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Desalination plant-credit ratings-water supply

Credit Agencies Affirm Water Authority’s Strong Ratings Despite Headwinds

All three major rating agencies – S&P, Moody’s, and Fitch – have affirmed the San Diego County Water Authority’s strong credit ratings, which will help the Water Authority optimize its debt portfolio and minimize the cost of financing important water reliability projects.

The reports cited the Water Authority’s strategic management, its conservative approach to water sales projections, and the benefits of the Water Authority’s rate case litigation that recently resulted in $44.4 million being refunded to local retail water agencies – among many other factors.

Significant challenges

However, 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 across San Diego County. If the two North County agencies leave per their plans, Water Authority analysis shows that the other 22 member agencies will have to pay $16 million to $46 million more per year to cover the cost of the departing agencies.

Moody’s said detachment could lead to a credit downgrade, which would increase borrowing costs for critical water reliability projects. S&P Global 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.”

Solid financial position

Water Authority General Manager Sandra L. Kerl said, “The Water Authority maintains a solid financial position even in these difficult times, and the credit ratings reflect that. But the challenges are real as well, and they should unify the region to ensure that we continue to benefit from the safe, reliable water supplies we’ve invested in together for the past 30 years.”

In affirming their credit ratings, the services cited the Water Authority’s strong financial leadership, including prudent strategies to manage issues related to COVID-19, its success diversifying water supply sources, its commitment to infrastructure maintenance, and its financial reserves for managing contingencies, among other factors.

  • Fitch Ratings affirmed its AA+ rating and gave a stable outlook on March 15. Fitch noted the Water Authority’s “operating costs are low”  and credited the Water Authority for “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.
  • Moody’s Investors Service affirmed its Aa2 rating and stable outlook March 14. Moody’s said, “the stable outlook reflects our expectation that the Authority’s satisfactory operating performance will continue, supported by strong management practices in the face of challenges associated with variable water supplies, rising costs, and the coronavirus pandemic.” Moody’s added: “Liquidity, including a rate stabilization fund, remains sound serving to insulate the Authority from risks associated with variable water supplies, including California’s (Aa2 stable) current drought conditions, as well as unanticipated events such as the coronavirus pandemic.”
  • S&P affirmed its AAA rating on March 17 and issued a negative outlook based on “heightened business risks associated with potential projected declines in water sales.” On the plus side, S&P cited the Water Authority’s demonstrated ability to navigate highly variable demands and weather cycles. The agency also said, “management is taking important steps” to balance fixed and variable costs, and it praised the Water Authority’s “robust infrastructure maintenance and operational policies.”

Risks include detachment

All three agencies addressed risks, such as additional local supplies that reduce Water Authority sales and member agency detachment. As proposed by Fallbrook and Rainbow, the detachments would allow those agencies 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.

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.

For more information about the Water Authority’s finances go to: www.sdcwa.org/finance-investor-relations. Information about detachment is at https://www.sdcwa.org/member-agencies/lafco-reorganization/.

Credit Agencies Affirm Water Authority’s Strong Ratings Despite Headwinds

March 17, 2021 – All three major rating agencies – S&P, Moody’s, and Fitch – have affirmed the San Diego County Water Authority’s strong credit ratings, which will help the Water Authority optimize its debt portfolio and minimize the cost of financing important water reliability projects. The reports cited the Water Authority’s strategic management, its conservative approach to water sales projections, and the benefits of the Water Authority’s rate case litigation that recently resulted in $44.4 million being refunded to local retail water agencies – among many other factors.

Olivenhain Municipal Water District Logo landscape design workshops

2021 WaterSmart Landscape Contest Now Accepting Entries

Encinitas, Calif. — Olivenhain Municipal Water District invites residents with water-efficient gardens to enter the 2021 WaterSmart Landscape Contest. The winning landscape will receive $250. The deadline to apply is May 14, and applications are available at www.landscapecontest.com.

