Water rates in San Diego are some of the highest in the country . So, two rural San Diego water agencies just came up with a novel way to save money: Buy water from Riverside County instead.
Leaders of two water agencies that serve about 50,000 people in and around Fallbrook are fed up with rising costs at the San Diego County Water Authority.
Local water agencies from across the region formed the Water Authority in 1944 to import water into the county from rivers hundreds of miles away. But, just in time for the Water Authority’s 75th anniversary, its future as the region’s main water supplier is in question.
Several local water districts, including the city of San Diego’s water department, are planning to recycle their wastewater , which reduces the need for Water Authority water. Now, the Fallbrook Public Utility District and the Rainbow Municipal Water District both want to exit the Water Authority entirely.
Rainbow general manager Tom Kennedy said his customers can save about $5.7 million a year by leaving the Water Authority and buying water from the Riverside-based Eastern Municipal Water District.
Customers wouldn’t notice much difference, since their water would still come from the same rivers, be treated at the same water treatment plant and sent to them through the same pipes.
Rainbow and Fallbrook’s exit plan exposes another hidden absurdity in California water: What happens on paper may have little resemblance to what happens in reality. Simply by changing who they say they are buying water from, Rainbow and Fallbrook’s thousands of customers can save hundreds of dollars a year.
San Diego’s water rates have risen steadily over the past three decades, driven in part by Water Authority spending following a drought in the early-1990s . The Water Authority, at the time, was itself a mere go-between. It existed almost entirely to buy water from the Metropolitan Water District of Southern California and then to resell that water to two dozen local water agencies, in cities like San Diego and in rural areas like Fallbrook.
But since Metropolitan wasn’t prepared for the drought, the Water Authority made big investments to ensure the region didn’t end up caught off guard by any future droughts. It’s spending billions of dollars to buy Colorado River water from farmers in Imperial County . It backed a privately owned desalination plant in Carlsbad that makes ocean water drinkable – a mostly reliable but highly expensive  water supply. It also paid $1.5 billion to increase the storage capacity of local reservoirs  so water can be set aside in case of an emergency.
Kennedy said his customers aren’t getting the benefits of those deals, even though they’re paying the price. Because prices are continuing to rise, farmers are going out of business . Rainbow is selling about half as much water as it sold just 15 years ago.
On top of that, the water from the desalination plant barely reaches any of Rainbow’s customers and, in the event of an emergency, none of the water from the new storage facilities can reach Rainbow either.
“The reality is that’s not worth the extra cost,” Kennedy said.
Rainbow and Fallbrook are in a unique spot. Because they are in the northernmost part of the Water Authority’s service territory, almost all of their water comes out of Metropolitan-owned pipelines that deliver water into San Diego – before the water touches Water Authority-owned facilities.
By quitting the Water Authority and joining the Eastern Municipal Water District, Rainbow and Fallbrook can buy water from Metropolitan with only a small markup.
Kennedy said the water would be about $1,000 an acre foot. An acre foot is 326,000 gallons, roughly as much water as two or three Southern California homes use in a year. The Water Authority charges about $1,600 for the same amount of water.
“How long is a person supposed to take that?” Kennedy said.
Any exit plan would need approval from both the San Diego Local Agency Formation Commission,  an obscure agency that oversees political boundaries, and from voters in Rainbow and Fallbrook’s service territory. Kennedy said he’s aiming for a vote in 2020.
The Water Authority’s general counsel, Mark Hattam, disclosed Fallbrook and Rainbow’s plans during a May 23 board meeting  because their exit could affect investor confidence in the Water Authority. The Water Authority is a nonprofit public agency but it pays for major projects using bonds.
Rainbow and Fallbrook are relatively small customers. In 2018, they bought about 29,000 acre feet of water, just about 7 percent of the water sold by the Water Authority. For comparison, the city of San Diego bought 156,000 acre feet of Water Authority water in 2018.
Still, the Water Authority is notoriously litigious and it may not let the agencies leave without a fight. The day after Hattam mentioned the plans publicly, he sent Rainbow a request for all public records about the agency’s plans to leave.
Plus, there may be bad blood.
Eastern Municipal Water District is led by Paul Jones, who also led an effort to criticize Water Authority spending  earlier this decade.
More recently, the Water Authority had to investigate its long-time general manager, Maureen Stapleton , after she accused Kennedy of sleeping with a Metropolitan employee. There’s no evidence the affair took place. The results of the investigation were never made public. Stapleton has since stepped down from the Water Authority, citing health challenges.
Kennedy said that incident didn’t have anything to do with Rainbow’s plans to leave the Water Authority.
“It just highlighted for me some of the dysfunction down there,” he said.
Mark Watton, the current head of the Otay Water District and a former chairman of the Water Authority’s board, said he’s “happy to make Tom’s dream come true,” but said Rainbow and Fallbrook may need to pay some Water Authority debts if they want to leave.
“When you get divorced, you don’t just to file your papers and walk away,” Watton said. “You leave behind a house and some bank accounts.”
In the past, other Water Authority members have expressed concern about the agency, though much of that came when Stapleton was still the general manager. Now, board chairman Jim Madaffer seems to be running the show .
“As this matter moves forward, the Water Authority will remain focused on ensuring we continue to provide our customers with reliable water at an affordable price,” Madaffer said in a statement.
Madaffer is one of the city-appointed representatives on the Water Authority board. Kennedy said he’s worried about how the city’s future actions will affect Water Authority rates. Right now, the city is working on a plan to recycle as much as a third of its water, which is less water it has to buy from the Water Authority. So, the Water Authority will be seeking to cover its costs even as it is losing sales, a recipe for even higher water rates.
On top of that, Madaffer is proposing a multibillion-dollar pipeline to get Colorado River water from Imperial . He thinks the pipeline could solve a lot of water problems and save money, but some North County water officials worry will only further increase rates.
Gary Arant, the general manager of the Valley Center Municipal Water District, pointed out the Water Authority is looking to spend lots of money at the same time it may be losing customers.
“It really is going to have make them stop and think about how this is going to play out financially,” he said.
Tensions between the Water Authority and the North County water agencies that buy water from it go back years. About 15 years ago, North County agencies formed a group to challenge the Water Authority’s rates for heaping too many charges on rural customers. The group, known as the Economic Study Group, lost its legal battle .