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Posts Tagged ‘Water prices’

San Diego water rates going forward

Posted by George J Janczyn on November 25, 2013

By now most San Diego water customers have heard that the City Council last Thursday approved water rate increases for the years 2014 and 2015 (Item-620 on the docket).


The main reason for the increase was that the price of imported water keeps going up and the Public Utilities Department (PUD), as we know, needs to purchase that high-priced water to supply over 80% of the city’s needs. PUD buys imported water from the San Diego County Water Authority (SDCWA) which in turn buys its water from the Metropolitan Water District of Southern California (MWD) and from the Imperial Irrigation District (IID).

Compared to price hike hearings in previous years, this time relatively few people were up in arms. Even though several of the 37 people who submitted protest slips at the meeting seemed quite indignant, many who spoke expressed disappointment and unhappiness but appeared resigned to the fact that PUD has little choice but to recover the price it pays for imported water. Even U-T San Diego, normally happy to throw gasoline on smouldering embers, refrained from inflammatory editorializing.

Still, there are some valid reasons for general dissatisfaction with the situation.

A seemingly abrupt and large price increase

In 2011 former San Diego Mayor Jerry Sanders directed PUD to absorb the higher price of imported water in 2012 and shield city customers from the rate increase. PUD managed this by cutting staff, creating new “efficiencies” in operations, and by drawing more water reserves that originated from local watersheds so that less imported water would need to be purchased.

In 2012 Sanders ordered PUD to continue absorbing higher imported water costs when imported water rates went up again for 2013.

For 2014 PUD was faced with serious financial and operational difficulties if forced to continue under the above constraints as the imported price continued to rise. Further, it appeared likely that the city’s credit rating could be downgraded as a result. Thus, the proposed rate increases.

At Thursday’s meeting before casting the only vote against the new rates, Councilmember Scott Sherman complained: “we’ve said all along that we’ve absorbed the rate increases on ratepayers for the last two years, but in this case we’re going back and trying to recover those rate increases” — as if to suggest that PUD absorbing the rate increase over the previous two years meant that in the future customers should never have to pay the true cost of imported water (or perhaps it was just political posturing).

In truth, Public Utilities did absorb the rate increases, to the tune of some $35 million in added water costs over those two years. But it should have been clear to all that by absorbing the rate increase for two years PUD was postponing the day when customers would have to pay the full price, not exempting customers from ever paying the real price.

PUD obviously cannot continue paying the full price for imported water as the price continues ever upwards while reselling it to city customers at below cost.

It’s wrong for Sherman and others to try to paint this situation as PUD covertly trying to recover the $35 million that it absorbed over 2012-2013.

Unfortunately it’s true that after being shielded from the rising price of imported water for two years, customers will feel the impact more acutely than if the price had incrementally increased in smaller steps over that period.

Reservoir storage impacted

PUD hasn’t publicized which reservoirs it has been drawing down as a result of the Sanders directive, but one can view the monthly report of reservoir storage published by SDCWA to see the general picture. In the city reservoirs that depend solely on local watershed and cannot be replenished with imported water (Barrett, El Capitan, Morena, Sutherland), storage levels are clearly low. Actually El Capitan does have a small capacity connection for imported water but it is rarely used — June 2009 was the last time a small amount of imported water was delivered to El Capitan. The other reservoirs have connections to receive infusions of imported water so their higher levels aren’t the best indicators of local conditions.

City of San Diego reservoir storage data October 2013 (source: San Diego County Water Authority)

City of San Diego reservoir storage data October 2013 (source: San Diego County Water Authority)


The city intends to withdraw even more water from Lake Morena reservoir in December in an attempt to save an additional $5 million in avoided imported water purchases. According to PUD Deputy Director of External Affairs Brent Eidson, the city will draw down and use water from the 50,694 acre-foot capacity Morena reservoir (now only 13% full with about 20,000 acre-feet of usable water left) until it reaches a virtual dead pool of 2,000 acre-feet, the point at which the intakes can no longer remove the water.

