Stop the Spending! MWD is Overcharging for Water

Led by the San Diego County Water Authority, a broad coalition of civic, community and business leaders has joined together to launch the “Stop the Spending!” campaign. In a unified voice, we call on MWD to correct its illegal rate structure, stop its unnecessary spending and bring an end to its continual rate increases.

The Metropolitan Water District of Southern California rates have doubled over the past decade and it overspent its budget by $1.2 billion in recent years. This has led to needlessly high water bills for families and businesses throughout Southern California.

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MWD’s Overspending Impacts Local Southern Californian Communities

Unnecessarily high water rates imposed by MWD are a real challenge to the economy and quality of life. Southern California residents and businesses suffer when the cost for essential services like water is higher than necessary, causing families to struggle and businesses to relocate or expand elsewhere. MWD needs to set legal rates and stop its unnecessary spending. It is not acceptable that Southern Californians pay higher water rates that are illegal and are not needed to ensure water reliability now and in the future.

Court Rules MWD’s Rates are Illegal

MWD’s water rates have been declared illegal by a California Superior Court.  A 2015 ruling found that MWD set illegal rates from 2011-2014, forcing San Diego County ratepayers to subsidize other MWD services and water rates. MWD was ordered to pay the San Diego County Water Authority more than $243 million and to set only legal rates in the future.  The case is pending before an appellate court and a decision is expected later this year.  Read more about the court case here:

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MWD’s Unplanned, Unbudgeted Spending is Out of Control

The court ruling addresses the illegality of MWD’s rates, but does nothing to rein in its spending and borrowing habits that are driving water rates higher each year.  Between 2013-2016, MWD overspent its budget by $1.2 billion. This unplanned spending included questionable land purchases in Northern California without appraisals and spending $420 million on turf replacement. MWD then authorized $900 million in unplanned debt to help cover its overspending.  MWD claimed these actions would not impact water rates, but its rates continue to rise each year – doubling over the past decade without a commensurate increase in reliability.
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MWD Plans to Spend Billions for Supplies Customers Don’t Need

MWD’s own data show that its existing programs and projects can meet demand projections under all of the hydrological conditions assessed in its 2015 Urban Water Management Plan through 2040. Despite sufficient supplies, MWD is proposing to spend billions of dollars to develop additional supplies, which threatens to waste ratepayer dollars and strand major assets, driving up water rates in the process. Read the full report here:
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Regional leaders and the Water Authority are Fighting for Southern California Ratepayers

The Water Authority is fighting to stop MWD’s out-of-control spending and borrowing, and ensure   reliable water supplies and affordable water supplies.

Join the Water Authority by sending an email to the MWD Board to stop the spending, by clicking here:

Lack of Transparency, Poor Planning Plague MWD’s Turf Program

Why are consumers of water forced to pay historic increases in water rates by the Los Angeles-based Metropolitan Water District of Southern California?  A big reason is their lack of transparency, which often serves to hide reckless spending from the public.

The latest example involves MWD’s “turf removal rebate program.”

A blockbuster exposé in the Los Angeles Times found the program suffered from gross mismanagement, poor planning, and lax oversight by the LA water bureaucrats – resulting in higher water rates for consumers.

MWD’s turf rebate debacle was one of the most expensive water supply programs in its history – all paid for by  water ratepayers.

For months, MWD didn’t even require participants in this turf removal program to show receipts proving they actually removed turf. Even now, after the scandal forced the LA water bureaucrats to make some changes, receipts are only required if the applicant is seeking more than $100,000 in rebates.

The LA-based water agency’s own internal auditor wrote a report on the program, finding “inadequate planning, execution, and follow-up of inspection and verification procedures.”

Remarkably, MWD bureaucrats continue to defend the turf rebate program – claiming they are “more than satisfied” with it because handing out money with little oversight was popular.

As the kids say, “no duh!”  If someone stood on a street corner handing out $1,000 bills, that would be popular, too.  But popularity does not make a program prudent, fiscally sustainable or good water conservation policy.

The San Diego County Water Authority repeatedly tried to put the brakes on this wasteful spending to save ratepayer money and will keep fighting to protect ratepayers and water supply.

