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Water Authority Recommends 0% Change in Next Two-Year Budget

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The San Diego County Water Authority’s general manager today recommended to the Board of Directors a $1.7 billion budget for fiscal years 2022 and 2023 – a 0% change from the current two-year budget – due to the agency’s continuing commitment to cost control.

Water Authority staff also proposed increasing rates and charges for member agencies by 3.6% for treated water and 3.3% for untreated water in calendar year 2022, attributable to more rate increases by the Water Authority’s wholesaler, continued payments for past investments in supply reliability, and inflationary pressures on energy, chemicals, and construction materials.

Although the Water Authority’s budget spans two fiscal years, the agency sets rates annually to manage changing conditions more effectively. The Water Authority Board is expected to vote on rates for next year and the two-year budget at its regular meeting on June 24, following budget workshops on June 8 and 10.

“Major accomplishment”

“Proposing a flat budget is a major accomplishment made possible by strategic guidance from the Board of Directors, input from our member agencies, and the dedication of agency staff who are committed to resilient operations, forward-thinking plans, and regional collaboration,” said Water Authority General Manager Sandra L. Kerl. “The pandemic and economic recession, combined with a second consecutive dry year, created unprecedented challenges, yet we have contained costs while continuing to deliver enough water to sustain our region’s $253 billion economy and quality of life.”

As usual, more than 90% of the Water Authority’s recommended budget is for buying and treating water or building and financing infrastructure. This reflects the Water Authority’s long-term strategy to invest in supply reliability to meet current and future needs of the San Diego region – a strategy that is paying significant dividends during the current drought hitting most of California.

Seven percent of the budget funds the Water Authority’s operating departments. The recommended budget proposes increasing spending by those departments by 1%, or $1.1 million, compared to the current two-year budget.

Key initiatives the Water Authority plans to pursue during the next two-year budget cycle include:

  • Long-term planning – The Water Authority’s Long-Range Financing Plan and the Water Facilities Master Plan will be prioritized. Both are critical documents for projecting the Water Authority’s financial future and providing the Board with flexibility. Phase B of the Regional Conveyance System Study will conclude, and the Board will determine whether to proceed. Another focus is developing water storage capacity in Lake Mead to provide additional drought resilience for San Diego County and other parts of the Colorado River Basin.
  • Controlling costs – The recommended budget includes the elimination of eight staff positions, along with a reduction in outside services and minimizing travel. In addition, equipment replacement was evaluated for deferrals, minimizing the budget impact of day-to-day operations. As always, the budget is partly the function of water sales and water rates, which are both trending upward.
  • Capital improvements – The Water Authority’s Capital Improvement Program is the cornerstone of the agency’s efforts to ensure that regional water delivery and treatment systems continue to meet a variety of ever-changing demands. The agency will move forward on the highest-priority asset management projects, along with detailed seismic, hydraulic and cavitation analysis. Staff also will continue to enhance security systems for physical and cyber assets – a responsibility that grows as potential threats continue to expand.
  • Collaborating with member agencies – Water Authority staff in every department work closely with member agencies to support local efforts, from outreach and advocacy to budget and rate development – and those efforts will continue to be a priority. There are opportunities for collaboration both in joint projects and joint policy issues, such as advocating for local decision-making about drought investments and responses.
  • Communicating with stakeholders – Whether it be in the state Capitol or local chambers of commerce, the Water Authority will continue to share the region’s water story through a full range of engagement tools and creative tactics.

To support the recommended budget, the Water Authority developed its 2022 rate proposal in conjunction with an independent cost-of-service study to ensure rates and charges comply with state law, legal requirements, cost-of-service standards, and Board policies. The Water Authority also worked closely with its member agencies to keep the proposed rates and charges at the low end of earlier projections.

In 2022, the Water Authority proposes charging its 24 member agencies an all-in rate of $1,523 per acre-foot for untreated water, or $49 more per acre-foot than they currently pay. Charges would be $1,833 per acre-foot for treated water, or $64 more per acre-foot than in 2021. (Note: An acre-foot is about 325,900 gallons, enough to serve the annual needs of 2.5 typical four-person households in San Diego County.)

Actual figures will vary by member agency, and each member agency will incorporate costs from the Water Authority into the retail rates it charges to residents, businesses, and institutions.

Prudent financial planning

The Water Authority’s overall rate increase is driven by multiple factors, including rising costs from its wholesale water provider, the Metropolitan Water District of Southern California (up 3.9%), which increased its rates and charges, including the amount it charges to transport the Water Authority’s independent Colorado River supplies.

“Thanks to prudent financial planning and debt management, we are able to keep the proposed rates at the low end of our projections,” said Water Authority Finance Director Lisa Marie Harris. “We’ve worked hard to control rates while maintaining a complex water production, treatment and delivery system that will continue to support the region for generations.”

