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Escondido addresses massive utility billing error

The Escondido City Council approves refunds and repayment plans after discovering 14-month, multi-million dollar billing error affecting thousands of residents

NORTH COUNTY — A 14-month billing error affecting more than 24,000 water and wastewater accounts has triggered a sweeping correction plan in Escondido, with the City Council taking action on Sept. 17 to address millions in mischarges.

The city discovered $2.5 million in overcharges and $3 million in undercharges in 2024, stemming from incorrect data used in calculating wastewater rates. Mayor Dane White said a programming failure misapplied the city’s wastewater formula.

The City Council approved a plan to credit overbilled accounts and impose a $10 monthly repayment fee on underbilled accounts, effective January. The period in question was from July 2023 through September 2024.

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The council discussed the issue in September 2024, and action wasn’t taken until this year due to several factors, such as reviewing the legal implications, how to pursue under-billed accounts, ensuring fairness, updating the billing software, and developing flexible repayment plans, among others.

The 2023 rate increases were 8% for water in 2024, followed by a 7.5% increase in January 2025 and 2026, and then 6.5% increases in January 2027 and 2028.

“On behalf of the city of Escondido, I wanted to apologize to each and every one of you and each and every resident here,” White said during the Sept. 17 meeting. “This was a simple yet colossal mistake that can never happen again, and we recognize that and take full responsibility.”

The billing system failed to lock in the correct water usage period from the city’s 2023 rate policy change. Instead, it reverted to outdated programming, recalculating wastewater charges based on new and incorrect data. About 13,000 customers were overcharged, while 10,500 were under-billed and 1,200 were unaffected, according to staff.

Above is a graphic from the city of Escondido regarding its billing errors for water and wastewater use. Courtesy image
Above is a graphic from the city of Escondido regarding its billing errors for water and wastewater use. Courtesy image

Wastewater billing is based on estimated flow, calculated using winter drinking water usage and a return factor to account for outdoor water use. In 2023, the city approved the 2022-23 winter period due to unusually wet conditions, assuming nearly all water entered the wastewater system.

The billing software failed to lock in those rates and changes, which led to the miscalculations.

Another concern for the council and the repayment plan was to ensure low-income residents and seniors on fixed incomes could absorb the additional $10 monthly charge.

“We cannot have a certain portion of the population paying for their bills and not the other portion,” Councilman Christian Garcia added. “One bit of nice symmetry, if we back bill over 14 months, the monthly charge is about equal to what they were underbilled in the first place.”

Additionally, 931 accounts were flagged by city staff as “high impact” as they would see an increase of $30 per month. Those accounts registered zero water use during the 14 months in question, while staff outlined the anomalies could stem from meter failures, extended vacancies or property transitions.

The city of Escondido discussed last month the 931 high-impact accounts regarding its water over-billing error and how to address those. Courtesy image
The city of Escondido discussed last month the 931 high-impact accounts regarding its water over-billing error and how to address those. Courtesy image

Staff explained applying the correction uniformly to the 931 accounts could result in inaccurate or unfair changes. The council directed staff to pause those adjustments and to develop a more tailored methodology, which may include recalculating estimates based on historical usage, verifying meter data, or applying alternative formulas for those with unique circumstances.

Staff warned the council that failing to recover the underbilled accounts would jeopardize the wastewater fund, delay capital projects and increase future rates. The council agreed, as several, such as White and Deputy Mayor Conseulo Martinez, said the system is a public service and every resident must contribute to keep it operational, fund maintenance projects and more.

The council’s adopted plan includes:

  • Refunds totaling $2.5 million to over-billed accounts.

  • Back billing of $2.95 million to under-billed customers, spread over 14 months at $10 per month.

  • Temporary exemptions for roughly 1,000 high-impact accounts, including those with zero water use or potential meter errors.

  • Rate corrections beginning this month.

  • Repayment to begin in January 2026.

  • Flexible payment options, including alternative plans and no late fees during the adjustment period.

The council also approved several reforms, including standard operating procedures for leaks and meter errors, contracting outside support to manage the workload, reinstating financial health checks, scheduling quarterly subcommittee meetings (the first is Oct. 21), and exploring electronic metering to detect anomalies in real-time.

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