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Water Charges Debated

POSTED June 19, 2012 8:40 p.m.

The state’s Water Use Efficiency Senate Bill 7, known as SBx7-7, is a regulation on agricultural water measurement and the Oakdale Irrigation District is among the water suppliers that will be affected. The OID Board of Directors discussed what’s going to be expected of the district to comply with the law and the impacts it will have on OID water rates at the June 19 regular meeting.

According to information about the bill, agricultural water suppliers will be required to submit an agricultural water management plan to the California Department of Water Resources (DWR) by Dec. 31, 2012.

OID General Manager Steve Knell said that there are two main points that affect OID. One is that the bill pushes Ag water suppliers toward volumetric pricing of water and the second is that there will be a higher standard of water measurement at the farm gate with 90 percent accuracy. Volumetric pricing is another term for paying for the amount of water used. Knell stated that accurate gate measurements are required with volumetric pricing.

He added that this is a “ratcheting down” approach by the state to move irrigation districts to measurement and volumetric pricing. He later stated it’s the state’s attempt at conservation through legislative actions.

There was discussion amongst the board and OID staff about the costs involved and what is equitable amongst the OID constituents.

OID engineer John Davids said that a cost analysis was done that showed it would cost $500 million statewide.

However, he questioned the parameters used because the average farm size was set at 30-40 acres, but, he said, in OID it’s different because the average farm size is larger.

Knell said that implementation would require more staff time, data management, meter installations, electronic gadgets, replacement and maintenance, and so on. OID will also have to upgrade many canal gates. He said the district couldn’t absorb those costs and that they have to be part of the new water rate to constituents.

Knell said that some tree farmers grumble that they pay the same amount as those with pasture, considering their irrigating practices are more efficient.

Director Steve Webb chimed in that OID’s rates are so low that he didn’t think many people cared too much about that.

Director Herman Doornenbal said that once volumetric pricing come in, people are going to realize just how much water they use.

“I think this boils down to: who’s going to pay for these meters? ... I want to see, across the board, that it’s fair,” he said.

From the audience, rancher and Farm Bureau staffer Tom Orvis commented that there are also some farmers who have ponds or gates in the “middle of nowhere” with no electricity to the area, so electricity or solar power would have to be installed in order to measure the water used. He also said this is just one more thing on a list that the state is trying to control with the area’s water.

Director Jack Alpers asked how the costs will be passed on to the constituents, asking if there would be a flat rate, water use rate, or both, and who was going to pay for the meters.

Doornenbal stated that some farmers already have meters and paid for them out of their own pockets if they’ve participated in Natural Resources Conservation Service (NRCS) programs, which are under the umbrella of the U.S. Department of Agriculture.

No specific action was taken but this matter will come before the board again when it comes to implementing volumetric pricing.

In other discussion, OID financial officer Kathy Cook reported further on the district’s unfunded liabilities and said that the district’s assets exceed liabilities by $140 million and that $35.6 million of that is set aside for special projects. She said that the retirement (CalPERS) program is not fully funded but they have plenty of cash set aside. It is underfunded by $2.7 million but if everyone were to retire today, she said OID could cover it.

Cook also stated that OID doesn’t have contingencies for “intangibles” such as losing lawsuits but that’s the sort of thing that the reserve fund covers.

Mike Eggener of the OE3, the district’s union, commented that the district was doing a good job in managing its assets, especially compared to some of the other entities he works with, and he expressed appreciation and thanked the board for their foresight.

Also in other discussion, director Frank Clark expressed concern that OID doesn’t have legal representation at all the Tri Dam board meetings and that sometimes only South San Joaquin Irrigation District’s attorney is the only legal input and that attorney’s expertise is in banking, not contracts. He felt OID’s attorney should be present to safeguard OID’s interests when important matters are on the agenda. Director Webb agreed that he’d like to have an OID attorney present at every Tri Dam meeting.

The estimated total cost to have the attorney at every meeting would be approximately $15,000, Knell said.

“It’s a 20 or $30 million business that’s not being protected by legal counsel,” Clark said, adding that OID needs someone to advise them.

Knell said that the SSJID and OID are two different business ventures that in some ways are in contrast to one another.

OID constituents Ken Krause and John Brichetto both commented from the audience about the legal representation, or lack thereof, specifically for Tri Dam. Board members commented that the challenge in finding an attorney for Tri Dam relates to finding someone unbiased; therefore, the two districts have their own attorneys.

The next regular meeting of the OID Board of Directors will be at 9 a.m. on Tuesday, July 3 in the OID boardroom, 1205 East F.

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