San Diego County Water Authority Set to Raise Water Rates by 39% The San Diego County Water Authority is planning to increase wholesale water rates by up to 39% by 2025, citing declining water sales and increasing costs across the industry. This rate hike will likely force local agencies that purchase water from the authority to also raise their rates, although the exact amount will vary. The authority emphasizes the importance of the rate increases to ensure a reliable water supply for future generations, despite the added cost.

Summary

Based on the information provided, here are the key points summarizing the situation with water rates in San Diego:

1. The San Diego County Water Authority is planning to increase wholesale water rates by up to 39% by 2025.

2. This includes a potential rate hike of 16-22% in 2025 alone.

3. The rate increases are due to declining water sales and increasing industry-wide costs.

4. Local water agencies that purchase water from the County Water Authority will likely have to raise their own rates as a result, though the exact amount will vary by agency.

5. The Water Authority cites the need to maintain water supply reliability for the region as justification for the rate increases.

6. The rate hikes are seen as necessary to cover costs and maintain infrastructure, despite the financial burden on consumers.

7. The Water Authority's board is currently considering rate increases for next year, with potential approval in June for changes to take effect January 1st.

8. There is concern about the impact on residents and businesses, especially given already high costs of living in the area.

9. The Water Authority emphasizes that these investments are crucial for ensuring long-term water supply, though they acknowledge it comes at a cost.

10. Some efforts are being made to mitigate the increases, such as the City of San Diego offering to pay some water bills in advance to help reduce the rate hike.

Why We're Paying More for Less Water

Based on the information provided, there are several reasons why San Diego residents are facing higher water rates despite using less water:

1. Fixed costs and infrastructure maintenance: The San Diego County Water Authority has significant fixed costs associated with maintaining its water infrastructure, including aqueducts, pipes, pumps, and reservoirs. These costs remain regardless of how much water is sold.

2. Take-or-pay contracts: The Water Authority has long-term contracts with suppliers, such as Imperial Valley farmers and the Carlsbad desalination plant, which require payment for a set amount of water whether it's used or not. These contracts were designed to ensure water supply during drought years but are now causing financial strain during wet years.

3. Debt repayment: The Water Authority is still paying off about $2 billion in debt from previous infrastructure investments. These payments must be made regardless of water sales.

4. Declining water sales: Due to recent wet winters and effective conservation efforts, water demand has decreased. This means less revenue for the Water Authority, but its fixed costs remain the same or are increasing.

5. Inflation and supply chain issues: Like many industries, the water sector is facing increased costs due to inflation and supply chain disruptions.

6. Climate change adaptation: The need to prepare for future water scarcity due to climate change requires ongoing investments in water security.

7. Aging infrastructure: The water system requires ongoing maintenance and upgrades, which become more expensive as the infrastructure ages.

In essence, the water system has high fixed costs that must be covered regardless of water usage. When usage decreases, these costs must be spread over fewer units of water sold, resulting in higher rates per unit. This creates a challenging situation where conservation efforts, while necessary for long-term sustainability, can lead to short-term price increases.

San Diego’s Water Prices Face Doomsday Increase | Voice of San Diego

Thursday is doomsday for water prices in San Diego.

That’s when the region’s water importer – the San Diego County Water Authority – debates whether to boost its prices a whopping 18 percent come Jan. 1. The price increase is massive compared to previous rate increases, and the Water Authority’s biggest customer, the city of San Diego, is pretty ticked off. For the last five years, water rates rose between 5 and 10 percent per year. The last time San Diego passed a higher price spike was 2010 at 20 percent.

San Diego Mayor Todd Gloria directed his powerful contingent of 10 water board members to fight the increase. We won’t know how hard they’ll fight until the full 33-member board meets Thursday afternoon to vote on it.

Gloria’s administration is building a water recycling project, which costs billions of dollars. Once its built, in 2035, San Diego won’t buy as much water from the Water Authority. But for now, San Diegans are saddled with the cost of building water recycling and purchasing expensive water from outside city boundaries.

San Diego can’t shoot down a big rate increase on its own. It needs one other water district to agree. But it’s not even clear if Gloria’s representatives agree on what needs to be done.

