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Home My WebLink About2011-06-07; Municipal Water District; 735; IMPORTED WATER COSTS UPDATECARLSBAD MUNICIPAL WATER DISTRICT - AGENDA BILL 17 AB# MTG. DEPT. 735 6/07/1 1 UTIL IMPORTED WATER COSTS UDATE DEPT. HEAD ^ ',/%&? CITY ATTY. '<^Sj!& CITYMGR. f^ RECOMMENDED ACTION: Receive an informational update on the cost of imported water from a San Diego County Water Authority (SDCWA) representative. ITEM EXPLANATION: This informational report provides an update and an explanation regarding water rate increases charged to CMWD by the Metropolitan Water District (MWD) and the SDCWA. FISCAL IMPACT: None with this action; however, escalating water delivery charges will have long term impacts on water rates. ENVIRONMENTAL IMPACT: None EXHIBITS: None DEPARTMENT CONTACT: Glenn Pruim 760-438-2722 Glenn.Pruim@carlsbadca.gov FOR CITY CLERKS USE ONLY. COUNCIL ACTION: APPROVED D DENIED D CONTINUED D WITHDRAWN D AMENDED D CONTINUED TO DATE SPECIFIC D CONTINUED TO DATE UNKNOWN D RETURNED TO STAFF D OTHER-SEE MINUTES D REPORT WAS RECEIVED Carlsbad Municipal Water DistrictJune 7, 2011June 7, 2011DiChDennisCushmanAssistant General ManagerSan Diego County Water Authority 22 20112020199114%6%5%5%7%3%5%95%14%12%9%5%17%10%6%13%5%48%23%22%Metropolitan Water DistrictImperial Irrigation District TransferAll A i & C h ll C l Li iSeawater DesalinationLocal Surface WaterAll American & Coachella Canal LiningConservationRecycled WaterGroundwater3 `Improving imported water supply reliability◦Imperial Irrigation District Transfer–200 000 AF/YImperial Irrigation District Transfer 200,000 AF/Y◦Canal Lining Projects – 80,000 AF/Y`Local supply developmentConservation`Conservation`$3.8 billion Capital Improvement Program to enhance infrastructure◦Improve regional storage, including emergency storage◦Improve delivery system xNew pipelines, pump stations and related facilitiesxRenowned pipeline relining program◦Expand region’s water treatment capacity◦Canal lining projects in the Imperial Valley4 Major CIP Investments Since 1991Major CIP Investments Since 1991Ri lPi liPi/Canal LiningsRegional Water TreatmentHydro-ElectricPipelinesPumping/Control Facilities19912000-20132020Pipe ReliningRegional Water Storage5 `The amount of money the Water Authority sent to MWD last year:$241,000,000`The amount of money at dispute in the Water Authority’s rate lawsuit vs. MWD (over 45 years):$1,300,000,000 -$2,100,000,0006 MWD is Biggest Driver of Water RatesMWD is Biggest Driver of Water RatesEstimated CY 2012Wholesale Costs per Household *Payments to MWD for$26.33MWD CostsIID/QSACostsPayments to MWD for water and transportation comprise 55% of the$4 15IID/QSA CostsWater Authority Treatmentcomprise 55% of the wholesale cost of waterQSAWater$4.42$0.86$4.15Water Authority OperatingWater Authority Ct34 7%QSA Water Supplies 8.6%$12.24Water Authority FacilitiesCosts 34.7%TOTAL: $48/month7* Based upon 0.5 AF of consumption a year `For the 5-year period 2008 and 2012, MWD approved rate increases totaling 55 percent for Tier 1 treated supplyMWD rates projected to continue rising◦MWD rates projected to continue rising`Supply challenges key driver of MWD rates`MWD’s flawed rate structure overcharges the`MWD s flawed rate structure overcharges the Water Authority for wheeling transfer supplies8 9$2,5002,500,000 MWD’s Projected Sales in 2020 are 24% Lower than 20002009 Average-32%$2,0002,000,000 2000-2009 Average$1,000$1,5001,000,000 1,500,000 $/AFAcre-feet+55%$500,500,000 ,,Actual SalesProjected - ExpectedMWD rates (actual/projected)FS Ti 1LRFP F t 20102020A$0-FS Tier 1-LRFP Forecast 2010-2020LRFP Forecast with annual 6% rate increases 9 `Engaged at board, management and staff levels◦Advocating cost containment, CIP deferrals and other budget reductions◦Opposed 2010 Integrated Resources Plan andOpposed 2010 Integrated Resources Plan and overdevelopment of suppliesxPlan to develop up to 500,000 AF/Y of unneeded “buffer” supplies at a cost of billions of dollarssupplies at a cost of billions of dollars◦Opposing unnecessary supply project expenditures◦Opposed FY 12 & FY 13 budgets◦Suing MWD over its misallocation of rates10 `Challenging MWD’s rate structure in courtMWD i ll tltttttit◦MWD misallocates supplycosts to transportationrate categoriesxOvercharging $31 million in 2011xLong-term overcharges: $1.3 billion to $2.1 billionxSuperior Court decision late-2011or early 2012$1,637 $1,637 $1 311$1 311$2,105 $2,105 MWD Overcharges$330 $330 $330 $330 $1,033 $1,033 $1,311 $1,311 11LowLow HighHighNext 10 YearsNext 10 Years35 Year Term35 Year Term45 Year Term45 Year Term `The Water Authority has long advocated that MWD`The Water Authority has long advocated that MWD obtain firm contractual commitments from its 26 member agencies for new spending programs. MWD’sanswer?MWD s answer?