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Water retailers worry about Peripheral Canal cost

The legislature passed an $11 billion water bond on Tuesday night, but that  doesn’t include the most talked-about potential water project in the state, a proposed “peripheral canal” to shuttle water around the California Delta to points south.

That project, if it comes about, would be paid for by several large water agencies in Central and Southern California: including the Westlands Water District and the immense Metropolitan Water District of Southern California (MWD), whose members include dozens of water retailers serving 18 million people in six counties from Ventura to San Diego.

The cost, they say, would be passed on to these retailers in the form of rate increases.

That has some retailers worried. While there is little open dissent at this point, some are openly wondering whether the price tag could balloon. Most retailers seem to agree that ensuring the reliability of water from the Delta is important, but many also say limited dollars could be better spent on conservation, recycling and other smaller scale projects.

“It’s not like there’s a magic pot of money,” said Mark Watton, general manager of the Otay Water District in southern San Diego County. “The only money they have is my ratepayers’ money. My ratepayers are being hit from all sides.”

The idea of a peripheral canal has been around for more than 30 years. While there have been several proposed routes, including a large pipe that would actually run under sections of the Delta, the cost would definitely be at least several billion dollars.

MWD CEO Jeffrey Kightlinger estimated the cost at anywhere between $6 billion and $12 billion. But with an environmental impact report (EIR) still to be done, and any plan still needed to be squared with the state’s Bay Delta Conservation Plan, he said “it’s still early days yet.”

“There’s another 18 months or so of work has to be done,” Kightlinger said. “The numbers and options will start to come into focus.”
But some worry the cost could be far higher. At the upper range of the costs estimated by MWD, Watton said, servicing the debt could double water rates for MWD customers. And those estimates might be low, he said.

“Name any major water project that’s come in on budget,” Watton said. “You can’t. Now we got a pig in a poke.”

Kevin L. Wattier, general manager of the Long Beach Water Department, also a MWD customer, agreed.

“We really don’t a have good handle on the cost,” he said. “Until we have that, we really can’t debate it.”

Both Wattier and Watton also agree that with overall costs for delivering water going up, whether it comes from the Delta or elsewhere, the equation of what types of projects make economic sense is changing as well. For instance, Watton cited a well Otay capped years ago. Years ago, when wholesale water rates were at $500 an acre foot, it didn’t make sense to operate the relatively inefficient well. With rates likely to climb to over $1,000 an acre foot by next year, he said, they’re making plans to uncap it.

Wattier said that Long Beach has gotten a huge return from a $250,000 a year advertising program urging people to save water. In fact, after a 17 percent reduction in per capita water use, he said, Long Beach is down to a very respectable 103 gallons per person per day.

Long Beach is also investing heavily in recycling sewage, though they’re using the resulting supply for non-potable uses and groundwater replenishment, not the “toilet to tap” concept that many consumers find off-putting. Wattier said they’re hoping to get 12 percent or more of their supply from their “toilet to lawn” program. At anywhere from $800 to $1,000 per acre foot, he said recycled water is becoming competitive with Delta water.

They’re also investing heavily in research and development for seawater desalinization, a water source that has been considered uneconomical in years past.  While desalinization will still likely cost $1,200 to $1,500 per acre foot, that might not look so bad in a few years. Wattier said Long Beach may get anywhere from 10 percent to 15 percent of their water this way eventually.

MWD’s Kightlinger said they’re very supportive of local efforts towards recycling and conservation, and he rejected the notion that these would somehow lessen his agency’s relevance. But he also said that fixing the Delta and ensuring reliable supply of Delta water for Southern California’s future was still a necessary foundation for the system.

“We do see a need for more conservation, more recycling, more desalinization,” Kightlinger said. “We’re not going to grow our imported supply. We hope to get back to the reliability of the past.”

But Conner Everts of the Southern California Watershed Alliance said that MWD has not made their own conservation programs a priority. For example, he said, is the conservation credits program they administer. The program has been around since the late 1980s—a period when drought put water on the minds of many urban Californians for the first time—and has subsidized the installation of two million low flow toilets, among other improvements.

The program has been so successful lately that it ran through its $19.3 million in funding for this year by February. MWD has been pushed to release more money, he said, but instead has made it more difficult for consumers to seek the rebates.

“They made it almost like getting a campground where you have to call on the first Monday of the month,” Everts said. “If you wanted to slow the program, they couldn’t have done a better job.”

One thing everyone agrees is that any water fix will remain a moving target—and that costs could easily get out of hand.

Ultimately, Watton said, the MWD and other large districts are controlled by their members. At the moment, he said, he is one of the few voices raising concerns about costs at MWD board meetings—but that could change.

“Suffice it to say that some of us are becoming exceedingly concerned with what appears to be a pretty grand plan for the Day Delta,” Watton said. He added that while others aren’t speaking up, “they’ll all tell me outside, walking to the parking lot with their folders over their mouths, ‘Yeah, that was a good point.’”


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