Water Authority Proposes Smallest Rate Increase Since 2004

Short Title
Water Authority Proposes Smallest Rate Increase Since 2004
Increases of 2.6 percent for untreated water and 3.5 percent for treated water proposed for 2014

The San Diego County Water Authority on Wednesday announced that it will propose increasing rates charged to its member agencies by 2.6 percent for untreated water and 3.5 percent for treated water in calendar year 2014, mainly to cover higher costs for imported water. If adopted by the Board of Directors in June, the increases would be the smallest since 2004.

Water Authority rates & budget schedule

May 23: Presentation to the Board of the cost-of-service study, proposed 2014 rates and charges, and release of the two-year budget for fiscal years 2014 and 2015

June 11 & 13: Special budget workshops

June 27: Public hearing on rates; Board considers adoption of rates and budget

The water rates and the proposed two-year budget for fiscal years 2014 and 2015 will be formally presented to the Water Authority’s Board of Directors on May 23.  On June 27, the Board will hold a public hearing on the 2014 rates and consider their adoption along with the recommended budget.  Although the Water Authority’s budget spans two fiscal years, the agency sets rates annually to ensure it can most effectively manage changing conditions.

“While the cost to obtain critical water supplies continues to go up, we are planning a significant reduction in our Capital Improvement Program and taking other measures to control costs and keep the proposed changes relatively small,” said Maureen Stapleton, general manager of the Water Authority.

The Water Authority proposes charging its 24 member agencies the “all-in” rate
of $1,029 per acre-foot for untreated water in calendar year 2014, or $26 more than they currently pay.  The Water Authority also proposes charging $1,303 per acre-foot for treated water, or $44 more than in 2013.  An acre-foot is about 325,900 gallons, enough to serve two typical four-person households in San Diego County.

The rate proposal was developed in conjunction with an independent cost-of-service study, which confirmed that the Water Authority’s rate structure complies with legal requirements, cost-of-service standards, industry best practices and Board policies.

“All-in” rates

The “all-in” water rate is the estimated average cost of water that includes the Water Authority’s rates for supply, treatment (if applicable) and transportation, along with charges for storage and customer service. Actual figures will vary by member agency.

The biggest factors behind the Water Authority’s increased costs are related to the purchase and treatment of water.  Those costs are projected to rise by 18 percent in fiscal years 2014 and 2015, partly because of the scheduled increases in the cost of water from the Imperial  Irrigation District as part of a long-term conservation-and-transfer program approved in 2003. In addition, the Los Angeles-based Metropolitan Water District of Southern California will charge 5 percent more for treated water in 2014.

Another significant addition to the Water Authority’s budget includes the planned purchase of water to store in the newly expanded San Vicente Reservoir.

The Water Authority’s fiscal strategy also impacts water rates.  The 2014 rate proposal was crafted to ensure debt-coverage ratios that maintain the Water Authority’s strong credit ratings and minimize the cost of borrowing money for construction projects – an approach that ends up saving rate payers money over the long run. The Water Authority has credit ratings of AA+ with a stable outlook from both Standard & Poor’s and Fitch ratings and Aa2 with a stable outlook from Moody’s.

For more information about the Water Authority’s proposed rates and the cost-of-service study, open the Board packet and go to page 184. The agency’s proposed two-year budget for fiscal years 2014 and 2015 will be released on May 23.