Questions Expand After Changes in MWD’s Ethics Office

The recent departure of MWD’s ethics officer and the appointment of an interim officer is raising new questions about the independence of the critical post.  The LA Times reported that Deena Ghaley stepped down on Sept. 12, saying it had “become ‘impossible’ for her to carry out her duties of creating, administering and enforcing ethics rules.”

MWD’s Ethics Office was established by the state Legislature in 1999, following a campaign by MWD to disrupt a Water Authority water conservation-and-transfer agreement with the Imperial Irrigation District.

“It appears that MWD management may now be attempting to interfere with the role of the Ethics Office by eliminating the Office’s current staff and replacing them with individuals who will not be independent, but rather be direct representatives of, and conduits to, management,” Water Authority General Counsel Mark Hattam said in a Sept. 14 letter to MWD. “This would be completely unacceptable, and would destroy confidence among MWD staff and the public that MWD’s Ethics Office is a neutral, unbiased and independent entity within MWD.”

Hattam insisted that MWD management not be granted access to Ethics Office files and that the Ethics Office be maintained as completely independent of MWD management in all respects.

Click here to read the letter.

San Marcos City Council Adds Support for Rate Litigation

The San Marcos City Council on July 25 became the latest in a long line of governing bodies to formally support the Water Authority’s rate litigation against the MWD. The San Marcos council voted unanimously in favor of the resolution, which also included support for the Water Authority and its member agencies to continue developing diversified water supplies.

The number of agencies and elected officials affirming their support of the Water Authority’s efforts to secure legal rates at MWD has continued to grow significantly, while MWD has undermined the best interests of ratepayers through overcharging, overspending and unplanned borrowing.

In recent months, the list includes:

  • San Diego County Board of Supervisors
  • City of San Diego
  • City of Del Mar
  • City of Encinitas
  • City of Escondido
  • City of National City
  • City of Oceanside
  • City of Poway
  • City of Santee
  • City of San Marcos
  • City of Vista
  • Padre Dam MWD
  • Otay Water District
  • San Dieguito Water District
  • Santa Fe Irrigation District
  • Vallecitos Water Dstrict
  • Valley Center MWD

 

 

Unchecked Spending by MWD Harms Low-Income Residents

Every time MWD raises rates, the giant water agency siphons money out of neighborhoods that are barely getting by and amasses it in downtown Los Angeles.

While everyone across the region is harmed by MWD’s unchecked spending, low-income residents are hardest hit by MWD’s freewheeling ways. No one can live without water, and water costs are a larger share of monthly budgets for working class and fixed-income residents than they are for others.

That’s a major reason why it’s so important to reign in out-of-control spending and unnecessary projects at MWD. Instead of building facilities that won’t be needed, MWD should maximize the use of existing capacity. Instead of putting artificial constraints on transferring water, MWD should facilitate water transfers. Instead of overspending and unplanned borrowing, MWD should live within its means – just like the residents the agency is supposed to serve.

Union-Tribune Editorial Board Calls for Audit of MWD

The San Diego region’s largest newspaper on July 21 advocated for the State Auditor’s Office to investigate reckless fiscal practices by MWD, which provides water to nearly 19 million people across six Southern California counties.

Citing concerns raised by the San Diego County Water Authority, the Editorial Board of The San Diego Union-Tribune said state Auditor Elaine Howle should examine assertions that MWD has overcharged ratepayers, overspent its budget and engaged in unplanned borrowing.

“For the millions of people who rely on MWD supplies — and who have seen their rates double over the past decade — the stakes are high. So Elaine Howle, come on down. There’s digging to be done,” the Editorial Board said.

Click here to read the full editorial.

MWD Races Past Public Process on Cal-Water Fix Decision

MWD staff has been lobbying for the state’s massive $15+ billion Twin Tunnels proposal in the Bay-Delta for years, despite the fact that the agency’s Board hasn’t taken a formal position on the project.

Now MWD leaders are rushing a decision through – giving their board less than 30 days to assess foundational financial materials of one of the largest public works projects in history — before calling for a vote. This schedule does not provide sufficient time for MWD’s member agencies and sub-agencies to properly analyze the data, inform the public, or seek input from their governing boards.  This timeline makes even less sense when the water rights permit for the tunnels, which may impact the amount of water the tunnels can produce, is not expected until 2018.

