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    GrokSurf's San Diego by George J. Janczyn is produced under a Creative Commons Attribution-Noncommercial-Share Alike 3.0 License. Anything on this blog copied and used elsewhere online must include attribution and a link to the original on this blog, or a citation with the URL if reprinted on hard copy.

     

     

Posts Tagged ‘San Diego County Water Authority (SDCWA)’

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Water Authority responds to San Diego Taxpayers Educational Foundation report

Posted by George J. Janczyn on January 17, 2012

[News Release]

January 16, 2012 –

The San Diego County Water Authority today responded to a report by the San Diego Taxpayers Educational Foundation that studied labor costs at the agency between 1999 and 2009.

“The Taxpayers Educational Foundation and the San Diego County Taxpayers Association serve important roles informing our community on issues impacting taxpayers and water ratepayers,” said Maureen Stapleton, general manager of the Water Authority. “The Taxpayers’ study focuses primarily on how much labor costs at the agency rose between 1999 and 2009. We believe it is equally important for ratepayers to be fully informed why the Water Authority’s workforce and labor costs grew during the decade. The Taxpayers’ report does not provide an equal focus on that part of the story.

“Ratepayers need to know what value they receive for their dollars.”

The Water Authority’s workforce grew between 1999 and 2009 to support new historic water supply reliability programs and the peak planning and construction period for its $3.5 billion Capital Improvement Program, including:

  • Negotiating and implementing the 2003 Quantification Settlement Agreement and managing Colorado River water transfer and canal-lining agreements included in the QSA. These long-term agreements will provide 170,000 acre-feet of new, highly reliable water for the region this year – enough to meet 27 percent of the region’s water needs. These supplies will grow to provide 280,000 acre-feet annually by 2021 – enough to meet more than one-third of the region’s water needs.

  • Emergency Storage Project: This $1.5 billion project, when complete, will ensure that the region will have up to a six-month supply of locally stored water if an earthquake or other disaster cuts off imported supplies. Construction of this network of more than a dozen major facilities, including dams, reservoirs, pipelines, pump stations, surge controls and more, began in 2000. Most of the facilities – including the Olivenhain Dam, reservoir and pipeline, the Lake Hodges pumped storage facilities, the San Vicente Pipeline, and the San Vicente Surge Tank and Pump Station, are now complete.

  • San Vicente Dam Raise: This project, the tallest dam raise project in the United States, will more than double the capacity of the city of San Diego’s San Vicente Reservoir. It is part of the Emergency Storage Project and will store an additional 52,100 acre-feet of water for emergency use. It will also add 100,000 acre-feet of carryover storage capacity – water stored during wet years to help meet demands during dry years. Construction began in 2009 and is expected to be complete in 2013. Since 1999, the Water Authority has added 114,375 acre-feet of regional water storage, and that figure will grow to 266,375 acre-feet when construction on the San Vicente Dam Raise Project is complete.

  • Twin Oaks Valley Water Treatment Plant: The plant, the largest submerged membrane water treatment plant in the world, was built between 2006 and 2008. It can produce 100 million gallons of high-quality treated water daily and reduces the region’s reliance on facilities outside of the region to meet treated water demands.

  • Pipeline Relining Program: This program, started in 1996, cost-effectively extends the service life of 82 miles of vital large-diameter pipelines around the region by inserting steel linings. The program is now one-third complete. Between 1999 and 2009, the Water Authority lined more than 22 miles of pipelines as large as 96 inches in diameter, extending their useful life by 50 years or more.

  • Aqueduct System Expansion: The Water Authority built 34 miles of new large-diameter pipeline, including the 11-mile long San Vicente Pipeline and Tunnel, an increase of 12 percent in the Water Authority’s aqueduct system. The Water Authority also built 22 new pumping control facilities, an increase of 26 percent in such facilities.

  • Electrical Power Generation– Since 1999, the Water Authority built nearly 42 megawatts of hydropower electrical generation capacity, helping to meet the region’s energy needs and generating revenues to help moderate water rate increases.

“Until this past decade, San Diego County was over-reliant on a single supplier to meet up to 95 percent of this region’s water needs,” Stapleton said. “Today, with the investments in the Imperial Irrigation Water Transfer, canal lining projects and other programs and projects, our region has a more diversified, and more reliable water supply.”

The following graphic depicts San Diego County’s water supply portfolio as it existed in 1999, compared to today.

Click on image above to enlarge

Stapleton also called the period covered in the Taxpayers’ report “the biggest decade in the agency’s history for building new, large-scale water infrastructure to serve our region.” The following graphic depicts the Water Authority’s infrastructure as it existed in 1999, compared to today.

