Senate Bill 350, introduced by state Senator Dede Albert (D-Coronado), specifically targets Metropolitan and would require the district to automatically refund reserves considered "in excess" of what is needed for ongoing expenses, capital projects and a normal reserve.

The bill, in effect, would take away important financial decision making responsibilities from the Metropolitan's Board of Directors and significantly impact our ability to maintain stable water rates in the future.

Over the years, sufficient financial reserve levels have allowed the District to maintain stable water rates while making important investments in future supplies.

We have not increased water rates in five years.

The board overwhelmingly adopted Metropolitan's reserve policies after discussion among board members and the member agencies. The current policy allows the board flexibility to determine the appropriate use of funds above the established maximum levels. Last year, those funds were used to buy down long-term debt. Additionally, Metropolitan's proposed rate structure already addresses the issue of "excess" revenues by rebating or crediting revenues.

SB 350 would amend the Metropolitan Water District Act to require Metropolitan to:

• Establish a shorter-term reserve fund for operating purposes and the payment of principal and interest on debt.
• Set a maximum amount for all reserves by a 2/3 vote of the board of directors
• Refund any "surplus funds" to the member agencies in proportion to the revenues each agency contributed.
• Retain the surplus fund only after a public hearing and a determination that it was necessary to retain the funds to maintain the fiscal integrity of the district.
• Detail the size and purpose of each reserve fund, payments made from them during the previous fiscal year, the plan for spending funds from each in the ensuing fiscal year, the amount of any surplus remaining, and the amount of refund that will be provided to each member agency.

Metropolitan's board of directors vigorously opposes SB350 because it is redundant, unneeded and limits the board's ability to make sound financial decisions that benefit all of Southern California.
(To read the language of this bill or any others discussed here, go to: http://www.leginfo.ca.gov/bilinfo.html).

Paying the power bill

Back in early December 2000 and again in January 2001, the California Independent System Operator (ISO) requested that DWR purchase energy when supplies were extremely tight and the investor-owned utilities' and the ISO's credit worthiness was in doubt. Metropolitan, and the other State Water Contractor agencies, will seek passage of legislation to require repayment of the funds utilized from the Water Resource Development Fund to make emergency purchases for the ISO and IOU's. Several similar bills-SB405 (McPherson), SBX1 65 (McPherson), AB1535 (Florez), ABX1 107 (Florez), and AB1X 63 (Havice) have been introduced to require repayment of the funds to the State Water Contractors.

• SB 868 (Costa), a general obligation bond measure which incorporates the water quality programs identified by Metropolitan as critical to ensuring safe drinking water;
• AB 901 (Daucher) requires that Urban Water Management Plans include information on the water quality of source supplies and its relationship to water management strategies and supply reliability; and
• AB 1192 (Pavley), a general obligation bond measure which ultimately will include funding for the research and development of technologies to further conservation in the commercial and industrial sectors.
• The proposal to commission the University of California to evaluate traditional centralized treatment methods and distribution of drinking water will also be pursued through the state budget process.

For more information on State Legislation, click here.

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