An increase in water rates may be in the future for Pine Cove Water District customers. At the director’s meeting on Jan. 14, General Manager Jerry Holldber provided a preliminary report on the district’s future finances.

Holldber was following up on several recommendations that Terry Shea, partner at Rogers, Anderson, Malody & Scott LLP, the district’s auditor, made at the board’s November meeting. He advised the board to investigate ways, including rate changes, to raise more cash over the next three to five years.

Shea made the suggestion because PCWD’s cash balance at the end of fiscal year 2014 (June 30, 2014) was about $200,000, which is about a third of what he recommends to clients.

In his presentation to the board, Holldber started with the deficit at the end of 2014. While the audit reported $255,000, this included $136,000 for depreciation, a non-cash item. Nevertheless, actual expenses exceeded the district’s revenues by almost $120,000.

To achieve a balanced budget, Holldber recommended a combination of water-rate increases and cost reductions. He has asked the district’s engineer, John Egan, to review the water needs and costs. Holldber intends to present a specific proposal to the board for review at its February meeting.

He proposed increasing PCWD’s minimum bi-monthly charge from its present level of $53 to $62 in three annual steps. Also, the water-sales rate would be increased 20 percent next year with no further changes. After three years, this would generate about another $70,000 annually.

Cost reductions include paying off the tractor purchased last year and a separate three-year payment to Southern California Edison. These savings are about $40,000 annually.

“I’m grateful you’re bringing this up. We need to do something,” said board President Michael Esnard. “Based on the audit, we’re eager to discuss this now.”

In the first half of fiscal 2014-15, PCWD’s revenues were almost $360,000, or 46 percent of the estimated total, while expenses were nearly $437,000 or 55 percent.

Expenses were greater because several items such as insurance, audit costs, workers’ compensation and construction were paid almost entirely in the first two quarters of the year.

In other business, the board unanimously approved Resolution 501 that defines the directors’ responsibilities, committees and general board policies. This replaced two older resolutions.

Esnard stressed that the board is already doing these actions.

The directors also enacted Resolution 502 to establish a policy for rewarding the public for identifying any leaks in the district. Board members and employees and their families may not receive these awards.

In water business, Holldber reported that the December production was 2.2 million gallons, slightly less than December 2013. For the year, total production was 33.1 million gallons, which was 1.2 million gallons more than in 2013. This is the second consecutive year of increased production after six years of decreasing usage from 2006 to 2012. Since 2006, PCWD total production has dropped 6.2 million gallons.

“All wells are doing good right now and the water level of Well No. 10 stayed the same,” Holldber said.

Most of the pipe-line work in the Dutch Flats area is completed and what remains will be finished in the spring, according to Holldber. This summer, pipeline installation will shift to the Nestwa, Pine Ridge and Laurel Trail neighborhoods.