CVIndependent

Thu12032020

Last updateMon, 24 Aug 2020 12pm

On April 2, with COVID-19 establishing itself as both a financial and fatal threat, Gov. Gavin Newsom signed an executive order prohibiting water shutoffs by local water agencies.

The order applied to all homes and small businesses in the state, protecting them from losing their access to water due to the nonpayment of service fees.

“This executive order will help people who have been financially impacted by the COVID-19 pandemic by ensuring they have water service,” Gov. Newsom said at the time. “Water is critical to our very lives, and in this time, it is critically important that it is available for everyone.”

Today, nearly seven months have passed since then, and the state is still mired in the pandemic—so questions are beginning to arise about how much debt is being accumulated, not only by the state’s water providers, but by customers who can’t afford to keep up with payments.

An Oct. 15 article from CalMatters reported: “The State Water Resources Control Board regulates all public water systems in California, serving close to 85 percent of the state’s customers. The board hasn’t required the utilities under its purview to report specific data about how the pandemic has had an impact on their finances, nor has it tracked ratepayer debt. Initial efforts over the summer to collect some of that information from water providers through a voluntary survey fell short” when only 10 percent of the state’s approximately 2,900 public-water systems responded.

The Independent spoke to representatives from two of the largest Coachella Valley water agencies to assess the impacts of this moratorium on their operations. To their credit, the directors at both the Coachella Valley Water District (CVWD) and the Desert Water Agency (DWA) voted on their own to enact water-shutoff moratoriums in March, weeks prior to the governor’s order.

“Right now, we have 510 accounts, out of a total of 23,492 active accounts, that are severely delinquent, which means they’re somewhere between five and nine months past due,” said Ashley Metzger, the outreach and conservation manager at the DWA. “Also, we have about 1,240 accounts that are delinquent, meaning at least two to five months past due. So, overall, we have 1,750 past-due accounts.”

Katie Evans, the director of communication and conservation at the CVWD, was less specific, but said the impact of the shutoff moratorium has been “exactly what we expected.”

“Every year, we generate around $1 million in late or delinquency fees. So we’re now anticipating that won’t happen (for the 2020-2021 fiscal year). In the meantime, other revenue hasn’t really changed much,” Evans said.

Is the shortfall in customer payments causing a cashflow problem for the CVWD?

“We have a reserve fund called the rate-stabilization fund,” Evans said. “It’s very specific for (an unusual occurrence) like this. It ensures that we have funds if there’s a major change in revenue. The intention there is to prevent a big spike in consumer rates in order to compensate for a catastrophic change in revenues due to some crazy situation like a pandemic. So, I think we’re fine, because we have that reserve available.”

To date, CVWD has not yet needed to tap into that reserve.

One reason why cashflow hasn’t yet become a major issue for these local water providers is the valley-wide customer-payment assistance program in which they’ve all opted to participate, administered by the United Way of the Desert. According to the United Way website, The “Help2Others” (or “H2O”) program helps eligible residential customers avoid water-service shutoffs due to nonpayment. Agencies across the Coachella Valley offer between $50 and $100 in annual credits.

(To find out about the program, visit www.unitedwayofthedesert.org/help2others.)

“We have experienced a 200 percent increase in demand for participation in the assistance program,” CVWD’s Evans said. “That’s actually kind of good news, because that means customers who are having trouble paying their bills, instead of just letting it accumulate, are reaching out for customer assistance to get help to pay their bill.”

Currently, both agencies contribute “non-rate” revenues to the H2O program, and at times, other ancillary revenues have been directed there, including water-vendor contributions, public donations and contributions from employees of the agencies themselves.

“Our fund was actually started using employee contributions and money from vendors,” DWA’s Metzger said. “It helps low-income customers when they need it. Also, what we really liked when we set up the program is that the United Way can connect our customers with other social services and resources, so that it’s more of a holistic approach.”

Looking ahead at the financial picture, Metzger reports some positive developments at the DWA in the July-September period—the first quarter of the new fiscal year.

“We’re actually tracking under budget for expenses, which is good,” she said. “Year-to-date, in our operating fund, expenses were 12 percent under budget, while our revenues are (tracking) 7 percent over budget projections.”

That good news didn’t happen by accident, though. The DWA’s fiscal 2021 budget was being prepared when the COVID-19 pandemic took hold, and the extent of the potential financial losses became apparent quickly.

“Our general manager, Mark Krause, told us all: ‘I don’t want to see a wish list. I don’t want to see a want list. I want to see a need list,’” Metzger said. “Basically, he said that if there’s (an expense) that isn’t imperative to do this year, then we don’t want to do it this year.”

Over at the CVWD, Evans reported: “The 2021 fiscal-year budget maintains current rates for domestic water, (as well as) canal and construction meter charges, and includes no increases in staffing for the district.” The operating budget decreased by 3.8 percent ($11.1 million) year over year, while the capital-improvement budget saw a 23.2 percent ($29.4 million) cut.

Still, there is much uncertainty about what the future holds regarding the longer-term costs and the potential debt problems lurking beneath the surface. No specific date has been set by the state for ending the moratorium.

As for when the moratorium ends, Metzger offered some words of comfort.

