Southern California Water Agency Asks Customers to Use 20% Less

The Metropolitan Water District, the Los Angeles-based utility for 19 million people in Southern California, said it would ask customers to voluntarily reduce water use by 20 percent amid a drought.

“Hopefully it will rain, but who knows?” Governor Jerry Brown said at a news conference in Los Angeles. “We have to be on alert. We have to look at the facts as we see them.”

Jeffrey Kightlinger, general manager of the district, said the agency will double its conservation budget to $40 million this year.

About two-thirds of California is in “extreme” or “exceptional” drought, the two most severe categories, according to the U.S. Drought Monitor, a federal website. Nine percent of the state -- all in the San Joaquin Valley -- is considered exceptional, the website said. The drought is the most severe in California since at least 1977, Brown and Kightlinger said.

The third consecutive year of abnormally low precipitation in California is likely to depress revenue for the Metropolitan Water District of Southern California and other local agencies, Moody’s Investors Service said in a Dec. 5 note. Metropolitan, the largest U.S. supplier of treated water, is rated Aa1, second-highest, the company said.

It had $4.4 billion in long-term debt as of June 30, according to data compiled by Bloomberg.

Kightlinger said the Metropolitan Water District has both cash and water reserves to cushion it against the effect of the drought.

“We are seen as very stable,” he said. “The ratings agencies have remarked on the fact that we have storage capacity. We have reserves.”

To contact the reporter on this story: James Nash in Los Angeles at jnash24@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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