Rainbow Water Completes Historic Detachment from San Diego County Water Authority

October 31, 2024

Rainbow Municipal Water District (Rainbow Water) has finalized its detachment from the San Diego County Water Authority (SDCWA), marking a significant step in its commitment to securing cost-effective and reliable water supplies for its customers. On Wednesday, October 30, Rainbow Water made a $3.2 million exit fee payment to SDCWA, the last requirement by the Local Agency Formation Commission (LAFCO) to certify Rainbow Water’s reorganization. 

Effective November 1, Rainbow Water will purchase treated water from the Eastern Municipal Water District (EMWD), shielding Rainbow Water’s customers from the looming SDCWA rate hikes of 14% in 2025 and an additional 16% proposed in 2026. New development projects in the Rainbow Water service area will also benefit, with capacity fees set to decrease by 31-48% from current levels, reflecting the elimination of previous SDCWA-imposed charges.

Rainbow Water and the neighboring Fallbrook Public Utility District (FPUD) sought this departure to protect the community from unsustainable wholesale water rate increases that have hit the agricultural sector hard. Over the past decade, agricultural sales dropped by nearly 9,000 acre-feet annually in Rainbow Water's service area alone, significantly impacting water sales revenue to the District, which impacts all customers.

From the beginning, Rainbow Water and FPUD faced numerous challenges, including securing a critical approval vote from LAFCO. Rainbow Water and FPUD first submitted detachment applications to LAFCO in March 2020. Rainbow and Fallbrook’s agricultural and residential community members rallied behind the detachment efforts, filling LAFCO hearings to encourage a Yes vote. Their commitment paid off in July 2023 when LAFCO approved the application, setting the stage for a historic public referendum. Voters in the FPUD and Rainbow service areas overwhelmingly endorsed the detachment in a November 2023 special election, even with the $15.8 million exit fee imposed by LAFCO.

The path to detachment, however, was further complicated by legal and political hurdles. SDCWA initiated litigation against Rainbow, FPUD, EMWD, and LAFCO while advocating for AB399, a legislative measure requiring detachment efforts to pass a countywide vote. Rainbow Water’s Board and leadership, however, persevered. While AB399 passed, it was not effective until after the 2023 voter referendum, making it only applicable to any future detachment efforts. A settlement was negotiated between the SDCWA, FPUD, Rainbow Water, EMWD, and LAFCO in December 2023, clearing a final path for FPUD and Rainbow Water’s departure and suspending costly litigation.

Completing the detachment also demanded swift infrastructure upgrades. While FPUD’s detachment took effect at the beginning of 2024, Rainbow Water faced the additional task of constructing three pump stations to transfer water from its existing Metropolitan Water District connections and disconnect from the SDCWA pipelines. Thanks to tireless work from Rainbow Water’s engineering and operations teams and close collaboration with project partners like Pacific Hydrotech and SDG&E, the pump stations were completed two months early, securing Rainbow Water’s detachment date and saving the district $768,000 in avoided fixed fees from SDCWA. Rainbow Water’s Board of Directors is now considering options for reinvesting these savings to benefit customers, and a final decision is expected at the Board’s special meeting on November 19, 2024.

Jake Wiley, General Manager of Rainbow Water, reflected on the journey, stating, “This detachment effort was a testament to both our community’s resilience and our commitment to doing everything possible to secure affordable water supplies. Our Board, staff, and residents came together to make this historic change, and today, we’re able to give our customers greater control over their water future.”

Beyond financial advantages, this milestone strengthens Rainbow Water customers’ representation in regional water governance. Residents will now have a greater voice in wholesale water costs, as they will have the opportunity to vote for a member of the Eastern Municipal Water District Board of Directors as well as voting for their representative on the Rainbow Water Board of Directors.

Rainbow Municipal Water District is honored to serve its community with a renewed commitment to affordable and reliable water and looks forward to a future of improved control and representation with the Eastern Municipal Water District.