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Posted on: April 2, 2021

Back to the Future: DWP "Rolls Back" Rates

Back to the Future: DWP Uses Fancy Finance Tools to Save You Money 

Final Payment of 1996 Bonds to Purchase the Water System

Big Bear Lake, CA: Thursday April 2, 2021—

In July 2021, the DWP's water rates will be reduced to less than the rates paid in June 2011.

Why? Because, the City of Big Bear Lake Department of Water and Power (the "DWP") will have enough money set aside to pay off the loans it took to buy and refinance the system more than twenty years ago.

On June 2, 1989, the City of Big Bear Lake (the "City") took over the Big Bear Water Systems of Southern California Water Company ("SCWC") after completing condemnation proceedings and obtaining a Court Order in August 1988.

In 1989, the City issued $35.2 million in municipal bonds to complete the purchase. Those bonds were refinanced in 1992 and again in 1996. The 1996 Water Revenue Refunding Bonds (the"1996 Bonds") were issued for $37.6 Million, which refinanced the water system purchase and funded water system improvements. These bonds reach maturity, their due date, in April 2022. However, on April 1, 2021, the final payment will be transferred from a reserve fund and the City and the DWP will be released of all 1996 bond obligations.

While not as cool as a DeLorean time machine, defeasance (pronounced dee-fee-zens) is a provision in a contract that voids a bond or loan on a balance sheet when the borrower sets aside cash or bonds sufficient to service the debt.

In July 2021, the DWP’s water rates will be reduced to less than the rates paid in June 2011. This will reduce the cost of water to our customers by about $1,200,000 per year or about $74 per year for the average residential customer. Currently, the average residential customer pays $558 per year. The DWP Board of Commissioners recently approved DWP’s 10-year Capital Improvement Plan (CIP). This plan specifies $32.5 million in water system improvements or $3.25 million per year. Over the last nine years, the DWP has constructed about $33 million in water system capital improvements. These improvements were funded with DWP revenue funds, low interest loans, and $7 million in grant funding. The new 10-year CIP will be funded with DWP revenues and no additional debt will be needed.

The DWP's General Manager, Reggie Lamson said, "The DWP will continue its commitment to maintaining and upgrading the water system infrastructure to ensure we meet the needs of our current and future customers, while maintaining some of the lowest water rates in San Bernardino County."

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