The rate proposal for Calendar Year 2022 includes strategic withdrawals from the Rate Stabilization Fund. To reduce 2022 rate increases by approximately $65 per acre-foot, the Water Authority plans to draw $25 million from the agency’s Rate Stabilization Fund. The fund was created in 1990 to help avoid rate spikes, especially those driven by reduced water sales. The rate proposal also includes strategic management of the Water Authority debt portfolio resulting in $130 million in net present value savings from several refundings.

The 2022 rate proposal ensures debt-coverage ratios that maintain the Water Authority’s strong credit ratings and minimize the cost of borrowing money for construction projects, an approach that saves ratepayers money over the long run. The Water Authority has senior lien credit ratings of AAA from Standard & Poor’s, AA+ from Fitch ratings and Aa2 from Moody’s.

For more information about the Water Authority’s recommended 2022 and 2023 budget, and proposed 2022 rates, go to pages 72 and 73 of the May Board packet at https://www.sdcwa.org/wp-content/uploads/2020/11/2021_05_27FormalBoardPacketSEC.pdf.

Water Authority Recommends 0% Change in Next Two-Year Budget

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May 27, 2021 – The San Diego County Water Authority’s general manager today recommended to the Board of Directors a $1.7 billion budget for fiscal years 2022 and 2023 – a 0% change from the current two-year budget – due to the agency’s continuing commitment to cost control.

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San Diego County Crops Supported by Water Rate Discount

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Alongside other cornerstone industries such as tourism and biotechnology, agriculture sustains the San Diego County’s economy with a farmgate value of nearly $2 billion a year, according to the most recent county assessment. Avocados – one of the county’s signature farm goods — account for $140 million of the farming total growth of 16% in 2019, county figures show.

And all the crops countywide are supported by reliable water supplied by the San Diego County Water Authority and its 24 member agencies, which have invested strategically over the past three decades to ensure water availability even during dry years. The Water Authority has also created a special ag water program that offers lower-cost water in return for lower reliability so that farmers can choose the level of service that works best for them.

“San Diego’s dynamic agricultural industry strengthens our region by employing thousands of people, contributing to the local economy, supporting the local food system and enhancing sustainability efforts,” said San Diego County Agricultural Commissioner Ha Dang. “All efforts to support our diverse agricultural economy are important, including water reliability and accessibility.”

San Diego County ag production is the combined result of more than 5,000 family farms – the most of any county in the United States. In fact, 69% of all San Diego County farms are smaller than nine acres. Innovative practices – including water-use efficiency measures – allow local farms to be productive by focusing on high-value crops such as ornamental trees and shrubs, bedding plants, cacti and succulents and indoor plants.

Agriculture directly employs 56,000 people in San Diego County, including the second-largest number of farms operated by women and the largest number of part-time farmers in the U.S. Along with avocados, San Diego County farmers rank first in the nation in production of nursery crops, and among the top five producers nationwide of lemons, limes, guavas, pomegranates, and macadamias.

Water Authority offers ag discount

In partnership with its member agencies, the Water Authority offers a Permanent Special Agricultural Water Rate Program to continue supporting commercial farms that are the economic engine of rural San Diego County.

In exchange for lower price water, participants in the ag water program agree to have lesser water service when the Metropolitan Water District of Southern California cuts supplies to San Diego County. It is similar to power companies offering lower rates to customers who agree to have their power service interrupted during peak demand periods. In turn, the Water Authority can reallocate those supplies as needed to commercial and residential customers who pay higher rates for full reliability benefits.

An important deadline for the ag water program is coming at the end of June, and farmers who want to take advantage of lower rates should contact their retail water agency for details.

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Vista Irrigation District Announces Student Contest Winners

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Vista, Calif. — Vista Irrigation District has awarded college scholarships to eight high school seniors and selected three fourth-grade students from the local community as winners of two separate district-sponsored contests.

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Neal Meyers Appointed to OMWD Board of Directors

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Encinitas, Calif. — Neal Meyers was sworn in this evening as Olivenhain Municipal Water District’s newest director, representing Division 5 of OMWD’s service area. The appointment of Mr. Meyers fills the seat vacated by the retirement of outgoing director Ed Sprague.

“We are excited to welcome an individual of Neal’s caliber to the Board of Directors,” stated OMWD Board President Larry Watt. “His experience with special district law and operations, as well as his expertise with risk management, will allow him to hit the ground running and continue OMWD’s tradition of responsive and transparent governance.”

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4S Ranch Water Reclamation Facility Earns Plant of the Year Recognition

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Encinitas, Calif. — Olivenhain Municipal Water District’s Board of Directors accepted at its May 19 meeting California Water Environment Association San Diego section’s 2020 Plant of the Year Award for its 4S Ranch Water Reclamation Facility. The Plant of the Year award acknowledges OMWD’s accomplishments in compliance, innovative practices, and cost‐effectiveness.

“Our board is thrilled that 4S WRF has been recognized for industry‐leading procedures and techniques to produce high‐quality recycled water, increase water reliability, and operate safely, effectively, and economically,” said OMWD Vice President Kristie Bruce‐Lane. “We need to focus on keeping water affordable and accessible to everyone. Diversifying California’s water portfolio by investing more in recycled water is a critical strategy in doing so, now and for our future generations.”

