HomeMy WebLinkAbout1994-08-24; Municipal Water District; 0827.01; Review of Metropolitan's New Rate StructureCARLSBAD MUNICIPAL WATER DISTRICT - AGENDA BILL
CITY MGR. ___ IEPT. m-
tECOMMENDED ACTION:
This is an informational item for discussion. No action is required at this time.
lTEM EXPLANATION:
A new rate structure has been developed by Metropolitan to provide for stable water rates while
securing management incentives, and distributing costs in an equitable manner. This new rate
structure was approved by the Metropolitan Board at its December, 1993 meeting. The new
rate structure consists of the current nonintenuptiile water rate structure with seasonal storage
service, a readiness-to-serve charge to collect fixed costs associated with debt service for capital
facilities needed to meet reliability goals, a new demand charge, a treated water peaking charge,
and a connection maintenance charge.
The new demand charge will be implemented in fiscal year 1995 - 96. Member Agencies and
Subagencies may establish mechanisms, including a connection fee, to collect funds to pay
anticipated new demand charges outside of their water rates. Under California law, a nexus
study relating the developer fee and the facilities supported by the fee is required for local
agencies that intend to impose fees on new development. Although Metropolitan is not
required by law to prepare such a study, the Metropolitan Board has directed staff to prepare
the nexus study to provide documentation supporting the allocation and calculation of the new
demand charge that Member Agencies and Subagencies may need in preparation of their own
nexus studies supporting connection fees to be assessed on new development.
The attached draft nexus report demonstrates the relationship between the charge, the method
of collection, and the capital facilities to be funded from the revenues derived through the
charge. Initially, the new demand charge is projected to be $1,000 per acre-foot (AF) which
is lower than the full present value of the anticipated cost of the new capital facilities. The new
demand charge is expected to increase over five years to more closely reflect the full cost of new
capacity to serve new demands. As shown in the draft nexus report, with the current
Intermediate Mix capital improvement program, the full cost is approximately $2,550 per AF.
The charge will be calculated and reviewed annually to reflect any changes in the capital
projects and programs designed to accommodate new demands.
The new Demand Charge and the nexus study are designed to provide member agencies a wide
range of flexiiility as they pass on the charge. In this manner the resulting impacts on the final
consumer will reflect local requirements. But, Metropolitan is committed to working with our
Member Agencies and to provide support as they determine the most appropriate way to
implement this charge.
A second draft of this report will be produced in September and will incorporate feedback from
our Member Agencies and the experience Metropolitan acquires as Member Agencies begin to
implement mechanisms to recover the charge. The third and final version of this first nexus
report will be revised to reflect the Capital Improvement Program resulting from the next phase
of the Integrated Resource Plan and is scheduled for completion in January 1995.
This item will be reviewed and discussed at the Commission meeting.
..
‘I
Section 1
Introduction
I .I Purpose of Study
Metropolitan has developed a new water rate structure that provides for more stable
water rates while securing revenues, retaining operating flexibility and resource
management incentives, and distributing costs in an equitable manner. Thts new rate
structure consists of the following components:
Water Rate using the current basic commodity charge (noninterruptible
water rate structure with seasonal storage service and interim agricultural
water);
Readiness-to-Serve Charge to recover the debt service not paid from taxes
necessary to meet reliability and quality needs of existing demands;
New Demand Charge to recover the capital costs associated with
accommodating new demands on Metropolitan’s system;
Treated Water Peaking Charge to encourage agencies that meet their peak
summer demands with Metropolitan’s treatment facilities to change their
behavior or more equitably share in the cost of facilities to meet their
needs; and a
Connection Maintenunce Charge to recover a portion of the costs associated
with maintaining Metropolitan service connections.
These rates provide most of the revenue of Metropolitan. However, Metropolitan
also receives revenue from the following sources:
Ad valorem taxes, which Metropolitan collects on property withn the
&strict for the purposes of carrying on the operations and paying the
obligations of the district; and
rn Hydropower safes, which Metropolitan generates during the operation of
the water distribution system.
Ths study addresses only the New Demand Charge. By recovering the costs
associated with accommodating new demands on Metropolitan, the New Demand
Charge in effect requires each agency responsible for increased demands to help pay
the cost of facilities necessary to serve anticipated new demands. Member Agencies
and their Subagencies may, at their option, establish mechanisms such as connection
fees to collect the New Demand Charges outside of their water rates.
1-1
c
Section 1
introduction
This study is furnished to establish the nexus (connection) between the New
Demand Charge and the costs for new facilities to service new demands on
Metropolitan’s system. In doing so, this study documents the allocation of a portion
of Metropolitan’s Capital Improvement Program costs to projections of new
demands.
Under California law, a local agency may impose a fee targeted at new development
only if it first establishes the connection between the development and the facilities
to be provided. The agency must also show that the amount of the fee does not
exceed the cost of the proportionate amount of the facilities necessary to serve the
new development. This connection usually is established through preparation of a
nexus study.
Metropolitan does not propose to directly levy a connection fee or other charge on
new development. The purpose of this study is to provide the documentation about
the New Demand Charge that Member Agencies and Subagencies may need in
preparation of their nexus studies.
This study will be reviewed annually and updated as required whenever there are
significant changes in the facility programs and demand projections.
1.2 Organization of Study
Section 1 of this study introduces the concept of the New Demand Charge and its
purpose, and provides background information on Metropolitan, its Member
Agencies, and availability of water supplies. Section 2 describes historic water use
and methodology for forecasting future water use. Section 3 describes the Capital
Improvement Program and lists costs allocated to the New Demand Charge. Section
4 describes how the New Demand Charge is calculated.
1.3 Overview of the New Demand Charge
The New Demand Charge will be imposed as a per acrdot charge on increased
n Metropolitan’s distribution system. The charge is intended to ’
recover the corresponding capital costs of the projects or portions of projects needed
to service new demands. Fundamentally, the charge is equal to Metropolitan’s costs
of meeting new demands divided by the projected regional increase in demand.
The basic steps in determining the New Demand Charge are as follows:
Determine the base water demands from which future increases in
demands will be measured; -
Estimate the increase in regional water demands, based on projections of
long-term demographics from adopted regional growth management plans;
1-2
Section 7
lnfmducfion
Determine whch projects or portions of projects in Metropolitan’s
Capital Improvement Program are needed to serve the projected increases
in water demand;
Estimate the capital costs for the new facilities needed to serve the new
demands; and
Calculate the New Demand Charge as presented in Section 4 of this
study.
The New Demand Charge will be implemented in fiscal year 1995-96. This study
evaluates the New Demand Charge over a 25-year period, from fiscal year 1995-1996
through 2019-2020.
1.4 Background
The Metropolitan Water District of Southem California
Metropolitan was created in 1928 to provide supplemental water to the cities and
communities of Southern California. Metropolitan’s 5,153 square-mile service area
includes most urbanized portions of Los Angeles, Orange, Riverside, San
Bernardino, San Diego, and Ventura counties. Nearly 16 million people-half the
population of California-live in Metropolitan’s service area. Metropolitan provides
about 60 percent of the water used in Southern California.
Since its formation, Metropolitan has providedhimported w water to
supplement the local supplies available to the people and economy of Southern
California. Metropolitan relies on two sources of water supply: the State Water
Project, which carries water from the Sacramento-San Joaquin Delta; and
Metropolitan’s Colorado River Aqueduct.
Metropolitan’s mission is to continue to provide reliable water supplies to meet the
water needs of the region at the lowest possible cost and in an environmentally
responsible manner. In recent years, constraints on the amount of imported water
available to Metropolitan combined with increasing costs of water resources
development, more stringent water and wastewater quality requirements, and
growing environmental concerns have led Metropolitan to assume a broader
responsibility for sound water management across Southern California.
