Loading...
HomeMy WebLinkAbout2000-11-14; Municipal Water District; 493; MOU w/ Water Authority for the ESPAB# 493 MTG. 1 l/14/00 DEPT. CMWD .*. ..- - I CARLSBAD MUNICIPAL WATER DISTRICT -AGENDA TITLE: AUTHORIZATION TO SIGN A MEMORANDUM OF UNDERSTANDING (MOU) WITH THE SAN DIEGO COUNTY WATER AUTHORITY FOR THE EMERGENCY STORAGE PROJECT (ESP) CITY .,I?.$-@ RECOMMENDED ACTION: Approve Resolution m authorizing the Executive Director, or his designee, to sign the Memorandum of Understanding (MOU) with the San Diego County Water Authority for the Emergency Storage Project (ESP). ITEM EXPLANATION: At the March 9, 2000 Special meeting of the San Diego County Water Authority Board of Directors, the Board directed Authority staff to proceed with the ESP as stated in current agreements with Olivenhain MWD and the City of San Diego, and based on the economic assumptions and cost allocation of the Authority’s current rate structure. At the April Board meeting, Authority staff presented a modified payment formula based on the existing rate structure. Under this formula each member agency would continue to pay their non-commodity charges (stand-by charge, capacity charge, property tax and IAC) on the existing basis and a percentage of those revenues would be specifically dedicated to the ESP. The remaining ESP revenue requirement would be met by member agencies through a fixed charge based on a 5 year historic rolling average of their annual imported water demands or throughput in the Authority’s system. This MOU serves as a prelude to contracts with those member agencies of the Water Authority that want contractual arrangements. Until a long-term agreement is reached between the Authority and CMWD, the parties agree to abide to the terms of this MOU. To date, all member agencies, with the exception of the Ramona Municipal Water District, will be contracting with the Water Authority for the ESP. The Ramona MWD has requested to opt out of the ESP and the Water Authority is currently considering that request. ENVIRONMENTAL IMPACT: The approval of this MOU does not qualify as a project pursuant to Section 15378 of CEQA. FISCAL IMPACT: As a result of this MOU, CMWD will be developing a long-term contract with the Water Authority to apportion its share of the costs of the Emergency Storage Project. Based on the payment formula presented in the attached MOU, there will be a continuation of the non-commodity charges for which the CMWD is presently responsible. The Water Authority will institute a separate ESP charge, payable as a user charge or service charge to CMWD. This ESP charge will be apportioned to CMWD according to imported water received from the Water Authority based on a 5-year rolling average. As a result, CMWD will be responsible for this additional charge and the CMWD Board may consider passing through this charge as part of its future commodity charges. . . Page 2 of Agenda Bill No. 233 Based on preliminary information from the Water Authority, the estimated cost of the Emergency Storage Project is $550 million. Carlsbad’s yearly share of this cost could range from $15 1,000 in 2000 to a maximum of $88 1,000 in 20 12. This cost could be paid through the charge for water, the commodity charge. Based on assumptions of future water demands, Carlsbad’s commodity charge could increase by $0.10 to $0.15 per unit over a 20-year period, for its share of the ESP. This commodity rate portion of the increase would equate to approximately $2.40 for a residential customer using the average monthly water usage of 16 units. These additional charges and alternate methods of financing these charges will be determined when the contract with the Water Authority is developed. EXHIBITS: 1. Memorandum of Understanding between the San Diego County Water Authority and the Carlsbad Municipal Water District Regarding the Emergency Storage Project. 2. Board of Directors of the Carlsbad Municipal Water District: Resolution No. fM7 R:\CMWDUkafl of AE3 for MOU on Emergency Storage (ESP).doc 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION NO. 1107 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE CARLSBAD MUNICIPAL WATER DISTRICT (CMWD) AUTHORIZING THE EXECUTIVE DIRECTOR TO SIGN A MEMORANDUM OF UNDERSTANDING BETWEEN THE SAN DIEGO COUNTY WATER AUTHORITY AND CMWD WHEREAS, at its March 9, 2000 Board meeting the San Diego County Water Authority directed Authority staff to proceed with the Emergency Storage Project (ESP) as stated in current agreements with the Olivenhain Municipal Water District and the City of San Diego, and based on economic assumptions and cost allocations of