Business Plan

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3 Business Plan August 2014

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5 Table of Contents CHAPTER 1 - Introduction Overview 1-1 Guiding Principles and Policies 1-2 Related Planning Documents 1-4 Current Business Trends 1-7 Business Plan Key Focus Areas and Programs 1-11 CHAPTER 2 - Water Supply Portfolio Focus Area Overview 2-1 Bay-Delta 2-2 Colorado River 2-6 Member Agency Local Supply 2-10 Metropolitan Water District 2-14 Potable Reuse 2-18 Seawater Desalination 2-22 Water Resources Planning 2-26 Water Shortage and Drought Response Management 2-28 Water Use Efficiency 2-32 CHAPTER 3 - Water Facilities Focus Area Overview 3-1 Asset Management 3-2 Capital Improvement Program 3-4 Facilities Security and Emergency Preparedness 3-8 Operations and Maintenance 3-10 CHAPTER 4 - Core Business Focus Area Overview 4-1 Energy Initiatives 4-2 Environmental Management 4-4 Financial Management 4-8 Government Relations Outreach 4-13 Information Technology 4-16 Integrated Regional Water Management and Grants Administration 4-20 Public Outreach 4-24 Regulatory Policy Support 4-28 Workforce Management 4-31 CHAPTER 5 - Performance Assessment & Monitoring Business Plan Performance Assessment 5-1 Water Authority Agency Dashboard and Key Indicators 5-2 CHAPTER 6 - Glossary 6-1

6 Figure 1.1 The San Diego County Water Authority Service Area and Member Agencies 1 Carlsbad MWD 2 City of Del Mar 12 3 City of Escondido 4 Fallbrook Public Utility District 5 Helix Water District 6 Lakeside Water District 7 City of National City** 8 City of Oceanside 9 Olivenhain MWD 10 Otay Water District 11 Padre Dam MWD 12 Camp Pendleton Marine Corps Base 13 City of Poway 14 Rainbow MWD 15 Ramona MWD 16 Rincon del Diablo MWD 17 City of San Diego 18 San Dieguito Water District 19 Santa Fe Irrigation District 20 South Bay Irrigation District** 21 Vallecitos Water District 22 Valley Center MWD 23 Vista Irrigation District 24 Yuima MWD GUAJOME LAKE OLIVENHAIN RESERVO SAN DIEGUITO RESERVOI R IR LAKE HODGE S A member of the San Diego County Board of Supervisors also serves as a representative to the Water Authority Board of Directors. ** The Sweetwater Authority is a service organization for the City of National City and the South Bay Irrigation District TURNER LAKE MIRAMAR RESERVOI R LAKE MURR AY LAKE WOHLFORD LAKE RAMON A LAKE PO WAY SAN VICENT E RESERVOI R SANTEE LAKE S 15 SWEET WATER RESERVOI R SUTHERLAN D RESERVOI R EL CAPI TAN RESERVOI R UPPER OT AY RESERVOIR LOWER OT AY RESERVOI R LOVELAN D RESERVOI R 10

7 Chapter 1 Introduction Overview The San Diego County Water Authority Business Plan describes the key focus areas, programs, key issues, management strategies, and goals necessary to carry out the policies and strategic direction set forth by the Water Authority Board of Directors in support of its mission. Based on a five-year horizon, the plan is updated biennially in accordance with guiding principles and policies, related planning documents, and an analysis of current business trends. OUR MISSION To provide a safe and reliable supply OUR MISSION of water to our member agencies To provide serving a safe the and San reliable Diego region. supply of water to our member agencies serving the San Diego region. Figure 1.1 The Business Plan Process BOARD STRATEGIC DIRECTION OUR VISION In partnership with member agencies and stakeholders, meet the region s water supply needs by: Providing a safe and reliable water supply Diversifying the region s water supply sources CURRENT BUSINESS TRENDS BUSINESS PLAN OTHER PLANNING DOCUMENTS Building, maintaining, and operating critical facilities in a cost-effective and environmentally sensitive manner INTRODUCTION - Overview 1-1

8 Guiding Principles and Policies The Water Authority s member agencies are represented through a 35-member Board of Directors. The Water Authority was formed by an Act of the California state legislature establishing the Board of Directors as the agency s governing body. This section highlights the Board adopted principles and policies that guide the Water Authority in its business practices. County Water Authority Act Sets forth the organization, incorporation and government of the Water Authority, including authorizing the agency to acquire and own water rights, to construct and maintain facilities, and to tax and incur bonded indebtedness. Debt Management Policy Ensures the Water Authority s debt portfolio is optimized to minimize cost of funds and ensures savings from refunded debt are maximized. Delta Policy Principles Guides staff in evaluating Bay-Delta initiatives and the Water Authority s advocacy to ensure a successful implementation of a Delta solution. Energy Management Policy Provides guidance to the Board when it is considering energy related issues, and provides guidance to staff in the development of projects and programs. Areas of focus include inter-agency cooperation; the design, construction, maintenance, and operation of facilities; and public education. Fiscal Sustainability Guiding Principles Provides guidance to the Board when it is considering changes or additions to the Water Authority s rates and charges structure or financial policies with the objective of ensuring the long-term fiscal sustainability of the Water Authority. Legislative Policy Guidelines Guides staff and the legislative advocates on issues of critical importance to the Water Authority and its service area. Provides a framework for evaluation of the potential impact of state and federal legislation on the Water Authority. 1-2 INTRODUCTION - Guiding Principles and Policies

