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IID technology cost formula revamped

February 22, 2001|By DARREN SIMON, Staff Writer

Splitting the $9 million cost of technology between the power and water departments was a source of debate during the Imperial Irrigation District board meeting this week.

By a 3-2 vote the board took an action that likely will cut the water department's share of those costs associated with the district's computer information services by more than $1 million.

In the wake of that move, the board has decided to review what is known as the falling water charge — the fee the power department pays to the water department for water used to generate electricity. That cost can reach $4 million a year.

IID officials said while the issue revolves around internal operations, the division of costs can affect service and rates for water and power customers.

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The action taken by the split vote Tuesday was to have the water department pay the same share it paid for information technology dating back to 1996 but with the added cost of the 2001 consumer price index.

That motion was made by Director Bruce Kuhn and seconded by Director Lloyd Allen and supported by Director Rudy Maldonado.

Board President Andy Horne and Director Stella Mendoza cast the votes against, stating the cost to the power department would become too great.

The debate over the cost of information technology stems from the passing of the district's budget this year and questions the farming community has raised about the benefit the water department has received from new technology.

When the district adopted this year's budget it increased the amount the water department was paying for the technology. In years past there was a 90/10 split in which power paid the 90 percent.

As part of this year's budget, water's share of the information technology costs increased to 24 percent, a move that angered the farming community, which has faced three 50-cent increases in the cost of water in the past three years and will face one more 50-cent increase next year.

Lauren Grizzle, executive director of the Imperial County Farm Bureau and the local Vegetable Growers Association, said the concern is the cost increase farmers are facing is directly tied to the costs of technology.

"It is unfair to saddle the water users with a system that was put in for the needs of (power) deregulation," Grizzle said.

IID officials have contended the cost increases farmers have faced is due less to information technology costs and more to costs tied to protecting water rights.

At the heart of the farming community's concern, Grizzle said, is the SAP business computer system the district has implemented.

That system was integrated to improve the technology used by the district for its operations.

Of the $9 million the district pays for information technology, the SAP system makes up about $3.5 million, according to Kris Fontaine, IID's chief financial officer.

Grizzle said she questions the success of the SAP system, adding farmers are being asked to pay for a system that more benefits the power department. She also said the system has not lived up to its purpose.

IID staffers said they disagree. They said the SAP has been a benefit to both the water and power departments and will become even more of a benefit in the future.

"It is providing what we need it to provide," Fontaine said, although she conceded there are still "bugs" in the system.

"This is a much bigger system and it is more complicated," Fontaine said. "It is taking longer to get to that stabilized period where everything is exactly the way we initially thought."

She said there are still issues with the printing of bills for water and power and "difficulties" with payroll.

With debate over SAP's success unresolved, Kuhn asked Tuesday that the board look at the split the water and power departments pay for information technology.

He said when the board in the mid-1990s was considering the implementation of a new system, it was concerned the purpose of the change was solely to meet the needs of power deregulation.

"It was not the need nor the want of the water department," Kuhn said, adding the board was concerned about burdening the water department with a cost geared toward power issues.

"If in fact we had to go to a new system, we didn't think it was fair for water to be encumbered," Kuhn said.

He said it was for that reason the board adopted a 90/10 split for information technology costs.

Kuhn added if the board had known a future board would alter the split to 76/24, it would not have approved the SAP system.

Kuhn said the goal of his motion Tuesday was to bring the split back to 90/10.

However, IID staffers said the board's decision to charge the water department what it paid for technology in 1996, means water will now pay about 4.5 percent for technology — about $400,000 of the $9 million total cost.

Kuhn added he was unaware the action taken by the board meant the water department would pay less than 10 percent. He said he would discuss the matter with staff today and might ask the board to revisit the issue.

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