Eastern Municipal Water District (EMWD)’s strong financial standing and forward-thinking financial structure has provided its ratepayers with an exceptional value and helped keep costs low.
EMWD’s strategic and responsible financial management has once again resulted in two major rating agencies — Standard & Poors and Fitch — assigning and reaffirming EMWD with a AA+ credit rating for various series of bonds. EMWD is also the holder of a AAA credit rating for its parity revenue bonds by Standard & Poors, the highest possible rating that can be assigned.
Those strong financial ratings help EMWD receive favorable financing terms and lower interest rates when financing critical infrastructure improvement and expansion projects that provide safe and reliable water, wastewater, and recycled water service to nearly 1 million customers in Riverside County.
“The Board of Directors at EMWD works hard to ensure we keep rates reasonable and avoid significant rate increases,” EMWD Board President Phil Paule said. “This stems from a vigilant responsibility of acting in the best interest with public funds.”
EMWD will hold a public hearing on June 16, 2021, to adopt a water rate increase of approximately 1.8 percent beginning January 1, 2022. EMWD is able to propose minimal increases each year in large part because of the proactive steps it has taken to reduce costs for its ratepayers.
The minimal adjustment to rates comes at a time when many water agencies throughout the state are facing financial challenges due to customer arrearages because of the ongoing global health crisis and corresponding economic downturn. However, EMWD’s sound financial approach has enabled it to continue to provide safe and reliable services to its customers with no significant impact to customer-facing services.
Some of the factors that help EMWD keep rates reasonable with minimal annual cost increases include:
- Being an early adopter of an allocation-based rate structure, which provides recovery of fixed costs through daily service charges instead of volumetric water use.
- The willingness to adopt nominal rate increases annually, instead of large rate spikes after periods of no rate adjustments, helps EMWD proactively maintain its infrastructure. This has been cited by rating agencies as a key factor in earning exceptional credit ratings.
- EMWD has an aggressive and highly successful grants and loans program, which leverages external funding opportunities to further reduce the burden of infrastructure investments on its customers.
- EMWD has invested in renewable and clean energy sources, such as solar generation facilities, which provide long-term costs savings when compared to other projected energy costs.
- EMWD’s rates are significantly below the United States Environmental Protection Agency’s water affordability threshold and its proposed rate increases is below the annual Consumer Price Index in Southern California.
“EMWD is proud of the proactive steps it has taken to provide financial stability to our organization and reasonable rates for our customers,” Paule said. “We are proud of EMWD’s accomplishments as a financially stable organization and are committed to continually act in the best interest of our ratepayers in every decision that we make.”
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