DEBATING MID WATER SALE: Failure of sale will have consequences

Modesto Irrigation District's proposal to transfer water to San Francisco has been subject to much misinformation and inflammatory rhetoric. The bottom line questions are:

• Is there enough water?

• Who pays for MID's water operations?

• What are the water rate impacts?

• Who will pay if the transfer doesn't go through?

To address these questions:

Is there enough water?

Yes. Clearly and unequivocally. MID has always met our water delivery obligations to our customers. By all measures, both historic and projected, MID has enough water to continue to meet both agricultural and the city of Modesto's needs.

In fact, MID recently concluded a 12-year water transfer of up to 11,000 acre feet per year for environmental purposes. That water is no longer obligated and is available. Another annual transfer of more than 10,000 acre feet, also for environmental purposes, is currently scheduled to end in 2016, freeing up more water.

Proposed irrigation system improvements will conserve even more water.

Who pays for MID's water operations?

Since operations began at Don Pedro, MID power customers have paid not only to reduce and eliminate the bonds utilized to build the dam, but have also covered the difference in irrigation revenue and irrigation system costs. It amounts to millions of dollars each year.

Don Pedro construction cost of $105 million was funded by MID (15 percent), TID (27 percent), San Francisco (46 percent) and the federal and state governments (12 percent).

MID's portion was financed with revenue bonds paid off by electric customer revenue. MID electric ratepayers continue to pay the lion's share of the water irrigation system operational costs. In 2012, water rate revenue is forecasted at $2.35 million, but budgeted operating expenses are $14.4 million.

This shortfall is reduced with $1.4 million compensation from San Francisco for water MID releases on San Francisco's behalf for regulatory requirements, leaving MID electric ratepayers to pick up the difference of $10.7 million, about 3 percent of each electric customer's bill.

What are the water rate impacts?

MID water users currently pay a little under $10 per acre-foot. If this rate were increased to reflect true cost of service, it would grow to approximately $71 per acre-foot.

This doesn't include funding any infrastructure improvements. The MID board has been presented with recommendations from recognized industry experts to conduct $115 million of infrastructure improvements over the next 10 years. This expense could bring water rates close to $100 per acre-foot.

There have been many public statements from agricultural leaders declaring agriculture wants to pay more for water. That is good. However, the increased cost to agriculture just to get to a break-even point on water operations is huge.

San Francisco has offered to pay $700 per acre-foot for water. Revenues from a water transfer could offset price increases for farmers and electric users as well as pay for necessary infrastructure improvements.

What if the transfer does not go through?

MID's customers and water will be at risk. Regulatory agencies are likely to increase efforts to seize water for directed purposes if they deem that water is not fully utilized. They can do this without compensation to MID. MID customers would then bear the cost, not only of the water, but also to construct the infrastructure improvements necessary to generate the required water flows.

What we need to focus on is: How will we pay for infrastructure improvements; how will we eliminate the current subsidy paid by electric customers for water operations; and how will we finance the effort to defend our water rights from those who would commandeer our water?

Our options are limited. We can increase water rates significantly; we can increase MID's already significant debt load to pay for infrastructure improvements over time, adding to MID's debt; we can seek revenue from water transfers and use that revenue to offset costs impacts to all MID customers.

MID doesn't have to transfer any water, but we must pay our bills.

Wild represents Division 2, central Modesto, on the MID board.

EDITOR'S NOTE: The Bee has run more community columns on the proposed water sale than on any other subject in recent history. And we know that more will be coming in. These articles are being assembled at www.modbee.com/water. The guidelines for submitting op-eds on this or other local or regional subjects are posted at www.modbee.com/opinion under the Submit op-eds tab.