The San Diego County Water Authority approved a water rate increase for Calendar Year 2020 purchases by CWA member agencies.
The new rates approved by the SDCWA board June 27 will increase the cost per acre-foot on a countywide basis from $1,617 to $1,686 for treated water and from $1,341 to $1,406 for untreated supply.
The increases equates to 4.3 percent for treated water and 4.8 percent for untreated water. The new rates also include an 18.3 percent increase in the Infrastructure Access Charge which is used for CWA fixed expenditures incurred even when water use is reduced. The CWA’s member agencies have the option of absorbing the rate increases or passing on the additional cost to customers.
The CWA’s rates are based on a melded rate which melds the cost of water delivered from the Metropolitan Water District of Southern California (MWD), water purchased from the Imperial Irrigation District (IID) under the Quanitification Settlement Agreement (QSA), and water produced by the Claude “Bud” Lewis Carlsbad Desalination Plant.
The CWA also has transportation, storage, and customer service charges along with fees and charges for fixed expenditures which are incurred even when water use is reduced. Debt coverage targets are also incorporated into the CWA rate structure; the CWA has a target debt coverage ratio, or ratio of cash available to debt obligation, of 1.5:1 for senior lien debt (debt secured by collateral in the event of default) and 1.4:1 for overall debt.
MWD increased the cost of treated water by 2.7 percent and its untreated water by 3.3 percent. MWD costs also include a “wheeling” charge to transport the QSA water through the MWD aqueduct system, which will increase by 6.4 percent.
The QSA included scheduled rate increases over the multi-decade agreement period; the price of IID water is now tied to an inflation index. IID deliveries will increase from 160,000 acre-feet during Calendar Year 2019 to 192,500 acre-feet for Calendar Year 2020.
The desire to avoid steep increases has also led to raising rates over a multi-year period to cover a specific cost, and the CWA also has a rate stabilization fund which allows increases to be spread over multiple years. The CWA will draw $38 million from its rate stabilization fund for Fiscal Year 2019-20, which will reduce next year’s rates by approximately $95 per acre-foot, and will also draw 10,000 acre-feet of operational storage.
The CWA’s rate per acre-foot of untreated water for municipal and industrial (M&I) customers will increase from $909 to $925.
The untreated water rate was $365 during 2007, $390 for 2008, $463 in 2009, $532 for 2010, $597 during 2011, $638 for 2012, $714 in 2013, $732 during 2014, $764 for 2015, $780 in 2016, $855 during 2017, and $894 in 2018.
The CWA also utilizes a melded rate for treatment based on the cost to purchase treated water from MWD, the cost of desalinated water from the Carlsbad desalination plant, and the cost to treat water at the Twin Oaks, Olivenhain, and Levy treatment plants (the Levy plant is owned and operated by the Helix Water District, and the CWA purchases treated water from Helix). The surcharge for treated water was increased from $276 to $280; that surcharge was $164 in 2008, $168 during 2009, $215 in 2010 and 2011, $234 during 2012, $256 in 2013, $274 for 2014, $278 in 2015, $280 during 2016, $290 in 2017, and $300 for 2018.
(An increase in treated production at the Twin Oaks facility from 51,800 to 66,400 acre-feet allowed for the reduction from 2018 to 2019 since the cost of treated water from Twin Oaks is less than the cost to purchase treated water from MWD.)
The Special Agricultural Water Rate for untreated water which was increased from $731 to $755 per acre-foot was $412 in 2009, $484 for 2010, $527 during 2011, $560 for 2012, $593 in 2013 and 2014, $582 for 2015, and $594 during 2016, $666 for 2017, and $695 for 2018. The rate per acre-foot for SAWR treated water was $580 in 2009, $699 during 2010, $742 in 2011, $794 for 2012, $849 in 2013, $867 for 2014, $860 during 2015, $874 in 2016, $956 for 2017, and $995 in 2018 and will increase from $1,007 for 2019 to $1,035 in 2020.
The CWA’s transportation rate is a uniform rate set to recover capital, operating, and maintenance costs of the CWA’s aqueduct system and will increase from $120 to $132 per acre-foot.
The rate per acre-foot was $64 in 2009, $67 for 2010, $75 during 2011, $85 in 2012, $93 during 2013, $97 for 2014, $101 in 2015, $105 for 2016, $110 during 2017, and $115 in 2018.
The Infrastructure Access Charge rate per meter equivalent was $3.01 both in 2018 and for 2019 and will increase to $3.66 for 2020. The IAC per meter equivalent was $1.90 during 2009, $2.02 for 2010, $2.49 in 2011, $2.60 during 2012, $2.65 in 2013, $2.68 for 2014, $2.76 in both 2015 and 2016, and $2.87 during 2017. A meter under one inch has a 1.0 meter equivalent; the rates are multiplied by 1.6 for one-inch meters, by 3.0 for 1.5-inch meters, by 5.2 for two-inch meters, by 9.6 for three-inch meters, and by larger factors for meters larger than three inches.
