17 February 2009

Water Chats -- IID Staffers

Yesterday, I posted Joe Tagg's water chat. Tagg claims that IID does NOT own the water and that IID's entire job is to deliver water to farmers.

That's not what IID appears to think. In today's hour and 22 minute water chat [29MB MP3], listen to me talk with Dean Currie (Key Customer Coordinator), Brad Luckey (Governmental & Regulatory Affairs Manager), and Carlos Villalon (General Superintendent of Water Operations) on these issues (and MUCH more):
  • IID power is FAR larger than IID water in revenue ($600 million vs. $100 million revenues), but both divisions are similar in staffing.
  • IID power is sold outside IID's political jurisdiction (140,000 meters).
  • 97% of IID water goes to farmers (about 300?), but 3% goes to people (100,000 meters?) in the service area.
  • IID is paying hardly anything to restore the Salton Sea because the State government agreed to cover those restoration costs in the 2003 QSA.
  • IID is limiting farmers to 5.25AF/acre for the first time. This is causing many problems with farmers' legal and operating procedures.
I came out of this interview convinced that IID is walking into a shitstorm of its own making:
  1. Nobody appeared to know how much revenue IID has made from water exports to urban areas or when or how that revenue would be distributed to farmers who fallowed land. Farmers are angry about that.
  2. IID is trying to set quantity (5.25AF/acre) AND price ($17/AF) at the same time. It's basic economics that you can't set both without getting a surplus or shortage.
  3. IID appears to think that water rights do not belong to the farmers whose land initially attracted those water rights. That's just silly.
To get a preview of how IID is getting into trouble, compare the new 10-page water rate card to the old index-sized cards. Farmers in the area told me that these new cards are going to be rejected by farmers under Prop 218 (no taxation without representation). Rejection will lead to an operating and governance deadlock.

Note: I forgot to highlight Joe Tagg's contention that IID's "mismanagement" of water is actually a ploy to "create" excesses that can be sent downstream to a junior water rights holder (The Metropolitan Water District of SoCal). How does this idea work? Since farmers MUST use less than 5.25 af/acre, they will be conservative in choosing what crops to grow. Given that they undershoot 5.25 af/ac on average, there will be "surplus" water. What's his evidence? Someone at IID told him they were counting on 200 taf of surplus.

To understand why farmers are fighting with "their" water agency, read the next post.

Bottom Line: IID staffers are nice but confused. This confusion weakens their mission, reduces their efficiency, and makes it more-likely that IID will be pushed around by outsiders determined to "fix" things.

3 comments:

  1. The podcast seemes to end prematurely...not sure if you all were done or not.

    Here's what I understand now about their oppositions to internal allocations based on use. Because there are so many landowners and tenant farmers, allocating water and letting them fallow if they felt like earning some money would probably be a good deal for the owners, not the tenants. The other people also wouldn't really like it--those that rely on the water. I think Susan Stratton and Gordon Rausser have looked at this in her diss.

    Also, it is not unique that they allow all people to vote in their district elections. All irrigation districts have this provision. Water Districts have landowners only voting. But IID may just be the extreme example of a popular voting structure hampering water allocation.

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  2. Damian -- my player says that time is up, but the audio runs past that point to the end of the discussion...

    I don't think the tenants have any right to require that landowners keep the land in production (that's like saying that a renter can prevent a home owner from selling the house)

    Landowner voting (on assessed value) is the key to good governance. See the other post on IID's governance failure.

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  3. I think they're all still struggling, as a legal matter, with just who the water rights actually "belong" to - the district, or the farmers. It is a basic issue to be decided in some of the ongoing QSA litigation.

    My own take - and this is without any due diligence on the rights themselves, as a historical matter, so this could be totally wrong - is that the district is trustee of the water rights, which are held for the benefit of the lands (and therefore farmers) comprising the service area. As such, IID has a fiduciary duty to act, in its administration of the water program, not in its own best interest...but in the best interest of the service area.

    It is probable that this duty can be discharged without requiring all water to stay in the district. Lots of other districts transfer water on a short-term basis - look at GCID, which sells to the Met and then fallows ground.

    At the same time, administration of the water program which is so divorced from the underlying lands within the service area - for example, by keeping the lion's share of transfer proceeds in IID coffers, rather than distributing outward to the landowners - is probably a breach of the duty.

    That's what I think. Who knows if its wrong...

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