◦“…to date, most of our board members have said ‘we’re not so sure about that.’ And, most of our member agencies have said‘No. Thanks, but no thanks, becauseagencies have said No. Thanks, but no thanks, because we prefer this the way it is.’”◦“Should people make those firm commitments going into the future? So far, the member agencies have opted not gpto. They prefer it the way it is.” --Excerpts of remarks by MWD General Manager Jeffrey Kightlinger, speaking at an August 10, 2010 public meeting in San Diego on MWD’s draft 2010 Integrated Resources Plan (IRP). 12 hhdhdh--$0.6$0.6--$0.3$0.3--$0.2$0.2$2$2City of AnaheimCity of AnaheimCity of Beverly HillsCity of Beverly HillsCity of BurbankCity of BurbankCll MWDCll MWDOverchargeOverchargeUnderchargeUndercharge--$2.5$2.5--$1.5$1.5--$0.1$0.1--$2.1$2.1--$0.2$0.2$0 3$0 3Calleguas MWDCalleguas MWDCentral Basin MWDCentral Basin MWDCity of ComptonCity of ComptonEastern MWDEastern MWDFoothill MWDFoothill MWDCit f F ll tCit f F ll t--$0.3$0.3--$0.4$0.4--$1.6$1.6--$0.5$0.5--$0.8$0.8$6 3$6 3City of FullertonCity of FullertonCity of GlendaleCity of GlendaleInland Empire Utilities AgencyInland Empire Utilities AgencyLas Virgenes MWDLas Virgenes MWDCity of Long BeachCity of Long BeachCit f L A lCit f L A l--$6.3$6.3--$5.3$5.3--$0.5$0.5$31.0$31.0$0.0$0.0$0 0$0 0City of Los AngelesCity of Los AngelesMWD of Orange CountyMWD of Orange CountyCity of PasadenaCity of PasadenaSan Diego County Water AuthoritySan Diego County Water AuthorityCity of San FernandoCity of San FernandoCit f S M iCit f S M i$0.0$0.0--$0.4$0.4--$0.3$0.3--$1.4$1.4--$0.4$0.4$0 5$0 5City of San MarinoCity of San MarinoCity of Santa AnaCity of Santa AnaCity of Santa MonicaCity of Santa MonicaThree Valleys MWDThree Valleys MWDCity of TorranceCity of TorranceUSGbilMWDUSGbilMWD13--$0.5$0.5--$2.9$2.9--$2.0$2.0Upper San Gabriel MWDUpper San Gabriel MWDWest Basin MWDWest Basin MWDWestern MWDWestern MWD 15 member agencies buy less than 2% of MWD’s water and pay less than 2% of MWD’s bills20 member agencies buy less than 5% of MWD’s water and pay less than 5% of MWD’s billsOne member agency buys more than 25% of MWD’s water and pays more than 25% of MWD’s billsAMWDWPhAverage MWD Water Purchases by Member Agency (2000-09)14 MWD Member AgenciesWater Purchases, Preferential Rights, and Voting EntitlementsThe way it is: Water and Voting Rights also The way it is: Water and Voting Rights also Disconnected from PaymentsDisconnected from Payments25.00%30.00%Water Purchase (00‐09 Average)Preferential Rights as of 06/30/10Voting Entitlement as of 08/10/1020.00%15.00%5.00%10.00%0.00%aheimly Hillsurbanks MWD MWDmpton MWDl MWDlertonendaleEmpirergenesBeach ngelesWDOCsadenao CWAnandoMarinota AnaMonicaValleysrranceGabrielt Basin MWDAnBeverBuCalleguasCentral BasinComEasternFoothillFulGleInland ELas VirLong BLos AnMWPasSan DiegoSan FerSan MSantSanta MThree VTorUpper San GWestWestern15 `Case assigned to San Francisco Superior Court Judge KramerJudge Kramer`Case has been designated as “complex”◦Assigned to single judge for all purposesAssigned to single judge for all purposes◦Complex cases generally get more attention/resources from the judgef`Next case management conference is 6/17/11`Estimate trial court decision in early 2012Appeal likely◦Appeal likely16 `Water Authority striving to provide reliable water supply for region’s $186 billion economy, 1.3 million full-time jobs, and the quality of life for 3 1 million peoplequality of life for 3.1 million people`Water Authority needs a reliable supply from MWD, at an affordable and equitable costMWD, at an affordable and equitable cost`Water Authority needs a fiscally sustainable MWD◦With sound fiscal policies, stable revenues and that respects ratepayers17 `Over past two decades:Ahi d j l◦Achieved major water supply diversification◦Secured 280,000 AF/YR of long-term li bl i d li (QSA)reliable new imported supplies (QSA)◦Reduced reliance on MWD by 50%◦Achieved sustained water conservation◦Invested billions in new, major water supply infrastructure◦Vastly improved water supply reliability to yp ppy yprotect region’s $186 billion economy and quality of life for 3.1 million people18 QuestionsQuestionsQuestionsQuestions19