San Diego County Water Issues 2010 Update

S Di R i l E i D l t C tiSan Diego Regional Economic Development CorporationSeptember 21, 2010

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Today’s PresentationDennis Cushman – San Diego County Water Authority

h b k d

Today s Presentation

Water Authority backgroundWater reliability strategy

Supply diversificationRatesRatesKey water issues

Supply challengesMWD ratesMWD ratesQSA litigationWater bond

Andrew Poat – San Diego Regional EDCAndrew Poat – San Diego Regional EDC Recycled water

Peter MacLaggan – Poseidon ResourcesCarlsbad Desalination FacilityCarlsbad Desalination Facility

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What Is the Water Authority?

Wholesale water agency g ycreated by State Legislature in 1944

24 membe agencies24 member agencies36-member board of directorsServes 3.2 million people and Se es 3 o peop e a dregion’s $174 billion economy

Service area950,000 acres97% of county’s population

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Sources of San Diego County’s Water Supply

LAKELAKESHASTA

LAKEOROVILLE

San Diego County imports ~80% of its water supply

State Water Project(Bay-Delta)

30%

water supply

30%Colorado River

50%

Local Supplies and Conservation

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and Conservation 20%

Imported Water SourcesImported Water Sources

State Water Project SuppliesColorado River Supplies

C lif i D t t fDepartment of InteriorBureau of Reclamation

California Department ofWater Resources

All American andC h ll C l

Priority 1: Palo Verde Irrigation District

Priority 2: Yuma Project

State Water ProjectContractors (27)

Metropolitan Water District of Southern California

Coachella CanalLining Projects

Priority 3a: Imperial Irrigation District

Priority 4 and 5a:Metropolitan Water District

Metropolitan Water District of Southern California

26 Other Contractors

Metropolitan Water Districtof Southern California

624 Local Retail Agencies and cities

San Diego County Water Authority

Supply DiversificationSupply Diversification

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Regional Water Supply Diversification

2010 20201991

95%

6%

7%

6%

10%

11%

5%

16% 3%3%

4%4%

10%

29%

6%

9%

10%10%

Metropolitan Water District Seawater Desalination

22%50%

Imperial Irrigation District Transfer

All American & Coachella Canal Lining

Conservation

Local Surface Water

Recycled Water

Groundwater

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Conservation Groundwater

Dry-Year Water Transfers

Quantification Settlement Agreement Q g

Colorado River QSA SuppliesQ ppImperial Irrigation District transfer

200,000 acre-feet*/year for 45 to 75 years

C l li i j tCanal-lining projects80,000 acre-feet**/year for 110 years

Key to supply diversification strategy C l li i j tstrategy

Provides 165,000 acre-feet in 2010; helps mitigate current shortage

By 2021 will provide 30% of

Canal-lining project

By 2021, will provide 30% of region’s supply

Lining the Coachella Canal

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*At full implementation in 2021** Acre-foot = 325,900 gallons

Groundwater and Recycled Water

Recycled Water 28 000 af/year today growing to

Groundwater and Recycled Water

28,000 af/year today, growing to 52,000 af/year by 2020High-quality, drought-proof water supply17 agencies in San Diego produce17 agencies in San Diego produce recycled waterPrimarily used for landscaping irrigation

Groundwater 13 000 f/ t d i t13,000 af/year today, growing to 53,000 af/year by 2020San Diego does not have significant underground storage basinsBrackish groundwater must beBrackish groundwater must be desalinatedSix local agencies have groundwater projects

Sweetwater Authority’s groundwater desalination plant

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ConservationComprehensive waterconservation programs

Conservation

conservation programs, incentives and school programs since 1990s65 000 af/year today65,000 af/year today, growing to 94,000+ by 2020C l ti iCumulative savings: more than 600,000 AF Shifting emphasis

Water efficient planting and rotating nozzleg p

from indoor tooutdoor conservation

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Seawater Desalination

Carlsbad Desalination ProjectCarlsbad Desalination ProjectProduce up to 56,000 acre-feet annuallyApproved term sheet that will lead to water purchase agreement to buy output p g y pof plant

Camp Pendleton Project56 000 to 168 000 af/year56,000 to 168,000 af/year Feasibility studies under way

Bi-national Desalination Projecth dIn conjunction with agencies in Nevada,

Arizona and MexicoStudying site in Baja California

Encina Power Station, Carlsbad

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Water Authority Rates 2011Water Authority Rates 2011

W t A th it B d d t d CY 2011 tWater Authority Board adopted CY 2011 rates following public hearing in June

Treated water rate – up 11 3% ($1 026/AF)Treated water rate up 11.3% ($1,026/AF)Untreated water rate – up 14.7% ($811/AF)

Primary drivers of rate increases:yCosts to purchase, deliver imported waterCosts for operating, maintaining and financing regional

t twater system

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Cost of Water Drives Treated Water Rate* IncreasesWater Rate* Increases

“All-in” Increase Water Authority Melded Supply

MWD 75%

All-in Increase Distribution

$104/AF

Water Authority Melded Supply Rate Increase

$65/AFTransportation 75%

($49)

Storage

p8%($8)

21%($22)

Supply62%($65)

Customer Service9%($9)

Water Authority 25%($16)

15*Municipal and Industrial Rate

Mitigating Rate Impacts –Water Authority ActionsWater Authority Actions

Current budget eliminated more than a dozen positions$2.4M reduction made mid-year in FY 2010 & 20112011Reduction in spot water purchasesRate stabilization draw – up to $10 7MRate stabilization draw up to $10.7MMWD rate challenge

Lawsuit challenging MWD’s rates and how they’re allocated

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Supply ChallengesMWD RatesMWD Rates

QSA LitigationWater BondWater Bond

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Supply Challengespp y g

Regulatory restrictionsg yFish protections limit State Water Project deliveries

Lingering effects of droughtdroughtStorage still recoveringLake Oroville – April 2010

Heading into another dry winter? (La Niña?)

