A new poll of San Diego County residents finds that nearly two-thirds believe they can do more to conserve water during California’s record drought.
The poll commissioned by the San Diego County Water Authority found that 88% feel they have a civic duty to use water efficiently and 66% say they can do “a little more” or “much more” to conserve.
After weeks of work, I’m pleased to report that thanks to the improved relationship between the Metropolitan Water District of Southern California (MWD) and the San Diego County Water Authority, along with increased collaboration with other water agencies across Southern California, we helped reduce proposed rate increases to our wholesale water supplies by 7 percentage points over the next two years. This is good news for water ratepayers!
The bottom line is this: Instead of raising wholesale water costs by 17% over the next two years, MWD unanimously adopted consecutive 5% increases. This will allow MWD to cover increasing costs facing every sector of our economy, including our water industry, while limiting the impact on residents and businesses.
After weeks of work, I’m pleased to report that thanks to the improved relationship between the Metropolitan Water District of Southern California (MWD) and the San Diego County Water Authority, along with increased collaboration with other water agencies across Southern California, we helped reduce proposed rate increases to our wholesale water supplies by 7 percentage points over the next two years. This is good news for water ratepayers!
The bottom line is this: Instead of raising wholesale water costs by 17% over the next two years, MWD unanimously adopted consecutive 5% increases. This will allow MWD to cover increasing costs facing every sector of our economy, including our water industry, while limiting the impact on residents and businesses.
My thanks to MWD Chairwoman Gloria Gray and MWD General Manager Adel Hagekhalil and their team of dedicated professionals, who heard water agencies’ concerns and presented a lower rate increase proposal that brought the MWD board together. It’s also important to note the role of San Diego County’s delegates, who sit on the MWD Board and played a key role in lowering the costs. These delegates (Lois Fong-Sakai, Gail Goldberg, Marty Miller, and Tim Smith) represent you and worked diligently over several weeks to help gain support from their colleagues for the rate proposal that prevailed.
I also want to thank the retail water agencies across San Diego County that supported our region’s delegates by sending letters to MWD, including Escondido, Helix, Olivenhain, Otay, Santa Fe, Sweetwater, and Valley Center. It makes a huge difference for the MWD board, which meets in Los Angeles, to see that we are a united region.
Water issues are not simple, and many challenges remain as the Water Authority takes on setting its rates for 2023. We all still face enormous challenges depending on the severity of drought conditions. For example, if Lake Mead water levels continue to drop, the ability to generate hydroelectric power at the Hoover Dam could grind to a halt. The demand and cost of electricity could skyrocket, which could severely affect the cost of water delivery. However, please be assured that your Water Authority Board will continue to make the affordability of water a priority.
(Editor’s note: The Helix Water District, Otay Water District, Olivenhain Municipal Water District, Santa Fe Irrigation District, Sweetwater Authority, Valley Center Municipal Water District, and the City of Escondido, are seven of the San Diego County Water Authority’s 24 member agencies that deliver water across the metropolitan San Diego region.)
Every year at this time, water agencies launch the long and thoughtful process of setting rates for the next year. It’s always complex and challenging – and in 2022 we’re starting in an even tougher spot due to larger economic uncertainties that are compounded by inflation.
Thankfully, the Water Authority strategically invested in supply reliability in decades past when costs and inflation were lower – and we are reaping the benefits of those investments during the worst megadrought in 1,200 years. Further, the Water Authority’s locally controlled sources have cost-control measures built into the contracts to help guard against sudden price increases.
However, water costs in San Diego County are heavily influenced by the Metropolitan Water District of Southern California. And now, MWD is proposing the largest increases in more than a decade – 17% over the next two years.
Under new management, MWD is undertaking several long-range financial and planning efforts while beginning an investment cycle to ensure its future water supply will be reliable. Over the next several years, MWD is starting a $3.7 billion recycled water plant in Carson followed by a multibillion-dollar tunneling project in the Bay-Delta. While these are important projects for MWD to shore up its supplies – especially for their member agencies that may have cutbacks due to their location in MWD’s system – they will drive up the cost of water from MWD far faster than the cost of Water Authority water. One result is that MWD’s water is expected to be more expensive than our supplies within the next decade (as shown in the chart).