the Water Authority’s current rate structure; and WHEREAS, at the April 27, 2000 San Diego County Water Authority Board meeting, Authority staff presented a modified payment formula for the ESP based on the existing rate structure; and WHEREAS, under this formula each member agency would continue to pay their non- commodity charges on the existing basis and a percentage of those revenues would be specifically dedicated to the ESP; and WHEREAS, the remaining ESP revenue would be met by member agencies through a fixed charge based on a 5 year historic rolling average of the annual imported water demands; and WHEREAS, the Board of Directors of the CMWD has reviewed the MOU and concur with its terms; NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Carlsbad Municipal Water District, as follows: 1. That the above recitations are true and correct. 2. That the Carlsbad Municipal Water District will endeavor to reach a contractual long- term agreement with the Water Authority to pay for its share of the ESP; and 3. That the Executive Director, or his designee, is authorized to sign this Memorandum of Understanding with the San Diego County Water Authority for the Emergency Storage Project. 1 PASSED, APPROVED AND ADOPTED at a special meeting of the Board of Directors of 2 the Carlsbad Municipal Water District held on the 14th day of November ,200O by 3 the following vote, to wit: 4 AYES: Board Members Lewis, Hall, Finnila and Nygaard 5 NOES: None 6 7 8 9 " 10 13 (SEAL) 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I ,$-. -\ MEMORANDUM OF UNDERSTANDING BETWEEN THE SAN DIEGO COUNTY WATER AUTHORITY AND THE CARLSBAD MUNICIPAL WATER DISTRICT REGARDING THE EMERGENCY STORAGE PROJECT The San Diego County Water Authority (“SDCWA”) and the Carlsbad Municipal Water District (“Carlsbad MWD”) have executed this memorandum of understanding (“MOU”) with respect to the SDCWA’s Emergency Storage Project (“ESP”). INTRODUCTION 1. The ESP consists of development of new and enhancement of existing pumps, pipelines, dams, reservoirs and other facilities and improvements that, upon completion, will result in approximately 90,100 acre-feet of additional water storage capacity under the ownership and control of the SDCWA for use when the SDCWA’s imported water supplies are interrupted or reduced due to a shortage of supplies from its regular sources or a failure of an imported water facility (Emergency). In addition to providing emergency water storage capacity, the ESP will enhance the SDCWA’s operational flexibility and water delivery capabilities for the benefit of its member agencies. 2. In furtherance of the ESP, SDCWA has entered into a contract with the Olivenhain Municipal Water District, including that certain “Agreement between the San Diego County Water Authority and the Olivenhain Municipal Water District for the Emergency Storage Project (Joint Use of Olivenhain Reservoir Site)” [Olivenhain Agreement]. 3. In furtherance of the ESP, SDCWA has entered into contracts with the City of San Diego, including that certain “Agreement between the San Diego County Water Authority and the City of San Diego for the Emergency Storage Project (Expansion of San Vicente Reservoir)” and that certain “Agreement between the San Diego County Water Authority and the City of San Diego for the Emergency Storage Project (Joint Use of Lake Hodges Dam and Reservoir).” [San Diego Agreements] which allow the SDCWA, in exchange for the benefits and consideration specified in the San Diego Agreements, to utilize the facilities and infrastructure of the City of San Diego in furtherance of the regional goal of maintaining adequate emergency storage for the entire San Diego region. 4. During the planning and approval process for ESP, SDCWA made certain assumptions regarding the amount of water in local water supplies and storage owned and controlled by the various SDCWA member agencies. However, these assumptions were made for planning purposes only and SDCWA has not relied and is not relying on any specific amount of water that is or may be available to Carlsbad MWD on account of its local supplies or storage. 5. In furtherance of the ESP, SDCWA has entered into, or anticipates entering into, numerous other contracts necessary for the implementation of the ESP as described in the Final Environmental Impact Statement / Environmental Impact Report as certified by the SDCWA Board of Directors. 