You are now in Features View From The Chair category.

Gary Croucher-Board Chair-San Diego County Water Authority-Primary

Water Authority Credit Remains Strong as Risks Emerge

All three major rating agencies affirmed the San Diego County Water Authority’s strong credit ratings, which will help us minimize the cost of financing important water reliability projects.

It is particularly gratifying that the reports cited the Water Authority’s strategic management, our conservative approach to water sales projections, and the benefits of rate case litigation that recently resulted in $44.4 million being refunded to local retail water agencies, among many other factors. In affirming their credit ratings, the services also noted the Water Authority’s strong financial leadership (including prudent strategies to manage issues related to COVID-19), decades of success diversifying water supply sources, our commitment to infrastructure maintenance, and our financial reserves for managing contingencies.

Significant investments in supply diversification

Just one example: Fitch Ratings said that the Water Authority’s “operating costs are low” and that the Water Authority’s “significant investments in supply diversification (that) have allowed SDCWA to continue to meet water demands in its service area.” Fitch also accounted for the Water Authority’s current hiring freeze, spending cuts and deferral of $30 million in planned capital spending to proactively manage finances during the pandemic.

At the same time, rating agencies also noted significant challenges ahead, including efforts by Fallbrook Public Utility District and the Rainbow Municipal Water District to “detach” from the Water Authority – a move that could negatively impact ratepayers countywide. If the two North County agencies leave per their plans, Water Authority analysis shows that the other 22 member agencies – who serve about 3.2 million residents – will have to pay $16 million to $46 million more per year to cover the cost of the departing agencies.

Detachment and credit ratings

Moody’s said detachment could lead to a credit downgrade, which would increase borrowing costs for critical water reliability projects. S&P Global affirmed its AAA rating for the Water Authority. However, it issued a negative outlook for the agency and called detachment uncertainty “an additional credit stressor” – “especially if an approved detachment sets a precedent if members can easily detach from the authority.” S&P added that, “this would be further exacerbated if the two members are not required to pay for their portion of the associated debt and infrastructure costs that the authority has undertaken to provide reliable water sources.”

In May 2020, the Water Authority’s Board of Directors voted to oppose detachment unless four conditions can be met related to protecting Fallbrook and Rainbow ratepayers, avoiding negative impacts for other member agencies, protecting the Sacramento-San Joaquin Bay-Delta, and maintaining the Water Authority’s voting rights at MWD. The issue is under review by the San Diego Local Agency Formation Commission, known as LAFCO. The LAFCO process, which is designed to provide for an impartial analysis of these issues, will allow the Water Authority and all other affected parties to determine if these conditions are satisfied. If not, the Water Authority will oppose detachment.

Gary Croucher-Board Chair-San Diego County Water Authority-Primary

Local Water Agencies to Receive $44.4 Million Rebate

I’m so pleased report that yesterday the Water Authority’s Board of Directors voted to distribute a rebate of $44.4 million to its 24 member agencies across the region after receiving a check for that amount from the Los Angeles-based Metropolitan Water District of Southern California to pay legal damages and interest.

The rebate resulted from the Water Authority’s decade-long rate case litigation in state Superior Court seeking to compel MWD to set legal rates and repay overcharges. The Water Authority won several critical issues in cases covering 2011-2014 and was deemed the prevailing party, which means the agency is also owed legal fees and charges in addition to the recent damages and interest payment from MWD.

The court rulings will also help avoid future overcharges and thereby minimize future disputes over MWD’s unlawful Water Stewardship Rate for transporting the Water Authority’s independent water supplies through MWD facilities. Those charges – if they had continued – would have cost San Diego County residents more than $500 million over the life of the Water Authority’s water delivery contract with MWD.

This day has been a long time coming. We never wanted to litigate these issues – but if we had not had the courage to do so, MWD would still be collecting the illegal fees and we would not have money to give back to local retail water agencies across the region.

MWD Overcharges-Rate Case-Rebates-Member Agencies

Gary Croucher-Board Chair-San Diego County Water Authority-Primary

Water Authority’s Legal Efforts Protect Local and Regional Ratepayers

I have some important news for our region to share: The San Francisco Superior Court has ruled the San Diego County Water Authority is the prevailing party in the agency’s first two lawsuits heard challenging rates and charges set by the Los Angeles-based Metropolitan
Water District of Southern California.

The order entitles the Water Authority to recover its attorneys’ fees and costs in those cases, in addition to a $44 million damage and interest awardmade earlier.

