"Ask me what tops the list of California’s most critical infrastructure, and I’ll tell you it’s the State Water Project. It’s hard to argue with the fact that water is a prerequisite for all life and a healthy economy.
That’s why financing the operation and maintenance of the State Water Project in a responsible, cost-effective manner should be common sense — not a political volley that puts California’s lifeline at risk and threatens ratepayers with a surge in water rates that is easily avoidable.
The State Water Project delivers water to more than 25 million people, 750,000 acres of farmland, and fuels business and industry statewide. We must ensure it can continue serving our needs today while providing for future generations in the most reliable and affordable way possible. The best and most responsible way to do that is by extending long-term water supply contracts that have been in place between public water agencies and the California Department of Water Resources (DWR) since the 1960s.
By extending the contracts, DWR can issue bonds beyond 2035 to allow for long-term financing for planned State Water Project capital operation and maintenance, such as the Communications System Replacement Project and the Fire Systems Modernization Project. This protects ratepayers statewide, shielding them from the steep water rate increases that result from financial compression.
Think of “financial compression” in terms of financing a home mortgage.
If a homeowner has a 15-year mortgage, their monthly payments are much higher than if they were to finance the same amount using a 30-year mortgage. The contract extension is equivalent to changing from a 15-year to 30-year mortgage for millions of ratepayers.
Without an extension, municipal and industrial public water agencies’ costs are projected to escalate by more than double, from $300 million to $700 million over the period until 2035. Agricultural public water agencies’ capital charges would spike from $36 million to $490 million over the same period, an increase that is 13 times greater.
Opponents of California WaterFix are making the contract extension for the entire State Water Project about the Governor’s $17 billion twin tunnels project in hopes of delaying the project. A joint legislative budget committee hearing, scheduled for September 11, is the final informational hearing required to complete the contract extensions and avoid the financial compression.
After nearly five years and an extensive public review, the contract extension process is nearly complete. An Agreement in Principle was developed in public in 2014, after which the CEQA draft environmental document was publicly released and comments were received. DWR and public water agencies have done their due diligence with great care and transparency. While WaterFix is a necessary investment in our State Water Project, it’s not the reason we need to extend the long-term water supply contracts.
The State Water Project is the nation’s largest state-built, user-financed water and power development and delivery system – a vast network of aqueducts, tunnels, canals, reservoirs, pumping plants, and hydroelectric power generation plants.
Bringing Sierra Nevada melted snowpack from the Bay Area to San Diego, it’s one of the cleanest and most cost-effective water supply sources. It gets us through droughts more efficiently than any other source, augments local water supply sources and recharges groundwater basins. Two-thirds of California’s water is delivered through the State Water Project. Some California regions depend on water from the State Water Project for as much as 80 percent of their total supply.
The hearing scheduled for next week has been delayed twice amidst the noise from WaterFix opponents, who are looking for any reason to slow down the project’s momentum. There’s no question the hearing should proceed as planned next week. Any further delay just makes it more difficult to maintain high bond ratings, keep interest costs low, and provide financial stability to the State Water Project.
And if there’s any doubt about just how important this is, imagine life without the State Water Project. It’s in California’s best interest to have a stable, reliable water supply."
Ed's note: Jennifer Pierre is the General Manager of the State Water Contractors, a statewide, non-profit association of 27 public agencies from Northern, Central and Southern California that purchase water under contract from the California State Water Project.