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CWA approves SAWR extension

The San Diego County Water Authority board approved recommendations from a workgroup on the SDCWA’s Special Agricultural Water Rate (SAWR) program which will continue the transitional agricultural discount program through the end of 2012 while providing a revised program from 2013 through 2015 with a review of the program prior to the beginning of 2016.

The CWA board vote March 25 drew no opposition. Rainbow Municipal Water District representative Rua Petty, a professional farmer who utilizes an agricultural discount, recused himself and did not vote.

“I think this is a very fair and balanced resolution to the issue,” said Valley Center Municipal Water District general manager Gary Arant, who serves as Valley Center’s representative on the CWA board and was also on the workgroup.

The workgroup’s 18 general and program findings led to eight recommendations which were adopted by the CWA. The existing transitional SAWR will be continued for two additional years (terminating December 31, 2012) with the requirement that program customers take a minimum 13 percent cutback for that period regardless of the Metropolitan Water District of Southern California (MWD) cutback level for Municipal and Industrial (M&I) customers with at least a five percent differential between M&I and transitional SAWR cutbacks (currently SAWR customers have a 25 percent cutback and a 17 percent differential from M&I customers). The SAWR will be revised effective January 1, 2013, and SAWR customers will not pay storage charges but will continue to pay all fixed charges as well as all supply, treatment, and customer service rates. SAWR customers will be cut back at twice the rate of M&I customers in an Emergency Storage Program event. SAWR customers will receive no Carryover Storage Program supply during Stage 2 or Stage 3 of the Drought Management Plan, and if Stage 2 is implemented SAWR customers cannot leave the program for a minimum of three years or the duration of Stage 2, whichever is less. Eligibility for the SAWR program is limited

to commercial growers owning at least one acre of property. The maximum amount of water delivered under the SAWR program will not exceed 100,000 acre-feet annually. Prior to January 1, 2016, a comprehensive review of the SAWR program will be completed and the board will evaluate the program’s effectiveness in its determination whether to continue, revise, or terminate the program. CWA staff will meet with agricultural industry representatives and agricultural member agencies within 12 months and will meet annually thereafter to identify other water management or conservation programs which can reduce agricultural water demand.

“We applaud the workgroup’s recommendation,” said San Diego County Farm Bureau executive director Eric Larson. “It’s exactly the kind of things we need to do,” said San Dieguito Water District board member Jim Bond, who is San Dieguito’s CWA board representative. “The agreement is equitable. It’s the right thing to do.”

In 1994 MWD implemented the Interim Agricultural Water Program (IAWP). The 12 participating MWD agencies had a maximum annual cap of 155,190 acre-feet, although agencies could use less than their allocation. The San Diego County Water Authority was allocated 100,459 acre-feet. During Fiscal Year 2005-06 the 17 participating CWA member agencies utilized 84,993 acre-feet of IAWP supplies.

While the IAWP provides surplus MWD supplies to agricultural customers at a discounted rate, the IAWP conditions allow for a reduction of up to 30 percent prior to implementing any mandatory reductions to M&I customers. MWD implemented such a reduction at the beginning of 2008 (an agricultural property may choose to pay the M&I rates and not be subject to the IAWP cuts, although when the reduction was implemented a December 31, 2006, cutoff obligation date was stipulated).

In October 2008, the MWD board approved changes to phase out the IAWP over a four-year period. The phase-out allows customers to opt out, and be subject to M&I rates, at the beginning of any calendar year during the transition period from 2009 through 2012. The CWA board’s response later that month was to approve a two-year transitional program for customers opting out of the IAWP program. That program provides the same discounts from storage and supply costs as continuing IAWP customers; customers choosing to participate in the transitional program are subject to the same allocation of water from the Emergency Storage Project and the future Carryover Storage Project as continuing IAWP customers and are also subject to MWD regional cutback levels if the CWA’s supplies are cut back.

The CWA’s transitional program is only available to customers who had been in the IAWP and opted out. Customers may remain in the IAWP throughout the phase-out period and be eligible for all CWA discounts.

Because agricultural customers can be cut back in a drought, they are not subject to certain CWA storage or supplemental supply costs. The CWA exempts SAWR customers from the melded supply and treatment charges from Imperial County water and from the CWA member agency’s proportional share of the fixed storage charge.

In December 2008, the CWA board adopted an ordinance setting transitional SAWR supply rates at $412 per acre-foot for untreated water and $580 per acre-foot for treated water for Calendar Year 2009. During that calendar year CWA member agencies paid M&I supply rates per acre foot of $463 for untreated water and $631 for treated supplies while the IAWP rate per acre-foot was $322 for untreated water and $490 for treated water.

Including transportation, storage, and other costs, the full M&I rates for 2009 per acre-foot averaged $598 for untreated water and $766 for treated water while the full IAWP rates averaged $413 for untreated water and $556 for treated water.

The CWA’s October 2008 action also formed a workgroup which was directed to return to the CWA board by the end of Calendar Year 2009 with options for programs beyond the transitional period. The complexity of the issues surrounding the agricultural discount programs caused recommendations to be delayed until March 2010. On December 17, 2009, the CWA board approved an update to the 2009 and 2010 Transitional Special Agricultural Water Rate (SAWR) Program Report, and that day the CWA’s Administrative and Finance Committee heard an information item on the status of the workgroup’s efforts.

The workgroup was chaired by Ken Williams, who also chairs the Administrative and Finance Committee and is one of the City of San Diego representatives on the CWA board. Its ten meetings discussed the group’s purpose and work plan, reviewed details of existing agricultural discount programs, received input from the agricultural community, established overriding policies and goals associated with any potential program, reviewed potential impacts to the reliability benefit for commercial and industrial customers during an emergency shortage, and discussed the cost and benefit to M&I customers associated with the supply component of the agricultural discount program. Two additional meetings with Larson, California Avocado Commission president Tom Bellamore, and California Avocado Commission board member Charlie Wolk allowed for feedback on the initial draft recommendations.

The overriding policies and principles included that any potential program must benefit M&I customers as well as agricultural customers, that any program will be stable and predictable for farmers, that the program does not need to be linked to MWD cutbacks or rates, and that program simplicity is desirable.

The supply discount did not meet the criteria, as the cost of dry-year transfers would cause an increase in costs for M&I customers. “We understand the workgroup’s rationale in coming to that finding,” Larson said.

Because the lower Emergency Storage Program and Carryover Storage Program levels provide increased reliability for M&I customers in an emergency or drought event and the rate impact from exempting storage charges was less than one percent of the total M&I rate, the revisions met the policies and principles.

“I believe that this is a good balance for our organization as well as for the community,” said Fern Steiner, who is one of the City of San Diego’s representatives on the CWA board.

Wolk noted that water expenses comprise 70 percent of the production cost for avocados. “We appreciate that the workgroup and hopefully the committee and the board will give us an opportunity to work together to examine the value that agriculture brings to the region,” he said.

“We grow a phenomenal product. It is healthy food for all of us,” said Bob Lucy, the president of Del Rey Avocado. “Programs such as this will keep us going.”

Water costs also impact flower growers. “It causes our product to be non-competitive,” said Janet Kister.

“We want to keep these plants affordable for the consumers,” Kister said. “We depend on you for an affordable source of water.”

Hershell Price, who is Del Mar’s representative on the CWA board, agreed that local agricultural costs need to ensure competitiveness. “You can only charge so much for avocados before you’ve got all those imports coming in,” he said.

“We want to grow our products here,” Lucy said. “Anything we can do in the future, agriculture’s willing to help.”

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