Miriam Raftery describes the resulting Lake Morena controversy in this East County Magazine report.

Still, while the city avoided buying some imported water over the last two years and will squeeze the last drops out of Morena, it cannot indefinitely draw down its other supplies without jeopardizing the reserves maintained for emergency (and I don’t think higher prices for imported water constitutes an emergency). Plus, the staffing cuts and other cost-cutting moves have surely taken a toll on the department’s morale and well-being. And, to the extent that the city may need to buy extra imported water in the future to compensate for the local reserves used up over the last two years, new imported water at much higher prices will be the cost.

During the public hearing, Council President and Interim Mayor Todd Gloria said that forcing PUD to absorb those costs undermined the city’s creditworthiness and negatively impacted maintenance of water infrastructure.

Councilmember David Alvarez said “we basically underfunded the system for a couple of years and cannot continue to act in this irresponsible manner going forward.”

Bottom line: Mayor Sanders’ politically motivated directive only set up the water customers for a rude awakening, put PUD in a difficult financial position & jeopardized the city’s bond credit rating, and gambled with the city’s water reserves.

New pricing tiers

In addition to higher prices for imported water, the existing 3-tier pricing system will be replaced by a new 4-tier price structure (see chart). A somewhat confusing U-T San Diego story tried to explain the new structure. News 8, San Diego 6, La Jolla Patch, and 7 San Diego also weighed in.

Put simply, the intent behind the new tiers was to minimize rate increases for those who conserve and to penalize excessive consumption.

Existing and proposed monthly pricing tiers. HCF=hundred cubic feet (source: City of San Diego Notice of Public Hearing for the water rate increase).

Existing and proposed monthly pricing tiers. HCF=hundred cubic feet (source: City of San Diego Notice of Public Hearing for the water rate increase).

PUD’s Brent Eidson informed me via email that 20.1% of water customers are expected to fall into the lowest first tier, 51.6% will be in the second tier, 16.6% in the third, and 11.6% in the highest tier.

The problem is that as a means to encourage water conservation the tiered pricing structure can seem rather arbitrary.

At the public hearing Councilmember Mark Kersey sounded off about this, saying he thinks a tiered structure “is archaic and crude.” He suggested that San Diego should consider a water budget based billing system that takes into account various household sizes and needs, similar to the successful Irvine Ranch Water District’s billing system.

Kersey may have forgotten it was only recently (July) that the City Council’s Natural Resources and Culture Committee (NR&C) reviewed PUD’s Water Budget Based Billing Report. After considering the report, NR&C decided to rule it out for residential customers because the report projected $5.7 million in one-time expenditures to design and implement the system, $3.6 million annually in ongoing costs for billing system enhancements, and unspecified labor and expense for handling individual variance requests from users who would seek adjustments to water budgets assigned to them.

The report also indicated that water budget based billing would also not be worthwhile because it would change the usage habits of only a small percentage of customers.

Note that Irvine Ranch’s customer base is much smaller than San Diego’s and implementing a water budget based system was less daunting than it would be for San Diego.

Still, water budget based billing remains attractive to many other people (myself included) and the idea is likely to be revived in the future. My earlier report on water budget billing discusses this billing method and related issues in more detail.

More rate increases in the forecast

It's still unknown what effect Poseidon's Carlsbad Desalination Plant under construction next to the Encina Power Plant will have on San Diego water rates.

It’s still unknown what effect Poseidon’s Carlsbad Desalination Plant under construction next to the Encina Power Plant will have on San Diego water rates.

