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Posts Tagged ‘San Diego County Taxpayers Association’

San Diego campaign politics interferes with oversight of Public Utilities Department water operations

Posted by George J Janczyn on March 30, 2012

On April 18, 2007, before San Diego’s Water Department and Metropolitan Wastewater Department were combined into the Public Utilities Department (PUD) the San Diego City Council enacted an ordinance to establish an Independent Rates Oversight Committee (IROC):

“It is the purpose and intent of the City Council to establish the Independent Rates Oversight Committee to serve as an official advisory body to the Mayor, City Council, and City Manager on policy issues relating to the oversight of the City of San Diego’s public utilities department operations including, but not limited to, resource management, planned expenditures, service delivery methods, public awareness and outreach efforts, high quality and affordable utility services provided by the public utilities departments, including the Water and Metropolitan Wastewater Departments. In addition, the Independent Rates Oversight Committee is established to assist the City in tracking and reviewing the use of rate proceeds to advance the capital improvements related to rate packages and work programs adopted by the City Council.”

The ordinance provides for a committee of eleven members plus several ex-officio members. It requires that a majority of the members of the committee shall possess expertise in one or more of the following areas: accounting, auditing, engineering, biology or environmental science, finance or municipal finance, law, and construction management.

Take some time to examine the IROC website agendas and minutes and you’ll understand the considerable effort IROC and its subcommittees put into meaningful oversight on issues that involve ensuring a safe and reliable water supply, sound environmental management, reasonable rates, wise investments, efficient operations, a knowledgeable public, and a sustainable water and wastewater system.

IROC members have contributed countless hours to help San Diego deal with its complex, difficult water and wastewater management challenges. Consider also that the committee members labor without financial compensation–we should be grateful to these dedicated civic-minded volunteers working to improve the community.

Unfortunately the City of San Diego’s Public Utilities Department (PUD) takes its marching orders from the Mayor and City Council. It shouldn’t be hard to see that powerful and wealthy competing interests consume large portions of these politicians’ time, so that a solid background of knowledge, expertise, and understanding of San Diego’s water and wastewater management issues is not a particularly strong suit.

IROC, therefore, has the broad expert knowledge to perform competent oversight that helps compensate for political interference or indifference over the Public Utilities Department.

Water rates are one political issue that some politicians are using in their campaigns. Some politicians are prone to blame high water rates on excessive salaries or financial mismanagement but you don’t usually hear them pointing out that 80% to 90% of San Diego’s water must be imported and the wholesalers selling the water control the price and we have to pay it. San Diego is in a semi-arid region with very limited local water resources, so it’s simply a fact of life that if you want to live in San Diego you’re going to pay plenty for water.

Even though IROC spends a great deal of time reviewing a broad array of factors that influence water rates, the fact is that San Diego has only limited control over water rates. On top of the massive water purchases, there are capital improvements, infrastructure upgrades, replacement of aging pipelines, performing tasks required by law or consent agreements and numerous other factors that make water cost so much.

Notwithstanding Councilmember Carl DeMaio’s claim that he can reduce water rates by 15% and keep that rate frozen for five years, the fact is that the cost of doing so would prevent replacement of worn out infrastructure and preventive maintenance. We would soon face even more broken pipes, sewage spills, wrecked streets, flooded homes, boil water orders, fines, and court orders. It’s important for PUD to be run as efficiently as possible, but cost control must not be an excuse to defer action on innumerable requirements to keep things working. It would certainly make people consider water conservation a lower priority.

Lately, IROC has increasingly been targeted by politicians and affiliated groups who allege it isn’t doing its job as mandated by the city ordinance.

For example, on November 7, 2011, in response to questions raised by Audit Committee member Thomas Hebrank about IROC needing to procure performance audits, an Independent Budget Analyst report was delivered to the committee. The report provides good clarity about the financial constraints IROC faced in initiating such audits.

The City Attorney also was queried by Audit Committee questions that implied IROC was acting beyond the scope of its responsibilities. The City Attorney’s reply was “Based on our review of the annual reports, we conclude that IROC’s recommendations and findings are within its scope of duties as described in the SDMC.”