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Effects of climate change

Response to Supply Challengesp pp y g

Water Shortage andWater Shortage and Drought Response Plan ImplementationImplementation

8% regional target beginning July 1 2009beginning July 1, 2009

Target in effect through June 30 2011June 30, 2011

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Region Succeeding in Saving Water

August ‘09 – July ’10 Urban Water Use

600,000

Acre-feet

12%18% below606 400

550,000

500 000

12% below ’08/09

below ’07/08

606,400561,300

500,000

450,000

495,100

400,000

2009/102008/092007/08350,000

San Diego County: 1991 vs 2010San Diego County: 1991 vs. 2010

$174

578 566$651.081.3

2.53.2

1991 20101991 2010

Water use (thousand acre-feet)

Gross Domestic Product (billions)

Jobs (millions)

Population (millions)

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Gross Domestic Product (billions) Population (millions)

MWD Rate ChallengeMWD Rate Challenge

W t A th it fil d it i J i t MWDWater Authority filed suit in June against MWD over its 2011-2012 ratesViolates California law standard practicesViolates California law, standard practicesMWD improperly overcharges for transporting water through its facilities gMWD improperly subsidizes the price of water it sells

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MWD Misallocating Its CostsMWD Misallocating Its Costs

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Impacts to Local RatepayersImpacts to Local Ratepayers

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*Based on 600,000 AF annual sales; 2021 figure includes $40B Delta fix share

Impacts on Supply ReliabilityImpacts on Supply ReliabilityBy disguising true cost f i t d tof imported water,

MWD discourages local supply development

Disincentive to pursuing conservation and local supply projectsDisincentive to transfers that require use of MWD’s facilities

These kinds of projects help protect region

Desalination membraneshelp protect region from supply shortages

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QSA LitigationQSA LitigationJanuary 2010: Superior Court ruling invalidated 13 agreementsagreements

Includes IID transfer and canal-lining agreementsRuling based on single sentence in one agreement

St t ’ bli ti t f dState’s obligation to fundSalton Sea mitigation foundunconstitutional

Water Authority and otherWater Authority and otheragencies appealed ruling

Temporary stay allowing transfers to continue

Appellate Court decision expected in 2011

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expected in 2011

All-American Canal

2012 Water Bond Summary$11.14 billion bond on Nov. 2012 ballot

2012 Water Bond Summary

$2.25 billion for Bay-Delta ecosystem restoration$3 billion for statewide surface storage$1 4 billi f W S l R li bili$1.4 billion for Water Supply Reliability$455 million for drought relief$1 785 billion for watersheds$1.785 billion for watersheds$1 billion for groundwater clean-up$1.25 billion for conservation, recycling and$1.25 billion for conservation, recycling and desalination

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2012 Water Bond Highlights for San Diego

$227 million in dedicated

2012 Water Bond Highlights for San Diego

funding$100 million for regional storage and supply reliability projects$87 million in funding for local supply reliability projects$40 million in funding for local

t h d j twatershed projects

Competitive grants for:Drought relief projectsConservation, recycling, desalinationEnvironmental protection and restorationClimate change adaptation

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2012 Water Bond Fund Categories and San Diego Co nt ’s 2020 S ppl Di e sificationSan Diego County’s 2020 Supply Diversification

$100 million for regional storage$40 million for San Diego

$1 billion for groundwater clean-up

$ gwatersheds

$1 billion for recycling and seawater desalination

Other Bond Funding:g$265 million for drought

relief projects$250 million for

conservation

$2.25 Billion for Bay Delta Ecosystem Improvements

$3 billion for new statewide surface storage

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Continuing ChallengesCo t u g C a e ges

Achieving Bay-Delta fixesAchieving Bay Delta fixes that restore reliability

Rising water ratesg

Sustaining new water use ethic

Resolving MWD and QSA legal disputesg p

Water bond passage? Bay-Delta waterways

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Recycled Water ecyc ed ate

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Carlsbad Desalination Project

Carlsbad Desalination Project

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Site Configuration

Delivery System

Project Benefits

Provide 56,000 AFY of high quality drinking waterg q y gOffset the need for an equivalent amount of imported waterImprove local water supply reliabilityProvide for long-term stewardship of Agua HediondaLagoonLagoonRestore and enhance of 66 acres of marine wetlands Fully mitigate increase in GHG emissions over baselineFully mitigate increase in GHG emissions over baseline

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Status and Timeline

Permitting and entitlements completeInitial phase of construction underwayFinalizing engineering, procurement and g g g, pconstruction contact, water purchase arrangements, and project financingProject will be fully operational 30 months after start of next phase of constructionp

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Construction Commenced - November 2009

QuestionsQuestionsQuestionsQuestions

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