“San Diego prevailed, and the judgment not only benefits its own ratepayers but all of thenearly 19 million people in Metropolitan’s service area because enforcing cost-of-service principles serves the interests of all ratepayers,” said Superior Court Judge Anne-Christine Massullo in her Jan. 13 order, which can be appealed.

The exact amount of recoverable fees will be decided later. It is deeply gratifying that the court not only validated our claims but acknowledged the importance of protecting ratepayers by water agencies following the law.

The order makes it clear once and for all that our desire to protect San Diego ratepayers was never intended to harm MWD, its other member agencies or the ratepayers they serve. Rather, the litigation was necessary to address serious flaws in MWD’s rates that will, as the court said, ultimately benefit not only San Diego County ratepayers, but all Southern Californians.

This order is another major step toward achieving Water Authority board objectives and one of my key initiatives as Board Chair: to conclude the litigation and work together with other MWD member agencies to address MWD’s water resource and rate challenges. This is essential in order to ensure MWD’s fiscal sustainability—and that of its member agencies—now and in the future.

Click here to learn more about this issue.

Gary Croucher-Board Chair-San Diego County Water Authority-Primary

Building a Collaborative Vision for San Diego County

We welcome the new year with heavy hearts about the recent events in our nation’s Capitol and a renewed commitment to civility and respect at every level of government.

At the same time, we are maintaining our concentration on our priorities for the year, which are numerous and significant. I’m focused on advancing San Diego County’s interests as we continue to fulfill our mission of making sure that our region has safe and reliable water supplies at an affordable price, which is critical to maintaining our economic competitiveness and sustaining our wonderful quality of life.

Here’s some good news about how the Water Authority is putting San Diego County first in 2021:

  • As part of our commitment to meeting some of the strictest environmental regulations in the world, the Water Authority and Poseidon Water have launched a state-of-the-art project evaluating intake screen technologies at the Claude “Bud” Lewis Desalination Plant, which has served more than 65 billion gallons of locally produced water over the past five years. Crews are testing both active screen and passive screen technologies in Agua Hedionda Lagoon to complete the full-scale project by the end of 2023.
  • We are updating our Urban Water Management Plan, which is a critical part of meeting the long-range water needs of the San Diego region for both normal years and dry years. This planning document is increasingly important given the increasingly unpredictable impact of climate change. The planning process is, of course, a collaborative effort with our 24 member agencies as we account for their local supplies and demand projections.
  • Our low-cost supplies of conserved water from the Imperial Valley are the foundation of our diversified supply portfolio. With Board direction, staff has launched the next phase of a study to explore a new system to deliver those supplies because initial studies show it could be most cost-effective than the current system and mutually beneficial for our partners in the valley. The study will only advance if it benefits the region by providing cost savings for ratepayers.
  • As the regional economy recovers, we are working hard to protect ratepayers by maintaining a focused and strategic budget. It’s a tough balance, but we are working hard to find the right combination of near-term and long-term funding priorities in these challenging times.
While I’m glad to put the old year behind us and welcome 2021, I’m certain there will be many challenges and opportunities ahead. I’m committed to keeping you informed along the way, and to working with our Board, member agencies, stakeholders, regional leaders and ratepayers to create innovative solutions. In my 20-plus years on the Water Authority Board, we’ve never shied away from big and bold ideas – and 2021 will be no exception.
Gary Croucher-Board Chair-San Diego County Water Authority-Primary

Building a Vision of Regional Strength Through Collaboration

If more than three decades in the fire service taught me anything, it’s that we are always stronger together. This has never been more clear than over the past several months, as the Water Authority and its 24 member agencies have worked together to ensure an affordable, safe and reliable water supply, as San Diego County works to overcome the COVID-19 pandemic. I truly believe we are stronger when we roll up our sleeves and work together. As we used to say on the fire lines: You go, we go.

We know how to do this because we’ve been doing it for more than 75 years. Working together, the Water Authority and its member agencies have built a water supply that supports our economy and quality of life and protects us from shortages in times of drought and emergencies. Our diversified supply, including major conservation investments in the Imperial Valley, is held up as a statewide and nationwide model.

The Water Authority plays a critical role as the region’s long-term water planning agency and wholesale water provider for 3.3 million residents and our $245 billion economy. We take the long view because we’re responsible for ensuring a safe and reliable water supply for our children and grandchildren. That’s a challenging task in our semi-arid region with few natural water resources, requiring us to look decades ahead to weigh complex options that serve the region’s water ratepayers and taxpayers.

