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Home My WebLink About1998-01-13; Municipal Water District; 401; Negotiations with Metropolitan Water DistrictCARLSbAD MUNICIPAL WATER DISTHCT - AGENDA BILL & w AB# +a 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 01/05/98 15:29 TX/RX NO.2491 P.002 Jan-05-98 02:22P HILTaN BUSINESS CENTER a,18 843 5354 P-03 . . 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 Jan-OS-98 02:22P HILTDN BUSINESS CENTER s1g a43 5354 P-04 . 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 01/05/98 15:29 TX/RX NO.2491 P.004 3an-05-98 02:22P HILTON 6USINESS CENTER 83- $343 5354 P-05 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