The same City Attorney report also replied to questions from the Natural Resources and Culture Committee as to (l) whether IROC should be reviewing City policies regarding the water and wastewater utilities or be focusing solely on the City’s use of ratepayer funds, and (2) whether review by IROC is a prerequisite to City Council action on water and wastewater matters.

In this case, the City Attorney concluded that “The focus of IROC is oversight of water and wastewater ratepayer funds and the perfonmance of
the City utilities. IROC is also tasked with advising the Mayor and City Council on policy issues related to water and wastewater service, having assumed that responsibility of the formerer PUAC. While prior review by IROC is recommended so that IROC can accomplish its mission, IROC review is not a legal prerequisite to City Council action.”

Subsequently, on March 5 there was an Audit Committee agenda item entitled “Proposal to Authorize City Auditor to Conduct PERFORMANCE AUDITS OF WATER AND WASTEWATER SYSTEMS. Interestingly, the supporting document for that item was a proposal from the San Diego County Taxpayers Association dated February 2012 entitled “Independent Rates Oversight Committee (IROC) Proposed Municipal Code Revisions”. A reading of the proposal to revise the ordinance seems to indicate that it would significantly curtail the scope of IROC and possibly hamper IROC’s ability to provide value to the Mayor and City Council.

A look at the Audit Committee Actions document for that meeting shows that things went considerably further than authorizing the city auditor to conduct performance audits. Indeed, the action taken was based on the SDCTA proposal to revise and limit IROC’s scope of responsibilities:

ACTION: Motion by Councilmember DeMaio, second by Chair Faulconer, to recommend the City Council:
a. Amend the San Diego Municipal Code in a manner consistent with the proposal’s new municipal code section 26.2003(d), related to the City Auditor.

b. Amend Municipal Code Section 26.2001, titled, “Purpose and Intent,” to read:

“It is the purpose and intent of the City Council to establish the Independent Rates Oversight Committee (IROC) to serve as an official advisory body to the Mayor and City Council on issues relating to water and wastewater system management. The goal of IROC is to ensure that rates charged to City residents are appropriate and the funds generated from rates are used appropriately. By establishing IROC, the Mayor and City Council seek a water and wastewater system that is efficiently and effectively managed.”

c. Make these amendments prior to any consideration of a rate increase in the water and wastewater system.

d. Ensure the City Auditor’s annual independent performance audits on water and wastewater systems do not affect the City’s general fund by funding audits through the Water and Wastewater departments’ Dedicated Reserve from Efficiency and Saving (DRES) fund or by appropriating funding annually from the Water and Wastewater departments’ budgets.

SDCTA’s Sean Karafin kindly shared with me the precise wording of Carl DeMaio’s motion in the above item:

“I would make a motion that we move this proposal to the City Council with recommendation that they amend the San Diego municipal code in a manner consistent with what the Taxpayers Association has suggested under item ‘d’ and the amendments to the purpose section, that I read for the record and I will be happy to provide our City Attorney here with my notes*, and that we make recommendation from the Audit Committee to the City Council that these amendments be made prior to any consideration of a rate increase in the water and wastewater systems.”

At some point after the abovementioned Audit Committee, SDCTA apparently made some revisions to their February proposal and presented the new version at IROC’s March 19 meeting. SDCTA’s President and CEO Lani Lutar and Economic Policy Analyst Sean Karafin’s discussion also included this Powerpoint presentation that was apparently intended to simplify matters by drawing comparisons between specific wording in the existing ordinance juxtaposed above the proposed changes.

The proposal implies that IROC was budgeted $100,000 each year to pay for performance and financial audits and that no financial audit has been performed. However it should have been noted that the Independent Budget Analyst report stated that it wasn’t until April 12, 2010 that funds for utility performance audits were made available to the city auditor.

The SDCTA proposal also seeks to eliminate some expertise requirements for committee members, and further appears to reduce IROC’s independence by requiring it to submit an annual work plan for approval by the Natural Resources and Culture Committee (NR&C).

With great concern about the proposal, IROC called a rare (and possibly the first one ever) special meeting on Monday to discuss the San Diego County Taxpayers Association proposal

SDCTA Economic Policy Analyst Sean Karafin was present to take questions, but he mostly got an earful of criticism.

