HomeMy WebLinkAbout1998-01-13; Municipal Water District; 401; Negotiations with Metropolitan Water DistrictCARLSbAD MUNICIPAL WATER DISTHCT - AGENDA BILL & w
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MTG. 01/13/98
DEPT. CMWD
TITLE:
Update on Wheeling Negotiations with
Metropolitan Water District
CITY MGR. ?‘--
RECOMMENDED ACTION:
This is an informational update item and there is no staff recommendation.
ITEM EXPLANATION:
The key component of the proposed imperial Irrigation District (IID) water transfer to the San
Diego County Water Authority (CWA) is the physical transportation of the water from the
Colorado River to the CWA. This is proposed to be accomplished by “wheeling” the water
through the Metropolitan Water District’s (Met’s) Colorado River Aqueduct.
CWA and Met have been meeting in an attempt to negotiate the fee CWA would pay to Met to
use this aqueduct. Recently CWA and Met negotiating teams met with David Kennedy, Director
of the California Department of Water Resources. Mr. Kennedy suggested his framework for
establish a wheeling rate between CWA and Met. (copy of letter attached as Exhibit 1)
Staff will be providing a briefing regarding Mr. Kennedy’s proposal.
FISCAL IMPACT:
This is an informational item and there is no fiscal impact at this time.
EXHIBIT:
1. Copy of letter from Mr. David Kennedy.
Jan-OS-SS 02tZlP tiILT4N 6USINESS CENTER al-m 843 5354 P-02
5lhlt OF CALIFORNIA-lb!f RtSOURCLb AGENC’I PEIE W’KSON. Gownor -. T-c, ‘A.-i -- ‘.- .i.-. ..;:. . “EPARTMENT OF WATER RESOURCES
,$ NlNTtl SlRtEl C 0 @G-.X 94711:1c,
;MMCMU CA Y4236 033f
(9161653 5791
January 5‘1998
Ms. Chris Frahm, Chairperson . . . . -.
San D@o County Water Authority .-.- .._...._
3211- Sth Avenue
San Diego, California 92’;03 - _ ..*. - . .i ._.. .
Mr. Ja& Foley, Chairman
The Metropolitan Water District of Southern California
350 South Grand Avenue -1
Los Angeles. California 90054 - . . .
_..
SUBJECT: Suggestions Regarding Wheeling Rate
Your two agencies have now been negotiatiig for considerable time on
conditions under which Metropolitan would wheel water that San Ofego proposes to buy
from Imperial trrigation District. There have been many meetings and exchanges of
information and position statements. In spite of these efforts, representatives of both
agencies have expressed frustration that there is little evidence of finding common
ground for bringing the matter to resolution. In addition; the Legislature and the
Governor have expressed concern that successful development of California’s 4.4 Plan
for the Colorado River depends on early resolution of the wheeling issue.
In fight of these concerns. I thought it might be helpful if I suggested an analytical framework for resohring the wheeling issue. The framework is outlined on Table I, attached. and its accompanying page of notes.
As both agencies know from our lengthy discussions, there are at Jeast a half- dozen parameter& that interplay one with another in considering wheeling. One of the
difficulties has been organizing these parameters jnto an analytical framework that
permits examination of alternative approaches. Table I is an attempt, admittedly simplified, to show how various factors can be related and balanced. In order to move
the process forward I have induded some suggested compromise values where
appropriate.
As you can see in the Table the analysis is laid out from the viewpoint of
. examining what San Diego would pay for the transferred water under altematlve conditions in which aqueduct space either is, or is not, available to wheel the water.
There are, of course, other ways in which the wheeling issue can be looked at. One
would be to treat it as a generic wheeling issue for Metropolitan and any of its member
agencies. I have chosen to do lt from San Diego’s point of view because that is the
specific problem before us. Nevertheless, I do not see anything in the analysis that would be inconsistent with a more generic analysis.
EXHIBIT 1 ,-.. : 1
: ’ .L., 2
3 ‘Ir
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. .
Ms. Chris Frahm .---.
: -J Mr. Jack Foley January 5, 7998 . . - _ _ . -. .-. _. . . - _ .
