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Updated: EID responds to candidates statements

By From page A4 | August 28, 2013

Following the forum last week for candidates wanting to serve on the El Dorado Irrigation District Board of Directors, EID was asked to respond to the information provided. Below are the submitted comments. EID officials added that if something was not responded to, that means they either have no comment or will provide a comment when they have more time to formulate a response.


Comment: Twenty-five percent of EID’s budget is currently devoted to servicing its debt.

EID’s response: Debt service expenditures are not included as part of the district’s annual operating budget. However, operating expenses budget plus interest expense budget = $55.8m. Interest expense = $13.9m, which is 24.9 percent.

Comment: EID is more than $400 million in debt and has $30 million in unfunded liabilities.

EID’s response: EID has $370 million outstanding debt per 2012 CAFR. Pension unfunded liability as of Dec. 31, 2012, is $35.2m. OPEB unfunded liability as of Dec. 31, 2012, is $22.2 million.

Comment: Rates have gone up 102 percent in last five years, 11 percent this year and another 11 percent next year.

EID’s response: The primary reason for the rate increases was to pay for capital facilities that were required to comply with state and federal mandates or to replace deteriorating assets.

Comment: In 2012, EID  overshot its budget by $4 million and only cut $940,000 from expenses.

EID’s response: False. 2012 operating budget was $41.9 million. Actual expenses were $41.5m. Below budget by $400,000. Including interest expense actual v. budget, we were below budget by an additional $325,000. Total = $725,000 below budget.

Comment: 73 percent of EID’s rate (revenue) comes from Shingle Springs, Cameron Park and El Dorado Hills.

EID’s response: None

Comment: That portion of the budget devoted to debt service will increase once interest rates rise.

EID’s response: This was in reference to the variable debt we have, and correct, history shows and economists agree that interest rates will eventually rise. Current rates for the variable debt are 0.05 percent and have been below 0.25 percent for the last two to three years. This has significantly saved ratepayers millions of dollars. As interest rates begin to rise, the variable debt may be restructured to fixed rate debt. 

Comment: It plans rate hikes of 102 percent from 2010 to 2015, including 11 percent next year.

EID’s response: The primary reason for the rate increases was to pay for capital facilities that were required to comply with state and federal mandates or to replace deteriorating assets.

Comment: EID has debt levels approaching a half billion dollars including unfunded pensions and health benefits and $60 million of debt.

EID’s response: EID faced major challenges to achieve regulatory compliance in the late 1990s. In 1999, the Board forecast that $176 to $300 million in capital investments would be needed to comply with state and federal regulatory mandates. This was in addition to the need to replace deteriorated assets and perform long-deferred maintenance. A proposed $60 million dollars of new capital expenditures will be used for Forebay Dam remediation required by the Division of Dam Safety and the Federal Energy Regulatory Commission, several multi-million flume replacement projects required to deliver one-third of our water to our customers, and several wastewater lift station replacements. These projects are needed to comply with regulations and provide safe and reliable service.

Annually required pension contributions as required by CalPERS are paid. The annual contribution percentage will be increasing over the next few years related to CalPERS actuarial changes and to recoup investment losses in the market by CalPERS.

Comment: There is ongoing deficit spending of $15 million a year.

EID’s response: False. EID does not borrow to pay operating expenses. The important factor here is that depreciation is not a cash expense.  Total operating revenues exceed operating expenses, not including depreciation is $11.7 million surplus. It is true, like most homeowners, EID will borrow capital funds to build new facilities for either expansion or regulatory requirements and to replace significantly expensive infrastructure which no longer is cost-effective to maintain or is a hazard to public safety.

Comment: When unfunded pensions, covering health cost for retirees, deferred debt repayment and looming interest rates are included, it will result in a 20 percent rate hike in the future.

EID’s response: False. Small annual rate hikes matching inflation to cover costs of operating expenses increasing may be required. Currently adopted rate increases already include projected increases in debt payments as principal payments begin increasing. Required contributions to fund retiree health imposed by the state legislature are currently planned for in the operating forecast going forward which includes an assumed CPI related increase to both rate revenue and operating expenses.

Comment: Factors driving the rise in water rates next year were $60 million in additional debt, a 7 percent wage hike next year for most employees and a 6 percent this year, plus additional benefit costs.

EID’s response: True, with regard to the issuance of debt for capital project funding, but False with regard to the wage hikes. In 2013 67 percent of the staff are not eligible for pay increases due to reaching the maximum salary within their respective salary band; thus the potential overall increase will be 3.88 percent (which includes a 2 percent COLA) if everyone that was eligible for an increase actually received one. In 2014 that percentage will rise to 79 percent; thus resulting in an overall 3.19 percent wage increase (which includes a 2 percent COLA) if everyone that was eligible for an increase actually received one.

