HomeMy WebLinkAbout05 O.C. WTR DIST ANNEX 05-18-98AGE N DA_
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NO. 5
5-18-98
DATE'
May 18, 1998
Inter-Com
TO: WILLIAM A. HUSTON, CITY MANAGER
FROM: PUBLIC WORKS DEPARTMENT/WATER DIVISION
$1JBdECT: ORANGE COUNTY WATER DISTRICT ANNEXATION ISSUES
SUMMARY:
This report summarizes the current annexation and rate setting activities at Orange County Water Distri'ct
RECOMMENDATION:
Receive and file.
DISCUSSION:
During the past 18 months Orange County Water District (OCWD) and its member agencies have been
studying potential annexations to the District and the effect of new water demands from these areas. New
demand forecasts through the Year 2020 from areas already within OCWD (130,000 acre feet per year)
indicate substantially greater demand than from potential annexed areas (33,000 acre fee per year). With
current total demand on the groundwater at 300,000 acre fee per year, the new demand from infill
development represents an increase of approximately 43% over today's demand. Since groundwater is the
City's least costly, most reliable source of water any policy changes by OCWD that affect the supply of
groundwater will have a significant effect on all citizens of the community regardless of whether the City
of Tustin or IRWD provides them water service.
OCWD is planning to provide for the new demands through a combination of increased replenishment
water purchases and new capital improvements, however this program has not yet been formalized in a
master plan.
Recently there has been increased seasonal groundwater pumping in the south Santa AnaJCosta
Mesa/Fountain Valley/Huntington Beach areas. This has caused lower groundwater levels which some
coastal agencies say have caused them increased costs through reduced flows, water quality problems and
the need to extend Pump settings. It has caused them to question OCWD's ability to supply current
demand let alone furore demand to the year 2020.
It should be noted that groundwater levels in Tustin have been stable. The situation seems to be localized
and may be related to lack of groundwater movement from the recharge areas in the Santa Ana River and
Santiago Creek to the areas of increased pumping between the 405 Freeway and Dyer Road.
OCWD finances its water purchases and capital improvements through imposition of a Replenishment
Assessment (RA) on all water produced from the groundwater basin. Since 1988 the RA has increased
from $32 per acre foot to $94 per acre foot in 1998. The increase is due to OCWD's increased costs for
purchases of replenishment water and to finance capital improvements to capture the increased base flow in
the Santa Ana River, which are all needed to meet current demands from the basin. In order to meet future
demands, it is anticipated that the rate of increase will continue for the next 10 years. Even with these large
increases, the City's cost to produce groundwater is only $160 per acre foot, including RA and electricity.
This is substantially less than the price of imported water at $440 per acre foot.
Some west Orange County cities have become alarmed because of the localized pumping depression in the
groundwater basin and the projected RA increases needed to meet future water demand. Some are strongly
advocating that OCWD abandon its existing rate structure and adopt a "variable" RA. The proposed
variable RA would assess each agency one rate for water pumping up to current levels, and a higher rate for
any water pumped in excess of current pumping amounts. As a result of this, agencies which expect to
experience growth would pay a higher price for water. For the City's water system the rate of RA increase
over the next 10 years would be slightly less than current projections. Irvine Ranch Water District (IRWD)
would experience a greater than projected increase, resulting in higher water rates for City residents served
by IRWD.
OCWD was established by a special act of the State Legislature in 1933 to "provide uniformity of cost and
access to groundwater throughout the District...". The unique way in which the Orange County Basin is
managed for sufficiency has allowed Orange County a more reliable, less expensive supply than most Other
Southern California groundwater basins where adjudicated, or restricted water rights prevail. Since the
district was formed all agencies have paid the same RA regardless of where growth was occurring. A
change in the historic policy could lead to an adjudication of the OCWD basin. This action would remove
' OCWD's flexibility in managing the basin by establishing rights for each groundwater pumper and reduce
OCWD's ability to enable groundwater cleanup projects such as the City's Seventeenth Street Desalter.
The OCWD Board of Directors was scheduled to act on implementation of the variable RA on April 29,
1998. Substantial public concern was raised at that meeting and action was deferred until a later date.
City staff will continue to actively participate in this process and report to the City Council.
Director of Public Works/City Engineer
Gary R Veeh
Water Services Manager
GRV:TDS:klb/COUNCIL:OCWD Annexation Issues