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Historic win for County Water Authority over MWD villains

On Friday, the San Diego County Water Authority won a historic victory — and sweet vindication — when a judge affirmed its contention that it has been systematically overcharged by the giant Metropolitan Water District of Southern California, known as MWD.

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San Diego County Water Authority announces MWD’s rates violated state law

A judge has upheld his ruling in a lawsuit against the Metropolitan Water District that found the MWD’s rates violated state law, the San Diego County Water Authority announced Friday.

San Francisco County Superior Court Judge Curtis Karnow on Thursday affirmed his Feb. 25 tentative ruling that stated MWD rates imposed since 2011 violated several statutes and Proposition 26, which sets the conditions for which taxes and fees can be increased, according to water authority officials, who filed the suit alleging the MWD illegally assigned unrelated water supply costs to its water transportation rates.

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MWD Continues to Over-Collect from Ratepayers

The Issues: Rate Increases. The Metropolitan Water District of Southern California is on pace to have its maximum reserves exceed its board-adopted maximum by $319 million (or 66% more than maximum level) in fiscal year 2014.  Tax Hikes. Last June MWD’s board halted a scheduled property tax decrease, saying it needed more money in order to maintain its “fiscal integrity.” The result: An additional $4.4 million in taxes from property owners to MWD over and above water rates.

Option2-5050-041012 January 2012: MWD’s staff told the board it needed 5% rate increases in 2013 and 2014 to maintain critical water delivery infrastructure and avoid layoffs.  They said an alternative proposal of 3% rate increases in those years would threaten water supply reliability.

July 2012: Just three months after adopting the budget and 5% rates increases for 2013 and 2014, MWD ended FY 2011/12 with revenues of $97 million over budget.

June 2013:  MWD projects it will over-collect $217 million in excess revenues, resulting in reserves exceeding its CurrentForecast-061013maximum limit by $75 million. The MWD board also voted to suspend the tax rate limitations in Section 124.5 of the MWD Act, resulting in an additional $4.4 million in unbudgeted revenues from higher-than-scheduled property taxes.  Staff claimed the action was necessary to maintain MWD’s “fiscal integrity”.

Despite efforts by ratepayers, business groups, community leaders, mayors and several Southern California water agencies asking to reduce the planned rate increase and allow the scheduled property tax decrease, the MWD board voted to raise taxes and spend $75 million on unbudgeted costs and programs; it chose to do nothing with its 5% rate increase scheduled to take effect in 2014. Leaving the 5% rate increase would generate MWD about $15 million, staff reported.

ReserveFundBalance-Jan2014January 2014:  Having already diverted $75M on unbudgeted uses, MWD still began FY 2014 with more than $62 million over its maximum reserve level, in violation of its own Administrative Code. MWD could have easily avoided the 5% rate increase in 2014 by using a quarter of the $62 million for that purpose.  Staff now reports MWD is on track to add another $270 million to its reserves this fiscal year, thus exceeding the maximum level by $319 million.

Letter Library, Part 2 (Finance – long range plan/long-term willingness to pay)

Correspondence between MWD and Water Authority by Key Issue

Finance: Long Range Finance Plan

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[one_half]Water Authority Letter [/one_half]
[one_half last]MWD’s Response [/one_half]
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[one_half]Draft Long Range Finance Plan (January 5, 2011) [/one_half]
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[one_half]Update on Rate Refinement Discussions (July 9, 2012) [/one_half]
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[one_half]Rate Refinement Workshop (August 16, 2012) [/one_half]
[one_half last]MWD’s response to Water Authority’s August 16, 2012 Rate Refinement Letter (September 7, 2012) [/one_half]
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[one_half]Re: Update on “Rate Refinement” Board Information Item 7-b (September 10, 2012) [/one_half]
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Finance: MWD Member Agencies’ Unwillingness to Sign Contracts

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[one_half]Water Authority Letter [/one_half]
[one_half last]MWD’s Response [/one_half]
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[one_half]Member Agency Unwillingness to Sign Take-or-Pay Contracts (August 16, 2011) [/one_half]
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If They Build It, Who Will Come?

