To understand why water agencies in Fallbrook and Rainbow are in revolt, consider the squeeze faced by Ismael Resendiz and the 250-acre cut-flower farm where he grows Protea, Pincushions and Banksia.
Resendiz said his flowers are barely getting the water they need to thrive. He said he’s had to cut irrigation in half over the last two years because of soaring rates. Over the last five years, his monthly bill has jumped from about $25,000 to $30,000 a month.
Now he’s considering dramatically shrinking his crop.
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“I think we have to go down to 75 to 50 acres,” said Resendiz, who has been farming in San Diego County for four decades. “The water is pushing all the growers out of the business.”
The situation isn’t limited to farmers. Ratepayers in low-to-moderate income neighborhoods are also struggling to pay their bills. The city of San Diego said it currently has more than $73 million in unpaid water bills.
A debate is now roiling throughout the San Diego region about how best to control the skyrocketing cost of water. The primary issue is that unforeseen conservation has put upward pressure on rates as the region’s wholesaler, the San Diego County Water Authority, scrambles to cover an array of fixed costs.
Retail water agencies in Fallbrook and Rainbow argue the Water Authority isn’t taking the situation seriously. They say the wholesaler is too fixated on shielding the region from drought-driven state cutbacks and not enough on affordability.
“If you’re Del Mar or Rancho Santa Fe, you’re fine,” said Tom Kennedy, general manager of the Rainbow Municipal Water District, “but if you’re someone trying to run an avocado grove or someone in National City on a tight income, it’s a big deal.”
In search of cheaper water, Rainbow, along with the Fallbrook Public Utility District, have taken the unprecedented step of attempting to cut ties with the Water Authority in favor of joining the Eastern Municipal Water District in Riverside County.
Water Authority officials have countered that any savings that departing agencies reap would be short lived, especially when the state finally gets around to building its new conveyance system in the San Joaquin-Bay Delta, known as Water Fix.
They’ve also warned that Fallbrook and Rainbow will likely be subject to significantly larger drought restrictions as part of Eastern. Gov. Gavin Newsom has already stopped deliveries through the State Water Project to Southern California and warned that mandatory cutbacks could be on the horizon.
“This really is a risky venture for them,” said Sandra Kerl, general manager at the Water Authority. “I don’t think any other time could illustrate that more clearly than where we are today.”
Kennedy said his constituents are willing to take that gamble.
“If you’re an avocado grower, and you’re out of business, you don’t care about future cutbacks,” he said.
Over the last two decades, the Water Authority has made sizable investments in Colorado River and costly desalinated water. The agency has boasted that such supplies are insulated from California drought.
Of course, that didn’t stop then-Gov. Jerry Brown from imposing mandatory cutbacks on San Diego, as well as the rest of the state, between 2015 and 2017, during the most severe drought in California’s recorded history.
San Diegans responded, ripping out lawns as well as embracing low-flow toilets and other water-efficient appliances. The Water Authority’s sales plummeted from more than 660,000 acre feet in 2007 to just over 354,000 acre feet last year. (An acre foot is enough water to cover an acre a foot deep or 325,851 gallons.)
At the same time, its cost for wholesale supplies went through the roof — from $620 for an acre foot of treated water in 2007 to nearly $1,700 last year.
The agency responded by ratcheting down the amount of water it buys directly from its wholesaler, the Metropolitan Water District of Southern California. The agency received about 40 percent of its supply from Metropolitan in 2007, and less than 12 percent this year.
However, Water Authority doesn’t have that same flexibility with its desalinated and Colorado River water supplies, which total 320,700 acre feet a year. The agency has what’s called take-or-pay contracts with Poseidon, the company that built and operates the desalination plant in Carlsbad, as well as the Imperial Irrigation District, which sells Colorado River water to the region. That means even if the Water Authority doesn’t need those supplies, it still has to pay for them.
Being locked into those contracts is concerning because the Water Authority’s demand is projected to continue dropping as cities produce their own supplies through new wastewater recycling projects, such as the city of San Diego’s Pure Water program. Local recycling projects are expected to produce more than 33,000 acre feet of additional water by 2025 and nearly 110,000 acre feet by 2035.
Costs of recycling
This shift away from imported water is playing out across Southern California, where agencies, including Metropolitan have plans to build out massive recycling projects.
Experts agree recycling is likely to be very effective at protecting the region against long-term drought — but at a high cost.
“I think it’s more likely that we’ll be troubled by the rising cost of water, in the end, than by cutbacks,” said Michael Hanemann, a water expert at Arizona State University. He has been hired by an independent agency overseeing the process to examine the potential impacts of Fallbrook and Rainbow’s proposed detachment.
Water Authority has said it’s looking for creative ways to limit wholesale prices, which are currently projected to be as much as $3,000 an acre foot by the end of the decade.
“We are concerned,” said Kelley Gage, director of water resources at the Water Authority. “We want to be viable going into the future as these recycling projects come online.”
Elected officials on the agency’s 36-member board, led by the city of San Diego, have been pressuring the Water Authority to explore ways to resell desalinated and Colorado River water.
While the Water Authority has suggested it will entertain such an idea, it’s also looking at the possibility of building a $5 billion pipeline through the desert to connect directly with the Imperial Irrigation District as an alternative to paying Metropolitan to deliver the water through its system of canals and pipes.
The idea of investing more money in Colorado River water at a time when demand is declining has proved galling to many board members.
“You can’t have Pure Water and the IID (Imperial Irrigation District) transfer,” said Jack Bebee, general managers of the Fallbrook Public Utility District.
“They’re so focused on saying, ‘We’re the best,’ that they’re unwilling to say, ‘Well, maybe we need to make adjustments,’” he added. “It’s time to realize there is a flat-demand future in the region, which requires major changes.”
Fallbrook and Rainbow’s application to leave the Water Authority is now in the hands of San Diego’s Local Agency Formation Commission, or LAFCO.
The agency is expected to issue a report by summer on whether and under what terms the two agencies would be allowed to leave. Then it would go to a public vote either of Fallbrook and Rainbow residents or, as the Water Authority has requested, countywide.
The agencies will likely be required to pay an annual exit fee to the Water Authority for some set period of time. The idea is to offset infrastructure and other costs accrued by the wholesaler on behalf of the two retail agencies. That way, the region’s remaining customers aren’t forced to pay higher bills as a result of the detachment.
LAFCO could give the parties a set period of time to thrash out an agreement before it steps in and unilaterally imposes conditions. That could prove contentious, and any arrangement would be subject to litigation.
Kerl of the Water Authority recently told the Union-Tribune’s editorial board that a proper exit fee is crucial for the wholesaler’s long-term viability.
“This is a slippery slope,” she said. “If these two agencies are allowed to leave with no obligations, then there’s nothing stopping others from going too.”