In fact, the San Diego County Water Authority has consistently expressed serious concerns about the negative impact MWD’s various out-of-control spending practices have on water users. (To read the letters that the Water Authority has sent expressing concerns on many, many issues, visit the letter library.)

The Voice of San Diego also reported on the issue, finding that it mostly benefited the wealthy and could raise everyone’s water bills.

Officials: That Wildly Popular Water-Saving Program Isn’t Really Worth It

MWD’s reckless spending has contributed to historic increases in water rates at MWD over the past decade Since 2006, MWD’s treated water rate has more than doubled, with rate increases of 7.6 percent, compounded annually.  MWD’s untreated water rate has risen nearly as fast, with rate increases of 6.7 percent, compounded annually.

 

 

It’s long past time to reign in the out-of-control LA Metropolitan Water District, to stop the financial mismanagement that has led to record rate hikes.  Please contact the MWD via this form and ask them to start containing costs in order to stop our rapidly escalating water rates.

MWD Refuses to Allow Vote on Twin Tunnels’ Cost

The Metropolitan Water District on Monday undermined the rights of 19 million ratepayers across Southern California to know how much the state’s $17 billion WaterFix proposal will cost them.

MWD’s Water Planning Committee Chairman David DeJesus refused to allow a vote on whether staff be directed to prepare a report detailing the costs of the WaterFix to MWD’s member agencies and how those costs will be allocated between increased water rates, property taxes and other charges.

Without that kind of analysis, MWD is poised to continue its long streak of avoiding the hard questions about the costs of the state’s twin-tunnels project while staff is at the same time fanning out across Southern California with a major PR campaign to support the WaterFix project.

Keith Lewinger, a Board member representing the San Diego County Water Authority, made a motion for staff to provide this information at next month’s meeting.  Every board member in every water agency in Southern California should be making this responsible request on behalf of their ratepayers.  MWD should disclose detailed cost information BEFORE proceeding further.  Instead of being supported, however, his request was summarily dismissed.

Read the transcript of the interaction here:

Let MWD’s board know that you demand transparency on the twin tunnels:

 

 
 

Verification

 

Fiscal concerns go unanswered as MWD raises more revenue from taxes

For the fourth year in a row, a majority of MWD’s board of directors have voted to raise even more revenue from property taxes despite no analysis to demonstrate why the increase is “essential.”   MWD is required under the law to demonstrate fiscal necessity before raising more money from property taxes.

In a letter to the board opposing the increase in tax collections, the San Diego County Water Authority raised issues about the actual necessity and legal justification for the action, including:

  1. MWD collected nearly $1 billion more than necessary to pay for all of its costs, and then spent all of the money on unbudgeted expenses. This spending spree calls into question the essential nature of the additional tax revenue, which is supposed to be a legislative litmus test for raising property tax collections.
  2. MWD can raise money from other sources of fixed revenue that would more equitably charge users based on the service provided.  For example, in April, MWD chose to lower its standby and readiness to serve charge for 2017 and 2018.  (These are fees charged to recover system costs associated with being ready to meet an immediate request(s) for water supplies from its member agencies.)  MWD cited “uncertainty,” “risk” and additional legal requirements associated with the continued use of these fees, but staff gave no analysis or detail about the nature and extent of risk and uncertainty.
  3. MWD’s reasoning for limiting the tax suspension violates the requirements of the MWD Act.  Further, the action based on the future costs of building the twin tunnels also known as the California WaterFix.  The board has not taken a formal position nor voted on approving additional expenses associated with these new costs.  Unless and until the board approves the project and the associated costs, the additional tax rate revenues are not justified.

To read the Water Authority’s concerns, and a historical background on the property tax issues, click here:

 

Fact vs. Fiction: The Spin Cycle Never Stops at MWD

At the end of Metropolitan Water District’s board meeting Tuesday, April 12, to consider and adopt higher rates and taxes for 2017 and 2018, MWD Chief Financial Officer Gary Breaux and General Manager Jeffrey Kightlinger made some astounding claims of how staff’s proposed rates would impact the San Diego County Water Authority.  Here’s what they said:

MWD General Manager Jeff Kightlinger: I just wanted to ask Gary if he would, I heard a lot of math uhm and I’m frankly puzzled how a 4 percent wholesale rate can translate to, no wrong Gary, (laughter) I appreciate your eagerness Mr. Arant, but I was actually going to go to our CFO for a math question despite your skills at math. Mr. Breaux could you explain to me how our 4 percent wholesale rate is being translated to 62 and 77 percent, uhm at one of our member agencies, as, San Diego specifically?

