Supply Reliability for San Diego through a Diverse Water Resources Mix and Drought Planning Dana L. Friehauf, San Diego County Water Authority

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1 Supply Reliability for San Diego through a Diverse Water Resources Mix and Drought Planning Dana L. Friehauf, San Diego County Water Authority DWR/NWRI Drought Response Workshop November 6, 2012

2 : Bottom of the Basket Falls Out 2

3 Resource Strategies to Manage Shortages Strategy Long-term Conservation ,680 Recycled Water 1,170 24,010 Brackish Groundwater 0 6,280 Colorado River Transfers 0 165,000 TOTAL (Acre-Feet) 2, , Supply Portfolio 2012 Supply Portfolio MWD 95% MWD 45% 3

4 High reliance on single source of imported supply MWD supplies from SWP and CR Uncertainties regarding reliability Recurring droughts Limited storage reserves on SWP Regulatory restrictions on SWP deliveries Delta levee failure due to earthquake Droughts SWP Reliability Growth Future water demand increases Potential effects of climate change Climate Change 4

5 Employ resource strategies unique to local conditions No single resource strategy can manage all uncertainties Multi-faceted approach required Conservation New supplies Supply diversification Infrastructure improvements Low-water using landscape Reclaimed water pipelines 5

6 New, local water supply Reduces need for imported water Drought-proof supply Improved water quality More expensive than existing imported supplies Cost on par with other new, local water supplies Enhances regional supply reliability and local control 6

7 Public-private partnership between SDCWA and Poseidon Resources Poseidon will permit, design, construct, own and operate desalination plant WPA outlines commercial and financial terms for production and delivery of water Proposed WPA released September 27, articles (sections) 18 appendices Prior to release, SDCWA performed comprehensive project and financial due diligence effort 7

8 50 mgd seawater desalination project Plant located at Encina Power Station Evaluated and certified in 2003 Master Plan Program EIR Included in SDCWA s 2005 and 2010 UWMPs Project fully permitted to commence construction Initial operations utilize power plant cooling water as source Post power plant stand-alone operation Contemplates upgrade of existing ocean intake to Best Available Technology Proposed Carlsbad Desalination Plant 8

9 Project Components TOVWTP TOVWTP Improvements P3 relining 5-miles Pacific Ocean Carlsbad Desal WTP Encina Power Station New 54-inch steel pipe 10-miles San Marcos Pipeline Interconnection Pipeline 4 Pipeline 3 9

10 SDCWA has never constructed or operated a seawater desalination facility Objective is to assign appropriate risks to private developer at minimum cost to ratepayers 10

11 Construction and Operating Cost Overruns Timely Project Completion Regulatory and Law Compliance Regulated or Differing Site Conditions Capital Maintenance, Repair and Replacement Labor Supply and Relations 11

12 Poseidon Permit, design and build desal plant Permit, design and build conveyance pipeline (design-build agreement) Operate and maintain desal plant Supply product water SDCWA Take or Pay for product water if it meets specifications (minimum 48,000AFY) Timely construction of improvements to existing facilities Operate and maintain conveyance pipeline 12

13 Product Water Quality Guarantee Compliance with all federal and state drinking water regulations Additional standards for certain water quality parameters Minimum Product Water Delivery Guarantee Annual supply to meet SDCWA demands (between 48,000 and 56,000 AF) Water Ordering Rights SDCWA rights to adjust delivery orders to reflect seasonal and daily demand changes 13

14 Purchase options at SDCWA sole discretion Convenience termination Early buy-out provisions after 10 years End of term $1 at end of 30-year term Event of default Poseidon bankruptcy Repeated violations of primary drinking water standards 14

15 Total Capital Cost Plant and pipeline cost Financing costs Water Authority improvements and oversight Total Capital Costs $691 million $213 million $80 million $984 million Total O&M Costs (Poseidon and SDCWA) $50 - $56 million annually Total Unit Cost 1 48,000 acre feet per year 56,000 acre feet per year $2,290/AF $2,041/AF 1 Includes debt service, operations, Water Authority construction oversight and administrative costs 15

16 Over 30 public meetings Two open houses/meetings in community Presented proposed project and WPA Approximately 130 to 160 people in attendance Received public comments and questions Earliest SDCWA Board could vote on WPA is November 29,

17 Significant uncertainties over current supplies affect regional reliability No single resource strategy can manage all uncertainties Important to continue multi-faceted approach Conservation Potential new supplies Supply diversification Infrastructure improvements Drought planning critical to managing potential shortages Conservation 13% 2020 Diverse Supply Portfolio Groundwater 2% Canal Lining Transfer 10% Local Surface Water 6% Recycled Water 6% IID Transfer 24% Seawater Desalination 9% MWD 30% 17

18 18

19 19

20 Serve as regional guide Avoid crisis planning Be prepared with orderly, progressive approach Provide regional actions to manage shortage conditions Including method to allocate supplies Meet state law requirements (UWMP Act) 20

21 Water Shortage Drought Response Plan Drought Response Matrix Allocation Methodology Communication Strategy 21

22 Regional Stages Potential SDCWA Regional Actions Voluntary SDCWA Supply Enhancement Mandatory Cutbacks Ongoing BMP implementation X X X Communication strategy X X X Monitoring supply and storage conditions X X X Call for voluntary conservation X X X SDCWA carryover storage (put & take) X X X Secure transfer options X X X Buy phase 1 spot transfers X X Call transfer options X X Buy phase 2 spot transfers X X Implement allocation methodology X Utilize Emergency Storage Supplies X 22

23 Provide regional consistency Core water-use restrictions Prohibit wasteful water practices Progressive severity of restrictions At more severe levels: Customer allocations Restrictions on new meters Exemption for demand offset Prohibit wasteful practices All member agencies updated ordinances Consistent levels Restrictions vary slightly 23

24 Implementation in accordance with SDCWA Drought Response and Shortage Management Plan Orderly, progressive approach Date Action Major Activities 2007 Call for voluntary conservation 2008 Supply augmentation measures 20 Gallon Challenge Media Campaign Secured dry-year transfers Acquired carry-over storage supplies 2009/ 2010 Allocation of supplies to member agencies per Plan Utilized dry-year transfers Declared Drought Response Level 2 o Mandatory Water-Use Restrictions o Drought Conservation Pricing 2011 Discontinued allocations Reinforced continued use-efficiency 24

25 Local water agencies tools to reduce demand Mandatory water use restrictions Adopted drought rates (inclining block) Setting water budgets that determine amount each customer should use Public outreach efforts 25

26 WSDRP s orderly, progressive approach was effective Followed up with member agency review process based on lessons learned Evaluated Allocation Methodology SDCWA Board approved minor changes in April 2012 Continue monthly monitoring of demand and supply conditions 26

27 QUESTIONS?

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