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CWA sets June 27 hearing for rate increase

A June 27 hearing will determine the actual San Diego County Water Authority rate increase for Calendar Year 2025, and the May 23 SDCWA board meeting included discussion about rate increase alternatives.

A May 23 CWA board action set the June 27 hearing date which will likely increase rates 18% or 19%. CWA staff developed 10 alternatives with various levels of financial risk and infrastructure risk. Two of those alternatives are still under consideration, and many CWA board members are hoping that additional reductions in CWA expenses will create lower rates.

Alternative 8, which is a low-risk capital improvement program, would have a 19% rate increase. Alternative 9, which has a moderate capital improvement risk, involves an increase of 18%.

“No one is happy with the rates,” said Yuima Municipal Water District general manager Amy Reeh, who is that district’s representative on the CWA board.

The CWA has fixed costs which are incurred even when water use is reduced. Consumer efficiency reduces CWA water sales to member agencies, and some agencies have also developed local supply which has reduced the amount of water those agencies need to purchase from the CWA.

Wet years also reduce the purchase of CWA water; water sales for Calendar Year 2024 are approximately 36% lower than budgeted.

“Those drops in demand were predicted in this board room,” said Tom Kennedy, who is currently the City of Escondido representative on the CWA board and was the Rainbow Municipal Water District delegate before he retired as Rainbow’s general manager.

The CWA’s water 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.

MWD plans to increase water rates by 8.5% for 2025, and MWD fixed charges will create a total expected 11% increase. Higher energy and construction costs are also contributing to the need for a CWA rate increase significantly higher than the 9.5% approved last year for 2024 water purchases.

The current CWA water rate per acre-foot for untreated sales is $1,200. That will increase to $1,445 under Alternative 8 and $1,430 if Alternative 9 is adopted. Under both alternatives the melded treatment surcharge will increase from $400 to $500, the Special Agricultural Water Rate will be raised from $903 to $912, and the per-acre transportation rate will drop from $189 to $141 although a new transportation fixed charge of $30,000,000 will be paid by member agencies on a pro-rata basis.

The Infrastructure Access Charge is used for fixed expenditures incurred even when water use is reduced, and the current IAC is $4.41 per meter equivalent. (A meter under one inch has a 1.0 meter equivalent and the rates are multiplied by 1.6 for one-inch meters, by 3.0 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.)

Under Alternative 8 the IAC will increase to $4.70 per meter equivalent while Alternative 9 will create an IAC of $4.59 per meter equivalent.

The Customer Service Charge which is intended to recover costs which support the operations of the CWA, the Storage Charge which recovers costs related to emergency service programs, and the Supply Reliability Charge which recovers a portion of QSA and desalination plant costs are all also assessed to member agencies on a pro-rata basis.

Under both alternatives the total Customer Service Charge will increase from $28,600,000 to $30,000,000, the Storage Charge increase will be from $60,000,000 to $65,000,000, and the Supply Reliability Charge will increase from $43,400,000 to $53,180,000.

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 has a Capacity Charge which is allocated to CWA member agencies proportionately, and that will increase from $9,429,280 to $10,944,700. 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 total will increase from $10,466,961 for 2023-24 to $11,453,673 in 2024-25.

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 will increase from $5,700 to $6,364 under both alternatives.

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 increase from $159 to $178 per meter equivalent under both alternatives.

The CWA’s Annexation Fee will remain at $11,156; that amount 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.

The specific pro-rata assessments will be approved during the June 27 hearing. The willingness of CWA board members to approve the motion setting the hearing does not commit them to approving any given rate.

Author Bio

Joe Naiman, Writer

Joe Naiman has been writing for the Village News since 2001

 

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