Commission Negotiates Reduced Ag Water Rate Increase in Ventura County Waterworks District 1
In January, the California Avocado Commission (Commission) was asked by Moorpark area growers to help in a pending water rate increase for Ventura County Waterworks District 1 (VCWD1). Commission staff, local growers and VCWD1 staff attended a meeting hosted by Supervisor Peter Foy, Ventura County District 4, to discuss the potential rate increases. The initial proposed agricultural rate was $1681.42 per acre foot (PAF), but for the meeting the VCWD1 Citizens Advisory Committee had developed a revised proposed rate for agricultural customers of $1489.75 PAF. For comparison, in 2016 the VCWD1 agricultural rate was $783.20 PAF for Tier 1 and $1352.10 PAF for Tier 2. Under the tiered system growers were given a modest Tier 1 allocation and once that allocation was exceeded Tier 2 rates were applied.
During the meeting, Commission representatives argued that agricultural customers’ deliveries are interruptible and therefore they are a different class of customer. In a public health and safety emergency, for instance if Oroville Dam failed, the State Water Project supplies would be significantly curtailed, if not cut off entirely. During this “emergency,” agricultural customers would have their deliveries cut. As such, the Commission argued that agricultural customers are a different class of customer than municipal and industrial customers and accordingly, based on reliability, should be charged a different Cost of Service (COS). Storage costs should not be applied to agricultural customers since they are not guaranteed the same level of reliability. Under Proposition 218 this COS basis provides a legally defensible rationale for establishing a lower rate for agricultural customers.
Commission staff worked with Michaela Brown, VCWD1 General Manager, and Jeff Pratt, Director Public Works, Ventura County, to identify an agricultural rate that was commensurate with agricultural water customers’ level of reliability. Throughout the process, Supervisor Foy remained a very strong advocate for a more affordable agricultural rate.
On March 14, 2017, the Ventura County Board of Supervisors unanimously approved an agricultural customer rate of $1123.85 PAF for VCWD1. This represents a reduction of 25 percent from the proposed $1489.75 PAF for a savings of $365.90 PAF to growers. Although this is an increase over the 2016 Tier 1 rate, it’s lower than the 2016 Tier 2 rate and for many growers may result in a lower aggregate cost for 2017 as compared to 2016. Based on 2016 VCWD1 sales, this agricultural rate will result in a reduction of nearly $1mm in revenue from agricultural customers for VCWD1. The two primary crops within the VCWD1 are about equally split between avocado and lemons, which means this action potentially saves avocado farmers in the service area roughly $500,000 in water purchases.
The Commission’s experience, coupled with the willingness of Ventura County staff to explore additional rate options, resulted in a considerably smaller rate increase for agriculture water customers than was initially proposed. Good news for the growers in VCWD1.