Andrew Hollingworth was perhaps the only committee member in full support of the revised ordinance. He also added “I think it also appropriate to consider the language of the mayor’s intent in establishing IROC… I believe the taxpayers association have language here which was the original press release establishing IROC.”

Jim Peugh replied: “I guess the City Council passed the ordinance, so I’m not particularly concerned with what the publicity was. I think we need to work just with the ordinance that was passed by the council.”

Irene Stallard-Rodriguez said: “I like some portions of what they’re recommending, there are some good portions that are good, I don’t think all of it is bad, I just don’t think all of it is appropriate, there are one or two things that are good [e.g., deleting the reference to the city manager which no longer exists; and clarifying that water and wastewater departments are now combined]. But the rest of it is like, “you’re kidding.”

Don Billings: “I think there are two issues here; there’s some things that to my surprise were taken to audit and some to city council…which is not just technical changes. It’s a substantial narrowing of IROC’s charter which in my view strips IROC of its ability to examine most of the major factors that track rates and I think it’s foolish…. We wouldn’t be able to look at a lot of the things that drive rates. It’s a caricature of oversight. If you go into the foyer here and look at the mission of the department, it’s about public health and welfare, it’s about water reliability and sustainable supplies, and long range planning and making sure not just that we execute current projects efficiently, which is very important, but it’s so much more than that.”

Gail Welch: “I’ve spent a great deal of time in the finance committee and feel we’re making progress in the finance committee…it seems the charter we have now is a good framework.

Also, Pat Zaharopoulos, President and Chief Executive Officer of the Middle Class Taxpayers Association spoke briefly during public comment. “The present ordinance seems to be broadly written to allow IROC to be independent…the cost of services need to consider the long-range assessment of capital and department operations and infrastructure and many factors to be properly determined. You can’t look at only one variable only and limit you to rates without tampering with your independence and ability to act logically. We oppose the proposed amendment.”

Deputy City Attorney representative Tom Zeleny who attends all IROC meetings as a legal consultant pointed out that the proposal to eliminate certain areas of expertise by committee members would probably mean that some members of IROC would have to be removed.

Zeleny also mentioned what he called a “loophole” in the wording of subsection F of the SDCTA proposal. The proposed wording in that section is so similar to the original wording, Zeleny said, “if the intent is to narrow the focus of IROC, subsection F essentially opens everything up again. A lot of what is considered policy can also be considered a question of cost efficiency. There is simply too much overlap between policy, cost effectiveness, and efficiency. I’ve explained this to the taxpayers association.” He added that he expects SDCTA to reword the proposed revision to eliminate the “loophole.”

When SDCTA’s Sean Karafin had an opportunity to comment, he said “our intent is not really to limit IROC, it’s to focus IROC. There is a significant difference, because if you spread yourself too thin and comment on other [important] sections. But more than anything taxpayers were promised oversight of the expenditures of ratepayer funds…that promise should be met first and foremost.”

Andrew Hollingworth, following up, asked, “Mr. Karafin, is it your intent to basically narrow the focus of IROC so that it serves the mayor’s intent that IROC be the ratepayer watchdog and that the taxpayer’s association perception is that it [IROC] spread out in doing all these other things so that mission has been lost?”

Mr. Karafin: “Exactly.”

It was clear, however, that a solid majority of IROC members were dismayed by the SDCTA proposal.

Irene Stallard-Rodriguez soon declared “I move that IROC oppose the taxpayer association proposal.” Don Billings seconded the motion.

As discussion began, Andrew Hollingworth charged that “several ratepayer proposals I’ve made have been quashed over the years. For example, this year one of the reviews I proposed was to compare rates among other local agencies and that was quashed.”

Don Billings responded: “Let me take exception to that because it has a specific legal definition of “quash” and I’m sure there are no motions to quash in the record. With respect to, for example, the idea of benchmarking, that’s the very first thing we did when we went to [HDR?] engineering and we spent a lot of time examining the question of benchmarking and educating ourselves and discovered that as anybody who does benchmarking knows, rankings are the beginning of the analysis and not the substitute for the analysis. Secondly, unfortunately they get misused. We have to be very careful how we do it…we don’t support “Lone Rangers”, we want it to be done properly and have credibility and far from “quashing” any such effort we asked to be part of that effort. To have it explicitly brought to the Finance Committee to talk about how we identify peers
so we do it carefully, how we identify the metrics so that we do it carefully and properly.”

