AGENCY CONSIDERS STRATEGIC FINANCIAL PLAN
Water rates could drop by more than 50% for customers of South Feather Water and Power Agency in 2011. And between now and then the rates will not increase. Further the $4.10 surcharge imposed last year when the Agency lost property tax revenue to the State budget will be terminated at the end of October 2006.
Those were the recommendations in a strategic financial plan considered by the Agency’s Board of Directors at its monthly meeting on September 26, 2006.
In 2010, SFWPA will begin a new era in power marketing that will see increases in revenues from the Agency’s hydropower project. It was the Board’s consensus that a portion of those revenues should be used to offset the cost of water for the Agency’s ratepayers. The recommendation being considered is to reduce the cost of water from 64˘ to 30˘ for every 100 cubic feet (748 gallons) of water consumed. Also recommended is a drop in the cost of irrigation water from $45 to $30 per acre-foot after 2010.
For the last 46 years, SFWPA (previously OWID) has been in a power-purchase agreement with PG&E. The current PG&E contract has provided the Agency with a good fixed income through the years, and at the same time has paid off over $60 million in bonds used to finance the hydro project. However, the next contract for power sales will be significantly different.
The current agreement with PG&E expires in 2010, and Agency representatives have already begun the process of searching for a new wholesale buyer of its hydro-generated electricity. Consultants have been retained to assist in developing pricing and marketing scenarios, and preliminary discussions are ongoing with PG&E.
PG&E could very possibly be the Agency’s power buyer again because it is the primary electricity retailer in northern California and owns the transmission lines across which the Agency’s power would have to travel, regardless who it contracts with. However, the next contract will be completely different in its pricing structure.
The Agency has enjoyed an income from its hydro project of between $1 and $1.5 million each year. Those funds have been used to subsidize water rates, primarily for irrigation customers, as well as for capital improvement projects.
Aside from the fixed income from power sales, and the revenue coming in from sporadic water transfers over the past 15 years that were used to fund the Agency’s FERC relicensing efforts, SFWPA has been dependent on revenue from the retail sale of water to domestic and irrigation customers, together with limited property tax revenue and fees for customer-requested services, to fund the operations and maintenance of its water system.
The Board’s strategic financial plan predicts that the sale of electricity will provide the Agency with at least an additional $10 million in net revenue each year after 2010. In addition to the recommendations to reduce rates, the proposal also includes a revenue distribution plan that would finance improvements in the Agency’s existing water-distribution facilities to ensure a dependable level of future serviceability, as well as provide for the community’s growth.
The proposed distribution plan would also utilize power revenue to expand treatment and storage facilities, expand domestic-water distribution infrastructure into areas within the district that are designated by the City and County for residential, commercial, and industrial development, as well as drastically reduce the amount of unaccounted water in the raw-water distribution system by lining and/or piping gold-rush-era earthen ditches and canals that are still in operation. The plan also anticipates programs whereby grants or low-interest loans would be available to Agency customers for rehabilitating water lines in older homes.