The new desalination plant in Carlsbad and its expensive water are driving up water prices across San Diego County. But does it have to be that way?
Right now, the two dozen water agencies in San Diego County get water from a variety of sources, including the Colorado River and the delta in Northern California.
Water from each source costs a different amount, but customers don’t see that difference on their bill. That’s because water officials blend together all of the costs so each customer pays roughly the same amount for every drop of water, no matter the source.
Richard Carson, an economist at UC San Diego, thinks it shouldn’t have to work that way. Instead of making everyone pay for desalinated water, water officials could have made only new customers pay for that new source of water. Since the desalinated water is helping cities justify new development by guaranteeing a water supply, why not make the new developments pay for the cost of new water?
Obviously, the idea would not be popular with builders.
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Every time the County Water Authority turns down an acre foot of MWD water in order to by the same amount of water from
the desalinization plant, how much more does that cost San Diego water ratepayers? Having signed a "take or pay" contract to
subsidize the desal plant, how much extra ratepayer money will the CWA spend over the next twenty years, then cross charge local member water agencies and their ratepayers for? This seems like a fairly simple sum to calculate.
Mr. Rivard does a great disservice publishing such a simplistic piece- as though water was only about gallons and price. It is a much complicated than that. Desal has never been about MORE water to serve new development. It has always been about improving water RELIABILTY for the region. Yes, desal water is expensive compared to some existing sources, but those sources (Northern California and Colorado River) are becoming less reliable with each passing day. Less reliable water means a real possibility (say, in a drought), that our region will not get the water necessary to maintain our vibrant economy and quality of life. Which is why our local water agencies have spent lots of money to diversify our water supply portfolio to improve reliability. Unfortunately, diversification means some supplies (more reliable) are more expensive than others (less reliable). Mr. Carson may be a fine economist, but the notion that each individual development can pay a different price for water ignores practical reality. Let's take the Carlsbad desal plant as an example. Water from the plant is pumped to the Twin Oaks water treatment plant where is blended with all other water supplies coming into the county. But from then on it is all one big distribution system so there is no way to segregate desal supplies from any other supply. At this point, the concept of charging different rates begins to have problems: first, if I'm paying more for desal water, then I want all the benefits of desal - namely, better water quality and reliability. Everyone knows that desal water is extremely high quality with virtually no dissolved solids (salts). Well, since the water has already been blended before I get it, I'm not getting what I am paying for, so now I want a discount for non-desal quality water. Second, during shortage conditions, since I am paying more for a more reliable supply, I expect to continue to get my full allocation, even when other water users are under curtailment orders. If you curtail my use, then I want a discount because now I'm not getting the reliability I've been paying for. Taking Mr. Carson's rationale to conclusion, he would create at least two different categories of water users/rate payers: the "haves" (those that pay more for better quality and reliability), and the "have nots" (those that pay the old rates and get none of the water quality or reliability benefits). Without an entirely separate and costly distribution system for each different water supply, it will be impossible to effectively segregate payer groups so they each receive what they are paying for. So while his explanation may sound enticing, the logistics just don't work. Better that everyone just pay a combined rate for our entire supply - that way we are all in this together.
" a lot of the cost of a water system are fixed costs, the pipes and the billing and all that."
My water bill has a fixed Base Fee and a separate fee for actual water use. The fixed fee currently exceeds the cost of the water that I use. Fixed fees are generally considered to be basic infrastructure costs and should not vary greatly based on water usage. Household fixed fees are things like your mortgage, care payments etc. Household usage costs include food, energy and other consumables. It makes sense for water costs to go up when there is a shortage, not an over supply. Fixed fees should not increase substantially unless new infrastructure is being built and that would be budgeted in advance.
Loss of revenue due to lower usage of water should affect water usage rates but not fixed costs for pipes and billing.
That being said the cost of water for most households is in the $3-5.00 per day range, less than many people spend on coffee per day.
Ah, the old 'raise taxes on the guy who's not here to vote no trick'. It's politically favorable, see hotel tax.
Here's a better strategy. Use the free market to reduce costs and improve service.
The government is the worst operator. They grow fat and lazy because nobody is ever fired and the incentives are wrong. If they do a poor job they can claim there's a crisis and demand more money. We need a system where the incentives work the other way. Fortunately we have one! It's called capitalism.
The city should sell the water company to a private operator. This will immediately save at least 30%. We know this because each time the SD government outsources a service citizens save 30% even if the service is delivered by the same group of employees.
Proceeds from the sale of the water company could be split between covering the outrageously high pension promises made by unions which control the companies and infrastructure which needs new investment.
With this approach the desal could never be built, since it so expensive; they have to spread the cost among all users or it would have been a no go. Even at that they were barely able to make it go. Now with ironically "excess water" on hand in the region and strict conservation rules due to statewide drought and new expensive water, it's easier to see it was always all about subsidizing new growth, which enviros said all along. But it will subsidize new growth if new businesses can afford it.
Utility pricing is a social issue. They way I think about it is that there is little capitalism in utilities like water and electricity - how many choices do we have? Typically, just one.
Seems like "new water" is the same as "old water" and should be apportioned to all. However, recognize that it is a utility with a fixed supply. Therefore, we need to find ways to allocate it "fairly". Regardless, seems that all should get equal access to the water supply in the same way that we all get the same access to natural gas or electricity.
Water is troubling to me because I have a family of (x6). How do we apportion the water fairly to businesses and people? How do we allocate the cost of water appropriately for uses we deem "fair". Should individuals get allocations for water? Therefore, my water rates should be based upon the number of people in my household? Should people be allowed to "waste" water at gyms, community pools, or their workplace? For example, why not shower at work and save a few gallons?
This is what I mean by a social issue. When the pricing structure changes, behavior changes. Since "we the people" should be in charge of water allocation, we need to think hard about what social values we are encouraging (discouraging) through water policy.
A little late for this addition to the debate. The City Council made a decision on rates that will likely stand for the next five years or so. This is the economic equivalent of the moot court.
I had not realized that the huge increase in water rates was to cover the cost of water for developers. This is simply wrong. Paying for water for the units they build should be a cost of doing business. It is time for this decision to be reexamined and changed.
A funding formula of government operations just like Prop 13. How has that worked out so far? For the business cabal running the place, just fine.
At long last, clarity of reason, from a respected academic:
"Since the desalinated water is helping cities justify new development by guaranteeing a water supply, why not make the new developments pay for the cost of new water?"