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HomeMy WebLinkAbout1995-11-07; Municipal Water District; 293; Imperial Irrigation Dist. MOU w/ Water AuthorityCARLSBAD ~lNlClPAL WATER DISTRI(=T -4GENDA BILL AB # &9-3 TITLE: IMPERIAL IRRIGATION DISTRICT DEPT. Hi! MTG. 1 l/07/95 MEMORANDUM OF UNDERSTANDING WITH %iiB CITY ATTY DEPT CMWD SAN DIEGO COUNTY WATER AUTHORITY . CITY MGR. $+‘+ RECOMMENDED ACTION: This is an informational item and there is no staff recommendation. ITEM EXPLANATION: Introduction Recently the San Diego County Water Authority (SDCWA) entered into a memorandum of understanding (MOU) with the Imperial Irrigation District (IID). This MOU is to provide for up to six months of continued negotiations to develop a water transfer agreement between SDCWA and IID for up to 500,000 acre feet of conserved water per year. To put this quantity of water in perspective, SDCWA water sales to its member agencies were approximately 393,000 acre feet in 199394. The MOU provides that the parties may agree to negotiate with other parties for the acquisition of a water supply but not in any manner which would interfere with the MOU and the planned transfer agreement. However, the MOU leaves a lot to further negotiation: the amount of water; the term of the agreement; the price of water; and an enforcement mechanism. Backclround on Met’s lnteclrated Resource Plan Met began an Integrated Resources Planning (IRP) process in June of 1993. This process has led to the development of a coordinated and affordable approach to meeting the region’s present and future needs for dependable supplies of high quality water. As a result of this planning process; Met is committing to: 0 Meeting wholesale water service 90% of the time and never providing less than 80% of full service wholesale demands l Six month emergency supplies for Southern California l Pursuing IRP Preferred Mix of additional local and imported supplies that meets reliability goals and minimizes rate impacts to water customers 0 Implementing Water Management Programs and Incentives that encourage Local Resource Development l Upgrading treatment to keep up with drinking water standards 0 Reviewing IRP every three years and making adjustments as necessary Page 2 of Agenda Bill No. 2 9,3 Met is relying on: 0 A Delta Fix completed by the Year 2010 0 A full Colorado River Aqueduct (1.2 Million Acre Feet) 0 A CIP to meet reliability goals, meet new, more stringent water quality standards, and upgrade and maintain existing systems 0 Cost-effective Water Transfers to help mitigate shortages 0 Local Agency commitment to the IRP 0 Common Water Management Objectives with Local Agencies The IRP does encourage Met member agencies to pursue development of local supplies such as reclaimed water, groundwater recovery, desalination, etc. These supplies are intended to supplement the present imported water supplies that Met has available. The SDCWA states that pursuit of this water transfer follows what is recommended in Met’s IRP. However, Met believes that this transfer amounts to more than a simple supplement to SDCWA’s present supplies. Metropolitan’s Aareement With Imperial lrrlaatlon District Prior to SDCWA and IID agreeing to this MOU, Met was talking (or in negotiations) with IID. The prevalent understanding is that IID was offering to sell water, conserved by its ag customers, to Met for $400 per acre foot. Met’s position was that any water conserved was water that was to remain in the River (Colorado) and that, in accordance with the Law of the River, the conserved water flows to the next priority user. In this way, Met was planning to secure water from the River without having to pay directly for it but, at the same time, help IID pay for capital programs that would conserve water. This is something that Met and IID have agreed to before. That agreement provided that Met would provide financing for certain capital projects for water conservation and pay direct and indirect costs of such construction in exchange for the transfer of the estimated water conserved, approximately 100,000 acre feet of water per year for a 35year term of the contract. IID also entered into an agreement with Met to transfer approximately 70,000 acre feet of conserved water made available from lining a portion of the All-American canal. Subsequent To Metrooolitan And lmoerlal lrrlaation District Since these agreements between Met and IID, IID has adopted a resolution regarding additional water transfers. This resolution states that: 0 The ownership of water rights would stay with IID which holds the rights in trust for the landowners; 0 The market value of water, rather than the cost of conservation measures, would fix the price and the price could be adjusted for inflation; - Page 3 of Agenda Bill No. a??,? 