Comment: EID sells less than half of its water and it already has plenty of water for all the development projects approved plus others being proposed. The added capacity is being done for developers.

EID’s response: EID has adequate water supplies for proposed new development. EID approved new hook up fees to ensure that new development pays the expansion cost and not the ratepayer.

Comment: Overhead at EID has increased from $7.5 to more than $18 million over the last dozen years and one-third of rates go to pay overhead.

EID’s response: Not true for the numbers quoted for overhead increases. EID’s overhead/indirect expenses in 2002 were $9.1 million. In 2012, they were $16.2 million. This represents a 5.94 percent compound annual growth rate for a 10-year period. If you do the math based upon what was alleged for the last dozen years, it would be a 7.57 percent compound annual growth rate, which is higher than what EID actually experienced.

Comment: EID has $370 million in debt with one-third of every dollar paid going to service that debt.

EID’s response: True. EID has $370 million of outstanding debt, but this is considered to be “moderate,” according to Standard & Poor’s rating agency.

Comment: Nearly half of EID’s debt results from regulatory measures imposed by state bureaucracies.

EID’s response: You may refer to past issues of the Waterfront newsletter to see details about this. It is true that much of the district’s debt is for regulatory-mandated projects.

Comment: If operating costs were brought under control it would stop escalating rate increases, with projects sometimes approved and built without a cost benefit analysis. EID has spent money on things that might happen instead of what will happen.

EID’s response: Future rate increase driven by future capital replacement projects; like flume replacement and Forebay reinforcement required by DODS.

Comment: Agricultural users only pay one-seventeenth what others pay.

EID’s response: Ag users pay the same rates as other ratepayers for their domestic use. For their irrigation use water, they are not charged the extra costs for their treated water as it is for the district’s convenience.

Comment: Board members currently receive a monthly stipend of $1,250 for serving plus health insurance.

EID’s response: Correct. Board members do receive $1,250 per month in compensation plus they may elect to be covered by the district’s health plan.

Special to Village Life

Discussion | 5 comments

  • Fly on the WallAugust 27, 2013 - 2:08 pm

    Time for a new and improved board at the EID. Flesher and Prada would be a great improvement. Don't forget to vote this November 2013! Be sure to let your neighbors know. The election is for District 2 and 4, but the results affect all of us. The EID website has a map of the districts. Please check it and and share!

  • Paul RavelingAugust 30, 2013 - 6:44 pm

    Look for a new fact check section for EID and the election, probably around the middle of next week, on sierrafoot.org. A point generally missed is that rate increases have been running rampant throughout California -- possibly also the nation, but I'm only checking California. I'm currently collecting data, starting with 2006 cost survey results for 452 water service areas in California and finithing with corresponding cost estimates for 2013 based on each agency's rate formula. One snapshot of where the data stands at this moment is that 76% of ALL service areas saw a rate increase over 50% in this time, by percentage. EID monthly costs for the benchmark consumption rate used in most industry studies are about 10% BELOW average costs for the 326 service areas that I've checked and documented so far. The rate hawks don't understand that a high percentage increase in rates is due to an exceptionally low starting point for those rates.

  • Geez!August 31, 2013 - 10:51 pm

    What is Whacko Raveling babbling about? If he was forthright he would do one of his fact checks and admit that 98% of what he says is an utter crock!

  • Raveling should read moreSeptember 01, 2013 - 1:24 pm

    "The Sacramento Suburban Water District board voted Tuesday to delay increasing water rates for a year, opting for a 16 percent jump over four years instead of 21 percent over five years...Metered customers will see $1.92 tacked onto their bill, which currently averages $47.95 per month." Read more here: http://www.sacbee.com/2013/08/30/5693787/water-district-votes-to-delay.html#storylink=cpy EID ratepayers wish they had it half as good as Sacramento Suburban. When will shameless EID shill Paul Raveling stop spewing dishonest statistics?

  • Paul RavelingSeptember 07, 2013 - 1:01 am

    About the comment from "Geez!". I'd really like to talk with one of these people using a pseudonym if it's possible to have a serious discussion. The only way I say something publicly is with facts to prove it. I'm increasingly uploading basic source documents to sierrafoot.org: At this moment it adds up to about one and a quarter gigabytes in the directory tree rooted at www.sierrafoot.org/civics/eid_2013/reference/. I don't expect to see "Geez!" but I'm perfectly willing to give any reasonable person a "guided tour" through the documentation that's the foundation for everything I write.



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