Water Agencies Disagree on How Much Water San Diego Needs

The San Diego Water Authority thinks the region is going to need way more water over the next few decades, but the smaller agencies that buy water from them aren’t so sure.

They think the Water Authority is projecting too much growth in future water demand, and they’re worried that if they’re right, residents are going to end up paying for it, even as they curtail their own water usage.

“If demand is inaccurate, we underset rates and then we have a deficit,” said Sarah Davis, a management analyst for Oceanside’s Water Utilities Department. “But if we overestimate, we can get into a situation where rates are set too high.”

Predicting water needs is a delicate exercise. The Water Authority makes a high-level forecast for the region every five years under its Urban Water Management Plan. Many of its 24 member agencies write their own plans using granular data on their populations’ water usage that comes from household meters. The Water Authority declined to share its draft plan with Voice of San Diego before its Feb. 25 board meeting.

For some water agencies interviewed by Voice of San Diego the problem is that the Water Authority predicts the region will demand 10 to 20 percent more water over than their residents actually need in the next 25 years. But that’s not what smaller agencies expect, based on recent experience.

“If you look at past projections, we’ve always overestimated future water demands because of population growth,” said Kim Thorner, general manager of the Olivenhein Municipal Water District which serves 87,000 people from Encinitas to Solana Beach and parts of eastern San Diego. “Then multiple realities hit over time.”

Thorner’s talking about drought, and the changes in behavior and water usage it brings. Gov. Jerry Brown mandated Californians cut water use by 25 percent during the 2015 drought. People converted lawns to desert landscaping, got smarter water meters and learned to live with less. Those behavior changes have stuck, said Thorner.

Thorner said Tuesday preliminary data from her staff showed near-term water demand is 10 percent lower than Water Authority’s projections. And future demand, out to 2045, is 20 percent lower.

“You see this downward trend in water use in the last 12 years, and a lot of that has been messaging from water agencies saying: conserve,” Thorner said. “My agency does not believe there will be this uptick (in water use) again.”

The same is true for smaller, rural Rainbow Municipal Water District. Its general manager, Tom Kennedy, said demand has dropped an average of 5.75 percent every year since 2005 amid the area’s declining agricultural economy. But the Water Authority told Rainbow its customers would buy 10 to 20 percent more over the next few decades, Kennedy said.

“It would be great if sales went that high. But when I try to forecast the future of ratepayers’ money, I don’t want to use unrealistic numbers,” Kennedy said.

Davis, in Oceanside, similarly said the Water Authority’s initial predictions were 10 percent higher than what its own staff calculated.

The Water Authority disputes this. In an email, spokesman Mike Lee wrote that the data the Water Authority has received so far from those member agencies doesn’t show a 10 to 20 percent disparity in demand projections.

“Where there are differences in projections, we are working with our member agencies to understand the reasons and adjust accordingly,” Lee wrote.

San Diego County Water Authority controls the connection the rest of the region has to its main drinking water source: the Colorado River. It also sets the cost of water its member agencies then have to either absorb or pass on to their residents. Last year, the Water Authority approved a 5 percent increase in water rates despite cries from elected officials to freeze costs during the pandemic.

The Water Authority’s last comprehensive annual financial report shows the amount of water it’s sold dropped by about 22 percent between 2013 and 2019. But the money it made from sales rose 11 percent. That means people are using less water, but paying more for it.

That’s because most of what you’re paying for is called a “fixed” cost to cover the maintenance of the water system, which is a ballooning source of debt for utilities across the country.

“We used to have the philosophy of just building supply (pipes, pumps and reservoirs) to meet demand,” said Ellen Hanak, vice president and director of the water policy center at the Public Policy Institute of California. “But demand has come down every year (in Southern California) since 2000 despite population growth.”

Southern Californians already pay some of the highest water prices in the country. But what eases the burden on an individual household is a growing region where there’s more people to spread out the costs, especially of an aging water system that owes $1.77 billion in principal debt.

Before the awful droughts of the 1990s, the relationship between water sales and population growth was complementary. But after each drought, more regulations encouraged (or even forced) people to use less. Now that relationship is on the inverse, or so water agencies thought until they saw the Water Authority’s numbers.

“If the Water Authority over-projects on demand, that might lead to some future infrastructure decisions like the (Regional Conveyance System) that may not be justified,” said Gary Arant, general manager at Valley Center Water District.

The Regional Conveyance System is a proposal to build a parallel pipeline to the Colorado River. The project would cost billions but wouldn’t bring a drop of new water to the region – it’s mostly about San Diego gaining autonomy over setting its own water rates on Colorado River water.

Arant and representatives from many of the other member water agencies almost had enough votes to kill further study of the project back in November. Kennedy, the Rainbow representative who also voted against the project, said he’s worried about saddling ratepayers with more debt than the Water Authority already has.

“People make rosy demand forecasts to make rosy rate predictions,” Kennedy said. “Politically, you don’t get projects approved with big rate increases. So there’s an incentive to show the best possible outcome when there’s an equally possible worse outcome that’s not being described.”

Jeff Stephenson, the Water Authority’s water supply resources manager, acknowledged in a January interview that demand is falling due to water efficiency habits people adopted since the last rounds of drought. Droughts are the reason Urban Water Management Plans were invented by the state, to ensure jurisdictions are prepared for years when suddenly the rain or snow doesn’t fall.

The Water Authority uses an economic modeling tool developed by the Army Corps of Engineers to forecast its water demands, Stephenson said. Smaller agencies have their own way of doing it, he said.

“We’re not using the exact same models so we probably won’t have the exact same numbers,” Stephenson said.

But the 10 to 20 percent difference is a much larger disagreement than the past, representatives of the smaller water agencies told Voice of San Diego.

Davis, from Oceanside, said they’ve adjusted their calculations to try and more closely match the Water Authority’s. Shauna Lorance, director of the Public Utilities Department for the city of San Diego, asked the Water Authority to share the math behind its model in a Dec. 1 email so the city could better understand its approach.

Stephenson, from the Water Authority, said the agency shoots for a 2 to 3 percent disparity between their forecasts and smaller agencies. But there’s no requirement on how close they should be, he said.

It’s worse to underestimate future demand than to overestimate, said Hanak, of the Public Policy Institute of California. There’s always tension around projections and what the right investment mix is between wholesalers (the Water Authority) and retailers (like the city of San Diego), she said.

“But the Water Authority is the supplier of last resort when times get tough,” Hanak said.