 

Olivenhain Municipal Water District Logo landscape design workshops

Low-Cost Rain Barrels Available for OMWD Customers

Encinitas, Calif. — To encourage water conservation and reduce runoff that can carry pollutants into local waterways and beaches, Olivenhain Municipal Water District has partnered with neighboring water districts—San Dieguito Water District, Santa Fe Irrigation District, and Carlsbad Municipal Water District—to offer discounted rain barrels to area residents.

Naturalists Paige DeCino (left) and Karen Merrill survey South Lake Reservoir. Photo: Vallecitos Water District

Volunteers Offer Birds Eye View at South Lake Reservoir

For decades, it was a source of drinking water for the San Marcos area. Today, the South Lake Reservoir has new life as a local wildlife habitat.

South Lake was built with an earthen dam and provided drinking water to the Lake San Marcos area, most of downtown San Marcos, and the Coronado Hills area. Updates to potable water treatment had detrimental effects on the lake ecology, so the Vallecitos Water District stopped using the lake as a drinking water source in 1984, although it remained an emergency water supply for another decade.

South Lake Reservoir is home to freshwater fish and abundant aquatic plant life, waterfowl, quail, doves, deer, rabbits, raccoons, skunks, squirrels, bobcats, and coyotes. Photo: Vallecitos Water District

South Lake Reservoir is home to freshwater fish and abundant aquatic plant life, waterfowl, quail, doves, deer, rabbits, raccoons, skunks, squirrels, bobcats, and coyotes. Photo: Vallecitos Water District

Now, South Lake provides a thriving ecosystem within and around the facility. The lake is home to freshwater fish and abundant aquatic plant life. Waterfowl such as coots, gallinules, grebes, various species of ducks, and cormorants frequent the lake throughout the year. The property is filled with quail, doves, deer, rabbits, raccoons, skunks, squirrels, bobcats, and coyotes.

Volunteers help identify habitat and wildlife at South Lake

Vallecitos Water District staff recently surveyed the area to look for animal tracks and other signs of wildlife, and to catalog plant and animal species.

Certified California naturalists Paige DeCino and Karen Merrill from Preserve Calavera assisted Vallecitos public information representative Alicia Yerman, who is also a certified naturalist. The team spent three days exploring the lake and the 1.4-mile trail. Merrill and DeCino host the volunteer UC Naturalist certification program. The program is currently on hold due to the coronavirus pandemic.

Wildlife cameras at South Lake Reservoir captured this visiting bobcat at night. Photo: Vallecitos Water District

Wildlife cameras at South Lake Reservoir captured this visiting bobcat at night. Photo: Vallecitos Water District

Two wildlife cameras were set up at South Lake to capture wildlife activity over a two-week period. Lisa Urabe, a University of California trained Master Gardener and Vallecitos public information representative, asked the Buena Vista Audubon Society to conduct a bird survey. The BVAS volunteers identified 36 species in mid-February and created a YouTube video showcasing some of the species.

BVAS volunteers were enthusiastic about surveying the birds in an area set aside as wildlife habitat. With increased habitat fragmentation, BVAS hopes the area will remain primarily an area for wildlife.

Buena Vista Audubon Society volunteers including Karen Merrill andd Paig DeCino identified 36 species in mid-February and created a YouTube video showcasing some of the species seen. Photo: Vallecitos Water District

Buena Vista Audubon Society volunteers including Karen Merrill andd Paige DeCino identified 36 species in mid-February and created a YouTube video showing some of species. Photo: Vallecitos Water District

“What you have at South Lake is a gem of the healthy functioning habitat— flora, fauna, and it is just a complete picture of what we hope our open spaces and natural lands to be,” said Karen Merrill. “It is something we should treasure now and into the future. It is one of a kind here on coastal San Diego County.”

Vallecitos employees take pride in the lake and its surrounding ecosystem and strive to keep the habitat intact for generations to come.

