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Water Authority Trims Planned 2021 Rate Increase by 30% Because of Pandemic

The San Diego County Water Authority board has trimmed a proposed 2021 rate increase by 30% because of concerns about the pandemic’s impact on the regional economy.

The board also directed staff to look for further opportunities to reduce the 2021 rate increase and provide recommendations by October before the new rates take effect Jan. 1.

Strategic Steps Minimize Water Rates for 2021

Following a public hearing, the San Diego County Water Authority’s Board of Directors today adopted rate increases for 2021 that are 30% lower than proposed last month following a series of refinements by staff. In addition, the Board directed staff to return in September or October with any further opportunities to reduce the 2021 rate increases, such as a decrease in rates set by the Metropolitan Water District of Southern California or the acquisition of federal or state economic stimulus funds.

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Strategic Steps Minimize Water Rates for 2021

Following a public hearing, the San Diego County Water Authority’s Board of Directors today adopted rate increases for 2021 that are 30% lower than proposed last month following a series of refinements by staff. In addition, the Board directed staff to return in September or October with any further opportunities to reduce the 2021 rate increases, such as a decrease in rates set by the Metropolitan Water District of Southern California or the acquisition of federal or state economic stimulus funds.

As adopted June 25, the all-in rates charged to the Water Authority’s 24 member agencies will increase by 4.8% for untreated water and 4.9% for treated water in calendar year 2021. The new rates take effect January 1, 2021.

Rate increases are driven by reduced water sales, higher rates and charges from MWD and continued regional investments in supply reliability.

Secure water supply is foundation of economic recovery

Since the staff’s rate proposal was released in May, the Water Authority re-evaluated several assumptions driven by COVID-19 recessionary pressures based on new economic data and forecasts. The Water Authority also funded some costs related to the Carlsbad Desalination Plant this year instead of in 2021. The 2021 rates and charges may be further reduced if MWD makes material changes when revisiting its budget and rates this fall.

“We’ve taken a series of strategic steps to minimize rate impacts during this pandemic-induced recession, despite numerous factors putting upward pressure on rates,” said Water Authority Board Chair Jim Madaffer. “At the same time, the Water Authority is maintaining its long-term fiscal stability while ensuring a safe and reliable regional water supply for residents and businesses that will be the foundation of our economic recovery.”

In 2021, the Water Authority will charge its 24 member agencies an all-in municipal and industrial rate of $1,474 per acre-foot for untreated water, or $68 more per acre-foot than they currently pay. Charges would be $1,769 per acre-foot for treated water, or $83 more per acre-foot than in 2020.

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. (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.)

In addition, the rates package includes new Permanent Special Agriculture Water Rates, following the Board’s decision late last year to make the temporary program permanent. The program provides farmers with lower rates that correspond to a lower level of water supply reliability. In 2021, the untreated PSAWR will increase from its current level of $755 per acre-foot to $777 per acre-foot and the treated PSAWR will increase from $1,035 per acre-foot to $1,072 per acre-foot.

Rising costs from MWD affect rates

The fiscal pressures faced by the Water Authority include:

  • Reduced water sales, which are 14% below the current budget and expected to remain low in 2021 due to coronavirus-related business closures and other factors. Decreased water sales put upward pressure on rates because costs must be spread across fewer units sold.
  • Rising costs from MWD that reflect continued increases to its base supply rates and charges and the amount MWD charges to transport the Water Authority’s independent Colorado River supplies. For the Water Authority, MWD’s adopted 2021 rates increase supply costs by more than 9%, or $15.4 million.

The Water Authority’s 2021 rates were developed 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, and strategic tools such as the Long-Range Financing Plan.

In addition, the 2021 rates are designed to ensure Board-adopted debt coverage ratios that support the Water Authority’s strong credit ratings and minimize the cost of borrowing money for construction projects. The Water Authority has credit ratings of AAA with a stable outlook from S&P, AA+ from Fitch, and Aa2 with a stable outlook from Moody’s.

