LAFCO report: FPUD and Rainbow water customers would save an estimated $7.6 million a year by switching suppliers

FALLBROOK – A long-awaited independent analysis has concluded that customers of the Fallbrook Public Utility District and Rainbow Municipal Water District would save an estimated $7.6 million a year if the districts change water suppliers from the San Diego County Water Authority to the Eastern Municipal Water District.

The analysis, conducted under the direction of the San Diego Local Agency Formation Commission, which will decide if the districts can switch water suppliers, also concludes that Eastern has the wherewithal to meet the water demands of Fallbrook and Rainbow for years to come.

“For our customers, this is positive,” said Jack Bebee, general manager of the FPUD. “Not only will they save millions of dollars a year, they can be confident that Eastern will provide us with a reliable supply of water.”

“This report validates what we’ve been saying – that buying water from Eastern instead of the San Diego County Water Authority would benefit our ratepayers – especially low-income residents and agricultural users who are particularly impacted by high water rates,” said Tom Kennedy, general manager of the RMWD. “If our applications are approved by LAFCO, our residential, commercial and agricultural customers, who have been unfairly burdened by rapidly rising water costs, will begin to see much-needed rate relief.”

Over the last decade, the San Diego County Water Authority has raised water costs on local water districts an average of 8% per year, with no sign of letting up. According to the Authority’s recently adopted Long-Range Financing Plan, water costs will jump another 50% over the next five years.

A study conducted last year by statista.com concluded that San Diego’s water rates were among the highest in the nation. Further, a 2017 report by the American Water Works Association found that San Diego area households pay more than twice the national average for water.

The LAFCO report also addressed whether Fallbrook or Rainbow should compensate the Water Authority through a so-called departure fee if they switch to Eastern. In a recommendation that Fallbrook and Rainbow leaders say violates State law, the report suggests that the districts pay the Water Authority $13-18.5 million each year for three to 10 years for a percentage of what is known as QSA water supply costs.

“Unfortunately, the report’s author did not review the provisions dictated in State law by the Legislature,” said Kennedy. “Since the report fails to include any legal analysis on this issue, we are hopeful that LAFCO and their attorneys will thoroughly examine this critical question before any decision is made.”

“While we are not opposed to providing some level of compensation through ongoing property tax payments, the report’s recommendation does not comply with the law,” said Bebee. “We hope to discuss this issue with LAFCO officials over the next several weeks.”

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, is expected to vote on the matter later this 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 fall, the Fallbrook Chamber of Commerce voted to support the switch. 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.