.d !M&
Metropolitan and its Member Agencies have assumed a leadership role in developing
innovative approaches to the efficient management of water resources. An Integrated
Resource Planning (IRP) effort has been developed to promote a cost-effective and
responsible balance of local supply development, regional water supply projects, and
facility improvements. As part of this resource planning effort, Metropolitan is
increasing the available supply of imported water through large-scale expansions of
its transmission, storage, and treatment facilities.
1-3
Section 1 Introduction
1 Member Agencies of Metropolitan
~
~ I ’ ,
Metropolitan is composed of 27 Member Agencies-14 cities, 12 municipal water
districts, and one county water authority. Metropolitan supplies its Member
Agencies with treated and untreated water. The Member Agencies and Subagencies
in turn combine it with local water resources for delivery to their customers.
Member Agencies vary in their reliance on Metropolitan; some depend on
Metropolitan for vimally all their water, while others use Metropolitan’s water
only during peak periods (periods of high demand), for groundwater replenishment,
and/or as a backup supply.
~ Availability of Water Supplies
The Board of Directors subsequently adopted goals that define methods of
accomplishing Metropolitan’s mission and achieving a reliable supply of hgh-quality
~ water.
Southern California has a wide array of water supply resources available to meet the
water needs of the region. These resources consist of both local and imported
supplies. Local supplies include groundwater and surface water runoff, wastewater
reclamation, groundwater and ocean desalination, groundwater conjunctive use
programs, and’water conservation. Imported supplies include deliveries from the
State Water Project, Colorado River Aqueduct, and water transfers.
The Board of Directors expressed Metropolitan’s commitment to maintain a balance
of fixed and variable revenue sources; adequately consider the environmental effects
and appropriate mitigation of its activities; operate in a cost-effective manner; recruit
and retain a qualified staff that reflects the diversity of the service area; maintain a
safe and healthful working environment; vigorously protect Metropolitan’s legal 1
Virtually all of these resources appear worthwhile when considered individually.
However, their full implementation would result in duplicated efforts, unnecessary
costs, and unacceptable water rate increases. To prevent this, Metropolitan’s IEW
process has evaluated the feasible combinations of resources in terms of water
supply reliability, costs, risk, environmental and institutional concerns, and
financing. Metropolitan’s proposed Capital Improvement Program reflects the
facilities necessary to serve the schedule and magnitude of required imported water
deliveries as determined through the IRP process.
Metropolitan’s Mission Statement and Goals
In 1992, Metropolitan’s Board of Directors adopted the following mission statement:
The mission of the Metropolitan Water District of Southern California is to provide its
service area with adequate and reliable supplies of high-quality water to meet present
and future. needs in an environmentally and economically responsible way.
14
Section I
lntmduction
interests; and maintain adequate systems of internal controls, including an
independent audit function.
Reliability Goal
To accomplish its mission statement with regard to water supply reliability,
Metropolitan’s Board of Directors adopted the following goal:
Metropolitan will provtde 100 percent of full service wholesale demands to its Member
Agencies 90 percent of the time. During adverse hydrologic conditions, such as a repeat
of the 1991 drought, Metropolitan will never provide less than 80 percent of full
service demands to its Memk Agencies.
This reliability goal expresses Metropolitan’s objective of achieving a measurable
overall performance standard. Although specified as a standard for wholesale water
supply, it fully accounts for local resource management alternatives that directly
reduce the demands for Metropolitan’s imported water supplies. The reliability goal
has guided the subsequent IRP and Capital Improvement Program activities at
Metropolitan and has defined the minimum level of service upon which Member
Agencies can rely in their own planning process.
Metropolitan has pledged to develop, construct, and operate the facilities necessary
to achieve its reliability goal in a cost-effective manner. The costs associated with
achieving this reliability goal for new demands on Metropolitan’s system will be
recovered through the New Demand Charge.
Metropolitan is simultaneously confronted with the challenges of operating and
maintaining an aging physical system. The current distribution system cannot
reliably deliver the supplies required to serve existing demands under adverse
hydrologic conditions. Therefore, a significant pan of the proposed Capital
Improvement Program is designed to increase the supply reliability of the system to
service existing demands. It is intended that these costs be recovered through the
Readiness-to-Serve Charge. The separation of these two costs is documented in this
repon.
1 -5
Section 2
Water Use
2.1 Historic Water Use
Regional Water Use
Metropolitan tracks total regional water use through its water saies records and
through water use reports prepared by the Member Agencies at the end of each
fiscal year. These combined data show that total regional water use in
Metropolitan’s service area increased 32 percent during the 1980s-from 3.0 million
acre-feet in 1980 to 4.0 million acre-feet in 1990. Most of this increase was due to
growing urban demands, which increased 37 percent, while agricultural water use
increased only 1 percent.
With the onset of the economic recession in late 1990 an
mandatory -...__ drought rationing in 1991, total regionalder&& rapidly declined. By
1992, total regional demands had decreased 18 percent from their 1990 level, to 3.2
million acre-feet. Slightly less than half of this reduction can be attributed to the
recession, with the remainder attributable to extreme wet weather and continued
drought conservation. In 1993, demands increased slightly as lingering drought
conservation behavior began to diminish.
Metropolitan Water Use
Demand on Metropolitan is the total regional demand less local water produced
from groundwater, surface water, reclaimed water, and water imported through the
Los Angeles Aqueduct by the City of Los Angeles.
As indicated by Metropolitan’s water sales records, demands on Metropolitan in-
creased significantly during the 1980s. In 1980, Metropolitan supplied approximately
1.3 million acre-feet of the region’s total water demand. In 1990, Metropolitan’s
deliveries had grown to a record high of 2.5 million acre-feet. In 1991, the sixth year
of a severe drought, Metropolitan fell short of meeting demand by about 800,000
acre-feet.
As with the total regional demands, the demands on Metropolitan have decreased in
recent years from the 1990 level. Demands in fiscal year 1992 of about 1.8 million
acre-feet are considered below normal due to below-average temperatures, above-
average rainfall, and the continued effects of the economic recession and drought-
related conservation. Demands on Metropolitan in 1993 rose slightly to about 1.9
million acre-feet.
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Section 2
Water Use
Base Average Metropolitan Water Use
The New Demand Charge is based on the increase in water purchases above a base
average. To minimize year-to-year variations due to drought conservation, water
shortages, and economic conditions, water purchases will be determined by averag-
ing the most current four years of water sales.
The base average reflects the expected normal demands for each Member Agency. It
is based on the higher of either (1) the four-year water sales average from 1989
through 1992, or (2) the three-year water sales average from 1989 through 1991.
These years capture both high and low water sale years for Metropolitan. With the
exception of two Member Agencies, the three-year water sales averages are greater
than the four-year averages because they exclude the below-normal water sales that
occurred during fiscal year 1992. Metropolitan considers water sales in fiscal year
1992 an aberration and believes optionally eliminating them more fairly represents
the Member Agencies’s average use of Metropolitan water.
