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SoCal & Farmers on Same Side in Water Fight!

Southern California Residents Paid over One Billion Three Hundred Million Dollars ($1,311,300,000) For WATER THEY DID NOT RECEIVE

Jul 22, 2011

 

Families Protecting The Valley Newsletter Tell Your Friends about Families Protecting The Valley
VOLUME 3 ISSUE 27 JULY 22 2011
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Board of Directors

Denis Prosperi
Chester Andrew
Bob Smittcamp
Russ Waymire
John "Dusty" Giacone
Joe Marchini
Mark Watte
Kole Upton
Piedad Ayala
Tom Barcellos
Jim Walls

 
SoCal & Farmers On Same Side In Water Fight!

According to recent news articles 19-million residents in Los Angeles, Orange, Riverside, San Bernardino, Ventura and San Diego County pay for water not delivered and suffer economic losses just like farmers in the Central Valley.   Take a look at how much water SoCal residents are supposed to get and how much they must pay for water not received, just like us:


19 Million Southern California residents in Los Angeles, Orange, Riverside, San Bernardino, Ventura and San Diego Counties are contracted to receive more than half of their drinking water allocations from the California Aqueduct State Water Project.  Southern California Water Districts and ultimately the 19 million residents are MANDATED and Forced to pay $558 Million Dollars EVERY YEAR for 100 percent of the State contracted WATER they are supposed to receive even if their contracted deliveries are reduced.   


Even if they receive 0%, 10%, 40%, 50%, Southern California Residents EVERY YEAR pay $558 Million.


Talk about Risk!


Over 5 Years Southern California Residents paid over Two Billion Seven Hundred Ninety Million Dollars, $2,790,000,000.00 for 100% of their Contracted Water


Southern California Residents Paid over One Billion Three Hundred Million Dollars ($1,311,300,000) For WATER THEY DID NOT RECEIVE over a 5 year period 2007-2011


2007- Paid for 100% received 60% = 40 percent CUT in Contracted Water Deliveries=$223.2 Million loss.


2008- Paid for 100% received 35% = 65 percent CUT in Contracted Water Deliveries=$362.7 Million Loss


2009- Paid for 100% received 40% = 60 percent CUT in Contracted Water Deliveries=$334.8 Million Loss


2010- Paid for 100% received 50% = 50 percent CUT in Contracted Water Deliveries=$279.0 Million Loss


2011- Paid for 100% received 80% = 20 percent CUT in Contracted Water Deliveries=$111.6 Million Loss

                                                                                                  5 Year Total Loss =$1,311,300,000


The DIRECT COST of paying for contracted water not delivered is destroying the Southern California Economy AND DESTROYING THOUSANDS OF California JOBS.

Paying for water not received = Lost Jobs
 

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Why Drought Is Over, But Rates Rose 75%

Orange County Register

 

We recently tried to answer a reader’s question about how it is that the drought is officially over, but what one pays for water continues to skyrocket nonetheless.

OC water districts — several of which will hike water rates this month — essentially jabbed fingers at the Metropolitan Water District of Southern California and said, “It’s their fault!”

  • MWD, friends, is a behemoth responsible for quenching SoCal’s blazing thirst, and largely the reason you can call this lovely desert home.
  • It is America’s largest provider of treated drinking water, supplying 19 million customers in Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura counties.
  • It imports water from the Colorado River and the State Water Project, and what with all those aqueducts and skirmishes over leaving enough wet stuff to keep the delta smelt happy, it’s expensive.

See, local water districts and cities buy water from MWD, and then sell it to you. So when MWD‘s rates go up, your rates go up. To wit:

  • In 2006, MWD’s treated rate was $453 an acre-foot for its most efficient water users.
  • On Jan. 1, 2011, that rate rose to $744 an acre-foot — a 64 percent increase.
  • And on Jan. 1, 2012, that rate will rise again, to $794 an acre-foot — a 75 percent increase over 2006.

How the heck can that be, when reservoirs are full and drought-inspired penalties for water-hogging are being lifted? (San Diego County water agencies are asking the same question: They’re suing MWD over the intricacies of its rate structure.)

MONEY MONEY MONEY

We chatted with MWD spokesman Bob Muir and water resource manager Deven Upadhyay, to try to understand this. But first, some quick factoids about MWD’s finances are in order:

  • MWD’s 2011-12 budget is $2 billion.
  • Its largest expenditures are:
    • State water contract (MWD purchases more than half of its water from the State Water Project under a contract with the Department of Water Resources): $558 million.
    • Debt service (to pay off bonds used to finance infrastructure): $333 million.
    • Operations and management (the staff and stuff that keep things moving): $310 million.
    • Capital projects (large-scale building and infrastructure planning and construction): $282 million.

ARE RATES GOING UP?


The short answer, if there is one, is that the infrastructure that gets the water to Southern California is 80 years old, the “useful life” of much of it has been reached, and we’re full into “replace and refurbish” mode.


This, Muir and Upadhyay said, happened at a time when MWD was “under-collecting” — i.e., wasn’t charging its agencies the full cost of what it took to provide the water. Instead, it dipped into its (not inconsiderable) reserve funds to smooth the rates.


MWD actually didn’t raise water rates for six straight years, Muir said. (That decision was made by its board of directors, and you can judge the wisdom of  it when you open your next water bill.)


“We’re in a situation where we do have to raise rates to cover those costs,” Muir said.


The idea is that, with the rate hike in 2012, MWD will be recovering all its costs and no longer pulling from reserves — it will actually be beefing up reserves. (This year’s budget took $14 million from reserves set aside for water and treatment rate stabilization.)


But the single largest cost driver in MWD’s budget is conveyance through the State Water Project, Upadhyay said. This moves water from the wet north to the dry south through the Sacramento-San Joaquin Delta, where there is at least one endangered fish and many angry farmers and lawsuits and restrictions on how much water can be taken, which has been driving rates up as well.


Plans for a new conveyance system through the delta are in the works — rather pricey plans that will change the way water moves in, around and through delta, helping to restore the environment and cut down on some of the chaos.


“The solution in the delta is projected to cost $8 to $12 billion,” Upadhyay said. “Now work is being done on planning, engineering and environmental work, and that’s showing up in our state water contract, that’s how we’re getting billed. We know it’s going to increase over time as it moves from environmental work into actual construction. We’ve worked that into our estimates over the next 10 years, and it will continue to drive our rates — but it will result in more reliable supply for the region.”


It will be another 10 to 12 years until all that’s done.


“It’s a fact of life,” Muir said. “We have water challenges. The Colorado River, even though we had a pretty good snow pack, is a system recovering after 12 years of drought. We’re being hit on both fronts, on two sources of supply.”


MWD is also in the midst of a $2 billion retrofit of its five water treatment plants, including one in Yorba Linda.


The good news, if you will, is that drought-inspired penalties on water use are being lifted.


Whoo hoo!


(A shout out to Upadhyay for doubling back on rates for us at The Watchdog – and telling us that rates had actually gone up more than we had originally calculated. We were looking at rates just for water, which rose 45 percent since 2006. Upadhyay pointed us to the rates for the whole kit and caboodle — water, capital projects, debt service, et al — which had risen the aforementioned 75 percent. We appreciate his forthrightness!)

 

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