County Water Authority proposes lower rate increases for 2019


A June 28 San Diego County Water Authority hearing will determine the SDCWA’s rates and charges for 2019, but the SDCWA is likely to have a lower rate increase than in past years.

A June 28 San Diego County Water Authority hearing will determine the SDCWA’s rates and charges for 2019, but the SDCWA is likely to have a lower rate increase than in past years.

A May 24, CWA board vote set the June 28 hearing date for the proposed rates and charges which included a 2.9 percent increase for untreated water supply and an increase of 0.9 percent for treated water. The cost for member agencies to purchase untreated water including both supply price and other charges would increase from $1,303 to $1,341 per acre-foot while the price of treated water would rise from $1,603 to $1,617 per acre-foot. 

The June 28 action will also allocate the pro-rata shares of total fixed charges to each CWA member agency.

One of the factors in the lower cost increase for treated water is an anticipated 28 percent increase in water treated through the CWA’s Twin Oaks Valley Water Treatment Plant which reduces the cost of treated water for the CWA which otherwise would need to purchase treated water from the Metropolitan Water District of Southern California. 

A CWA lawsuit against MWD has resulted in a reduction of transportation costs MWD charges the CWA to transport Imperial County water through MWD facilities, and the Quantification Settlement Agreement (QSA), which provides the CWA with Imperial County water, also includes increased supply for 2019. 

Additionally, the CWA’s Rate Stabilization Fund has a maximum funding level of 3.5 years of wet weather so the CWA will withdraw $18.4 million from that fund.

The use of Rate Stabilization Fund reserves translates into a rate reduction of $49 per acre-foot. 

“We are pretty much at the maximum and we needed to draw some amount,” said CWA director of finance Lisa Marie Harris.

The Rate Stabilization Fund allows the CWA to withstand a 25 percent reduction in water sales and has a target reserve of 2.5 consecutive wet years (although rain is seasonal the calculation of half a year applies to the multiplication) along with the maximum reserve level of 3.5 years. 

The proposed rate changes would also modify the policy to base the RSF on withstanding a 15 percent reduction in water sales; water efficiency programs have resulted in a 47 percent decline in per capita water usage between 1990 and 2017 so the CWA is less susceptible to significant demand reduction in wet weather years. 

The reduction would be phased to a 20 percent reduction for Fiscal Years 2019 and 2020 and a 15 percent reduction beginning in Fiscal Year 2021.

The CWA’s rates are based on a melded rate which combines the cost of water delivered from MWD, water purchased from the Imperial Irrigation District under the 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.  The QSA included scheduled rate increases over the multi-decade agreement period; the price of Imperial Irrigation District water is now tied to an inflation index.

MWD’s April 10 meeting approved rate increases of 3.4 percent for treated water and 5.2 percent for untreated supply.  MWD also has a Readiness to Serve Charge, which will decrease by 5.0 percent, and a Capacity Charge, which will be reduced by 1.1 percent. 

MWD’s “wheeling” charge to transport the QSA water through the MWD aqueduct system will decrease by 6.8 percent due to the lawsuit settlement.

The QSA increases the CWA’s purchases of Imperial County water over the long-term agreement and supply from the QSA will increase from 208,700 acre-feet for 2018 to 238,700 acre-feet in 2019.

The CWA’s rate per acre-foot of untreated water for municipal and industrial (M&I) customers will increase from $894 to $909. 

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, and $855 during 2017.