S.D. County Water Authority rates to rise 2.9% for untreated supply, 2.6% for treated - TSAWR extended through end of CY 2015

On a countywide basis, the San Diego County Water Authority rates for 2015 will increase by 2.9 percent for untreated water and 2.6 percent for treated water.

The SDCWA board adopted its calendar 2015 rates and charges, including each agency's share of pro-rata assessments for charges other than water purchases, on June 26 while also extending the Transitional Special Agricultural Water Rate through the end of 2015.

"This is one of the smallest increases we've seen in the past decade," said CWA financial planning manager David Shank.

The CWA member agencies have the option of absorbing the rate increase or passing on the additional cost to customers. The CWA's water rates are based on a melded rate which in the past has melded the cost of water delivered from the Metropolitan Water District of Southern California (MWD) and of water purchased from the Imperial Irrigation District under the Quantification Settlement Agreement.

The seawater desalination plant in Carlsbad is expected to be producing water during fall 2015, and the cost estimates from water produced by the Carlsbad plant were also included as a rate factor. 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 were 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 Quantification Settlement Agreement includes scheduled rate increases over the multi-decade agreement period; the price of Imperial Irrigation District water will be tied to an inflation index for calendar year 2016 but had a slated five percent increase from $594 to $624 per acre-foot for 2015.

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

In 1994, MWD implemented the Interim Agricultural Water Program (IAWP) which provided surplus supplies to agricultural customers at a discounted rate with the condition of cutbacks in a drought of up to 30 percent prior to implementing any mandatory reductions to municipal and industrial customers.

MWD imposed such a cutback at the beginning of 2008, and in October 2008 the MWD board voted to phase out the IAWP over a four-year period through the end of 2012. The CWA responded by creating the Transitional Special Agricultural Water Rate (TSAWR) program for agricultural users. The CWA's October 2008 action created a two-year transitional program for customers opting out of the IAWP while also creating a workgroup to provide the CWA board with options after that transitional period.

In March 2010, the CWA board extended the TSAWR through the end of 2012 while calling for a revised program from 2013 to 2015 and a review of the program prior to 2016, although in April 2012 the CWA board extended the TSAWR itself through the end of 2014.

The May 22 CWA action which set the June 26 hearing date included a presentation to the CWA's Administrative and Finance Committee on extending the TSAWR, and during the May meeting the board opinion favored continuing the TSAWR.

"We're just very pleased that they extended the ag program through 2015," said San Diego County Farm Bureau executive director Eric Larson. "We'll take it a year at a time."

The CWA has convened a fiscal sustainability task force which will propose a revised rate structure as part of an effort to avoid a situation where conservation resulting in a decrease in water usage leads to the need to increase rates. The extension of the TSAWR only through the end of 2015 allows consideration of that program to be included in the task force's activities.

"Part of the sustainability study does include a directive to include the ag program," Larson said. "We'll be participating in that."

The sustainability task force recommendations - and the board's action on those recommendations - will also determine how the debt and equity payments for the Carlsbad desalination plant will be applied; those payments are applied to the supply rate for 2015 but may be transferred to a fixed-cost charge in future years.

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

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 $97 to $101 per acre-foot. The rate per acre-foot was $64 in 2009, $67 during 2010, $75 for 2011, $85 in 2012, and $93 during 2013.

The Infrastructure Access Charge is used for CWA fixed expenditures which are incurred even when water use is reduced. The IAC per meter equivalent of $1.90 during 2009, $2.02 in 2010, $2.49 for 2011, $2.60 in 2012, $2,65 during 2013, and $2.68 for 2014 will become $2.76 effective Jan. 1.

The CWA's Customer Service Charge is also 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 for 2010, and $23,200,000 during 2011 has been $26,400,000 since 2012 and will remain at that amount next year. The Rainbow Municipal Water District's 2015 portion of the charge will be $1,204,479. The Fallbrook Public Utility District will pay $712,757. Camp Pendleton will be responsible for $3,000.

The CWA's Storage Charge recovers costs related to emergency storage programs and is allocated based on a pro-rata share of non-agricultural deliveries. It will remain at the 2014 total of $63,200,000 after previous increases from $22,200,000 in 2008, $23,000,000 for 2009, $34,000,000 during 2010, $44,300,000 in 2011, $54,200,000 for 2012, and $60,200,000 during 2013. Rainbow will pay $1,842,600, FPUD will be responsible for $1,213,650, and the Camp Pendleton share will be $7,891.

The CWA also has a Standby Availability Charge of $10 per acre or $10 per parcel under one acre; that amount remains unchanged.

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. Funding for the CWA's $25,043,402 charge after standby and administrative credits will include $516,825 from Rainbow, $478,449 from FPUD, and $4,841 from Camp Pendleton.

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 $10,738,140. Rainbow's 2015 payments will total $587,129, FPUD will be assessed $303,342, and Camp Pendleton will contribute $1,203.