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.

Mismatched: MWD Overstates Demand for Its Water

One of the most active environmental groups in California water issues is raising serious questions about “mismatches” in MWD’s water supply plans that could result in spending millions of ratepayer dollars unnecessarily. The central problem raised by the Natural Resources Defense Council is that MWD is overstating future demand for its water by undercounting the impact of local supply projects and understating the impact of conservation.

An analysis commissioned by the Water Authority came to a similar conclusion earlier this year.

“If water agencies overestimate water demand, they run the risk of investing in water supplies that won’t be needed (but still need to be paid for) and sticking customers with higher water bills,” said NRDC. “We find that MWD overprojects annual water demand by 335,000 to 554,000 acre-feet and underprojects local water supplies by up to 229,000 acre-feet compared to the water agencies in its service area. Based on these projections for higher demand and less local supply, MWD anticipates 259,000 to 281,000 AF more in annual imported water sales than member agencies plan to purchase.”

Click here to read NRDC’s report “Mismatched.”


Is MWD Trying to Silence its Ethics Officer?

The Los Angeles Times reported this week that MWD hired a Washington, D.C., firm to review recent cases handled by the ethics office. MWD board member Sylvia Ballin, who represents San Fernando, told the paper that she fears the investigation is part of a larger effort inside MWD to undermine the independence of the ethics office.

“For the first time, I thought we really and truly had an ethics officer that believed in ethics,” said Ballin, a former MWD employee. “And I feel like her hands are being tied.”

Ethics officer Deena Ghaly told the Times that she is concerned that someone at the MWD is seeking a particular result from the review. “We handled a couple of politically sensitive matters, and it seems like this was kind of a response to that. That feels different from an overall review of what our office does,” Ghaly said.

Click here to read the full story in the Times.

Water Authority Delegate Seeks Answers on MWD’s Costly Failed Strategy

A Water Authority delegate to MWD’s board of directors is pressing MWD for answers about its interest swap program that reportedly squandered tens of millions in ratepayer money and could lose even more.

MWD has paid nearly $88 million to get out of a series of “risky” financial ventures, and the agency still has a liability of $71.5 million related to those deals, according to an Aug. 4 investigation by the Voice of San Diego. It says those payouts and the remaining liability “show Metropolitan got the raw end of the deals and lost.”

Michael Hogan, who represents the Water Authority on MWD’s board, sent a letter to MWD’s general auditor on Aug. 10 seeking more information about the agency’s failed swap program. Specifically, he asked whether recommendations for improving the swap program in 2012 have been implemented and whether MWD has completed an internal audit of the program that has been referenced in audit program updates over the past two years. Hogan also asked whether MWD is currently in compliance with the relevant standard set by the Government Accounting Standards Board. Click here to read Hogan’s letter.

The Water Authority previously raised questions about MWD’s swap program in 2013, when MWD disclosed that it would be paying $20 million in termination penalties. Click here to read the Water Authority’s letter from Feb. 11, 2013.  Click here to read MWD’s response.

MWD Bets with Public Money, Loses Nearly $88 Million

MWD has paid nearly $88 million to get out of a series of “risky” financial ventures, and the agency still has a liability of $71.5 million related to those deals, according to an investigation by the Voice of San Diego. It says those payouts and the remaining liability “show Metropolitan got the raw end of the deals and lost.”

The story, published Aug. 4, 2017, was part of a review of local public agencies that engaged in a financial practice known as “swaps.” According to the story, “MWD entered two dozen interest-rate swap deals, which, in a convoluted way, aimed to stabilize debt interest rates, but amount to bets on the way interest rates will go. If interest rates move one direction, the swap becomes an asset. If they move the other direction, it becomes a liability.”

The Voice of San Diego used Public Records Act documents to show that “Metropolitan’s swaps stood out because leaders there invested more heavily in them than the rest – tying nearly $2 billion in debt to swap contracts – and paid a heftier price for doing so when it wanted out of the losing deals.”

