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Why Government Robs You Blind: Because It Can — They Make and Enforce the Laws and Frighten You into Submission

Between pass-throughs and rate hikes and surcharges and transfers to other uses, you might have noticed your bills for water and power have been soaring for years.

You ain’t seen nothing yet — utilities are the certain cash cow for government at all levels, a reservoir of money that can be used just about anyway your elected officials want if they are lucky enough to operate their own water and/or power systems like the LADWP.com (a web address that makes clear it’s a business, not a government agency).

To read more, click here.

Another water fight means $17 million

The San Diego County Water Authority is once again locked in a financial battle with its major supplier, this time over $17 million worth of rate increases and property taxes.

For the average ratepayer and property owner, the annual amount at stake is negligible, coming to less than what they would pay for one cup of coffee a month.

But the contest is worth millions of dollars cumulatively to the Metropolitan Water District of Southern California and its biggest customer, the county water authority.

The dispute is twofold.

To read more, click here.

Will Angelinos be Submerged In a New Water Tunnel Tax?

VOICES – It’s still Chinatown, and like Jake, we can’t forget it. On Tuesday (June 11), the powerful Metropolitan Water District (known as Met) will vote to take the first step towards raising property taxes to help pay for Governor Brown’s coveted twin-tunnel project 350 miles north of Los Angeles at an estimated price tag of $50 billion. The tunnels would deliver more water to California’s biggest corporate agribusinesses and oil companies in the Central Valley while southern California taxpayers and ratepayers would get most of the bill and no new water.

To read more, click here.

Metropolitan Water District board to consider reduction in rate increase

The Board of Directors of the Metropolitan Water District, Southern California’s largest wholesale water agency, today will consider a reduction in a 5 percent rate increase scheduled to go into effect on Jan. 1, 2014.

MWD has more money since water sales are up and expenses are down, leading to an increase in the district’s reserves, according to a staff memorandum from General Manager Jeffrey Kightlinger and Gary Breaux, chief financial officer.

To read more, click here.

MWD over-collects from ratepayers… and demands more

The Los Angeles-based Metropolitan Water District of Southern California is pushing ahead with water rate increases despite projections it will over-collect from Southern California ratepayers more than $217 million in excess of its needs this fiscal year alone. In spite of this fact, on April 9, MWD’s board decided to increase its readiness-to-serve charge by 17 percent, increase its capacity charge by 34 percent, and, keep in place its previously approved 5 percent water rate increase beginning January 2014. Since 2009, MWD rates have increased more than 100 percent.

Before the vote (item 8-2) to increase rates, the San Diego County Water Authority and the cities of Compton and Long Beach asked MWD to rethink whether these large increases in MWD charges and 5 percent rate increase were really necessary in 2014, when it is so clear that MWD’s actual water sales and costs once again varied substantially from those estimated by management. MWD set rates in 2012 for rates in 2013 and 2014, which were based on the assumption that 2012 revenues would roughly equal expenditures. MWD ended 2012 by over-collecting $100 million more than it needed.

MWD delegate Diana Sanchez, who represents the city of Compton, told the board that in her city there are families working multiple jobs just to make ends meet, and others on fixed incomes that cannot afford another rate increase. “This increase will not break MWD, but it could break a family struggling to survive.”

“We know for a fact that MWD is collecting substantially more revenues than its budget or cost of service supports,” wrote the San Diego County Water Authority’s MWD delegates in an April 8 letter. “To move ahead with higher 2014 rates is a disservice to the cities and ratepayers we serve, many of whom are struggling with their own budgets and to make ends meet. MWD does not need a 5 percent water rate increase in 2014.”

The Water Authority delegates objected to increased Readiness-to-Serve and Capacity charges being voted on by the board. In addition, the Water Authority asked MWD to return to its practice of adopting rates annually instead of every two years in order to respond to changed conditions and material differences between actual water sales and costs as contrasted with those estimated by management in setting the water rates and charges. The Water Authority delegates urged MWD to adjust its budget and water rates to better reflect its actual revenues and costs in order to be more sensitive to the cities and ratepayers it serves. Read the Water Authority letter objecting to the rate increase and over-collection by clicking here.

