City of Riverside Sells Excess Water to Western Municipal Water District

The City of Riverside, California approved an agreement to provide excess groundwater in the Bunker Hill Basin to the Western Municipal Water District (“Western”) this year. The water will come from the city’s export rights in the basin which cannot be carried over into future years.

Under the state’s mandatory conservation regulations, Riverside’s water customers have conserved 28% compared to baseline water use levels. However, the city blends water from different basins for water quality purposes—so it could not alter operations to use more of the Bunker Hill Basin “use it or lose it” supply. As a result, city staff projects the production in the basin will be down approximately 5,000 AF this year.

Western is acquiring 2,500 AF of the excess water and will pay $187.50/AF for the water supply. Additional charges for production and wheeling, which are established by a previous agreement, bring the price to $664/AF.

According to the city, there is no real market for the water because of constraints imposed by the 1969 Judgement that governs the Bunker Hill Basin, so the parties negotiated a price that represents value to both parties. Western avoids having to purchase that volume from Metropolitan Water District of Southern California at a more costly $923/AF. Riverside receives additional revenue.

Because of the customers’ drought response, the city has lost revenue. In a report to the city council, staff explains that the revenue from this one-time water sale could help backfill that loss. The city council, however, wants to explore the possibility of providing rebates to customers. An analysis and recommendation on the potential rebates will be presented to the council in January 2016.

The city has no other buyers for its excess water at this time, but city staff does see the potential for future sales. But the 1969 Judgement and physical constraints relating to the ability to connect to the water system may limit that potential.

 

Written by Marta L. Weismann