August 18, 2014

OID to consider irrigation water rate increases

Water rate increases will be discussed – and possibly approved – Tuesday morning by the Oakdale Irrigation District’s board of directors. The proposed price increase would be the first in more than 30 years.

Water rate increases will be discussed – and possibly approved – Tuesday morning by the Oakdale Irrigation District’s board of directors. The proposed price increase would be the first in more than 30 years.

If approved, OID’s irrigation rates would remain a bargain compared with what most California farmers pay for water. But the new rates would be significantly higher than what the district’s 2,900 agricultural customers currently pay.

The proposal is to charge farmers $27 per acre for service, plus $3.15 per acre-foot of water received. That water charge would increase for those using four or more acre-feet of water each year.

A 20-acre farm using four acre-feet of water would pay $916 a year after the proposed rate increase, compared with the $390 charged now.

Most Oakdale farmers pay only $19.50 per acre for irrigation, no matter how much water they take. They typically use more than four acre-feet of water per acre, and the district hasn’t cut allocations during this three-year drought.

A 2009 state law, however, requires OID to start promoting conservation by metering how much water farmers use and charge based on volume. That’s why the district must alter how it bills for water starting in 2015.

Farmers in some water-strapped California districts have paid more than $1,000 per acre-foot for irrigation water this year.

But OID is relatively flush with water, thanks to its century-old rights to Sierra snowmelt and Stanislaus River flows.

The Modesto, Turlock and Merced irrigation districts don’t have nearly as much water available for their farmers. Modesto this year is providing just 24 inches of irrigation water, Turlock is providing only 20 inches, and Merced is providing a mere 13 inches.

Oakdale, by contrast, usually has more water than its farmers need. It frequently has sold its surplus to out-of-county districts, using the proceeds to keep its water rates low.

The OID pocketed more than $35.3 million during the past decade by selling 382,408 acre-feet of water to outsiders, such as Fresno County’s Westlands Water District.

Besides needing to comply with the Water Conservation Act of 2009, OID said it must raise rates for financial reasons.

In part that’s because the drought has decreased revenues from sale of the hydroelectric power generated at the district’s Tulloch, Beardsley and Donnells dams along the Stanislaus River. Those power sales previously subsidized OID’s water rates.

Because revenues are down, the district this year is dipping into its reserves to balance its budget.

“You can’t do those types of drawdowns in too many years before the bank goes bust,” OID General Manager Steve Knell said. “We’re using $6 million out of reserves a year. We need to stop that and spread that cost out across (the district’s) 57,000 acres.”

OID’s rate proposal will be discussed at 9 a.m. Tuesday. The agenda lists the proposal as an action item, and the agency’s staff is recommending approval.

“It’s about time. Our farm revenues are up, and (farmers) need to start paying for the true cost of water,” said Neil Hudson, an Oakdale resident who is president of the Stanislaus Water Coalition advocacy group. He also is on Stanislaus County’s Water Advisory Committee.

Stanislaus farmers produced nearly $3.7 billion worth of agricultural products last year, a 12 percent increase over 2012.

Almonds have become particularly profitable, and they are the dominant crop around Oakdale.

On average last year, a 20-acre Stanislaus almond orchard generated about $148,000 in revenue from nuts, hulls and shells, according to the county’s recently released crop report.

If OID increases its water rate as proposed, such an orchard using four acre-feet of water would pay $916 per year for irrigation. That’s 0.6 percent of the crop’s value.

Bigger rate hike urged

Some farmers don’t think OID’s proposed increase is big enough.

Former OID board member Louis Brichetto called the proposed $3.15 per acre-foot water rate “ridiculous.”

“I would be happy to pay $30 an acre-foot, which would still be some of the cheapest and best quality water in the state,” said Brichetto, who owns farms inside and outside OID.

“At that ($30) rate, OID would have enough money to pay for maintenance and infrastructure, bond payments, and still have a positive cash flow,” Brichetto said. “OID would be able to sell the remainder of its surplus water locally. OID is in the perfect position to help stabilize our groundwater and economy.”

Brichetto is among a group of farmers in eastern Stanislaus’ Paulsell Valley who want to get their farms annexed into the OID. Paulsell Valley farms – most of which are almond orchards – irrigate with groundwater.

“I’d rather pay more for surface water and leave the groundwater alone,” Brichetto said. “The key to keeping the groundwater levels stable is keeping the surface water here.”

OID’s General Manager Knell, however, has advocated for his district to continue selling surplus water to outside agencies.

During closed-door discussion Tuesday, OID’s directors are scheduled to privately discuss the price and terms of possible water sales to the Westlands Water District, the San Francisco Public Utilities Commission and others. Details of exactly what is being considered have not been made public.

The public also will get to have its say Tuesday about water rate increases.

OID’s proposed rates for 2015 include a flat charge of $27 per acre, plus:

•  $3.15 per acre-foot of water for up to three acre-feet
•  $6.25 per acre-foot for the fourth and fifth acre-feet
•  $8.30 per acre-foot for the sixth and seventh acre-feet
•  $10.40 per acre-foot for the eighth acre-foot
•  $20.75 per acre-foot for nine or more acre-feet

OID’s 650 domestic water users will not be affected by this irrigation rate increase.

The district’s board will meet at 9 a.m. Tuesday in the OID boardroom, 1205 E. F St., Oakdale.

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