MWD Chief Financial Officer Gary Breaux: I’ll try to respond to that. So just to, overall, as Jeff mentioned it’s a 4 percent rate increase. We have many different components to our rates though. We have a full service treated rate, a full service untreated rate, an exchange cost rate, readiness to serve charge and a capacity charge and all of those are moving in different directions and going up in some cases and down in some cases. But the overall change is 4 percent. And when we look at if you were on one continuum which is 100 percent treated, your overall rate increase would be about 2 percent. If your 100 percent untreated you would be about 8 percent increase.

But still we have heard a lot, particularly from San Diego, different letters, what have you describing some very high rates. So what I attempted to do is to look at San Diego, we sell about 450,000 acre-feet to 500,000 acre-feet a year to them and they are a user of all our different types of water and they pay their portion of fixed charges. And what I get for 2016 is a melded rate, so if you look at all those rates what they’re paying now with the rates that are in place right now is about $717 an acre foot.

I then looked at what we have in the budget for 2017, their mix of usage and we’re showing their usage going down, we’re showing treatment cost, their treated revenues particularly going down, treated usage. So when I apply the three different options that the Board has before them, we have for Option 1, a melded rate increase of 2.2 percent. Option 2, a 3.6 percent in Option 2; and 1 percent in Option 3.

Now if you look strictly at treated, because I think a lot of these have referenced treated water and I heard today that it sounds like San Diego’s anticipating a much lower purchase of treated water that may be driving some of these higher rates. Just looking at treatment in isolation, the full service treated rate would go up 9.3 percent for Option 1; 15.2 for Option 2; 3.9 percent for Option 3. So, that’s the best I can, you know sense I can make of it so.

Jeff Kightlinger: Thank you Gary I just I had done the math and I had come to about for San Diego region a 1-3 percent melded rate under any of the options, and that verified that. So I’ll turn it back to you Mr. Chairman.

Click here to listen to the comments.

We put these claims side by side with the facts of how MWD’s proposed rates will impact the Water Authority’s ratepayers and its costs at MWD.

MWD Claim

The Facts

MWD sells about 450,000 acre-feet to 500,000 acre-feet a year to the Water Authority. Because of the Water Authority’s long-term water supply diversification strategy, the Water Authority estimates it will buy less than 200,000 acre feet of water from MWD next year.  The last year the Water Authority purchased more than 500,000 acre-feet of water from MWD was 2007.  The fact is, we will never buy that much water from MWD again.
The impact of MWD staff’s proposed fixed water treatment surcharge would only raise the Water Authority’s treatment costs by 3.9% to 15.2%. In its own written analysis, MWD itself estimated that the Water Authority’s treatment costs under its Option 1 proposal would be 7% higher than its Option 3 proposal in 2017.  Here’s a link to MWD’s own table showing the 7%. View the entire presentation here.
But, MWD’s 7% calculation is fatally flawed because MWD based that estimate on an incorrect projection of the Water Authority’s treated water purchases from MWD in 2017.  MWD projects the Water Authority will buy 97,266 acre-feet of treated water from MWD in 2017.  The fact is, because of the Water Authority’s investment in water treatment facilities right here in San Diego County – and including supplies from the Claude “Bud” Lewis Carlsbad Seawater Desalination Plant – the Water Authority estimates that it will buy only 38,289 AF of treated water from MWD in 2017. When you spread the proposed fixed charge and the commodity charge in MWD’s Option 1 over the smaller volume of water, it increases the total cost of MWD treated water to the Water Authority by 77% when compared to MWD’s Option 3 proposal.  See below for a table the Water Authority produced comparing MWD’s written analysis of the impact of Option 1 to the Water Authority’s analysis based upon the correct volume of projected 2017 treated water purchases.