Table 2-1 compares the four-year water sales average and the three-year average by
Member Agency. The last column in Table 2-1 shows the higher of the two that
will be used as the base in the New Demand Charge. The base average of 2.17
million acre-feet closely matches the expected demands on Metropolitan’s system, as
predicted through statistical water demand forecasting for normal weather and
economic conditions. This eve1 of deliveries through Metropolitan’s distribution
system that would occur i
current normal demands.
e existing system were fully capable of reliably meeting tY 2.2 Projected Water Demands
Methodology
Planning for water supply reliability requires detailed knowledge of the region and
the factors that influence its water use characteristics. Metropolitan projects water
demands for the region by incorporating forecasts of population, housing, jobs, and
income from the adopted regional growth management plans provided by the
Southern California Association of Governments (SCAG) and the San Diego Associ-
ation of Governments (SANDAG). Currently, Metropolitan references the Draft
1993 Regional Comprehensive Plan developed by SCAG and the Preliminary Series
8 forecasts issued by SANDAG.
The demographic factors affecting water use include the following:
Family Size. Increases in family size increases household water use. However,
because a significant amount of household water use is fixed (such as land-
scaping), water use per capita actually decreases as family size expands, and
vice versa.
2-2
Table 2-1
New Demand Charge Base
(acre-feet)
Base Base
Member Agency Four-Year Three-Year New Demand
Sales"' Sales'" Charge Base
City of Anaheim
City of Beverly Hills
City of Burbank
Calleguas MWD
Central Basin MWD
Chino Basin MWD
Coastal MWD
City of Compton
Eastern MWD
Foothill MWD
City of Fullerton
City of Glendale
Las Virgenes MWD
City of Long Beach '
City of Los Angeles
MWD of Orange County
City of Pasadena
San Diego County Water A
City of San Fernando
City of San Marino
City of Santa Ana
City of Santa Monica
Three Valleys MWD
City of Torrance
ithority
Upper San Gabriel Valley MWD
West Basin MWD
Western MWD of Riverside County
Total
23,066
13,350
20,256
96,821
108,834
76,396
41,646
4,849
56,867
9,361
11,121
25,683
18,223
42,135
334,558
228,684
19,277
522,863
753
1,219
14,632
7,991
68,020
20,072
71,598
165,792
72,972
24,928
13,614
20,446
99,025
17 5,869
76,950
43,091
4,591
57,696
9,610
12,261
25,599
18,525
42,576
358,449
242,429
21,363
553 , 543
903
1,287
15,840
8,889
69,637
20,140
71,899
167,187
77,260
24,928
13,614
20,446
99,025
1 15,869
76,950
43,091
4,849
57,696
9,610
12,261
25,683
18,525
42,576
358,449
242,429
21,363
5 5 3,543
903
1,287
15,840
8,889
69,637
20,140
71,899
167,187
77,260
2,077,040 2,173,606 2.1 73.947
(1 1
(2)
(3)
Average of Fiscal Years 1989-90 through 1992-93.
Average of Fiscal Years 1989-90 through 1991-92.
Water taken under Metropolitan's one-time drought storage agreements has been subtracted from
these water sales.
Section 2
Water Use
Housing Mix Single-family households typically use more water than multi-
family households because of additional water using appliances and more
outdoor water use per capita.
Income. Increases in income tend to translate into additional water using
appliances and greater outdoor water use, both of which increase per capita
water use.
Indushy Mix Increases in water-intensive industries (e.g., manufacturing that
require washing or cooling) can increase per capita water use. Increases in
industries such as finance decrease per capita water use.
Inland Growth. Metropolitan’s service area spans coastal, inland, and desert
climate zones. Much of the growth in housing and development is projected to
be in the inland and desert zones (e+, Riverside and San Bernardino counties),
which increases overall per capita water use.
Other factors that influence water use include the following:
rn Water Consmation. Long-term water conservation efforts decrease per capita
water use.
rn Price. Increases in water prices tend to decrease per capita water use.
Metropolitan projects water demands for the enure region by incorporating these
demographc factors into an econometric demand model known as MWD-MAIN
(Municipal and Industrial Needs). This model was developed by the U.S. Army
Corps of Engineers, Institute for Water Resources, in the early 1970s for use
throughout the United States. Consultants for Metropolitan calibrated it to match
Southern California conditions.
In addition, Metropolitan uses an Integrated Resource Planning Simulation Model
(IRPSIM) to simulate the effects of different hydrologic and climatic conditions on
future supply and demand. IRPSIM uses 70 years of climatic data to estimate the
impact on projected agricultural, municipal, and industrial demands for the entire
region, and impacts on local and imported water supplies. IRPSIM then determines
the resultant water demands on Metropolitan.
Demographic Trends
Population
Between 1980 and 1990 the population in Metropolitan’s service area increased 25
percent from 12.1 million to 15.1 million. During this period Metropolitan’s service
area accounted for over 50 percent of the state’s population. The recent economic
recession and an expected decrease in birth rates has slowed the annud average rate
of population increase in the region from 2.4 percent during the 1980s to an
expected rate of 1.5 percent between 1990 and 2010. Although the rate of population
2-3
Section 2
Water Use
increase is expected to slow, over 233,000 people per year will be added to the
region’s population between 1990 and 2010. At this rate, regional population will
reach 17.6 million by year 2000, and 19.7 million by year 2010. Metropolitan’s
planning horizon currently extends to year 2020 when population is expected to
reach 21.7 million (Figure 2-1).
In addition to slowing the rate of population increase, the recession has also had an
impact on the components of population increase. The poor job market is the
primary reason that net migration, which was the largest component of annual
increase during the 1980s, has dropped off. Figure 2-2 illustrates hstoric and
estimated annual rates of population increase between 1990 and 2020.
Housing
In Metropolitan’s service area, occupied households increased at an average annual
rate of 80,000-from 4.3 million in 1980 to 5.1 million in 1990. During this same
period the average family size increased from 2.79 persons per household to 2.96
persons per household. Multi-family housing grew at a faster rate than single-family
housing in the 1980s, resulting in an increasing share of total households being made
up of multi-family households. In 1980, multi-family households accounted for 42
percent of total households, increasing to 44 percent by 1990.
In the short term, the recent recession has had a major impact on the housing
market. Residential building permits in Southern California, a leading indicator of
housing starts, have fallen 78 percent from an annual peak of 162,000 in 1988 to an
estimated low of 35,000 in 1993. However, both the Construction Industry Research
Board and the University of California Los Angeles Business Forecasting Project
have forecast a modest recovery in residential building permits for 1994.
In general, the trends in housing that were witnessed during the 1980s are projected
to carry out through year 2010 as total households in Metropolitan’s service area
increase 30 percent-from 5.1 million in 1990 to 6.6 million in year 2010. By 2010,
multi-family households will make up 46 percent of total housing. Family size is
projected to peak in year 2000 at 3.01 persons per household and then gradually
decline to 2.98 persons per household by year 2010. Even though the demographic
trends of increasing multi-family share and increasing household size are working to
slow the rate of increase in residential water use, forecasts of water demand reveal
that residential water use will remain the largest component of urban water use in
Metropolitan’s service area and will likely increase its share from current levels.
Table 2-2 summarizes trends in housing in Metropolitan’s service area.
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Section 2
Water Use
Single-Family Households
(millions)
Multi-Family Households
(millions)
Total Households
(millions)
Family Sire
(persons per household)
Table 2-2 Regional Housing Trends
1980 1990 2000 2010 2020
2.52 2.85 3.18 3.55 3.93
1.82 225 2.65 3.07 3.41
4.34 5.1 5.83 6.62 7.34
2.79 2.96 3.01 2.98 2.96
Jobs
Total jobs in Metropolitan’s service area increased at an average annual rate of 2.7
percent-from 6.0 million in 1980 (56 percent of total jobs in the state) to 7.6
million by 1990 (55 percent of total jobs in the state). The fastest growing sectors of
the economy during this period were services (7.9 percent annually) and
construction (3.9 percent annually). Manufacturing jobs were one of the slowest
growing sectors during the 1980’s, increasing an average of 0.1 percent a year.
