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FPUD and RMWD applications to change water suppliers head to LAFCO this fall

Water Authority Acknowledges it Would Realize $40 Million Savings if Approved

 

Last updated 9/20/2022 at 10:03am



FALLBROOK – The San Diego Local Agency Formation Commission is set to begin formal consideration this fall of applications by the Fallbrook Public Utility District and Rainbow Municipal Water District to change water suppliers.

After enduring skyrocketing water cost increases over the past decade from the San Diego County Water Authority, Fallbrook and Rainbow are seeking to part ways with the Authority and begin purchasing their water from the Eastern Municipal Water District. The switch is expected to save Fallbrook and Rainbow ratepayers approximately $7.6 million a year, according to an independent analysis conducted for LAFCO.

LAFCO is the agency charged with overseeing boundary changes of cities and special districts, including water districts in San Diego County.

In August, during a meeting of an ad hoc committee that was established by LAFCO to review the applications, LAFCO representative Adam Wilson told committee members that the full commission will consider the applications by the end of the year. He said it could happen as early as November.

Also at the meeting, the Authority acknowledged that it would save upwards of $40 million if Fallbrook and Rainbow leave because it would no longer need to build long-planned pump stations in each of the two communities.

“There’s three pump stations,” said Sandra Kerl, the Authority’s general manager. “One is going forward because it’s needed for Valley Center and Yuima. The other two are strictly for Fallbrook and Rainbow, and if they leave (the pump stations) are absolutely unusable assets.”

The acknowledgement is important because a consultant hired by LAFCO focused on the reduced revenue to the Authority from Fallbrook and Rainbow ratepayers. But he did not identify the savings realized by the Authority. The analysis did not take into account the $40 million savings that the Authority will realize by not having to build the pump stations in Fallbrook and Rainbow.

“We understand that there will be a financial impact to the Authority if we change water suppliers,” said Jack Bebee, general manager of the Fallbrook district. “However, the Water Authority will save a significant amount of money if we leave because they won’t have to proceed with the planned pump stations. In addition to these savings, the Water Authority has fortunately structured some of its more expensive water supply contracts in a way they could make water transfers to fully offset the impact of reduced revenue from Fallbrook and Rainbow ratepayers. It is up to the Water Authority board if they want to take additional measures to fully offset the costs given their overall supply commitments will be reduced without Fallbrook and Rainbow.”

“Before making a decision, it’s important that LAFCO commissioners see the entire picture,” said Tom Kennedy, general manager of the Rainbow district. “While there will be an impact to the Authority, albeit rather minimal from our perspective, they will immediately save $40 million if our applications be approved.”

The rising cost of water has long been a hot topic in San Diego County.

A study conducted last year by statista.com concluded that San Diego’s water rates are among the highest in the nation. Further, a 2017 report by the American Water Works Association found that San Diego area households pay more than twice the national average for water.

In June, the Authority raised water costs on Fallbrook and Rainbow by another 8% – more than any of the Authority’s other 22 water districts. And, according to the Authority’s recently adopted Long-Range Financing Plan, water costs could jump 50% over the next five years.

If LAFCO approves the applications, then the voters of Fallbrook and Rainbow will have the final say in an election that will likely be held sometime next year.

 

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