A presentation at the March 25 Rainbow Municipal Water District board meeting analyzed the financial impact of the elimination of agriculture within the district.
There was no vote or other action taken on the presentation by Larry Carlstrom and Harry Stitle, who represented the district’s Budget Committee. The presentation which addressed Rainbow’s financial feasibility without agriculture was prompted by previous discussions on strategies the district should develop due to its shrinking agriculture customer base.
“I think that it was a well thought out report,” said Rainbow board president George McManigle. “The presentation made sense.”
The presentation indicated that Rainbow would still be able to operate with minor impacts on residential rates. “That, of course, is counting on 2,000 new hookups for developments that are happening east of the 15 in the next two to three years,” McManigle said.
Rainbow currently has approximately 7,200 customers and sells approximately 20,000 acre-feet of water annually. The average residential customer was assumed, for the purpose of rate comparisons, to use 26 units (one unit is 100 cubic feet, or approximately 748 gallons) per bill. The cost of water purchases includes Rainbow, San Diego County Water Authority, and Metropolitan Water District of Southern California charges, and Rainbow’s cost of water share for each billing unit is $0.62. The $175.87 bill for the average customer consists of $46.10 for Rainbow fixed fees, $46.77 for SDCWA and MWD fixed fees, $15.22 of Rainbow cost of water charges, and $65.78 for SDCWA and MWD water costs.
The presentation included seven theoretical levels of usage. Rainbow’s total bill for 3.25 units of usage is $104.99 while the bill for 208 units is $742.87.
Under the scenario that annual water sales fall to 10,000 acre-feet with no new hookups, Rainbow would increase its share to $1.24 per unit, Rainbow’s cost of water would double on the average bill to $30.44, and the total amount would be $191.09. The bill for 3.25 units would increase to $105.79 while the bill for 208 units would be $864.53.
(Since the purpose of the analysis was to determine the impact on residential water rates from the elimination of agricultural sales, the scenarios assume that Rainbow’s fixed costs remain constant and that the CWA and MWD rates and fees do
If 2,000 new housing connections use an annual average of 120 units, Rainbow’s share would become $1.18 per unit and the average bill would be $189.50 if the increase in fixed charges is not applied to reduced water rates. Rainbow’s share would be $0.92 per unit and the average customer would pay $183.27 if the additional fixed-charge revenue is used to offset water rates.
The scenario with 2,000 new connections and fixed charges not being applied to water rates translates into bills of $105.65 for 3.25 units and $851.91 for 208 units. If the fixed-charge revenue is used to offset water rates, the customer using 3.25 units would pay $105.10 and the customer using 208 units would be charged $802.03.