The severity and duration of the recent recession has had a tremendous impact on
both the’ state’s job base and the job base in Metropolitan’s service area. Southern
California has experienced job losses because of its traditionally volatile construction
industry and the added impact of defense cutbacks on the large share of defense
contractors and aerospace firms that are located in Southern California. These two
unique factors, coupled with the recessionary pressures of down-sizing and increased
competition, have reduced the job base in Metropolitan’s service area by an
estimated 610,000 jobs since 1990. Job losses and the slow growth in housing caused
by the recession have significantly reduced regional water use since 1990.
Jobs are expected to begin to increase by 1995. By year 2010, total jobs are expected
to increase. 30 percent-from 7.6 million in 1990 to 9.8 million. This growth reflects
an average annual increase of 1.5 percent. Future job growth will be slower than
that experienced during the 1980s’ with the fastest growing sectors being services
(2.5 percent annually) and retail trade (2.0 percent annually). The manufacturing
industry’s share of the job base is expected to continue to decline gradually after the
recession through year 2010, decreasing 0.1 percent a year. Table 2-3 shows
commercial and industrial jobs in Metropolitan’s service area.
2-5
.
Commercial Jobs
Section 2 Wafer Use
1980 1990 2010
4.58 6.17 8.45
Table 2-3
Regional Jobs Data
Total Non-Farm Jobs 5.89 7.49 9.74
Industrial Jobs 1 1.31 1 1.32 I 1.29 I
Demand Forecasts
Based on the demographic trends and estimates of local water supplies provided by
the Member Agencies, total regional water demands and demands on Metropolitan
were projected through the year 2020. The total water use in Metropolitan’s service
area is projected to increase from 4.0 million acre-feet in 1990 to 5.0 million acre-
feet in 2020, assuming normal weather and full implementation of conservation
practices. Under drier year conditions, which occur 10 percent of the time, regional
demands are projected to be 6.5 million acre-feet in the year 2020.
Local water supplies, includmg groundwater, reclamation, and groundwater recovery
projects, are expected to increase from 1.50 million acre-feet in 1990 to about 2.20
million acrefeet by year 2020. Resulting demands for Metropolitan’s imported water
are expected to increase from 2.50 million acre-feet in 1990 to 2.87 million acre-feet
-y year 2020, assuming normal weather and hydrology. However,
because 1990 represented an above-normal weather demand, a normalized base
demand was used to estimate the growth in demand. The normalized base demand
for Metropolitan is 2.17 million acre-feet. Therefore, the growth in demand for
Metropolitan from current conditions to the future represents an increase of 695,000
acre-feet. Table 24 compares the normalized base demand to the projected normal
demand in year 2020 for each Member Agency.
Although normal year conditions were used in the calculation of the New Demand
Charge, many of the facility improvements of Metropolitan’s proposed Capital
Improvement Program are sized and timed to meet above-normal demand
conditions. Projections at a drier year condition indicate demands on Metropolitan
could reach 3.36 million acre-feet in the year 2020, a 17 percent increase. wJ(\pp/
2-6
Table 2-4
Projected New Demands on Metropolitan
(acre-feet)
Projected Projected
Charge Base Demand"' Demands
Member Agency New Demand Year 2020 New
City of Anaheim
City of Beverly Hills
City of Burbank
Calleguas MWD
Central Basin MWD
Chino Basin MWD
Coastal MWD
City of Compton
Eastern MWD
Foothill MWD
City of Fullerton
City of Glendale
Las Virgenes MWD
City of Long Beach
City of Los Angeles
MWD of Orange County
City of Pasadena
San Diego County Water Authority
City of San Fernando
City of San Marino
City of Santa Ana
City of Santa Monica
Three Valleys MWD
City of Torrance
Upper San Gabriel Valley MWD
West Basin MWD
Western MWD of Riverside Countv
Total
24,928
1 3,614
20,446
99,025
11 5,869
76,950
43,09 1
4,849
57,696
9,610
12,261
25,683
18,525
42,576
3 58,449
242,429
21,363
553,543
903
1,287
15,840
8,889
69,637
20,140
71,899
167,187
77,260
45,302
15,407
24,473
148,215
80,563
120,471
63,693
6,111
1 25,549
1 9,280
13,083
24,903
28,576
44,67 1
380,607
325,349
32,564
81 2,139
1,549
1,377
23,239
11,161
106,958
24,014
67,68 1
109,483
21 2.624
20,373
1,793
4,027
49,190
0
43,52 1
23,602
1,262
67,853
9,670
822
0
10,051
2,095
22,158
82,920
11,201
258,596
646
90
7,399
2,272
37,321
3,874
0
0
135,364
2,173,947 2,869,039 695.092
11) Normal-year conditions.
i-
1 3.2 Allocation to New Demand Charge
I Section 3
Capital Improvement Program
Each project in the CIP was evaluated to determine whether it replaces or rehabili-
tates a facility, constructs new facilities to service new demands, or some
combination of both. Costs of replacing or rehabilitating existing facilities were
excluded from the New Demand Charge.
I
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3.7 Purpose of Capital Improvement Program
Metropolitan periodically updates a Capital Improvement Program (CIP) to guide its
planning of new facility construction and rehabilitation of existing facilities. ,
This plan has two objectives:
To improve reliability and to maintain existing delivery and support
facilities; and To increase the ability to provide water.
Part of Metropolitan's CIP is to maintain and improve the system and supply
reliability for existing demands in conjunction with other water management
programs. In a dry year, it is estimated Metropolitan can depend on approximately
1.5 million acre-feet of imported water supply (about 600,000 acre-feet from the
Colorado River Aqueduct, 700,000 acre-feet from the State Water Project, and
200,000 acre-feet from existing storage). This supply is less than the current normal
demand of 2.17 &on acre-feet, indicating an immediate need to increase reliable
supplies for existing demands on the system.
The other part of the CIP is to increase the supply reliability for future demands in
conjunction with other water management programs. As described in Section 2,
normal water demands on Metropolitan are expected to increase to 2.87 million
acre-feet in a dry year.
Some of the projects contained in Metropolitan's fiscal year 1994/95 CIP are listed
in Table 3-1. Projects intended to improve existing system reliability and rehabilitate
facilities are grouped at the heading "Total Reliability/Rehabilitation/
Administrative Services" and are not shown individually. Only projects expected to
be completed in fiscal year 1995/96 or later are included. Table 3-1 also shows the
escalated, estimated annual expenditures for the CIP from fiscal year 1995/96 to
fiscal year 2019/20. Cost estimates were prepared by Metropolitan using standard
construction cost estimating procedures.
3- 1
F
B
e
I Table 3-2 I
!
!obi San Mepa Rpeline No.6 19% 81%
I West Valley Area Study 27% 73%
West Valley Project 27% ~ 73% Total West Valley 27% 73%
Pknning Division
Cost Allocation Summary
(Bored on IntermOQate * IIWettmont Mix - 6/94) Without Contingencies
Perris/Sanlacinto Area Study Perris Filtrahon Plant
Perris Filtration Plant Expansion
Desalinabon Demonstration Prolect
Total Penis Rltrcrtion Plant
Total Desalination
TOTAL UP floor Nexus Study)
I
otal Reti&lHy/RehaWAdmln. Service I 100% 0%
0% j 100%
0% j 100% 0%' 100%
0% 100%
0%' 100%
OX ?DO%
54.2% 45.8%
Total Domenlgonl Rerewdr 62% 38%
/Total lnkmd Feeder 24% 76%
Section 3
Capital lmprovement Program
As noted above, some projects that rehabilitate existing facilities also increase the
ability to service new demands. For example, due to more stringent water quality
regulations, the amount of water flow that can be processed by the Jensen Filtration
Plant decreased to 540 cubic feet per second (cfs). However, existing peak demands
are 850 cfs. Expansion No. 1 will add 620 ds of capacity, with half of that
expansion (310 cfs) allowing the plant to meet existing demands and half for future
demands.
