Farmers Face Yet Another Water Hike

Casitas $15M budget means 18.8 percent agricultural rate hike beginning Tuesday

By Daryl Kelley
With a telling absence of public dissent, directors of the Ojai Valley’s largest water agency approved this week a new $15-million budget supported by another sharp jump in water rates to valley farmers.
Although farmers would absorb an 18.8 percent increase in rates during the fiscal year beginning July 1, farm leaders in the audience at Wednesday’s hearing praised Casitas Municipal Water District directors for trying to keep rates down.
Indeed, despite the proposed increase of agricultural rates from $312 an acre-foot to $371, farmers said they were grateful that directors had used property taxes to offset part of the cost of delivering water to farmers.
Without the offset, farmers could have faced rates of more than $500 per acre-foot for the coming year.
“I think they’re doing a good job of trying to do what they have to do; they’re very much between a rock and a hard place,” said Tony Thacher, an East End farmer, in an interview.
Still, the more expensive farm water, coming on top of a 53 percent hike in the cost to irrigate crops last year, is putting Ojai Valley agriculture in jeopardy, because marginal farmers simply cannot pay the new price, Thacher said.
Even farmers with profitable crops such as lemons, avocados and specialty tangerines, will have to sink new wells into the valley’s subterranean water basin to be able to make farming pencil out, he said. The cost of well water, not counting maintenance expenses, is about $70 an acre-foot, farmers say.
But the new wells, costing up to $100,000 each, could be a huge problem, Thacher said, since they could pull too much water out of the underground basin, depleting the water supply of hundreds of farmers and thousands of residents.
“My biggest concern is the groundwater basin,” Thacher said. “There are lots of wells being drilled or contemplated right now.”
Added East End farmer Jim Churchill: “If everybody’s doing it, that affects the groundwater basin.” And a depleted Ojai aquifer could affect everything from drinking and irrigating water to the valley’s eco-system, Churchill said. “Wouldn’t that affect the oak trees?”
The interdependence of the Ojai Valley’s water supply systems has become an increasing issue during the last year, as water agencies have sharply hiked rates to maintain and rebuild aging pipes, pumps, tanks and reservoirs.
And every move by Casitas can affect every other agency in the valley, since it controls the huge reservoir behind Casitas Dam, a federal public works project managed by a locally elected board.
“There’s a lot of room for improvement in how we manage our water supplies,” said Casitas general manager Steve Wickstrum. “We need to protect our long-term and our short-term supplies.”
In fact, the valley’s groundwater management agency has begun an extensive study of precisely how the Ojai Valley Basin works and what effect new wells would have on it during dry years when there is not enough rain to replenish it. But that study is just beginning, and will take two years to complete, officials said.
In the short term, farmers must deal with the 18.8 percent rate increases, if the Casitas board enacts them as expected after a hearing Aug. 27. Property owners will be formally notified of the proposed hikes in coming weeks, and they will have 45 days to challenge them in writing.
If a majority of customers do, the rates would not be imposed and the district would have to go back to the drawing board on how to pay for its operations and an ambitious program to rebuild its sagging infrastructure.
Chances of a majority challenge are minuscule, however, since most Casitas customers are not farmers, but residents, and they fare well under the proposed new rate structure. Most Ojai Valley customers, mostly Oak View residents, will get a sharp reduction in rates resulting from the 2008-2009 budget.
Casitas provides water for about 65,000 people and nearly 5,700 acres of farmland in the Ojai Valley and Ventura areas. About 200 farmers use about 44 percent of the district’s water.
The net effect of water rate increases in the new budget is about a 10 percent increase overall, with farmers taking the biggest hit. The net operating increase to farmers is less than the 18.8 percent hike for water, because the district would reduce the monthly service charge to big users.
Farmers said they are waiting to see the details of the new water rate study on which the new budget is based. A summary of the study was distributed during the last week, but farmers said they wanted to see precisely how the rate model works, so they can come to their own conclusions about its effect on them.
At a previous meeting, farmers said they were concerned that basic 22 percent service charges for administration and overhead may be too high. They said they have not yet seen a breakdown to support that fixed charge. District officials said that the water industry standard for such overhead charges is 25 percent, so Casitas’ proposed rate is low.
Higher rates are required not only to fund millions of dollars in maintenance projects and fully fund an emergency reserve account, but because the district is under pressure to follow state guidelines that require water charges based on the actual cost of service, something the district has not done in the past when it came to agriculture.
In a 2006 State Supreme Court decision, justices ruled that Proposition 218, passed by voters in 1996, requires equitable distribution of water costs.
Homeowners already pay for the full cost of delivering their water. Historically, farmers have enjoyed a subsidized rate partly because the federally constructed Casitas Dam project was built, in part, to promote Ojai Valley agriculture.
Even with the farmers’ rate increased from $208 an acre-foot to $312 this fiscal year, and perhaps to $371 by September, they would still pay less than the $438 per acre-foot most residential customers pay. An acre-foot of water meets the needs of two typical households for a year.
Casitas officials have said they might be able to legally justify the lower rate because agricultural users do not need the high quality water delivered to their orchards since a sophisticated treatment plant was built a decade ago to meet state drinking-water standards.
If all costs, including treatment, were included, farmers would pay $521 an acre-foot, analysts have said.
But farmers fear that spiraling costs could eventually put them out of business.
Mary Bergen, who farms 100 acres of avocados along Creek Road, said she’s still trying absorb the increased costs from last September’s water hike.
“My bill has gone from $7,000 to $8,000 a month (during the summer and dry periods) to $12,000 a month,” said Bergen, who attended the Wednesday hearing.
Higher water rates will force farmers to pump more from their own wells in years with good rainfall, like this one, then go back to Casitas supplies when underground water basins dry up during low-rain years.
That would create a yo-yo effect in Casitas revenue, farmers have said, because the water district cannot count on selling water to farmers consistently.
Water rate summaries released by Casitas this week show that the proposed new rates would be good news for about 2,600 residential customers in the Oak View area, with their water rates dropping sharply and their overall water bills dropping somewhat after an increase in the basic service charge is included.
The new water rates differ from customer to customer, depending on the size of a customer’s water meter and how much water is used.
For example, a resident with a typically sized water meter (5/8 to 3/4 inch), using 34 units of water (748 gallons per unit) every two months, would pay $81.40 under the new rates, including a service charge of about $38. That’s about $9, or 10 percent, less than the resident now pays bi-monthly.
For farmers, water rates would go up 18.8 percent regardless of the size of farm, but proposed reductions in fixed service charges would mean a smaller percentage increase in the overall water bill.
For example, a farmer with 40 irrigated acres would pay $30,802 a year for water service, $4,341 or 16.4 percent, more than now. That assumes the farmer has a 2-inch meter and uses 2 acre-feet of water per acre per year.
A farmer with 200 irrigated acres would pay $152,628 for water service, $21,030 or 16 percent, more than now. That assumes the farmer has a 4-inch meter and uses 2 acre-feet per acre.
And if the same 200-acre farm had a 6-inch meter, the annual tab would increase to $157,649, $13,035 or 9 percent, more than today.