9 Monthly meetings of the Board take place at the Water Authority s Kearny Mesa Headquarters. Water Shortage and Drought Response Plan Allocation Methodology Establishes policies and procedures for administering the Municipal and Industrial (M&I) water supply allocation methodology to member agencies during times of water shortage or drought. Water Supply Diversification Strategy Guides staff to enhance regional supply reliability through a diversified water supply portfolio. Water Use Efficiency Policy Principles Provides Water Authority staff with long-term strategic direction in planning and implementing regional water use efficiency initiatives and programs. INTRODUCTION - Guiding Principles and Policies 1-3

10 Related Planning Documents The Business Plan serves as the overarching planning document for the Water Authority in accomplishing its mission of providing a safe, reliable water supply to the region. Highlighted in this section are specific plans developed to support the management strategies and goals outlined in the Business Plan. Asset Management Plan Prepared by the Water Authority Operations and Maintenance department The Asset Management Plan documents the actions necessary to derive the most value from each of the Water Authority s assets through their life cycles. It ensures the operation, maintenance, rehabilitation, and replacement or surplus of capital facilities and infrastructure occurs at the optimal time using optimal methods. The Asset Management Plan is updated regularly to adapt to the changing needs of the Water Authority, ensuring the plan is an effective means of managing our assets. Aqueduct Operating Plan Prepared by the Water Authority Operations and Maintenance department The annual Aqueduct Operating Plan reflects on-going efforts to optimize the delivery, treatment, and storage of water in the San Diego region through coordination between the Water Authority staff, its member agencies, and the Metropolitan Water District of Southern California. It is developed based on information received from member agencies, historical delivery/production data, constraints within the Water Authority s aqueduct system, and scheduled system shutdowns. Climate Action Plan Prepared by the Water Authority Water Resources department The Climate Action Plan is an inter-disciplinary effort intended to promote, facilitate, and coordinate implementation of climate change strategies and related activities within the Water Authority. The plan provides a comprehensive look at Water Authority current practices and operations, and includes an analysis of measures that could be implemented to reduce greenhouse-gas emissions and prepare for climate-change effects through INTRODUCTION - Related Planning Documents

11 General Manager s Adopted Multi-Year Budget Prepared by the Water Authority Finance department The General Manager s Adopted Multi-Year Budget is based on the Board of Directors financial and operational policies. It provides the resources necessary to achieve or advance the Water Authority s Business Plan management strategies and goals. It serves as a comprehensive financial plan and communication tool describing the Water Authority s programs, services, and resource requirements; accommodates the implementation or assessment of new and improved ways to accomplish our mission in the most efficient, fiscally sustainable, and cost-effective manner possible; and ensures our member agencies and their ratepayers receive maximum value for their investments. Integrated Regional Water Management Plan Prepared under the direction of the Regional Water Management Group, consisting of the San Diego County Water Authority, City of San Diego, and County of San Diego The Integrated Regional Water Management Plan addresses resource management, water quality, and habitat in a region that includes the portion of San Diego County that is tributary to coastal waters. The plan builds on local and regional management plans within the San Diego region, and was developed with input from an array of key stakeholders. The plan also provides the basis for acquiring grant funding from state bond propositions 50 and 84. Long-Range Financing Plan Prepared by the Water Authority Finance department The Long-Range Financing Plan provides a solid financial foundation on which to build and operate the Water Authority s growing system infrastructure. It identifies the financial policies that guide the Water Authority s prudent management of financial risk, outlines how the Water Authority plans to finance the Capital Improvement Program, details key underlying assumptions, and provides long-term financial forecasts. INTRODUCTION - Related Planning Documents 1-5