The Water Authority, its member agencies, and countless civic leaders and ratepayers from San Diego County urged MWD’s Board of Directors to reject the punitive Option 1 treatment charge.  Fortunately for the Water Authority and our ratepayers, MWD’s Board of Directors rejected its own staff’s recommendation and instead adopted Option 3.  This was a big victory for our ratepayers, notwithstanding the fact that MWD’s adopted 2017 and 2018 rates continue to violate California laws, the California Constitution and the common law requirements that MWD’s rates only recover the cost of the services it provides. MWD has already been ordered to repay the Water Authority $244 million in damages, interest, costs and attorneys’ fees for the illegal rates it charged the Water Authority from 2011-2014.  While the Court also ordered MWD to adopt only lawful rates that comply with cost of service legal requirements, MWD ignored the Court order and  adopted rates and charges based upon the same flawed and illegal rate allocation methodology. So, well the Water Authority successfully avoided the imposition of even higher treated water rates by MWD, it still suffers overcharges based on its other rates and charges.

Fact vs. Fiction: Another MWD Rate Cycle, Another MWD Spin Cycle

It’s another rate-making cycle at MWD, with proposed rate hikes, more tax hikes and more illegal rates that will overcharge San Diego taxpayers and water ratepayers more than $134 million over the next two years – this, doesn’t even include the potential additional cost the new treatment charge MWD’s concocting to impose would add to San Diego’s ratepayers’ water bills. But, to hear it from MWD officials, the Los Angeles-based agency is a paragon of financial virtue. In commentaries in San Diego news media over the past several days, MWD has made astounding claims about its proposed rates, charges and property tax increases.

Please read on to see the MWD claims and the facts that refute them.

MWD Statement:   “Metropolitan Water District is proposing overall rate increases of 4 percent for each of the next two years.” (Voice of San Diego, April 7, 2016.)   “To meet future needs, we are proposing overall 4 percent rate increases for the next two years and projecting increases in the 4.5 percent range in the subsequent eight years…. There is nothing unusual or underhanded in how the percentage increase varies for the different rate components. Overall, it is a 4 percent rate hike.” (The San Diego Union-Tribune, April 8, 2016.)

FACT:  The 4 percent figure is an MWD talking point that has no relevance to San Diego County ratepayers. For San Diego ratepayers, MWD’s proposed rates will increase the untreated water rate by 12 percent, the treated water cost by a whopping 77 percent (or under another alternative, by 115 percent), and the water transportation rate by 6 percent. These do not average to 4 percent – not even close.

See page 5 of the April 12, 2016 MWD board memo here.

Tax Increases
And, MWD is also proposing to increase property tax collections from San Diego County taxpayers by more than $20 million over the next two years, by freezing its tax rate rather than lowering it as intended by the California Legislature and required by MWD’s own Act.   Even MWD’s rate “projections” must be taken with a grain of salt: MWD’s track record of keeping rate increases within its projections is abysmal. Take a look at this chart, which showing MWD’s 2004 10-year rate forecast. Compare MWD’s range of projected rates with the actual rate increases MWD subsequently approved and imposed.

Read the 2004 Long Range Finance Plan here.

MWD Statement:   “…strong financial practices at Metropolitan are essential to maintaining the backbone of the region’s water infrastructure.” (Voice of San Diego, April 7, 2016.)   “In the coming weeks, Metropolitan and its board of directors will be making important budget decisions to help meet the region’s future water needs with vision and fiscal responsibility.” (The San Diego Union-Tribune, April 8, 2016.)

FACT:  The claims about “strong financial practices,” and “vision and fiscal responsibility” at MWD are exposed when one considers some of the actions MWD has taken over the past several years:

Overcharges

  • Set rates far higher than necessary to pay all of its expenses, overcharging all of its ratepayers $847 million just since 2012. In fact, MWD’s Chief Financial Officer says it is MWD’s budget and rate strategy to over-collect revenues from its ratepayers in seven of every 10 years. For San Diego County ratepayers, these over-collections amount to $188 million – revenue collected by MWD without having shown any need to these revenues.
    • “You know the 1.7 when we set that, as well as the 1.75, I think we were pretty clear with the board that in seven out of 10 years we’re going to do a little bit better.” MWD Chief Financial Officer Gary Breaux at MWD’s April 8, 2013 Finance and Insurance Committee Meeting

To view MWD Chief Financial Officer Breaux’s full statement, click on video link here (fast-forward to 24:21).