It’s not over. Not only are more rate increases for imported water certain in the future, two other factors will push water prices even higher:

  • Desalinated water. While San Diego normally purchases only less expensive untreated imported water because it has its own water treatment plants, it definitely wants to be able to purchase treated desalinated water if the need arises. Therefore the city will need to pay “availability” fees to SDCWA for access to desalinated water, plus the price of desalinated water itself. Desalinated water will be much more expensive than the present cost of imported water, although SDCWA has not yet announced exactly what those prices will be. Presently the imported price is about $800 per acre-foot while desalinated water is expected to be in the vicinity of $2,000 per acre-foot.
  • The upcoming July 31, 2015 expiration of the EPA Point Loma waiver. The waiver allows the Point Loma Wastewater Treatment Plant to discharge partially treated wastewater into the ocean (“advanced primary treatment”) instead of upgrading to secondary treatment as required by the Clean Water Act. The current waiver was granted on condition that the city recycle more water and greatly reduce the amount of wastewater discharged at Point Loma. So far not enough recycling is being done. In order to avoid steep financial penalties and be forced to upgrade the Point Loma facilities at great expense, the city will try to negotiate for yet another waiver by demonstrating its commitment to divert ever-larger amounts of wastewater from Point Loma into a large-scale potable reuse program. Regardless of how this all plays out, it will end up raising water and/or sewer rates. Click here for a detailed examination of this issue.

There WAS something to chuckle about at Thursday’s public hearing: Councilmember Sherri Lightner said “Some day we will get to the point where our city is selling water, not buying it. That’s my vision.”


Posted in Point Loma Wastewater Treatment Plant, San Diego Public Utilities Department (PUD), Water, Water rates | Tagged: , , , | Leave a Comment »

San Diego City Council to consider 2013 water rate case (updated)

Posted by George J Janczyn on August 1, 2013


The San Diego City Council’s Natural Resources & Culture Committee (NR&C) on July 31 accepted a proposal for a new water rate billing structure, including a rate increase, and sent it to the City Council for consideration at its September 10 meeting. The committee recommends a new billing method that would use a four-tier rate structure designed to provide a greater financial incentive to conserve water. The current rate structure has three tiers with weaker conservation incentives.

The new rate structure is an option in the 2013 Water and Wastewater Cost of Service Study delivered at the NR&C meeting. 43 percent of the water ratepayers in San Diego (those who use 10 HCF or less per month) could see lower rates under the new plan, according to Public Utilities Department (PUD) staff that presented Study. Those who consume water at the high end of the scale (19+ HCF) would pay dramatically higher rates (HCF = Hundred Cubic Feet = 748 gallons). More details about rates will follow below.

Current operating situation of the Public Utilities Department.

Current operating situation of the Public Utilities Department.


For the past two years PUD has been operating under a requirement to “absorb” rate increases for imported water that it buys from the San Diego County Water Authority (SDCWA or CWA), rather than pass the cost on to ratepayers. San Diego imports some 80% of the water it uses.

The decision to do that was made by then-Mayor Jerry Sanders in mid-2011. The news was well-received by the public, likely because of the recession, high unemployment rates, and of course, because nobody likes rate increases. Public opinion and Sanders’ decision may also have been influenced by Carl DeMaio, a city councilmember who had positioned himself as a mayoral candidate for the 2012 election and was waging an aggressive campaign arguing that past water rate increases had been excessive due to mismanagement within PUD. One of DeMaio’s goals was to cut water rates by 15% and then freeze rates at that level for five years.

So, PUD had a tightrope to walk.


To “absorb” SDCWA’s 2012 rate increase PUD cut back on contracts, supplies, materials, personnel, and drew down reservoir “surplus” so that less imported water would need to be bought, at a fiscal impact of $17.5 million.

This year, the fiscal impact on PUD from SDCWA’s 2013 price increase is estimated to be $20.6 million due to further cuts in contracts, supplies, materials, personnel, and drawdown of reserve funds.

“Over the last two years (Calendar Years [CY] 2012 and 2013), PUD absorbed CWA’s purchased water increases. PUD estimates that the cumulative impact of these increases is approximately $35 million. PUD was able to absorb the impacts through a combination of one‐time revenues, drawing on reserves, and implementing operational efficiencies. However, as Tables 10 and 11 indicate, continued absorption of the CY 12/CY 13 pass‐through increases, and trying to absorb the CWA CY 14 increase is not sustainable. If the City does not make revenue adjustments in FY 14, then by FY 15, PUD will not meet DSC requirements for senior or aggregate debt.”

