Water Delivery: Trickle of Fairness

The biggest water problem in California is not necessarily having enough but getting it from where it isn’t needed to where it is. That often means moving it from Northern California or Imperial County farms to the cities of the south through the pumps and canals of giant public water agencies.

State and federal officials are counting on the development of an active commercial water market to offset long-term water deficits that are forecast for arid Southern California. That development is not likely to happen, however, until the Legislature can establish a method for setting a fair price for shipping the water from seller to buyer through someone else’s pipes. This should be a priority for the Legislature this year.

A 1986 law requires water agencies such as the State Water Project and the Metropolitan Water District of Southern California to allow others to use their canals on a space-available basis in return for “fair compensation.” But how is that to be defined? Currently, the canal owner sets the price and the would-be canal user must pay or go to court in hopes of winning a lower fee. There are no competing canals, no other ways to transfer the water. In one case, the price demanded by the MWD to “wheel” water through its Colorado River Aqueduct for San Diego County was more than the cost of buying the water.

A new group of private water entrepreneurs is accusing the MWD and other public water agencies of using monopolistic pricing practices to stymie them. The private water purveyors have a point. What’s needed is some independent arbiter to establish a fair rate structure.

State Sen. Don Perata (D-Alameda) is proposing that the California Public Utilities Commission serve in such a role. His SB 1973 would require the commission to develop a rate framework in 2001. If a water buyer and a canal owner could not agree on the rate within that framework, the case would go to the PUC for a decision.

The MWD, a giant wholesaler of water, and other public water agencies oppose the bill. They claim it would force them to subsidize water transfers so private companies could compete for water business in Southern California. Perata’s proposal may not be the perfect solution, but it’s on the right track. Further negotiations should lead to a workable compromise.

If the MWD and its allies reject this approach, the development of a vigorous water market may be put off for still more years. That is a delay the state cannot afford.