Oakdale Irrigation District directors agreed Tuesday to alter the agency’s water rate structure so farmers will be billed based on how much water they use.
OID hasn’t raised its water rates in more than 30 years, and its flat-rate charges have been among the lowest in California.
The district now is deficit-spending, however, so directors agreed that farmers need to start paying more for water.
The new rates are supposed to take effect in 2015, but OID’s staff suggests that farmers be given a couple of extra years to get used to paying for the water they use.
General Manager Steve Knell said he plans to propose waiting until 2017 before charging farmers the full rate.
OID’s 2,900 agricultural customers pay $19.50 per acre annually to irrigate, no matter how much water they put on their crops.
The new plan is to charge them $27 per acre for annual service, plus $3.15 per acre-foot for the water they receive. That water charge would increase for those using four or more acre-feet of water each year.
The switch to billing based on volume is required by a 2009 state water conservation law, which all irrigation districts must implement to motivate farmers to save water.
Even at those higher rates, OID customers would be paying significantly less for water than what most area farmers pay.
Knell suggested that OID charge only the $27-per-acre service fee next year, while essentially waiving the water use bill. Then, starting in 2016, Knell suggested charging farmers half of what they would owe for the water they use. The full charge wouldn’t be collected until 2017, under his plan.
Even if OID raised its rates all at once in 2015, the planned increase wouldn’t cover the district’s deficit spending. To meet its budget needs, Knell said OID would have to sell $4 million worth of water each year to buyers outside the district. Fresno County’s Westlands Water District, for instance, is interested in buying OID water.
OID also is banking on revenue increases from its hydroelectric power plant. Its Tri Dam Project normally generates about $8 million in annual sales, but drought-reduced water flows lowered that to only $4.7 million this year.
“We’re assuming we will have $4 million in water transfers and $8 million in Tri Dam revenues (in 2015),” said Allan Highstreet, the CH2M Hill consultant who helped the district craft its new rate structure.
Even with hydroelectricity and outside water sales subsidizing OID’s budget, some of the districts’ farmers criticized the plan to raise rates.
“We can live with a rate increase now,” said farmer John Brichetto, “but there’s no guarantee our almonds, walnuts and milk prices are going to stay where they are now.”
Brichetto said the proposed water costs for almond orchards would be 21/2 times higher than what OID growers currently pay: “I think you need to temper that a little bit.”
By contrast, his brother Louis Brichetto has been urging the district to raise its rates significantly more so it doesn’t have to subsidize its budget by selling water outside the region. Louis Brichetto said paying $30 per acre-foot – rather than $3.15 – would be more in line with irrigation water’s real value.
Fellow farmer Guy Stueve, however, warned that raising the price of surface water could backfire: “It could stimulate more groundwater pumping … which could have a negative effect.”
Stueve said the planned rate increase would be excessive for those who use lots of water. Pasture owners who pay just $19.50 a year to put 6 acre-feet of water on their land would have to pay $62.40 per year under the new structure.
But lowering prices by selling water to outsiders isn’t the solution either, according to Stueve.
“We want to keep this water in district,” he said after the OID meeting. “It helps the aquifer and the groundwater recharge.”
OID board President Steve Webb made it clear he is eager to sell water to out-of-area buyers. He endorsed plans to sell outsiders $4 million worth of water every year so Oakdale farmers wouldn’t have to pay so much to irrigate.
OID collected more than $35.3 million during the past decade by selling 382,408 acre-feet of water to districts including Westlands.
Knell also favors selling off OID water, noting that the more outsiders buy, the less local farmers would have to pay to cover the district’s costs.
Knell said he plans to propose that some Oakdale pasture land go fallow next year so more water is available to sell elsewhere.
Some Southern San Joaquin Valley farmers are so desperate to irrigate this year that they’ve been offering more than $1,000 per acre-foot for water.
Louis Brichetto and some other Stanislaus farmers, meanwhile, have been urging OID to annex additional land so water and ag jobs stay in the county.
OID landowners will have a chance to object to the proposed rate increases and pricing structure at a public hearing Oct. 21. A majority of landowners would have to oppose the plan to stop the change.