CA Review CKM
Meeting Date: Jan. 28, 2025
To: Mayor and City Council
From: Geoff Patnoe, City Manager
Staff Contact: Jason Haber, Intergovernmental Affairs Director [email protected], 442-339-2958
Subject:
Districts:
San Diego County Water Authority - 2025 Rates and Charges All
Recommen
ded Action
Receive an informational report from the San Diego County Water Authority on its rates and charges for calendar year 2025.
Executive Summary/Explanation & Analysis
The San Diego County Water Authority, a public agency created in 1944, delivers wholesale water supplies to 22 retail water providers, including the Carlsbad Municipal Water District. The Water Authority’s member agencies are six cities, five water districts, three irrigation districts, seven municipal water districts, and the Camp Pendleton Marine Corps Base.
Member agencies are represented on a 34-member Water Authority Board of Directors. A member of the San Diego County Board of Supervisors also serves as a non-voting representative to the Water Authority Board.
Each year, the Water Authority Board of Directors sets water rates and charges to recover the cost of providing service to its member agencies, in keeping with legal requirements and industry standards. The rate-setting process occurs generally from March to June, in a public forum with the board. The retail customer rates are set by the governing bodies of the member agencies.
This item is an informational report from the Water Authority’s Deputy General Manager Tish Berge summarizing the authority’s 2025 rate-setting process.
Fiscal Analysis
This item has no fiscal impact. However, Water Authority rates and charges will be incorporated into the proposed retail customer rates to be approved by the Carlsbad Municipal Water District Board.
Jan. 28, 2025
Item #10 Page 1 of 2
Next Steps
The Carlsbad Municipal Water District Board is scheduled to receive a presentation and set a public hearing date for proposed multi-year rates for potable water, recycled water and wastewater services on Feb. 11, 2025. The proposed rates have incorporated the Water Authority’s 2025 approved rates.
Environmental Evaluation
This action does not require environmental review because it does not constitute a project within the meaning of the California Environmental Quality Act under California Public Resources Code Section 21065 in that it has no potential to cause either a direct physical change or a reasonably foreseeable indirect physical change in the environment.
Exhibits
None.
Jan. 28, 2025
Item #10 Page 2 of 2
Wholesale Water Rates:
Strategies for Long-Term Stability
Tish BergeJanuary 28, 2025
Carlsbad City Council Chief Operating Officer
2 Serving a Vibrant
Region
• Established in 1944
• 22 member ag encies
• 3.3 million pe ople
• $268 billion ec onomy
3 1990s Crisis Sparked Change
4 Strategic Investments in Supply Reliability
$3 billion in infrastructure creates water security for region QSA Water Transfer
& Canal Linings
Water-Use Efficiency
Investments Pipeline ReliningPotable Water Reuse
& Purple Pipe Pipeline Relining
Local Surface Water
Storage
Carlsbad Seawater
Desalination
Twin Oaks Valley Water
Treatment Plant
5 Infrastructure Risk Reduction
Supports Region
Maintaining system reliability protects
ratepayers, businesses
• Water Authority
maint
ains 308 miles of
large-diameter pipelines
• Deferred maintenance
wo
uld create significant
risks due to the scale of
Water Authority system
• CIP maintenance budget
prio
ritized
6 Debt Management & Credit Ratings Play Key Role
$-
$20
$40
$60
$80
$100
$120
$140
$160
$180
FYE
2024
FYE
2025
FYE
2026
FYE
2027
FYE
2028
FYE
2029
FYE
2030
FYE
2031
FYE
2032
FYE
2033
FYE
2034
FYE
2035
FYE
2036
FYE
2037
FYE
2038
FYE
2039
FYE
2040
FYE
2041
FYE
2042
FYE
2043
FYE
2044
FYE
2045
FYE
2046
FYE
2047
FYE
2048
FYE
2049
Series 1998A Series 2015A Refunding Series 2016AB Refunding Series 2019 Series 2010B BABs Series 2020A (CIP) Series 2021A (CIP) Series 2021B (CIP) Refunding Series 2022A Anticipated FY 2026 $2 Billion Outstanding Debt & Debt Service Payment Schedules 7 After multiple years of drought, 2023
and 2024 delivered above-average
precipitation, raising reservoir levels
statewide and significantly reducing
water sales.
Climate Whiplash Creates New Threats
8 Structural Challenges Facing Water Authority
Costs are largely fixed, but revenues vary significantly year to year .
Debt Service 16%
Water Purchases and
Treatment 64%
Capital Improvements 10%
Operating Departments 7%
Other 3%
Expenses
Revenues Variable 69%
Rigid
14%
Rolling
17%
9 Water Affordability is Everyone’s Business
Long-term decline in state, federal investments creates challenges for aging infrastructure 10 Many Factors Drove Rates Up for 2025
Most costs beyond control; impacts flow from agency to agency MWD
+4%
Supply Costs
+3%
SDCWA Finance &
Infrastructure
+3%
External Factors
Detachment
+4%
11 Rate Relief Efforts Span Water Authority
14% rate increase was half the initial projection due to numerous actions Rate Relief
$19 million federal grant
$40 million savings from three-party water
exchange
$200 million in applied rate relief since 2020
(litigation proceeds and reserves)
$17 million reduction in cost of desal water
Budget Cuts
$4.8 million reduction across Operating
Departments
$7 million capital project deferred
$1 million equipment replacement
deferred
Note: All figures are rounded.
12 Member Agency Opportunity to Lessen Rate Impact
Pilot program provides member agency discounts for pre-paying fixed charges Opt-in program
provides 4% discount
on all fixed charges
Designed to be
revenue neutral
Enables Water
Authority to increase
non-rate revenue
(investment earnings)
Signed agreements due
December 2024 with
payments due January
2025
Looking Ahead
14 Key Drivers of 2026 Rates
Potential for a double-digit increase; actual increase will be determined by several factors • Water sales
• Passthrough costs
(wa
ter/power)
• Infrastructure needs
• Exchanges and transfers
• Grant funds and other
non-r
ate revenues
Schedule
September 2024 – Internal budget processes begin
March 2025 – Initial rate discussion w/ Board
April – Refined rate discussion w/ Board
May 6 & 8 – Budget workshops
May – Draft proposal for 2026 rates
June – Public hearing; adoption of rates and budget
15 Strategies for Long-Term Stability & Affordability
All options being explored over next 3-5 years
• Control costs
• Restructure rates to boost fixed
re
venues
• Minimize cost of debt through
re
financing and strong credit
• Increase grant funds
• Secure water transfers and exchanges
• Assess long-ter m water contracts
Seek and deploy innovative
solutions with partners.
SanDiegoCountyWaterAuthority
@sdcwa
@sdcwa
Thank You!