The El Dorado Irrigation District Board of Directors considered $225.3 million in capital improvements at Monday’s meeting that would be paid through a combination of rates and borrowing.
Funds would be spent over five years, 2021-25, although EID typically only spends 70-80% of what’s planned.
Going through infrastructure improvements planned, in 2021 Flume 30 will be replaced at a cost of $10.3 million. Other flumes slated for replacement between 2022 and 2025 are flumes 4, 45, 45A, 46A, 47A, 47B and 52A at a cost of $9.5 million.
Improvements to penstocks will be carried out between 2020-25 at a cost of $1.8 million. Between 2021 and 2025 there are also plans to replace the Echo Conduit at a cost of $1.8 million. The conduit, which is comprised of pipe, ditch and tunnel, carries water from Echo Lake to the South Fork drainage near Phillips.
The district also has plans to pipe the Main Ditch in Pollock Pines at a cost of $14 million and to replace the Folsom Lake intake at a cost of $28.7 million. The Folsom Lake intake provides approximately one-third of EID’s water and is critical to supplying El Dorado Hills customers with water.
A storage tank program that includes Reservoir 1, 6 and the Moose Hall will be conducted over five years at a cost of $12.5 million as well as a water line and service line replacement program at a cost of $41.5 million.
Five wastewater lift station upgrades will be carried out over five years at a cost of $7.9 million along with replacement of wastewater pipeline at a cost of $20 million. General district items included in the capital improvement plan are the replacement of outdated software, vehicles, information systems, IT infrastructure and security at a cost of $20 million.
Some more costly projects not included in the CIP are replacing the Silver Lake Dam, Sly Park intertie and Flume 48.
Objecting to the number of projects, Director Alan Day attributed rate increases to increases in the CIP, saying the agency was trying to do too much too fast. Director Mike Raffety also indicated his opposition to some projects listed.
In response Directors Lori Anzini and Pat Dwyer pointed out the CIP is just a working document and that as projects come before them for funding, they will have a chance to reevaluate them. Dwyer noted that EID already has the money set aside for most of the projects and their impact on rates has already been felt. Board Chairman George Osborne added that putting off the work will only mean paying more later.
A motion to approve the CIP then passed 4 to 1 with Day the lone no vote.
Also presented at Monday’s meeting was a five-year financial plan by Finance Director Mark Price. Price projected 2020 revenues would be about $6.8 million lower than the previously adopted budget. He attributed it to $9.4 million less in facility capacity charge revenue and $.9 million less in hydroelectric revenue despite slightly more rate revenues of about $.7 million and water transfer revenues of $2.83 million.
This year’s expenses were also projected to be $2.6 million less than budgeted due to lower-than-expected professional services costs and contracted repairs related to the COVID-19 lockdown.
Price said 2021 revenues are forecast to be up $5 million due to an increase in facility capacity charges of $7.3 million. Rate revenues are projected to be higher by $1.4 million due to already approved cost of service increases for water, wastewater and recycled utilities. Offsetting these increases is a reduction of water transfer revenues of $2.8 million, a reduction of $850,000 in wastewater surcharge revenue and a further anticipated reduction in hydroelectric rate revenue of $100,000.
The 2021-25 plan assumes that facility capacity charge revenues will decrease over time from an estimated $16.7 million in 2021 to $5 million for 2023 through 2025. Surcharge revenues will decrease in 2021 by $850,000 and another $730,000 in 2022 as two of the three billing surcharges sunset. The plan includes grant revenue for 2021 for the last year of forest management grants.
The financial plan includes an increase in the overall cost of operations. The 2021 budget reflects an increase of 4.3% in expenses over 2020 and a 4% consumer price index increase in 2022, a 3% increase in 2023 and 2024 and then in 2024 lowering to 2%.
The district also issued $61.1 million (proceeds of $75 million) in debt in 2020 to fund certain capital improvement projects and to refinance $186.9 million in higher interest rate debt. Potential debt is expected to rise to $370.8 million by 2025 including a $75 million water bond sale in 2025. The latter is expected to fund long-term CIP assets such as the Sly Park intertie replacement, replacing several flumes and potentially replacing Silver Lake Dam.
With the sale of water to Westlands Water District bringing in an extra $2.83 million, the discussion then revolved around how to best use the money with General Manager Jim Abercrombie and Price recommending funds be used toward capital improvements. As Abercrombie noted, he didn’t want EID to be “the water industry PG&E” and not be able to deliver water to its customers because of broken infrastructure.
Director Day instead suggested using the money to reduce water rates.
Director Pat Dwyer commented the $2.83 million wouldn’t have a significant impact on rates with he and Director Osborne suggesting the money might be better spent on a one-time expense.
Abercrombie was then asked to research the issue further and come back to the board with an analysis of the impact of a one-time credit to customers, the impact on water rates if the money is used to assist low-income customers or if the money is used for a one-time payment on an item.