Vallecitos Water District staff including maintenance operator Marcelino Sanchez help maintain the lake and habitat. Photo: Vallecitos Water District

Vallecitos Water District staff, including water distribution operator Marcelino Sanchez, help maintain the lake and habitat. Photo: Vallecitos Water District

Firefighting helicopters can pull water from the lake

In addition to its value as local wildlife habitat, South Lake is available for fire suppression. Firefighting helicopters can pull water from the lake during wildfire events. The lake may be used as part of the City of San Marcos’ park system in the future.

Water quality within South Lake is monitored daily by water distribution operators, and the condition of the dam’s integrity is recorded weekly. Recently, an environmentally-sound ultrasonic technology made by LG Sonic was placed on the lake to reduce algae blooms and to improve water quality.

Urban Water Management Plan-San Diego County Water Authority

Water Authority Plan Shows Sufficient Supplies Through 2045

The San Diego County Water Authority’s draft 2020 Urban Water Management Plan was released for public review today. The plan highlights how regional investments in a “water portfolio approach” to supply management and a sustained emphasis on water-use efficiency mean that San Diego County will continue to have sufficient water supplies through the 2045 planning horizon — even during multiple dry years.

A 60-day public comment period on the draft plan ends May 6 and will include a public hearing on March 25. The Board of Directors is expected to consider adoption of the final plan during its regular meeting on May 27. The 2020 UWMP is due to the state by July 1, 2021. To read the draft 2020 Urban Water Management Plan, or to submit comments, go to http://bit.ly/Water-Authority-UWMP.

Regional investments pay off for water supply

“Thanks to decades of regional investments, the draft plan shows that we don’t need to secure more regional supply sources for the foreseeable future,” said Water Authority General Manager Sandra L. Kerl. “Instead, we are focused on helping our member agencies develop local supplies and looking for other ways we can continue to ensure supply reliability at a reasonable cost.”

The Water Authority started the current UWMP process in September 2018, coordinating closely with its 24 member agencies, most of which must submit their own plans to the state. Member agencies provided input into the draft plan as part of the Water Authority’s ongoing effort to align local and regional projections as closely as possible. The plan’s long-range demand forecast shows an increase in regional demands of less than 1% per year through 2045. This change in demand is consistent with the change forecasted by other large water suppliers, including the City of San Diego and the Metropolitan Water District of Southern California.

Plan is mandated by state law

Multiple supply and demand projections factor into Urban Water Management Plans, which are mandated by the state to ensure sufficient supplies over 25 years. The plans are not used to set water rates; rates are set annually based on multiple financial factors at the time, not long-term projections about water supplies.

Urban Water Management Plans are dictated by statutory guidelines, Water Authority Board direction and an agreement with the San Diego Association of Governments to use its regional growth forecast. The plans also support state laws that link approval for large housing developments to water supply availability.

By law, the plans must be updated every five years. Per state guidelines, the Water Authority’s Urban Water Management Plan includes:

  • Projected water demands under normal weather and dry weather scenarios
  • Conservation savings information
  • A process to conduct an annual water supply and demand assessment
  • Supply reliability analysis

The demand forecast accounts for changes in socio-economic factors, such as the number of projected housing units, the mix of single-family and multi-family dwellings, and employment growth.

Conservation by water ratepayers in San Diego County

Conservation projections account for continued adoption of water-use efficiency measures, compliance with landscape water-use ordinances for new residential construction, and continued installations of sustainable landscapes at existing homes. Since 1991, San Diego County ratepayers have conserved more than 1 million acre-feet of water, and per capita potable water use in the region decreased nearly 60% between fiscal years 1990 and 2019.

