San Diego County Water Authority Adopts Rates and Charges for 2013

June 28, 2012

Today the San Diego County Water Authority Board of Directors approved wholesale water rates and charges for 2013.

Today the San Diego County Water Authority Board of Directors approved wholesale water rates and charges for 2013.

The total cost for municipal and industrial untreated water purchased by its 24 member agencies will rise to $1,003 per acre-foot on January 1, 2013, up $88 per acre-foot, or 9.6 percent from the current rate.  The treated water rate for 2013 will be $1,259 per acre-foot, up $111 per acre-foot, or 9.7 percent.  (An acre-foot is about 325,900 gallons, enough to meet the needs of two average single-family households of four people for a year.)

Actual changes to an individual’s water bill will vary, depending on the mix of water their local water agency purchases from the Water Authority and each agency’s own rate-setting decisions in coming months.

Three main factors are driving the increased rates for 2013: 1) increased costs from the Metropolitan Water District of Southern California; 2) increased debt service costs necessary to pay for the Water Authority’s $3.5 billion investments in major new water infrastructure projects; and, 3) an increase in the quantity and price of the Water Authority’s purchases of supplies from the Imperial Irrigation District.

Key 2013 Rate & Charge Drivers: “All-In” Rate IncreasesKey Rate & Charge Drivers


“The Board took a long, hard look at how to keep the 2013 rates as low as we could,” Water Authority Board Chair Michael T. Hogan said. “The adopted rates reflect the necessary balance of minimizing impacts to our region’s ratepayers, maintaining the Water Authority’s fiscal stability, and paying for vital water supply and infrastructure projects that provide increasing protection and benefits for our region’s $186 billion economy and 3.1 million residents now and for decades to come.”

The Board adopted the rates following a six-week review period and a public hearing at today’s board meeting.  The Board memo explaining the 2013 rates and charges is available at


The largest single driver of the higher rates is rate increases approved April 10 by MWD.  MWD’s Board of Directors approved an “average” 5 percent rate increase for 2013.  However, the actual impact of the rate increase varies among MWD’s member agencies.  For the Water Authority, the actual impact is an estimated 8.5 percent increase in MWD-related costs.  This accounts for about 48 percent of the Water Authority’s proposed rate increases for next year.

MWD’s rate increase could have been even higher.  This spring, the Water Authority, its member agencies, and members of the public succeeded in persuading MWD to lower its 2013 average rate increase from an originally proposed 7.5 percent down to the approved 5 percent.  The Water Authority estimates the smaller MWD increase will save the San Diego region’s ratepayers $5 million in 2013.

“We will keep pushing MWD to reduce unnecessary spending that leads to inflated water costs for ratepayers here and throughout Southern California,” Hogan said.  “In addition, we are continuing to challenge MWD’s illegal water rates.  MWD’s rates discriminate against the Water Authority and harm our residents and businesses by forcing our region to pay MWD tens of millions of dollars in overcharges every year.”

The Water Authority filed suit in June 2010 challenging MWD’s 2011 and 2012 water rates, and filed a second suit earlier this month challenging MWD’s adopted water rates for 2013 and 2014.  MWD is overcharging the Water Authority for transporting the Water Authority’s independent Imperial Irrigation District transfer and canal-lining supplies from the Colorado River.  The Water Authority estimates the gross amount of transportation overcharges will increase in 2013 to $57 million.  The gross overcharges in 2011 and 2012 were $38 million and $40 million, respectively.  For more information on the rate litigation, visit


The second factor driving the Water Authority’s 2013 rates is increases in payments for major water infrastructure investments made over the last two decades.  They account for about 26 percent of the untreated water rate increase and about 31 percent of the treated water rate increase.  The Water Authority is obligated to pay an additional $21 million in planned debt service costs to finance large-scale infrastructure projects such as the San Vicente Dam Raise (the largest single expansion of local reservoir storage in the county’s history, currently under way), the Olivenhain Dam and Reservoir, Twin Oaks Valley Water Treatment Plant, and additional pipelines, pump stations, and other projects necessary to operate and maintain the region’s water delivery and storage system.

The Water Authority has reduced the costs of financing its capital projects.  Recent bond refunding sales are expected to save $19 million in financing costs (on a present-value basis over the life of the bonds).  This lowers debt service costs in fiscal year 2013 by $2 million, compared to previous estimates.

