Coachella Valley Water District (CVWD) went on record today during Imperial Irrigation District’s (IID) Board of Directors meeting to oppose IID’s proposed fee to be charged to IID’s Coachella Valley rate payers. CVWD is IID’s largest single power customer.
IID and CVWD are party to the 1934 Compromise Agreement, and under that agreement, IID is obligated to charge Coachella Valley rate payers (including CVWD) the same rates as IID charges to rate payers within its district in the Imperial Valley. This obligation is contained within the 1934 Compromise Agreement that created a power joint venture between IID and CVWD during the life of the Compromise Agreement, but the obligation exists for the benefit of all of IID’s rate payers in the Coachella Valley.
During the IID board meeting today, IID proposed the creation of the Coachella Valley Energy Commission (“CVEC”) to serve as an advisory commission comprised of the IID board and Coachella Valley representatives to strategize on long-term planning for energy service in the Coachella Valley. The IID board considered approval of bylaws for the CVEC, including Article 6.01 which discusses the funding for the commission.
Under Article 6.01, IID proposed to charge a fee to IID’s Coachella Valley rate payers only (not its own district rate payers) to fund the CVEC, citing Compromise Agreement Paragraph 19 as justification for the fee.
CVWD disagrees with IID’s interpretation of the 1934 Compromise Agreement, because Paragraph 19 does not allow IID to charge its Coachella Valley customers rates that are higher than those charged to power customers within IID’s own district boundaries. Paragraph 19 includes a narrow exception to this limitation, which allows IID to charge its Coachella Valley rate payers any extra cost IID might incur in physically transmitting power across the distance from the Imperial Valley to the Coachella valleys.
The costs to be incurred in connection with the CVEC do not fit within the scope of the exception to Paragraph 19, and the Compromise Agreement does not allow IID to charge the fee to its Coachella Valley customers only.
“As a party to the 1934 Compromise Agreement with IID, CVWD does not believe the fee described in Article 6.01 of the proposed Bylaws falls within the scope of Section 19 of the Compromise Agreement,” said CVWD General Manager Jim Barrett during today’s meeting. “The language in Section 19 regarding rates to be charged to Coachella District power customers was intended to address the actual extra cost, if any, of power transmission due to the physical distance between IID and its Coachella District power service area (e.g., for additional physical improvements necessary for such a long transmission distance, which was a significant issue in 1934). IID started providing power in 1936, but has never charged its Coachella District power customers more than its Imperial District customers. Accordingly, CVWD considers the proposed use of Section 19 of the Compromise Agreement to be an inappropriate source of funding for the CVEC budget and requests that Article 6.01 be struck and removed from the By-Laws. In fact, should IID begin charging Coachella District power customers more than Imperial District power customers for the purpose as stated within these proposed By-Laws, CVWD would consider that a breach of Article 19 of the Compromise Agreement.”
About the Compromise Agreement
The Compromise Agreement is a 99 year agreement which terminates on December 31, 2031. IID is contractually obligated to continue serving power to its customers in the Coachella Valley through 2031, and to charge those customers rates that are no higher than rates charged to IID’s own district power customers. More than 60% of IID’s power customers reside within the Coachella Valley, outside IID’s own official district boundaries in Imperial County.
CVWD is a public agency governed by a five-member board of directors. The district provides domestic and irrigation water, agricultural drainage, wastewater treatment and reclamation services, regional storm water protection, groundwater management and water conservation. It serves approximately 108,000 residential and business customers across 1,000 square miles, located primarily in Riverside County, but also in portions of Imperial and San Diego counties.