Is the Water Supply Agreement (WSA) with the City a Good Deal for Montecito and for the City? (Part I)

Last Thursday, the Board of Directors of the Montecito Water District (MWD) voted unanimously to approve the Water Supply Agreement (WSA) with the City of Santa Barbara. Next up is approval by the Santa Barbara City Council. The WSA is expected to go before the City Council June 30. If agreement is reached, city water deliveries to Montecito and Summerland would commence on January 1, 2022.

What is the Mission of the Montecito Water District?

The mission statement of the Montecito Water District is to provide an adequate and reliable supply of high-quality water to the residents of Montecito and Summerland, at the most reasonable cost. Think about that – and measure Water Board Director performance against that yardstick. Is the Water Supply Agreement (WSA) with the City a “good deal” for both Montecito and the City? Take a look at the record and make your own judgment.

How Important is Reliable Water to the Montecito Community?

The reality is that water is Montecito’s most precious community resource. Without it, no human being can live for more than three to four days. Without reliable water, Montecito is no longer Montecito – a billion dollars in Montecito home values shrinks to zero. The Montecito Community Plan makes two promises: (1) Retain the special, semi-rural residential quality and character of the community, and (2) Protect and preserve the extensive landscaping and “garden” atmosphere of Montecito.

Is Montecito Vulnerable to Future Droughts?

Between 2012 and 2019, the County of Santa Barbara experienced extraordinary drought conditions, including seven of the driest consecutive years on record. Tree ring analysts predict that California is actually facing not only a drought, but the strong possibility of a “megadrought” which may involve a decades-long period of low precipitation and dry soil moisture.

Prudent planners look for the worst case scenario, and smile broadly if buckets of “raindrops keep falling on our heads” in Montecito. Too much water is a problem we would all love to have. The job of the current MWD Directors is to make sure Montecito has adequate water, drought or no drought.

How Much Water Does Montecito-Summerland Use Per Year?

MWD water sales peaked in 2008 at 6,518 acre feet per year (AFY). For the next six years after 2008, water sales ranged from a high of 5,964 in 2009 to a low of 4,715 AFY in a wet 2011. One acre foot is equal to 893 gallons, or the planned water usage of a suburban family household, daily. That’s 326,000 gallons per annum.

In 2015, after water rationing and mandatory conservation were imposed, MWD water sales plummeted to 3,331 AFY, or 50% of the water sales in 2008, and have remained at about that level since. The District’s Future Supply and Demand Study assumes a demand of some 3,850 AFY in wet years, rising to possibly 5,000 AFY in dry years.

Are Our Current Water Supply Sources Reliable?

Our biggest supplier, the State Water Project, (SWP) promises to deliver 3,300 AFY of allocated water for Montecito from snowmelt in the High Sierra Mountains through the California Conduit and down the Coastal Branch Aqueduct to the Lake Cachuma Reservoir, 400 miles to the south, and on to Montecito.

Unfortunately, State Water has a long history of being overpromised and under-delivered. Depending upon the volume of snowmelt, deliveries of State Water to Montecito have varied between 5% in 2012, a dry year, to 85% in 2018, a wet year. The average delivery from the State Water Program for Montecito lies in the 60% range of promised allocations.

The aging State Water Project, designed to serve 23 million California residents, is now being asked to serve 40 million residents. Its 21 dams and more than 700 miles of aqueducts, canals, pipelines, and pumping stations are energy inefficient and badly in need of repair. Some 70% of the increasingly expensive State Water Project water is used by urban areas in Southern California and the San Francisco Bay area, while 30% is sent to the Central Valley to be used for agricultural irrigation.

Other sources are also rainfall dependent. Surface reservoirs like Lake Cachuma are subject to massive evaporation. Pipeline capacity into Cachuma is too small to transport purchased water and State water in times of drought. Any unused MWD carryover water stored in Cachuma becomes the first water to be spilled over the dam and lost forever when Cachuma fills. Who can forget the loss of a year’s worth of MWD water stored in the San Luis Reservoir in 2017 when additional water from the Orville Dam was pumped through the Delta and into the San Luis Reservoir?

Jameson Reservoir is increasingly filling with silt and cannot be dredged economically, thanks to environmental restrictions. Debris, soot and ash from the Thomas Wildfire shut down water deliveries from Jameson for almost a year.

More State Water is Needed for Agriculture

The thirsty Central Valley of California covers approximately 18,000 square miles, about 11% of California’s total land area. Its watershed comprises 60,000 square miles, or over a third of California’s area. About one-sixth of the irrigated land in the U.S. lies in California’s Central Valley.

The Central Valley is the single most productive agricultural region in California, and one of the most productive in the world. It provides more than half of the fruits, vegetables, and nuts grown in the United States, including tomatoes, almonds, grapes, cotton, apricots, and asparagus. Agricultural productivity relies on irrigation from both surface water diversions and groundwater pumping from wells. More than seven million acres of the valley are irrigated. The valley also demands water for its urban cities, including the state capitol, Sacramento as well as Fresno, Bakersfield, Redding, Stockton, Modesto and Chico.

Is Desalination the Way to Go for All of Coastal California?

The California Department of Water Resources’ Water Plan Update has identified the need for 275,000 AF of desalinated water by 2025. Given California’s growing need for more agricultural water, it is becoming increasingly challenging to provide reliable water for urban areas on the California Coast.