(From the Study)


The problem with saying PUD had to “absorb” higher rates is that they are not one-time expenses; they are permanent, and future SDCWA rate hikes will just add to the burden.

Assistant PUD Director Alex Ruiz made just that point at the Independent Rates Oversight Committee (IROC) at its July 18, 2011 meeting, saying the situation would be more properly called “Deferral of Rate Increases” rather than absorption of increased costs.

On top of all that, new imported water rate increases for 2014-2015 have already been announced by SDCWA.

Water purchases have decreased while cost has gone up.

Water purchases have decreased while cost has gone up.


It seems fairly obvious that in order for PUD to continue as a viable self-supporting enterprise (i.e., not funded by local taxes), water rates will have to go up. But what should the price be?

Guidance on that question is contained in the Cost of Service Study delivered to NR&C (the study is also referred to as the 2013 Rate Case). The Study examined “what actions the PUD should undertake to maintain the financial viability of the Water and Wastewater enterprises in light of the results of the 2007 Rate Case, increasing purchased water costs, minimal economic growth, regulatory requirements, and needed future large infrastructure investments.”

The Study has three components: (1) Determining total revenue requirements; (2) Allocation of costs to the appropriate customer class; and (3) Rate design.


“Since 2008, the effective rate that the City pays for purchased water from CWA (cost/acre‐foot purchased) has doubled. Infrastructure investments by both CWA and Metropolitan Water District of Southern California, restricted allocations from the Colorado River, and the Bay‐Delta all continue to drive costs up, while declining sales reflecting conservation efforts are driving down revenues.”

“Historically, the City has passed increased rates from CWA through to ratepayers. Over the past two years (Calendar Years 2012 and 2013), PUD has used one‐time revenue sources, identified operational efficiencies, and additional local supplies to absorb the CWA pass‐through increases, which is estimated to be approximately $35 million. These increases, however are not one‐time, but continue on yearly. Continuing to absorb these increases creates a structural deficit that is not sustainable. ”

“Over the past two years (Calendar Years 2012 and 2013), PUD has used one‐time revenue sources, identified operational efficiencies, and additional local supplies to absorb the CWA pass‐through increases, which is estimated to be approximately $35 million.”

(From the Study)

The Study suggests a revenue adjustment of 7.25% in FY14 and 7.5% in FY15 for PUD. That translates into two rate increases over the two year period. Several options for a new tiered billing structure were given, and as noted earlier, the NR&C committee recommended Option 4 (shown in the tables below).

PUD will still need to finance some capital improvement projects through a combination of fully drawing down the Dedicated Reserve from Efficiency and Savings (DRES) fund and using cash on hand.

Fortunately, the Study’s recommendation for wastewater rates (sewer charges) is to leave them alone. The Study says, “Based on the analyses of revenues and revenue requirements, Black & Veatch recommends that Wastewater does not need a rate revenue increase in FY 14 and FY 15.”


The Study (or Rate Case) will be placed on the September 10 City Council agenda. If councilmembers approve the rate proposal, they will schedule a public hearing in accordance with Proposition 218. That would have to happen fairly soon, since the plan aims for the first rate increases to take effect on January 1, 2014 and the second increase on January 1, 2015.

Keep in mind that further rate increases, in addition to those proposed, are possible in the future because the Cost of Service Study didn’t take into account future expenses from potable reuse projects, desalinated water from Poseidon’s Carlsbad Desalination Plant, and the coming 2015 expiration of the waiver that allowed the Point Loma Wastewater Treatment Plant to avoid upgrading to the secondary treatment standard mandated by the Clean Water Act. If negotiations for a new waiver are unsuccessful the City could face some very expenses choices.


The tables below illustrate the various options identified in the Cost of Service Study. Again, option 4 was the committee’s preferred alternative. Beneath the tables, there are links to documentation submitted to NR&C.







UPDATE September 8, 2013: below are links to selected documents that were posted as accompanying materials for the September 10 City Council agenda item on this topic.