  • Spent $1.2 billion on unbudgeted spending since 2013, completely outside of its budgets that already exceed $1.6 billion annually.

  • Approved unplanned borrowing of $500 million in November 2015, and proposes to take out $400 million more in lines of credit from commercial banks to replenish its Water Rate Stabilization Fund, which it depleted paying for such unbudgeted “gimmicks” like turf removal rebates.

MWD memo determining MWD’s interests require the use of $500 million in revenue bonds (Oct. 13, 2015

Memo authorizing $400 million in short-term revenue certificates (March 8, 2016)

Read the story in the LA Times here (Title: “Not much bang for the buck in DWP turf rebates, city controller audit says”).

Raiding PAYGo Funds

  • Raided $226 million in funds collected from ratepayers to pay for water infrastructure and used them instead to pay for operating expenses. And in its February memo forwarding proposed rates and charges, staff said it plans to recommend see advanced authority from the Board so it could raid another $240 million over the next two years without additional Board oversight. It appears that even MWD is no longer seeking the authority to raid PAYGo revenues without letting the Board know first. But it is unknown if staff will not return to the Board to ask for such authority over the next two years. How would MWD replace the cash paid by ratepayers? You guessed it – with even more long-term debt. Read the MWD board memo on proposed biennial budget and revenue requirements (Feb. 9, 2016).
  • Since 2014, MWD has increased property tax collections from taxpayers throughout its service area by almost $100 million more than allowed under the MWD Act. And yes, now it is proposing to increase property taxes again — by more than $100 million over the next two years, claiming that the additional tax revenues are “essential to the fiscal integrity of the district.”

MWD board actions to increase property tax collections:

In all, just since 2012, MWD has approved $3.3 billion in reckless fiscal actions – nearly all of it outside of the agency’s biennial budget.  

MWD Statement: Just about every year, the San Diego County Water Authority uses ratepayer funds to bus local citizens to the Metropolitan Water District of Southern California’s final budget meeting in downtown Los Angeles. They are customers who have ended up with some unfortunate misimpressions about Metropolitan’s financial practices and proposed budget, and they come to urge Metropolitan to collect less revenue than what is proposed. And then the bus goes home. (Voice of San Diego, April 7, 2016.)

FACT:  Besides insulting and deriding San Diego civic leaders and ratepayers who have to take a day out of their lives to travel more than 100 miles to MWD to exercise their First Amendment rights to petition this government agency, MWD gets it wrong again. Our civic leaders and ratepayers don’t have “unfortunate misimpressions about Metropolitan’s financial practices.

They are well informed and armed with the facts about MWD’s reckless unbudgeted spending, deliberate over-collections, higher property taxes, unplanned borrowing, and raids of funds intended for water infrastructure to pay the exorbitant salaries of MWD’s top management and other overhead costs. They are also well aware of another fact that was mentioned nowhere in MWD’s Voice of San Diego commentary: a court has already invalidated the rates MWD charged in 2011-2014, finding that the agency systematically and illegally overcharged San Diego ratepayers for transporting its independent Colorado River water supplies and awarding the San Diego County Water Authority $244 million in damages, interest, costs and attorneys’ fees. The Water Authority has already filed suit to collect over another $113 million in over-charges for 2015 and 2016. Despite the Court’s ruling, MWD’s board is continuing its illegal rate allocation and, if approved on April 12, will overcharge Water Authority ratepayers another $134 million in 2017 and 2018. Over just eight years, MWD’s overcharges – illegal taxes imposed on all San Diegans — will amount to more than one-half billion dollars. MWD is on pace to overcharge San Diego ratepayers more than $1 billion per decade.  We think it’s well worth the bus ride.

MWD Statement: “Metropolitan has been developing its next two-year budget over many months – multiple workshops, hundreds of pages of detailed financial information, all public and all transparent.” (Voice of San Diego, April 7, 2016.)