The allocation between existing demand and new demand is shown in Table 3-2.
That portion of the project costs found to service new demands is allocated to the
New Demand Charge. Table 3-3 shows these costs by year for each project.
3.3 Project Descriptions
Each project in the CIP was evaluated to determine whether it serves existing
demands or serves new demands. Projects intended to rehabilitate existing facilities
or provide adrmnistrative services for the Metropolitan system were excluded from
the New Demand Charge, because they are required whether or not any additional
demands are met from the Metropolitan system. Other major projects in the CIP
are described below.
Treated Water Distribution Projects
The following two projects extend the treated water distribution system.
Allen-McColloch Pipeline Purchase
The Allen-McColloch Pipeline is a treated water line constructed by Municipal
Water District of Orange County that is being purchased by Metropolitan as an
extension of regional water delivery capacity to consumers in Orange County.
Allocation of this project is 100 percent for existing demand because the line
currently conveys Metropolitan water to existing demand.
South Orange County Pipeline - Joint Participation
The South Orange County Pipeline is a treated water line constructed by Municipal
Water District of Orange County that is being purchased by Metropolitan as an
extension of regional water delivery capacity to consumers in Orange County.
Allocation of ths project is 100 percent for existing demand because the line
currently conveys Metropolitan water to existing demand.
Water Quality and Treatment Projects
,-
The following projects rehabilitate existing filtration plants, meet the requirements
of various treatment regulations, and/or increase the ability to service new demands.
3-2
.
Section 3
Capital lmpmwement Ptugram
I Metropolitan operates five regional filtration plants. Water demands on these
treatment plants will generally be higher in the summer and in dry years. Seasonal
and dry year peak demands are used for allocating water quality and treatment
projects because those projects are sized to meet these peak demands. ~
Some of the filtration plants cannot puri;fy as much water as they have in the past
because of more stringent water quality regulations. These regulations and new
demands have required Metropolitan to rehabilitate and expand some of the existing
filtration plants. In the following water quality and treatment projects, those
projects or portions of projects required to bring the plants back up to its historic
peak capacity (before the more stringent water quality regulations became effective)
are allocated to existing demands. Projects associated with filtration capacity beyond
historic peak demands are allocated to future demands. Historic peak demands on
existing plants are utilized rather than plant design capacity because at times historic
peak flows have exceeded the designed plant capacity. Using hstoric peak demands
instead of historic average demands results in a smaller percentage of the project's
cost being allocated to the New Demand Charge.
All Facilities - Discharge Elimination
This project identifies and implements discharge systems to comply with
regulations. All filtration plants are affected by these new rules.
To allocate this filtration plant project, Metropolitan first determined the current
demand on the filtration plants. This demand was then compared to filtration plant
capacity.' Dividing existing demands (in cfs of filtration capacity) by filtration plant
capacity shows the percentage portion of the project to be utilized for current
requirements. The remaining portion of the project is the portion allocated to serve
anticipated new demand.
Q?-b
In equation form, the allocation is as follows:
Jensen Plant:
Existing Peak Demand = 850 cfs
Capacity with Expansion #1 = 1,160 cfs
Existing Peak Demand = 690 cfs
Capacity = 800 cfs
Existing Peak Demand = 800 cfs
Capacity = 800 cfs
Existing Peak Demand = 160 cfs
Capacity with Expansion #2 = 500 cfs
Existing Peak Demand = 600 cfs
Capacity with Expansion #3 = 800 cfs
Weymouth Plant:
Diemer Plant:
Mills Plant:
Skinner Plant:
3-3
Section 3
Capital Improvement Program
A. Allocation to Existing Demand:
=
=
= 75 percent
(Sum of Existing Peak Demands) 4 (Sum of Capacities)
(850 + 690 + 800 + 160 + 600) Cfs i
(1,160 + 800 + 800 + 500 + 800) cfs
B. Allomion to New Demand = 25 percent
All Filtration Plants 6 Distribution System - Chemical Spill Containment
This project minimizes the chance of contamination in the event of a chemical spill.
Allocation of this project, as all projects common to all fdtration plants, is 75
percent to existing demand and 25 percent to new demand.
All Filtration Plants - Oxidation Retrofit Program
This project evaluates the use of ozone as a disinfectant to reduce disinfection
byproducts in Metropolitan’s system.
Allocation of this project, as all projects common to all filtration plants, is 75
percent to existing demand and 25 percent to new demand.
Diemer and Weymouth Filtration Plants - Install Emergency Generators
This project ensures that the plants continue to operate during extended power
outages.
To allocate this filtration plant project, Metropolitan first determined the current
demand on the filtration plants. This demand was then compared to filtration plant
capacity. Dividing existing demands (in cfs of filtration capacity) by filtration plant
capacity shows the percentage portion of the project to be utilized for current
requirements. The remaining portion of the project is the portion allocated to serve
anticipated new demand.
In equation form, the allocation is as follows:
Diemer Plant:
Existing Peak Demand = 800 cfs
Capacity = 800 cfs
Existing Peak Demand = 690 cfs
Capacity - 800 cfs
Weymouth Plant:
A. Allocation to Existing Demand:
= (Sum of Existing Peak Demands) i (Sum of Capacities)
= (800 + 690) cfs i (800 + 800) cfs
= 93 percent
.-
a.
Section 3
Capital Improvement Progmm
B. Allocation to New Demand = 7 percent
Diemer Filtration Plant - Miscellaneous Site Improvements
Several Capital Improvement Projects to maintain and modify existing equipment
are planned for the Diemer plant.
To allocate this filtration plant project, Metropolitan first determined the current
demand on the filtration plant. This demand was then compared to filtration plant
capacity. Because the Diemer plant is already fully utilized by existing demands,
allocation of these projects is 100 percent to existing demand.
Diemer, Weymouth & Jensen Filtration Plants - Sludge Handling Study
This project investigates mechanical sludge dewatering procedures for the Diemer,
Weymouth & Jensen Plants.
To allocate this filtration plant project, Metropolitan first determined the current
demand on the filtration plants. This demand was then compared to filtration plant
capacity. Dividing existing demands (in cfs of filtration capacity) by fdtration plant
capacity shows the percentage portion of the project to be utilized for current
requirements. The remaining portion of the project is the portion allocated to serve
anticipated new demand.
In equation form, the allocation is as follows:
Diemer Plant:
Existing Peak Demand = 800 cfs
Capacity = 800 cfs
Existing Peak Demand = 690 cfs
Capacity = 800 cfs
Existing Peak Demand = 850 cfs
Capacity with Expansion #1 = 1,160 cfs
Weymouth Plant:
Jensen Plant:
A. Allocation to Existing Demand:
= (Sum of Existing Peak Demands) + (Sum of Capacities)
= 85 percent
= (800 + 690 + 850) cfs + (800 + 800 + 1,160) cfs
B. Allocation to New Demand = 15 percent
Filter Plants, Distribution System, and Colorado River Aqueduct - BacMow
Prevention Assemblies
This project minimizes the opportunity for crosstonnections with contaminants
that may be present in the plant. It is required to comply with water quality
regulations. Allocation of this project is 100 percent to existing demand.
