Effort by local water districts to change water suppliers moves into next phase

FALLBROOK – The advisory committee, established by the San Diego County Local Agency Formation Commission to analyze applications from the Fallbrook and Rainbow water districts to change water suppliers, is expected to complete its work by the end of this year and forward its recommendation to the full commission.

After enduring years of soaring water costs from the San Diego County Water Authority and having to pay for infrastructure projects that don’t serve the districts and that they don’t need, Fallbrook Public Utility District and Rainbow Municipal Water District are seeking to detach from the Water Authority and begin purchasing their water at a reduced rate from Eastern Municipal Water District.

Over the last decade, the Water Authority has raised water costs on the Fallbrook and Rainbow districts by an average of 8% each year. By purchasing their water from Eastern, the districts expect to save their ratepayers between $7 to $10 million a year collectively.

“Our ratepayers have been burdened by escalating costs for quite some time,” said Jennifer DeMeo, board president of the Fallbrook water district. “They’ve been paying the Water Authority for infrastructure projects that offer no benefit to them, and it’s taken a heavy toll on our ratepayers, especially those with limited incomes, as well as our agricultural users, who are the cornerstone of our local economy.”

At the most recent LAFCO advisory committee meeting on Oct. 4, members were presented with a draft report that addressed two key issues: water reliability and whether the Fallbrook and Rainbow districts should pay any departure fee to the Water Authority. The report was prepared by Dr. Michael Hanemann, who was retained by LAFCO to help analyze the proposals.

With regard to water reliability, while Hanemann stated that there are benefits to the Water Authority’s supplies, he also determined that there are future uncertainties with these supplies that make it difficult to quantify a difference in water reliability.

“I cannot quantify the difference at this time,” he said. “My assessment is that I don’t feel I can say that the difference in supply reliability is material. That’s both because the hydrology is uncertain, but it’s also because water marketing will play a bigger role on the stage, and it may turn out that water supply reliability morphs from being not having enough quantity of water to having to pay more dollars for water.”

“We believe that Eastern has a more reliable supply of water than the Authority because Eastern is less dependent on imported water from the Colorado River, which also provides water to other California communities, and because Eastern produces a greater share of its water locally,” said Tom Kennedy, general manager of the Rainbow district. “In fact, Eastern produces 40% of its water locally through recycling and desalination and with groundwater supplies, while the Water Authority generates only 13% of its supply locally and is reliant on the Colorado River and other imported sources for 87% of its water.”

In addition, Eastern Deputy General Manager Nick Kanetis told committee members, “We have looked at this under every scenario that we can, and Eastern is confident that we will 100% be able to provide the water (to Fallbrook and Rainbow).”

With regard to whether or not the Fallbrook and Rainbow districts should have to compensate the Water Authority for any investments the agency has made, Hanemann provided two possible options: an annual departure fee or a potential commitment by the Fallbrook and Rainbow districts to continue buying some amount of water from the Authority at a cost yet to be determined.

“Our district does not believe the departure fee option, which would require us to pay for water we wouldn’t even receive and that the Water Authority could resell, is consistent with existing state laws,” said Jack Bebee, general manager of the Fallbrook district. “The other option is an interesting topic that deserves further discussion.”

Whether or not the Fallbrook and Rainbow districts can switch water providers will be up to LAFCO, which is governed by local appointed and elected officials, and is responsible for overseeing the establishment, expansion and boundary changes of cities and special districts, including water districts. The LAFCO board is expected to vote on the matter early next year. If approved, Fallbrook and Rainbow voters would have the final say in an election held in each of the two districts’ service areas.

Last month, the Fallbrook Chamber of Commerce voted to support the change of water suppliers. The group says the ongoing cost increases from the Water Authority have hurt local businesses, which are already struggling due to the pandemic.

Eastern, which was established in 1950, provides water to more than 850,000 people living and working in Riverside County, including Temecula, Murrieta, Perris, Menifee and several other cities and unincorporated communities.

Submitted by Fallbrook Public Utility District and Rainbow Municipal Water District.