Posts

San Diego County Water Authority And its 24 Member Agencies

Gov. Newsom Signs Bill to Protect Water Ratepayers

The Water Ratepayers Protection Act of 2023 (Assembly Bill 399) was signed Friday by California Gov. Gavin Newsom, adding affordability safeguards for residents and businesses in the San Diego County Water Authority’s service area.

The legislation, introduced by Encinitas Assemblymember Tasha Boerner and sponsored by the City of San Diego, expands voting requirements should agencies seek to withdraw or “detach” from the Water Authority. Under the new law, a majority vote in both the separating district and the County Water Authority would be necessary to complete a detachment as of Jan. 1, 2024.

“This is a simple matter of fairness,” said Water Authority Board Chair Mel Katz. “The people whose rates would increase if a water district leaves the County Water Authority should have a say. It’s gratifying that the state Legislature and the governor added these important protections for disadvantaged communities, working families, farmers, and others across San Diego County.”

County Board Votes to Allow Fallbrook, Rainbow to Detach from Water Authority

The San Diego County Local Area Formation Commission voted 5-3 on Monday to allow two rural water districts in North San Diego County to detach from the San Diego County Water Authority.

LAFCO, which is responsible for forming special public districts, did not require a vote by ratepayers and did not set a timetable for detachment of the two districts, pending further study.

The Fallbrook Public Utility District and the Rainbow Municipal Water District, with a total of 56,000 residents, are seeking to join the Eastern Municipal Water District in Riverside County in hopes of securing lower-cost water for farmers.

Padre Dam Customers Could Be Facing Even Higher Bills

Already paying some of the highest water bills in the nation, customers of Padre Dam Municipal Water District as well as 22 other agencies could see their rates increase even more if two North County water districts secede from the San Diego County Water Authority.

Both the Fallbrook Public Utilities District and the Rainbow Municipal Water District have been trying to leave the CWA because they say the costs for the purchased water is too high, and they can get it cheaper by joining the Eastern Municipal Water District in Riverside County.

San DIego Mayor Todd Gloria led a coalition of regional leaders urging a no vote on detachment by LAFCO at its Monday, July 10 meeting. Photo: San DIego County Water Authority protect ratepayers

Regional Leaders Seek to Protect Ratepayers from $200M Water Bill

San Diego Mayor Todd Gloria joined with regional agriculture, business, water, and elected leaders on July 7 to oppose a potential $200 million water bill increase for ratepayers across San Diego County.

“The proposed action will have significant, long-term economic impacts to most households in San Diego County. Nearly every family and business will see an increase in their water rates,” Mayor Gloria said. “The cost of living is a continuous struggle for many San Diegans and these proposed rate increases are unacceptable.”

Detachment costs to water ratepayers

Chair Nora Vargas of the San Diego County Board of Supervisors commented on the proposal’s impact on low-income residents and the lack of a countywide vote. “An unnecessary increase in water bills means taking money away each month from hardworking families who can least afford it,” she said. “Not only will this detachment proposal lead to higher water bills, we also won’t have a say in the matter.”

Jerry Sanders, President and CEO of the San Diego Regional Chamber of Commerce, said it’s counterproductive to saddle businesses with additional bills. “This proposal would shift millions in added costs onto local businesses, many of which operate on thin margins,” Sanders said. “Our businesses face so many threats to success. Let’s not add to these challenges with an unnecessary water rate hike.”

Cost Analysis of Detachment Called Flawed

Two water agencies in Fallbrook and Rainbow seek to leave the San Diego County Water Authority without paying the full cost of investments made on their behalf over the past several decades. On July 10, the San Diego Local Agency Formation Commission’s (LAFCO) board is expected to vote on the “detachment” proposal, possibly with the inclusion of a limited “exit fee” for Fallbrook and Rainbow. However, LAFCO’s figures are based on years-old data and flawed projections that understate the annual costs of detachment by at least 50%.

Updated figures released this week show that disadvantaged communities, working families, farmers, and others across San Diego County will be forced to pay nearly $200 million more over the next decade for water service unless the agencies seeking to leave the Water Authority are required to fully cover their costs. LAFCO’s data don’t reflect the inflationary realities or the fact that the financial impacts of detachment will continue far beyond LAFCO’s five-year horizon.

“I am deeply concerned that LAFCO could make this momentous decision without ensuring the accuracy of the costs of detaching from the Water Authority or allowing residents countywide to vote on this scheme,” said Water Authority Board Chair Mel Katz.

LAFCO’s staff recommendation to approve the detachment plan does not include a substantive analysis of impacts to disadvantaged communities or to agriculture in the Water Authority service area. Nor does it include the environmental analysis required by law.

County Leaders Rally Against Water ‘Divorce’ With Fallbrook and Rainbow

A coalition of county, city and labor officials held a news conference Friday morning to make their case against two North County rural water districts leaving the San Diego County Water Authority (SDCWA).

In updated numbers released this week, the SDCWA reported that it would cost San Diegans nearly $200 million over a decade if Fallbrook Public Utility District and Rainbow Municipal Water District were allowed to leave the 24-member agency.

La Mesa Vice Mayor Colin Parent said that was unfair to his constituents. The Helix Water District, which services La Mesa, was projected to pay an additional $1.2 million-plus if those two agencies leave.

Regional Leaders Seek to Protect Ratepayers from $200M Water Bill

San Diego Mayor Todd Gloria joined with regional agriculture, business, water, and elected leaders on July 7 to oppose a potential $200 million water bill increase for ratepayers across San Diego County.