6. The timely and successful completion of the ESP is critical to the ability of the SDCWA to meet the emergency water storage needs within its jurisdiction and to prevent economic disruption and personal suffering caused by limited water supplies. The businesses and people of San Diego County have endured extensive shortages of water in recent years. It is imperative that the ESP be completed in a timely fashion, making effective use of the limited financial resources of the public in general and the SDCWA in particular, in order to reduce hardship and meet water needs in a water shortage emergency. 7. SDCWA and Carlsbad MWD desire to provide mutual commitments and assurances to the financing, construction, maintenance and operation of the ESP for the public health, safety and welfare. Carlsbad MWD has requested the establishment of its commitments and assurances through a long-term contract. STATEMENTS OF UNDERSTANDING 1. SDCWA will construct the ESP in phases as a multi-year project with each phase of construction to be awarded and completed according to the terms of the Olivenhain and San Diego Agreements. 2. A long-term agreement, based upon this Memorandum of Understanding, will be developed between SDCWA and Carlsbad MWD. Until that long-term agreement is made, SDCWA and Carlsbad MWD, as a matter of legislative commitment but not contract, agree to abide by the terms of this Memorandum of Understanding. 3. Only after a member agency complies with SDCWA Resolution No. 2000-7 will the SDCWA permit the member agency not to participate in ESP or its funding. :. H-N A 4. SDCWA water stored pursuant to the ESP will be available for delivery to SDCWA member agencies whenever the SDCWA’s imported water supplies are interrupted or reduced such that the SDCWA is unable to obtain imported water to supplement local supplies so that its member agencies can meet 75 percent of their demands. The ESP facilities will also be available for use in non-emergency situations to enhance the operational flexibility and water delivery capabilities of the SDCWA for the benefit of its member agencies and to maintain the water quality of SDCWA’s stored water. Except as necessary for water quality and operational exchanges as set forth in the Reservoir Regulating Plans to be developed pursuant to the Olivenhain and San Diego Agreements, SDCWA water stored for emergencies in ESP facilities will not be used by SDCWA for delivery to its member agencies whenever the SDCWA is able to obtain imported water from the Metropolitan Water District of Southern California (MWD), or other sources, in amounts sufficient to supply its member agencies with water. 5. The SDCWA will establish revenues for the ESP as follows: a. The basic formula for ESP revenues is: Total Annual Revenue Requirement for ESP (debt service and operation and maintenance costs) minus ESP Pro Rata Share of Taxes and Charges (property tax or tax in lieu payments plus standby charge plus capacity charge plus infrastructure access charge multiplied by ESP percentage of total capital cost) equals Amount of Revenue to be Generated by ESP Charge Payable as a User or Service Charge for Water. b. Beginning on January 1 of each calendar year, the ESP Charge will be apportioned to Carlsbad MWD according to the ratio obtained by dividing the amount of imported water received (Imported Water Supply) by Carlsbad MWD over the five previous fiscal years (July 1 through June 30) by the amount of imported water received by all member agencies over the five previous fiscal years. The Imported Water supply shall be the sum of the imported water Carlsbad MWD receives from facilities owned by the SDCWA or MWD. The amount of Imported Water Supply will be calculated based upon a 5-year rolling average beginning with the five most recent fiscal years of the SDCWA, updated annually (e.g., the calendar year 2001 ESP Charge would be based on the historic average of Imported Water Supply for the1996 through 2000 fiscal years). Agricultural customers have agreed during emergencies to a reduction in deliveries at twice the rate of system-wide reductions (Agricultural Water). The additional water made available through these reductions (Additional Agricultural Cutback Water) will be made available to commercial and industrial customers. Neither local water transported through local facilities nor Agricultural Water, would be included . -. in the determination of the historic average of Imported Water Supply received by Carlsbad MWD. c. The ESP Charge will be applied to all SDCWA member agencies except member agencies, if any, that are not participating in ESP pursuant to SDCWA Resolution No. 2000-7. 6. SDCWA and Carlsbad MWD will fix Carlsbad MWD’s payment obligation in a long-term contract according to the formula set forth in paragraph 5. 