CWA increases incentive to use reclaimed water

The San Diego County Water Authority board voted November 30 to increase the Reclaimed Water Development Fund incentive rate credited to member agencies.

The maximum incentive level for eligible projects will increase from the current $147 per acre foot to $200 per acre foot. The board action also made brackish groundwater recovery projects eligible for the incentive credit and changed the name of the program to the Local Water Supply Development Program to reflect the desire to include brackish water as well as reclaimed water.

The County Water Authority’s planning process includes dependence upon local supplies, and since 1991 the CWA has provided Reclaimed Water Development Fund incentives. In September 2005 an interim measure raised the maximum incentive level per acre foot from $100 to $147.

Attempts to increase use of recycled water have focused on identifying obstacles as well as marketing potentials. The CWA created a Member Agency Local Projects Ad Hoc Committee which identified policies, programs, and strategies to increase the amount of local recycled water and brackish groundwater used and produced in San Diego County. Much of the discussion concerned the effectiveness of the $100 per acre foot level, since a slower than anticipated market development has resulted in longer payback periods for capital investment. Other challenges identified include increasingly more stringent regulatory criteria and annual inspection requirements, uncertainty over Metropolitan Water District incentive funding through MWD’s Local Resources Program, and lack of a clear strategy to fund existing customer retrofits.

The increase to $200 per acre foot was based on various possible costs. The $147 rate was derived from calculating a three percent annual inflation rate from the $100 base cost through a period between Fiscal Years 1993 and 2005. An incentive of $193 would reflect the difference between predicted seawater desalination and Metropolitan Water District costs, which the avoided cost of capacity method equates to $215 per acre foot. Other calculations based on incremental capacity costs created options at $291 and $172 per acre foot. The $200 figure was deemed to reflect both the regional benefit the CWA derived from the project and the financial incentive needed to encourage local agencies.

The Reclaimed Water Development Fund criteria was developed for recycling projects and might not be applicable to future groundwater projects, so CWA staff will return to the board in early 2007 with proposed groundwater guidelines which will be considered for adoption.