As the newly elected Chair of the Water Authority, my number one priority will be to support critical long-term planning initiatives to ensure that water and facilities are in place to support future generations at an affordable cost. I plan to do this working in collaboration not only with the Water Authority’s 24 member agencies, but also with other regional agencies such as the Imperial Irrigation District and Metropolitan Water District. The Water Authority will also be working with key stakeholders, including environmental, business and other civic and philanthropic groups.

In taking the helm, I also want to recognize the work by General Manager Sandy Kerl, including her leadership through the myriad challenges presented by the COVID-19 pandemic. She is responsible for day-to-day operations at the Water Authority and for guiding a talented staff of about 250 employees, most of whom are now working and sheltering in place. Sandy and her leadership team worked especially hard to limit rate increases during the pandemic, and will be looking for new ways to protect ratepayers as we head toward 2021.

In closing, I want to assure you that you can count on me in the spirit of, “you go, we go!” The Water Authority stands behind our 24 member agencies and the commitment to providing an affordable, safe and reliable water supply now, and for future generations. At the end of the day, I am confident that San Diego County is, and will remain, stronger together.

San Diego County Water Authority Board of Directors Chair Jim Madaffer-primary-View from the Chair

Threat Emerges to Reduce Water Supply Reliability, Fracture Region

Thank you for your support over the past two years. It’s been an honor to serve as the chair of the Water Authority’s Board of Directors. While some may not realize it, this 36-member Board plays a critical role in sustaining San Diego County’s quality of life and economy.

And I’m pleased to say that this Board engages in the difficult discussions and decisions to make sure our children and grandchildren enjoy the same safe and secure water supplies that we enjoy today. Unfortunately, it’s also true that efforts are underway that would undermine decades of successful planning that has served our county well from Fallbrook to San Ysidro.

This week, the Water Authority filed a formal response to address a proposal by the Fallbrook and Rainbow water districts to detach from the Water Authority and annex into Eastern Municipal Water District in Riverside County. These proposals would increase costs for water ratepayers in San Diego County, reduce the county’s voting power, and decrease water supply reliability for farms and residents.

Our detailed filing with the San Diego Local Agency Formation Commission (LAFCO) spells out how the Fallbrook and Rainbow detachment proposals contain significant areas of misleading or incomplete information that must be addressed before LAFCO and all of the interested parties countywide can understand the full scope of impacts that would be created by detachment. The LAFCO process is expected to take at least another year.

As proposed by Fallbrook and Rainbow, the detachments would allow Fallbrook and Rainbow to avoid paying for water supplies and infrastructure that have been developed in collaboration with those agencies and are currently being used by those agencies to meet their customers’ needs. Abandoning those cost obligations would force other ratepayers countywide to cover their portion of the bills already incurred for decades of investments in supply reliability.

Our agency’s analysis shows that detachment, as proposed, would reduce water reliability and increase risk for Rainbow and Fallbrook customers, create environmental impacts that haven’t been studied, and impair the successful long-term planning efforts that have served our county well. And it would give Riverside County water agencies more control over San Diego County’s water future, including water rate and property tax impacts. The Water Authority’s formal response to the Fallbrook/Rainbow reorganization proposals and related documents are at www.sdcwa.org/lafco-reorganization.

It’s critical that LAFCO and all the interested parties across San Diego County take the time to address the full scope of consequences created by these unprecedented proposals so we avoid unintended harm to our region. The Water Authority, its member agencies and regional planning agencies such as SANDAG have worked together for more than 75 years to provide this region with safe and reliable water supplies. Trying to turn back the clock now is a costly, difficult process with numerous impacts to Fallbrook and Rainbow customers and across the region.

As we transition to the new Board leadership in October, I trust that you will give incoming Chair Gary Croucher and Vice Chair Christy Guerin the same support that you’ve given to me over the past two years. And don’t forget that whatever the challenges, San Diego County is stronger together.

View From The Chair represents the viewpoints of Jim Madaffer, Chair of the San Diego County Water Authority Board of Directors.
San Diego County Water Authority Board of Directors Chair Jim Madaffer-primary-View from the Chair

Help Us Reduce Water Rates

As my two-year term as the Water Authority Board chair winds down, it’s my pleasure to update you on two important efforts that are underway for the betterment of the San Diego region.

First of all, our Board voted unanimously last week to spend a few more months discussing and assessing a study of a new regional water conveyance system to deliver our high-priority Colorado River supplies from the Imperial Valley. The work we’ve done over the past year shows the project would produce billions of dollars in potential savings over several decades – and we plan to use the next few months to outreach to stakeholder communities about this study, address questions raised in recent weeks and seek Board direction in November.