3-5
Section 3
Capital lrnprovement Program
Jensen filtration Plant Expansion No. 7
This project expands the capacity of the Jensen plant to compensate for the loss of
filtration capacity resulting from implementation of more stringent water quality
regulations.
To allocate this filtration plant project, Metropolitan first determined the filtration
capacity that was lost due to the regulations. This loss was then compared to the
capacity of the filtration plant expansion project. Dividing the loss of plant capacity
by the capacity of the expansion project shows the percentage portion of the project
to be utilized for current requirements. The remaining portion of the project is the
portion allocated to serve anticipated new demand.
In equation form, the allocation is as follows:
Historic Capacity = 850 cfs
Current Capacity = 540 cfs
Lost Capacity due to regulations
I: (H~storic Capacity) - (Current Capacity)
= 850 CfS - 540 Cfs
= 310ds
Total Capacity of Jensen Filtration Plant with Expansion #1 = 1,160
Capacity of the Jensen Filtration Plant Expansion #1 - (Capacity with Expansion) - (Current Capacity) - 620 cfs
1,160 CfS - 540 ds
A. Allocation to Existing Demand
= (Lost Capacity) i (Capacity of Expansion #1)
= 310 cfs + 620 cfs - 50 percent
B. Allocation to New Demand = 50 percent
Jensen Filtration Plant - Replace Filter Media
This project replaces the filter media.
To allocate this filtration plant project, Metropolitan first determined the current
demand on the filtration plant. This demand was then compared to filtration plant
capacity. Since the plant has operated at its capacity, allocation of ths project is 100
percent to existing demand.
Lake Penis Pumpback Expansion No. 3
This project would expand the existing pump station that pumps Colorado River
Aqueduct water to Lake Perris. The expansion would be entirely for future demand.
Allocation of ths project to future demand is 100 percent.
3-6
.
Section 3
Capital Improvement Program
Mills Filtration Plant - Expansion No. 2
This project expands the capacity of the Mills plant to compensate for the loss of
filtration capacity resulting from implementation of more stringent water quality
regulations.
To allocate this filtration plant project, Metropolitan first determined the filtration
capacity that was lost due to the regulations. Ths loss was then compared to the
capacity of the filtration plant expansion project. Dividing the loss of plant capacity
by the capacity of the expansion project shows the percentage portion of the project
to be utilized for current requirements. The remaining portion of the project is the
portion allocated to serve anticipated new demand.
In equation form, the allocation is as follows:
Historic Capacity = 240 cfs
Current Capacity = 170 cfs
Lost Capacity due to Regulations
= (H~storic Capacity) - (Current Capacity)
= 70 cf~
= 240 CfS - 170 CfS
Total Capacity of Mills Filtration Plant with Expansion #2 5 500
Capacity of the Mills Filtration Plant Expansion 12
= (Capacity with Expansion) - (Current Capacity)
F 500 CfS - 170 cfs
= 330 Cfs
A. Allocation to Existing Demand
= (Lost Capacity) i (Capacity of Expansion #2)
= 70 cfs i 330 cfs
= 20 percent
B. Allocation to New Demand = 80 percent
Mills Filtration Plant - Landfill
This project evaluates sizes, sites, and constructs a landfill for sludge from the Mills
Plant.
To allocate this filtration plant project, Metropolitan first determined the current
demand on the filtration plant. This demand was then compared to filtration plant
capacity. Dividing existing demands (in cfs of filtration capacity) by filtration plant
capacity shows the percentage portion of the project to be utilized for current
requirements. The remaining portion of the project is the portion allocated to serve
anticipated new demand.
In equation form, the allocation is as follows:
3-7
Section 3
Capital lmprovement Program .
i Existing Peak Demand = 160 cfs
Capacity with Expansion #2 = 500 cfs ' A. Allocation to Existing Demand
= (Existing Peak Demand) i (Capacity with Expansion #2) - 160 cfs i 500 cfs
= 33 percent I
B. Allocation to New Demand - 67 percent
San Joaguin Reservoir Improvement Project
This project covers the existing reservoir as required to meet the Safe Drirdung
Water Act. Allocation of this project is 100 percent to existing demand.
Skinner Filtration Plant - Miscellaneous Site Improvements
Several Capital Improvement Projects to maintain and modify existing equipment
are planned for the Skinner plant.
To allocate this filtration plant project, Metropolitan first determined the current
demand on the fdtration plant. This demand was then compared to filtration plant
capacity. Dividing existing demands (in cfs of filtration capacity) by filtration plant
capacity shows the percentage portion of the project to be utilized for current
requirements. The remaining portion of the project is the portion allocated to serve
anticipated new demand.
In equation form, the allocation is as follows:
Existing Peak Demand - 600 cfs
Capacity = 800 cfs
A. Allocation to Existing Demand
= Existing Peak Demand i Capacity - 600 cfs i 800 cfs
= 75 percent
B. Allocation to New Demand = 25 percent
Skinner filtration Plant - Emergency Power Generating System
This project installs an emergency power generating system at the Skinner plant.
Allocations are the same as those described under the previous Skinner Filtration
Plant project.
3-8
r Section 3 Capital Improvement Program
Skinner Filtration Plant - install Effluent Adjustable Weir Slide Gates
This project installs adjustable effluent weir slide gates to improve filter cleaning.
Allocations are the same as those described under the previous Shnner Filtration
Plant project.
Skinner Filtration Plant - Landfill
This project designs and constructs a landfill for sludge from the Skinner Filtration
Plant.
Allocations are the same as described under the previous Skinner Filtration Plant
project.
Skinner Fiffrafion Plant - Module 7-3, Electrical Conduit and Wireways
Replacement
The project replaces the electrical conduit and wireways in 54 filters on Modules 1-3
at the Skinner Plant.
Allocations are the same as described under the previous Skinner Filtration Plant
project.
Skinner Filtration Plant - Modules 4, 5, & 6 Sedimentation Basins
The project designs and constructs sedimentation basins at the Skinner plant to
comply with anticipated water quality regulations.
Allocations are the same as described under the previous Skinner Filtration Plant
project.
Warehouse & Storage Building at Mills Filtration Plant
This project designs and constructs a warehouse and storage building at the Mills
plant to accommodate the increase number of personnel resulting from
consolidation of facilities.
Allocations are the same as described under the previous Mills Filtration Plant
project.
Water Quality - Demonstration Scale Testing
This study evaluates the use of ozone as a disinfectant to reduce disinfection
byproducts in Metropolitan’s system.
Allocation of this project, as all projects common to all filtration plants, is 75
percent to existing demand and 25 percent to new demand.
3-9
Section 3
Capital Improvement Program
Water Qualify - Laboratory Expansion
This project enlarges the water quality laboratory.
Allocation of this project, as all projects common to all filtration plants, is 75
percent to existing demand and 25 percent to new demand.
Weymouth Filtmtion Plant - Miscellaneous Site lrnprovernents
Several Capital Improvement Projects to maintain and modify existing equipment
are planned for the Weymouth plant.
To allocate this filtration plant project, Metropolitan first determined the current
demand on the filtration plant. This demand was then compared to filtration plant
capacity. Dividing existing demands (in cfs of filtration capacity) by filtration plant
capacity shows the percentage portion of the project to be utilized for current
requirements. The remaining portion of the project is the portion allocated to serve
anticipated new demand.
