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February 11, 2014

MID to consider brokering farmers’ water transfers

The Modesto Irrigation District will explore creating a program to pay farmers for not irrigating, freeing up some water to be offered at a premium price to others with crops suffering in the drought.

The Modesto Irrigation District will explore creating a program to pay farmers for not irrigating, freeing up some water to be offered at a premium price to others with crops suffering in the drought.

The price would be the same on both ends and would amount to a water transfer brokered by the MID, something staff initially did not want to do.

At Tuesday’s MID board meeting, leaders also said they intend to raise water rates and impose a per-acre drought surcharge, as well as penalties for stealing water meant for others. All money amounts will be decided at future meetings.

The worst-case scenario: delivering only 18 inches of water to each acre at a price about three times what customers paid last year, including an $11.91 per-acre surcharge that could last only this year, if the drought ends. It was clear Tuesday that board members don’t agree on whether that’s a reasonable price, and a fallowing program could affect it.

Eighteen inches is half the amount that farmers received this year, and far less than the historic average of 42 inches per acre. Of the 18 inches for each acre, 10 already are in the district’s Don Pedro Reservoir, 11/2 inches are expected from this year’s snowmelt and 61/2 inches would be pumped from the district’s groundwater wells.

Most crops can’t get by on 18 inches per acre; almonds, for example, might stay alive with that little, depending on soil type, but typically require an additional 6 inches or so to bear nut harvests. And row crops such as corn require more.

Promised only 18 inches, some farmers could opt to save money by fallowing certain fields and not paying to irrigate them, district staff initially figured, and the freed-up water would mean a bit more for everyone else.

Board member John Mensinger, however, suggested letting farmers test the open market, buying and selling to each other without restriction. That could allow some crops to flourish rather than barely staying alive, he said, and maybe the district could make a buck by taking a cut.

“The world has changed and we need to adjust with it,” Mensinger said.

Board member Jake Wenger, a farmer, proposed a compromise of sorts, saying the district could set the price and arrange transfers of water and money, giving all a fair chance at rescuing crops. “We want to see the district succeed,” he said, “not necessarily a handful of growers who can outbid their neighbor.”

In a long discussion, leaders did not hazard guesses on prices, although figures of about $100 per acre-foot seemed most common. For perspective, MID farmers last year paid $9.83 per acre-foot and could pay roughly three times that amount this year, or $29.61, under a formula yet to be debated.

The Oakdale Irrigation District recently turned down a Fresno buyer’s offer of $400 per acre-foot, and a water auction last week in Kern County fetched bids up to $1,350 per acre-foot.

Even at the maximum amount contemplated, MID prices are “rates to die for,” said Lee Delano, a retired MID water operations manager, charging the board with having “pitted (electrical) ratepayers against our farmers” with policies favoring farmers, costing power customers millions of dollars each year. “We electric ratepayers have been building your Cadillac (water) system since 1938. I don’t think it’s right,” he said.

Board member Larry Byrd sees things differently, saying small growers struggling to make ends meet could go under if forced to pay an $11.91 per-acre drought surcharge. “It’s going to be tough on those guys. They’re already backed up and got nowhere to go.”

He suggested that some MID employees could do less construction work this summer, freeing them up to be deployed for canal patrols on nights and weekends. That could allow the board to lower the proposed surcharge, he said.

John Davids, MID’s civil engineering manager, said the district expects to spend $700,000 more this year for well pumping to augment Tuolumne River water. That figure was added to extra labor costs for patrolling to arrive at the $11.91 surcharge. The extra labor is partly necessary because some people will be tempted to take more water than their share.

Board chairman Nick Blom defended a surcharge because it represents real costs. But Wenger suggested the surcharge might be lowered if MID increases the proposed penalty for stealing water: $300 for a first offense, and no more water this year if caught a second time. A $300 fine might seem cheap to a farmer faced with losing a crop, Wenger said, noting far steeper penalties in neighboring districts.

Because rain and snow returned in small amounts over the weekend, directors agreed to stall the start of the irrigation season by two weeks, meaning the fourth week of March rather than the second. That could allow the season to extend beyond Sept. 19, which is about three weeks shy of the normal season end.

Leaders seemed to agree that individual growers would be allowed to transfer water among their own fields, and they asked staff to propose rules for transferring within families.

The board on Feb. 25 expects to set in motion a process required by Proposition 218, notifying water customers of a proposed rate increase. Six weeks later, the board would hold a public hearing and tally any protest votes; the idea would be killed if more than half of MID’s 3,100 farmers submit written protests, a rare occurrence for California utilities.

By law, board members could reduce the proposed rate hike or drought surcharge and could increase the amount of water promised to growers if the heavens open with wet weather. Such decisions, and others involving a fallowing program and theft penalties, are subject to further debate.

In other news, some board members agreed to revisit membership in the Modesto Chamber of Commerce during budget talks in the fall because of concerns over the chamber lobbying the Modesto City Council to someday let the city swallow the Wood Colony farming community west of Highway 99.

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