Click on image above to enlarge

“These investments support the region’s $186 billion economy and 3.1 million people, and will continue to serve our region for generations to come,” said Michael T. Hogan, chair of the Water Authority’s Board of Directors. “The region’s residents and businesses have received very strong returns for their investments in new long-term water supplies and infrastructure projects.”

Water Authority compensation costs grew at a rate comparable to entities in the private sector. Figures from U.S. Bureau of Labor Statistics show per-hour compensation costs at private utilities nationally grew 30 percent between 2004 and 2010, a period for which such data was available and that overlapped the years reviewed in the Taxpayers’ report. Water Authority per-hour compensation costs grew 33 percent over the same period.

Stapleton noted that since 2009, the Water Authority has reduced its workforce in accordance with plans made more than a decade ago. For example, the Water Authority used limited duration employees to help meet the peak staffing needs associated with its Capital Improvement Program. As capital spending is dropping, the Water Authority is eliminating limited duration positions as planned.

“The Water Authority is undergoing the largest workforce reduction in our agency’s history and taking other measures to manage labor costs,” Stapleton said.

Measures the Water Authority has taken since 2009 include:

  • Executing a workforce management plan that will reduce staff positions 16 percent between 2008 and 2014. As part of this plan, the Water Authority is eliminating 31.33 full-time positions during the current two-year budget cycle. Many of these positions are “limited duration” positions that were designed to end as specific construction projects and other limited duration staffing needs ended.
  • Requiring employees to pay an increased share of their retirement benefits (4.5 percent of employee contribution, up from 0 percent in 1999).
  • Deferring 14 construction projects worth $150 million to July 2014 or later.
  • Making $6 million in mid-year operational budget cuts in fiscal years 2010 and 2011.
    Adopting a budget for fiscal years 2012 and 2013 that features $235 million lower spending on capital projects and a 7 percent decrease in the cost of operating departments.
  • Aggressively refinancing its debt portfolio to reduce the costs of financing capital projects. Bond refunding sales this year are expected to save $18.7 million in financing costs on a present-value basis over the life of the bonds.
  • The recent increase in unfunded liabilities at the Water Authority is largely related to poor economic conditions and market performance in recent years. This phenomenon is common among public agencies and private entities with pension plans.

Labor costs represent only about 6 percent of the Water Authority’s budget, and are not significant drivers of recent rate increases, Stapleton noted.

One of the biggest drivers of recent and projected water rate increases is increased water supply and transportation costs imposed by the Metropolitan Water District of Southern California, the San Diego region’s largest supplier. The cost to purchase treated water from MWD increased 94.6 percent from 2003 to 2012. In addition, the rates MWD charges the Water Authority to transport its independent Colorado River supplies through MWD’s conveyance and distribution system have increased 56.5 percent over the same period.

The Water Authority alleges that MWD improperly overcharges the Water Authority for the transportation of its independent Colorado River supplies and uses that money to subsidize the cost of MWD water to its other 25 member agencies. This violates California’s Constitution, other state law, and standard water utility practice. In June 2010, the San Diego County Water Authority Board of Directors unanimously approved filing suit against MWD over its rate structure.

MWD’s rate structure causes significant financial harm to the San Diego region. San Diego County will be overcharged by about $40 million in 2012; those overcharges will grow to as much as $220 million annually by 2021, and total as much as $2.1 billion over the next 45 years. The case is being heard in San Francisco Superior Court. More information on the rate challenge is available at www.sdcwa.org/mwdrate-challenge.

“The Water Authority is dedicated to ensuring our region has a safe and reliable water supply,” Hogan said. “We understand ratepayers want to make sure their dollars are being spent wisely and prudently to achieve that mission.”

The Water Authority holds long-term senior lien credit ratings of AA+, AA+ and Aa2 from Standard and Poor’s, Fitch and Moody’s, respectively. The Water Authority also holds subordinate lien credit ratings from those agencies of AA, AA and Aa3, respectively. (Subordinate lien credit ratings are typically at least one level below senior lien credit ratings.) The Water Authority’s current credit ratings are considered high quality by all standards and are held by only a few select water agencies in California. High credit ratings benefit ratepayers by helping to lower the cost of borrowing.

The Water Authority is recognized nationally for its sound financial management practices. It has received the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association of the United States and Canada for 11 consecutive years. It also received the 2010 Excellence in Budgeting Award from the California Society of Municipal Finance Officers.

More financial information about the Water Authority is available at www.sdcwa.org/financials-investor-relations.