Montecito sits on the front doorstep of the Pacific Ocean, the largest reservoir in the world, designed by God and built by nature without any help from CEQA. The Pacific Ocean is larger than all of the Earth’s land areas combined. It covers 30% of the Earth’s surface, the largest water mass on the planet. It holds 578 quadrillion acre feet of water. It is available and inexhaustible.

Does Desal Use Too Much Energy?

There is an argument that desalination uses too much electricity. Desal energy costs are dropping rapidly as new desalination membrane technology becomes available. The City’s recommissioned Charles E. Meyer Desalination Plant uses 40% less energy than the original design built in 1992, greatly reducing its carbon footprint by using high-efficiency pumps, motors and improved filter technology.

Whenever environmentalists complain about the high cost of energy in desalination, I am reminded that the current California State Water Project is the #1 largest single consumer of power in the state with a mammoth net usage of 5,100 Gigawatt hours (GWh) per annum. Why?

State Water has to be pumped 2,882 feet over the Tehachapi Mountains, with 1,926 feet at the Edmonston Pumping Plant alone, the highest water lift system in the world. In addition, each time Montecito-bound State Water passes through any one of the seven pumping stations along the State Water Project’ delivery route, add at least an additional $100 per AF in energy cost to the Montecito water bill.

A Different View of Water Conservation

The thing about water is that it is not like oil or gas, where once used, it can never be replaced in nature. Today, we are reusing the same water used by our ancestors, millions of years ago. Here is where I get in trouble!

Water is everywhere. It is stored in oceans, streams, and rivers; trapped in shrinking glaciers of ice; in clouds, or mists or rainfall; in green plants; in underground aquifers; in dams or reservoirs; and even in plastic water bottles waiting to be consumed by water purists. 60% of our body weight is stored water. Water, like air, can be clean, dirty or full of salt. Its only problem is that water can be in all the wrong places and has to be moved or converted to potable water for human consumption.

Conserving water has become synonymous with “Saving the Planet.” Practically speaking, conserving water makes about as much sense as conserving air. If we destroy our green plants that clean the air and transform Montecito and our neighboring communities into a desert, air quality and environmentalists suffer.

You would think that the environmental community WOULD NOT object if Santa Barbara and Montecito-Summerland borrowed 10,000 AFY of saltwater per year and returned 10,000 AFY of fresh water per year to our ocean or groundwater aquifers.

Are Montecito Residents “Water Pigs?”

Based on water use per household Montecito water users could be considered “water pigs” compared to their neighbors in Santa Barbara, Goleta, and Carpinteria. However, much of Montecito is zoned for one-acre or more lot sizes. When the measurement yardstick is shifted to “water sales per acre” instead of “water sales per capita,” MWD water sales are comparable to Santa Barbara, Goleta, and Carpinteria.

What is this “Water Supply Agreement” with the City of Santa Barbara?

Negotiated over the last two years, the WSA between the City of Santa Barbara and the Montecito Water District calls for the city to provide MWD with 1,430 AFY (acre feet per year) of potable water for each of the next 50 years. Water deliveries will begin January 1, 2022 and end December 31, 2071.

1,430 AFY represents 38% of Montecito’s estimated need of 3,750 AFY. Water will be delivered to MWD in equal monthly amounts of 1,117 AF per month, even though Montecito water use skyrockets in June, July, and August. It will be delivered on a “take it or pay” purchase commitment.

This is NOT a desal agreement. The city has the right to sell potable water to MWD from any source the city chooses. This could be desal water blended with less expensive water from the city-owned Gibraltar Reservoir. It could be desal water blended with low cost purchased water that the city buys from other water districts; or it could be desal water blended with recycled city wastewater, as soon as treatment standards and state legislation allow highly treated wastewater to be blended with desal, or with other potable water sources. It is the desal plant safety valve that enables the City to enter into this Water Supply Agreement with District.

Is a 2.8% Increase in District Water Rates Justifiable?

Starting June 26, 2020, water rates in Montecito and Summerland will increase by 2.8% on water meter charges and variable water use charges, followed by four more years of 2.8% increases. However low volume users will get a DECREASE in rate. 73% of MWD customers are expected to see a decrease in their costs, or an increase of less than $20 per month. 19% of all customers are projected to see a monthly increase between $20 and $100 per month. The remaining 8%, all high-end users, are expected to see an increase of more than $100 per month.

The new Water Rates were structured with seven goals in mind: (1) Maintain existing rate revenues of roughly 25% from meter charges and 75% from variable use water charges; (2) Encourage conservation by actually reducing rates for low water users and penalizing high-end users; (3) Avoid steep rate increase shocks of greater than 3% a year; (4) Eliminate the emergency drought water surcharge imposed at the time of rationing, but now long outdated; (5) Reduce the number of usage tiers from 4 to 3; (6) Provide water rate certainty for the next five years.

The rate increase has been mistakenly characterized as a rate increase to fund a desal deal with the city. But a deeper dive reveals that 2.8% increase will also be used to pay down $5 million in debt principal; meet debt coverage requirements; cover anticipated added fixed charges from the State Water Program; and fund the capital costs of replacing aging pipelines, costs which have been deferred for years.

The Bottom Line

The City owns, operates, and maintains the desalination plant and the conveyance pipeline. The City keeps 100% of ownership and all the residual value. Montecito pays 47% of all costs of desal plant design, construction, operations, maintenance and administrative costs, in order to receive the equivalent of 47% of the water produced by the plant at its current capacity.

Montecito receives a reliable, drought proof local supply of 1,430 AFY of potable water and achieves water security and water independence for the next 50 years. Sounds to me like a good deal for both parties.