Pushing ahead with an ambitious effort to take a majority stake in the state’s troubled $16.7 billion tunnels project, Southern California’s behemoth water agency announced Tuesday that the plan would cost its ratepayers less than $5 a month.
On Tuesday, staff at the Metropolitan Water District of Southern California told board members $4.80 was the most the 6.2 million households in Metropolitan’s service area could expect to pay if the agency moves ahead with plans to take on 65 percent of the share of building both tunnels.
Metropolitan officials said the $4.80 figure may be on the high side.
So far, most big San Joaquin Valley agricultural water districts have balked at paying for the tunnels, leaving the project about $6 billion short and prompting Gov. Jerry Brown’s administration to explore building the two tunnels in phases.
The farm districts have said the cost is too high. But Metropolitan believes that if it’s willing to pay upfront costs of around $10.8 billion, at least some of the farm districts will enter into financing agreements to gradually repay Metropolitan.
That could drop the monthly costs to Southern California ratepayers to as little as $2.40.
"One of the strengths of an agency like Metropolitan is that we have a big (ratepayer) base that we can spread our costs along,” Metropolitan General Manager Jeff Kightlinger said in an interview after Tuesday’s meeting.
Metropolitan’s board is expected to vote on the proposal on April 10. The vote comes at a critical time.
Tunnels supporters want to get the project’s funding secured before Brown terms out at the end of the year. For years, Brown has advocated for the tunnels over objections from environmental groups, Northern California farmers and local governments who view the project as a “water grab” by the south state and an environmental catastrophe in the making.
The tunnels would divert a portion of the Sacramento River’s flow from a point near Courtland south of Sacramento and send it underground 40 miles, to the massive pumping stations in the south Delta.
Brown’s administration says the tunnels would reduce the environmental problems caused by how pumps in the Sacramento-San Joaquin Delta currently operate. They’re so powerful they cause the Delta’s currents to run backward at times, leading endangered fish to their deaths. Brown’s administration says the tunnels would reduce those “reverse flows” and make water deliveries more reliable to San Joaquin Valley farmers and to 25 million Bay Area and Southern California residents.
But with a large share of San Joaquin Valley farmers unwilling to finance both tunnels, Brown’s administration in February said it was going to do one tunnel at a time, starting at an estimated $11.1 billion.
A second tunnel could get built years later if the rest of the dollars materialized.
Metropolitan and other tunnels boosters said it would be cheaper and make more environmental sense to build both tunnels at once. Some of Metropolitan’s board members asked the agency’s staff in February to explore whether the agency could pick up the farmers' portion so that both tunnels could get built.
Tuesday’s meeting provided the first glimpse of what Metropolitan’s two-tunnels plan could cost Southern California ratepayers and the financing plan the district has in mind.
Under the proposal presented Tuesday, Metropolitan would enter into financing agreements with San Joaquin Valley farming groups that would see Metropolitan picking up most of the upfront costs of building the project. The farming associations would pay Metropolitan back with interest once the project was finished. Kightlinger said that even if none of the farming groups sign off, the most Southern California ratepayers would pay is $4.80 a month.
Kightlinger said he's convinced the agency could also lease or sell space to move water through in the tunnels to help drive down costs for ratepayers.
"We know we're not going to be stuck with it and have that sit empty," Kightlinger said.
Environmental and community groups joined the tax-fighting Howard Jarvis Taxpayer Association to speak in opposition at Tuesday's meeting. They said they were troubled by the environmental risks and the burden that paying for the project would put on impoverished Southern Californians.
"People are struggling," the Rev. Clarence Moore told the board. "An increase would have a great impact on them."
Southern California business groups and trades unions voiced their support, saying the tunnels would secure the region’s water supply.
This story was originally published March 27, 2018 4:04 PM.