MWD panel weighs 14% rate increase for 2009

The board of the Metropolitan Water District is to vote this week on a proposed 14.3% increase in the 2009 rates it would charge cities and water districts serving 18 million people in Southern California.

Although the cities and districts would then determine how much more residents would pay, MWD officials estimated that the hike would add about $1.50 to monthly bills for an average household, varying widely from city to city.

If the increase is approved by a panel of the MWD board today and the full board Tuesday, it would take effect Jan. 1. Rates could rise again by 6% to 12% in 2010 and 5% to 10% in 2011, said Brian G. Thomas, chief financial officer and assistant general manager.

“Our rates have not been sufficient -- and will not be sufficient even with this increase -- to cover our expected costs,” Thomas said.

The rising rates would bring home the problems plaguing water supplies in the state and across the West. The MWD, the region’s largest water agency, imports water from Northern California and the Colorado River and sells it to cities and districts that use it to supplement groundwater and other local supplies.

Driving the rate increase are the costs of buying extra water to offset a barrage of shortages resulting from last year’s dry weather, a prolonged drought in the Colorado River Basin and a court decision reducing deliveries from the north to protect the endangered Delta smelt.

The MWD must also pay for higher electricity rates and removing invasive quagga mussels from its pipes and pumps, officials said. In recent years, the agency has spent nearly half of its $425 million in financial reserves to forestall rate increases and must rebuild those reserves.

The rate hike would be the largest since the early 1990s for the MWD.

Overall response is mixed.

Although an increase of about $18 a year per household might not seem sizable, it would come during a time of rising gasoline prices and other increased costs, critics say. Many cities are also already raising water rates because of their growing costs.

“I cannot take a 14% increase to my constituents. That’s not going to fly,” said Susan J. Varty, board president of the Olivenhain Municipal Water District in Encinitas, which, like most of San Diego County, relies largely on imports. She questions if the MWD has done all it can to “cut out every bit of fluff” from its operations: “You’re forcing the little agencies to toe the line and cut staff, and, in the same vein, you need to do it.”

Some groups believe the proposal could do more to encourage conservation.

“These increases really highlight the risks of depending on imported water,” said Heather Cooley, senior research associate at the Pacific Institute, an environmental research group in Oakland.

Managers of water utilities in Burbank, Glendale and Long Beach say the increase appears unavoidable.

“Their financial reserves are way down. I don’t know that there’s a whole lot they can do,” said Bill Mace, assistant general manager for water systems in Burbank.

Water, in general, is not heavily priced, said Peter Kavounas, Glendale water services administrator. “I pay more for electricity in my home than I do for water. I pay more for cable television.”

Each city served by the MWD, including Los Angeles, Long Beach, Anaheim, San Diego and Santa Monica, would determine how the increase would be reflected in customer bills. Santa Monica, San Diego and other cities that depend heavily on MWD water could be hardest hit.

Los Angeles typically depends on the MWD for about half of its water in a year of normal rainfall. That includes about $90 million worth of water each year to replace water that the city is legally required to divert for environmental remediation in the Owens Valley and Mono Basin.

The Los Angeles Department of Water and Power also has proposed a hike, now being reviewed by the City Council. The combined increases would raise the median monthly water bill by $3.31 as of mid-2009.

DWP General Manager H. David Nahai said Saturday that he understands and accepts the reasons why water district officials believe they must raise rates.

He called the increase “another wake-up call” that Los Angeles must decrease its use of imported water by finding other sources, such as recycling, cleaning up local aquifers and redoubling conservation efforts.

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deborah.schoch@latimes.com