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Thursday, Dec 7, 2023

INFRASTRUCTURE–Water Authority Studies Changes in Rate Structure

Infrastructure: Emerging Water Markets Force Reconsideration of Fees

The San Diego County Water Authority is taking a long, cold look at how much it charges for water in the county.

Although there are no changes planned for this year, there could be a massive overhaul in the near future, said Alan Ames, a spokesman for the water authority.

“(Our hope is) obtaining water and improving reliability,” he said. “Many in the industry are now interested in access to emerging water markets and are seeking to transport , or wheel , water through public facilities.

“New approaches to supplying water call for a new look at the costs associated with supplying the water and paying for the facilities needed to move the water.”

The action by the water authority comes in response to the actions by its member agencies. Nine of the 23 member agencies in the water authority have signed agreements with independent water suppliers, and that’s led to the question of how to bill an agency for third-party water transported through the CWA’s lines, Ames said.

One possible solution mentioned in the authority’s rate structure study is “unbundled” transportation costs, Ames said.

The study recommends four possible strategies for assessing water rates. The first is the status quo, in which water rates are charged uniformly. All the other alternatives will be compared against this one, Ames said.

In the second alternative, pricing would be based on different factors, such as season, time of day, and location.

Unbundled Transportation

The third alternative is called “unbundled transportation,” in which the transportation component of water would be separated from the rest of the water bill, and the water transportation rate would be assessed separate from the rest of the bill.

Within this last alternative, there would be three different scenarios: Rates based on zone of cost, where the costs would vary from one zone to the next; capacity/utilization, where the cost is based on the system capacity or utilization by an agency; and point-to-point, in which costs would be based on how much it costs to move water from one point to another, Ames said.

The final alternative is the “fully unbundled services” option. As the name implies, the water authority would seek to unbundle as many of its services as possible , transportation, storage, supply, treatment and others. Then, member agencies would be able to pick and choose from the services the water authority provides, Ames said.

This is only the first round of detailed analysis the board will use in comparing the possibilities. The study makes no recommendations on any of these revenue structures, but is meant as a starting point for further discussion, said Bob Campbell, executive assistant to the general manager of the water authority.

Changes Expected

Each option has analysis to show the results of what would happen if that option were to be implemented. With more discussion and additional analysis, the field of options can be narrowed down to the most acceptable options, Campbell said.

“The board may choose to narrow or focus down on any one of these alternatives, or it may come up with its own, or it may choose a combination of these. But my sense is there will be a change in the existing structure in the way things are done,” he said.

The board is holding workshops every two weeks on the water study to narrow the choices down, and also determine a timeline. The next workshop is scheduled for Feb. 24, during the water authority’s regular meeting.

The water authority will narrow the choices by March. In April, the authority will present the choices to its member agencies, while a public hearing will be held most likely in May, Campbell said.


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