The Foothill Municipal Water District Board of Directors voted last month to absorb as part of its 2010-11 fiscal budget 75% of rate increases from Metropolitan Water District of Southern California.
The decision came shortly after the Metropolitan Board approved an addition two-year, 15% rate increase on top of a 20% increase adopted last year.
"The Board felt that it was important to absorb the majority of the rate inrease considering the difficult economic times we are all facing," FMWD Board President, Robert Gomperz, said in a statement.
Gomperz warned, however, that FMWD may not be able to continue absorbing increased costs because of much-needed upgrades to its 60-year-old distribution system.
FMWD supplies imported water to seven local retail agencies, including Crescenta Valley Water District, La Cañada Irrigation District, Mesa Crest Water Company and Valley Water Company. It reduced coasts by $477,000 in order to minimize on its agencies and their customers the financial impact of the Metropolitcan rate hikes, said General Manager Nina Jazmadarian.
"Considering that purchasing MWD water and the associated electrical costs to move that water to the service area are over 70% of our $12 million budget, it was a difficult task," Jazmadarian said in a statement. "We have tried hard to contain expenses but not erod our reseves that are needed in case of an emergency."
The rate hikes, cost cutting measures and ongoing conservation efforts come even after a year with slightly higher than everage rainfall. And California's water supply crisis is likely to get worse in the coming months – climetologists are predicting a dry, La Niña year ahead.
"El Niño is defnitely in the rear view mirro and what is developing here is La Niña," said Bill Patzert, a climatologist at the Jet Propulsion Laboratory said.