Urban Water Management Plan-Water Authority-Desalination Plant

The draft 2020 Urban Water Management Plan shows how regional investments by the San Diego County Water Authority in a “water portfolio approach” mean that San Diego County will continue to have sufficient supplies, including locally-controlled drinking water from the Claude “Bud” Lewis Carlsbad Desalination Plant, the largest, most technologically-advanced and energy efficient desalination plant in the nation. Photo: San Diego County Water Authority

The draft 2020 UWMP also highlights the value of the Water Authority’s long-term strategy to invest in highly reliable and locally controlled supplies from the Claude “Bud” Lewis Carlsbad Desalination Plant and the nation’s largest conservation-and-transfer agreement, which provides high-priority, low-cost water from the Colorado River.

In addition to the UWMP, the Water Authority also regularly updates its Regional Water Facilities Optimization and Master Plan, which focuses on the infrastructure necessary to meet projected long-term demands, and its Long-Range Financing Plan. Those documents work together to ensure the right mix of supplies and facilities to meet the region’s needs at an affordable cost.

Urban Water Management Plan-Water Authority-Primary photo-Colorado River Aqueduct

The draft 2020 Urban Water Management Plan highlights the value of the Water Authority’s long-term strategy to invest in highly reliable supplies, including the nation’s largest conservation-and-transfer agreement, which provides high-priority, low-cost water from the Colorado River. Photo: San Diego County Water Authority

Water Authority Plan Shows Sufficient Supplies Through 2045

March 8, 2021 – The San Diego County Water Authority’s draft 2020 Urban Water Management Plan was released for public review today. The plan highlights how regional investments in a “water portfolio approach” to supply management and a sustained emphasis on water-use efficiency mean that San Diego County will continue to have sufficient water supplies through the 2045 planning horizon — even during multiple dry years.

Olivenhain Municipal Water District Logo landscape design workshops

OMWD’s 2021 Fourth-Grade Poster Contest Now Accepting Entries

Encinitas, Calif. — Fourth-grade students living or attending school in Olivenhain Municipal Water District’s service area are invited to enter its 28th annual poster contest. The contest is held in participation with other North County water agencies, and will accept entries until April 5. This year’s theme is “Love Water, Save Water.”

Mayor Gloria Announces City on Track to Develop 50% of its Water Locally

As part of his efforts to create a more sustainable future for all of us, Mayor Todd Gloria today publicly released a new analysis of San Diego’s future water needs that indicates that the City will develop more than 50% of its water locally by 2045, in large part due to the Pure Water recycling program. This will be a dramatic increase in local water supply, which currently requires the City to purchase 85% to 90% of its water from imported sources.

Phillips Station-Mountain Snowpack-Climate Change-DWR Snow Survey

New Study Identifies Mountain Snowpack Most “At-Risk” from Climate Change

As the planet warms, scientists expect that mountain snowpack should melt progressively earlier in the year. However, observations in the U.S. show that as temperatures have risen, snowpack melt is relatively unaffected in some regions while others can experience snowpack melt a month earlier in the year.

This discrepancy in the timing of snowpack disappearance—the date in the spring when all the winter snow has melted—is the focus of new research by scientists at Scripps Institution of Oceanography at the University of California San Diego.

In a new study published March 1 in the journal Nature Climate ChangeScripps Oceanography climate scientists Amato Evan and Ian Eisenman identify regional variations in snowpack melt as temperatures increase, and they present a theory that explains which mountain snowpacks worldwide are most “at-risk” from climate change. The study was funded by NOAA’s Climate Program Office.

Mountain snowpack changing rapidly in coastal regions

Looking at nearly four decades of observations in the Western U.S., the researchers found that as temperatures rise, the timing of snowpack disappearance is changing most rapidly in coastal regions and the south, with smaller changes in the northern interior of the country. This means that snowpack in the Sierra Nevada, the Cascades, and the mountains of southern Arizona is much more vulnerable to rising temperatures than snowpack found in places like the Rockies or the mountains of Utah.

The scientists used these historical observations to create a new model for understanding why the timing of snowpack disappearance differs widely across mountain regions. They theorize that changes in the amount of time that snow can accumulate and the amount of time the surface is covered with snow during the year are the critical reasons why some regions are more vulnerable to snowpack melt than others.

