This post originally ran in the Morning Report.
After hours of debate, San Diego’s water importer (because the region has to buy most of its water from outside the county) decided to raise rates just a smidgen – and put off the doom-iest part of its proposed water price spike until next month.
Why? Well, a lot of local water district representatives (there are 33) weren’t comfortable with how the city of San Diego (the region’s biggest and most powerful water buyer) wanted to try and stave off bigger rate increases. And the city, which has the power to ram through anything it wants, hit the pause button instead.
How we got here: Staff at the San Diego County Water Authority first proposed a 22 percent rate increase for Jan. 1 for a whole slew of reasons you can read about here. That was later negotiated down to 18 percent – still huge compared to water price increases over the past few decades. Actual water rates consumers pay at homes and businesses would not necessarily go up that much but local water districts would have to pay those rate increases somehow.
Then the Water Authority scrounged up a $19 million dollar grant from the federal government to help buy down that price spike to around 15 percent.
Not good enough: The city of San Diego, at the urging of Mayor Todd Gloria, still wasn’t happy with that. At Thursday’s Water Authority board meeting, vice chair and Gloria’s deputy chief of staff Nick Serrano asked the agency to try to make a 14 percent rate hike happen. That sent the Water Authority General Manager Dan Denham and his finance team back into the proverbial locker room to come up with a new play for how to get there.
Denham’s team told the full board later that afternoon the Water Authority could offer a 14 percent rate spike, but it’d have to use $9 million cash from its emergency coffers (there’s only $25 million left in there) to make it happen.
Rates and Debt Manager Pierce Rossum threw up a plan showcasing some scary red “x’s” indicating what less rate collections would mean for the agency’s future: That plan wouldn’t meet the board’s own cash-on-hand policy, it would take money out of the emergency fund, and further hurt the Water Authority’s already weakened credit rating.
It was enough to generate some cold feet. “Stop trying to make 14 percent happen. It’s not going to happen,” was the vibe of the room. The city of San Diego backed off their ask. The board went into recess.
When the board returned, San Diego’s Board Director Fern Steiner threw a proverbial flag on the city’s own play. She asked the board to instead approve a 4 percent increase so the Water Authority could pay its bills to the Metropolitan Water District of Southern California – San Diego’s lifeline to all of its major water sources. And then the board would deal with the rest later – at its July 25 meeting
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