7. The SDCWA will administer ESP water as follows: a. When the water supply available to the region, including imported water and local supplies (Regional Water Supply), drops below 100 percent of demand due to an Emergency, the SDCWA will estimate the duration of the Emergency and the amount of imported water supplies that remain available. Then the SDCWA will determine the level of service that each member agency could expect without the delivery of water from the ESP during the estimated duration of the Emergency. Such determination will be based upon: i. The estimated demands of each member agency for the duration of the emergency, and ii. The estimated amount of water available from Local Supplies for the duration of the emergency, up to an amount of water no greater than four average months of demand. b. Should there be insufficient Regional Water Supplies to meet a minimum of 75 percent of system-wide demand, water from the ESP will be used to supplement Regional Water Supplies to maintain a 75 percent, or if sustainable, a higher, system-wide level of service. c. When water is allocated during emergencies, the Additional Agricultural Cutback Water will be allocated to commercial and industrial customers to raise their level of service above the system wide level to the extent possible. d. Should there be insufficient supplies available to the region, including ESP supplies (Total Regional Water Supplies), to meet a minimum of 75 percent of system-wide demand, the SDCWA will allocate Total Regional Water Supplies to the extent possible such that supplies to customers receiving Agricultural Water will be reduced at twice the rate of system-wide reductions, and that all remaining demands will be supplied in amounts sufficient to provide an equal level of service. e. In determining the amount available to each member agency from its Local Supplies, the SDCWA will consider all sources of water owned, available, or under the operational control of the member agency that the SDCWA estimates would meet a demand for water in the member agency’s service area during the estimated duration of the Emergency, up to a limit of four average months of demand. These sources include water stored in surface water reservoirs or groundwater basins, water recycling projects, brackish groundwater desalination, seawater desalination, or any other locally controlled and available supply that can help meet that agency’s demand for water during the estimated duration of the emergency. In determining Local Supplies available to a member agency, the SDCWA will also take into consideration the physical capacity of an agency’s water distribution system and its actual ability to deliver water for end uses. 8. The SDCWA does not expect any member agency to maintain any specific amount of water in storage for emergencies. 9. Recycled water supplies will be deducted from an agency’s total water demands prior to determining its 75 percent level of service. This is because during an emergency it is expected that recycled water customers will continue to receive a 100 percent level of service unless physically interrupted due to the emergency and, recycled supplies are distributed through an independent system pursuant to health and safety regulations that restrict reclaimed water use. 10. The description in this MOU of the typical process to be used by SDCWA for the allocation of ESP water is not intended to give SDCWA any control over Carlsbad MWD’s local supplies. Such control, if any, must be based upon a separate agreement between SDCWA and Carlsbad MWD or other delegation in the event of a duly declared emergency. Unless otherwise authorized by law in an emergency or by contract with Carlsbad MWD, SDCWA will request the cooperation of Carlsbad MWD to utilize Carlsbad MWD’s local supply to meet the needs of one or more of the SDCWA’s other member agencies. Such cooperation by Carlsbad MWD shall be at Carlsbad MWD’s sole discretion. 11. With respect to the implementation of the Olivenhain and San Diego Agreements, SDCWA will coordinate with Olivenhain and San Diego, respectively, to jointly eliminate impacts on their respective facilities, consistent with the terms of the Olivenhain and San Diego Agreements. 12. The SDCWA will develop a Water Shortage Management Plan for Authority water, including ESP water, which is consistent with the terms of this MOU, the Olivenhain Agreement, and the San Diego Agreements. SAN DIEGO COUNTY WATER AUTHORITY Maureen A. Stabletbn General Manager San Diego County Water Authority CARLSBAD MUNICIPAL WATER DISTRICT General Manager u General Counsel Carlsbad MWD