Mountain Snowpack-Climate Change-Scripps Institution of Oceanography

Using a new model, the Scripps researchers theorize that snowpack in coastal regions, the Arctic, and the Western U.S. may be among the most at-risk for premature melt from rising temperatures. Graphic: Courtesy Scripps Institution of Oceanography

Snowpack vulnerable due to increasing temperature

“Global warming isn’t affecting everywhere the same. As you get closer to the ocean or further south in the U.S., the snowpack is more vulnerable, or more at-risk, due to increasing temperature, whereas in the interior of the continent, the snowpack seems much more impervious, or resilient to rising temperatures,” said Evan, lead author of the study. “Our theory tells us why that’s happening, and it’s basically showing that spring is coming a lot earlier in the year if you’re in Oregon, California, Washington, and down south, but not if you’re in Colorado or Utah.”

Applying this theory globally, the researchers found that increasing temperatures would affect the timing of snowpack melt most prominently in the Arctic, the Alps of Europe, and the southern region of South America, with much smaller changes in the northern interiors of Europe and Asia, including the central region of Russia.

Climate Change and snowmelt

To devise the model that led to these findings, Evan and Eisenman analyzed daily snowpack measurements from nearly 400 sites across the Western U.S managed by the Natural Resources Conservation Service Snowpack Telemetry (SNOTEL) network. They looked at SNOTEL data each year from 1982 to 2018 and focused on changes in the date of snowpack disappearance in the spring. They also examined data from the North American Regional Reanalysis (NARR) showing the daily mean surface air temperature and precipitation over the same years for each of these stations.

Using an approach based on physics and mathematics, the model simulates the timing of snowpack accumulation and snowpack melting as a function of temperature. The scientists could then use the model to solve for the key factor that was causing the differences in snowpack warming: time. Specifically, they looked at the amount of time snow can accumulate and the amount of time the surface is covered with snow.

“I was excited by the simplicity of the explanation that we ultimately arrived at,” said Eisenman. “Our theoretical model provides a mechanism to explain why the observed snowmelt dates change so much more at some locations than at others, and it also predicts how snowmelt dates will change in the future under further warming.”

A “shrinking winter” and longer fire season

The model shows that regions with very large swings in temperature between the winter and summer are less susceptible to warming than those where the change in temperature from winter to summer is smaller. The model also shows that regions where the annual mean temperature is closest to 0˚C are less susceptible to early melt. The most susceptible regions are ones where the differences between wintertime and summertime temperatures are small, and where the average temperature is either far above, or even far below 0˚C.

For example, in an interior mountain region of the U.S. like the Colorado Rockies, where the temperature dips below 0°C for about half the year, an increase of 1°C can lead to a quicker melt by a couple of days—not a huge difference.

However, in a coastal region like the Pacific Northwest, the influence of the ocean and thermal regulation helps keep the winter temperatures a bit warmer, meaning there are fewer days below 0°C in which snow can accumulate. The researchers hypothesize that in the region’s Cascade Mountains, a 1°C increase in temperature could result in the snow melting about a month earlier in the season—a dramatic difference.

Arctic “at risk”

One of the most “at-risk” regions is the Arctic, where snow accumulates for nine months each year and takes about three months to melt. The model suggests that 1°C warming there would result in a faster melt by about a week—a significant period of time for one of the fastest warming places on Earth.

This study builds upon previous work done by Scripps scientists since the mid-1990s to map out changes in snowmelt timing and snowpacks across the Western U.S. The authors said that a “shrinking” winter—one that is shorter, warmer, and with less overall precipitation—has adverse societal effects because it contributes to a longer fire season. This could have devastating impacts on already fire-prone regions. In California, faster snowpack melt rates have already made forest management more difficult and provided prime conditions for invasive species like the bark beetle to thrive.

Funding for this work was provided by a NOAA/CPO grant to the University of California.