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TID prepares for new volumetric irrigation pricing

POSTED March 27, 2012 11:04 p.m.

Most Turlock Irrigation District growers will pay more for irrigation water in 2013, as the district will be required by state law to adopt a by-volume pricing schedule.

District directors discussed the new price schedule for the first time Tuesday, legislated as part of a November 2009 comprehensive water package signed by then-Gov. Arnold Schwarzenegger.

That bill package was intended to improve water supply and restore aquatic ecosystems statewide. Much of the legislation focused on the Sac-Joaquin Delta, but other aspects required enhanced measurement of irrigation water and volumetric pricing for that water.

TID currently operates with a tier structure, whereby farmers pay an initial $26 per acre for an annual allotment of water, determined by district directors. Further water is available at $15 per acre foot for the first acre-foot, and $20 per acre foot thereafter, if available.

But that pricing structure is unfair to consumers and encourages wastefulness, per the state.

Nearly three years out of four, TID allots 36 inches of water per acre, while 50 percent of growers use 33 inches of water per acre or less. That means more than half of TID growers pay for more water than they use.

The new, volumetric pricing structure would more accurately charge customers based on usage levels.

 “Growers who use less water would pay less,” said Bob Nees, TID assistant general manager of water resources and regulatory affairs. “Those who are using a higher level of water will pay a little more.”

 

Rates different in wet and dry years

The proposal calls for growers to pay a base fee of $23 per acre in normal years, followed by a $2 per acre-foot charge for the first two acre-feet. The next two acre feet of water will cost $3 each, followed by an acre-foot available at $15. Any remaining water will be charged at $20 per acre-foot.

The change will see a grower who uses 36 inches of water pay $4 more per acre, and growers who use 48 inches or more pay an additional $7 per acre.

Growers will pay more in dry years, as determined by TID directors, to offset the additional costs to the district of pumping groundwater to supplement limited rainfall and snowmelt. The average TID customer already pays about $300 more in a dry year, as allotments are set lower and growers must purchase additional Tier 2 water to nurture crops.

The dry year schedule will see an initial fixed cost of $26 per acre, with one acre-foot of water available for $2. The next 18 inches of water will be charged at $3 per acre-foot, with another acre-foot at $15. Additional water will be charged at $20 per acre-foot.

In dry years, growers using between 30 and 42 inches of water will ultimately spend an additional $6.50 per acre compared to the current schedule.

“It’s not foolproof, but it is one possible direction,” Nees said.

 

Increase needed to close gap

The rate change was not viewed positively by grower George Duarte, who addressed TID directors via a letter.

“Instead of charging more money to farmers, TID should try to operate by cutting costs,” Duarte wrote.

But TID irrigation rates, last adjusted in 2010, are already far below true costs to the district, Nees said. Though the district has frozen budgets and reduced staffing levels, fuel, material, and regulatory costs continue to rise.

Costs of providing irrigation water exceed the revenues generated – even after a payment from the electrical side of the business. For the past two years, those revenues have fallen nearly $1 million short of costs; in some dry years, the gap grows as wide as $2 million.

The new rate schedule will produce additional revenues for the district, narrowing that gap to roughly $300,000 in wet and dry years alike.

The intermediate step was taken instead of closing the gap completely, Nees said, to give growers time to adjust to the new rates. The smaller increase also will allow the district to judge how the pricing change effects irrigation water usage – some growers may use less to save money, reducing district revenues – and then make further changes accordingly.

“We thought that was too big of a step,” Nees said. “We want to see some of this settle out a little bit.”

Growers will also face an additional cost to install flow measuring vents in irrigation sidegates and pipes, also required by the state comprehensive water package. The district must measure delivered water to an accuracy of plus or minus 12 percent, but many older irrigation facilities lack vents where TID can insert handheld flow monitors.

“We're hoping that cost isn't going to be too substantial, but we'll have better information later this year,” Nees said.

Nees expects to return to the TID Board of Directors on Tuesday with a recommendation to establish a public hearing date where the new rate structure will be voted on. Before then, the district will hold growers meetings and send out informational packets.

If approved, the rates would not take effect until the 2013 water year.

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