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Report On SD Water Rates Is Flashpoint

May 3, 2012 1:09 p.m.

A report on San Diego County water rates sounds like dry stuff. But as far as the Metropolitan Water District and the San Diego County Water Authority are concerned, it's the latest salvo in a decades-long feud.

Related Story: Report On SD Water Rates Is Flashpoint

Transcript:

This is a rush transcript created by a contractor for KPBS to improve accessibility for the deaf and hard-of-hearing. Please refer to the media file as the formal record of this interview. Opinions expressed by guests during interviews reflect the guest’s individual views and do not necessarily represent those of KPBS staff, members or its sponsors.

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CAVANAUGH: This is KPBS Midday Edition. I'm Maureen Cavanaugh. The San Diego County water authority has been publishing feuding with the Metropolitan Water District going so far as to start a website that's aimed at exposing Metropolitan's alleged conspiracy against San Diego. Now it's Metropolitan's turn to fight, with a release of the analysis of the economic development corporation on the cost of water in San Diego. It seems neither side agrees on either the numbers or the goals of San Diego's effort to cultivate reliable water sources that are independent of the Metropolitan Water District. I'd like to welcome my guest, Steven Eerie is a UC San Diego political science professor and coauthor of the cost of water report. Welcome back to the program.

EERIE: Good to be here, Maureen.

CAVANAUGH: We have spoken to Dennis Cushman of the San Diego County water authority twice on the show this year where he's outlined San Diego's position in in dispute. Today we get another perspective. Steve, what's the overall finding of the cost of water analysis that you coauthored, specifically is San Diego's effort to become more water independent costing more than if we just stayed with getting 95% of our supplies from the Metropolitan Water District?

EERIE: Maureen, it's costing more to the tune of $140 million since the Imperial Valley transfer began in 2003. Though in terms of significant findings, the period 2002-2010, the biggest cost driver in San Diego is it the cost pass-on from the Metropolitan Water District. But going forward, the key thing is we're now in 2012, going forward the major cost drivers are local policy decisions, including purchasing more and more higher priced Imperial Valley water as we wean ourselves off of mother met.

CAVANAUGH: Let me of course and you, why was this study commissioned in the first place?

EERIE: Well, as I understand it, I have been a consultant now seven times with the LA economic development corporation. So I have a long history with them, dealing with infrastructure issues. Evidently, some of the member agency, the other messages of MWD wanted to find out what the cost drivers were in San Diego. Water rates have gone up roughly 75% in the last several years south of Camp Pendleton. And they wanted to see if the motivation for their lawsuit, the water author's lawsuit against MWD and its rate structure could be explained by the rising cost of water, particularly, from the Imperial Valley in San Diego.

CAVANAUGH: So the local policy decisions that you referenced, you mean specifically the decision to buy more water from the Imperial Valley water district?

EERIE: Correct. The imperial irrigation district has 75% of California's total allotment of Colorado river water. It is a monopoly seller. I've argued before that we were an overeager buyer. We were so determined to become independent of MWD in the 1990s, we've been so traumatized by the draught of the late '80s and early '90s that we were willing to pay top dollar for this. Of that's fine. The thing is realize what the cost, the price tag of reliability is. And it's high. And the Imperial Valley water is only one of the local policy drivers undergirding our, in a sense, movement or attempt to be more independent of MWD. We have an emergency storage program, capital improvement program, whose costs have ballooned from under $900†million to well over $2†million in the last couple of years. We financed it like the teaser homeowner loans with interest-only, by 2015, the principle is going to kick in. At the same time, we and other MWD agencies introduced voluntary and mandatory conservation efforts. So the City of San Diego, you watered depending on your street address every other day. Well, a reduction in your revenue stream, your water at the same time that you have rising fixed cost means that that's going to drive your water bill up too.

CAVANAUGH: Now, the San Diego County water authority takes issue with the numbers in this report because they say you're evaluating seven years of a 45 year contract with the Imperial Valley, and they say they knew the water would be more expensive in the first years but then it drops. So is this then a fair analysis?

EERIE: It's not -- the analysis is fair because the only reliable numbers that we have, the water authority has, are only up to about 2015 because you're comparing the Imperial Valley water versus the cost of other water sources. We don't know beyond that 3-4 year period what it's going to be, which is why our analysis ends at 2015. Yes, the water authority thinks it knows what the cost of Imperial Valley water is. But understand, it's not only the supply of water that's costing. It's always mitigation charges, economic and environmental mitigation. And this reliability comes with risk. And that is the Salton sea. And mitigation, environmental mitigation and who's going to pay for it. So even the water authority, and that's winding its way through the Courts right now. Even the water authority doesn't know what the true total cost of the package is.

CAVANAUGH: Now, San Diego's argument that -- they say is not that Metropolitan is charging too much for the water. So comparing the costs from Imperial Valley and Metropolitan is not the point. Their point is that Metropolitan is overcharging them for transportation fees. Now, does your analysis look at the transportation fees and how they've increased from the Metropolitan water district?

EERIE: Well, the transportation fee, it's called a wheeling or conveyance charge, right? And this was a fee that San Diego agreed to early on, to get some additional water. And they agreed to pay that price. Metropolitan's argument is the following: You're going to take 300,000 acre feet of available space in the Colorado river aqueduct that is the revenue stream. You're going to take it to transport, to exchange through Metropolitan. The imperial water to San Diego. Well, the fixed costs are there, there's less revenue coming in because you're using it. We have to develop a wheeling or conveyance charge that captures some of that fixed cost, otherwise everybody else's water bill goes up in Southern California to capture those fixed costs. That's the essence. And we've already gone through this in the 1990s. The MWD, I was an expert witness hired by Brian curry, who now is the council for mayor Antonio Villaraigosa in LA, hired me to prepare an expert witness brief on our declaration on the Imperial Valley situation. And the Courts ruled, the appellate court ruled in favor of MWD, sustained their rate. The rate has been 250, $270 an acre foot. And it varies. San Diego argues we're the only one subject to it. But then San Diego is the only one in a sense asking to rent MWD's pipes for their own water.

CAVANAUGH: Now, you brought up the fact that you had given testimony, and been basically a paid consultant or paid testimony; is that correct?

EERIE: I was an expert witness.

CAVANAUGH: Expert witness.

EERIE: But the water authority since day 1 has said that I'm a paid consultant. I'm still waiting for that first paycheck!
[ LAUGHTER ]

EERIE: And that's been 15 years!

CAVANAUGH: I misspoke, you have said and it's on your CV, that you testified in this trial, and that you were paid as most expert witnesses are. But that charge is being made by the San Diego County water authority in challenging the objectivity of this report that you have now coauthored. Steve, considering what you've written in previous books and articles, I mean, you can't call yourself unbiased about this situation, can you?

EERIE: I have a point of view, Maureen. But the point is, I was not the only author of this. In fact, I played a minor role in the publicly released document. My job was primarily to put the team together. And absolutely talked -- team, to groves at UCSD, Greg Freeman at LAEDC. He was the one who organized things. Vlad Kogan, our star graduate student who's getting his PhD., and is the coauthored of our book, Paradise Plundered, my job was so minor relative to this, it was really to coordinate, to be sort of a devil's advocate, a sounding board. But to basically take someone who played a minor administrative clearinghouse role and to claim that -- we bent over backwards. I cannot tell you, you know? And look, our principle finding is from 2003-2010. MWD's rising water rates are the principle, not the only, but the principle drive of water rate increases here.

CAVANAUGH: So the totality of your writing seems to indicate that you believe San Diego did have an alternative to its goal of water independence. What would be the benefit of not going for the Imperial Valley water, and the other sources of water? San Diego County water authority is looking into. And sticking as the biggest complaint of the Metropolitan Water District? How would we benefit that way?

EERIE: Well, we would benefit in that our water rates would be considerably lower right now. From my book, beyond Chinatown, a history of the Metropolitan Water District published in 2006, I interviewed former general managers like Lynn Brazel, councils like Paul
Ingstrand of the water authority who just were incredulous as we attacked Met. All water agencies in Southern California were caught unprepared by the draught of the late '80s and early '90s. MWD then turned toward what is called the integrated resources plan, basically to diversify their portfolio. And to do demand management as well as supply augmentation, like conservation, recycling, and reclamation. My feeling is that we would be in very good shape, and it would be a lot cheaper if we just stayed on board. When Brazel told me in his years as the general manager, we were more Met than Met. And that loyalist strategy paid off. Yes, everybody got caught. We in a sense felt more insecure, and perhaps more paranoid in the early '90s because we're at the bottom of the spigot. But MWD is a cooperative. They're all there together. They have worked to diversify the portfolio. And even with recent droughts, we're in much better shape moving forward. And it would have been a lot cheaper in a sense to stay a loyal member of the Met family.

CAVANAUGH: I want to get your take on a couple of items that came out in an article in UT San Diego this week. And it outlined some of San Diego's new efforts to increase its independence from the Metropolitan Water District. It's beginning to negotiate for water from the desalination plant in Carlsbad. Is that another mistake as you see it?

EERIE: Well, again, if you want reliability, putting straws into the Pacific ocean may not be a bad idea. There's a lot of water out there. But it's expensive. And its expensive was lessened for a while because MWD was subsidizing these local projects to the tune of $250 an acre foot. By suing we lost in a sense that subsidy. It's expensive water. It's more expensive than the Imperial Valley water. If you want to pay it, it's going to probably mean an 8-10% increase in the price of water. But again, if you want reliability, be willing to pay for it. What I found in San Diego, because it's not only the water authority. I study city government, I study other regional agencies. This is a town with a civic culture where people want the services but really don't want to pay the full price. And remember, we started as a Navy town. We got used to Uncle Sam. Uncle Sam built the first aqueduct down here. We're used to somebody else providing. Look who provides fire in east county. It's cal fire, a state agency. San Diego, and do understand, I was raised in Los Angeles with a very different civic culture. The culture of Mulholland, William Mulholland. They built -- I don't know if they could do it any longer, vast heroic public works projects. The LA aqueduct, LA international airport, the ports of LA and long beach. The they mastered infrastructure. That's their crown jewels. Because of San Diego's proximity to Los Angeles, we could act as a free rider and hook up. Our international port is not the port of San Diego. 90% of our vessel cargo goes through LA and long beach. Our international airports really the nearest one is LAX. Not San Diego international airport. And in a sense, I bring that LA attitude. Building the infrastructure and pay for it, right? And I find resistance to that point of view in this town.

CAVANAUGH: What do you expect Metropolitan Water District to do with this report on the cost of water?

EERIE: Well, I don't know if MWD is going to do anything. I know right now that the various member agencies are discussing it in their respective board meetings. Just to get a handle right on the lawsuit, MWD right now, we've got a lawsuit on rates and particularly on these wheeling rates that's winding through the Courts. And I think MWD -- it has to be as much an umpire or referee among contending member agencies as anything else. That's what it is.

CAVANAUGH: I want to thank you. I've been speaking with Steve eerie, UC San Diego political science professor and coauthor of the cost of water report. Thank you so much.

EERIE: You're welcome.