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Water Agencies Plan to Abandon Costs, Reduce Supply Reliability

Analysis released today shows that proposals by the Fallbrook and Rainbow water districts to leave the San Diego County Water Authority and annex into the Eastern Municipal Water District in Riverside County would increase costs for water ratepayers in San Diego County, reduce the county’s voting power, and decrease water supply reliability for farms and residents.

Numerous financial, environmental and legal issues that affect property owners and water users across San Diego County are analyzed in the Water Authority’s formal response to the reorganization proposals filed today with the San Diego County Local Agency Formation Commission, known as LAFCO.

Environment Report: State Throws Cold Water on Pricing Scheme

Water customers in Imperial Beach and Coronado were at risk of a suspect pricing mechanism, according to a ratepayer watchdog, until state regulators stepped in late last month. There’s a lot to unpack, so let’s dive into one of the wonkier features of the state’s water market.

FPUD Staff Receives Bebee’s Performance Bonus

Jack Bebee, general manager of Fallbrook Public Utility District, earned his performance bonus but will not receive that money.

A 5-0 FPUD board vote, Aug. 24, gave the $5,000 that Bebee would have received to the rest of FPUD’s staff. Each staff member will receive a $75 stipend.

“Instead of paying me a performance bonus this year, we divided the money that was set aside,” Bebee said. “My recommendation to the board was to do that. They’re incurring more challenges during this period that I am.”

When all staff positions are filled, FPUD has 67 employees including Bebee. Three positions are currently vacant, so 63 FPUD employees will receive a stipend.

San Diego County Water Authority Seeks Rate Relief at MWD

With the recession and the COVID-19 pandemic causing economic havoc nationally and across Southern California, the San Diego County Water Authority has adopted several cost-cutting strategies to reduce rate increases and it’s asking the Los Angeles-based Metropolitan Water District of Southern California to do the same.

San Diego County Water Authority Board of Directors Chair Jim Madaffer-primary-View from the Chair

Help Us Reduce Water Rates

As my two-year term as the Water Authority Board chair winds down, it’s my pleasure to update you on two important efforts that are underway for the betterment of the San Diego region.

First of all, our Board voted unanimously last week to spend a few more months discussing and assessing a study of a new regional water conveyance system to deliver our high-priority Colorado River supplies from the Imperial Valley. The work we’ve done over the past year shows the project would produce billions of dollars in potential savings over several decades – and we plan to use the next few months to outreach to stakeholder communities about this study, address questions raised in recent weeks and seek Board direction in November.

Ultimately, the questions are bigger than a new aqueduct – they are about how we sustain our economy and quality of life at a reasonable cost. A new multi-benefits conveyance system is one potential solution – but if not that, then we must grapple with equal intensity over whether it makes sense to pay ever-increasing costs (over which we have no control) to the Los Angeles-based Metropolitan Water District of Southern California to deliver our water for generations, or whether a plan based mainly on local water generation is financially feasible.

The other big issue this month is related – my request that MWD adopt rate relief measures this fall that reduce our water costs. Put simply, despite the recession and the COVID-19 pandemic MWD has not enacted the same kind of rate relief as the Water Authority, which froze hiring, deferred non-essential projects and significantly reduced travel – among other steps. In the end, we limited rate increases to 4.8-4.9 % for 2021 – and more than 60% of that is directly attributable to MWD.

Now, we’re asking MWD to take a similar approach, recognizing that we’re all in this together. We aren’t prescribing the strategies for MWD. We’re just asking that the nation’s largest water agency help its customers, and we’re pledging that any rate relief MWD provides will be passed directly to our member agencies. You can view the letter I sent to MWD at www.sdcwa.org/support-rate-relief-mwd.

I invite you to help move this conversation forward by encouraging MWD to find meaningful cost savings this fall that are reflected in its budget. Please take a moment to do so at www.sdcwa.org/support-rate-relief-mwd by submitting a letter of support for rate relief.

San Diego County Water Authority-Rate Relief-MWD-COVID-19

San Diego County Water Authority Seeks Rate Relief at MWD

With the recession and the COVID-19 pandemic causing economic havoc nationally and across Southern California, the San Diego County Water Authority has adopted several cost-cutting strategies to reduce rate increases and it’s asking the Los Angeles-based Metropolitan Water District of Southern California to do the same.

When the Water Authority’s Board of Directors approved its 2021 rates in June, it limited rate increases to 4.8-4.9% – and more than 60% of that rate increase is directly attributable to MWD. The Water Authority Board also directed staff to return this fall with any other cost savings, specifically, any pass-through savings from MWD.

Water rates and COVID-19

So far, MWD’s Board has directed agency staff to look for cost-cutting measures – but MWD staff is proposing not to offer further rate relief.  Even though MWD is proposing to initiate cost-containment efforts to save $11.7 million in FY2021 (less than 0.6% of its budget), MWD’s September rate review memo recommends not to incorporate the savings into its budget and not to offer rate relief because it found member agencies “have not experienced significant [financial] impacts attributable to COVID-19.”

Water agencies face financial pressure

In reality, San Diego County and the nation continue to face a recession and double-digit unemployment, and many water agencies across Southern California are facing financial pressure due to unpaid bills by residents and their own efforts to provide rate relief.

