The Los Angeles Department of Water and Power has agreed to give a portion of the water it gets from the State Water Project to the region’s water wholesaler to help smaller water districts that are facing greater challenges amid a severe drought.
The State Water Project was constructed after World War II to funnel water from northern California to southern California cities and the agriculture-heavy Central Valley.
Amid persistent drought conditions, the California Department of Water Resources has warned that the state’s water network might supply no water to southern California water districts next year.
Those water districts in southern California are served by the Metropolitan Water District of Southern California, a water wholesaler that supplies water to 28 regional member agencies in Los Angeles and Ventura counties.
With the DWR warning it might cut off the spigot, MWD worked out agreements to help out the districts that would be most harmed by the move. One of those agreements was with LADWP.
“Living with limited water resources isn’t just a phase — it’s the new normal, and we have to work together as a region if we want to ensure that we can count on access to water for generations to come,” said Los Angeles Mayor Eric Garcetti during an Oct. 5 press conference held at the Los Angeles Aqueduct.
MWD’s ability and willingness to prepare for and mitigate the effects of drought and climate change on its own finances and that of its 28 member agencies factor into its AA-plus, AAA and AA-plus bond ratings from Moody’s Investors Service, S&P Global Ratings and Fitch Ratings.
Rebecca Kimitch, an MWD spokeswoman, attributed MWD’s consistently high bond ratings to high scores in areas the rating agencies consider including board governance, management, financial policies and performance, and bond covenants.
“Our investments in storage, supply-reliability projects and our demand management programs have been critical to our resilience to the impact of the previous and current drought,” she said.
While the drought has created challenges for Metropolitan and its member agencies, she said “it is only one factor among several that determines our credit ratings.”
MWD “benefits from an immense service area that includes over 300 cities across six counties within southern California,” Moody’s analysts wrote in a June piece. “Consistent finances with sound debt service coverage and liquidity levels further support a strong credit profile.”
Both California’s State Water Project and the Colorado River have experienced water shortages as a result of severe drought conditions affecting the Western United States. MWD and LADWP benefit…