CWA rates and charges to rise

Increase of 5.4% for treated water, 6.6% for untreated supply

The water rates and charges for Calendar Year 2016 adopted by the San Diego County Water Authority will, on a countywide basis, increase rates for treated water by 5.4 percent and for untreated water by 6.6 percent.

The rates and charges which will go into effect Jan. 1 were adopted by a unanimous SDCWA board vote June 25.

"Our water rate increase is very modest. Our goal is to provide the most cost-effective service to our member agencies as possible," said CWA general manager Maureen Stapleton.

The CWA member agencies have the option of absorbing the rate increases 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 under the Quanitification Settlement Agreement (QSA), and water produced by the 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. Debt coverage targets are also incorporated into the CWA rate structure; the CWA has 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 default) and 1.4:1 for overall debt.

The QSA included scheduled rate increases over the multi-decade agreement period; the price of Imperial Irrigation District water is now tied to an inflation index.

On March 26, the CWA board adopted recommendations from the CWA's fiscal sustainability task force to develop 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 now allocating non-commodity revenues to all rate and charge categories including treatment and applying the debt and equity payments for the Carlsbad seawater desalination plant to the supply rate.

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

The charge is allocated to CWA member agencies on a pro-rata basis utilizing a rolling five-year rolling average of municipal and industrial (M&I) deliveries for each member agency. Although some member agencies have local supplies such as brackish groundwater desalination and recycled water, those local supplies could be subject to mechanical or regulatory interruption and the Supply Reliability Charge is considered an "insurance policy" to ensure allocation from the CWA in case of a shortage.

The CWA's rate per acre-foot of untreated water for M&I customers will increase from $764 to $780. The untreated water rate was $365 during 2007, $390 for 2008, $463 in 2009, $532 for 2010, $597 during 2011, $638 for 2012, $714 in 2013, and $732 during 2014. The surcharge for treated water was increased from $278 to $280; that surcharge was $164 in 2008, $168 during 2009, $215 in 2010 and 2011, $234 during 2012, $256 in 2013, and $274 for 2014.

The Special Agricultural Water Rate which was increased from $582 to $594 per acre-foot was $412 in 2009, $484 for 2010, $527 during 2011, $560 for 2012, and $593 in 2013 and 2014. The per-acre rate for SAWR treated water increased from $580 in 2009 to $699 during 2010 to $742 in 2011 to $794 for 2012 to $849 in 2013 to $867 for 2014 to $860 during 2015 and will be $874 in 2016.

The CWA's transportation rate is a uniform rate set to recover capital, operating, and maintenance costs of the CWA's aqueduct system and will increase from $101 to $105 per acre-foot. The rate per acre-foot was $64 in 2009, $67 for 2010, $75 during 2011, $85 in 2012, $93 during 2013, and $97 for 2014.

The Infrastructure Access Charge is used for CWA fixed expenditures which are incurred even when water use is reduced. The 2015 IAC of $2.76 per meter equivalent will remain at that amount for 2016. The IAC per meter equivalent was $1.90 during 2009, $2.02 for 2010, $2.49 in 2011, $2.60 during 2012, $2.65 in 2013, and $2.68 for 2014.

The Customer Service Charge is intended to recover costs which support the operations of the CWA and is allocated among member agencies based on a three-year rolling average of all deliveries. The charge which was $16,000,000 in 2009, $18,000,000 during 2010, and $23,200,000 for 2011 has been unchanged at $26,400,000 since 2012. The Rainbow Municipal Water District's 2016 portion of the charge will be $1,205,415. The Fallbrook Public Utility District will pay $686,333. Camp Pendleton's share is $2,734.

The Storage Charge recovers costs related to emergency storage programs and is allocated based on a pro-rata share of non-agricultural deliveries. The total charge of $63,200,000 is the same as it was for 2014 and 2015. The total Storage Charge was $22,200,000 in 2008, $23,000,000 during 2009, $34,000,000 in 2010, $44,300,000 for 2011, $54,000,000 during 2012, and $60,200,000 in 2013. Rainbow will pay $1,714,360; FPUD will be responsible for $1,153,572, and the Camp Pendleton assessment is $7,206.

The initial Supply Reliability Charge is $26,000,000. The assessments to member agencies include $739,775 from Rainbow, $492,396 for FPUD, and $3,210 payable 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 took effect in July, involves credits for the standby charge and administrative costs. The CWA's share is allocated to member agencies based on a 10-year rolling average of demands. The CWA's charge after standby and administrative credits was reduced from $25,043,402 for 2015 to $22,406,380 in 2016 which will include $527,584 from Rainbow, $447,301 assessed to FPUD, and $4,343 of Camp Pendleton payments.

The MWD Capacity Charge is allocated to CWA member agencies proportionally based on a five-year rolling average of flows during peak periods. The total charge to the CWA will be $12,406,380. Rainbow's 2016 payments will total $657,756; FPUD will pay $379,035, and Camp Pendleton will be assessed $1,459.