“It would be easy for us to defer maintenance on our water infrastructure to temporarily blunt the sticker shock of rising rates,” wrote Jim Madaffer, a long-time board member representing the city of San Diego, and Valley Center’s water district general manager and Water Authority representative in an op-ed. But we can’t afford to do that to our water system, they wrote. In other words, the lower the rates, the higher the risk on the aging infrastructure.

As we wait for the politics to play out, the Water Authority is scrambling to get rid of water. It’s halted production at its expensive ocean water-to-drinking water treatment plant in Carlsbad. It’s sold some of its Colorado River water (San Diego’s main water source) back to the Imperial Valley farmers they bought it from. It’s banking even more Colorado River water in reservoirs that are so full, they’d have to empty them some to make room for more. And the Water Authority is starting to get bad reviews from credit rating agencies.

To tame the price shock, the city of San Diego (the Water Authority’s largest customer) offered to pay its bills early. The Water Authority would be happy to take their money, but its financial staff argued that even if every one of their 23 customer water districts did the same, it’d only soften the expected rate increase by 1.5 percentage points.

It’s also unclear whether any other water buyers want to chip in. These water districts shoulder some of the rate impact, if their budgets can handle it, but typically have to pass on the Water Authority’s bill to their own customers.

So the Water Authority has a conundrum on its hands. It’s an election year for the mayor of its biggest and most powerful customer; that mayor would like to celebrate a victory against an increase to the already high cost of living for his constituents.

Thankfully, a $19.4 million grant from the U.S. Bureau of Reclamation to upgrade San Diego’s desalination plant came just in the nick of time – so the final rate increase might look more like 15 percent. But the climbing cost of water in San Diego may be a battle already lost.

How we got here: San Diego has too much water. That wasn’t the case in the 1990s, when major droughts sparked fears of water rationing. Metropolitan Water District of Southern California, based in Los Angeles, controls San Diego’s only lifeline to its main water source: the Colorado River.

To make sure that never happened again, the Water Authority made big investments in building expensive storage reservoirs and cutting a decades-long deal to buy Colorado River water from farmers in Imperial County. It also financed Southern California’s largest ocean-water-to-drinking-water plant, a highly-energy intensive process and the region’s most expensive water source, in Carlsbad.

Now it must pay for all those investments and care for huge aqueducts responsible for getting water here that are aging and need major glow-ups to survive earthquakes and daily wear and tear.

But at the same time it made these investments, it started selling less water. The Water Authority hasn’t sold enough water to pay off its giant loans and maintain its infrastructure. It sold about 75 percent of what it sold in 2021, when much of California faced brutal years of drought. That’s why Water Authority leaders want to raise rates by a lot.

Enter 2024, and Southern California’s had two of the rainiest years in recent memory. Knowing rainy years bring low water sales, the Water Authority’s new general manager Dan Denham began looking for other buyers for San Diego’s ample supplies. Denham cut a deal to sell some of San Diego’s pricey Colorado River water back to Imperial Valley and swap it out for cheaper water from Metropolitan. (The deal still isn’t complete. The parties are waiting on the federal government to pay for part of it.) He’s also trying to find customers for San Diego’s de-salted ocean water from Carlsbad. At least one tiny water district in Orange County is interested, but so far that deal amounts to a handshake.

In the meantime, the desal plant ramped down its production, Water Authority spokesman Mike Lee told me. The agency – the desal plant’s only customer – is buying only about 65 percent of its contracted amount, said Mike Lee, a spokesman for the Water Authority.

Lee said the Water Authority will be buying less desal through December, which they anticipate will save $18 million. The savings are equivalent to a 3 percent decrease in water rates, Lee said.

The Water Authority has what’s called a take-or-pay contract with the owner of the desal plant, once Poseidon and now Channelside Water Resources, according to spokesperson Michelle Peters. That means it typically must take all the water it signed up to buy in its contract, no matter the circumstances.

There’s flexibility in that contract, said Jeremy Crutchfield, a water resources manager at the Water Authority. Terms in the contract allow the Water Authority to cut its desal order and just pay a portion of the total water cost.