In response to those unprecedented pressures, the Water Authority froze hiring, limited travel and training, and delayed equipment replacement, among other efforts.

“The Water Authority Board believes that it is important for all water suppliers, including MWD, to be recognized as part of the solution for Southern California ratepayers during this difficult time,” said Jim Madaffer, chair of the Water Authority’s Board of Directors. “MWD has an opportunity to help millions of ratepayers by tightening its belt like the Water Authority and numerous other water agencies have already done.”

Nation’s largest water agency has opportunity to help ratepayers across Southern California

Madaffer wrote a letter to MWD’s Board chair this week encouraging the nation’s largest water agency to take additional cost-saving steps. One way MWD could benefit all member agencies would be to reduce its water transportation rates by $15 per acre-foot. This would trim MWD’s budget by about 1.3% and provide $24 million in savings to Southern California water agencies.

However, Madaffer said the Water Authority is open to other ways that MWD can cut costs and reduce rate increases.

“We want to be clear that it also is not our intention to impede in any way MWD’s ability to provide a safe and reliable water supply to its member agencies – to the contrary, we believe these cost savings may be achieved without having any material impact on service,” Madaffer said.

To read Madaffer’s letter and submit a letter of support for rate relief to MWD, go to www.sdcwa.org/support-rate-relief-mwd.

FPUD Approves Additional LAFCO Deposit

San Diego County’s Local Agency Formation Commission requires a deposit to process applications to LAFCO for jurisdictional changes, and the Fallbrook Public Utility District will be providing an additional deposit to process the application for FPUD to detach from the San Diego County Water Authority and annex into the Eastern Municipal Water District.

A 5-0 FPUD board vote, Monday, Aug. 24, authorized an additional $62,220 deposit to LAFCO. The deposit is expected to cover an additional 510 hours of LAFCO staff time at LAFCO’s rate of $122 per hour.

San Diego County Water Authority Board of Directors Chair Jim Madaffer-primary-View from the Chair

Major Water Rate Case Victory; San Diego County is Stronger Together

As you know, the Water Authority has been working for years to conclude lawsuits over rates set by the Los Angeles-based Metropolitan Water District of Southern California – and this week, we have taken a big step forward with the entry of final judgment in two major cases.

Yesterday, a Superior Court judge has awarded the San Diego County Water Authority $44,373,872.29 for two cases covering rates paid by San Diego County ratepayers during 2011-2014. The award included $28,678.190.90 in damages for MWD’s breach of contract for the four years at issue, plus pre-and post-judgment interest. As these first two cases are finally concluded, the Water Authority is also working to narrow the scope of the remaining 2014, 2016 and 2018 cases (a 2017 case has already been dismissed).

Entry of final judgment caps a 10-year effort by the Water Authority Board of Directors on behalf of San Diego County ratepayers, proving once again our region is stronger together in charting our water future. While the damages and interest award is important, the entry of judgment will also help avoid future overcharges and thereby minimize future disputes based on rulings by the Court of Appeal. MWD’s improper charges – if they had continued – would have cost San Diego County residents more than $500 million over the life of the Water Authority’s water delivery contract with MWD.

The lawsuits generated other substantial benefits, such as requiring an increase in the Water Authority’s preferential rights to MWD water by approximately 100,000 acre-feet a year, equivalent to about twice the annual production of the $1 billion Carlsbad Desalination Project.

In February, the Water Authority’s Board of Directors voted to dismiss certain issues from the litigation after securing more than $350 million in local project subsidy benefits for the San Diego region, beginning late last year. In doing so, the Water Authority acknowledged the MWD Board action to stop imposing the district’s Water Stewardship Rate as a charge for transporting the Water Authority’s independent water supplies through MWD facilities, thus resolving for now that issue in future rate years. Consistent with the Water Authority Board’s direction, its attorneys are taking the steps necessary to narrow the litigation and have recently dismissed one case in its entirety.

As the lawsuits continue to wind down – which remains my personal goal – the Water Authority is working collaboratively with MWD member agencies across the district’s six-county service area to update MWD’s long-term water resource and financial planning. MWD’s Integrated Resources Plan, or IRP as it is called, will be its roadmap for the future, factoring in updated data and plans by many MWD member agencies who are working to develop their own local water supplies like the Water Authority and its member agencies have done over the past two decades and we will continue to do in the future.

Final Judgment Entered in Favor of Water Authority in 2010-2012 Rate Litigation

A Superior Court judge has awarded the San Diego County Water Authority $44,373,872.29 in a final judgment for two cases covering rates paid by San Diego County ratepayers during calendar years 2011-2014. The award included $28,678,190.90 in damages for the Metropolitan Water District of Southern California’s breach of contract for the four years at issue, plus pre-and post-judgment interest.

Water Utilities Pin Hopes on WRDA Bill During Coronavirus Pandemic

The Senate and House will negotiate soon on robust legislation for water infrastructure projects, which is especially critical for water and wastewater facilities during the coronavirus pandemic.

In a letter sent to Republican and Democratic congressional infrastructure leadership on Monday, the National Association of Clean Water Agencies urged that the Water Resources Development Act of 2020 authorize strong funding for the public water sector.