Further, MWD has a long track record of materially overestimating or underestimating its water sales and costs, resulting in poor financial practices such as raiding funds intended for capital projects in years when revenues are insufficient to pay operating costs.

In years like this, when MWD ends up with revenues substantially in excess of its costs – and even in excess of its allowable reserves, MWD looks for new, unplanned ways to spend the money rather than return it back to weary ratepayers.

Fighting for fair rates is nothing new for the Water Authority. Last year, the Water Authority successfully protested a 7.5 percent rate increase MWD had planned for 2013. The Water Authority instead asked the board to consider adopting a 3 percent increase, which would have preserved funding for water supply and infrastructure needs, while cutting unnecessary operational expenses. The Water Authority also asked MWD to perform a new cost of service analysis in compliance with Prop. 26 to ensure its rates are reasonably proportional to the costs of the services it provides. MWD’s board refused to consider or study this option and is continuing on this course by moving forward with the planned additional 5 percent increase in January.

Read the Water Authority’s proposal and letters here.

Metropolitan Water District spending questioned as water bills double

Judge fast-tracks water rate complaint

A Superior Court judge has expedited the San Diego County Water Authority’s challenge to the Metropolitan Water District by allowing two separate water rate lawsuits to be pursued simultaneously.

In the ruling on Friday, Superior Court Judge Richard A. Kramer said he would coordinate the agency’s two challenges to wholesale water rates set by the Los Angeles-based Metropolitan Water District.

Letter Library, Part 3 (Finance – budget and water rates/audit practice/annexation, Resources Planning, Subsidy Programs, QSA, Other)

Correspondence between MWD and Water Authority by Key Issue

Finance: Budget and Water Rates

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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]Proposed Biennial Budget for 2011/12 and 2012/13 (April 11, 2011) [/one_half]
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[one_half]Proposed Biennial budget and Associated Rates and Charges for 2012/13 and 2013/14 (March 8, 2012) [/one_half]
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[one_half]Recommendation to Cap MWD Rate Increases at 3% for 2013 and 2014 (March 21, 2012) [/one_half]
[one_half last] [/one_half]
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Finance: Audit Practice

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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]KPMG Audit Report (October 25, 2011) [/one_half]
[one_half last]Response to KPMG Audit Report (November 1, 2011) [/one_half]
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Finance: Water Authority Annexation

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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]San Diego County Water Authority’s Annexation (March 13, 2012) [/one_half]
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Resources Planning including Integrated Resources Plan (“IRP”)

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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]Integrated Resources Plan (October 11, 2010) [/one_half]
[one_half last] [/one_half]
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[one_half]Adjustments to MWD’s Water Supply Allocation Plan Formula (September 9, 2011) [/one_half]
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[one_half]Water Planning and Stewardship Reports – lack of justifications to demonstrate needs and benefits (October 7, 2011) [/one_half]
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[one_half]Water Authority’s Request to Include Information in MWD’s SB 60 (December 13, 2011) [/one_half]
[one_half last]MWD’s Letter on Request to Include Information in Report to Legislature (January 18, 2012) [/one_half]
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Subsidy Programs: Local Water Supply Projects

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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]MWD Local Resources Program – Chino Desalter (June 13, 2011) [/one_half]
[one_half last]Response to June 13, 2011, letter on Chino Basin Desalination Program (June 14, 2011) [/one_half]
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[one_half]Oppose Local Resources Program Agreements (March 12, 2012) [/one_half]
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[one_half]Oppose Local Resources Program Agreement with MWDOC and the City of San Clemente for the San Clemente Recycled Water System Expansion Project (June 11, 2012) [/one_half]
[one_half last] [/one_half]
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[one_half]Oppose Local Resources Program Agreement with MWDOC and El Toro Water District for the El Toro Recycled Water System Expansion Project (August 20, 2012) [/one_half]
[one_half last] [/one_half]
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Subsidy Programs: Conservation