Gail Welch added, “I go to all the finance subcommittees — in fact I go to all the subcommittees — and there is a lot of focus on rates and costs…there are costs related to everything and that is a main theme. When it comes to benchmarking, I’m not opposed to benchmarking but I think we need to understand who we benchmark against, how one utility is run vs. another and what the layouts and geographics vs. ours are and whether it’s even meaningful to compare us to the people you’re comparing us to.”

Don Billings then said “I’d like to call the motion.”

Jim Peugh: All in favor: all members present voted eye, except Andrew Hollingworth who voted to oppose.

How to handle next steps was then discussed. The consensus seemed to be that a letter to the Mayor and City Council simply stating a rejection of the proposal would not be helpful; rather that the letter should not only to state the rejection of the proposal but also outline the concerns and reasoning for the vote.

Don Billings suggested one way to frame the letter:

“We feel we have been operating in accordance with the ordinance. Indeed most of what we look at is financial. We feel the proposed ordinance would turn IROC into a political tool. How did we get involved in embarking on all these rate increases? Because prior city councils didn’t have the courage to tell ratepayers the truth that we have to fix things. Any jackass (pardon the language) can tell the public that we can cut the budget by 10% but a broader understanding of the entire process is necessary to protect ratepayers. Audits and appropriate benchmarks are necessary, but IROC needs an informed view by looking at management of resources and long-term planning, and this proposal doesn’t let us do that. Risk management, how to invest, having a qualified workforce, essentially all the things that come before the department. It also prevents us from looking at things outside of PUD, since many functions that affect rates are performed by agencies outside of PUD.”

As for the proposed workplan in coordination with NR&C: he added “we can certainly create our own work plan, but it shouldn’t be approved by political committee — or we won’t be independent.”

Andrew Hollingworth immediately countered, “I would strongly oppose any proposal to adopt a workplan that was not adopted by NR&C in consultation with IROC.”

Jim Peugh replied, “In that case I guess we could call it the “Dependent Rates Oversight Committee.”

Following more discussion in the same general tenor, Michael Ross moved for Jim Peugh (in collaboration with Gail Welch) to write a letter to the mayor and city council explaining that IROC believes it has operated according to the ordinance and translate the committee consensus as to why it opposes the SDCTA proposal.

Tom Zeleny then stated that assuming there would not be a future meeting to discuss the particulars of the letter, it would be be advisable to decide at this meeting what should be said in the letter.

So discussion ensued about what particulars should be included in the letter. Some committee members referred to notes they had prepared following the Monday presentation in suggesting wording they thought should be included in the letter.

This discussion greatly displeased Andrew Hollingworth who angrily rose and announced his intention to leave the meeting, saying that discussion of items to include in the letter has “obviously been orchestrated.”

Nearly everyone asked him to stay, saying they wanted to hear his opinions and that they certainly had not coordinated their written topical lists –that today was the first time anyone had discussed them. Briefly, Hollingworth sat back down but after a few more minutes of discussion, he appeared increasingly agitated and growing red in the face. Again he abruptly rose, announced that “IROC’s problem all along is that it hasn’t focused on ratepayers” and then he left the room for good.

As to the question of the proposed workplan, a consensus developed as to a willingness to internally develop a workplan within the committee, but to have one developed and/or approved by the Natural Resources and Culture Committee was unacceptable.

Don Billings again phrased sentiment that seemed to satisfy the committee members: “I think it [the SDCTA proposal] completely misses the point of what IROC is about, to have political approval of what we’re going to look at and what we’re not going to look at. A big reason we get into problems in this city and in managing the public health and welfare is because there’s no buffer from the political interference that prevents the professional managers from managing this operation professionally. To me that’s an essential part of my job on IROC…it’s to call it as I see it and not go into NR&C and ask for instructions. We can create our own work plan but there’s no reason to have one approved by NR&C. IROC’s essense is its independence.”