In equation form, the allocation is as follows:
Existing Peak Demand = 690 cfs
Capacity = 800 cfs
A. Allocation to Existing Demand
= (Existing Peak Demand) i (Capacity)
= 690 cfs t 800 cfs
= 86 percent
B. Allocation to New Demand = 14 percent
Weymouth, Dierner, Skinner Filtration Ptants - Ferric Chloride Retrofit
This project installs ferric chloride chemical feed systems at the Weymouth, Diemer,
and Skinner plants. The new chemical feed systems will allow for more efficient
coagulation of different water qualities.
To allocate this filtration plant project, Metropolitan first determined the current
demand on the filtration plants. This demand was then compared to filtration plant
capacity. Dividing existing demands (in cfs of filtration capacity) by filtration plant
capacity shows the percentage portion of the project to be utilized for current
requirements. The remaining portion of the project is the portion allocated to serve
anticipated new demand.
In equation form, the allocation is as follows:
3-1 0
Section 3
Capital Improvement Program
Weymouth Plant:
Existing Peak Demand- 690 cfs
Capacity = 800 cfs
Existing Peak Demand = 800 cfs
Diemer Plant:
Capacity - 800 cfs
Existing Peak Demand = 600 cfs
Capacity with Expansion #3 = 800 cfs
Skinner Plant:
A. Allocation to Existing Demand:
= (Sum of Existing Peak Demands) + (Sum of Capacities)
= (690 + 800 + 600) + (800 + 800 + 800)
= 87 percent
B. Allocation to New Demand = 13 percent
Dornenigoni Valley Reservoir
This water supply storage project provides seasonal, drought carryover, and
emergency storage. It meets a portion of the water storage needs for Metropolitan.
Emergency storage requirements assume imported water systems would be unable to
deliver water for six months, but local supplies would continue at full production.
Emergency storage is sized to supplement local supplies for six months assuming
that water demands are 75 percent of normal water demands.
Carryover storage allows Metropolitan to meet its reliability goal during drought or
other periods of water shortage. It was calculated using statistical analysis of 70 years
of hydrologic data. Withdrawals from storage for those hydrologic scenarios was
used to determine carryover storage requirements.
Seasonal shift storage allows Metropolitan to meet peak summertime water demands
with water from
capacity. It was
demand.
To allocate this reservoir project between new and existing demands, Metropolitan
first calculated current requirements for emergency, drought carryover, and seasonal
storage in the reservoir. Ths total was then compared to projected storage
requirements (including emergency, drought carryover, and seasonal storage) in the
year 2020. Dividing current storage requirements (in acre-feet of storage capacity) by
year 2020 storage requirements shows the percentage portion of the portion
allocated to serve new demands.
In equation form, the allocation is as follows:
Current storage requirements - Emergency + Drought Carryover + Seasonal
= 293,000 + 200,000 + 0
3-1 1
.
Section 3
Capital lmpruvement Program
Year 2020 storage requirements
= 430,000 + 275,000 + 95,000
A. Allocation to Existing Demand
= (Current Storage Requirements) + (Year 2020 Storage Requirements)
= 493,000 i 800,000
= 62 percent
B. Allocation to New Demand .I 38 percent
inland Feeder
This water supply conveyance project delivers water from the east branch of the
State Water Project to the Colorado River Aqueduct.
To allocate this feeder project between new and existing demands, Metropolitan first
calculated expected annual delivery requirements. This requirement was then
compared to actual delivery capacity. The amount of delivery capacity available
beyond the delivery needs is available to improve the service reliability, Dividing the
reliability capacity (in acrefeet per year) by the delivery capacity shows the
percentage portion of the ponion allocated to serve existing demands.
In equation form, the allocation is as follows:
Maximum annual delivery capacity - 725,000 acre-feet
Expected average annual deliveries = 550,000 acre-feet
Available annual reliability capacity for existing demand
= Delivery Capacity - Expected Deliveries
= (725,000 - 550,000) - 175,000 acre-feet
A. Allocation to Existing Demand
= (Reliability Capacity) i (Delivery Capacity)
= (175,000) + (725,000)
= 24 percent
B. Allocation to New Demand = 76 percent
San Diego Pipeline No. 6
This pipeline constructs a new pipeline to increase flows from Metropolitan to San
Diego County.
To allocate this feeder project between new and existing demands, Metropolitan first
calculated expected annual delivery requirements. Ths requirement was then
compared to actual delivery capacity. The amount of delivery capacity available
beyond the delivery needs is available to improve the service reliability. Dividing the
reliability capacity (in acre-feet per year) by the delivery capacity shows the
percentage portion of the portion allocated to serve existing demands.
3-12
.-
Section 3
Capital lmpmvernent Program
In equation form, the allocation is as follows:
Maximum annual delivery capacity - 360,000 acre-feet
Expected average annual deliveries = 290,000 acre-feet
Available annual reliability capacity for existing demand
= Delivery Capacity - Expected Deliveries
= (360,000 - 290,000) = 70,000 acre-feet
A, Allocation to Existing Demand
(Reliability Capacity) i (Delivery Capacity)
= (70,000) + (360,000)
= 19 percent
B. Allocation to New Demand = 81 percent
West Valley Project
This project installs a new pipeline to increase flows from Metropolitan to western
Los Angeles and southern Ventura counties.
To allocate this feeder project between new and existing demands, Metropolitan first
calculated expected annual delivery requirements. This requirement was then
compared to actual delivery capacity. The amount of delivery capacity available
beyond the delivery needs is available to improve the service reliability. Dividing the
reliability capacity (in acre-feet per year) by the delivery capacity shows the
percentage portion of the portion allocated to serve existing demands.
In equation form, the allocation is as follows:
Maximum annual delivery capacity = 220,000 acre-feet
Expected average annual deliveries = 160,000 acre-feet per year
Available reliability capacity for existing demand
= Delivery capacity - Expected Deliveries
= (220,000 - 160,000) = 60,000 acre-feet per year
A. Allocation to Existing Demand
= (Reliability Capacity) t (Delivery Capacity)
= 27 percent
= (60,000) t (220,000)
B. Allocation to New Demand = 73 percent
Central Pool Augmentation
These projects install a new pipeline, tunnels, and water filtration plant to increase
the flows from Metropolitan to Orange and western Riverside counties.
3-1 3
Section 3
Capita/ lrnprovement Program
Central Pool Augmentation Filtration Plant - Site Acquisition
This project identifies and acquires critically needed lands for the Central Pool
Augmentation Filtration Plant.
Allocation of this project to new demand is 100 percent.
Central Pool Augmentation Filtration Plant
The Central Pool Augmentation Study has currently identified the need for
additional treated water capacity and is evaluating alternative sites for the Central
Pool Augmentation Filtration Plant.
Allocation of this project to new demand is 100 percent.
Central Pool A ugmen tafion Plant Expansion
The Integrated Resources Planning Study has identified the future need for enlarging
the Central Pool Augmentation Filtration Plant.
Allocation of this project to new demand is 100 percent.
Central Pool Augmentation Tunnel and Pipeline
Ths project installs a new pipeline and tunnel which, in conjunction with the
Central Pool Augmentation Filtration Plant, will increase flows from Metropolitan
to Orange County.
To allocate this feeder project between new and existing demands, Metropolitan first
calculated expected annual delivery requirements. Ths requirement was then
compared to amd delivery capacity. The amount of delivery capacity available
beyond the delivery needs is available to improve the service reliability. Dividing the
reliability capacity (in acre-feet per year) by the delivery capacity shows the
percentage portion of the portion allocated to serve existing demands.
