Merger one possibility in water utility talks

By: DAVID FRIED - Staff Writer | Tuesday, September 5, 2006 9:57 PM PDT ∞

ESCONDIDO ---- A merger is one, but not the only possible outcome of recent discussions between the city's water division and the Rincon del Diablo Municipal Water District, officials with both agencies said Tuesday.

"We (Rincon) do not have an assumption that any action at all takes place," said Rincon board member David Drake, part of an ad hoc committee in discussions with the city. "Our assumption is, let's investigate."

Meanwhile, Mayor Lori Holt Pfeiler, who in July proposed studying a merger between the two water agencies, said that folding Rincon's operations into the city's is still the ultimate goal for Escondido officials.

But Pfeiler cautioned that whatever comes from the current round of talks with Rincon will depend on a number of factors, not least of which is what would be best for ratepayers.

"At least we're engaged in a practice that will fairly analyze the arguments, and we're both committed to doing what's right and letting any analysis take us where it goes," said Pfeiler, who along with Councilman Sam Abed represents the city in discussions.

The two sides met for the first time Thursday to discuss Pfeiler's proposal, and will sit down together again on Oct. 5.

A 1994 agreement between the city and district calls for the city and Rincon to periodically evaluate the possibility of consolidating services.

About three-quarters of Rincon's service area lies within Escondido city boundaries, mostly west of Interstate 15.

Pfeiler said consolidating the two utilities could be more efficient and reduce costs for customers, especially future businesses in the Escondido Research and Technology Center, a 186-acre business park on the city's west end, served by Rincon.

The last thing a company wants when planning to build a facility, she said, is to deal with additional government agencies and bureaucracy.

In the end, however, Pfeiler and Drake said merger discussions could result in any number of outcomes. That could include additional emergency service agreements, shared infrastructure investments, or a single-billing system for customers who receive two water bills, one from the city for wastewater disposal, and one for potable water from the district, which does not provide sewer services. Or, it could result in nothing at all.

"Both sovereign agencies are trying to find the best solution for their constituency," Drake said. "There's also the sense that, if there's not much of a problem, there's not a need for change."

In the meantime, administrators for both agencies are preparing overviews of all their operating costs and equipment, a comparison that will involve working out several differences between the two districts, such as storage capability and infrastructure needs.

"There are some apple-to-banana issues we have," Drake said of the $9.8 million Rincon operations compared with Escondido's $33 million water division.

The two sides will also need to hash out several financial matters, such as what any additional cooperation between the agencies would mean for ratepayers.

Rincon officials estimate that, after new Escondido rates take effect Jan. 1, the average residential customer served by the city will pay 13 percent more each month than the average Rincon customer.

"If it (a merger) didn't improve the cost to our customer and didn't improve services, then it's a nonstarter," Drake said.

For the last eight years, Escondido's water division has run a deficit of between $3 million and $7 million. Even after recently approved rate hikes, the city is predicting a $1.4 million budget gap this year.

Pfeiler said discussions of a merger were unrelated to the city's water division deficit.

-- Contact staff writer David Fried at (760) 740-5416 or dfried@nctimes.com.

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