12 Quantification Settlement Agreement Prepared by various parties The Quantification Settlement Agreement provides California the means to implement water transfers and supply programs that allow California to live within the state s 4.4 million acre-foot basic annual apportionment of Colorado River Water. The parties involved include the San Diego County Water Authority, Coachella Valley Water District, Imperial Irrigation District, Metropolitan Water District of Southern California, the State of California, and the U.S. Department of the Interior. The statewide benefits include reducing California s over-dependence on the Colorado River, restoring the Salton Sea, and providing voluntary agricultural water transfers for urban use. Regional Water Facilities Optimization and Master Plan Prepared by CH2M Hill and Black & Veatch for the San Diego County Water Authority The Water Authority s Regional Water Facilities Optimization and Master Plan is a comprehensive evaluation of infrastructure requirements needed to meet the Water Authority s mission of providing a safe and reliable water supply to its member agencies. The Master Plan includes recommendations on new pipelines, treatment plants, and storage facilities, as well as improvements to existing facilities needed to assure the Water Authority s mission is achieved in a cost-effective manner through a 2035 planning horizon. Urban Water Management Plan Prepared by the San Diego County Water Authority Water Resources department The Urban Water Management Plan identifies a diverse mix of water resources projected to be developed over the next 25 years to ensure long-term water supply reliability for the region. The plan is prepared in accordance and compliance with the Urban Water Management Planning Act and includes conservation measures, programs, and policies. Water Shortage and Drought Response Plan Prepared by the San Diego Water Authority Water Resources department The Water Shortage and Drought Response Plan provides the Water Authority and its member agencies with a series of potential actions to take when faced with a shortage of imported water supplies from Metropolitan Water District of Southern California due to drought conditions. The plan describes the stages of water supply conditions and the steps that may be necessary to manage water supplies at each stage. 1-6 INTRODUCTION - Related Planning Documents

13 Current Business Trends In several important respects, the water utility industry is similar to other factions of the American economy. It is subject to, and must continue to adapt to, changing economic conditions, societal perceptions, governmental regulations, and environmental pressures to meet its mission. The Water Authority faces an increasingly challenging future. At the same time, the future also presents opportunities and will require a new approach to the management of water. Strategic planning is essential to develop this new approach and early, proactive action will help position the Water Authority to achieve success. Additionally, there are many business trends that will influence the way the Water Authority conducts business. These trends are categorized in four critical areas: economic, societal/political, technological, and environmental. Economic Trends Increased Cost of Water Scarce water supplies, increased competition for water amongst agencies, and higher energy costs of conveying water will impact future water rates. In the foreseeable future, the unit cost of water will continue to increase and new supplies will cost more than existing supplies. New technology may offset some of the cost of new water, but the trend for water rate increases remains a sound prediction. The Water Authority must continue to be an efficient provider of high quality, reliable, and affordable water that meets or surpasses the customers expected level of service. To sustain this quality of service now and into the future, we must demonstrate a level of financial prudence that strikes a balance amongst present-day operating expenses and revenues, community expectations and demands, condition of our assets and infrastructure, and long-term debt obligation. Rate Making/Financial Impacts Financial planning systems must be monitored, upgraded, and revised to assure that all cost factors are included in revenue projections used to establish a rate structure. Both long-term and near-term planning is critical and innovative approaches are needed to meet the financial challenges. Human Resources and Workforce Planning The Water Authority is viewed in the community as a progressive and business-oriented employer. It is important to continue to attract and retain experienced professionals and to engage in knowledge transfer to leverage the years of experience of its existing workforce. This knowledge and skills are required to lead in the face of an increasingly complex environment. INTRODUCTION - Current Business Trends 1-7

14 Societal/Political Trends Intergovernmental Relations The nexus between regional growth and water is an ongoing and important discussion. While the San Diego region s growth rate has slowed, the population is still increasing. Between 2000 and 2010, the region s population increased by 10 percent. The Water Authority continues to communicate, cooperate, and collaborate with local and regional land-use agencies. The Water Authority also continues to focus on state and federal level coordination. A significant portion of our water supply is integrated with large and complex water systems, such as the Colorado River or Bay-Delta. Taking an active role in the intergovernmental arena and advocating for our region will continue to be necessary to ensure supply reliability. Integrated Public Policies The Water Authority s involvement with regional agencies is key towards the integration of public policies affecting energy, housing, transportation, and water quality and supply. Advocating for the clarification of policies is in the public s best interest to ensure public agencies work in a consistent direction for the benefit of the region. Transparent and Open Disclosure The Water Authority strives to make decisions that positively contribute to the well-being of citizens today and in the future. Organizations with transparent and open disclosure of performance information strengthen the water industry as well as communities. The Water Authority will continue to be transparent with information and demonstrate a willingness to be forthright. This willingness stresses accountability, supports continuous improvement, builds stakeholder trust, reinforces credibility, and educates and serves the public. Public and Private Partnerships The Water Authority has successfully engaged in partnerships with its member agencies, private sector, and community organizations, as well as ratepayers. These partnerships have resulted in the construction of the Twin Oaks Valley Water Treatment Plant, Helix Water Treatment Plant, San Vicente Dam Raise, Carlsbad Desalination Project (currently under construction), and innovative water use efficiency programs. When cost-effective and feasible, the Water Authority and its member agencies will identify and evaluate opportunities for collaboration with each other and with private enterprises to provide services and water supplies. 1-8 INTRODUCTION - Current Business Trends