On behalf of our member agencies, farmers, small businesses, and you, we are asking MWD to prioritize affordability and aggressively control costs before imposing significant rate increases. We have worked very hard to do that at the Water Authority and we are committed to advocating on our region’s behalf at MWD while supporting the very important work they do.
There’s been a lot of talk lately about the cost of water — and that makes sense given the economic realities faced by many residents, farmers, and businesses. But it also seems that newer generations of San Diegans do not know there was a time when we didn’t have water when and where we needed it.
Thankfully, that’s not a problem in San Diego County today, even though elsewhere drought-stricken communities face the potential of only having enough water to meet basic health and safety needs. Due to investments we’ve collectively made in seawater desalination, conserved water, reliable infrastructure, and increased storage capacity, the San Diego region has transformed its water supplies from highly insecure to some of the most reliable in the nation.
(Editor’s Note: Gary Croucher is chair of the San Diego County Water Authority Board of Directors.)
We received some welcome news from the three major U.S. rating agencies last week, when they reported strong credit ratings and credit quality for the San Diego County Water Authority.
While that might not seem like a big deal, it really is. The newly released analysis by Fitch Ratings, S&P Global, and Moody’s allow the Water Authority to optimize its debt portfolio and minimize the cost of financing vital water reliability projects. In addition, S&P changed its long-term outlook for the Water Authority to stable from negative due to actions by the agency’s Board of Directors and staff leaders.
Ultimately, that means saving ratepayer money.
All three rating agencies highlighted the strength of the Water Authority’s significant investments in supply diversification, which allow the agency to meet demands in its service area despite ongoing drought conditions. The Water Authority’s credit quality is deemed strong, in part because the agency adopted its Long-Range Financing Plan in 2021. S&P said, “the LRFP reflects strong management of the authority’s financial and capital needs balanced with long-term affordability for its member agencies.”
The rating services also cited the Water Authority’s 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.
We plan a $170 million bond sale this week, and these ratings will help us get the best rates. That’s just one part of our strategy at the Water Authority to promote affordability in everything we do – from maintaining our extensive water supply system to distributing tens of millions of dollars to our member agencies to investing in conserved water sources.
I look forward to sharing more of our affordability strategy as we move into 2022.
Looking back over all that we have accomplished in 2021 makes me thankful for the thousands of hard-working professionals who serve our region by ensuring safe, reliable water supplies each and every day.
I’m especially proud of the team at the San Diego County Water Authority – from my fellow Board members to our dedicated staff to our member agency partners – that works on countless complex issues from pipeline relinings to bond refundings. Everything they do is designed to support the long-term health of our regional water delivery system at an affordable cost, even in the face of ongoing challenges like the pandemic and supply chain issues.
There’s a lot more to our story that you can read in our FY2021 Annual Report. For now, I’ll wish you a wonderful holiday season and look forward to seeing you in 2022.
Happy holidays!
I’m so gratified to report that due to your efforts, today’s New York Times features a lengthy story recognizing the benefits of the San Diego County water reliability strategy – an approach that aligns with Gov. Newsom’s Water Resilience Portfolio.
The article addresses our region’s role in the nation’s largest ag-to-urban water conservation project, along with the conservation ethic embraced by homes and businesses across the region, and current investments in potable water reuse, which is the next major source of supply for the region.
The Times cited the Public Policy Institute of California – a leading think tank – commending the San Diego region’s efforts. And the story said our collective “try-everything approach to getting water has emerged as a model for cities — including Denver and Albuquerque — where leaders are dealing with one of climate change’s most dire effects.” Also today, the Southern California News Group published an editorial that showcased local investments as a model.
While we celebrate these recognitions, we remain acutely aware of the severe and worsening drought conditions across the West – and how important it is for the San Diego County to continue being a leader in statewide drought defenses. That’s why our Board next week will consider activating our drought response plan. This action supports the governor’s request that local water suppliers implement plans responsive to local conditions, and his extension of the drought emergency declaration to San Diego County.
