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CWA approves rate redesign recommendation

San Diego County Water Authority rates for calendar year 2025 will reflect additional fixed revenue for the SDCWA

A CWA board vote Thursday, Feb. 22, approved the recommendation of the CWA’s Finance Planning Workgroup. The calendar year 2025 changes include apportioning 40% of the transportation charge as a Transportation Fixed Rate allocated to member agencies by a seven-year rolling average with the current volume-based Transportation Rate designed to recover the remaining 60% of the forecasted annual revenue requirement.

The CWA currently allocates its Customer Service Charge, Storage Charge and Supply Reliability Charge based on rolling averages, and all of those rolling averages will be for a seven-year period.

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, water purchased from the Imperial Irrigation District under the Quantification Settlement Agreement 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, which is debt secured by collateral in the event of a default, and 1.4:1 for overall debt.

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 CWA’s transportation rate is a uniform rate set to recover capital, operating and maintenance costs of the CWA's aqueduct system. The Infrastructure Access Charge is used for fixed expenditures incurred even when water use is reduced.

The Customer Service Charge is allocated among member agencies based currently on a three-year rolling average of all deliveries. 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. 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 municipal and industrial deliveries. The CWA also has a Standby Availability Charge of $10 per acre or $10 per parcel under one acre.

A combination of conservation and wet years has decreased CWA sales, and both the Finance Planning Workgroup and the Member Agency Rate Workgroup held meetings before unanimously supporting the rate redesign proposal. The Customer Service Charge and the Storage Charge will be changed from a three-year average to a seven-year average and the Supply Reliability Charge will change from a five-year average to a seven-year average. The treatment and supply rates will not change.

The actual 2025 rates will be discussed at the CWA’s meeting Thursday, May 23, although the only action which will be taken on that date will be to set a hearing date for Thursday, June 27, to adopt the rates.

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

Author Bio

Joe Naiman, Writer

Joe Naiman has been writing for the Village News since 2001


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