“It’s not as if the day that the moratorium ends, we’re going to shut everybody off,” she said. “We’ll work with people to set up payment plans so that they can get (their finances) back in order.”

Published in Local Issues

After months of rain—and increased revenue from last year’s rate increases—both the western Coachella Valley’s Desert Water Agency and the eastern valley’s Coachella Valley Water District find themselves wading in more riches than they could have imagined just one short year ago.

However, that does not mean that all of the water-conservation mandates are a thing of the past.

“The drought is over, but conservation isn’t,” said Ashley Metzger, the DWA’s outreach and conservation manager. “That’s the big message.”

While Gov. Jerry Brown declared on April 7that the drought was officially over in most of the state—including Riverside County—many of the water-usage restrictions imposed during the drought may be with us for some time.

“We live in the desert, and we’re always in a drought,” said Heather Engel, the CVWD’s director of conservation and communication. “Even though there were many areas of the state that were facing unprecedented circumstances, for us, this is how it is all the time.”

Coachella Valley residents are continuing to conserve. According to the CVWD’s March conservation report, customers used 24.5 percent less potable water than compared to the same period in 2013, while the DWA reported a 23.6 percent decrease.

“There are still prohibitions on water waste, water runoff and watering during or soon after rainfall. These are all things for which the DWA will cite people,” Metzger said. “We see the drought as having been a good learning opportunity for our customers, and we want to keep that message going in terms of water use efficiency.”

However, some of the most onerous water restrictions may be eased.

“Any restrictions that local water agencies imposed above and beyond the state’s, according to my understanding, can be eliminated,” said Engel. “That’s where you see that some of the local time or day-of-the-week outdoor-irrigation usage restrictions are being lifted. But the state restrictions are pretty much common-sense restrictions, and I wouldn’t be surprised if the governor and the State Water Resources Control Board make those kinds of restrictions permanent.”

Still, the local agencies are celebrating the results of all the recent precipitation.

“The big and good news is that, with the state getting plenty of rain and snowmelt runoff in Northern California, we are expecting to get 85 percent of our imported water allotment from the State Water Project this year,” Engel said. “That’s huge. If you’ve driven over that Whitewater Bridge lately, you’ve seen the water flowing down, and it’s going to be flowing all year. We’re thinking that we might be able to put about 300,000 acre feet of water into the aquifer, which is huge for all of us here in the Coachella Valley.”

The last year in which the valley received a noteworthy imported water allotment from the state was 2013.

“The only downside is that we have to be more diligent in our messaging concerning safety,” Metzger said. “You know during the summer when people want to get a reprieve from the heat out here that the river flow is alluring. But we want to point people to the reserve to experience the water resource—and not have them go into the river.”

The CVWD may also receive an unexpected revenue windfall. Last year, the CVWD board of directors approved aggressive incremental rate increases over five years. Engel explained: “When we pitched the need for these rate increases to the community, we said there were three key reasons: chromium 6 treatment (required by new state regulations); reduced revenue due to conservation; and the third had to do with a number of other capital-improvement projects, some of which had been deferred during the recession years.”

However, CVWD staff members last fall—after the rate increases were enacted—became aware of test results involving an alternative chromium 6 treatment program.

“We decided to take a timeout and do a pilot study of this alternative treatment method,” Engel said. “If this doesn’t work, we probably won’t meet the deadline to be in compliance with state-mandated chromium 6 levels by 2020. So there’s a bit of a risk there, but the savings to our customers would be so significant, and the positive impact on our communities and the environment so significant, that our board decided it was a risk worth taking. Since the report came, a handful of water districts in the state, and the city of Coachella, are looking into this other method.”

Could this new treatment option lead to—at least—lower rate increases for CVWD customers?

“The board could reduce rates back to 2010 levels if they wanted to do that,” she said. “Or they could say they don’t need any increase this year. Or they could increase any amount up to the total that was published.”

At 8 a.m., Monday, May 22, the CVWD Board is holding a public meeting to review a presentation on next year’s fiscal budget, effective July 1.

“Certainly, we did not spend the money in the last year on the chromium 6 treatment project that we had planned, but we’re uncertain about that future,” Engel said. “People are still conserving, and that’s good, and we do still have these additional projects that we need to do. For instance, we’re in the planning stages for the construction of a new aquifer-recharge facility in Palm Desert, where subsidence of the aquifer has become an issue. So there’s still a need to fund these other projects, but whether or not we can do it with or without a rate increase is still undecided. Based on what the board has said in recent public meetings, it’s clear they’re hoping that staff can come up with a plan (for the next fiscal year) that does not require an increase.”

Meanwhile, the DWA and other local water agencies have found a way to lessen the impact of rate increases on some customers. Partnering with the United Way, the DWA formed the Help2Others program, which provides financial aid to help lower-income residents pay their water bills.

“We have a lot of seniors and some lower-income neighborhoods. … it was really important to get a program like that set up, and we did,” Metzger said. “… Now all five public water agencies in the valley have this program in conjunction with the United Way.

This valuable assistance is funded differently through each of the participating agencies. “Here at the DWA,” Metzger said, “our vendors and our employees have contributed funds to make our program possible, which I’m super-proud of. I think we all realize what we do wouldn’t be possible without the residents paying our rates, and if you need help, we understand water is one of the most fundamental things you need.”

Published in Local Issues