Posted in San Diego County Water Authority (SDCWA), San Diego Public Utilities Department (PUD), Water | Tagged: , , , | 2 Comments »

Water rates and the cost of providing service in San Diego

Posted by George J Janczyn on June 26, 2012

Periodically water and wastewater rates paid by San Diego residents becomes a hot topic and with November elections drawing nearer the issue is certainly going to get more coverage, much of it political, in the press. But if you want to truly understand water rates you need to look beyond the surface rhetoric of politicians (recall one mayoral candidate who said he can cut rates by 15% and freeze them that way for five years) and press reports that sometimes inflame more than inform.

Nobody likes to see water rates go up but the City of San Diego’s unique geographic and climate characteristics make expensive water inevitable since most of it has to be imported from great distances. Relying on distant water sources also makes San Diego vulnerable to supply reductions from those sources (Colorado River and Northern California) and potential disasters that could cut the supply entirely for an extended period of time.

Reducing dependence on water imports by developing more local supplies through water recycling and potable reuse is expensive.* Protecting against potential supply cutoffs by increasing local storage capacity is expensive. Water conservation is the most cost-effective means of reducing demand for imported water to the extent that people are willing to conserve. In general, these things are understood by informed residents. What’s not well understood yet is what may happen to water rates in the future.

*(although the City of San Diego doesn’t plan to purchase desalinated water in the foreseeable future, if the Poseidon plant in Carlsbad deal with the County Water Authority (CWA) comes together the city will, however, be required to pay a certain percentage towards that project as part of the cost of being connected to CWA’s infrastructure)

Politics aside, for a better understanding of issues underlying water rate structure there is useful information out there: the 2010 Urban Water Management Plans for the City of San Diego and for San Diego County; the city’s 2011 Recycled Water Master Plan and Recycled Water Study. There’s also the city’s new Comprehensive Water Policy that was implemented following a drive by city councilmember Sherri Lightner to update the city’s old and sometimes conflicting policies.

More immediately, the city has contracted with Black & Veatch (a global engineering, consulting, construction and operations company specializing in infrastructure development) to conduct a Cost of Service Study.

The information and recommendations that will result from this study, due to be completed around the end of the year, will play a large role in determining water and wastewater rates in the coming years.

A very good presentation on how this new study will help determine a new rate structure for San Diego was given at the June 18 meeting of the Independent Rates Oversight Committee.

You can listen to the presentation (including an interesting Q&A afterwards) and view the Powerpoint slides just below.

The presentation was given by Black & Veatch Director Ann Bui, Principle Consultant Brian Jewett, and Patricia Tennyson from Katz & Associates. Thank you to IROC representatives Ernie Linares and Monica Foster for their assistance in securing permission for me to record a copy of the presentation. Apologies for a few seconds of interference about halfway through the recording:





Posted in Independent Rates Oversight Committee (IROC), Water, Water rates | Tagged: , | Leave a Comment »

The price of water doesn’t need to go up when you conserve

Posted by George J Janczyn on April 21, 2010

Consider this breaking water news headline:

U.S. urban residents cut water usage; utilities are forced to raise rates / Circle of Blue Water News.

That’s just one of many recent news reports about water rate increases caused, at least in part, by falling revenues due to conservation efforts by customers (it’s worth a serious read).

But things don’t have to be that way.

If a water utility keeps its operating expenses separate from the price of water, then when people use less water they don’t need to be charged more for it. As it says in the above article, “[e]xisting designs for deciding water rates are the culprits. A handful of cities are restructuring their billing systems to benefit conservation-minded consumers who deserve to be rewarded rather than penalized.”

The City of San Diego is set up so that customers pay a ‘fixed’ fee and a ‘water used’ fee. The ‘fixed’ fee goes to operating expenses. By law the ‘water used’ fee can reflect only the cost of the water itself and cannot be padded to generate extra revenue. Unfortunately, since the San Diego Water Department must import nearly all its water and buys it from the San Diego County Water Authority, which in turn gets its water from the Metropolitan Water District of Southern California, San Diego residents are affected by rate increases from those suppliers whose water prices ARE mingled with operating expenses.