The Water Authority has a similar contract with Imperial Valley farmers. Because San Diego’s market had no demand for that water during this past winter, the Water Authority banked Colorado River water in the San Vicente Reservoir – which is nearly full now.

That’s partly why the desal plant is producing less, because there’s nowhere to store that extra water. And it’s too clean to store in a reservoir anyway. San Diego has so much water stored, it would have to spill some out of the reservoir to make room for more.

The Water Authority staff said the agency is in a “financially precarious position” in a June 19 letter to its governing board.

“Following two wet years (low sales), rate increases are necessary to maintain and repair current systems and support the financial position of the Water Authority,” the document says.

The water seller has drawn down its cash reserves, below the target amount the board sets for itself, to help smooth over previous rate spikes. And one of its credit rating agencies, S&P Global, gave the Water Authority a negative credit outlook. That can affect the interest rate on future borrowing to pay for the vast system of aqueducts, pipes, pumps and reservoirs the Water Authority maintains. The agency is already sitting on over $2 billion in debt that it needs to pay off.

Some of this is out of the Water Authority’s control. S&P noted that human-caused climate change and planet warming is affecting the water agency’s ability to remain stable in the long run.

“Given the recent climate whiplash, we anticipate the authority will continue to experience hydrological volatility that influences water sales revenue with a need to adjust to the rising cost-of-service requirements,” S&P wrote on June 12.

SAN DIEGO (FOX 5/KUSI) — Water districts across San Diego County are grappling with an expected price hike from San Diego County Water Authority, which is projected to increase water prices by nearly 40% over the next few years.

Olivenhain Municipal Water District board members on Wednesday night voted to approve a budget that will affect 87,000 customers. A spokesperson for the district says they don’t know yet exactly how much this will cost their customers.

“If you think gas prices are high, imagine paying nearly 40% more for water over the next two years,” said Dee Dee Camarillo, a local customer. “I think we already pay quite a bit, and I wouldn’t be happy if it went up any higher.”

Bobbie Henry, another customer, echoed the sentiment: “It’s just insane, especially with how much everything else costs right now. The last thing we need is for water prices to go up as well.”

Olivenhain Municipal Water District General Manager Kimberly Thorner described the price increase as unprecedented. The district, like many others, relies on wholesale drinking water from the San Diego County Water Authority. Thorner explained that the authority has secured reliable water supplies through fixed take-or-pay contracts, including water from the Colorado River and desalination plants.

“For decades, they have been building their reliable supplies and securing contracts for water,” Thorner said. “These contracts have to be paid for whether or not there is a demand.”

The authority’s contracts are designed to ensure a steady water supply during drought years. However, following a couple of wet winters and effective conservation efforts, the region’s water reserves are full, leading to a surplus.

“Demand has actually dropped below the point of what their take-or-pay contracts are,” Thorner said. “San Diego currently has more water than it needs, but the rates still have to go up to keep the Water Authority sustainable.”

In light of high inflation and supply chain issues, Thorner emphasized that passing along a nearly 40% rate increase to customers is impractical. The board is therefore exploring budget cuts to reduce the financial burden on customers.

“We are delaying hiring positions, freezing current positions, and selling some property to offset rates,” Thorner said. “The goal is to keep the rate hike under 10%, which would mean an extra six or seven dollars a month for the median customer.”

“That’s doable. I could go for that,” Camarillo said. Henry added, “It sounds a lot better than 40%, that’s for sure.”

The board is also considering delaying non-critical projects to help mitigate the rate hike.

Guest Commentary written by Grayson Zulauf

Grayson Zulauf is the CEO of Resonant Link. He holds a PhD in electrical engineering from Stanford University and is a Forbes 30 Under 30 honoree for energy.

For the first time in this drought-stricken century, a new price for water in the West has been set – and it’s 25 times higher than what farmers have paid for the last 75 years.

Arizona, Nevada and California recently agreed to reduce their water consumption from the Colorado River by 13% through 2026. The federal government will pay their irrigation districts, Native American tribes and cities $521 for each acre-foot of water they don’t use.