Ultimately, the questions are bigger than a new aqueduct – they are about how we sustain our economy and quality of life at a reasonable cost. A new multi-benefits conveyance system is one potential solution – but if not that, then we must grapple with equal intensity over whether it makes sense to pay ever-increasing costs (over which we have no control) to the Los Angeles-based Metropolitan Water District of Southern California to deliver our water for generations, or whether a plan based mainly on local water generation is financially feasible.

The other big issue this month is related – my request that MWD adopt rate relief measures this fall that reduce our water costs. Put simply, despite the recession and the COVID-19 pandemic MWD has not enacted the same kind of rate relief as the Water Authority, which froze hiring, deferred non-essential projects and significantly reduced travel – among other steps. In the end, we limited rate increases to 4.8-4.9 % for 2021 – and more than 60% of that is directly attributable to MWD.

Now, we’re asking MWD to take a similar approach, recognizing that we’re all in this together. We aren’t prescribing the strategies for MWD. We’re just asking that the nation’s largest water agency help its customers, and we’re pledging that any rate relief MWD provides will be passed directly to our member agencies. You can view the letter I sent to MWD at www.sdcwa.org/support-rate-relief-mwd.

I invite you to help move this conversation forward by encouraging MWD to find meaningful cost savings this fall that are reflected in its budget. Please take a moment to do so at www.sdcwa.org/support-rate-relief-mwd by submitting a letter of support for rate relief.

View From The Chair represents the viewpoints of Jim Madaffer, Chair of the San Diego County Water Authority Board of Directors.
San Diego County Water Authority Board of Directors Chair Jim Madaffer-primary-View from the Chair

Major Water Rate Case Victory; San Diego County is Stronger Together

As you know, the Water Authority has been working for years to conclude lawsuits over rates set by the Los Angeles-based Metropolitan Water District of Southern California – and this week, we have taken a big step forward with the entry of final judgment in two major cases.

Yesterday, a Superior Court judge has awarded the San Diego County Water Authority $44,373,872.29 for two cases covering rates paid by San Diego County ratepayers during 2011-2014. The award included $28,678.190.90 in damages for MWD’s breach of contract for the four years at issue, plus pre-and post-judgment interest. As these first two cases are finally concluded, the Water Authority is also working to narrow the scope of the remaining 2014, 2016 and 2018 cases (a 2017 case has already been dismissed).

Entry of final judgment caps a 10-year effort by the Water Authority Board of Directors on behalf of San Diego County ratepayers, proving once again our region is stronger together in charting our water future. While the damages and interest award is important, the entry of judgment will also help avoid future overcharges and thereby minimize future disputes based on rulings by the Court of Appeal. MWD’s improper charges – if they had continued – would have cost San Diego County residents more than $500 million over the life of the Water Authority’s water delivery contract with MWD.

The lawsuits generated other substantial benefits, such as requiring an increase in the Water Authority’s preferential rights to MWD water by approximately 100,000 acre-feet a year, equivalent to about twice the annual production of the $1 billion Carlsbad Desalination Project.

In February, the Water Authority’s Board of Directors voted to dismiss certain issues from the litigation after securing more than $350 million in local project subsidy benefits for the San Diego region, beginning late last year. In doing so, the Water Authority acknowledged the MWD Board action to stop imposing the district’s Water Stewardship Rate as a charge for transporting the Water Authority’s independent water supplies through MWD facilities, thus resolving for now that issue in future rate years. Consistent with the Water Authority Board’s direction, its attorneys are taking the steps necessary to narrow the litigation and have recently dismissed one case in its entirety.

As the lawsuits continue to wind down – which remains my personal goal – the Water Authority is working collaboratively with MWD member agencies across the district’s six-county service area to update MWD’s long-term water resource and financial planning. MWD’s Integrated Resources Plan, or IRP as it is called, will be its roadmap for the future, factoring in updated data and plans by many MWD member agencies who are working to develop their own local water supplies like the Water Authority and its member agencies have done over the past two decades and we will continue to do in the future.

View From The Chair represents the viewpoints of Jim Madaffer, Chair of the San Diego County Water Authority Board of Directors.
San Diego County Water Authority Board of Directors Chair Jim Madaffer-primary-View from the Chair

Charting a Long-Term Water Strategy for San Diego County

During my nearly two years as chair of the Water Authority’s Board of Directors, I have seen firsthand the regional benefits of decisions made by our predecessors to secure water supply reliability. I cannot count the number of times I have been thankful for all the board members, regional stakeholders, staff and supporters in decades past who wrestled with challenges and made tough decisions to invest in big ideas and projects. From water supplies and water storage to pipelines and water treatment, these decisions have resulted in water supply security for our region.