15 Technological Trends Technology Technology is rapidly advancing. While the Water Authority recognizes the cost of water will continue to rise, new technologies may help offset some of these increases. The Water Authority fosters innovation and the use of new information, communication, water system, and water treatment technologies to effectively meet the challenges facing the water industry over the next 10 to 20 years. Technology should be viewed as a solution and we strive to be a successful user of state-of-the-art technology and information. The Water Authority will continue to embrace the use of the most advanced information, communication, water system, and water treatment technologies available to provide customers with a high level of service. The water industry is a trusted guardian of public health, and as such, the Water Authority employs innovative technologies and management strategies to mitigate the risks associated with water supplies. Reuse Water Reuse water is part of a natural cycle. The Earth s water supply is a closed loop system, with all the water on our planet being used over and over again. Water can be reused safely, economically, and in a sustainable manner. For these reasons, it is a viable part of the Water Authority s supply portfolio. To achieve the Water Authority s mission to secure a safe and reliable water supply for the region, it is important to beneficially reuse our treated water supply. Seawater Desalination The development of seawater desalination is a necessary source of potable water for the future. The process of turning seawater into fresh water represents a new, viable source of water for the region. As supplies of traditional water become scarce, desalinated seawater will become increasingly important to meet the region s water supply needs. Environmental Trends Energy Demand The Water Authority recognizes that business decisions have a direct impact on natural resources and the environment. The use of sustainable resources and improved energy efficiency will reduce energy demand. For example, technology improvements in the Water Authority s method to pump and convey water will not only increase operating efficiencies, but may also reduce energy costs, which are a significant component in the cost of water. INTRODUCTION - Current Business Trends 1-9

16 Environmental Trends, continued Climate Change The climate is becoming increasingly warmer and drier, and ocean levels are on the rise. Snowfall in the Sierras, a major source of water for California, is occurring later and melting earlier, therefore, reducing the supply of water. In addition, the State of California now mandates that government agencies address climate change impacts and reduce their carbon footprint. Natural Disasters The Water Authority recognizes its responsibility to be prepared and to respond quickly, safely, and effectively to emergency situations that arise within our jurisdiction. Building partnerships with other utilities and businesses for mutual aid, establishing clear public communication procedures, and having resources in place to effectively meet the needs at hand are evidence of our commitment to the well-being of the communities we serve and the environment. Limited Traditional Water Supplies Traditional sources of water supplies, such as local surface water and groundwater, are limited and becoming less reliable. While these supplies represent the historically least-costly source of water, climate change may negatively impact these already scarce traditional water resources. As a result, they will continue to comprise a smaller percentage of our water supply portfolio and make the development of additional supply sources and increased water use efficiency of utmost importance. Conveyance and Environmental Issues While new water supplies could be procured, there are significant costs and environmental challenges to conveying those supplies to the San Diego region. Conveyance and environmental initiatives require close coordination and negotiation amongst all parties involved INTRODUCTION - Current Business Trends

17 Business Plan Key Focus Areas and Programs Business Plan programs are divided into three key focus areas Water Supply Portfolio, Water Facilities, and Core Business, which are further divided into 22 programs. Detailed management strategies and supporting near-term and long-term goals were established for each of the programs, and are provided in the individual program sections of this document. Near-term goals are to be completed by June 30, 2016, and long-term goals are to be completed by June 30, Water Supply Portfolio Key Focus Area The programs within the Water Supply Portfolio key focus area are designed to reach the Board of Directors adopted level of water supply diversity. Bay-Delta Colorado River Member Agency Local Supply Metropolitan Water District Potable Reuse Seawater Desalination Water Resources Planning Water Shortage and Drought Response Management Water Use Efficiency Water Facilities Key Focus Area The programs within the Water Facilities key focus area are designed to implement the Board of Directors cost effective asset management strategy by building, operating, and maintaining the water facilities essential to meet regional water demand. Asset Management Capital Improvement Program Facilities Security and Emergency Preparedness Operations and Maintenance Core Business Key Focus Area The programs within the Core Business key focus area are essential, in that they include the majority of the Water Authority s business operations needed to execute the activities of the previous two focus areas. Energy Initiatives Environmental Management Financial Management Government Relations Outreach Information Technology Integrated Regional Water Management and Grant Administration Public Outreach Regulatory Policy Support Workforce Management INTRODUCTION - Key Focus Areas and Programs 1-11

18 Figure Water Supply Portfolio 95 % Metropolitan Water District 5 % Local Surface Water Figure Water Supply Portfolio (estimated) 49 % Metropolitan Water District 15 % Imperial Irrigation District Transfer 12 % Canal Lining Transfer 11 % Conservation 6 % Local Surface Water 4 % Recycled Water 3 % Groundwater Figure Water Supply Portfolio (projected*) 30 % Metropolitan Water District 24 % Imperial Irrigation District Transfer 13 % Conservation 10 % Canal Lining Transfer 7 % Seawater Desalination 6 % Local Surface Water 6 % Recycled Water 4 % Groundwater *Based on normal year demand projections in the 2010 Urban Water Management Plan

