Local and regional leaders are ramping up calls for fiscal transparency and reforms at the Metropolitan Water District of Southern California following a decade in which MWD’s treated water rates doubled as the agency overspent its budget, overcharged ratepayers and authorized unplanned borrowing to cover its overspending.
A new study commissioned by the Water Authority highlights the potential for ratepayer overcharges to worsen unless the Los Angeles-based agency makes major fiscal reforms.
At a March 22 news conference, San Diego regional elected officials joined the Water Authority Board officers and others calling on MWD to “Stop the Spending!” Click here for more details and documents related to the “Stop the Spending!” education campaign.
The Water Authority is taking a leadership role to inform elected officials across Southern California about the need to pay more attention to MWD’s finances and governance because many of the cities served by MWD don’t have direct representation at MWD. That means many city leaders aren’t aware of how freely MWD is spending their residents’ money or the lack of transparency at the nation’s largest water agency.
Long-running concerns about MWD’s finances are growing because MWD’s own documents show:
- MWD overcharged ratepayers $847 million more than the agency’s own budgets said was needed from 2012-2015.
- MWD overspent its budget by $1.2 billion from 2013-2016 on things like buying Bay-Delta islands ($175 million) and turf replacement ($420 million)
- In 2016, MWD authorized $900 million in unplanned borrowing to pay for its overspending.
In addition, MWD is preparing to spend billions of dollars developing water supplies that the agency’s own data say are not needed to meet its member agencies’ current or future demands.
Stop the Spending!
Details about MWD’s overcharges, overspending and unplanned borrowing are at www.mwdfacts.com.
A new study commissioned by the Water Authority – based on data from MWD and its member agencies – details how MWD is undercounting local supplies being developed by water agencies across Southern California. That approach is likely to lead to stranded assets and wasted ratepayer money.
The study shows that MWD is grossly overstating how much water its member agencies plan to purchase, by more than 300,000 acre-feet in the average year (2020-2040).The study also shows that MWD isn’t accounting for more than 30 local water agency projects that are in the pipeline now and will further reduce demand for MWD’s water.
These fiscal practices go beyond MWD’s illegal rates that have been successfully challenged by the Water Authority in court. A Superior Court judge ruled in 2015 that MWD set illegal rates from 2011-2014, forcing San Diego County ratepayers to subsidize water costs across Southern California. The judge ordered MWD to pay the Water Authority more than $243 million and to set only legal rates in the future. The appellate court is expected to hear the case this spring, with a decision expected later this year. Two additional lawsuits covering rates from 2015-2018 are pending because MWD has refused to limit its rates to the costs of the services it provides.