The Customer Service Charge is intended to recover costs which support the operations of the CWA and is allocated among member agencies based on a three-year rolling average of all deliveries.
The charge was $16,000,000 in 2009, $18,000,000 during 2010, $23,200,000 for 2011, and $26,400,000 from 2012 to 2018 before being reduced to $25,600,000 in 2019. The 2020 total charge will also be $25,600,000. The agency contributions will include $1,701,986 from the Otay Water District, $1,574,270 paid by the Helix Water District, $586,333 assessed to the Padre Dam Municipal Water District, and $161,803 provided by the Lakeside Water District.
The Storage Charge recovers costs related to emergency storage programs and is allocated based on a pro-rata share of non-agricultural deliveries. The $65,000,000 total charge for 2020 was also the total amount for 2017, 2018, and 2019.
The total Storage Charge was $22,200,000 in 2008, $23,000,000 during 2009, $34,000,000 in 2010, $44,300,000 for 2011, $54,000,000 during 2012, $60,200,000 in 2013, and $63,200,000 from 2014 through 2016. In 2020 Otay will contribute $4,697,239, Helix is responsible for $4,344,760, Padre Dam will pay $1,587,589, and the Lakeside share is $446,554.
In March 2015 the CWA approved a revised rate structure intended to avoid a situation where conservation resulting in a decrease in water usage leads to the need to increase rates.
The CWA added a Supply Reliability Charge while allocating non-commodity revenues to all rate and charge categories including treatment and applying the debt and equity payments for the Carlsbad seawater desalination plant to the supply rate.
The Supply Reliability Charge utilizes a fixed charge to recover a portion of the QSA and Carlsbad desalination plant costs. The charge is set equal to the difference between the supply cost of desalination and the Imperial County purchases (including MWD’s wheeling charge) and a like amount of water purchased at MWD’s Tier 1 rate multiplied by 25 percent.
The charge is allocated to CWA member agencies on a pro-rata basis utilizing a five-year rolling average of M&I deliveries for each member agency.
The initial Supply Reliability Charge for 2016 was $26,000,000, the 2017 amount was $24,800,000, the 2018 total was $28,600,000, the 2019 total charge is $30,200,000, and the 2020 amount will be $37,430,000. Otay will account for $2,642,500 of the payments, Helix will provide $2,567,448, Padre Dam’s assessment is $896,531, and Lakeside will pay $261,513.
The CWA also has a Standby Availability Charge of $10 per acre or $10 per parcel under one acre; that amount will not change.
MWD’s Readiness to Serve Charge, which is set on a fiscal year basis and becomes effective July 1, involves credits for the standby charge and administrative costs.
The CWA’s share is allocated to member agencies based on a ten-year rolling average of demands. The CWA’s charge after standby and administrative credits was reduced from $22,406,380 in 2015-16 to $18,623,577 during 2016-17 to $16,291,858 for 2017-18 to $14,870,829 in 2018-19 and will be $12,909,485 for 2019-20. The 2019-20 payments will include $807,806 by Helix, $791,452 from Otay, $97,273 assessed to Padre Dam, and $18,043 charged to Lakeside.
The MWD Capacity Charge is allocated to CWA member agencies proportionally based on a five-year rolling average of flows during peak periods. The total charge to the CWA decreased from $12,406,380 for 2016 to $9,105,600 in 2017, increased to $9,902,340 for 2018, was dropped to $8,262,020 during 2019, and will be $8,019,440 in 2020.
Otay will contribute $586,571, Helix will fund $498,862, Padre Dam will provide $222,218, and Lakeside will pay $94,044.
The CWA also has a System Capacity Charge which is a one-time charge for new system connections and recovers the proportionate cost of the existing and planned system serving the new customers.
The System Capacity Charge which increased from $4,840 per meter equivalent in 2016 to $5,029 for 2017 to $5,099 during 2018 to $5,257 for 2019 will be $5,301 per meter equivalent in 2020. A Water Treatment Capacity Charge which recovers a portion of the regional water treatment facility expenses but exempts the City of Del Mar, City of Escondido, and City of Poway customers who cannot benefit from that service will increase from $146 to $147 per meter equivalent and was $123 during 2016, $128 for 2017, and $141 in 2018.
In 2017 the CWA board approved a change in the annexation fee structure from a processing fee and a per-acre annexation fee to a flat annexation application fee after a cost analysis determined that parcel size had little impact on the CWA’s staff time.
The annexation application fee which was $10,340 in 2018 and $10,681 during 2019 will be $10,749 for 2020. That fee does not include the CWA member agency and MWD annexation fees, nor does it include the Local Agency Formation Commission processing fee.