Electioneering with claims that everyone’s being drastically overcharged for water fuels emotional public sentiment but doesn’t change the fact that it costs money to import water and to responsibly manage our meager local water supply and deteriorating infrastructure. Like police and fire, San Diego’s water supply is a serious public health and safety issue.

 

Posted in Politics, San Diego Public Utilities Department (PUD), Water | Tagged: , | Leave a Comment »

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 San Diego County Water Authority (SDCWA), Water | Tagged: , | 1 Comment »

San Diego: Friction with Taxpayers Association evident at Water Authority meeting

Posted by George J Janczyn on August 25, 2011

At the beginning of the marathon committee meeting sessions preceding the monthly board meeting of the San Diego County Water Authority (SDCWA) today, General Manager Maureen Stapleton reported on her recent exchange about SDCWA labor costs with Lani Lutar, President/CEO of the San Diego County Taxpayers Association (SDCTA).

Ms. Stapleton described originally having provided voluminous data in response to requests from SDCTA as well as from the San Diego Taxpayers Education Foundation (SDTEF), an arm of SDCTA. The Foundation used that data to produce a draft study which was then submitted to SDCWA for review. SDCWA apparently found numerous errors which led to their response that “the majority of the “Key Findings” and table data points in the report are incorrect, and in some cases, grossly misleading.”

Stapleton described her exchange of correspondence with Ms. Lutar about the disputed material (copies were distributed at the meeting) and described some difficulties during that period. She concluded, however, that she’s optimistic that SDCTA has indicated willingness to engage in further discussions to examine the issues.

Discussion among board members ensued with many comments that were critical of SDCTA, including an angry director Dion saying he felt the SDCTA analysis was “not only convoluted, but intentionally fraudulent.”

I tweeted that quote and it turned out that Ms. Lutar saw it and decided to make an appearance at the board meeting (which made me feel awkward because I hadn’t intended to stir the pot — not that much, anyway!). When the board meeting began, she requested to speak during the public comment period. In a nutshell, she stated that she wanted to make sure everyone understands that SDCTA has every intention of working closely with SDCWA staff to make sure all the facts and data are accurate.

That’s basically what happened. I obtained a copy of the letters in question and scanned them, reproduced below:

 

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Paying for water in San Diego

Posted by George J Janczyn on January 22, 2011

The San Diego Public Utilities Department (PUD), faced with an increase in the price it must pay for imported water, proposes to pass along the price increase to consumers. Unless the City Council rejects the proposal at a public hearing on Monday January 24, the price increase will take effect March 1. The PUD has indicated that the increase is to cover only the cost of the water it must buy, not to fund other departmental expenses.

The San Diego County Taxpayers Association (SDCTA) has released a statement opposing the increase. As rationale, the Association cites a long history of rate increases (as if that has any bearing on the current issue) and echoes arguments made by Councilmember Carl DeMaio that PUD hasn’t addressed management problems that were previously criticized. They say the department should instead dip into reserves or use Capital Improvement funds to cover the cost.

The underlying theme is, therefore, that because of PUD’s perceived management faults, it should be punished by forcing the department to absorb the increased cost of water rather than making consumers pay for it.

Pretty weak. There are appropriate venues for challenging management practices. This isn’t one of them. And reserves should be used for temporary emergencies, not for ongoing expenses.

Amazingly, SDCTA introduces this gem of a thought at the beginning of their document:

“While the cost of water will undoubtedly increase until the San Diego region has a local, sustainable, and reliable water supply, more emphasis must be placed on local water agencies to reduce costs to minimize the impacts on ratepayers.”

The price will go up UNTIL we have more local, sustainable, and reliable water? Someone was out to lunch when that statement was printed.

We’re not trying to develop more local supplies because it’s cheaper, but because we’re trying to safeguard against a catastrophic cutoff of our supply of imported water. San Diego imports water because it doesn’t have enough of its own. Development of local supplies is more expensive than importing water. Just look at desalination or indirect potable reuse or squeezing out a little more groundwater. Cheaper? Not quite.