FACT:   Far from being “all public and transparent,” MWD stonewalled the Water Authority’s requests for all of the information and data it used to develop its proposed rates and charges, including its cost of service report and the rate model it uses to allocate its costs to various rates and charges. MWD refused to release this information prior to its March 8, 2016 public hearing on its proposed 2017 and 2018 rates and charges. And, MWD still refuses to release the most vital information needed to review its rates and charges: its rate model.  MWD claims its rate model – dubbed Financial Planning Model – is proprietary and a trade secret. That’s right: the largest public water agency in the United States claims the methodology it uses to allocate its costs and impose water rates and charges imposed on 19 million Southern Californians is a “secret.” The Water Authority has filed a formal demand for the rate model under the California Public Records Act.  MWD general counsel’s letters refusing to release the rate model:

MWD General Counsel response to Water Authority Public Records Act request  letter (Feb. 26, 2016) 

MWD General Counsel response to Water Authority Public Records Act request letter (March 11, 2016)

MWD General Counsel further response to Water Authority Public Records Act request letter (March 30, 2016)

MWD General Counsel further response to Water Authority Public Records Act request letter (April 11, 2016)

MWD is well aware that without the rate model, the papers MWD released SUBSEQUENT to the public hearing are meaningless. “All public and transparent?” Hardly.

MWD Statement: “Metropolitan plans to use cash on hand to pay 60 percent of the costs for capital projects over the coming decade. For Metropolitan, relying too heavily on the credit card would have long-term consequences.” (Voice of San Diego, April 7, 2016.)

FACT:   Since 2014, MWD has already raided $226 million of the money it budgeted to spend on water infrastructure to instead pay for operating expenses of the agency, including turf removal gimmicks. To make up for it, MWD then borrowed money and increased its long-term debt to pay for the water infrastructure. In February, MWD actually proposed doing the same thing over the next two years:

Read the MWD board memo on proposed biennial budget and revenue requirements (Feb. 9, 2016)

Although MWD ratepayers have dodged this bullet for now, we won’t be surprised to see the idea brought back later as it has been in prior years. MWD needs to stop using ratepayer money collected to pay for infrastructure to instead pay operating expenses. That has real, long-term consequences for water ratepayers.

MWD Statement: “Paying off the credit card: Metropolitan seeks to have on hand twice the net revenues (annual operating revenues minus annual operating costs) to meet its debt obligations. It helps to assure that Metropolitan can borrow money at low rates. For Metropolitan, shaving budgets too closely would have potentially expensive long-term impacts for ratepayers.” (Voice of San Diego, April 7, 2016.)

FACT:  MWD has a financial policy to maintain 2.0-times debt coverage, its proposed budget and long-term forecast in the budget show that MWD will drop below that target in six consecutive years.  MWD Board memo on fixing and adopting water rates and charges (April 12, 2016) Given its $847 million in over collected revenues to date, and its budget process, calculated to over collect from ratepayers in seven out of 10 years, we doubt anyone at MWD has to worry about “shaving budgets too closely.” The fact is that not one single dollar was cut by the MWD board of directors from the staff recommended budget. That would have been almost impossible to do since the staff refused to provide the board in a timely fashion – during budget deliberations and “workshops” – with the level of budget detail necessary to understand how staff was proposing to spend money or where reductions might be found.

MWD Statement: “Meeting targets for reserves: Metropolitan has a baseline target and a maximum target for maintaining reserves. Metropolitan is projecting to have reserves on hand sufficient to meet its baseline target for the next 10 years. For Metropolitan, failing to meet a minimum reserve target would be a big red flag to lending institutions and credit-rating agencies.” (Voice of San Diego, April 7, 2016.)

Fact: Since 2012, MWD over-collected $847 million from ratepayers, but spent $1.2 billion on unbudgeted expenses. To make up the difference, MWD raided its cash funds that were budgeted for water infrastructure and issued more unplanned, long-term debt. It drove the balance of its Water Rate Stabilization Fund so low that it now proposes to take out $400 million in lines of credit to backfill the fund. Without this extraordinary borrowing, MWD’s Water Rate Stabilization Fund would fall far below its minimum reserve level. MWD is right about one thing: because MWD uses the cash in its Water Rate Stabilization Fund to maintain bond coverage promises it makes to its bondholders, “failing to meet a minimum reserve target would be a big red flag to lending institutions and credit rating agencies.” Taking out commercial lines of credit to replenish its cash reserves to meet its bond coverage minimum target are just be the kind of red flag the big three credit rating agencies — Standard & Poor’s, Moody’s Investor Services, and Fitch Ratings – might raise.