The rates adopted by the Board are the result of strategic measures that include:

  • Providing more than $80 million in rate relief from the Rate Stabilization Fund over the next 24 months.
  • Capitalizing on historically low interest rates and strong credit ratings by lowering annual debt expenditures by optimizing cash to restructure outstanding debt to provide significant savings.
  • Planning to withdraw stored water to reduce water purchases while maintaining water reserves for future years – the result of careful planning and investments over more than two decades.
  • Reducing budget expenditures with a hiring freeze reduced professional services contracts and reprioritizing more than $30 million in capital projects.

 

Sweetwater Authority Board Approves $64M Budget for Fiscal Year 2020-21, No Rate Increase

The Sweetwater Authority Governing Board approved the budget for fiscal year 2020-21 at its June 24, 2020 meeting. The budget does not increase water rates for customers and reflects more than $13M in reductions over last fiscal year. To achieve these savings, the Board worked closely with Authority staff to produce a balanced budget that minimizes the financial impact to customers.

Revealed: Millions of Americans Can’t Afford Water as Bills Rise 80% in a Decade

Millions of ordinary Americans are facing rising and unaffordable bills for running water, and risk being disconnected or losing their homes if they cannot pay, a landmark Guardian investigation has found.

North Marin Water District Delays Novato Rate Hike

The North Marin Water District will push off a planned water rate hike and restructuring plan for Novato until fall in response to economic hardships caused by the coronavirus pandemic.

After a nearly two-hour discussion, the district board of directors voted 4-1 on Tuesday to delay changes set to take effect July 1 to Oct. 1.

“There is a downside to this financially and we have got to keep the water district afloat — that’s No. 1, period,” director Rick Freitas said. “But we weren’t counting on this pandemic when we started these discussions and there is a lot of people hurting in our community.”

LAFCO Approves Detachment Review Committee

San Diego’s County’s Local Agency Formation Commission approved a committee to review issues regarding the proposed detachment of the Fallbrook Public Utility District and the Rainbow Municipal Water District from the San Diego County Water Authority.

An 8-0 LAFCO board vote June 1 approved the composition of the committee, although LAFCO executive officer Keene Simonds will appoint the specific members and the list of tasks for the committee.

“We have agreement with the County Water Authority, Rainbow and Fallbrook,” said county supervisor Dianne Jacob, who is the chair of the LAFCO board.

“We have consensus on the tasks. I think we have a working agreement on the composition,” Simonds said.

CWA Sets June 25 Rate Hearing

The San Diego County Water Authority hearing to approve calendar year 2021 rates and charges will be June 25.

The May 28 motion to set the rate hearing date along with the proposed rates and charges passed with 78.139% of the SDCWA weighted vote. Twenty-one CWA board members supported the motion. Fallbrook Public Utility District general manager Jack Bebee, who is also FPUD’s representative on the CWA board, cast one of the eight votes against the action. Tom Kennedy, who is the Rainbow Municipal Water District general manager and Rainbow’s CWA representative, abstained as did Lois Fong-Sakai, who is one of the city of San Diego’s representatives on the CWA board.

A non-voting presentation earlier in the day addressed proposed changes to the CWA’s two-year budget which covers fiscal year 2019-2020 and fiscal year 2020-2021; the June 25 CWA board meeting will also include consideration of the budget adjustments. If the rates and charges are approved June 25, the action will also allocate the pro-rata shares of total fixed charges to each CWA member agency.

CVWD Approves $376 Million Budget, No Rate Increases

The Coachella Valley Water District’s board of directors on Tuesday voted to approve a  $376 million budget for the upcoming fiscal year, which begins July 1. The budget notably will not include rate increases even though CVWD — which has a service area of roughly 1,000 square miles and includes about 108,000 homes and businesses — had planned to implement one this year. The new math comes after the water district ripped up its previously proposed budget in May due to the economic slowdown caused by the response to the coronavirus.

Water Authority Considers 6% Rate Increase for 2021 as COVID-19 Affects Operations

The San Diego County Water Authority is considering rate increases for 2021 of 6.2% for treated water and 6.3% for untreated supplies as the COVID-19 pandemic puts pressure on operations.

The proposal that will be considered by the water authority’s board on May 28 calls for charging member agencies $1,790 per acre-foot for treated water and $1,495 for untreated. A public hearing will follow on June 25.

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.