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Executive Summary for July 21st

For an overview of the latest news on the California drought, we’ve organized the most recent developments in a curated summary.

Published on July 21, 2015 Read time Approx. 2 minutes

Drought Poses No Risk to California’s Credit Rating

The Moody’s credit rating agency says the drought is unlikely to hurt California’s creditworthiness.

Unless it continues for several more years.

That’s a pretty big caveat, because it very well could continue.

In any case,Moody’s says“positive overall trends” are masking any downside from the drought. That is the case particularly because agriculture – the economic sector most impacted by the drought – represents only about 1 percent of California’s gross domestic product.

But there is another caveat. Moody’s says continued strong credit among local water agencies depends on their willingness to raise water rates.

Moody’s foresees no difficulties there: “We expect that customers will pay the increased rates, if implemented, without too much protest,” its report says.

There is no mention here of Proposition 218. As we noted in aprevious reportwhen another major credit rating agency failed to consider Proposition 218, the law gives utility ratepayers the right to vote on rate increases. In other words, there is very real uncertainty about whether customers will accept steeper water bills. Some customers are even resorting toclass-action lawsuitsto protest water rates, claiming their rights under Proposition 218 were violated.

Water Agency Hit With $1.5 Million Fine

The Byron-Bethany Irrigation District near Tracyhas been slappedwith a $1.5 million fine by the State Water Resources Control Board for illegally diverting water from the Sacramento-San Joaquin Delta.

The district allegedly pumped more than 2,000 acre-feet despite a June 12 curtailment order banning the diversion of surface water. If true, the act was particularly brazen, because the water was pumped from a canal attached to the Banks Pumping Plant, a massive diversion facility owned by the state.

Another odd twist in the case is that Byron-Bethany supplies water to Mountain House, a giant housing subdivision carved from bare ground several years ago. Mountain House is an investment by CalPERS, the massive state-employee retirement fund, which has spent about $1 billion to develop the subdivision.

State law requires developers to ensure their housing projects have a secure supply of water. But critics have long complained that loopholes make it too easy for developers to provide the necessary assurances. Apparently nobody considered what would happen to Mountain House residents if a severe drought resulted in a curtailment order on Byron-Bethany’s water rights.

Buzzing About Solar Desalination

A tiny demonstration project proposed in the San Joaquin Valley to purify salty farm drainage water isn’t going to be so tiny anymore.

The firm backing the project, WaterFX,announced recentlyit will jump right into a full-scale project with the Panoche Water and Drainage District capable of producing 1.6 billion gallons of freshwater per year. We’ll do the math for you: That’s about 5,000 acre-feet, a significant amount of water on the valley’s parched west side.

Unlike conventional desalination, which forces water through fine membranes under high pressure, the WaterFX system works on the principal of distillation. It also uses a thermal energy storage system so the plant can operate continuously, whether or not the sun is shining.

Lead photo by Sylvia Wright, [email protected]

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