“The proposed action will have significant, long-term economic impacts to most households in San Diego County. Nearly every family and business will see an increase in their water rates,” Mayor Gloria said. “The cost of living is a continuous struggle for many San Diegans and these proposed rate increases are unacceptable.”

Water ratepayers-LAFCO decision-detachment-San Diego County Water Authority-water rates

LAFCO Decision Could Raise Region’s Water Bills by Nearly $200 Million

Updated figures released July 3 show that disadvantaged communities, working families, farmers, and others across San Diego County will be forced to pay nearly $200 million more over the next decade for water service unless agencies seeking to leave the San Diego County Water Authority are required to fully cover their costs.

On July 10, the San Diego Local Agency Formation Commission’s board is expected to vote on a plan for the Fallbrook and Rainbow water agencies to leave the Water Authority, possibly with the inclusion of an “exit fee.” However, LAFCO’s figures are based on years-old data and flawed projections that understate the annual costs of detachment by at least 50%. Like everything else, costs related to water supplies have inflated significantly over the past three years.

LAFCO decision and data

LAFCO’s data don’t reflect the inflationary realities or the fact that the financial impacts of detachment will continue far beyond LAFCO’s five-year horizon, which does not reflect the actual lifespan of water infrastructure or the debt used to finance it. The LAFCO staff report acknowledges impacts will continue far longer than five years, suggesting that the rest of the county should pay for benefits to Rainbow and Fallbrook.

“From the start of this process, one of our top priorities was making sure that residents across the region aren’t harmed financially. It’s critical that ratepayers who are struggling to make ends meet, independent farmers, and small businesses aren’t forced to subsidize Fallbrook and Rainbow for years to come,” said Water Authority Board Chair Mel Katz. “We encourage the LAFCO Commissioners to require Fallbrook and Rainbow to fully cover their costs.”

LAFCO’s staff recommendation to approve the detachment proposals by the Fallbrook and Rainbow water agencies does not include substantive analysis of impacts to disadvantaged communities, or to agriculture in the Water Authority service area. Nor does it include environmental analysis required by law.

The LAFCO staff recommendation includes an exit fee of about $4.8 million a year for five years, which isn’t close to covering the actual costs that will be shifted to residents elsewhere in the county.

Here’s how much retail water agencies in the region may have to pay each year to cover the projected $18.9 million bill from Fallbrook and Rainbow leaving:

(Editor’s Note: The San Diego County Water Authority response to the proposals by the Fallbrook and Rainbow water districts to leave the Water Authority and annex into the Eastern Municipal Water District in Riverside County addressed the wholesale water agency’s concerns in September 2020. San Diego LAFCO’s website provides addtional details on the detachment process.)

San Diego County Water Authority And its 24 Member Agencies

LAFCO Decision Could Raise Region’s Water Bills by Nearly $200 Million

Updated figures released today show that disadvantaged communities, working families, farmers, and others across San Diego County will be forced to pay nearly $200 million more over the next decade for water service unless agencies seeking to leave the Water Authority are required to fully cover their costs.

On July 10, the San Diego Local Agency Formation Commission’s board is expected to vote on a plan for the Fallbrook and Rainbow water agencies to leave the San Diego County Water Authority, possibly with the inclusion of an “exit fee.” However, LAFCO’s figures are based on years-old data and flawed projections that understate the annual costs of detachment by at least 50%. Like everything else, costs related to water supplies have inflated significantly over the past three years.

LAFCO’s data don’t reflect the inflationary realities or the fact that the financial impacts of detachment will continue far beyond LAFCO’s five-year horizon, which does not reflect the actual lifespan of water infrastructure or the debt used to finance it. The LAFCO staff report acknowledges impacts will continue far longer than five years, suggesting that the rest of the county should pay for benefits to Rainbow and Fallbrook.

“From the start of this process, one of our top priorities was making sure that residents across the region aren’t harmed financially. It’s critical that ratepayers who are struggling to make ends meet, independent farmers, and small businesses aren’t forced to subsidize Fallbrook and Rainbow for years to come,” said Water Authority Board Chair Mel Katz. “We encourage the LAFCO Commissioners to require Fallbrook and Rainbow to fully cover their costs.”

LAFCO’s staff recommendation to approve the detachment proposals by the Fallbrook and Rainbow water agencies does not include substantive analysis of impacts to disadvantaged communities, or to agriculture in the Water Authority service area. Nor does it include environmental analysis required by law.

The LAFCO staff recommendation includes an exit fee of about $4.8 million a year for five years, which isn’t close to covering the actual costs that will be shifted to residents elsewhere in the county.

Here’s how much retail water agencies in the region may have to pay each year to cover the projected $18.9 million bill from Fallbrook and Rainbow leaving:

Table

Description automatically generated

Fitch Ratings: EPA’s Cyber Rules Will Add Financial Burden for Utilities

According to a release from credit rating firm Fitch Ratings, the U.S. Environmental Protection Agency’s (EPA) requirement that all public water systems incorporate cyber risk and resiliency in their periodic reviews will add an increased regulatory and financial burden that could be even greater for smaller systems and systems with minimal existing cyber infrastructure.

Fitch Ratings says the requirement could have a significant effect on water utilities’ capex budgets, and margins would be pressured if systems are unable or unwilling to pass on the added costs to customers through rate increases.

Looking Out for Water Ratepayers in San Diego County

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 2022 is an even more challenging year due to larger economic uncertainties that are compounded by inflation.

The good news is that the San Diego County 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.