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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]Comment Letter on MWD Staff Analysis on Opt-in/Opt-out Conservation Program (August 16, 2010) [/one_half]
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[one_half]MWD Draft Long Term Conservation Plan (November 29, 2010) [/one_half]
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[one_half]Comments on Long Term Conservation Plan Working Draft Version 11 (July 20, 2011) [/one_half]
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[one_half]Opposition Letter on Long Term Conservation Plan and Revised Policy Principles on Water Conservation (August 15, 2011) [/one_half]
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[one_half]Turf Replacement Grant (November 23, 2011) [/one_half]
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[one_half]Oppose changes to water conservation incentives (subsidies) as described (May 7, 2012) [/one_half]
[one_half last]  [/one_half]
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Subsidy Programs: Replenishment

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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]MWD Discounted Water Program (April 25, 2011) [/one_half]
[one_half last]MWD’s Response to Water Authority’s April 25, 2011 Letter on Discounted Water (May 4, 2011) [/one_half]
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[one_half]Sale of Discounted Water (May 6, 2011) [/one_half]
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[one_half]Comments and Questions – Replenishment Service Program (September 12, 2011) [/one_half]
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[one_half]Letter on Approve Policy Principles for a Replenishment (Discounted Water) Program (November 4, 2011) [/one_half]
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[one_half]Letter on Review Options for Updated Replenishment (Discounted Water) Program (December 12, 2011) [/one_half]
[one_half last]MWD’s Response to Water Authority’s December 12, 2011 letter on Replenishment Program (December 21, 2011) [/one_half]
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[one_half]Response letter to MWD Letters on Replenishment Dated December 21, 2011 (January 5, 2012) [/one_half]
[one_half last]MWD Response to January 5, 2012 Letter on Replenishment Workgroup Materials addressed to MWD Delegation (January 18, 2012) [/one_half]
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[one_half last]MWD’s Replenishment Workgroup Documentation Response Letter to SDCWA’s January 5, 2012 “MWD Letters on Replenishment dated December 21, 2011” addressed to Ken Weinberg (January 18, 2012) [/one_half]
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Quantification Settlement Agreement (“QSA”) including IID Water Transfer

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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]MWD Initiated this correspondence [/one_half]
[one_half last]Notice of Default Pursuant to Amended and Restated Exchange Agreement (April 12, 2012) [/one_half]
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[one_half]Request for Negotiation (April 26, 2012) [/one_half]
[one_half last]Response to April 26, 2012 SDCWA Letter re Request for Negotiation (May 4, 2012) [/one_half]
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[one_half]MWD Initiated this correspondence [/one_half]
[one_half last]Notice of Default Pursuant to Amended and Restated Exchange Agreement (June 12, 2012) [/one_half]
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[one_half]Water Authority’s response to MWD’s June 12, 2012 Notice of Default (June 27, 2012) [/one_half]
[one_half last]Compliance with the Amended and Restated Exchange Agreement (August 1, 2012) [/one_half]
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[one_half]IID Water Conservation and Related QSA Issues (July 10, 2012) [/one_half]
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[one_half]SDCWA’s response to MWD’s August 1, 2012 Letter (August 16, 2012) [/one_half]
[one_half last]  [/one_half]
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Other

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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]Water Authority’s letter to Los Angeles County Economic Development Corporation re LAEDC Draft Report on “Cost of Water in San Diego: the SDCWA-IID Water Transfer and SDCWA Water Rates” (March 8, 2012) [/one_half]
[one_half last]N/A –  Our letter was address to Los Angeles County Economic Development Corporation [/one_half]
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[one_half]Re: Letter to U-T San Diego (March 28, 2012) [/one_half]
[one_half last]MWD’s Response to SDCWA’s March 28, 2012 Letter “Re: Letter to U-T San Diego” (April 19, 2012) [/one_half]
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[one_half]Water Authority’s Response to MWD’s April 19, 2012 Letter to U-T San Diego (April 24, 2012) [/one_half]
[one_half last]NONE (but we had sent initial letter on 3/28/12, MWD responded 4/19/12, and then we responded 4/24/12 [/one_half]
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[one_half]Re: Approve amendments to MWD Administrative Code (September 10, 2012) [/one_half]
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MWD approves higher than necessary rate increases for 2013-2014

MWD Board shoots down ratepayer-sensitive Water Authority plan that would have capped average MWD rate increases at 3 percent a year for next two years

Disregarding public concern over rapidly rising water rates, the Metropolitan Water District of Southern California’s board of directors today approved raising its “average” water rates by 5 percent in 2013 and another 5 percent in 2014.  No one pays “average” rates at MWD.  The rates MWD’s board approved today increase its Tier 1 Treated water rate by 6.7 percent in 2013 and another 5.1 percent in 2014.

