pipelines to improve flows for fire suppression: $6.5 million
  • Conduct Citywide cross connection survey

For more information, please review our Water and Wastewater Rate Study.

Residential drinking water and recycled water bill components

  1. Fixed meter charge—Based on size of meter serving the property; helps fund operations and maintenance.
  2. Volumetric charge—Charged in dollars per hundred cubic feet (or per 748 gallons) of water delivered to a property; also helps with fixed costs as well as costs like purchasing water.
  3. Capital surcharge— Each water customer pays based on each hundred cubic feet of drinking water delivered to their property; funds capital program to replace and refurbish the essential assets in the drinking water system. Customers who receive recycled water do not pay this surcharge.


Sample bi-monthly bill for average drinking water use

Below is a sample bill for an average Milpitas residential water user that outlines how the change will impact them.

Full water rate schedule

Details about the full proposed rate schedule can be found here.

Proposed recycled water rate increase

The regional wastewater facility treats wastewater which is either discharged to the San Francisco Bay or recycled for industrial and irrigation use.

Please see information about the proposed recycled water rate increase.

City of Milpitas’ proposed 2023 sewer rate adjustment details

Sewer water fact sheet

Our sewer system serves over 16,750 customer accounts and sends an average of 6 to 7 million gallons of sewage to the San Jose/Santa Clara Regional Wastewater Facility daily. The wastewater is treated and either discharged to the San Francisco Bay or recycled for industrial and irrigation purposes.

It’s important to have a healthy sewer system for our community and the environment to make sure it can keep up with sewage demands and increasingly stringent regulations. The regional wastewater treatment facility efficiently treats wastewater and prevents pollution from being released into our local waterways.

For the average single family, rates will increase 4 percent from July 1, 2023 through and including July 1, 2027.

Your sewer rates help fund:

  • Sewer maintenance to keep pipes clean, repair and replace aging pipes, and correctly operate pump stations.
  • Reduced sanitary overflows due to City professionals who respond to and prevent overflows.
  • City’s share of costs for treating our wastewater plus a share of the regional treatment facility’s capital costs.

Key drivers for proposed 2023-27 sewer rate increases

  • Pay share of City capital costs at regional wastewater treatment plant: $30.1 million
  • Pipeline replacement and pump station improvements for the critical pipeline connecting to the treatment plant: $26.1 million
  • Replace or rehabilitate City-owned wastewater facilities: $6.4 million
  • Conduct detailed in-pipe condition assessments: $2.1 million

For more information, please review our Water and Wastewater Rate Study.

Residential sewer customer components

Milpitas has three residential drinking water customer classifications: single-family, multi-family and mobile home parks. Customer classes are based on common sewage characteristics, including the flow and strength of sewage, and common patterns and levels of demands placed on the sewer system by the customer. Sewer charges are based on the flow of each customer classification, the number gallons per day, as determined by the City of San Jose’s flow study.

Sewer charges

Below is a sample bill for an average Milpitas residential sewer user that outlines how the change will impact them.

Sample bi-monthly bill for average sewer system use


Non-residential sewer customer charges

Sewer rates include a bimonthly fixed flat fee and an additional volumetric charge measured by every hundred cubic feet of metered water consumed. The fixed flat fee is uniform for all non-residential customer classes and the volumetric component depends on the type of use and each type’s shared characteristics of strength and flow of sewage.

Non-residential customers are categorized into several different classes, including commercial customers, monitored sites, non-monitored sites, and institutional customers. The classes are broken down into subcategories.

What adjusted rates will fund

Thousands of customers rely on the City of Milpitas’ sewer and water systems every day. While they might seem functional now, as infrastructure ages, there is a higher probability for leaks and failures which threaten the reliability of both our sewer and water systems. The proposed rate increases will help us maintain our critical infrastructure and continue providing our community with safe and reliable services every day.

The proposed drinking water rate increase will allow us to:

  • Collect adequate revenue to make payments for wholesale water purchases from Valley Water and San Francisco Public Utilities Commission.
  • Replace or rehabilitate infrastructure such as aging pipelines, water tanks and pump stations
  • Replace pipelines to improve the water system’s flow, ultimately helping with fire suppression

The proposed sewer rate increases will allow us to:

  • Keep up with current and projected costs for operations and maintenance, ensuring we provide reliable service
  • Improve our infrastructure and update aging infrastructure that is no longer be useful
  • Cover our share of the San Jose Regional Wastewater Facility’s operations to ensure high quality wastewater treatment to prevent pollution in our environment

Outcomes if new rates not approved

If the proposed rates are not approved, the City will:

  • lack the sustainable funds we need to meet our capital, operations and reserve requirements.
  • face a higher chance of major emergency system repairs or system failures
  • likely pay higher rates than currently forecasted to pay for costly emergency and unplanned system maintenance
  • be in violation of municipal code if it cannot meet the requirements.
  • put its credit at risk which will affect our ability to borrow, and in turn, update infrastructure and maintain our level of service to our community.

When new rates will take effect

If the rates are approved, we will phase in adjustments over five years, starting July 1, 2023 through and including July 1, 2027. The City will continue with bi-monthly billing.

Water and sewer master plans

The City developed draft water and sewer master plans which include findings and recommendations for capital improvement program projects through 2040. The recommended master plan projects address:

  • improvements to help maintain existing service levels
  • future system requirements
  • findings from the risk and resiliency assessments through sustained improvements.

The total recommended water and sewer capital projects during the next five years is approximately $167 million. Due to the cost and impact on rates in FY23/24, some projects programmed to start design and construction in FY23/24 were pushed to FY25/26.

The master plans are a key component of the funding needs assessment used by rate consulting firms. For more information, see the water and sewer master plans here.

Profits from water or wastewater rates

California law does not allow any water or wastewater utility to charge rates beyond what is required to provide service. We cannot use rate revenue for anything outside of the cost of providing service.  No profit is allowed.

Complying with California law and protest process

Before increasing rates, the City must notify and engage customers in a public process outlined in Proposition 218. Before a City Council vote, the City must:

  • Mail every property owner a notice of the proposed rates (download a PDF copy here)
  • Host a public hearing with information about the rate increases
  • Provide an opportunity for property owners to state their objection to the proposed rates, known as a protest vote

Under California state law, all property owners and customers of record may submit a written protest about the proposed rate changes. Mailed protests must be received by March 21, 2023. Only one protest per parcel is permitted. All written protests will be verified. Letters should be sent to City of Milpitas City Clerk, 455 E. Calaveras Blvd., Milpitas, CA 95035.

How to reach us!

We are here to help! Call Milpitas Public Works at (408) 586-2600 or email milpitasworks@milpitas.gov for more information or see details about the proposed drinking and recycled water or sewer rate adjustments.