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Why San Diego Pays Some of Highest Water Rates in State and Country

San Diego County’s water costs may double in the next decade. Part of the problem is that contracts oblige it to buy the most expensive water in the region.

Written by Ry Rivard, Voice of San Diego Published on Read time Approx. 6 minutes
A worker passes giant tubes at the Carlsbad Desalination Project Tuesday, Sept. 22, 2015, in Carlsbad, Calif. Desalinated water from the plant is the most expensive source of water for San Diego. AP/Gregory Bull

San Diego has some of the most expensive water in California – and in the country.

A typical household in San Diego County pays about $80 a month for water, whereas the national average is less than $40, according to a recent survey by the American Water Works Association.

Water in California is more expensive than elsewhere, but San Diego still has among the steepest rates in the state, another recent survey found. The priciest supplies are found in Santa Barbara and other communities along the state’s central coast.

By all indications, water prices in San Diego will keep rising.

Since 2007, the cost of water from the San Diego County Water Authority has doubled. And in its worst-case scenario, the agency projects its water costs could nearly double again in the next decade.

The authority buys water from a variety of sources and then resells it to local agencies. These agencies have their own ways to control costs – or increase them.

Within the county, the difference between the highest and lowest bills is enormous, depending on where a customer lives. A family in the rural northern community of Yuima pays $110 a month for the same amount of water that costs a family in Lakeside $58, according to a recent survey of rates by the Otay Water District. The City of San Diego’s rates fall in between those two extremes.

Water rates are notoriously difficult to fairly compare. Each district has its own circumstances, including some beyond its control. Weather, population, topography, income, when a community was first settled, political decisions and even the kinds of soil all affect rates.

But the general trend across San Diego has been ever-rising rates. Not only that, but they seem to be rising faster here than elsewhere in Southern California.

One of the biggest drivers is the water authority’s effort to buy itself out of a bad marriage.

For years, it has been trying to distance itself from the Metropolitan Water District of Southern California, the Los Angeles-based agency from which the authority gets much of its water.

SDCWA officials blame Metropolitan for failing to prepare for a drought in the early 1990s and penalizing San Diego then and now. To avoid being so reliant on Metropolitan, the authority went on a spending spree to find new sources of water. It also built or expanded area dams to prepare for a drought or other emergency. The authority has done so largely with the support of the business community and ratepayers.

The Colorado River flows downstream of Imperial Dam in Winterhaven, Calif., in eastern Imperial County on Thursday, July 17, 2003. Some of San Diego’s water supply comes from the Imperial Valley. (AP/Imperial Valley Press, Cuauhtemoc Beltran)

“Increasing reliability comes at a cost, and we have never shied away from telling that to stakeholders or ratepayers,” said Mike Lee, a water authority spokesman.

In 2003, the authority agreed to buy enough Colorado River water for roughly 1.6 million people a year from another agency in Imperial County. That was the largest water purchase of its kind in United States. Then, a year and a half ago, it helped open the nation’s largest desalination plant, in Carlsbad.

Those supplies are more expensive: the new water represents about 62 percent of the authority’s supplies, but 72 percent of the agency’s costs.

In San Diego, the most expensive water comes from the desalination plant. It costs about $2,100 for an acre foot of water, which is roughly as much as eight people need in a year. The cheapest water still comes directly from Metropolitan, which costs about $1,000 an acre foot.

Meena Westford, a Metropolitan representative in San Diego, said the water authority has created a situation where it is contractually obligated to buy the most expensive water in Southern California – desalinated water – while it’s only optional to buy the cheaper Metropolitan supply.

“As a San Diego resident, I don’t want our most expensive water supplies to be our baseload and our cheapest supplies to be our insurance policy,” she said. “That’s why we will have the most expensive water in California.”

But there is a gray area at the heart of San Diego’s higher rates and an endless legal conflict. That’s the Imperial County water.

