The Montecito Water District board approved a water shortage emergency surcharge Tuesday night, putting the fee into effect April 1.
Water sales from last July through January were about half compared to 2013-14 — very good for conservation, but bad for the district’s bottom line, especially at a time when it’s spending millions of dollars on supplemental water and desalination plant studies.
The surcharge rate can change depending on water sales, but the board approved a starting rate of $1.87 per HCF (hundred cubic feet, or 748 gallons) and a maximum possible rate of $4.16 per HCF.
There was a more organized effort to protest this surcharge and the district received 388 protest letters by the time of the meeting, general manager Tom Mosby said.
Almost 200 people showed up to the meeting, and the board unanimously approved the surcharge.
Unlike so-called drought water rates, the surcharge doesn’t follow the tiered rate structure and charge larger users more money per unit than the lowest users, it’s the same increase for everyone.
At the same time, the board repealed Ordinance 93, the water rationing rules adopted a year ago, and adopted Ordinance 94 to implement the new allocation plan. These rules give a 26 percent increase in water allocations to all customers, including water for outdoor irrigation use for single family residences.
Plenty of people have pointed out the mixed messaging of increasing allocations while still calling for conservation and purchasing supplemental water to keep up with demand.
The district says the surcharge and increased allocations will help the district stay fiscally solvent, with low water sales and high drought costs.
“Though it helped water supply, higher conservation has reduced revenues to a point where we have to increase rates, which is the purpose of the surcharge,” Mosby said, adding that 70 percent of the district’s expenses are fixed costs.
The district bought enough supplemental water to make a “two-year water supply bridge” until it can boost local water supplies — banking on the fact that it can build and start a new desalination facility.
The Montecito Water District is importing 85 percent of its water through supplemental purchases right now and it’s unlikely that any level of conservation would have avoided those purchases, Mosby said.
The district expects to get no water from its Lake Cachuma allocation or State Water Project next year, as a worst-case scenario plan, so the lack of surface water and groundwater supplies is pushing the organization to desalination.
“The supplemental water is a two-year bridge and takes the urgency off, however, we believe 2017 is the drop-off point — if conditions stay as they are, desalination must be operating by then,” Mosby said.
The $1.87 surcharge is meant to compensate for a 20-percent drop in water sales and depends on the district receiving $2 million in rationing penalties. It already received that much for the 2014-15 year.
This water shortage emergency surcharge is a temporary measure that will end once water supplies have “normalized” and drought-related expenses are recovered, according to the district.
Only a majority protest by district customers would have stopped the approval.
The district already approved planned increases of 16.3 percent in mid-2013 and 7.4 percent every year through 2017-18, as part of its five-year financial plan adopted in 2013.
— Noozhawk news editor Giana Magnoli can be reached at gmagnoli@noozhawk.com. Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.
