"Skin in the Game"
Last updated 10/8/2018 at 4:24pm
The Borrego Water District Board thanks the Sun for its questions concerning the effect of the Sustainable Groundwater Management Act’s (SGMA) impact on water rates for municipal water ratepayers. Below is the Board’s response:
From SGMA’s perspective, the District is a “pumper” of groundwater from a critical overdraft basin. That means that the District, like all pumpers of the basin (including farmers, golf courses, etc.), will be required to either reduce its usage or purchase additional allocation to pump water. The District and all pumpers may also pay a pumping fee starting in 2020.
Paying nothing for the groundwater itself is the case today for all pumpers of the basin. The District’s current plan is to purchase water to make up the difference between its usage and the reduced amount it is allowed to pump under SGMA and to do this before the reductions would begin to impact ratepayer usage. Thus, District commodity rates – what a ratepayer pays for the water delivered to our homes and businesses – will increase.
The cost is the cost. There is no way around this cost increase for ratepayers, and it is due to SGMA and to aging infrastructure that the District owns and operates. Almost all municipal water users in California dependent on groundwater face this kind of pricing pressure.
However, there are two relatively unique aspects of our basin that introduce additional risk for the District’s fixed costs, which ratepayers pay as a “base rate” independent of how much water they use. First, is the potentially large annual reduction from historical maximum pumping to reach the sustainable yield of the basin where inflows of water match out flows.
This overall basin reduction will impact all pumpers, not just the District, and the District will purchase additional water so ratepayers do not have to curtail their usage.
The second is the large variability in annual natural recharge rates (inflows) that can range from 1,000 acre-feet per year (AFY) to 25,000 AFY in an exceptionally wet year. Both of these unique aspects introduce financial risk for the District and economic risk for ratepayers.
These risk factors are influenced by the length of the reduction period to achieve the sustainable yield and the rate of the annual reductions to get to the SGMA reduction target by the cutoff date.
For example, if the reduction period is too long or the rate of annual reductions is too slow, independent of the reduction period chosen, two things could occur.
Full story in the 10-4-18 issue of the Borrego Sun.