How Your Water Bill Subsidizes Purple Pipe

Government

How Your Water Bill Helps Subsidize Golf Courses

The city’s purple pipe water system provides treated but undrinkable water that’s used for irrigation by places like golf courses and public parks. San Diego’s purple pipe rates are incredibly low and haven’t gone up at all since 2001. That means regular water users have been propping up that system by paying tens of millions of dollars over the past dozen years in subsidies.

San Diego water customers have seen rate increases almost annually to replace the city’s old pipes and keep up with water’s soaring cost.

One class of water users hasn’t had to face this reality. They’re the golf courses, major companies and a few hundred other customers who tap into the city’s purple pipe water system, which provides treated but undrinkable water for irrigation.

Purple pipe rates haven’t gone up at all since 2001. That means regular water users have been propping up that system and its low rates by paying tens of millions of dollars over the past dozen years in subsidies.

Now, the city is moving to increase purple pipe rates, but the proposed hike will leave the purple pipe system in much the same situation it’s already in: Fees will be lower than the city’s own water consultant recommends, and subsidies from regular water customers will continue.

San Diego’s rates for this purple pipe water are lower than other California cities’ rates – a lot lower. The water has been described by one water official in another city as “liquid gold” now, because recycled water users are not subject to the drought-related cutbacks ordered by the state.

Since 2001, the city has charged $0.80 for a unit of purple pipe water. That’s less than 20 percent of the rate customers pay for a unit of drinking water. The new rate for purple pipe water would be $1.73 per unit, more than double what it is today.

Experts say the price is not going up enough. The new price would still be below what a consultant recommended back in 2013. The city’s water price consultant says most California cities set purple pipe rates at about 75 to 90 percent of their drinking water rates. If San Diego did that, the price of purple pipe water would be at least $3.70 – nearly five times what it is.

Instead, San Diego operates a purple pipe system that in 2012 ran a $56 million deficit, according to its consultant, Raftelis.

Dawn Guendert, a member of a 2013 city water policy task force, said it was unjust to ask low-income people and seniors on fixed incomes to the subsidize golf courses and tourist attractions that use purple pipe water.

“My big push is that we should always cover the cost of service, so why the city of San Diego has continued to keep it so low, I don’t understand,” she said.

Water officials say rates are as low as they are because the city wants to incentivize use. Lobbying against rate increases is also strong. At a City Council committee hearing last week about rates, more purple pipe users showed up to protest higher recycled water rates than showed up to protest an increase in drinking water rates.

When the city began selling purple pipe water in 1997, the price was higher than it is now and the city had trouble getting people to sign up. But – like Walmart cutting prices to bring people in the door – the city slashed the rate 2001. That plan worked: More than 350 customers new customers signed up by 2013.

Purple pipe rates have to be somewhat low. The purple pipes carry recycled wastewater that can only be used for watering lawns and certain other industrial uses.

Everyone also benefits from recycled water when it’s used in lieu of drinking water: When a golf course uses a gallon of recycled water, it’s not using a gallon of drinking water.

The city, however, said it has not done a cost-benefit analysis of the purple pipe system, so it’s impossible to tell what the tangible benefit is.

And the rates have stayed low. During former Mayor Jerry Sanders’ administration, the city talked about raising its purple pipe rates but never did, despite recommendations from a consultant to do so.

By summer 2013, the city’s consultant had again recommended the city raise rates to $2.24 per unit.

The same summer, a water policy task force told the city it should raise purple pipe rates.

Many of the purple pipe system’s largest customers are public entities, including the city’s parks department, Caltrans and the city landfill at Miramar. But several private companies use the low-cost recycled water and are upset by the proposed increase.

The biggest private purple pipe user last year was the Santaluz Golf Course in Black Mountain Ranch.

Santaluz’s general manager, Jim MacDonough, said he understands the need for an increase, but he’s concerned the city has no formula for setting its new purple pipe rate.

“We are all working on the good side of environmental sensitivities, and working with the city to help for the benefit of all,” he told me in an email.

The golf course, he said, had spent more $1.5 million just to hook up to the purple pipe system, and the price increase would upend his business model.

The golf course has clearly benefitted from the lower prices over time. If purple pipe rates were set at prices recommended by the city’s consultant, the course would have spent $600,000 more last year for the water it purchased.

If you apply the same math to the entire city, purple pipe customers would have paid at least $50 million more since 2001. (Of course, this math assumes that the higher prices would not have discouraged people from using the purple pipe water.)

Halla Razak, director of the city’s public utilities department, said the lower prices are incentives that help encourage use of the purple pipe system. That benefits every water and wastewater customer, she said, even if they’re not hooked up to the purple pipe system.

“The benefit to the regular water ratepayer is that I don’t need to go out there and buy an extremely expensive new water supply,” she said. “That would increase my potable ratepayers’ price so much more than paying for a conservation program or developing underground water or developing Pure Water or continuing to expand recycled water.”

Pure Water is the city’s planned program to recycle wastewater so that it’s drinkable – and is not to be confused with the purple pipe system.

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