CWA modifies PSAWR calculation methodology

Joe Naiman

Village News Reporter

The San Diego County Water Authority has modified its Permanent Special Agricultural Water Rate calculation methodology.

The Thursday, Oct. 27, SDCWA board meeting included approval of the modification which allows participating agencies the ability to prescribe how their local supply is allocated under the PSAWR program. If the local agency chooses to do so, its local water supply could be excluded from the calculation used to determine the amount of CWA water which is eligible for the PSAWR water rate. The modification will take effect Jan. 1.

In 1994, the Metropolitan Water District of Southern California implemented the Interim Agricultural Water Program which provided surplus supplies to agricultural customers at a discounted rate with the condition of cutbacks in a drought of up to 30 percent before implementing any mandatory reductions to municipal and industrial customers.

An agricultural user could choose to pay M&I rates and not be subject to the cutbacks. In 2008, the MWD board voted to phase out the IAWP over a four-year period, and in December 2008, the CWA board created the Transitional Special Agricultural Water Rate program for farmers who chose to opt out of the IAWP. The TSAWR was limited to farmers who had been in the IAWP before 2008, and TSAWR customers were not eligible to receive certain water from CWA augmented supply programs.

The initial TSAWR was for a two-year period, although the CWA board approved four extensions with the most recent of those extending the TSAWR to the end of 2020. A unanimous CWA board vote in November 2019 approved making the SAWR permanent, although that approval was for the framework only and did not include any criteria, and that November 2019 vote also called for an evaluation of the program every five years to review current and forecasted demands and supplies.

The plan was for the CWA to develop and finalize new program guidelines during the first half of calendar year 2020 and to initiate new sign-ups during the second half of 2020. The specific rates will be part of the CWA’s annual budget process and will reflect cost of service standards.

In September 2020, the CWA board established the Permanent Special Agricultural Water Rate program effective Jan. 1, 2021, and set eligibility criteria. Existing TSAWR customers were granted eligibility to participate in the PSAWR program on a temporary basis through June 30, 2021, which gave CWA member agencies time to verify compliance with the new program’s eligibility requirements.

The PSAWR eligibility requirements include that customers grow or raise for commercial purposes products of an agricultural, horticultural or floricultural nature. Member agencies are required to confirm that PSAWR customers are on one of four lists: the Regional Water Quality Control Board General Agricultural Orders Enrollment List, the county’s Growers List, the county’s Active Certified Producers List, or the county’s Organic Producers List.

The IAWP and TSAWR had minimum acreage requirements, but the PSAWR does not stipulate a minimum acreage. Although the TSAWR was limited to former IAWP customers, farmers who were not in the TSAWR are eligible for the PSAWR. Participation in the PSAWR is voluntary.

Initially, the PSAWR volume calculation accounted for local supplies used by PSAWR customers to avoid assessing the CWA’s agricultural rate on lower-priced agency local supplies. Local supply, such as groundwater or storage, often costs less than acquiring CWA water at the agricultural rate, but some CWA member agencies are pursuing brackish groundwater desalination or groundwater recharge programs which when capital expenses are included cost more than PSAWR deliveries. Those member agencies cannot recover the full cost of these local supplies, if they are designated as PSAWR deliveries and subject to the PSAWR rate pass-through.

On April 19, the CWA received a letter signed by the representatives of the Fallbrook Public Utility District and the city of Oceanside to request an administrative change to the PSAWR calculation methodology so that member agencies could exclude their local supplies from the PSAWR volume calculation. CWA staff met with representatives from FPUD, Oceanside and the city of Escondido to discuss the proposal.

The member agencies were informed that the proposed modification could not be made administratively as requested due to several reasons, including the impact of the proposed modification on other member agencies and the potential impact the change could have on member agencies’ cost of service process and the requirements of Proposition 218.

In November 1996, the state’s voters passed Proposition 218, which requires a public vote on benefit assessments. Proposition 218 exempts water and sewer rate increases if a cost of service study shows a relationship between the rates and the agency’s cost to provide water or sewer service.

The CWA’s Financial Strategy Work Group discussed the proposed modification Aug. 26 and Sept. 1. The Sept. 1 meeting included a unanimous recommendation for the full CWA board to approve the bifurcated local supply adjustment.

CWA staff anticipates reduced revenue of approximately $500,000 for calendar year 2023 due to the adjustment. Any revenue losses would be funded through the CWA’s Rate Stabilization Fund.

The PSAWR program rules only apply to CWA deliveries sold at the PSAWR rate. Local supplies are not subject to PSAWR program rules.

Joe Naiman can be reached by email at [email protected].