—————————————————————————————-

The San Diego County Water Authority is a public agency serving the San Diego region as a wholesale supplier of water from the Colorado River and Northern California. The Water Authority works through its 24 member agencies to provide a safe, reliable water supply to support the region’s $186 billion economy and the quality of life of 3.1 million residents.

MEDIA CONTACT INFORMATION
Donna Nenow
Office: (858) 522-6707
Cell: (858) 414-8168 		MEDIA CONTACT INFORMATION
Jason Foster
Office: (858) 522-6701
Cell: (858) 761-5950

 

Posted in Water | Tagged: , , | 1 Comment »

County Water Authority mobile app is latest in social media efforts

Posted by George J. Janczyn on October 26, 2011

As part of an ongoing effort to integrate social media into its public outreach programs, the San Diego County Water Authority (SDCWA) announced yesterday a free mobile smartphone app that provides access to Water Authority news and Board documents.

Dubbed “Water News” in SDCWA’s news release, the app supplies “Water Authority news releases, videos, top issues, board documents, legislative information and a 24-hour water-related news feed.”

Versions for iPhone and Android smartphones are available now, and a version for Blackberry will also be released soon. [update Nov 19--the Blackberry version has now been released].

SDCWA had conducted numerous internal discussions and solicited public feedback to generate ideas to improve public outreach and began implementing social media tools beginning in 2009. Over the last two years it launched a Facebook page, Slideshare page, and a YouTube channel. It has not yet established a Twitter presence, although it did experiment with “@paths2partners” for its “Paths to Partners” small business and networking event. The popular Water Talks forums were also an outgrowth of these efforts, as was SDCWA’s website redesign making information easier to find.

Public Affairs Representative Craig Balben led the development team as project manager to produce a plan for functionality and design. Coding for the apps on the three mobile platforms was outsourced to Bytes, Inc. last March at a cost of $33,760. Design and functionality are the same on all apps, although there are slight variations in appearance depending on the platform.

The app can be downloaded by visiting the market for your platform and searching for “SDCWA water news.”

Permissions required on the Android version that I downloaded were: prevent phone from sleeping, full internet access, fine GPS location, allow app to control phone vibrator, and view wi-fi and network state.

There are two unwelcome (for me) behaviors of the Water News app. First, it launches automatically when the phone is started. I prefer to start apps at my own discretion, but there is no way to override that default behavior. Second, whenever fresh news is available the app sounds an audible alert. There is no setting to turn that off either, other than to put the phone in silent or vibrate mode. I hope these issues will be addressed in a future version of the product.

Overall, the app makes a good addition to SDCWA’s already excellent public outreach efforts.

[Update on the auto-launch and audible alert: when booting the phone the app automatically launches into the background and continuously scans for news updates. One "feature" of the audible alert is that it keeps ringing periodically even when there appears to be no new news. Craig Balben told me that it's not just the main news page that triggers alerts, but items in the "more" submenu do as well. Further, unless one actually reads (opens) the news item, the audible alerts will continue. Craig said this annoyance is on the list for future fixes.]

 

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Grand Jury’s water rates report is ‘right on the money’

Posted by George J. Janczyn on July 28, 2011

[Reprint of a news release from the San Diego County Water Authority]

On June 28, [sic; i.e., July 28] the San Diego County Water Authority Board of Directors largely concurred with the key findings contained in the May 31 San Diego County Grand Jury report, “San Diego County Water Rates: High Today, Higher Tomorrow”. The report determined that the region’s water rates are likely to continue to rise, that underrepresentation on the Board at Metropolitan Water District of Southern California (the Water Authority’s largest imported water supplier) harms the interests of the region’s ratepayers, and the region’s water agencies have not clearly communicated why water rates are rising.

The Board determined the Water Authority has implemented or is implementing the report’s recommended actions for developing new local water supplies, pushing for fair representation at MWD, and improving public outreach.

The Water Authority also offered clarifications on two of the report’s findings related to water rates.

  • The increasing cost of water and transportation service from MWD today remains the largest driver of rate increases in San Diego County. The need to develop new local supplies, and thus incur those costs, is not being driven principally by the needs of growing population or development. Instead, it is driven by uncertainties surrounding the future availability of imported water from MWD.
  • Effectively communicating information about water rates is often difficult to do quickly and easily. Obstacles include the inherent complexity of region’s water supply and rate-related issues, constantly changing hydrological conditions that affect supplies and rates, and varying rates among the region’s local retail agencies. Nevertheless, the Water Authority acknowledged the need for clear communications is increasing and that it is working to enhance its outreach efforts.