I am pleased to announce a decision by the Metropolitan Water District of Southern California’s Board of Directors to pay the San Diego County Water Authority damages and statutory interest for illegal water charges from 2015-2017, totaling about $36 million. MWD’s vote followed a California Court of Appeal decision upholding earlier rulings in favor of San Diego.
This payment will bring the Water Authority’s cash recovery on behalf of San Diego County water agencies and ratepayers to more than $80 million. An additional award of attorneys’ fees to the Water Authority, still on appeal, is expected to bring the cash recovery to almost $94 million for rates and charges set by the Los Angeles-based wholesaler over an 8-year period from 2010-2017. Adding in avoided rate increases when MWD stopped imposing the illegal rate, brings the total savings for San Diego County ratepayers to almost $140 million over the 10-year period at issue in the cases.
I want to thank General Manager Adel Hagekhalil, Chairwoman Gloria Gray and the entire MWD Board for taking this important step toward a more collaborative future. This provides exactly the kind of catalyst we need to resolve the remaining issues between our two agencies.
I also want to acknowledge the collaboration with our peers at MWD over the past several months, working together on the challenges we face including the severe drought conditions across California and how to maintain an affordable and reliable water supply for all of our collective member agencies and ratepayers.
The recovery aligns with the Water Authority’s focus on taking all actions necessary to protect our ratepayers and ensure affordable water rates for future generations. Litigation is never welcome or easy and it wasn’t in this case. But our Board felt there was too much at stake and that an independent tribunal was needed to address and resolve our respective concerns.
Announcement of these ratepayer benefits follows the Water Authority’s distribution seven months ago of a $44 million recovery from MWD for damages and interest in earlier 2011-2014 cases. The money – refunded to the Water Authority’s member agencies in proportion to their overpayments – also resulted from the Water Authority’s ratepayer protection litigation in state Superior Court and positioned its member agencies to reduce future regional water rate increases.
Importantly, the court rulings and guidance are also expected to help avoid future potential taxation of San Diego County ratepayers and minimize future disputes over MWD’s rates.
In February 2020, after the Court of Appeal ruled MWD’s “rate structure integrity” clause unconstitutional, MWD changed its rules to allow Water Authority member agencies to apply for benefits. As a result, the Water Authority’s Board of Directors voted to dismiss these issues from the litigation. Since then, the Water Authority has assisted its member agencies in obtaining nearly $500 million in MWD funding agreements including the City of San Diego’s Pure Water project, which is funded by rates paid by all MWD member agencies including the Water Authority.
The Water Authority is currently working collaboratively with MWD and its member agencies across Southern California to update MWD’s long-term water resource and financial plans. MWD’s Integrated Resources Plan, known as the IRP, will be supplemented by a new “One Water” plan intended to represent the agency’s roadmap for the future and focusing on enhanced collaboration with its member agencies.
This has been a tough week in the water world. On Monday, the U.S. Bureau of Reclamation announced the first formal shortages on the Colorado River for 2022. That will directly impact Arizona, Nevada and Mexico next year. On Tuesday, the Metropolitan Water District of Southern California’s Board of Directors increased its drought alert level – another signal of the serious situation faced by residents across the western U.S.
Declining water availability on the Colorado River and worsening drought conditions statewide underscore the importance of collective actions to ensure reliable water supplies not only for today, but for next year and for future generations. Thankfully, the San Diego region has prepared for dry periods and our water supplies will continue to sustain our economy and quality of life.
At the same time, we are working with our partners at the regional, state, and federal levels to advance water management solutions for the Southwest because we realize that we are all in this together.
The quickest way to help defeat drought is to eliminate water waste at homes and businesses, and we stand with MWD and Governor Newsom in supporting voluntary water-use efficiencies. There are several ways to do that: checking irrigation systems for leaks and repairing them quickly; keeping chilled water in the fridge instead of running the tap to let it cool; keeping showers to 5 minutes or fewer; applying mulch around plants to reduce evaporation.
With those steps and others, we will emerge from this drought stronger together. Thank you for joining with us in this effort. For more information, resources, rebates and tips, go to www.watersmartsd.org.
The Water News Network is San Diego County’s source for water news and information.
