News

District tightens belt in anticipation of extraordinary price hikes from San Diego County Water Authority

At its June 19 meeting, Olivenhain Municipal Water District’s Board of Directors will consider approving a two-year budget for 2025 and 2026, reflecting board direction to control costs and limit the impact to customers of impending wholesale water prices.

After consideration by the board’s Finance Committee in April, the final spending plan for fiscal year 2025 operations reflects a 2.6% reduction compared to what was originally requested by staff.

“OMWD receives its drinking water from a wholesale water agency,” stated Neal Meyers, OMWD Board Treasurer and member of the board’s Finance Committee. “When the wholesaler’s rates surge and other costs escalate, we must look for ways to prudently control our rates while still ensuring the continued delivery of safe and reliable water to our community.”

To control costs, OMWD will freeze hiring for vacant positions, delay previously planned positions, and reprioritize non-critical capital spending and capital projects.

Capital projects that will be funded over the next two years include replacement of aging pipelines, installation of new recycled water pipelines, and improvements at OMWD’s water treatment plant and water reclamation facility. Over $4 million in costs for these projects will be offset by state and federal grants.

The largest unknown with regard to OMWD’s financial position over the next two years is the cost at which OMWD purchases water from its wholesaler, the San Diego County Water Authority. OMWD initially anticipated a 5% increase in SDCWA’s wholesale rate for 2025, based on direction provided from SDCWA in 2023. However, in April, SDCWA announced that it expects to hike wholesale water costs in the county by 39% over the next three years, and up to 20% in January 2025 alone. 

Consideration of OMWD’s new budget will take place only weeks after the board was notified that Fitch Ratings, a global rating agency that offers independent credit opinions, affirmed OMWD’s “AAA” bond rating with a stable outlook, the highest possible rating. In affirming the AAA rating, Fitch cited OMWD’s prudent rate-setting, low operation cost burden, and adequate capital investments, resulting in a very strong financial profile.

SDCWA will host on June 27 its public hearing, where public input is invited, on this wholesale rate increase for 2025. Public comments may be made at any time prior to the meeting up until the public hearing closes on June 27 by submitting a comment to publiccomments@sdcwa.org or in person at the meeting at 4677 Overland Avenue in San Diego.