For more details on the Grand Jury’s report and the Water Authority’s response, please click on the resources below.

 

Posted in Water | Tagged: , | 2 Comments »

The unsettled water rates in San Diego

Posted by George J. Janczyn on July 19, 2011

San Diego’s most recent water rate hike last March happened because the Metropolitan Water District of Southern California (MWD) raised its water rate to the San Diego County Water Authority (SDCWA) which in turn raised the water rate for county water agencies that it supplies (including the City of San Diego). San Diego, of course, typically needs to import 85-90% of its water so it doesn’t have much recourse.

As a result, the City Council reluctantly approved a “pass-through” water rate increase for City customers effective March 1 to cover the SDCWA rate hike. The Council also sought to exert some pressure on MWD.

The perceived pressure point was SDCWA’s lawsuit against MWD charging that it illegally inflates the price of water for San Diego County. The City naturally supports that position so when approving the pass-through increase the City Council asked the City Attorney to recommend whether the city should join SDCWA’s lawsuit against MWD, and also asked the Mayor’s Intergovernmental Relations Department to develop a recommendation for seeking state legislative support for auditing MWD pricing practices.

Here we must note that an underlying issue in SDCWA’s lawsuit against MWD is that in addition to buying water from MWD, SDCWA buys Colorado River water from Imperial Valley as part of the Quantification Settlement Agreement (QSA). However, there are no water pipelines from Imperial Valley to San Diego so SDCWA needs to pay MWD to capture Imperial Valley’s water upstream at Lake Havasu and transport it through the Colorado River Aqueduct to San Diego’s pipelines.

MWD’s charge to transport that water (wheeling charge) is a big deal. SDCWA says MWD illegally inflates the wheeling charge with expenses unrelated to the Colorado River Aqueduct (e.g., costs associated with obtaining State Water Project water from Northern California).

The disagreement over water transport pricing is an old issue that was already evident when the QSA was enacted in 2003. The Record of Decision actually memorialized that “…MWD and SDCWA do not agree on the nature or scope of rights to the delivery, use or transfer of Colorado River water within the State of California.”.

So when MWD and SDCWA signed their agreement for transporting the water, the contract included a provision that “after conclusion of the first five years, nothing shall preclude SDCWA from contesting in an administrative or judicial forum whether such charge or charges have been set in accordance with applicable law and regulation.”

Which is exactly what SDCWA is now doing with its lawsuit.

Meanwhile, on another front around that time, MWD had been developing incentive agreements to provide rebates and subsidies for local conservation and recycled water programs. Those programs are funded through MWD’s Water Stewardship Rate fee charged to all MWD member agencies.

Here’s where MWD got tricky: in 2004 MWD adopted so-called Rate Structure Integrity (RSI) language in the Water Stewardship agreements to the effect that if a member agency “files or participates in litigation or supports legislation to challenge or modify Existing Rate Structure…Metropolitan may initiate termination of this Agreement.”

So, after MWD refused to modify its wheeling charge and SDCWA filed suit, in response MWD recently exercised its option to terminate support for some of the San Diego County programs. It partially retained a few residential and commercial agreements but decided against implementing larger agreements including funding for a San Vicente Recycling program in Ramona and a subsidy for the Poseidon Desalination Project in Carlsbad.

How would that affect the City of San Diego? At an Independent Rates Oversight Committee (IROC) Environmental & Technical Subcommittee meeting on July 10, Cathy Pieroni, Principal Water Resources Specialist for the Public Utilities Department reported that MWD’s Water Stewardship cuts would not impact existing MWD contracts with the City and that the City could still potentially obtain MWD funding for up to $250/AF for Indirect Potable Reuse (IPR) water if the Water Purification Demonstration Project materializes as a full-scale operation.

As for the City Council’s request that the City Attorney investigate possible legal action that could be taken to apply pressure on MWD over the rate hike issue, City Attorney representative Tom Zeleny said that his office will likely recommend against legal action, saying it “would probably not be cost-effective.” He said the official report from his office will be on the August agenda for the City Council’s Natural Resources and Culture Committee.

On the issue of the Council’s request to the Mayor’s Intergovernmental Relations Department, it appears the Mayor may have influenced Assemblyman Nathan Fletcher to introduce AB 779 relating to establishment of water district oversight committees. Faced with opposition (including MWD’s considerable influence), at the last minute Fletcher pulled the bill from its scheduled hearing indicating he would make it a two-year bill and proceed later.