This agreement is the start of the end of agriculture as we know it in the West, but not just agriculture. For every drop of water used, industries – from farms and ranches to data centers and power plants to ski resorts and golf courses – must determine whether it pays more to use the water, or to avoid using it.

And the price of using it will only increase.

Some businesses will become more water-efficient. Some will move. Some will close.

What was the price of water, anyways? It depends on both the source and the use. If water comes from a river or lake, it’s zero. If water comes from an aquifer in the ground, it’s the cost of pumping the water up. And despite the enormous infrastructure required, water delivered from reservoirs behind large dams (as promised by the federal Bureau of Reclamation) has historically cost farmers no more than $20 per acre-foot, which is enough to cover a full acre one foot deep.

This water costs much more to deliver, with the difference subsidized by federal taxpayers. For example, in the Imperial Water District, the destination for 80% of all Colorado River water delivered to California, water for irrigation costs farmers that $20 per acre-foot even though the water is stored (in Lake Mead, behind Hoover Dam) and transported (through the All-American Canal) by mega-projects paid for by federal taxpayers.

In the Westlands Water District of central California, taxpayers subsidize farms at $2,200 per acre. For California farmers who receive water from the Central Valley Project, taxpayers contribute $416 million annually.

With the price signal of water now reset to $521 per acre-foot, the math for water users will change, starting with agriculture. Food generates more than $50 billion annually across the lower Colorado River basin states, and the industry rests on the foundation of $20 water promised by the Bureau of Reclamation.

With this new agreement, every use of water must exceed the value of not using it.

Take the most-grown crop in the Colorado River basin: alfalfa. This grass is exported worldwide and fed to livestock, mostly cows. Alfalfa sells for $230 per ton in California. With 3 acre-feet of water, an acre of alfalfa will yields around 6 tons of product. So, at $20 per acre-foot of water, a farmer would spend $60 in water for $1,380 of alfalfa, leaving plenty of money for labor and equipment and profit. At $521 per acre-foot of water, the farmer pays $1,563 for water alone for that same $1,380 in alfalfa, losing nearly $200 per acre.

By contrast, the farmer could make $1,563 from the federal government for growing nothing and avoiding the water consumption altogether.

The math for most other crops is not much better.

Although the agreement only runs through 2026, water price signals are here to stay. And the price of water – or the value of avoided water use – will only increase. Because of global warming, the flows of the Colorado River will drop by half by 2100, making the current cuts almost seem painless.

Carbon credits set the price for carbon dioxide emissions, with the avoided emission of one ton of carbon dioxide fetching a firm, trusted price. Over the last decade, as this price has started to come into focus, carbon-intensive industries have reexamined their businesses, analyzing if their products or services would remain profitable if they paid the market price for emissions.

The price of a water credit is now set, with the avoided consumption of one acre-foot of water worth $521. Over the next decade, similarly, water-intensive industries will reexamine the water liability of their businesses. For every use of water, they will have to consider what will happen if the price of water doubles, triples or more. For every drop of water used, they will have to weigh whether it is worth using it at all.

The water reckoning is here, and the West will never be the same.

Editor’s note: A previous version of this story miscalculated the cost of growing alfalfa under the new terms for Colorado River water use.

When the region’s water importer said it was hurting for cash, the city of San Diego said: I’ll be your sugar daddy.

That’s basically what happened last week after the San Diego County Water Authority – in charge of getting water from the Colorado River and northern California to San Diego – broke the news to its 22 customer water districts that its prices were going up 39 percent over the next two years. Mayor Todd Gloria pushed back on the increase, calling on his board members to find a way to soften the blow on San Diegans.

Then the city, the Water Authority’s largest customer, stepped in and offered to help foot part of the bill by paying a few of its water bills in advance.

The Water Authority bit immediately, sending a letter on Friday to its 22 customer water districts that said, if everyone did the same, they could lower the 19 percent rate increase that would go into effect Jan. 1 by 1.5 percent.

The Water Authority’s cash crunch exists for several reasons, namely because the Water Authority is selling less water – therefore it’s making less money. The last few years have been inordinately rainy for southern California, which is great for cities and farmers because the land is so saturated and reservoirs are so full, but that means less water needs to be purchased from non-local sources through the Water Authority.