The Board took another step to mitigate the impact of increasing debt service costs on the 2013 rates by accepting a lower senior lien debt service coverage ratio (the amount of net revenues available to pay debt service costs).   The Water Authority will reduce this ratio from the current fiscal year estimate of 1.47 to 1.35 in fiscal year 2013.  Staff projects the Water Authority will be able to raise the ratio to meet the Board’s 1.5 coverage policy target in 2014. 

“This exemplifies how we lowered costs to ratepayers in prudent, sensible ways that do not threaten our mission of water supply reliability or our financial stability,” Hogan said.   “If we didn’t lower the debt coverage ratio, the necessary rate increase in 2013 would have been 17.5 percent.  The reduced ratio, however, will continue to meet all bond covenants.”


Another portion of the rate increases is related to supplies from the Water Authority’s water conservation and transfer agreement with the Imperial Irrigation District.  IID supply costs account for about 26 percent of the Water Authority’s proposed untreated water rate increase and about 21 percent of the proposed treated water rate increase, with nearly half of these increases attributable to a 10,000 acre-feet supply increase next year. The IID transfer will provide 100,000 acre-feet of water in 2013, up from 90,000 acre-feet in 2012.  The cost of this water will increase 10 percent in 2013 under the terms of the agreement.

In addition, investments by the Water Authority in lining the All-American and Coachella canals in the Imperial Valley desert provide approximately 80,000 acre-feet of water annually to the Water Authority under a 110-year agreement with the U.S. Secretary of the Interior.

Supplies from the IID transfer and canal-lining projects provide vital water supply reliability benefits for the San Diego region and are more reliable than MWD supplies. 

During the latest supply cutback from MWD, from July 1, 2009 to mid-April 2011, the Water Authority received approximately 264,000 acre-feet of supplies from the IID water transfer and the canal-lining projects.  These supplies reduced MWD’s 13 percent cutback to an overall 8 percent shortage for the Water Authority.

In addition to the water supply reliability benefits, the IID and canal-lining agreements improve the Water Authority’s control over the cost of a significant and growing portion of the region’s imported water supply.  MWD’s rates are set annually or biennially by MWD’s Board of Directors and have proved to be both unpredictable and far higher than MWD’s own projections.  In contrast, the price of supplies from IID is set according to an agreed-upon schedule through 2015.  From 2016-2034, IID supply increases are tied to the Gross Domestic Product Implicit Price Deflator index.  Over the most recent 10-year period, the GDP-IPD index has a compounded annual growth rate of 2.3 percent per year.  In comparison, MWD’s Tier 1 untreated water rate rose at a compounded annual growth rate of 7.3 percent between 2004 and 2014.


The Water Authority has taken aggressive steps to cut its own costs.  The Water Authority’s current two-year budget (fiscal years 2012 and 2013) is 16 percent lower than its previous two-year amended budget.  Spending reductions include:

  • Executing the largest workforce reduction in the agency’s history.  The Water Authority is reducing the number of employees by 16 percent between 2008 and 2014.  This includes the elimination of 31.33 full-time employee positions in the current budget period.
  • Deferring 14 construction projects totaling $150 million to July 2014 or later.
  • Reducing the budget of the water conservation program by 60 percent to right-size conservation spending in light of significantly reduced water use in the region since 2007.
  • Providing no new local supply development funding, decreasing school education and small-contractor outreach programs, and reducing internal support services for finance, human resources, and information technology.
  • Cutting spending in a number of areas supporting the operations of the organization such as supplies, travel, training, memberships and non-capital equipment purchases saved approximately $1 million over the two-year budget.
  • Managing labor and benefit costs by increasing the employees’ cost share of retirement benefits.

To learn more about the services provided by the San Diego County Water Authority and its member agencies to ensure regional water supply reliability, read the Water Authority’s fact sheet at:

  • The San Diego County Water Authority sustains a $268 billion regional economy and the quality of life for 3.3 million residents through a multi-decade water supply diversification plan, major infrastructure investments and forward-thinking policies that promote fiscal and environmental responsibility. A public agency created in 1944, the Water Authority delivers wholesale water supplies to 23 retail water providers, including cities, special districts and a military base.

    Media Contact Information

    Grace Sevilla

    Phone: (619) 855-5135