MWD’s opposition to Fletcher’s bill can be seen in its May 16 board meeting minutes where it revealed its suspicion that AB 779 was related to the San Diego City Council’s desire for legislative intervention over MWD water rates:

“There is speculation, however, that AB 779 might be amended and used as a legislative vehicle to assist the San Diego County Water Authority (SDCWA) in its lawsuit against the Metropolitan Water District of Southern California (Metropolitan) which challenges Metropolitan’s water rates and charges. A judicial victory by SDCWA would result in a significant increase in the cost of water for Metropolitan’s customers outside SDCWA’s boundaries. The rationale for this speculation is based on a memorandum circulated by the San Diego City Council after the filing of the lawsuit that details potential parallel strategies regarding the issues addressed in the lawsuit. These strategies included seeking a Joint Legislative Audit to perform a financial audit of Metropolitan as well as sponsoring legislation to create an Independent Rate Oversight Committee for MWD to evaluate the price charged for water as well as operations.”

So for the time being AB 779 is stalled and prospects are uncertain, it doesn’t look like the City will pursue legal action, and other legislative initiatives seem iffy.

Instead, for the short term, the City will try to “absorb” the SDCWA rate increase announced for next fiscal year: Mayor Sanders has proclaimed that the City won’t raise water rates next fiscal year. Instead, he wants the Public Utilities Department (PUD) to take the hit from the higher expense.

Discussing the Mayor’s announcement at yesterday’s IROC meeting (July 18), Assistant PUD Director Alex Ruiz said the department will find an accomodation because local water supplies increased considerably during the last rainy season. As a result the department figures it can draw “up to” 20,000 AF of local supplies to avoid buying about $8.75 million in imports from SDCWA. The department is also looking at more staffing cuts and creating further “efficiencies.”

Although the action hasn’t been labeled a “deferred” price increase, that’s what it looks like. SDCWA’s higher price isn’t going away at the end of the next fiscal year and there will likely be another price hike announced for the following year as well. So at some point the City will have to cover the higher costs either by passing them on to consumers or by further “absorbing” expenses within the department at some risk to infrastructure and operations. And if you think capital improvement projects, maintenance and repairs, and EPA consent agreement work isn’t piled up already, think again.

Will San Diego have to “catch up” with deferred water rate increases? What’s the risk of drawing down the City’s emergency storage capacity now that it has some water saved? Are we using precious reserves to temporarily defer expenses as a political expedient? And what about popular support for setting water rates that discourage waste? Does artificially keeping rates down send a mixed message about that?

Whatever happens, I don’t think broader public understanding will come from would-be mayors accusing PUD of mismanagement over water rates and saying things like “I pledge to cut rates by 15% and freeze them for five years without any delay in our infrastructure investment and while maintaining the highest standards for water quality.”

 

Posted in Water | Tagged: , , , , | 4 Comments »

MWD to San Diego water managers: you’ve betrayed us

Posted by George J. Janczyn on June 23, 2011

[updated June 24]

You’ll recall that Metropolitan Water District (MWD) recently terminated a number of agreements to help fund local conservation and water supply development projects like the San Vicente Recycling project in Ramona and also decided against entering pending agreements to support projects such as the Carlsbad Seawater Desalination Project.

San Diego County Water Authority (SDCWA) has a big objection: MWD funds such conservation program agreements from its Water Stewardship Rate fee…and SDCWA’s contribution to that fund comes to a cool $22.5 million per year. Not fair, they say.

SDCWA says MWD’s terminations amount to “retaliation” for a lawsuit charging that MWD’s water transportation rate structure is illegal. SDCWA says MWD’s rates are illegal in part because MWD overcharges for delivering water that SDCWA already owns, in effect subsidizing MWD’s State Water Project water. This circumstance comes about because SDCWA buys Imperial Valley water from Imperial Irrigation District and pays MWD a wheeling charge to transport to the water to San Diego Aqueduct pipelines via the Colorado River Aqueduct. What gets bundled into that wheeling charge is the question.

The topic came up at this morning’s SDCWA Imported Water Committee meeting, part of a monthly all-day committee marathon culminating in a Board meeting.

“SDCWA pays $22.5 million per year to support that program and receives nothing in return?” asked Director Doug Wilson. “Why don’t we just stop sending that money and keep it for ourselves?” That was met with silent agreement, but General Manager Maureen Stapleton cautioned that there would be complications with unilaterally stopping those payments.