Given that situation, it’s not going to help to get angry with the San Diego Water Department when they have to pass along increased water costs. Doing something about our supplier policies is another issue, though.

However, San Diego’s water pricing system has also been criticized for failing to encourage conservation and penalize waste, not least by the Voice of San Diego as well as the San Diego County Taxpayers Association (see the Voice’s article “City officials again accused of water misrepresentations“).

The Circle of Blue item cited above says that “[s]everal water utilities have figured out how to resolve the conflict between conservation and revenue…Irvine Ranch Water District in Orange County, Calif. pioneered a new model when it instituted an allocation-based rate structure in 1991…”.

Irvine is a very good example. Even I have written about it. Here’s a link to Irvine’s water pricing system that takes user needs into account, rewards conservation, and charges more for excessive use.

“There’s no reason why municipalities who implement conservation programs should have to raise their rates,” said Peter Gleick, president of the Pacific Institute. “If that happens it’s a failure of rate design.”

There are very good reasons for San Diego to revise its water pricing system, and we absolutely should get started on that, but don’t expect the result to be lower prices overall, because there’s another serious issue on the horizon, well stated in this On the Public Record post: “Deferred maintenance is coming due and many districts are facing the failure of systems installed in the fifties or before. Reliability must be paid for anew, and that’s why districts will need to charge more even as they’re asking people to use less water.”

Related water pricing blog posts:


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

The water subsidy for golf courses ‘scandal’

Posted by George J Janczyn on April 17, 2010

Balboa Park Golf Course

Balboa Park Golf Course is not yet using reclaimed water

How your water rates subsidize golf courses” is the headline in a recent Voice of San Diego article by Rob Davis that will probably stir up some indignation around town. The article says that “475 businesses, homeowners associations, golf courses and public agencies” get a 78% discount on reclaimed water which is subsidized by regular water users. The article cites Michael Shames, executive director of UCAN, who suggests that discounted prices for reclaimed water users may be illegal, and that “City Councilwoman Donna Frye called it “out-of-whack” and promised to hold a public hearing on it.” In a subsequent PBS Editors Roundtable discussion, Voice of San Diego executive editor Andrew Donohue said a normal discount for reclaimed water should be only 10% and that the City had been keeping the subsidy for industrial use a secret.

I really don’t see a scandal here.

North City Water Reclamation Plant

First, the discount isn’t a secret (although details on its financial impact may be hard to obtain). The City’s Guaranteed Water for Industry Program is where the discounted water has been publicly documented [the discount is also documented here]. Initially the discount was only for businesses certified under the program, but presently the $0.80 per HCF price (which they wrote was a 50% discount) applies to all purchasers of reclaimed water (with the exception of Poway which is charged more because it didn’t pay certain capacity fees). [There is no discount for the fixed base fee, however. All water users pay the same base fee.]

Second, the suggestion that one group is subsidizing another group sidesteps the fact that it’s looking at two classes of water–it’s not one group of potable users subsidizing another group of potable users. It may be true, though, that if reclaimed water is being sold at a loss the entire Water Department budget has to absorb that loss [or possibly the Wastewater Department in which case the sewer fee would be the water customer revenue source supporting the recycled water sales].

Third, to use reclaimed water requires an expensive investment in purple pipe infrastructure and plumbing, so a discount in the water price certainly makes that decision by potential new customers a little easier.

Ocean outfall at Point Loma

Last, as things stand, San Diego’s water reclamation plants remain unable to sell all the water they can treat. The Voice’s article briefly mentions the 2001 City Council decision to discount the water in order to attract buyers, but the lack of buyers is still a very important fact to consider. A large amount of usable reclaimed water they can’t sell, even today, is pumped to the Point Loma Wastewater Treatment Plant and disposed of through the ocean outfall into the Pacific. Considering the substantial infrastructure expense and the amount of treated water going to waste, it only makes sense that large water consumers like golf courses should be targeted first as customers for reclaimed water. Without a discount for the reclaimed water, businesses have less incentive to stop using potable drinking water for their irrigation and industrial needs. [Consider, too, that the City is under an EPA mandate to maximize the reuse of the water treated at this plant]. Do we really prefer to continue sending precious potable water to golf courses and industry while treating reclaimed water to usable standards and then dumping it in the ocean?

