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CWA approves rate increases

Joe Naiman

Village News Reporter

The San Diego County Water Authority board approved SDCWA rates and charges for Calendar Year 2024.

A weighted board vote of 62.951% June 22 approved a rate increase, which on the average will increase the cost of supply purchased from the CWA by 9.5%.

CWA board members Jack Bebee of the Fallbrook Public Utility District, Tom Kennedy of the Rainbow Municipal Water District, Dan McMillan and Joel Scalzitti of the Helix Water District, Lindsay Leahy of the City of Oceanside, Neal Meyers of the Olivenhain Municipal Water District, Kyle Swanson of the Padre Dam Municipal Water District, Joy Lyndes of the San Dieguito Water District, Steve Castaneda of the South Bay Irrigation District, Gary Arant of the Valley Center Municipal Water District and Amy Reeh of the Yuima Municipal Water District cast the votes against the rate increase.

The board vote June 23 also allocated the pro-rata share of fixed charges to each CWA member agency. The 9.5% increase is an average charge for all 24 CWA member agencies, and due to pro-rata shares, the cost may be more or less for specific agencies. The Calendar Year 2024 rates include a 10.6% increase for untreated supply, 14.3% increase of the treatment surcharge and 10% increase in the Customer Service Charge, which is intended to recover costs that support the operations of the CWA. The CWA member agencies have the option of absorbing the rate increase or passing on the additional cost to customers.

The CWA’s rates are based on a melded rate, which melds the cost of water delivered from the Metropolitan Water District of Southern California (MWD), water purchased from the Imperial Irrigation District (IID) under the Quantification Settlement Agreement (QSA), and water produced by the Claude "Bud" Lewis Carlsbad Desalination Plant. The CWA also has transportation, storage and customer service charges along with fees and charges for fixed expenditures, which are incurred even when water use is reduced.

The CWA also incorporates debt coverage targets into its rate structure with a target debt coverage ratio, or ratio of cash available to debt obligation, of 1.5:1 for senior lien debt (debt secured by collateral in the event of a default) and 1.4:1 for overall debt.

MWD increased the cost of treated water by 3.9% and untreated water by 5.6%. The price of IID water is now tied to an inflation index and will increase by 4%. Electricity accounts for approximately 38% of desalinated water costs, so the San Diego Gas & Electric rate increase is significantly responsible for an 47% increase in the cost of desalinated water.

The CWA untreated water rate per acre-foot for municipal and industrial (M&I) customers will increase from $1,085 to $1,200. The M&I untreated rate was $909 in 2019, $925 during 2020, $940 for 2021 and $1,009 in 2022.

The melded CWA rate for treatment is based on the cost to purchase treated water from MWD, the cost of desalinated water from the Carlsbad plant and the cost to treat water at the Twin Oaks, Olivenhain and Levy treatment plants (the Levy plant is owned and operated by the Helix Water District, and the CWA purchases treated water from Helix). The treated water surcharge will increase from $350 to $400. That surcharge was $276 during 2019, $280 for 2020, and $295 in 2021 and $310 during 2022.

The per-acre untreated Special Agricultural Water Rate, which was $755 in 2020, $777 for 2021 and $799 in 2022, will be increased from $855 to $903. Treated water for SAWR customers will increase from $1,205 to $1,303 per acre-foot after being $1,035 in 2020, $1,072 during 2021 and $1,109 in 2022.

The CWA's transportation rate is a uniform rate set to recover capital, operating and maintenance costs of the CWA's aqueduct system. The $173 rate per acre-foot, which was the case for 2022 as well as for this year, will be $189 in 2024. The rate had been $132 in 2020 and $150 during 2021.

The Infrastructure Access Charge is used for fixed expenditures incurred even when water use is reduced. The IAC per meter equivalent, which had been $4.24 since 2021 after rising from $3.66 for 2020, will be $4.41 next year.

A meter under one inch has a 1 meter equivalent and the rates are multiplied by 1.6 for one-inch meters, by 3 for 1.5-inch meters, by 5.2 for two-inch meters, by 9.6 for three-inch meters and by larger factors for meters larger than three inches.