However, the meeting agenda packet reveals a variant tactic. A letter sent on June 13 to MWD Chairman Jack Foley reads in part:

“The Water Authority pays more to support MWD’s conservation and local supply programs than any other MWD member agency. By MWD’s own estimate, the Water Authority averages $22.5 million annually in Water Stewardship Rate payments; yet, under MWD board policy and action
under the RSI clause, the Water Authority and the ratepayers it serves are ineligible for program
benefits. The Water Authority hereby makes formal demand that MWD cease collection of Water Stewardship Rate dollars from the Water Authority’s ratepayers so we may fund our own conservation and local water supply development projects directly.”

The letter was signed by Directors Jim Bowersox, Lynne Heidel, Keith Lewinger, and Fern Steiner.

Director Lewinger lobbied that it’s time to begin a really vigorous public relations campaign and flood the county with updates and news highlighting the situation.

Was MWD retaliating for the lawsuit when it terminated its agreements? SDCWA Director Lynne Heidel said MWD Chairman Foley recently told her “You’re all a bunch of Benedict Arnolds.” Kidding? – maybe.* But GM Stapleton said she heard the same thing and that Foley later told her “Don’t take it personally.” Stapleton’s reply: “Just call me Ms. Arnold.”

* June 24: Someone told me they didn’t understand what the “betrayal” was. My take is that these are water management colleagues who are normally on friendly terms and the lawsuit puts them in a sensitive position, perhaps like someone choosing sides when a couple with whom (s)he is mutual friends are getting divorced. I guess Stapleton could have also replied that MWD was the Benedict Arnold by engaging in retaliation.

 

______________________________

 

The following is from a handout provided at the committee meeting showing the status of the existing and pending agreements with MWD.

 

Posted in Water | Tagged: , , , , | 2 Comments »

Update on MWD’s subsidy (or not) for the Poseidon desalination plant

Posted by George J. Janczyn on June 16, 2011

This is a followup to Tuesday’s post “Lawsuit leads to cut in Poseidon desalination subsidy and more“ in which a San Diego County Water Authority (SDCWA) news release was cited. The news release, in part, said “The MWD board also instructed its staff to refuse to consider any pending or future local supply development projects in San Diego County. The pending agreements included the Carlsbad Seawater Desalination Project, which would have been eligible for up to $14 million in annual payments…”

Today a story in the Desalination & Water Reuse website writes that Poseidon Resources “denied reports that the current standoff in Southern California between the Metropolitan Water District (MWD) and the San Diego County Water Authority (SDCWA) will affect the Carlsbad Desalination Project” and that a Poseidon representative said “This claim is incorrect and shows a disappointing lack of understanding about the project’s status and financing.”

A review of the summary report for the June 14 MWD Board meeting doesn’t clarify things much:

“The board reviewed the Rate Structure Integrity provisions of Local Resources Program and conservation agreements with the San Diego County Water Authority; voted to not terminate the two regional commercial and residential conservation incentives agreements; and approved termination of the remaining two active conservation and Local Resources Program funding agreements with the Water Authority.”

Looking deeper in the MWD Board Agenda packet, the Legal and Claims Committee provided the Board with several options. The recommended option reads:

…”terminate the existing incentive agreements with the Water Authority that contain rate structure integrity language. This option is consistent with the policy set forth by the RSI language. Staff will also continue to defer the approval of any pending agreements with the Water Authority requiring inclusion of the RSI provisions, until authorized by the Board.” [the Carlsbad subsidy is one of those pending agreements]

As noted, the meeting summary doesn’t mention the pending agreements, but assuming the Board approved the recommended option, it appears the Carlsbad desalination agreement was not specifically terminated; rather, it remains in the same limbo that was created at MWD’s May 10 meeting which deferred execution of the agreement until further notice.

 

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Lawsuit leads to cut in Poseidon desalination subsidy and more

Posted by George J. Janczyn on June 14, 2011

[updated June 16--see bottom]

As predicted here one year ago (“San Diego County Water Authority water pricing lawsuit could jeopardize funding for Carlsbad Desalination Plant“), the Metropolitan Water District of Southern California (MWD) has moved to terminate an agreement that would have paid a subsidy of $250 per acre foot (potentially $14M annually) to Posiedon and the San Diego County Water Authority (SDCWA) for water produced at the Carlsbad Desalination Plant. According to the SDCWA news release, “The MWD board also instructed its staff to refuse to consider any pending or future local supply development projects in San Diego County. The pending agreements included the Carlsbad Seawater Desalination Project, which would have been eligible for up to $14 million in annual payments.” SDCWA said MWD’s action was retaliation for its lawsuit filed last year challenging MWD’s water rates.

Other MWD conservation rebates were also affected.