19 Chapter 2 Water Supply Portfolio Key Focus Area Overview The Water Supply Portfolio key focus area consists of nine programs intended to guide the Water Authority as it strives to reach the Board of Directors adopted level of supply diversity and reduce its dependence on imported water. The goal of the focus area is to protect traditional supplies while increasing the diversity of the Water Authority s supply portfolio to enhance reliability and meet the region s growing demands. Since 1947, water has been imported to the San Diego region to supplement existing local surface water and groundwater supplies. However, these traditional supplies are limited and becoming less reliable. With new sources of water in development, such as seawater desalination and potable reuse, the projection for further diversification, as illustrated in Figures , show a reduction in reliance on Metropolitan Water District supplies from 95 percent in 1991, to 30 percent by Developing new water supplies requires close coordination and collaboration with our member agencies, as well as the public. Engaging stakeholders will help the Water Authority and the region plan for the future, obtain necessary funding, develop the necessary infrastructure, and attain our water diversity goals. PROGRAMS BAY-DELTA COLORADO RIVER MEMBER AGENCY LOCAL SUPPLY METROPOLITAN WATER DISTRICT POTABLE REUSE SEAWATER DESALINATION WATER RESOURCES PLANNING WATER SHORTAGE & DROUGHT RESPONSE MANAGEMENT WATER USE EFFICIENCY In addition, the potential of imported water shortages in the near-term are addressed in the Water Shortage and Drought Response Management program. Conservation efforts are addressed in the Water Use Efficiency program. WATER SUPPLY PORTFOLIO - Overview 2-1

20 Bay-Delta The Bay-Delta, a critical component of the federally-managed Central Valley Project and the State of California s State Water Project, is among the world s largest water diversion projects. The Bay-Delta provides drinking water to 25 million Californians and irrigation to approximately five million acres of cropland. Seventy percent of the water used for agricultural and urban purposes within the state moves via pumps from sources north of the Bay-Delta to farms and communities in central and southern California. The region also provides one of the largest, most important estuarine systems for fish and waterfowl production on the Pacific Coast. In recent years, supplies from the Bay-Delta have provided San Diegans with approximately 20 percent of all water used in the region. Therefore, a significant and prolonged reduction in supplies from the State Water Project could have serious impacts to the region s water supply reliability. The Bay-Delta provides one of the largest, most important estuarine systems for fish and waterfowl production on the Pacific Coast. In November 2009, the California Legislature passed a package of legislation to address the problems confronting the Bay-Delta, as well as improve water supply reliability and environmental restoration. In addition, the legislation package created new governance entities and programs for the Delta region. 2-2 WATER SUPPLY PORTFOLIO Bay-Delta

21 The legislative effort was largely centered on development and implementation of the Bay-Delta Conservation Plan. The California Natural Resources Agency initiated preparation of the BDCP as a collaboration of: state, federal, and local water agencies; state and federal fish and wildlife agencies; environmental organizations; agricultural organizations; and other entities. The BDCP is being developed as a multi-species Habitat Conservation Plan and a Natural Communities Conservation Plan under the federal and state Endangered Species acts. By providing a plan that seeks to recover and protect listed species, state and federal water management agencies will be able to obtain the permits necessary to build infrastructure in the Delta, including the construction and operation of a new water conveyance system over a 50-year time frame. The Bay-Delta provides drinking water to 25 million Californians and irrigation to approximately 5 million acres of cropland. The Water Authority s Bay-Delta program seeks to actively engage at various governmental decision-making levels. To ensure the State Water Project will be able to safely and reliably convey water supplies to Southern California, the Water Authority will work with the Governor, state legislators, federal officials, the BDCP program, the Delta Stewardship Council, and other water agencies to implement near-term and long-term solutions to the Bay-Delta s infrastructure. The Water Authority is also working to: Ensure that costs for fixing the Bay-Delta are equitably apportioned among water contractors; Require wholesale contractors (such as the Metropolitan Water District) to obtain firm commitments from their member agencies to pay contractors obligations; and Protect San Diego ratepayers from paying a disproportionate share of BDCP costs. The Bay-Delta program s key issues directly affecting the mission of the Water Authority include, among other issues, water supply reliability, financing and funding, ecosystem restoration and sustainability, facilities selection and design, and governance. WATER SUPPLY PORTFOLIO Bay-Delta 2-3