Plans by Southern California water agencies to reduce their demand for imported water were highlighted this week by the National Geographic Newswatch blog and the Los Angeles Times.

National Geographic  reported on the efforts of Santa Monica, Camarillo, Ventura County Waterworks District No. 1, Long Beach Water Department, and Los Angeles Department of Water and Power to reduce their demand for imported Bay-Delta and Colorado River water by more than 40 billion gallons per year, equivalent to the amount of water 1.11 million people would use in one year. The article highlights efforts by these jurisdictions to boost local supplies through recycling, conservation and development of more local supplies.

The Los Angeles Times article discusses how a proposed project of the Los Angeles Department of Water and Power might make that a reality. LADWP announced plans to build the largest groundwater treatment plant in the world to reduce its purchases of costly imported water.

“By 2035, we plan to reduce our purchases of imported water by half,” said James McDaniel, LADWP’s senior assistant general manager.

Similarly, many of MWD’s member agencies have plans to reduce their demands for imported water over the coming decades. In January, a  report compiled by the San Diego County Water Authority using the member agencies’ Urban Water Management Plans found that planned local supply projects could reduce demand for imported water by as much as 1.2 million acre-feet by 2035. To view a map of the planned local projects, click here.

Yet, MWD – Southern California’s water wholesaler and  the biggest buyer of water from the State Water Project – has not considered many of these  projects in its decision-making about support for a proposed Bay-Delta facility. Ratepayers are being asked to pay for a project that currently does not take into account the reality that most water agencies in Southern California are planning to decrease their imported water purchases from Metropolitan, and thus, in turn, lessen the demand for water from the Bay-Delta. A coalition of environmental groups, water agencies, and businesses has asked the state to include the following in its analysis:

■ What is the real demand in Southern California for water imported from the Bay-Delta?

■ What size project are agencies willing to pay for, as demonstrated by firm, long-term financial commitments by those who will benefit from it?

MWD acknowledges that its member agencies are not obligated to purchase any of the water available from MWD. If MWD’s member agencies continue to reduce their purchases of imported water from Metropolitan, as they already are doing, who will be left to pay Metropolitan’s share of the Bay-Delta costs?

Water agency unfair to San Diego

Founded in 1928, the Metropolitan Water District (MWD) is a confederation of 27 local water agencies that stretches from the Mexican border north to Santa Barbara.

MWD has been the dominant purveyor of imported water to this region for most of its history, acting as a secret, shadow government. It created an impenetrable megalith that did as it wished until the San Diego County Water Authority (SDCWA) dared to guarantee its own source of this vital resource and secure its own water supply.

This quest began in 1995 as a result of MWD’s arcane “preferential rights” policy, which gives the Los Angeles region privileged access to MWD’s water during a drought. About 85 percent of San Diego’s water supplies came from MWD. Los Angeles’ need for backup water in a drought could balloon from 34 percent to 65 percent or more.

Click here to read the story.

Southwest agencies proposing rate hikes

Water and sewer bills could become more expensive this summer as three southwest Riverside County water districts consider rate increases.

Just how expensive, however, depends on where one lives.

This week, the Rancho California Water District and the Elsinore Valley Municipal Water District will hold public hearings on proposed rate increases to both water and sewer services. Both hearings are scheduled to be held Thursday, June 13.

Click here to read the story.

San Diego loses financing fight with MWD

The Metropolitan Water District Board of Directors Tuesday dismissed pleas from powerful interests in the San Diego region to roll back increases in water rates, hold the line on property taxes and issue refunds to customers.

The San Diego County Water Authority argued that Metropolitan should:

• Reduce a planned 5 percent water rate increase in 2014 to 3 percent and send $75 million of its “excessive reserves” back to customers. Of that, $16.38 million would go the San Diego water authority, Metropolitan’s largest buyer.

• Continue past policy of gradually reducing its property tax rate. Metropolitan instead suspended the planned rate reduction, which will cost property owners about a dime per $100,000 in assessed valuation. Keeping the tax rate stable will save Metropolitan about $4.4 million and cost property owners in the San Diego region about $800,000.

Click here to read the story.