The Morning Report
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The cost of getting water from the drought-stressed Colorado River is spiraling and parts of San Diego County with some of the highest bills and big water recycling projects on the horizon seem to be drawing pool noodles together.
That is, in any case, the rough sense that stuck out to me as I re-shuffled through my notes from last week’s story about huge, forecasted increases in the price of Colorado River water, which is controlled by San Diego County Water Authority.
It’s part of this “double whammy” effect, as Matt Vespi, the city of San Diego’s chief financial officer put it so aptly, that is starting to unfold as water districts get creative about recycling their own water instead of relying on the river as the only source. Trick is, you gotta pay for both. The city of San Diego in particular is straddling this precipice right now. It’s gearing-up to ask ratepayers to start paying off loans it took out on a multi-billion wastewater-to-drinking water project (called Pure Water). Those costs would come down pretty much at the same time the Water Authority’s projected 5.5. percent to 10 percent rate increases kick in (around 2023.)
Before the Water Authority and its 24 member agencies took a vote to enshrine those projected hikes under a long-range financial plan — which helps everybody prepare for future water costs — the city of San Diego tacked on some extra tasks, like keeping tight tabs on the amount of cash the Water Authority raises from ratepayers right now, and even third-party audits of its math.
“We want to go in eyes wide open with as much frequent monitoring as possible,” Ally Berenter, senior manager of external affairs and water policy for Mayor Todd Gloria’s office, told me. “We want to increase transparency and (have) a better road map going forward with the changing landscape of the industry of wholesale water.” (Wholesale water is what the Water Authority sells.)
But the city of San Diego’s move caused a bit of a rift in the final vote on the financial plan. Other water recycling agencies supported the city’s move, like Padre Dam Municipal Water District and Helix Water District, which together are developing a kind of Pure Water project of their own called East County Advanced Water Purification Program.
The Olivenhain Municipal Water District and city of Oceanside, which together are developing another water recycling project, sided with the city of San Diego, too. Water representatives from Fallbrook and Rainbow, two agencies trying to ditch the Water Authority altogether, also fell in step.
“I wasn’t a super big fan of the (long range financial plan) at all,” said Tom Kennedy, general manager of Rainbow Municipal Water District. “But when (the city of San Diego) came out with amendments saying, ‘Hey, we want to be more informed about the rate setting process and see the data more clearly in spreadsheets’… I support those things so I decided to vote in favor.”
Most of those cities recently experienced some of the biggest percent increases in their average monthly water bills, with Padre Dam experiencing a 28 percent increase in their bills between 2017 and 2022; Olivenhain a 29 percent increase; Rainbow and Fallbrook between 22 percent and 29 percent, according to a comparison of surveys by the Otay Water District.
Del Mar’s representative didn’t vote — despite seeing bills spike the highest, 38 percent, in those years — and couldn’t be reached in time for this newsletter.
Could we call this apparent banding of high-paying water recyclers a voting bloc? I’m not sure. We’ll have to see how these water agencies vote on future decisions.
Eric Heidmann, Poway’s representative on the Water Authority, voted against the city of San Diego’s motion for the financial plan — for a different reason, though. Heidmann is concerned about the Water Authority’s credit rating, which the agency’s chief financial officer said was under threat of a downgrade. (If you don’t know what I’m talking about, there’s a good explainer in my story last week.)
The Water Authority’s credit affects Poway’s credit, he said. In other words, if credit rating agencies downgrade the Water Authority, which likely means it pays more interest on loans, so will Poway. The city of San Diego doesn’t really buy that threat of a downgrade and instead pushed for the Water Authority to issue debt instead of raising cash through boosted water prices.
“There’s a direct risk to my agency,” Heidmann said.
That’s because Poway is gearing-up to make a big purchase: a second connection to the Water Authority.
Poway gets about 98 percent of its water straight from the Colorado River/Water Authority. The city buys untreated river water, which means Poway has to clean that water through its own treatment plant. But that treatment plant is around 50 years old and its electrical system needs a facelift. The city can’t shut that treatment plant down long enough to do those fixes, so it wants to build a new connection to the Water Authority and buy straight treated water.
Once it has that connection, Poway can shutdown its treatment plant long enough to do the maintenance while still providing an ample supply of water for its citizens. That’s going to add at least another 7 percent to 10 percent onto rates eventually, Heidmann said. (It’s bills have spiked about 18 percent between 2017 and 2022.)
He wasn’t totally against the city of San Diego’s changes to the financial plan, but he wasn’t sure whether paying for oversight on the Water Authority would cost more than a downgraded credit rating would hurt.
- Just can’t get enough of this wonky topic? Voice of San Diego editors Scott Lewis and Andrew Keatts break it down further in the latest VOSD podcast and Politics Report.
In Other News
- Gov. Gavin Newsom inked a bill aimed at mitigating the impacts of sea-level rise written by San Diego lawmaker and Senate President Pro Tem Toni Atkins.
- Climate scientists from Scripps Institution of Oceanography inked an op-ed in the Union-Tribune arguing against a recent partnership between the institution and San Diego Gas and Electric, owned by natural gas exporter Sempra.
- Encinitas banned natural gas infrastructure from new residential and commercial construction within city limits, an effort we covered back in August. (Union-Tribune)
- Thousands lost power in an unplanned outage earlier this month in Rancho Santa Fe, Encinitas, Cardiff and Lake Hodges area. (Fox 5 San Diego)
- A new 5,000 gallon water tank in North County and a so-called “heli-hydrant,” or water-spraying helicopter, came online this month through a partnership between Rainbow Municipal Water District, CalFire and North County Fire Protection District.
- Though Gov. Gavin Newsom called for 15 percent voluntary water use cuts across the state, San Diegans actually used a little bit more. (Los Angeles Times)