22 Bay-Delta Management strategies Key issue Management strategy Goal number Water supply reliability Analyze and influence proposals for improving water supply reliability from the Bay-Delta that achieve the Board-adopted Bay-Delta Policy Principles. Advocate Board-adopted policies and positions regarding Bay-Delta and funding with the San Diego business community, statewide environmental and other stakeholder organizations, the Legislature, Congress, and state and federal administrations. 1,2,3 1,2,3 Financing and funding Ecosystem restoration Facilities selection and design Governance Influence the selection of any Bay-Delta conveyance project based on the principle of firm commitments to pay the fixed costs of the project by not only water contractors, but also their member agencies. Ensure adequate information is available to effectively evaluate the cost-benefit of any proposed Bay-Delta project. Influence proposals for ecosystem restoration to provide the greatest level of long-term permitting assurances as may be obtained through state Natural Community Conservation Plans and federal Habitat Conservation Plans. Ensure water ratepayers are not burdened with paying for ecosystem restoration costs that should be borne by the public at-large or other Bay- Delta users. Influence the selection of a Bay-Delta conveyance project that is rightsized, as demonstrated by real demand for water supplies from the Delta, and firm financial commitments by water contractors and their member agencies. Ensure the State Water Project and other facilities are operated in the best interests of all Californians. Ensure the State Water Project and other facilities remain open to water transfers and other water management activities at lawful and reasonable cost. 1,2,3,4 1,2,4 2,4,5 1,4,5 1,2,3,4 4,6 4,6 2-4 WATER SUPPLY PORTFOLIO Bay-Delta

23 Bay-Delta Near-term goals No. Goal Target date Upon publication of cost allocation data, prepare a comprehensive independent financial review and analysis of the Bay-Delta Conservation Plan preferred conveyance project and project alternatives (e.g., cost-benefit analyses and ability-to-pay analyses) to assess any project s cost-benefit to Water Authority ratepayers, as compared to other supply alternatives. Complete a comprehensive evaluation of Bay-Delta Conservation Plan conveyance project alternatives, including financial components, and present proposed Delta solutions to the Board of Directors to assist in guiding a policy position and framing any conditions that must be satisfied before the Water Authority supports a proposed Delta fix option. Secure the support of the San Diego business community, civic leaders, opinion leaders, and media for the Bay-Delta Conservation Plan solution supported by the Water Authority. Secure requirement for firm financial commitments through take-or-pay contractors or legal equivalent from member agencies or units of the State Water Project and Central Valley Project contractors, to pay the fixed costs of the Bay-Delta Conservation Plan conveyance project before bonds are issued and commencement of project construction. Sep 2015 Dec 2015 Apr 2016 Dec 2016 Long-term goals No. Goal Target date 5 6 Prevent the adoption or imposition of water user fees to fund ecosystem restoration or any other public purpose or non-water supply improvements, in the Bay-Delta that benefit the public at-large, other water users, or other Bay-Delta users. Support continued state ownership and control of the State Water Project as a public resource, and oppose the transfer of operations of State Water Project facilities from the California Department of Water Resources to Metropolitan Water District, the State Water Project contractors, Central Valley Project contractors, the State and Federal Contractors Water Agency, any entity or joint powers authority comprised of MWD or other water related project contractors, or any other special interest group. Sep 2017 Sep 2017 WATER SUPPLY PORTFOLIO Bay-Delta 2-5

24 Colorado River The Water Authority s Colorado River program manages the water transfer agreement with the Imperial Irrigation District and the All-American and Coachella Canal Lining projects. In addition, the program implements the Water Authority s agreements under the Quantification Settlement Agreement. The Colorado River program implements the Water Authority s agreements under the Quantification Settlement Agreement. The Quantification Settlement Agreement, executed in October 2003, will provide the San Diego region with approximately 24 percent of its water by 2017, growing to 34 percent by The quantities of water transferred through the QSA will increase according to an agreed-upon delivery schedule. By 2021, the amount of transferred water will have increased to 200,000 acre-feet and will continue at this level as late as The Water Authority currently receives 56,200 acre-feet of water annually from the All-American Canal Lining project, and approximately 24,000 acre-feet of water annually from the Coachella Canal Lining project (21,500 acre-feet conserved by the project plus an estimated 2,500 acre-feet determined by environmental mitigation requirements). Both canal lining projects require environmental mitigation work to be implemented over the next several years. The Water Authority serves as the administrative agency for the QSA Joint Powers Authority, which was established as part of the QSA to administer the funding of environmental mitigation requirements related to QSA water transfers. A large portion of the implemented and planned mitigation measures by the QSA JPA are associated with the Salton Sea, which is also the target of a separate restoration effort Figure 2.4 Projected 2020 Water Supply from the Colorado River 30 % Metropolitan Water District 24 % Imperial Irrigation District Transfer 13 % Conservation 10 % Canal Lining Transfer 7 % Seawater Desalination 6 % Local Surface Water 6 % Recycled Water 4 % Groundwater 2-6 WATER SUPPLY PORTFOLIO Colorado River

25 Colorado River water transfer agreements are a cornerstone of the Water Authority s strategy to improve water supply reliability through a more diversified water portfolio. that is the responsibility of the State of California. The Water Authority is involved in discussions and evaluation of long-term mitigation measures and restoration options associated with the QSA water transfers and the Salton Sea. The water transfer agreement and the canal lining projects are of concern to a variety of stakeholders both within and outside the San Diego region and Imperial County. A public outreach program has been established to address these issues and respond to stakeholder concerns. The key issues directly affecting the mission of the Water Authority and the focus areas of the Colorado River program are cost and schedule control of canal lining projects and water transfers, environmental mitigation, scheduled deliveries of transfer water, and identification of feasible water supply augmentation projects. WATER SUPPLY PORTFOLIO Colorado River 2-7