Page Two _- ..-:...:.> .i .-_-z -i-.x r. --:i:::-. . ...’ _.. . - *
There are several key assumptions underlying the approach in Table I. First, arrangements need to be made to store conserved water (to the extent feasible) during
periods in which the aqueduct is filled with hydrologic surpluses. I belii % makes
sense for MWD to make the arrangements in terms of working with a storing entity,
paying the costs and receiving the benef&. As a practical matter, WVD would
undertake these storage arrangements if it did the IID deal.
Second, it is not possible right now to define precisely the Lake Mead operational
criteria that will produce “hydrologic surpluses.’ This issue has been discussed at great
length among the agency managers of California’s Colorado River contractors, and to a
lesser extent with representatives of the other states and the U.S. Bureau of Reclamation. The concept is that, even without a 4.4 Plan, there would be periods in
which river hydrology would produce enough water to fill the Momdo River Aqueduct.
This surplus condiion would become the reference base for considering “as ‘avaiI&bb’ opacity in the aqueduct. The specific operationef criteria that would result in these
surpluses will take some time for the states and the Bureau of Reclamation to develop.
Third, there are several issues between SD and MWD that have been discussed
within the context of the wheeling arrangements but whfch are not addressed herein.
These include water quality, the term of the agreement, integration of the transferred
supply with a regional drought management plan and governance issues.
DavM N. Kennedy Director
Attachments
cc: Members, Colorado River Board
( ‘: k. _. I’
01/05/98 15:29 TX/RX NO.2491 P.003
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.
I’---. , .i
(1)
(2)
(3)
c
. .
.._.
(4)
(51
(43)
.-.‘I.
i,_
Illustrative Calculation - Analytical Framework for Considering Whaoling
Rate and Altomative Condltlans of Space Avrileble in the Calomdo Aqueduct
I.. IC . - *-&tdlrm Per Acre-feet)
Space u Available in the
Aqueduct for IID/SD
Spaoe &Available in’the
Aqueduct for llD/SD
SD payment to IID for the conserved water
SD Payment to MVVD per MVVD rate schedule
-.
MWD credit to SO for
regional benefit - i.e.
investment MW did not
have to make
SD pays to MWD for wheeling**
tlD Credit to SD during Surplus Conditions
Net Cost to SD
- ..- -.
-- -.- .-
$250. ‘- -.- . . $250
s350 0
:_ ._
$220
0 $80
sio-- . 0
- , ,.-. --
$380 $330
All values shown are rounded, ballpark approximations For ease of comparison, iWVCl is assumed to provide power @p $30/acrefoot
.q
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tes to TW
m The $250 per acre-foot SD payment to llD for conserved water is an
approximation based on the proposed contract between SD and 110 released for
public review on December 11,1897. The actual rate is determined by a formula
keyed to Metropolitan’s rates.
(2) The $350 per acre-foot SD payment to MVVD Is the rate (rounded).for untreated
water In MwD’s current projeotiin of its rates over the next 10 years.
(3) The proposed credit to SD by MVVD is based on the assumption that MWD would have had to do a comparable IID conservation/transfer agreement as a
component of the 4.4 Plan, if San Diego had.not. Also, by SD arranging RN this
bjock of water to meat its needs, MWD does not have to develop this amount of new supply in its overall water supply program. The suggested value of $220 per
acre-foot is a little more than MWD’s most recent estimate of what lt would have
to pay IID for such an agreement, $208. 0bviousfy, there is d&agreement between MWD and both SD and IlD on this value. My suggestion of $220 is simply an attempt to compromise this issue.
(4) The wheeling rate of $80 per acre-foot is a suggested compromise behtveen various rates advocated by MWD and SD over the course of the discussions. It
t&es into account Metropolitan’s fixed system costs and the regional benefits provided by San Diego bringing conserved IID water to the region.
,.---.. (5) The proposed credit by flD to SD of $20 per acre-foot during periods in which hydrologic surplus water fills the aqueduct is a suggested variation of a term in
the IIDISD agreement. That term provides IID will contribute to costs of storing conserved water during periods of surplus.
(61 The net costs to SD, shown far Conditions A and B, indicate that during periods
in which there is surplus water (no space in the aqueduct for SD’s water), its net cost of water will be greater than MVVD’s rate and, conversely, during periods in
which space is available, SD’s net water cost will be less than MwD’s rate.
Since there is no way of knowing what the conditions of hydrologic surplus will. turn out to be, there are some upside and downside risks for both agencies in
the ultimate distribution of costs and benefits.
01/05/98 15:29 TX/RX NO.2491 P.005