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OMWD’s Recycled Water Treatment Project Named Project of the Year

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Encinitas, Calif. — Olivenhain Municipal Water District’s Ultraviolet Disinfection System Project was recognized today as a 2021 Project of the Year by American Public Works Association’s San Diego and Imperial County Chapter at its virtual awards event.

The UV project replaced an outdated system at OMWD’s 4S Ranch Water Reclamation Facility in order to continue serving high-quality recycled water. 4S WRF treats and disinfects wastewater for use as tertiary treated recycled water throughout 4S Ranch and the southeastern portion of OMWD’s service area. It can produce up to two million gallons of this alternative water supply for irrigation at schools, parks, golf courses, streetscapes, and homeowner association common areas.

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High School Photo Contest Winners Highlight Importance of Water at Home

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Chula Vista, Calif. – Thirteen local high school students will be honored for their award-winning photographs at tomorrow night’s Sweetwater Authority Board Meeting. The winners were selected from a group of 50 students from high schools across South Bay who submitted over 100 entries for the Authority’s annual High School Photo Contest. This year’s contest challenged students to creatively showcase through photography the importance of water in their homes, and in the context of the pandemic.

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Water-Use Efficiency, Investments Protect Region as Drought Impacts Spread

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Board Chair thanks ratepayers, member agencies

 May 11, 2021 – “Governor Newsom’s latest drought emergency declaration is a grim reminder of the growing water supply challenges across California – and of the value of three decades of our collective dedication to use water efficiently combined with strategic investments that protect San Diego County from dry years. Thanks to efforts of ratepayers, the Water Authority, and our 24 member agencies, we have sufficient water supplies for 2021 and the foreseeable future. Our regional adoption of water-use efficiency measures is a major piece of our strategy, with per capita water use falling by almost half over 30 years. At the same time, the rates we pay for water have been invested in new water sources along with major dams and reservoirs that are showing their worth more with each passing day.” – Gary Croucher, Board Chair, San Diego County Water Authority

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Pure Water Oceanside’s New Virtual Reality Video

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To celebrate Water Awareness Month in May and highlight the value of water, the City of Oceanside has unveiled its new virtual reality video tour. The 360-degree video shows the water recycling process that prepares water for Pure Water Oceanside. The advanced water purification project will create a new local source of high-quality drinking water that is clean, safe, drought-proof and environmentally sound.

The video provides an immersive 360-degree look at Oceanside’s San Luis Rey Water Reclamation Facility in anticipation of opening the first advanced purified water project in San Diego County. The water for the project will be sourced from the reclamation facility. The virtual 360-degree video allows viewers to engage and look all around by simply using a computer mouse or touch screen or moving their phones in order to see all around.

Virtual reality video is “educational resource”

Viewers who have a virtual headset for cell phones can take it one step further by “stepping into” the video much like a simulation. In June, the City of Oceanside will begin scheduling opportunities for schools and scouts to view the video using city-provided virtual reality goggles.

“As we enter into another dry summer, Water Awareness Month provides a reason to reflect on how valuable Oceanside’s investments in water supply reliability and water use efficiency are,” said Cari Dale, City of Oceanside water utilities director. “The 360-degree video is an educational video resource for the community to have a better understanding of the City’s efforts to create local sources of water including recycled and advanced purified water, which will provide up to 50% of the City’s water supply.

“Pure Water Oceanside and recycled water expansion projects are examples of how the City works efficiently to provide safe, local and sustainable water resources while keeping water rates among the lowest in the county for our residents and businesses,” she added.

Water recycling and reuse projects

Pure Water Oceanside is one of several potable water reuse or recycling projects under development in the San Diego region.

The East County Advanced Water Purification project is a collaborative partnership between the Padre Dam Municipal Water District, County of San Diego, City of El Cajon and the Helix Water District. Once operational, the East County AWP will provide up to 30% of East San Diego County’s drinking water demands, or almost 13,000 acre-feet of water per year, while eliminating the discharge of 15 million gallons of partially treated wastewater into the Pacific Ocean.

Pure Water San Diego is a $5 billion project designed to generate 83 million gallons of water per day by 2035, nearly 50% of the City of San Diego’s water demand based on the new 2021 urban water management plan.

Drought safe and sustainable supply

The combination of Pure Water Oceanside with the City’s recycled water expansion project exemplifies the value the City of Oceanside places on water. The project will safeguard against drought, provide a local and sustainable source of water, and reduce the city’s dependence on increasingly expensive imported water from the Sacramento Bay Delta and the Colorado River.

Scheduled to be completed in 2022, Pure Water Oceanside will be the first operating advanced water purification facility in San Diego County. The $71 million project will use advanced technology to replicate and accelerate the natural recycling process to provide 3 to 5 million gallons per day to the City of Oceanside.

(Editor’s note: The City of Oceanside is one of the San Diego County Water Authority’s 24 member agencies that deliver water across the metropolitan San Diego region.)