26 Colorado River Management strategies Key issue Management strategy Goal number Cost and schedule control Represent the Water Authority s interests through committees that exercise oversight of design, construction, and operations and maintenance of projects. Respond to existing and potential litigation against canal lining or water transfer projects. 1,3,4,6,7,8 1,2,3,6,7,8 Environmental mitigation Delivery of scheduled amounts of transfer water Feasible water supply augmentation projects identification Administer the Quantification Settlement Agreement Joint Powers Authority to reimburse mitigation costs. Participate in discussions and evaluation for long-term environmental mitigation and restoration options associated with the Quantification Settlement Agreement. Complete environmental mitigation projects and requirements for the All-American Canal and Coachella Canal linings. Implement and update an outreach plan to effectively communicate water transfer issues, emphasizing local water resources programs, to build strong relationships and partnerships with Imperial Irrigation District, Coachella Valley Water District, and in the Imperial and Coachella Valleys. Evaluate options for flexible deliveries such as establishing a storage account in Lake Mead or allowing temporary variation in annual deliveries for operational purposes. Participate in work group meetings, Lower Basin studies, and Basin States discussions. 1,5,6 1,7,8 1,2,3,7,9 1,4,5,9,10 3,9 2-8 WATER SUPPLY PORTFOLIO Colorado River

27 Colorado River Near-term goals No. Goal Target date 1 2 Ensure transfer and delivery of scheduled conserved water from canal lining projects and Imperial Irrigation District water transfer. Provide legal and technical support in order to obtain a favorable ruling on federal Quantification Settlement Agreement litigation. Jun 2016 Jun 2016 Long-term goals No. Goal Target date Evaluate the option of a term extension of the Metropolitan Water District-San Diego County Water Authority Exchange and the Imperial Irrigation District/Water Authority Transfer Agreements for decision by the Water Authority Board. Support Imperial Irrigation District in its need for increased annual flexibility in the creation and delivery of conserved water, while maintaining the overall Quantification Settlement Agreement delivery schedule. Identify, through dialogue with state, federal, and local elected officials, alternative mitigation measures and a funding plan that would allow for enhanced and more durable air quality mitigation and wildlife habitat creation at the Salton Sea that is within the projected budget. Ensure that the Quantification Settlement Agreement Joint Powers Authority budget is adequate to fund reasonable environmental mitigation costs to sustain environmental permits. Administer the Water Authority s portion of operations, maintenance, and repair costs for the All-American Canal Lining and Coachella Canal Lining projects, and ensure costs are within contractual obligations. Implement environmental mitigation projects on time and on budget for the All-American Canal Lining and Coachella Canal Lining projects as required by state and federal environmental compliance documents. Advocate for the Water Authority s interests in development of Colorado River Basin water supply and management strategies, including binational projects. Achieve the establishment of a Water Authority Intentionally Created Surplus account for the temporary storage of Water Authority Quantification Settlement Agreement water in Lake Mead. Dec 2017 Jun 2019 Jun 2019 Jun 2019 Jun 2019 Jun 2019 Jun 2019 Jun 2019 WATER SUPPLY PORTFOLIO Colorado River 2-9

28 Member Agency Local Supply Local water resources developed and managed by the Water Authority s member agencies are critical to the success of the region s water supply diversification program. Local projects reduce the need for imported water and often provide agencies with a drought-proof supply. Local resources managed by the member agencies and included in the Member Agency Local Supply program are recycled water, groundwater, and surface water. As part of this program, the Water Authority works closely with its member agencies to encourage the development and optimization of local water supplies. This is accomplished by identifying, promoting, and obtaining outside funding opportunities to assist agencies in offsetting project costs, serving as a regional leader and facilitator on various regulatory issues, and providing technical assistance. Local supplies reduce the need for imported water and often provide agencies with a drought-proof supply. Recycled water is a sustainable resource that has become an important supply source for the San Diego region. Recycled water is municipal wastewater that is treated and distributed for use in irrigation and other non-potable purposes, or can be treated to a higher level and used as a source of drinking water. Recycled water use in 2013 was approximately 28,800 acre-feet for the San Diego region and was limited to non-potable purposes. Consistent with the Water Authority s 2010 Urban Water Management Plan resource targets, staff estimates that more than 40,000 acre-feet of recycled water will be beneficially reused within the Water Authority s service area by To encourage the use of recycled water, the Water Authority has obtained outside funding to assist member agencies within the region to offset their recycled water project planning, design, construction, and operating costs. Through Proposition 50, the Water Authority was awarded grant funding for the Recycled Water Retrofit Assistance Program. The Program offers financial assistance to end-users to facilitate the retrofitting of user s sites to accept recycled water and help expand non-potable recycled water distribution systems. Approximately 3,000 acre-feet of recycled water will be beneficially reused as a result of this funding program. While large scale groundwater supply development is limited within the region due to local geologic conditions, this supply source still has a role in diversifying and improving the reliability of the region s resource mix. In 2013, the annual production of groundwater was approximately 20,000 acre-feet. This total represented yields from both brackish groundwater desalination facilities and municipal wells producing groundwater not requiring desalination. Consistent with the 2010 Urban Water Management Plan resource targets, staff estimates that normal year groundwater yields will be approximately 26,600 acre-feet in Increases in groundwater production over the next few years will be primarily due to the expansion of existing brackish groundwater projects within the region. These projects are operated on a 2-10 WATER SUPPLY PORTFOLIO Member Agency Local Supply