Yes, we need to reexamine the discounted price for reclaimed water; that price probably should at least be adjusted for inflation and operating costs. And in fact, the Water Department is currently performing a Recycled Water Pricing Study which is due sometime this year.

As for additional outlets for surplus reclaimed water, I completely support the Indirect Potable Reuse Study that is looking at advanced purification of reclaimed water to bring it to a potable drinking water standard. That project envisions a 1 million gallon per day operation during the study, and if deemed feasible and if approved by the Mayor and Council, a full-scale IPR/Reservoir Augmentation project with a plant adjacent to the North City Water Reclamation Plant and a pipeline to San Vicente Reservoir, would generate approximately 16 MGD. But convincing the population to agree to recycled drinking water isn’t made easier when the media keeps calling it “toilet to tap.” The Voice’s “…use its sewage to boost drinking water supplies” is just as bad. Surely they can do better than that. A good substitute for the awkward phrase “indirect potable reuse” that I’ve seen used is “repurified water.”

So, we still need to find a way to stop throwing recycled water away — we need to find new buyers for that water. I say we should definitely make a realistic adjustment to the discount for reclaimed water, but not eliminate it. In the long term reclaimed water needs to make a big difference in the availability and reliability of drinking water supplies for San Diego and we should support incentives to increase its use.

Apr 20, 2010: The Voice continues to press its complaint with The unanswered golf course subsidy question: “The city knows the answers to those questions — it just isn’t sharing.”

Looking at the Recycled Water Cost Study draft report (the ‘confidential city study‘ that the article refers to), I see that it recommends the recycled water rate to significantly increase from the present $0.80 per HCF to $1.46 in 2010, $2.03 in 2011, and $2.66 in 2012. The report also states that the recycled rate increases are expected to eventually allow the potable water system to recover all contributions it is making to support the recycled system discount.


Posted in Environment, Indirect potable reuse, Water | Tagged: , | 2 Comments »

San Diego encourages development with corporate water discounts

Posted by George J Janczyn on March 30, 2010

Like newspapers facing economic facts, San Diego is facing water facts.

For years now, the news industry has searched for a way to profit (or survive) in the digital environment created by the Internet and still be able to produce high-quality journalism. The financial model that sustained print-only newspapers no longer works today.

Clay Shirky, a well-known analyst on the problem, worries that newspapers are irreplaceable for accountability journalism and hopes they’ll continue performing that function on the Internet but he doesn’t think they’ll ever be able to return to the old model they enjoyed. He doubts that fee-based news (“paywalls”) will work except possibly in certain specialized areas where information is jealously guarded, such as finance. Rather than continue searching for a way to replicate their economic model in a digital age, he says, newspapers need to adapt to the ways of the web by finding a new balance through “vast and varied experimentation” (see his insightful presentation “Internet Issues Facing Newspapers” at Harvard’s Kennedy School). Others have cited organizations such as ProPublica and Voice of San Diego as examples of worthwhile efforts to produce high-quality journalism in the new environment.

Similarly, our relationship with water is changing. Our old assumptions are being challenged. It is becoming more and more obvious that our supply of water has a definite limit in general and also that for whatever reason (e.g., climate change, Delta environmental issues), our supply of imported water could well be reduced in the future.

Certainly we’ve responded in many ways. We’ve negotiated agreements to buy additional water from farmers and others, we’ve increased voluntary conservation, we’re looking at possible new groundwater resources, we’re considering (sort of) using prices to influence water use, we’re recycling, we’re exploring Indirect Potable Reuse, we’re installing a desalination plant, we’re enlarging the San Vicente Dam. Despite these measures, as long as there is unrestrained growth in our demand for this finite resource we obviously can’t expect a good outcome. And growth is one thing we haven’t dealt with sufficiently in response to the situation.

