Delta pipe’s impact on water bills could sink plan
Monday, March 19, 2012
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Of all the unanswered questions about a plan that could result in a giant pipeline to move water out of the Sacramento River, and under the fragile Sacramento-San Joaquin River Delta, perhaps the biggest is how high Californians’ water bills will rise.
The answer to that question could doom the project, though no one knows for sure when that answer will come.
Such uncertainty has some water experts concerned about the fate of the years-long process that is expected to result in a final proposal later this year. Others say ratepayers may revolt once the costs are revealed.
“If you were going to hire an architect to design a house for you … that architect would ask you a very fundamental question before he got out that pencil and ruler: How much can you afford?” said Dennis Cushman, assistant general manager of the San Diego County Water Authority, the urban water agency that receives the most delta water.
“That is the fundamental question that has not been asked in the process: How much can ratepayers afford?” he said.
According to initial documents released for the water proposal known as the Bay Delta Conservation Plan, building two large tunnels under the delta to move water at up to 15,000 cubic feet per second would cost nearly $17 billion.
That cost includes both the construction of the project and the cost to operate and maintain it for 50 years. Including interest on the bonds for the project, the total construction cost would near $40 billion.
Farmers, residents to pay
The bill would be paid entirely by urban residents and farmers who use the water – residents and farmers in the Central Valley and Southern California and parts of Alameda and Santa Clara counties.
Determining just how much that expense would push up the price of water depends on a host of factors that have yet to be decided. Those include not only which project is chosen, but also how much water can actually be taken from the delta. The state has not yet decided on how or if it will bypass the delta, but Gov. Jerry Brown’s administration will declare a “preferred alternative” this summer that many believe will be the large tunnels.
If there is a massive construction project that results in less water than estimated, the price of the water will rise even more.
Costs differ by agency
Costs will also differ by individual water agencies. For instance, some agencies have to spend significant amounts of money to treat water that comes from the north. The tunnel proposal would take water from the Sacramento River before it flows through the delta, which is expected to result in better quality water and lessen treatment expenses.
Officials at the Department of Water Resources said that their rough estimate of increased costs would amount to between $100 and $150 per acre foot of water. An acre foot is the amount of water covering 1 acre to a depth of 1 foot.
The Metropolitan Water District of Southern California, which includes 26 cities and agencies that supply water to 19 million people including in San Diego, is using a preliminary estimate that the price paid for water would increase by $150 per acre foot. Ratepayers would be looking at a 15 percent increase in water rates, said Roger Patterson, assistant general manager of Metropolitan.
The association of 29 water agencies, including Metropolitan, that receive water from the State Water Project – which provides water to half of all Californians – should be able to afford the cost of the project, even if the price tag increases, said Terry Erlewine, general manager of the association.
Those agencies will likely split the cost based on how much water they receive, and then it would be up to the boards of the agencies to decide how the cost would be passed on to ratepayers in different cities.
But while urban users may be able to afford the yet to be determined price increases, agricultural water users may not. The price of water could more than double for farmers, though it is too soon to know how high the increase would go, said Tom Birmingham, general manager of the Westlands Water District, which covers 600,000 acres serving about 600 farms.
“There is a breaking point at which the project is no longer feasible,” Birmingham said. “It’s a significant concern,” though he said officials can’t evaluate the cost effectiveness until the outstanding questions are resolved.
“It’s a classic catch-22. The conundrum is you don’t know what project to implement until you know the cost, but you don’t know the cost until the project is implemented,” Birmingham said.
The unknowns also are drawing the attention of lawmakers. Assemblyman Bill Berryhill, R-Ceres (Stanislaus County), has introduced a bill to mandate a cost-benefit analysis that he hopes would state clearly how much water rates would increase by constructing the large project.
Berryhill, who also is a farmer, said he has heard estimates that the cost of water could increase by as much as $1,500 per acre foot and said he doesn’t trust figures from state departments or water agencies that want the project. He said he opposes the tunnel project and thinks an independent evaluation of costs would stop it from happening.
“We’re trying to push it over a cliff by shining a light,” Berryhill said. “We don’t want another bullet train fiasco where the costs go up and up and up and you can’t afford it.”
The calculation method for determining the cost of the project also is facing criticism.
Jeffrey Michael, director of the Business Forecasting Center at the University of the Pacific in Stockton, said a more accurate measure of the cost should be based on calculating how much more water would come from the large project versus what is pumped today.
Cost of water will increase
State officials estimate the increase would be about 1.2 million acre feet per year, which Michael said puts the cost at more than $1,000 per acre foot. Still, he said most urban users probably won’t see an unaffordable water bill, but he said the money would be better spent tapping into groundwater supplies and increasing water recycling and desalination.
“For a similar increase in their rates they could receive water from local sources,” he said. As for farmers, Michael said the tunnel plan does not make economic sense.
But state water officials and water agencies that receive the delta water argue that reliability is key and thus the increases in water costs should be determined using the full amount that would be delivered.
Also, they said, no matter what happens – whether the large project is built, nothing is built, or something in between is approved – the cost of water will increase. And, if the biggest project is approved, individual agencies will inform ratepayers of potential cost increases before agreeing to fund it, said Richard Stapler, spokesman for the California Resources Agency.
He said increased costs are not going to “slip through in the night.”