Here are news releases from both parties and local news reports:

A few days ago, the Sacramento Bee had this observation on the dispute: Warring water agencies should tone down rhetoric.

June 16: MWD move will not affect Carlsbad desalination, says Poseidon

Please see also the June 16 update to this story

 

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San Diego County making good progress diversifying water supply

Posted by George J. Janczyn on February 11, 2011

“Our strategies are working” was the message from the San Diego County Water Authority (SDCWA) Water Planning Committee at a joint meeting with the SANDAG Regional Planning Committee held Friday at 1pm at the SDCWA headquarters on Overland Avenue.

The severe drought experienced in California in the 1990-91 years was a wake-up call for San Diego County, which at the time relied on the Metropolitan Water District of Southern California for 95% of the county’s water supply — delivered from Northern California and the Colorado River. News headlines from those days delivered numerous grim messages about the effect water shortages were having on the local economy and way of life.

The response, explained Ken Weinberg, Water Authority Director of Water Resources, was to develop a strategy to improve water supply reliability and reduce San Diego’s dependence on imported water.

Developing new supplies would not be cheap compared to what had been spent previously, said Maureen Stapleton, SDCWA General Manager, but the drought made San Diego realize how vulnerable it was and that it could not afford the consequences of a catastrophic cutoff from future drought or when the California Delta breaks (I noticed Stapleton said when, not if).

Facing growth, regulatory restrictions, the possibility of future droughts, climate change, and increased costs, the county’s strategy for supply reliability was to develop a forecast of demand, encourage water use efficiency, invest in regional infrastructure, and diversify supply sources.

SDCWA coordinated with SANDAG to obtain a wealth of information and planning expertise on growth forecasts and the regional comprehensive plan.

That planning effort led to the development of new supplies as well as infrastructure investments.

For new water supplies, encouraging a water conservation ethic became a high priority. Negotiations to purchase water conserved by Imperial Valley farmers were concluded. Water recycling programs and brackish groundwater projects were implemented. Seawater desalination (Poseidon in Carlsbad) and the City of San Diego’s Indirect Potable Reuse demonstration project are more recent developments.

As for infrastructure, SDCWA created a $3.8 billion Capital Improvement Program to implement an Emergency Storage Project that would bring new surface storage (Olivenhain Dam, Lake Hodges, San Vicente Dam Raise), water treatment (Twin Oaks Water Treatment Plant), as well as pipelines, pump stations, and hyroelectric generation from water gravity flows within the system, among other things.

This SDCWA chart graphically depicts the progress that has been made towards the goal for 2020:

The meeting ended with the conclusion that the strategies to reduce reliance on MWD through sustained conservation, new supply sources, and infrastructure development have been working. The plan is to continue implementation of these strategies and to pursue further local supply sources.

See also this North County Times story that highlighted other topics that came up at the meeting — including reduced demand by aging citizens.

 

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San Diego water rates to go up in March

Posted by George J. Janczyn on December 14, 2010

By now, just about all San Diego city residents should have received a notice of public hearing to be held on January 24, 2011 to discuss a requested water rate increase. The increase is needed to cover the new price of water charged by the San Diego County Water Authority (SDCWA) — the imported water wholesaler supplying the City of San Diego and 23 other member water agencies in the county.

Although SDCWA’s price increase to its member agencies takes effect January 1, 2011, the City’s proposed rate increase would not begin until March 1, so there will be a few months where water rate revenues will be out of sync with what the City has to pay for water. The San Diego Public Utilities Department (PUD) believes it can absorb the difference for a few months, but if the March 1 increase does not take effect, something will have to give.

Many water agencies throughout the county have already approved rate increases for the same reason. In addition, some of them have taken the opportunity to bundle in additional operations and maintenance costs into their rate increases, so they are doing more than simply passing along the increased price of water.

San Diegans are not being asked for those extras. The higher price of the water itself is the only thing residents are being asked to pay for. For single-family residences — the majority of San Diego water customers — the increase will amount to about $0.47 per month. [late clarification: that amount pertains only to the increase in the base fee. The overall increase in the bill can be $3.41 for for up to 14HCF of use -- see comments]

San Diego is in the middle of the pack. From the 2006 Water Cost of Service Rate Study

Practically speaking, it looks pretty straightforward and non-controversial. But politically there are complications.

For one thing, it is already known that SDCWA will increase the wholesale price of water again in 2012, so San Diego residents will again be asked to approve a “pass-through” rate increase next year.

For another, the City will eventually need to expand its water capital improvement program (to replace overaged water mains, etc.) and cover other higher costs.

