The roughly water prices – a key engine of water bills from the residents and the county companies – should not increase almost as much next year as we thought previously.
On Thursday, the county water managers lowered their increased water rate scheduled for next year from 18% to 12%, thanks mainly to higher projected water sales to local agencies over the next three years.
The higher sales projections are based in part in particularly dry winter and spring and that San Diego has known, which increased the demand for irrigation water from farmers and people with large lawns.
Higher sales help finances from Water Authority, as it is contractually forced to buy more water than its member agencies generally need it, forcing it to increase rates to cover its integrated costs.
But the dry winter pushed the expected demand for member agencies for next year about 10% higher than what was estimated last month – from 300,000 acres to 327,000 acres.
And the request should remain higher than planned previously in 2027 and 2028 because the dry winter exhausted the local tanks which had filled during the rainwaves in 2023 and 2024, said officials of the water authority.
“The reason why this roadmap of last year which provided for an increase of 18% is now down around 12% is due to higher demand,” said Pierce Rossum, responsible for the rate and debt of the authority.
The request for member agencies – which recently gave authority their projections of the quantity of water they expect to buy over the next three years – is expected to increase by 6% in 2026.
This contrasts strongly with 2024, when water sales dropped by 15% and helped to cause a budgetary crisis for the authority.
Last year, officials offered an increase between 16% and 22% to help resolve this crisis. But the Water Authority board of directors ended up an increase of 14% after aggressive lobbying by officials of the city of San Diego.
This year, the range of possible rate increases offered by the board of directors is much lower: 7% to 14%.
Rossum said financial figures now indicate 12%, but he said that these figures will be refined, re -examined and possibly modified before the water authority staff make a closed price proposal at the next meeting of the board of directors on May 22.
The board of directors is scheduled for June 26 to finalize the increase in rates for 2026, which will take effect on January 1.
Any increase which is adopted in June will probably require almost all local water agencies to pass on additional costs to its customers. But how much the quantity could vary considerably.
Some agencies buy less water in large than others, in particular those with storage of the groundwater or other local water supplies. And some agencies have already built an increase in the water authority projected in their prices.
Rossum said that higher sales projections have such a significant impact on rates because the authority is just near the profitability threshold with purchases and water sales.
Be constrained by long -term contracts to buy more water than requires requires the power to store it and obtain any turnover in exchange for purchases.
“There is a very large financial impact, because you spend money and receive none to the other side,” he said. “We are just in this kind of precipice, so you see these wild oscillations in the rates.”
Water sales represent almost 90% of the annual authority budget.
Despite higher sales projections, rates are still increasing due to several factors, said Rossum.
They include inflation, employee compensation increases, higher rates billed by Metropolitan Water District and plans to increase debt payments by selling bonds next year to increase $ 285 million for infrastructure projects.
On the other hand, the prices could be lower than those next year if the director general Dan Denham is able to finalize certain transactions to sell the additional water supply of the authority to other agencies outside the County of San Diego.
“We are talking with potential partners in southern California and beyond,” said Denham earlier this month.
He said that the authority is negotiating with the water scorce areas to sell them, sized sea water to the test of the drought of Carlsbad for several years.
In addition, the authority may be able to rent water to an agency in Arizona, using the Colorado river as a conduit to deliver these supplies.
These transactions will take months or even years to obtain due to the complexity of water, said Denham.
“Although we cannot discuss details of the negotiations, it is just to say that there is an important interest in buying part of our resilient water at drought – and this is good news for the taxpayers of the County of San Diego,” said Denham.
But things are not all positive.
The pricing projections presented Thursday include the leash of the authority’s rates stabilization fund, which can help soften the increases during the years of crisis, at the minimum level of $ 79 million. And the treasury flows of the authority are also at least 150 days.
In addition, the capital improvement budget is at the level at moderate risks instead of the low risk level. This means that the authority delays certain infrastructure projects it would pursue if finances were strong.
The managers of the water authority say that the fundamental problem they face is that they have borrowed money to build and maintain a much more important storage and delivery system than what is now necessary.
The officials expected that demand continues to grow as the population of the county did and that development has developed, but the member agencies have rather bought large water in the past two decades.
But Jim Madaffer, member of the board of directors of the authority representing the city of San Diego, said that there is a positive way to look at the situation.
“We have built an infrastructure that will survive drought,” he said. “We will have more droughts, and we are the only agency in the State of California that is prepared there.”
He said efforts to solve the authority’s problems are quickly the wrong approach.
“You cannot repair a 40-year trajectory in one or two budgetary cycles,” he said.
Originally published:
California Daily Newspapers
