Water Authority Defers 11 Projects to Help Manage Rates

Short Title
Water Authority Defers 11 Projects to Help Manage Rates
Board also reviews efforts to cut operational costs in current, future budgets

In response to reduced short-term water demand projections and changing economic circumstances, the San Diego County Water Authority Board of Directors today approved deferring the construction of 11 infrastructure projects to July 2014 or later.  This action postpones $82 million in costs and will help moderate Water Authority rate increases in 2012 and 2013. 

The board also directed staff to evaluate three other projects, totaling $68 million, for potential deferral. Staff will return to the board in February with a recommendation.

“Water use is down 20 percent compared to 2007 levels, and this has given us the opportunity to review the need for new facilities and adjust the timing for their construction,” said Michael T. Hogan, Water Authority Board Chair. “Deferring these projects is in the best interests of the region because it will help manage Water Authority rate increases for the next two years without jeopardizing our mission to provide the San Diego region with a safe and reliable water supply.”  

Projects urgently needed to ensure regional water supply reliability are still moving forward as planned.  These include the San Vicente Dam Raise, Lake Hodges projects, pipeline relining projects and canal-lining mitigation projects in Imperial Valley.

The deferred projects include new pump stations, pipeline expansions, flow control facilities, and mitigation projects linked to future construction.  In addition, the Water Authority will re-evaluate the need and scope for some of these projects.

This action will lower the impact of wholesale water rate increases from capital projects by approximately $9 to $12 an acre-foot during the deferral period.

The Water Authority still expects long-term water demands to increase over time, but at a slower rate compared to previous estimates.  Factors expected to slow increases in demand include new legislative mandates to significantly reduce urban water use by 2020 and permanent reductions in the region’s agriculture industry.

More details on this action can be found at Monthly Board Meeting | San Diego County Water Authority, and clicking on the January 27 board agenda.  The action is under the Administrative and Finance Committee meeting.

During today’s meeting, the board also reviewed cost-cutting and workforce management efforts the Water Authority has implemented or identified to address the revenue impacts caused by declining water sales and minimize impacts to rates. Highlights of these efforts include:

  • Executing a workforce management plan that reduces the size of the Water Authority’s staff by 12 percent from fiscal year 2008 levels.
  • Making $6 million in cuts to the two year operating budget by eliminating, reducing or deferring a range of programs, services, outreach and other costs.
  • Keeping vacant positions unfilled and deferring equipment replacement purchases. These measures are forecasted to save an additional $1.4 million in the current budget.

Staff also updated the board on plans and the schedule for developing a recommended budget for the Water Authority’s next two-year budget cycle, which begins July 1.  The next two-year budget will address a number of issues, including the Water Authority’s transition from building facilities to operating them, rising water purchase costs, reduced water sales and public concerns about water rates.  The board will review and consider adoption of the next two-year budget in June.