The Public Utilities Department has been engaged in longer-term thinking about the water rate structure and the Independent Rates Oversight Committee (IROC) has been monitoring developments and giving feedback on that topic.

To that issue, yesterday the IROC held a special workshop — a presentation from PUD on the framework for the rate setting process. The nearly two-hour presentation by PUD Assistant Director Alex Ruiz went into detail about the many complex issues involved in designing rates. To list a few of the rate drivers: operations and maintenance; pumps, plants, and pipes; bond coverage requirements; rate affordability; current economy; pensions; trust/transparency; taxes; CIP financing; regulations.

The current rate structure was last overhauled via a four-year capital improvement program in 2007. The 2007 program was based on the San Diego Water Cost of Service Rate Study completed in 2006. FY 2011 is the final year for that program and PUD is now gathering information for a new rate review, with a new cost of service study expected to begin in FY 2012.

Mr. Ruiz also briefly characterized ongoing staff discussions about a future revision to the rate structure possibly incorporating some of the techniques used by the Irvine Ranch Water District for taking household needs into account in a rate structure that encourages conservation and penalizes waste.

Meanwhile, City Councilmember Carl DeMaio is campaigning against the increase by introducing tangental arguments that, especially in the City’s current economic malaise, tend to generate emotional responses. Based on a “white paper” he delivered in September, DeMaio makes charges of “empty promises” and “out of control labor costs” and that “flaws and weaknesses” in PUD’s management and the overall rate structure have not been addressed and therefore (as punishment, I guess) this pass-through increase should not be approved until those issues are addressed.

(Incidentally, while observing the IROC workshop I got to wondering if Mr. DeMaio ever attends IROC meetings. IROC’s administrative support person Monica Foster wasn’t sure how many times, but committee member Gail Welch recalled that did he come to one meeting long enough to inform the committee of his priorities as a councilmember.)

Ultimately, the whole rate structure issue can appear to boil down to this dynamic between costs and rates: on the one hand you can total the costs and then calculate what rates should be to pay for them; or you can determine what ratepayers can afford to pay and then decide which costs can be funded with that amount. Somewhere in that mix is the answer.

The immediate rate increase bypasses those difficult issues for the time being. Carl DeMaio’s diversions notwithstanding, the question is simply whether we’re willing to cover the commodity cost of water that the City has to pay SDCWA.

For further information, here’s a report by the San Diego Independent Budget Analyst (see also the City Auditor’s review of calculations used for the proposed increase).

 

Posted in Water | Tagged: , , , , | 6 Comments »

SDCWA: the price of water has little historic influence on water usage

Posted by George J. Janczyn on December 9, 2010

[Revised Dec 15]

According to a [staff] study performed requested by the Water Planning Committee of the San Diego County Water Authority (SDCWA), “Historically, water pricing has not been a major driver in consumer decisions to use water” although “water demands can be responsive to the retail price consumers pay when the appropriate factors are in place.”

The study report was presented at today’s SDCWA Board of Directors meeting (contained in the agenda packet) [at the Planning Committee meeting preliminary to the full Board meeting].

Rather than price being the key factor [historically influencing] in water use, “it was the upswings and downturns in the local and national economy, population growth, weather, long term conservation programs, heightened messaging and imposition of water use restrictions that had the greatest effect on retail water demand” according to the study. In particular, “personal income is one of the major factors that can influence customer water usage.” Mandatory restrictions and extensive media coverage are also considered to be strong factors among the interacting variables.

On the surface, this report would seem to be at odds with a Metropolitan Water District Long Term Conservation Plan report (a different agenda item) which states “Price to the end user is a significant factor affecting conservation – as the price of water goes up many consumers will choose to use less. Significant research on retail price elasticity has already established this premise.”

The Planning Committee report does include a qualifier that “It must be emphasized that this is a very simplistic evaluation of water demand responsiveness due to price over the last few years. The results are unique to the rate increases and demand reductions experienced over the four-year time frame.”

In any event, Dana Friehauf, SDCWA Water Resources Specialist, told Directors that price adjustments “can be an effective strategy with the right pricing signals.”

Several Directors expressed concern about how to use this information to help explain price increases to the ratepayers, but the answer to that question remains elusive.

[later: Ms. Friehauf confirmed to me that there isn't really a conflict with the MWD report. The Met report isn't saying price is THE determining factor, just a significant factor, while the committee report doesn't say price is not a big factor. It just shows that many other variables also have considerable influence. She also pointed out that the committee report looked at both historic and near-term price elasticity and price does play a bigger role in the near-term analysis.]

 

Posted in Water | Tagged: , | 5 Comments »

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