0 Water would come primarily from agreements with landowners for reduced deliveries in exchange for receipt of a portion of the revenues from the transfer agreement. SDCWA-IID Memorandum-of-Understandinq SDCWA’s position is that Met broke off talks (and/or negotiations) with IID and that SDCWA is in a position to discuss a water transfer with IID. SDCWA directors that sit as Met directors made a presentation to the Met Board on Thursday, October 5, regarding SDCWA’s memorandum-of-understanding with IID. The reaction of Met’s Board was subdued and polite, however, there were some concerns and reservations expressed. First of all, Met is concerned that its CIP status would be affected by an SDCWA-IID water transfer. For example, the size of the Domenigoni Reservoir project, that is being constructed to provide the six-month water storage (as mentioned in the IRP) for emergencies and drought situations, could be affected. Pipeline 6 that is intended to bring additional water into San Diego County, to satisfy future water demands, could also be affected and possibly eliminated. Met Board members are not sure of the legality of securing water from IID through water transfers because of the Law of the River and the Seven Party Agreement. The Seven Party Agreement allocates water from the Colorado River to water right holders within California. Agreements in 1946 and 1947 between Met, the United States, and the City of San Diego provided for the consolidation of the Met and the San Diego water allocations as a result of the decision to include San Diego in the Metropolitan Water District. The contention is that because the SDCWA has no water rights on the Colorado River and that they are not a party in the Seven Party Agreement, the SDCWA does not have standing to transfer water to San Diego County. In order for the SDCWA to transfer any water from IID, the SDCWA would have to obtain the sign-off from the signatories of the Seven Party Agreement which includes the Metropolitan Water District. This could prove difficult if Met objects to this transfer or if this transfer causes difficulties with Met’s CIP and how costs are allocated to the other member agencies. Due to these concerns, the Met Board requested that the SDCWA provide answers to these and other issues as soon as possible. Another issue the SDCWA have to look into as a result of this MOU (in addition to the quantity of water transferred, the cost of the water, and the term of the agreement) is how to convey the water to San Diego County. There are two potential ways to convey the water from Imperial to San Diego. One is to construct an aqueduct from Imperial to San Diego and the other way would be to use the existing Colorado River aqueduct. Constructing a new aqueduct would cost upwards of a billion dollars and require pumping facilities to lift the water over the mountains between Imperial and San Diego. The cost of operating this system would prove quite expensive since costs would include the cost of power for those pumping facilities. - Page 4 of Agenda Bill No. &93 Using the present Colorado River aqueduct would also present some problems. Met is presently committed to running the aqueduct at capacity to take advantage of the surplus water in the river and also because Arizona has not taken their full entitlement. This means that there is presently no capacity in the aqueduct to carry additional IID transfer water. Even if there was capacity in the aqueduct, Met has yet to develop what is known as a “wheeling policy.” California Water Code requires water agencies to make available up to 70 percent of otherwise unused capacity in their water facilities to transport water as long as certain criteria are met and fair compensation is paid for the use. Past discussions, at Met, regarding development of this wheeling policy resulted in disagreement over what is “fair compensation.” SDCWA has indicated that they want to remain as a member of the Met and continue to purchase some water from Met to supplement the water realized from this proposed water transfer. This does raise some additional questions. 0 What will be the cost of that supplemented water? 0 What will be SDCWA’s share in the cost of Met’s CIP? Discussion CMWD staff has additional concerns regarding this potential water transfer that needs to be addressed by the SDCWA. These concerns are as follows: l Since this additional supply could give San Diego County practically 100 percent reliability, what will happen to SDCWA’s member agencies’ plans for continued development of local projects such as groundwater recovery and reclaimed water? 0 If it is decided to continue these local projects, what incentive will Met have to continue to offer rebates? Considering that the SDCWA will be purchasing much less water from Met, if any, what revenue source will be available to Met to continue to offer rebates to SDCWA? 0 How does this potential for a water transfer from IID relate to the SDCWA’s Emergency Water Storage project currently in the EIR process? With the increased costs of this project and the probable increase in water rates should the proposed water transfer become reality, what would the new rates be and would they be affordable to the residential customers and also the agricultural customers? CMWD staff believes, at this time, that while the water transfer itself is a good idea, it is a mistake for SDCWA to pursue this water transfer. The SDCWA has been a part of the Metropolitan Water District of Southern California since about 1944. The SDCWA gave the Met its 112,000 acre feet of Colorado River entitlement and has relied on Met to secure the water needed for most of southern California. Met has been aggressive in pursuing contracts with irrigation districts to keep the Colorado River Aqueduct full. To date, Met has been able to acquire this water at the River by paying for conservation measures and land fallowing agreements. It seems counterproductive for the SDCWA to enter into negotiations for Page 5 of Agenda Bill No. &! 97 transfer of water that Met could be pursuing. In effect, we end up in competition with ourselves. Even if the SDCWA was to be successful in a transfer agreement, the same problem exists that existed in 1944. We may have the water but we don’t have a way to get it to San Diego. We may be better served in encouraging Met to pursue this water transfer. FISCAL IMPACT: This is an informational item only and therefore has no fiscal impact at this time.