While the prudent plans of the past benefit current and future generations, we must continually grapple with the uncertainties of the future given the decades-long lead time for major infrastructure projects. One of my mantras as Board chair has been to focus not just on today, but the next 25, 50, and even 75 years. We know that new infrastructure investments will be necessary, and they take time to plan and build. The challenge is how best to balance the costs, benefits, and uncertainties.

Regional Conveyance System

That’s why more than a year ago, our Board authorized a technical feasibility study to look at whether building our own conveyance system to transport our locally controlled regional water supplies from the Colorado River Quantification Settlement Agreement (Imperial Valley) could be cost-competitive with other options. The initial findings, released in June, confirm that is the case and offer a preview of what would be needed to build a conveyance system for meeting the region’s long-term water needs.

In coming months, the Board will decide whether to move the study to the next phase. This next phase will look in-depth on financing and costs – and more importantly mutually beneficial partnerships designed to reduce costs of improving regional water management. These partnerships might include joint ventures with Water Authority member agencies, the Imperial Irrigation District, Mexico, agriculture, the State of California through its Salton Sea Management Plan, tribal governments, renewable energy developers, public-private partnerships and more.

Currently, Water Authority staff is reviewing a second independent analysis of the June study, sponsored by some of the Water Authority’s member agencies. It is vitally important that we take the time to digest new information and different perspectives, and perhaps incorporate their suggestions in the next phase of our study, especially as we look toward a project of this size and magnitude that will be paid for over many generations.

Even after reviewing the voluminous data, I expect that there will be a variety of opinions about how to proceed. We all recognize that it is inherently difficult to forecast both costs and benefits over several decades for this project or any other, which is why we have taken measured steps.  Should the study move to the next stage, the process will include many future off-ramps for the Board in case better alternatives emerge.

At every stage, our Board should be committed to a thoughtful, fulsome assessment, never shying away from the need to cooperatively, collectively and civilly engage on these important questions with real benefits – and perhaps consequences – for our children and grandchildren. This is fundamental to the civic process, and critical to charting our region’s course as we have been doing for more than 75 years at the Water Authority.

View From The Chair represents the viewpoints of Jim Madaffer, Chair of the San Diego County Water Authority Board of Directors.
San Diego County Water Authority Board of Directors Chair Jim Madaffer-primary-View from the Chair

Good News: Hundreds of Millions of Dollars Approved for Local Water Projects

I’m pleased to share some good news for our region. You will recall the Water Authority was recently awarded $15 million in state grants for several water supply projects throughout the county. Earlier this week, we also secured approval of more than $115 million for local water supply projects in San Diego County through the Metropolitan Water District of Southern California. That brings the total to nearly $500 million since we successfully challenged in court MWD’s imposition of an illegal contract clause barring our region’s participation in MWD’s funding program. Unlike state grants, MWD’s program is funded by its member agencies, including the Water Authority, in the water rates and charges we pay to MWD.

Kudos to our member agencies for their strong applications and to MWD’s Board of Directors for approving them. It is an affirmation of our ongoing efforts to collaborate with MWD and to address shared challenges.

Local water projects, along with the Water Authority regional supplies, are key components of our region’s long-term supply reliability strategy. A few months ago, we worked with Fallbrook Public Utility District, the City of San Diego and the City of Oceanside to secure MWD program funding for their projects.

The two most recent successes are:

  • Up to $91.8 million was awarded to the East County Advanced Water Treatment Plant. It will meet up to 30% of East County’s drinking water demands (approx. 13,000 acre-feet of water per year) and eliminate the discharge of 15 million gallons of partially treated wastewater into the Pacific Ocean.
  • Up to $23.4 million was awarded to the Membrane Filtration Reverse Osmosis Facility in the City of Escondido, which will provide up to 3,280 acre-feet per year of advanced treated recycled water to irrigate farmland.

Now that San Diego County agencies can compete for – and win – Local Resources Program funding, the Water Authority is taking actions in court to voluntarily dismiss certain related legal claims against MWD. We hope to soon have prompt resolution of our remaining litigation issues, and to work with the other MWD member agencies to create a strategic plan, a financing plan and a rate structure that are fair to ratepayers across Southern California.

View From The Chair represents the viewpoints of Jim Madaffer, Chair of the San Diego County Water Authority Board of Directors.