MWD needs to provide answers to key questions before pressuring its board to make a decision:

  • How much water will actually be produced?
  • What portion of the cost will be put on rates?
  • What agencies statewide will commit to paying for improvements?
  • Will the higher MWD rates hamper local supply development?

MWD has must also allow for a more complete and full public involvement in this decision, which almost certainly will saddle MWD and Southern California with at least $4 billion or more in new debt.

To learn more, read the Water Authority letter to MWD outlining their concerns:

Court Rules MWD Contract Clause Unconstitutional

Big win for millions of Southern California water ratepayers: A California Court of Appeal ruled today that MWD’s “Rate Structure Integrity” contract clause is unconstitutional and that the Water Authority has legal standing to challenge it. The RSI clause was designed to punish MWD’s own member agencies if they decided to challenge MWD’s rates in court. The clause has prevented the Water Authority from receiving funding for local water supply projects, while collecting San Diego ratepayer dollars to build projects in Los Angeles and other areas in Southern California. Read more at www.sdcwa.org/mwdrate-challenge.

 

Taxpayer Advocates Outraged by MWD Spending

The Yorba Linda Taxpayers Association in Orange County is calling out MWD for “shocking” fiscal mismanagement.

“MWD overcharged Southern California water users over $847 million between 2012 and 2015,” said the association’s June 8 newsletter. “Our residents and businesses in Orange County overpaid a whopping $122 million of that amount! This is money that MWD collected over and above all its budgeted expenses, meaning one thing. MWD has been setting its water rates way higher than necessary.”

The article outlines overspending and unplanned borrowing by MWD. “I’m astounded that MWD has been allowed to get away with such reckless behavior, all at the expense of Yorba Linda residents and businesses,” said Ed Rakochy, of the taxpayers association.

Click here to read the full newsletter article.

MWD Tries to Force Quick WaterFix Vote

Board members of the Metropolitan Water District of Southern California are being asked to support the state’s multi-billion dollar WaterFix proposal for the Bay-Delta with less than 30 days to analyze critical cost-benefit information, seek public comment and gather input from their governing boards.

The Water Authority has not taken a position on WaterFix. MWD’s Board hasn’t taken a position either, but staff has been aggressively promoting the $15+ billion project for months via an outreach campaign.

The Water Authority’s four delegates to MWD have asked MWD Board Chair Randy Record to extend MWD’s timeframe by at least a month given the complexity of the proposal and the fact that critical questions remain unanswered. “There is no urgency we are aware of dictating an MWD Board vote in September, on such a tight schedule,” the Water Authority’s delegates said in a June 9 letter to Record.

The delegates also raised numerous fundamental issues that should be addressed before MWD’s Board takes a position, including: the supply benefit, if any, created by the project; the financing plan and how the costs will be split among agencies statewide, including the Water Authority; and MWD’s potential use of its taxing authority to recover WaterFix costs.

Click here to read the delegates’ letter and the MWD response.

County Supervisors Warn about Flawed Business Practices at MWD

Two San Diego County Supervisors have issued an alert to their colleagues in five other Southern California counties warning that the Metropolitan Water District of Southern California has overcharged residents by hundreds of millions of dollars.

“Although MWD is a public agency, little attention has been paid to its flawed business practices and uncontrolled spending that have contributed to significant water rate increases in recent years,” said Dianne Jacob, chairwoman of the San Diego County Board of Supervisors, and Kristin Gaspar, vice chairwoman of the board. “Water bills will continue to be higher than necessary in our communities until MWD’s out-of-control spending can be stopped.”

Click here to read the full letter.

San Diego Civic and Business Leaders Call on MWD to ‘Stop the Spending!’

San Diego County Board of Supervisors supports efforts to end uncontrolled spending as new study raises more questions about fiscal practices at the Los Angeles based- Metropolitan Water District of Southern California. 

 

 

The San Diego County Board of Supervisors today unanimously adopted a resolution in support of efforts by the San Diego County Water Authority to recover nearly $250 million in illegal charges imposed on local water users in recent years by the Metropolitan Water District of Southern California, and calling on MWD to end ratepayer overcharges, overspending and unplanned borrowing that have contributed to MWD doubling water rates over the past decade.

In conjunction with the action, the San Diego County Water Authority released a study that shows ongoing ratepayer overcharges will only worsen unless the Los Angeles-based agency makes major changes to rein in out-of-control spending.

During a news conference at the County Administration Center, Water Authority Board Chair Mark Muir was joined by business and civic leaders to demand MWD “Stop the Spending!”

“MWD’s irresponsible fiscal practices have doubled the cost of MWD’s treated water over the past decade without a corresponding increase in water reliability,” said Muir. “The overcharges will just get worse unless MWD is forced to reform its finances. MWD needs to face the fact that its wasteful overspending must stop.”

MWD’s own data show a series of serious problems:

  • MWD overcharged ratepayers $847 million more than the agency’s own budgets said was needed from 2012-2015.
  • MWD overspent its budget by $1.2 billion from 2013-2016 on things like buying Bay-Delta islands ($175 million) and turf replacement ($420 million).
  • In 2016, MWD authorized $900 million in unplanned borrowing to pay for its overspending.

Supervisor Jacob commended the Water Authority for developing water supplies for the San Diego region that have cut reliance on MWD by more than half – and for leading the charge against MWD’s flawed fiscal practices.

“The Board of Supervisors stands with the Water Authority in its fight with the Metropolitan Water District,” said Supervisor Jacob. “Access to affordable and reliable water is critical to our region, but Metropolitan continues to undermine that with its financially reckless behavior. We can’t let Metropolitan leave San Diego water users high and dry.”

At today’s news conference, the Water Authority shared a new analysis – based on data from MWD and its member agencies – that shows MWD’s existing programs and projects can meet water demand projections under all of the hydrological conditions assessed through 2040. That means MWD’s multi-billion dollar plans to develop new supplies are not needed to meet its member agencies’ current or future demands. Instead, MWD’s continued overspending would significantly increase the financial burden on ratepayers and create significant stranded assets.

The study details how MWD is undercounting local supplies being developed by water agencies across Southern California. Unrealistic projections mean MWD is grossly overstating how much water it says its member agencies plan to purchase from MWD, by more than 300,000 acre-feet in average years from 2020-2040. The study shows that MWD isn’t accounting for more than 30 local water agency projects that will reduce demand for MWD water, nor has it accounted for long-term water-use efficiency standards being developed by the state that will decrease demand for MWD’s water.

“The continuous water rate increases have to stop!” said Supervisor Gaspar. “MWD needs to rein in its reckless spending to ensure reasonable water rates for its customers. County leaders are paying attention to your actions and will hold you accountable. We are calling on you to reform your practices to ensure a stable and trusted model for rate increases.”

As another sign of poor fiscal management, MWD’s water rates have already been declared by a San Francisco Superior Court judge to be illegal. The judge ruled in 2015 that MWD set illegal rates from 2011-2014, forcing San Diego County ratepayers to subsidize other MWD services and water rates. The judge ordered MWD to pay the Water Authority more than $243 million and to set only legal rates in the future. The appellate court is expected to hear the case this spring, with a decision expected later this year. Two additional lawsuits covering rates from 2015-2018 are pending because MWD has refused to limit the rates it charges to the actual costs of the services it provides.

“San Diego’s economy and our businesses depend on a reliable and affordable water supply. The necessity of this essential service cannot be understated especially when it comes to attracting new companies and retaining talented employees,” said Jerry Sanders, president and CEO of the San Diego Regional Chamber. “We look forward to the resolution of the lawsuit and development of fair water rates for San Diego moving forward.”

The news conference was the public launch of an education campaign led by the Water Authority to reform MWD’s spending practices that impact nearly 20 million residents across MWD’s six-county service area.

“The Water Authority has tried for many years as a member agency of MWD to work with MWD staff and board members to rein in out-of-control spending on gimmicks such as the turf removal program,” said Water Authority Vice Chair Jim Madaffer. “However, MWD’s refusal to make reforms – or even respond on the merits of the issues – leaves us no choice but to speak out about MWD’s flawed approaches.”

The Water Authority is taking a leadership role to inform elected officials across Southern California about the need to pay more attention to MWD’s finances and governance. In recent months, Water Authority Board officers have sent a series of letters to elected officials across Southern California addressing MWD’s unplanned spending and borrowing. Many of the cities served by MWD don’t have direct representation at MWD, leaving many city leaders unaware of how freely MWD is spending their residents’ money, particularly given the lack of transparency at one of the nation’s largest water agencies.

To learn more, click here: