PALMDALE — Rates charged to other water agencies and other users of State Water Project water from the Antelope Valley-East Kern Water Agency will increase by 7.5% for each of the next five years to cover cost increases, after the AVEK unanimously board approved a new rate plan Tuesday.
The new rates take effect Jan. 1.
The rate adjustment will allow the agency to cover its projected costs and maintain reserves for any emergencies or unexpected expenses over the next five years, Assistant General Manager Matt Knudson said.
According to the presentation to the board, the financial study produced by Raftelis Financial Consultants included inflation factors of 4% for personnel costs, 5% for utilities, 3% for supplies, general inflation of 3%. Also, a 4% increase in costs for capital improvement projects is included for the 2019 and 2020 fiscal years, and 3% after that.
It also factors in a growth in revenues from property taxes of 2%.
The rate increase is based on the agency selling 47,500 acre-feet of water in fiscal year 2019, then an additional 2,500 acre-feet each year from 2020 to 2022. After 2022, the agency expects water sales to flatten at 55,000 acre-feet annually.
An acre-foot is 325,851 gallons, or approximately the amount of water a typical Antelope Valley household used in one year, before the most recent drought-reduced usage.
“This is really tied to the ramp down in the adjudication,” Knudson said, referring to the gradual reduction in groundwater pumping — and corresponding increase in water purchases — by water providers involved in the court settlement that set limits on the amount of groundwater that may be used across the Valley.
With storage in local water banks, AVEK will still be able to meet the minimum 47,500 acre-feet of water to sell throughout the rate period, even if deliveries from the State Water Project are reduced, he said.
The study also is based on the assumption that the agency will not add any new customers during the period.
AVEK sells water from Northern California carried through the California Aqueduct to Los Angeles County Waterworks District 40, Quartz Hill Water District and other public and private water providers and agricultural users.
For these retailers, the cost of untreated water from AVEK will increase next year from $385 to $414 per acre-foot, and treated water from $560 to $602 per acre-foot.
The increase also includes a new rate for water deliveries through Los Angeles County Waterworks to the Acton area, for which there are additional costs that weren’t being covered by the previous rate structure, Knudson said.
The water to Acton is passed through the Palmdale Water District’s treatment plant, which has a more expensive treatment process using granular activated carbon than what is used by AVEK, and additional transportation costs for moving the water.
The rate for this treated water is increasing from $560 to $645 per acre-foot, a 20.5% increase, Knudson said.
In calculating the rates, the capital improvement fund is budgeted to be essentially stable for items such as replacing worn out equipment, but it also includes a couple “big ticket” items, primarily a proposed expansion of the Eastside Water Bank, should the agency proceed with that plan in 2021.
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