Criticism of PUD management and financial practices should be addressed through appropriate channels. Using past disagreements about management as an excuse to force the PUD to absorb the higher price of wholesale water in this case can only disrupt department operations and finances.

[January 28 postscript]

I don’t think I differ that much philosophically with the Taxpayers Association; my disagreement is more with inflaming public opinion on the pass-through increase as a political tactic in getting those other long-standing issues addressed.

I rather agree with Peter Gleick who wrote: “Psychologically and socially, it is hard for millions of people who love this region to admit that it is fundamentally dry and that the rules for building, living, and working there must be different from those in the wet regions where most of them were born and raised.” (http://www.pnas.org/content/107/50/21300.full)

Unfortunately, too many San Diegans still believe they should get Wal-Mart prices to water their lawns, and the publicity surrounding this latest controversy probably reinforces that mindset.

As for local vs. imported costs, I think that the cost of water must realistically be expected to rise regardless of source. I don’t think people should consider cost savings to be the reason for more development of local sources. The main reason is better protection against reduced access to imported supplies. Supply reductions is an ongoing problem likely to increase in severity with Colorado River and State Water Project water even without a catastrophic cutoff due to disaster.

 

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San Diego’s water future: who has the helm?

Posted by George J Janczyn on August 11, 2010

As noted in yesterday’s water rates story, the main supplier for most of San Diego County’s water is the Metropolitan Water District of Southern California (MWD) and it holds great power when it comes to the cost and reliability of our water supply. So when MWD announced a stakeholder forum to examine the 2010 Integrated Resources Plan (IRP) Update there were naturally going to be many local water professionals in attendance. The IRP makes major changes to MWD’s strategy for water reliability through the year 2035, including a bold plan to create a large storage “buffer” to serve as a backup supply against virtually any scenario.

 

Held at the Ramada Conference Center on Kearny Mesa Road Tuesday, Aug 10, this was the third in a series of four stakeholder forums held in different Southern California cities, the objective being “to present Metropolitan’s Draft IRP resource strategy and to hear stakeholder input and feedback.”

There were about 75-100 individuals in attendance.

The morning session was delivered in segments with a brief question period after each presenter finished. After lunch it was time for the Q&A and comments from the audience. The public comment period was moderated by Paul Brown who did an excellent job of managing the process, facilitating discussion, drawing out comments, and summarizing/recapping statements being made.

Since the plan had been available online well in advance of the meeting, it was apparent that most people there had already seen it, processed their personal reactions, and had thoroughly analyzed it. That preparation showed in the comments which were delivered very diplomatically. You can view the plan at MWD’s IRP page.

Mark Weston, General Manager of Helix Water District pointed out that local water agencies are much better at mobilizing conservation efforts than the Met dictating from a distance. He suggested the Met might be less involved in conservation programs and focus more on reliability of imported water.

Other individuals posed questions that tended toward two themes: MWD’s financial transparency or lack thereof (“Exactly how does Met plan to allocate or distribute supply project costs?”) and authoritarian management style (“It seems like Met is always dictating to us”).

I wasn’t counting but numerous individuals wanted to know about costs of projects being contemplated by MWD.

One gentleman rose to complain about water shortages caused by population growth and rapid development.

Chris Cate from the San Diego County Taxpayers Association (SDCTA) said he was unable to find a database of every project contemplated across all service areas; same for a comprehensive list of assumptions used for MWD ‘buffer’ projects: He said “the cost information provided in the Draft IRP is wholly inadequate to form the basis of decision-making by the MWD Board of Directors.” SDCTA also submitted written comments in this letter for the Chairman of the MWD Board.

Other questions and comments from attendees ranged from “What’s the reason for the rush with an October deadline for the IRP?” to “Where are the emergency plans?” to “We need more help with purple pipe infrastructure” to “What’s it going to cost?”

The feedback most representative of the general sentiment in the room was undoubtedly given by Dennis Cushman, Assistant General Manager at San Diego County Water Authority. His statement is below. For your convenience, here’s the 1994 Blue Ribbon Report that he refers to.

 

Thanks to Mr. Cushman and to SDCTA for providing me with a copy of their statement.

 

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