In equation form, the allocation is as follows:
AMU~ delivery capacity = 580,000 acre-feet
Expected annual deliveries = 480,000 acre-feet
Available annual reliability capacity for existing demand
= Delivery Capacity - Expected Deliveries
= (580,000 - 480,000) = 100,000 acre-feet
A. Allocation to Existing Demand
= (Reliability Capacity) + (Delivery Capacity)
= (100,000) i (580,000)
= 17 percent
B. Allocation to New Demand - 83 percent
3-14
Section 3 Capital Improvement Program
Groundwater Storage
The following projects provide groundwater storage to help meet the water delivery
reliability goals of Metropolitan during droughts or other periods of water supply
shortage.
Chino Basin Groundwater Storage Program
This groundwater storage project is located in San Bernardino County.
To allocate this conjunctive use project between new and existing demands,
Metropolitan first calculated its current requirements for drought carryover storage.
This total was then compared to projected drought carryover storage requirements
in the year 2020. Dividing current storage requirements (in acre-feet of storage
capacity) by year 2020 storage requirements shows the percentage portion of the
portion allocated to serve new demands.
In equation form, the allocation is as follows:
Existing carryover storage requirements = 200,000 acre-feet
Year 2020 carryover storage requirements = 300,000 acre-feet
A. Allocation to Existing Demand
= (Existing Carryover Storage Requirements) i (Year 2020 Carryover
Storage Requirements)
= 67 percent
' = 200,000 i 300,000
€3. Allocation to New Demand = 33 percent
Main San Gabriel Basin Groundwater Storage Program
Ths groundwater storage project is located in Los Angeles County.
To allocate this conjunctive use project between new and existing demands,
Metropolitan first calculated its current requirements for drought carryover storage.
This total was then compared to projected drought carryover storage requirements
in the year 2020. Dividing current storage requirements (in acre-feet of storage
capacity) by year 2020 storage requirements shows the percentage portion of the
portion allocated to serve new demands.
In equation form, the allocation is as follows:
Current carryover storage requirements = 200,000 acre-feet
Year 2020 carryover storage requirements = 300,000 acre-feet
A. Allocation to Existing Demand
3-1 5
Section 3
Capital Improvement Program
= Current carryover storage requirements + Year 2020 carryover storage
requirements
= 200,000 + 300,000 - 67 percent
B. Allocation to New Demand = 33 percent
Perris Filtration Plant
This project installs a new filtration plant to increase the flows from Metropolitan
to Riverside County.
PerristSan Jacinto Area Study
This project evaluates alternative sites for the Perris Filtration Plant, which would
be constructed to meet new demand. Allocation of this project is 100 percent to
new demand.
Penis Filtration Plant
The Perris and San Jacinto Area Study has currently identified the need for
additional treated water capacity and is evaluating alternative sites for the Perris
Filtration Plant. Allocation of thts project to new demand is 100 percent.
Desalination Demonstration Project
This project designs and constructs a state-of-the-art 5 million gallon per day
seawater desalination demonstration plant to provide a proven design and operating
hstory to undertake a full-scale 50/100 million gallon per day seawater desalination
project.
3-1 6
-.
Section 4
New Demand Charge
The New Demand Charge is based on water sales above a historic base. As
explained in Section 2, the new demand charge base is based on sales to each
Member Agency in recent fiscal years, averaged to even out hgh and low demands.
The three or four-year average listed as the New Demand Charge Base for each
Member Agency on Table 2-1 has been adjusted to subtract from the base water use
water taken under the onetime drought storage agreements (OTDS) because such
sales do not reflect normal demands.
Each fiscal year the average of each Member Agency's most recent four years of
water purchases from Metropolitan will be compared to the base to determine
whether a New Demand Charge has been incurred. This rolling four-year average
(in which a new year's sales are added and the oldest year's information is dropped
when the annual charge is calculated) has also been selected to even out highs and
lows resulting from climatic, hydrologic, economic and other factors in each year.
This average will also be adjusted to factor out sales for long-term storage purposes
to more accurately reflect normal demands on Metropolitan. The historic rolling
four-year average would be adjusted as follows:
(1) Water taken under the Cooperative Storage Program (COOP) will be
subtracted through April 12, 1994.
(2) Water taken under long-term seasonal storage service (LTSSS), cyclic
storage, and the 1993 Demonstration Storage Program (DEMO) will be
subtracted from the water sales calculations through fiscal year 1993-94.
(3) Contractual LTSSS and COOP (starting April 13, 1994) deliveries will be
subtracted from the New Demand Charge calculation during the year of
delivery but will be added in the year of use.
The adjusted rolling four-year average will be compared to the base amount and the
volume of water above the base amount will result in an onetime New Demand
Charge. When a Member Agency exceeds its base amount, the new rolling four-year
average will become its base, allowing water use to vary within that new rolling
average without any additional charges. For example, if a Member Agency's New
Demand Charge Base is 100,000 acre-feet (AF) and its rolling four year-average of
historic water sales (adjusted as described above) is 90,000 AF, it will incur no New
Demand Charge. If its rolling four-year average of historic water purchases is
105,000 AF, it will incur a New Demand Charge in an amount equal to the amount
of new demand (5,000 AF) multiplied by the per-acre-foot amount of the New
Demand Charge for that fiscal year (discussed below). At that point, its New
Demand Charge base will be reset at 105,000 AF and no further New Demand
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c.
1
1
Through purchases of water supplied by Metropolitan, new users will pay a portion
of the costs of financing Metropolitan’s capital facilities (including facilities to serve
new demand) because some debt service costs are included in the basic water rate.
To avoid double payment by these users of the same capital costs, the present value
of annual expenditures for facilities for new demand ($2.11 billion) must be offset by
a credit equal to the present value of the new users’s share of capital costs included
in the water rate. To determine this amount, Metropolitan’s projected average water
rates (Column 4) are calculated for the planning period. The new demand capital
portion included in the water rate (Column 5) is then determined, based on the
proportion of the new demand debt service to the total water revenue requirement
each year.
Section 4
New Demand Charge
The new demand capital portion of the water rate is multiplied by the projected
annual acre-feet of new demand water sales (Column 6) to determine the annual new
demand capital contribution (Column 7). Column 8 shows the present value of
Column 7, determined using the same discount factor shown in Column 2. The
present value of the total capital credit to the new demand charges totals
$310 million.
The present value of the projected facilities cost is reduced by the present value of
the credit for future capital contributions, for a revised present value cost of
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The New Demand Charge will be implemented in fiscal year 1995-96. The initial
New Demand Charge is expected to be $1,000 per acre-foot of new demand. For the
first four years, &IS charge is projected to be set lower than the total present value
cost of new facilities to service new demands to minimize the financial impact and
Demand Charge is expected to increase over five years to the unit New Demand
Charge calculated on Table 4-1 and explained above. Ths is the amount determined
to represent the reasonable cost (per acre-foot of projected new demands) of facilities
necessary to serve new demands. The New Demand Charge will be calculated and
reviewed annually to reflect any changes in the capital projects and programs
designed to accommodate new demands, and will be established each year by the
Board, based on these calculations. Once incurred by a Member Agency, the New
Demand Charge may be collected over a 15-year period, which corresponds to the
average weighted life of Metropolitan's outstanding long-term debt. The amount
collected each year will be adjusted to include carrying costs calculated at
Metropolitan's weighted average cost of capital.
~ I allow the Member Agencies time to adjust to the new charge. The actual New i
,
'
'
1
b
Section 4
New Demand Charge
$1.8 billion. This new cost is divided by the amount of projected new system
capacity to be provided to serve new demands by the future facilities, measured in
acre-feet per year (see Table 2-4). New capacity in the year 2020 is estimated to be
695,092 acre-feet per year. As a result, the present value cost of providing new
facilities necessary for projected new demands is projected to equal $2,550 per acre-
foot.
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