MWD’s board voted down an alternative proposed by the San Diego County Water Authority that was more sensitive to water ratepayers.  The Water Authority’s proposal called for reducing spending and capping average rate increases at no more than 3 percent per year for the next two years.

“By its vote today, MWD’s board continues to spend more than is necessary to provide a safe and reliable water supply,” Water Authority Board Vice Chairman Thomas V. Wornham  said.  “In doing so, MWD rejected a more sensible option to reduce its operating costs and discretionary spending, as most other water agencies and cities in Southern California have.  We are deeply disappointed that MWD’s board and staff did not give meaningful consideration to our proposal, which would have funded all of MWD’s core needs and provided some much-needed relief to 19 million water ratepayers in MWD’s service area.”

Wornham was part of a contingent of San Diego County water officials, city leaders and ratepayers who traveled to Los Angeles to testify at MWD’s board meeting.

MWD board approved the rate increases for 2013 and 2014 to support a $1.78 billion budget for fiscal year 2012-2013 and $1.89 billion spending plan for 2013-2014.  MWD has pointed to rate increases as necessary to fund repair and replacement of aging infrastructure, including maintenance and repair of MWD’s Colorado River Aqueduct.   In reality, the budget recommended by MWD staff increases funding for travel expenses, staffing levels and consulting services.  MWD’s rates are mostly being driven by reduced water sales, which are down more than 30 percent since 2006.  To learn more about the real reasons that MWD needs to raise rates, click here to read the first four installments of Fact vs. MWD Fiction.

The Water Authority’s alternative proposal, submitted to MWD’s board on March 21 after previous attempts to have MWD’s board and staff explore additional budget cuts to lower rate increases failed, would have made the 3 percent rate increase cap possible though $116.5 million in reduced spending.  The proposed spending reductions would have left funding for necessary repairs and maintenance of aging infrastructure intact, but would have reduced overall operations and maintenance spending by 10 percent.  It also would have suspended conservation funding for two years, to give a break to weary water ratepayers who have heeded MWD’s call to conserve water – but are still paying more.  Significant reductions in MWD’s water sales also show a diminished need at this time to fund its expensive rebate programs.

During the public comment period of MWD’s Board meeting today, the Water Authority also presented evidence that questions the legality of MWD’s proposed rates and charges.  The documents demonstrate that MWD’s rate structure favors some member agencies over others, and does not adequately recover the costs to provide some services, while overcharging for other services.  Under its rate structure, ratepayers in San Diego will be overcharged by $40 million this year, an amount set to grow with MWD’s approved rate increases for 2013 and 2014.

Under California law, public agencies must prove that rates charged bear a fair and reasonable relationship to the cost of providing those services and the customer’s burden on the system.

For example, the Los Angeles Department of Water and Power buys different amounts of water every year, depending on how much of its own water it receives from the Sierra Nevada via its own Los Angeles Aqueduct.  MWD’s rates do not reflect the costs MWD incurs to provide standby supplies and capacity to accommodate these annual demand fluctuations.  As a result, LADWP receives a $35 million to $40 million annual benefit while MWD’s other member agencies, including the Water Authority, pick up a disproportionate share of those costs through MWD’s rates.

MWD’s decision today perpetuates its rate structure that the Water Authority contends is illegal and is challenging in court.  The Water Authority filed suit over MWD’s 2011 and 2012 wholesale water rates in 2010.  The Water Authority alleges that MWD improperly overcharges for the transportation of water and uses that money to subsidize the cost of MWD water.  By 2021, if left unchallenged, the overcharges could grow to more than $217 million annually. To learn more about the rate challenge, visit www.sdcwa.org/mwdrate-challenge.

SD water officials contend “secret society” of agencies hurt region

County water authority claims Metropolitian maneuvers for unfair rate hikes                                                     

U-T San Diego – San Diego County water officials intensified their bitter feud with the Metropolitan Water District Monday, releasing hundreds of pages of emails and other records that they claim expose a secret “shadow government” of agencies formed to undermine a local water deal…