MWD board memo authorizing $400 million in short-term revenue certificates (March 8, 2016)

MWD Statements:   Metropolitan fully understands the need to keep costs down so that local projects such as San Diego’s Pure Water can advance.” (Voice of San Diego, April 7, 2016.)   “Keeping our rate increases modest, as is planned, will also create the financial opportunity for cities such as San Diego and projects such as Pure Water to move forward. Keeping Metropolitan on a strong financial footing will prevent sudden spikes in rates that can disrupt local projects.” (The San Diego Union-Tribune, April 8, 2016.)

FACT: MWD’s proposed budget is going up, not down, and has grown by 45.7 percent over the past decade – even as MWD sales declined by 38.3 percent over that same period. And, MWD’s own long-term forecast shows its budget will grow by another 37.6 percent over the next decade.

 MWD Board memo on fixing and adopting water rates and charges (April 12, 2016)

MWD has increased its treated water rate by 126.3 percent and its untreated water rate by 82.2 percent since 2004 to 2016. These annual increases averaging 9.7 and 6.3 percent, respectively, far exceeded MWD’s own 10-year rate forecast, issued in 2004. MWD’s reckless fiscal practices and rate increases drain available ratepayer dollars from the City of San Diego, the Padre Dam Municipal Water District and other local agencies who are developing new local water resources including the City’s Pure Water Program and Padre’s Advanced Water Repurification Project.

MWD’s $847 million in over-collections alone since 2012 drained $189 million from water agencies in San Diego County and their ratepayers. Of that amount, $75 million was picked right out of the pockets of ratepayers in the City of San Diego – funds the City could have invested in its Pure Water Program. The more money local water agencies send to Metropolitan, the less they have to invest in local facilities – because around here, affordability matters. Of the $244 million awarded to the Water Authority in its rate litigation victory against MWD, nearly $100 million was illegally collected from ratepayers in the City of San Diego. MWD’s platitudes to local water supply development ring hollow when you consider how much money it has drained from local agency coffers.   Despite MWD’s reckless fiscal practices, San Diego water agencies are forging ahead with projects that are more cost-effective than ever when compared to the steadily increasing cost of MWD’s imported water. Local supplies are also more reliable that MWD’s supplies. They’re drought-proof, and – importantly for ratepayers – locally controlled, and you don’t have to get on a bus and travel 100 miles away.

 

MWD’s 2017/18 Rate Proposal is A LOT Higher Than They Say It is

  • MWD’s rate increases are a lot higher than MWD says they are
    • MWD says its “overall” rate increase is 4%, but that is highly misleading
    • In fact, every individual MWD member agency pays different rates and costs, depending on the MWD services it uses
      • San Diego ratepayers will pay 6.2% higher wheeling rates
      • San Diego ratepayers will pay 12.1% higher cost for raw water
      • San Diego ratepayers could be forced to pay 77% more in 2017 for treated water bought from MWD — at the very same time it is buying far less treated water from MWD
  • MWD claims that the manner in which it sets its rates is a trade secret
    • MWD has refused to make available to the public or even its own board of directors the financial planning model that shows how it allocates its costs to rates and charges
    • The Water Authority has been forced to file a Public Records Act request in order to obtain this information
    • MWD also refused to provide the public and board members a level of budget detail that would allow them to understand how MWD is proposing to spend money
  • MWD has a history of collecting a lot more money than it needs to pay its costs
    • Over the past five years alone, MWD has collected and spent $847 million more than necessary to pay 100% its costs
    •  MWD has authorized spending of more than $1 billion on unbudgeted expenses
  • MWD’s proposed rates and charges for 2017 and 2018 are illegal
    • A Superior Court judge has already ruled that MWD’s rates are illegal – but MWD is still using the same flawed methodology to misallocate costs among its rates and charges
    • MWD’s methodology forces San Diego residents and businesses to pay water supply costs that should be paid by others
    • MWD is also raising taxes again, even though the California Legislature passed a law intended to limit MWD’s ability to impose higher property taxes to situations where its “fiscal integrity” is at stake
    • Having collected $847 million more than necessary over the past five years, and then authorized spending MWD can hardly claim that its fiscal integrity is threatened if it doesn’t also collect higher taxes
  • The Water Authority continues to seek fair and legal rates at MWD
    • After winning two lawsuits challenging MWD rates for the 2011-2014 calendar years, MWD owes the Water Authority and its member agencies more than $235,000,000 — which increases by $45,000 per day or $16.4 million annually — until paid
    • The judge also issued a writ of mandate requiring MWD to set lawful rates, but MWD claims it doesn’t apply to them until after its appeal is decided.
  • MWD will vote on the illegal rates at its board meeting on April 12

