Two Small Agencies Want A Divorce From The Water Authority. It Could Get Messy.

Speaker 1: 00:00 San Diego. Lynn's already pay some of the highest prices for water in the country and on Sunday water rates increased. Again, those high prices are leading to water agencies, the Fallbrook public utility district and the rainbow municipal water district to find water from a cheaper source, which is the eastern municipal water district based up in Riverside. But Voice of San Diego reporter rive Revard who covers issues surrounding water and power, says the San Diego County Water Authority is not going to just let them go without a fight. Rye joins us now. Rye. Welcome. Hi. Thanks for having me. So the water authority is serious about trying to keep those two agencies in the fold. What does the agency say had plans to do to prevent their departure? Well, I mean they, they might accept the terms of a divorce, but they definitely want some alimony payments. Um, they're saying, hey, if these two agencies are going to leave their 24 agencies that form the water authority, we've all together invested billions of dollars, they're gonna need their PA pay their fair share for those investments before they leave. Speaker 1: 01:00 And the water authority was formed 75 years ago to buy water from the Colorado River and then resell it to local agencies. A Fallbrook was a founding member and rainbow joined a decade later. Is there any precedent for such local agencies to leave the water authority? No, nothing like it. Um, there has been rebellions in the past. Um, North County in particular where there's been a lot of farming has been particularly concerned about, uh, the, the price of water. And I'm about 20 years ago, 25 years ago, they were concerned about a major water deal that the water authority was contemplating and eventually signed, uh, to buy water rights from farmers in the Imperial Valley. That water would end up being somewhat expensive in San Diego and the farmers in North county were concerned and rightly so, that that more expensive water would affect their profitability. And so you've seen a lot of farms go out of business in part because of water costs and the eastern municipal water district and Riverside gets its water from the Metropolitan Water district in Los Angeles. Speaker 1: 02:01 Uh, the San Diego County Water Authority buys water from metropolitan as well. Why is our water more expensive than theirs? So it's interesting. There's the city of San Diego, just to think about this, the city of San Diego buys water from the water authority. The water authority buys water from, among others, the Metropolitan Water district, they have water rights that a, they have with farmers in the imperial valley to raise the water from the Colorado River. So everybody's buying water from, from everybody else. And each time they buy it, they have their own markup and part of that market, none of these agencies are profiting. Um, but they have their own different costs. And one of the costs that the water authority has taken on over the years is after a drought in the 1990s, that metropolitan, which was then the primary supplier for all of southern California, including the water authority, what metropolitan just wasn't prepared for that drought. Speaker 1: 02:48 And the water authority said, hey, we're going to do a bunch of things to make water more reliable. And when you do that, when you buy special water rights, when you build a desalination plant like they built in Carlsbad to make ocean water, all that comes with a cost. And so the water authorities water is likely more reliable, but also more expensive. If member agencies start leaving, then water prices go up for everyone else, right? Uh, that's the theory. The water authorities put together some estimates and they say that there'll be about $13 million a year in costs, um, that rainbow and Fallbrook won't be paying that customers that are left, uh, buying water from the water authority, uh, will have to pay, including customers in the, in the city of San Diego, that translates very, very roughly to several dollars a year per customer. So why does the basic business logic of supply and demand to not apply here? Speaker 1: 03:40 Well, it's interesting. So there'll be right, fewer people buying the, roughly the same amount of water. Um, a lot of the costs are fixed costs. So the water that the water authority has signed contracts to buy, um, from the Colorado River for instance, that's fixed. They, they can't save money by buying more or less. Um, the same thing with the desal unaided water that we're buying from a private company that has that plant in Carlsbad that's fixed. You can't buy more or less than save money. Really. Um, so, and then there are also infrastructure costs. There are dams that have been raised. Um, there's pipelines that have been built. None of those costs go away. So on the supply side, the Water Authority is basically in longterm contracts to buy a fixed amount of water. And on the infrastructure side, those pipes don't get up and walk away either. Speaker 1: 04:27 So speaking of infrastructure, if Fallbrook and ray and rainbow do leave a, will they have to build any new infrastructure to buy their water from eastern as opposed to the water authority. So one of the interesting things that a fall broken rainbow talk about that makes them unique is the way the pipeline infrastructure works is metropolitan system actually comes partway into San Diego County. And then the water authority has built its own system to connect to that rainbow. And Fallbrook are by and large and almost entirely still on the metropolitan side of that pipeline. So they say, hey, we're not really benefiting from a lot of the infrastructure that the water authority is build that is further south than North County. And so they can continue to get water from essentially the same pipelines. They'll have to build, um, some systems to move water a little bit differently in their area. Speaker 1: 05:15 But it's, it's not a big thing. At least they don't think so in terms of costs. So then is there any chance this could get worked out without having to go to court and, and how might that happen? I've been, uh, covering water in San Diego for four and a half years. Um, the water authority has a reputation for being litigious. They always say, yeah, well, we're defending our interests. Um, I find it somewhat unlikely that there won't be some sort of a court case. And Do, how involved do you think this court case could get? Well, I mean, there is a chance that this could get resolved by this really obscure agency called the local agency Formation Commission that, uh, draws boundaries, like city limits and water district limits and where fire department service areas are. There's a chance that everything can get worked out, um, by this, this commission. Um, but if not, uh, you know, court cases last years. All right, I've been speaking with voice of San Diego, reporter Rye. Revard. Thank you so much for joining us. Thanks for having.