San Diego’s pro-development position on growth has only softened somewhat. The San Diego Association of Governments (SANDAG) projects that the region will have 1.2 million additional residents, for a total population of 4.4 million by the year 2050.

In January 2010, SANDAG’s website had a Housing section listed on their sidebar, where they stated that “SANDAG is working to eliminate barriers to development…[which] may include complex development entitlement and permitting processes, construction defect litigation, and development standards that do not reflect the goal of providing more housing.”

Web page in Jan 2010. Note the Housing sidebar includes Funding and Incentives.

Their tone has changed somewhat now. That housing sidebar of their website is now incorporated in their Land Use and Regional Growth page, and the above quotation no longer appears. Instead, they say they’ll work to “manage our population growth, preserve our environment, and sustain our economic prosperity.”

Housing sidebar is now under Land Use along with Sustainable Communities and other like headings

And in a rare departure from its pro-development endeavors, SANDAG recently denied a permit for a proposed 2,632-unit housing development in the North County. Water availability was just one consideration for that decision, but we’ll need more actions like that in the future.

The City of San Diego has worked to increase its water independence and reduce consumption, although it still gives businesses special programs and discounts.

The Guaranteed Water For Industry Program enables some water customers to become “exempt” from potential mandatory water conservation measures adopted by the City. After certification, such firms are placed on a list of preferred customers who will not be forced to reduce their consumption of potable or reclaimed water during a drought (“water warning”) situation. It applies to all industrial firms located in an “Optimized Zone” which currently includes the communities of University, Mira Mesa, Scripps Miramar Ranch, and Miramar Ranch North.

* Provides a guaranteed supply of potable and reclaimed water for irrigation, cooling, research, product development, and production activities during drought conditions.

* Provides ongoing cost savings to businesses through discounted rates for reclaimed water usage (.80/HCF, currently a 50 percent discount).

There’s also a Business & Industry Incentive Program. In order to “improve the business climate of the city,” this program gives businesses a 40 percent reduction in water capacity fees and a 60 percent reduction in sewer capacity fees (Council Policy 900-12).

Both of these programs are ripe for reconsideration in view of the growth problems we’re facing.

April 16 update: Since publishing this story, I was told by a representative from the San Diego Water Department that their web pages contain incorrect information:

First, the Guaranteed Water for Industry Program no longer has any bearing on the price of reclaimed water. As things now stand, the discounted rate of $0.80/HCF applies to ALL buyers of reclaimed water. Here’s the updated flyer for the program.

Second, the fee reductions indicated in the Business & Industry Incentive Program were invalidated by a Supreme Court ruling and the City has not authorized any fee reductions under this program since 2007.

Third, the exemption from drought water conservation rules now extends to ALL users of reclaimed water–it is no longer a benefit of the program.

As author Robert Glennon observes “Our existing supplies are stretched to the limit, yet demographers expect the U.S. population to grow by 120 million by midcentury…To understand the depth of the water crisis, consider that more than thirty-five of the lower forty-eight states are fighting with their neighbors over water” (from Unquenchable: America’s Water Crisis and What To Do About It, Island Press, 2009).

In addressing its water future, San Diego has been doing almost everything that’s been thought of. However, its entire water pricing system could use a complete overhaul with an eye towards incentives to conserve; and, San Diego has to redouble its resolve in confronting powerful forces for growth and expansion, because given the size of our population, even significant restraints could take decades before there is a visible reduction in the growth rate. It’s good to see that SANDAG is possibly reducing its aggressive promotion of development, but that’s not enough.

Just as newspapers need to face the realities of the digital world, San Diego needs to adapt to the realities of water. In his presentation, Shirky draws a parallel with the control of ideas, saying the news media ultimately cannot succeed in “attempting to treat an infinite good as if it were a finite good.” With water, it’s the same thing in reverse with a twist: even though water is an infinite (recirculating) good, we should be (but haven’t been) treating it as a finite good. Shirky said news needs to find a good balance. With water, well, they say it always seeks its own level.

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