MWD is meeting on April 12 to vote for even higher water and property tax rates

IF YOU DON’T SPEAK UP YOUR WATER RATES AND PROPERTY TAXES WILL GO UP!

  • These water rate and property tax increases are a “done deal” – unless the public shows up and makes itself heard.
  • To learn more, click here

WHERE TO GO TO SPEAK OUT AGAINST MWD’S RATE INCREASES:

WHEN: Tuesday, April 12, 2016, 12-noon WHERE: Metropolitan Water District (adjacent to Union Station)
700 North Alameda St. Room 2-145
Los Angeles, CA 90012
 (Click for directions)

IF YOU CAN’T ATTEND THE HEARING, CLICK HERE TO SEND YOUR COMMENTS DIRECTLY TO MWD:

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Time for Transparency at MWD

It’s time for transparency. Ratepayers deserve to know the facts when an agency is proposing a rate hike. This week, the Metropolitan Water District of Southern California and its Board of Directors continued on its mission of significantly raising water rates for millions of Southern Californians, while offering no reason for the rate increases and ignoring public demands for budget transparency.

While they continue to raise rates on Southern California water users, MWD refuses to tell the public why the increases are needed how they intend to spend hundreds of millions of dollars of public money.

In addition to this dismissive attitude toward its ratepayers, these latest rate increases also come at a time when there is a Superior Court ruling that MWD’s rates are illegal.

It’s long past time for MWD to be transparent and explain why the increases are needed and what the money will be used for. On behalf of its ratepayers, the San Diego County Water Authority has filed a Public Records Act request so we can see what MWD plans to spend our money on. While promising to comply with state open records laws, the MWD board continues to drag its feet, deliberately stalling as they run out the clock on the public’s right to know before Tuesday’s public hearing and the April 12 board vote scheduled to approve rate and tax increases.

The request being made by San Diego ratepayers of MWD is a simple one:  Show us why you need to hike our water rates yet again, and what you plan to spend the money on. Show us that your rates conform to California’s cost of service law and Constitution. Using public money requires building public trust. By being more open and transparent in the way they do business, the MWD board can go a long way toward building some of that basic trust between the MWD and the ratepayers of Southern California.

Water Authority delegates’ letter to MWD outlining its concerns over lack of transparency in its rate and budget process

 

Water Authority Presses MWD for Transparency in Delta Land Deal

A Nov. 5, 2015 letter from the San Diego County Water Authority delegates to MWD’s Board of Directors sought to ensure details and purpose of a potential purchase option for four islands located in the Sacramento-San Joaquin Bay-Delta are made public to the extent required by California law.  The Water Authority wrote the letter to express concerns that a subsequent closed session discussion about the purchase option might exceed the limits of exemptions to the open meeting requirements.

“The Water Authority requests that the board meeting agenda be revised to include an open board meeting presentation and discussion regarding the purpose of the option prior to the closed session discussion of the price and terms,” wrote the Water Authority’s General Counsel.  “I am advised that the MWD Board of Directors has never been informed of or discussed in open session the purpose of the option to purchase the properties listed…. the purpose of a real property aquisition cannot be presented to the Board outside the bounds described in the Attorney General opinion…The Water Authority requests that the board meeting agenda be revised to include an open board meeting presentation regarding the purpose of the option to purchase the properties prior to the closed session discussion of price and terms.”

To watch the MWD board discussion, click here: