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San Diego County Water Authority Calls on MWD to Cut Spending and Cap Rate Hikes at 3 Percent
If adopted, plan would reduce proposed rate increases by more than half
March 26, 2012
The San Diego County Water Authority has submitted a proposal to the Metropolitan Water District of Southern California to cap its “average” rate increases for 2013 and 2014 at 3 percent. The rate cap would be accomplished through a $116.5 million budget reduction over the next two years. The recommendations were sent March 21 to MWD’s Board of Directors, which is expected to adopt a two-year budget and two years of rate increases at its April 9 Finance and Insurance Committee meeting and April 10 board meeting.
The Water Authority’s recommended package of budget reductions and proposed rate increases would protect all funding for water supply and infrastructure programs, while cutting operational expenses 10 percent, saving $76.5 million. MWD’s current staff recommendation calls for an “average” 7.5 percent rate hike in 2013 and another 5 percent “average” hike in 2014. Because no one pays an “average” rate at MWD, the actual proposed rate increases consumers will experience will be higher than the rate increases formally adopted by the board of directors.
MWD has pointed to rate increases as necessary to fund repair and replacement of aging infrastructure, which the Authority proposal leaves intact, including maintenance and repair of MWD’s Colorado River Aqueduct. In reality, however, the budget recommended by MWD staff increases funding for travel expenses, staffing levels and consulting services. MWD’s rates are mostly being driven by reduced water sales, which are down more than 30 percent since 2007.
“MWD’s staff recommendation is inconsistent with MWD’s lower water sales and revenue trends, and is out of step with cities and other public water suppliers who have been forced to make difficult decisions to reduce expenditures as a result of declining revenues,” Michael T. Hogan, Water Authority Board Chair, said.
The Water Authority’s proposal also suggests suspending conservation subsidies over the next two years to give a break to weary water ratepayers who have heeded MWD’s call to conserve water – but are still paying more.
“The Water Authority has a long history of supporting consumer programs and efforts to use water more efficiently, but when MWD’s water sales are down more than 30 percent – it simply does not make sense to spend $40 million on more water conservation right now,” Hogan said. “We understand rebates have been popular, but consumers throughout southern California are questioning why they are paying so much more when they are using less water. We need to take some time to smooth these impacts and give our water ratepayers a break.
“Our recommended approach is a sensible and responsible way to proceed for Southern California’s ratepayers and for MWD. We hope MWD’s Board will seriously consider this proposal when it considers adopting its 2013 and 2014 budget and rates.”
To read and learn more the Water Authority’s proposal, visit www.mwdfacts.com