MWDSC Board adjusts rate structure language to maintain water management incentives

Language supporting nearly $1.9 billion in investments for long-term conservation, recycling, seawater desalination and other resource-stretching projects was approved by MWDSC's board of directors. Effective April 15, all of the California water agency's agreements offering financial incentives for local water management programs will include language aimed at maintaining the integrity of the district's four-year-old rate structure.

LOS ANGELES, Dec. 14, 2004 (BUSINESS WIRE) -- Language supporting nearly $1.9 billion in investments for long-term conservation, recycling, seawater desalination and other resource-stretching projects was approved today by Metropolitan Water District of Southern California's board of directors.

Effective April 15, all Metropolitan agreements offering financial incentives for local water management programs will include language aimed at maintaining the integrity of the district's four-year-old rate structure.

"This action preserves the rights of our member public agencies and supports the foundation of our rate structure, which provides stable revenue for development of vital local projects and conservation programs," said Metropolitan board Chairman Phillip J. Pace.

"In the end, we're looking to encourage member agencies and our other funding recipients to work collaboratively within the existing open, public process. As opposed to initiating divisive and costly legal or legislative battles as a first resort, they will maintain their rights to first propose any changes in our rate structure through our board process," Pace said.

Adopted in December 2000, Metropolitan's rate structure includes a stewardship charge for every acre-foot of imported water sold, in order to raise revenues that support the district's financial commitments to conservation, water recycling, groundwater clean-up and other resource management programs.

In the 2004-05 fiscal year, Metropolitan expects to provide $41 million in incentives through the stewardship charge, with the commitment expected to reach $95 million annually by 2015. Over the next 20 years, the stewardship charge is expected to raise a total of nearly $1.9 billion for local water management programs.

Proposed changes to the rate structure, developed in collaboration with Metropolitan's member agencies with extensive public input, are vetted through MWD's existing board and member agency processes. Metropolitan Chief Executive Officer Ronald R. Gastelum noted, however, that legal and legislative challenges to the structure outside the established board process could impact Metropolitan's ability to sustain the financial incentives.

"This rate structure is the foundation for an integrated approach for resources management with our member agencies that has provided supply reliability in the face of years of uncertainty," Gastelum said.

"The key to that approach has been the integration of planning and finance. Any agency that receives financial incentives for various innovative water management programs and projects should also support the integrity of the rate structure that makes it possible," he added.

In today's action, Metropolitan's board encouraged member agencies to offer refinements that would further improve the rate structure by March 2005.

In other actions, Metropolitan's board named Executive Vice President Gilbert Ivey to serve as interim chief executive officer while the board completes its search for Gastelum's successor. In addition, the board asked Gastelum to act in an advisory role to Ivey and the board during a transition for up to six months.

Ivey was responsible for coordinating the board's development of its new strategic plan and rate structure, which fundamentally changed the way imported water is sold throughout Southern California. He also was project manager for the development and construction of Metropolitan's headquarters building near Union Station in downtown Los Angeles.

Ivey, who joined the district in 1970 as a summer trainee in the district's engineering division, has held various positions in the district's finance, right-of-way and land, operations and human resources divisions. In his current post, he serves as Metropolitan's executive office's chief liaison to the board chairman and directors.

The Metropolitan Water District of Southern California is a cooperative of 26 cities and water agencies serving 18 million people in six counties. The district imports water from the Colorado River and Northern California to supplement local supplies, and helps its members to develop increased water conservation, recycling, storage and other resource-management programs.

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