Also, the Water Authority has to buy water from farmers in Imperial Valley and from a desalination plant in Carlsbad, the region’s most expensive water source, even if there’s no demand for it. (The new leader of the agency has been trying to find ways to sell off some of those supplies.) Plus, the Water Authority is still paying off about $2 billion in debt from building a lot of infrastructure to get and keep water here.

The crunch is a $95 million bill coming due in April to help pay down some of that debt, confirmed Mike Lee, a Water Authority spokesman. Nick Serrano, Mayor Gloria’s deputy chief of staff and vice chair of the Water Authority board, told Voice of San Diego the agency approached the Water Authority with the idea. Even if only the city of San Diego participates, a few fronted monthly bills could make a dent in that bill.

Vice Chair Nick Serrano during a Water Authority meeting in Kearny Mesa on July 27, 2023. / Photo by Ariana Drehsler

Beyond paying people and pensions, water is the city’s largest expense. San Diego spent about $300 million for water in 2023, records show, and that was during a nice rainy year.

Even though San Diego is having a tough budget year of its own, water is a planned expense that lives in its own, special untouchable fund. By law, water districts can only charge what it costs to provide water. Districts bank water rates and keep some cash on hand as an emergency reserve because, no water, no civilization.

“For everyone who has been critical of the city’s influence on the Water Authority, this is us coming to the table with solutions,” Serrano said.

The Water Authority is slated to vote on the rate increase at its June 27 meeting.

Water rates effective Dec. 1, 2023.

Single-Family Domestic Customers

The typical single-family domestic customer has a 3/4-inch meter (some larger homes may have a 1-inch meter). The total bill is a combination of the monthly meter base fee (which is based on the size of the meter) and the amount of water used. For billing purposes, the Public Utilities Department measures water used by hundred cubic feet (HCF). Each HCF equals 748.05 gallons.

The monthly charges for a typical single-family domestic customer are:

Base fee: $24.11
0 - 5 HCF used are billed at $6.09 per HCF.
6 - 11 HCF used are billed at $6.89 per HCF.
Each HCF used after the initial 11 HCF is billed at $8.67 per HCF.

Other Domestic Customers

The total bill for multi-family domestic customers is a combination of the monthly meter base fee (which is based on the size of the meter) and the amount of water used. These customers pay $7.15 per HCF. Please see the chart below to find the meter base fee.

Commercial and Industrial Customers

The total bill for Commercial and Industrial customers is a combination of the monthly meter base fee (which is based on the size of the meter) and the amount of water used. These customers pay $6.97 per HCF. Please see the chart below to find the meter base fee.

Temporary Construction

The total bill for Temporary Construction is a combination of the monthly meter base fee (which is based on the size of the meter) and the amount of water used. These customers pay $7.86 per HCF. Please see the chart below to find the meter base fee.

Irrigation Customers

The total bill for Irrigation Customers is a combination of the monthly meter base fee (which is based on the size of the meter) and the amount of water used. These customers pay $8.20 per HCF. Please see the chart below to find the meter base fee.

Meter Base Fees

Meter Size	Base Fee
5/8 inch	$ 24.11
3/4 inch	$ 24.11
1 inch	$ 38.98
1.5 inch	$ 76.16
2 inches	$ 120.77
3 inches	$ 276.92
4 inches	$ 462.80
6 inches	$ 1,072.52
8 inches	$ 1,654.05
10 inches	$ 3,124.72
12 inches	$ 3,942.63
16 inches	$ 5,801.51

IMPORTANT NOTE: Rates are per month.

Private Fire Line Fees

Meter Size	Base Fee
1 inch	$ 2.21
1.5 inch	$ 3.00
2 inch	$ 4.36
3 inch	$ 9.23
4 inches	$ 17.62
6 inches	$ 47.76
8 inches	$ 99.75
10 inches	$ 177.95
12 inches	$ 286.32
16 inches	$ 608.13
20 inches	$ 1,092.18

IMPORTANT NOTE: Rates are per month.

For questions or concerns, call the Public Utilities Department at 619-515-3500 or email customercare@sandiego.gov

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