The Customer Service Charge is allocated among member agencies based on a three-year rolling average of all deliveries. The charge had been $25,600,000 from 2019 to 2022 but increased to $26,000,000 this year and will be $28,600,000 for 2024. The pro-rata shares will be $1,444,874 for the Rainbow Municipal Water District, $578,390 for the Fallbrook Public Utility District and $3,617 for Camp Pendleton.

The Storage Charge recovers costs related to emergency service programs and is allocated to member agencies based on a pro-rata share of non-agricultural deliveries using a three-year rolling average. The total charge was $65,000,000 from 2017 to 2020 and has been $60,000,000 since 2021. The overall charge will be $63,000,000 next year. Rainbow will pay $1,727,199, FPUD is responsible for $1,071,929 and the Camp Pendleton amount is $8,519.

In March 2015, the CWA approved a revised rate structure intended to avoid a situation where conservation resulting in a decrease in water usage leads to the need to increase rates. The CWA added a Supply Reliability Charge while allocating all non-commodity revenues to all rate and charge categories including treatment and applying the debt and equity payments for the Carlsbad desalination plant to the supply rate.

The Supply Reliability Charge is a fixed charge to recover a portion of the QSA and desalination plant costs and is set equal to the difference between the supply cost of desalination and the Imperial County purchases (including MWD's wheeling charge) and a like amount of water purchased at MWD's Tier 1 rate multiplied by 25%.

The charge is allocated to CWA member agencies on a pro-rata basis using a five-year rolling average of M&I deliveries. The charge, which had been $37,430,000 in 2020, $38,840,000 for 2021 and $39,340,000 during 2022, is currently $40,850,000 and will increase to $43,400,000 for 2024. The member agency amounts include $1,157,325 due from Rainbow, $746,541 charged to FPUD and $7,328 to be paid by Camp Pendleton.

The CWA also has a Standby Availability Charge of $10 per acre or $10 per parcel under one acre. That amount will not change.

MWD's Readiness to Serve Charge, which is set on a fiscal year basis and becomes effective July 1, involves credits for the standby charge and administrative costs. The CWA's share is allocated to member agencies based on a ten-year rolling average of demands.

The CWA's charge after standby and administrative credits was reduced from $12,909,485 during 2019-20 to $11,739,042 for 2020-21 and $10,553,506 in 2021-22, increased slightly to $10,556,052 for 2022-23, and will be $10,466,961 for 2023-24. The contributions include $447,670 by Rainbow, $240,977 from FPUD and $3,025 of Camp Pendleton payments.

MWD has a Capacity Charge which is allocated to CWA member agencies proportionately based on a five-year rolling average of flows during peak periods. The total charge to the CWA, which rose from $8,019,440 in 2020 to $9,153,850 for 2021 to $10,437,100 in 2022, was dropped to $7,668,040 for 2023 and will be $9,429,280 next year. The cost to Rainbow will be $411,389, FPUD’s share will be $217,091 and Camp Pendleton will provide $707.

The CWA also has a System Capacity Charge which is a one-time charge for new system connections and recovers the proportionate cost of the existing and planned system serving the new customers. The System Capacity Charge per meter equivalent, which increased from $5,301 in 2020 to $5,312 for 2021 new connections to $5,328 for 2022, is currently $5,700 and that will also be the amount next year.

A Water Treatment Capacity Charge which recovers a portion of the regional water treatment facility expenses but exempts City of Del Mar, City of Escondido and City of Poway customers who cannot benefit from that service will remain at $159 per meter equivalent after being $147 in 2020, $148 during 2021 and $149 in 2022.

The CWA Annexation Fee, which was $10,729 during 2020, $10,771 in 2021 and $10,801 for 2022, is now $11,156 and that amount will be unchanged for next year. The annexation fee does not include the CWA member agency and MWD annexation fees, nor does it include the Local Agency Formation Commission processing fee for the annexation.

 

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