[Water_news] 1. DWR'S CALIFORNIA WATER NEWS - Top Item for 4/06/09

Department of Water Resources

California Water News

A daily compilation for DWR personnel of significant news articles and comment

 

April 6, 2009

 

1.   Top Item–

 

New creed on water: Use less, pay more

The San Diego Union Tribune – 4/4/09

By Mike Lee

 

If you think mandatory water rationing is painful, wait until you see your water bill in several months.

 

The Metropolitan Water District, the main supplier for Southern California, is marching toward rate increases of about 40 percent over two years – the largest spike since the early 1990s. Its higher prices could show up as early as September.

But that's not all.

 

Some local water districts had planned to boost rates to pay for expenses such as maintaining their own pumps and pipes, so they will add their increases to Metropolitan's. And districts countywide are drafting stiff penalties or fees to encourage water conservation amid California's drought.

 

“Stunning, isn't it?” said Mark Watton, general manager of the Otay Water District in Spring Valley.

 

It could feel like a punch in the gut for recession-weary residents, who will have to pay much more for water and use much less.

 

“It's not easy to swallow that pill,” said Kelly Sakoi, a pharmacist in Rancho Peñasquitos. “There are a lot of people out there who can't afford it.”

 

Her water provider – the city of San Diego – already charges one of the highest rates among major utilities in the nation, a recent survey shows.

 

Metropolitan is expected to finalize its rate structure April 14. The agency's directors are set to adopt a water-rationing plan and set higher prices for Southern California. That will prompt new rates across San Diego County as local water districts pass along the rising costs.

 

The steep rate increases are meant to help Metropolitan cover its fixed costs during times when it sells less water – and thus gets less revenue.

 

Regardless of how much water Metropolitan gets from the State Water Project, it still has to pay $310 million in fiscal 2010 for its share of the water storage and delivery system. The agency also spends hundreds of millions of dollars annually on debt payments, power, water treatment and other items.

 

Such challenges arise whenever water suppliers are forced to limit sales but still have to finance their operations and buy water at escalating prices. During the early 1990s – the tail end of California's last major drought – Metropolitan boosted rates between 10 percent and 25 percent for three straight years.

 

In recent days, Metropolitan officials have considered several options that mainly differ on how to split the increase from year to year. One scenario calls for a 33.9 percent rise in wholesale water costs in 2010, followed by a 5.4 percent jump in 2011. Another proposal would impose a 19.7 percent increase in September and a 21.5 percent rise in 2011.

 

“They are both bad,” said Jim Barrett, San Diego city's water chief and a Metropolitan board member. “I don't think anybody is happy about where we find ourselves.”

 

San Diego, by far the county's largest water agency, has raised rates at least five times since mid-2007 and has approved more increases that will take effect in three months and again in July 2010. After factoring in Metropolitan's plan, many residents will pay at least 70 percent more per gallon than they did in early 2007.

 

Each water district in San Diego County has its own rate formula, based on factors such as their water sources and construction projects. Some agencies'officials said a 40 percent Metropolitan jump would translate to a 20 percent to 30 percent rate boost for their customers; others said it's too soon to speculate.

 

Customers' bills won't necessarily rise as much as Metropolitan's pricing because water is only one component of the overall bill, which also covers local infrastructure, operations and other expenses.

 

In anticipation of Metropolitan's next move, leaders of the Vallecitos Water District in San Marcos are looking at phasing in average rate increases of 17.5 percent and 9.5 percent over two years. The agency also is contemplating punitive drought rates for water hogs.

 

Officials there and at other water agencies agree that customers shouldn't expect rate rollbacks when the drought ends. If some costs decrease, they likely will be replaced by the expense of improving California's water reliability through building new canals, dams, desalination plants or other means.

 

“This water pricing isn't temporary,” said Watton at Otay.

 

If Metropolitan's supplies remain tight, it will reduce deliveries beginning in July. In turn, local agencies will order residents and businesses to conserve by 10 percent to 20 percent.

 

California's water shortages stem from two problems: years of below-average snowfall across the Southwest and restrictions on pumping water through the Sacramento-San Joaquin River Delta to protect imperiled fish.

 

The crisis is pushing up prices from north to south, said Laura King Moon, assistant general manager of State Water Contractors, a nonprofit group that represents major water buyers including Metropolitan.

 

“Right now, you are seeing the first bump of significant rate increases, and you are seeing large portions of the San Joaquin Valley laying off farmworkers,” Moon said. “That alone is painful, but it's not the end.”

 

Concern is growing among business leaders, said Patti Krebs, executive director of the Industrial Environmental Association, a group of manufacturing companies in San Diego County. She said water and power are top expenses for her members.

 

At some point, Krebs said, higher water bills “will make their operating costs increase so greatly that they will have to look at moving their lines to other places and not expanding here.”

 

But businesses and residents who move out of state might be in for a surprise.

 

“The general trend among U.S. drinking-water suppliers is double-digit increases annually in their rates,” said Amy Vickers, a water consultant in Amherst, Mass. She links the trend to higher costs for chemicals used to treat water, electricity and other factors.

 

“People may be frustrated that they are conserving, but the rates are going up,” Vickers said. “They really need to think this is a fair warning that if they don't conserve, they are really going to pay through the nose for other sources of water such as desalination plants.”#

 

http://www3.signonsandiego.com/stories/2009/apr/04/1n4rates01323-htk/?metro

 

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