Click here to read the story.

Local Mayors Support Rate Case While MWD Misstates Facts

The San Diego Union-Tribune recently published a commentary by four San Diego County mayors that outlined “Why San Diego should stay the course in water agency litigation.” It was posted online Aug. 2 and in the print edition on Aug. 3.

“While MWD says no ratepayers win when large water agencies spend years in court, the reality is that under MWD’s current rates, some agencies do win. In fact, all MWD’s other customers benefit to San Diego’s detriment when MWD adds the costs of its State Water Project supplies onto the cost of transporting our independent water supplies from the Colorado River,” said mayors Bill Wells of El Cajon, Matt Hall of Carlsbad, Ron Morrison of National City and Steve Vaus of Poway.

Click here to read the commentary.

At the same time, the newspaper published a commentary by MWD’s Board chairman that makes numerous false and misleading statements that warrant correction.

Click here to read the commentary. Click here to read the response.

La Mesa Mayor Joins Effort Against MWD Overcharges

La Mesa Mayor Mark Arapostathis on July 26 issued a letter in strong support of the Water Authority’s continued efforts to diversify the region’s water supplies and to “defend county ratepayers against overcharges by MWD.”

The mayor, known as Dr. A, noted that the Water Authority has successfully transformed the region by developing independent water supplies and investing in infrastructure upgrades. “All of these efforts will continue to provide a locally controlled water supply and mitigate the impacts to the San Diego region from any efforts made by the MWD to unfairly charge ratepayers,” he wrote.

Click here to read the letter.


Water Authority Secures Significant Water Rights Victory for Ratepayers

The San Diego County Water Authority won the most significant water rights victory in county history today when the state Court of Appeal issued a ruling in the Water Authority’s litigation against the Metropolitan Water District of Southern California. The court said the Water Authority has a right to tens of thousands of acre-feet more water annually for the San Diego region – a water supply comparable to the amount produced annually by the $1 billion Carlsbad Desalination Project.

Click here to read the story.




Majority of Ratepayers Disapprove of Recent Fiscal Decisions by MWD

A survey of 1,000 Southern California water ratepayers conducted by a nationally recognized polling firm found that when presented with facts about recent decisions by the Metropolitan Water District of Southern California, 58 percent of respondents disapprove of the agency’s performance. Over the past several years, MWD has made several questionable financial decisions that have caused rates to double.  The on-line poll was conducted April 19-24, 2017, by the San Francisco-based David Binder Research.

Notably, a majority of respondents support reform measures to improve MWD’s transparency, accountability and stop overspending.



Truth & Transparency About Spending & Spinning

Los Angeles-based Metropolitan Water District of Southern California is still reeling from a blockbuster exposé in the Los Angeles Times that revealed MWD’s “turf removal rebate program” suffered from gross mismanagement, poor planning, and lax oversight.

While a few MWD water users were lucky enough to receive turf rebates large enough to pay for a week-long cruise to Mexico, the real impact for water users is higher water bills.  This includes a large number of low-income homeowners.

MWD also says it was able to fund the program without raising water rates.  “Metropolitan in 2015 approved the largest turf removal, water conservation and public outreach program in the United States.  The $450 million program, together with local rebate programs, brought total regional investments to more than half billion dollars over two years without impacting water rates.”
–    MWD Talking Points, Top-Line Messages (emphasis added)

Click here to read the “talking points.”

How would a public water agency come up with $450 million “without impacting water rates”?
Where does MWD get that money?  From water users of course.  In fact, MWD raised rates more than necessary from 2012-15, resulting in ratepayers being overcharged by  $847.2 million.

To daylight MWD’s out-of-control spending and lack of transparency, the San Diego County Water Authority has sent letters to more than 1,000 public officials in Southern California to open a dialog and daylight MWD’s questionable spending decisions with ratepayer money.

Click here to read the letter.