The authority calls the water it gets from Imperial County its own “independent” supply. Metropolitan scoffs at that and says San Diego’s so-called independence relies in large part on the use of Metropolitan’s system. Because the authority never built a pipeline to the Colorado River, it has to rely on Metropolitan to bring the Imperial County water to San Diego.

Metropolitan charges money for that. The water authority believes Metropolitan is overcharging it by up to 465 percent to bring that water to San Diego.

The authority filed a lawsuit over the issue several years ago. One court agreed Metropolitan’s rates were too high; Metropolitan appealed. An appellate court’s decision is expected by mid-August. That decision is likely to be appealed at the state Supreme Court.

At stake is about $7 billion over the next several decades. If the water authority wins, rates may do something they never do – go down. If it loses, it’s going to be stuck paying more than it wants for another two decades to an agency from which it is trying to disentangle itself.

That’s one of the reasons the authority has launched a statewide “Stop the Spending!” campaign, blaming Metropolitan for rising bills in San Diego. In March, the authority signed an 11-month, $220,000 deal with a law firm and with Southwest Strategies, a San Diego-based public relations operation, to “communicate clearly with the public and other public agencies” about the lawsuit and other matters. One of the PR campaign’s manifestations is a local TV segment featuring a pizza shop owner complaining about rising rates.

The water authority has also sent letters to 1,100 people in Southern California – mostly politicians and city officials – trying to persuade them to investigate Metropolitan for “overspending, overcharging and unplanned borrowing.”

Across California, other water agencies praise San Diego’s plan to diversify its supplies. But they also question how expensive it is.

Shane Chapman, general manager of the Upper San Gabriel Valley Municipal Water District, took issue with the authority’s campaign, but he praised it for diversifying its water supply.

“However,” Chapman said in a letter to the authority, “I am left with the impression that SDCWA’s recent public relations campaign ‘stop the spending’ and the on-going barrage of lawsuits challenging Metropolitan’s water rates and charges, are very expensive ways to direct attention away from the other cost drivers in your constituent’s [sic] water bills.”

He pointed out that San Diego customers are now paying about $27 more a month more than they were in 2009. Customers in Los Angeles County – who also receive Metropolitan water – have seen their rates increase by only $11 during the same period.

Maureen Stapleton, general manager of the water authority, replied to Chapman. Without disputing any of his numbers, she acknowledged that the new supplies have “contributed to the rising cost of the water authority’s supply” but shifted the blame to Metropolitan.

Metropolitan’s general manager, Jeffrey Kightlinger, said the water authority was just trying to duck costs by slamming and suing his agency.

“Three million people want to shift cost to 16 million people,” he said, referring to the population of San Diego and the other parts of Southern California that Metropolitan serves.

The authority views the situation in reverse, as 16 million people trying to overcharge 3 million San Diegans. Since both parties are at endless odds, it seems only a court can settle the matter. Until then, it’s hard to know how much rates will keep rising.

If the water authority wins its lawsuit, rates could still go up as much as 58 percent or as little as 11 percent, depending on other factors. If it loses, rates could rise by as much as 87 or as little as 28 percent. For next year, the authority proposes a modest 3.7 percent increase, much of which, it says, is related to Metropolitan’s charges.

Beyond politics, San Diego’s rates are high, in part because of its distance from major supplies. There are more than 250 miles between San Diego and its main source of water, the Colorado River, and 600 miles between San Diego and its second major source, the rivers of Northern California.

San Diego also suffers from a historic combination of poor planning and bad luck. In the early 1900s, Los Angeles built an aqueduct to drain water from the Eastern Sierra, a decision that provides the city with cheap water to this day. Orange County has large groundwater basins, which can basically provide free water. San Diego never built its own pipeline system to a distant river nor does it have any major groundwater basins to tap.

So, for now, it pays a markup to buy water from others.

This story was first published by Voice of San Diego. Sign up for VOSD’s newsletters here.

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