29 safe-yield basis, and are considered highly reliable in times of drought. Of the total projected groundwater yield, approximately 15,500 acre-feet will be from brackish groundwater projects in Historic surface water supplies still represent the largest single local resource in the Water Authority s service area. Twenty-five local water supply reservoirs, with a combined capacity of more than 590,000 acre-feet, capture local runoff from the region s watersheds and store imported water supplies for delivery to surface water treatment plants. The Water Authority s member agencies manage the majority of the region s reservoirs, and have, and will continue to, make substantial investments in these systems. To optimize the use of local storage, the Water Authority works with its member agencies through storage agreements and the aqueduct operating plan. Regulatory requirements, and the water quality in these local reservoirs, have an impact on the ability to maximize the use of these important resources. Since 1980, annual surface water yields have ranged from a low of 18,000 acre-feet to a high of 146,000 acre-feet. Water Authority member agencies have predicted normal surface water yield to be approximately 48,000 acre-feet in year This yield is included in the 2010 Urban Water Management Plan. Figure 2.5 Projected 2020 Water Supply from Member Agency Local Supply 30 % Metropolitan Water District 24 % Imperial Irrigation District Transfer 13 % Conservation 10 % Canal Lining Transfer 7 % Seawater Desalination 6 % Local Surface Water 6 % Recycled Water 4 % Groundwater WATER SUPPLY PORTFOLIO Member Agency Local Supply 2-11

30 Member Agency Local Supply Management strategies Key issue Management strategy Goal number Funding Identify and promote regional water recycling grant opportunities and inform member agencies of potential grant funding opportunities for their local water supply projects. Advocate for state and federal funding of local water supplies. 1,3,4 3,4 Regulatory constraints Retail customer acceptance of recycled water Work with member agencies to ensure local supply projects qualify for funding, and take the lead on implementing regional funding programs. Obtain acceptable and practicable regulatory standards that allow member agencies to maximize local water supply development by engaging in discussions with regulatory agency staff. Advocate at the local, state, and federal level for improving and minimizing regulatory constraints on local water supply development. Implement economically feasible public information and customer outreach strategies, and offer technical assistance to increase use of recycled water. Ensure that total dissolved solids levels do not preclude customers from using recycled water. Advocate for legislative and regulatory changes to advance recycled and groundwater use and participate in stakeholder outreach activities. 1,3,4 4,5,6 4 4,5,6 New local supplies Management of surface water storage Monitor member agency implementation of local water projects and facilitate project development as needed. Implement operational strategies that optimize water storage to protect the region during supply shortages and interruptions. 2 1,2,3, WATER SUPPLY PORTFOLIO Member Agency Local Supply

31 Member Agency Local Supply Near-term goals No. Goal Target date 1 2 Coordinate a regional effort to inform and solicit through the member agencies customer participation in Metropolitan Water District s recycled water On-site Retrofit Pilot Program. Collaborate with the member agencies to develop a plan for surface water storage and groundwater banking that addresses seasonal operations and carryover storage needs. Jun 2016 Jun 2016 Long-term goals No. Goal Target date Implement and distribute Proposition 50 grant funding to local public agencies through the Recycled Water Retrofit Assistance Program. Identify and support member agencies efforts to secure funding for the development and implementation of local water supply projects through the Integrated Regional Water Management Program and other funding sources. Support member agencies in achieving an annual distribution and beneficial reuse of approximately 39,000 acre-feet of recycled water. Support member agencies in achieving an annual production of 11,000 acre-feet of water supplies from brackish groundwater desalination. Jun 2017 Dec 2019 Dec 2019 Dec 2019 WATER SUPPLY PORTFOLIO Member Agency Local Supply 2-13

32 Metropolitan Water District Water from the Metropolitan Water District of Southern California was first imported to the San Diego region in 1947 to supplement existing local surface and groundwater supplies. For more than five decades, MWD had been the region s sole imported supply source. Due to San Diego County s limited natural local supplies, by the late 1980s the region relied on MWD for more than 95 percent of its total water supply. In 1991, critically dry conditions on the State Water Project, one of MWD s two sources of supply, severely limited its ability to meet demands, and caused MWD to ration its supplies to its member agencies. The Water Authority s supply from MWD was reduced by 31 percent 1. While many of MWD member agencies had local supplies to mitigate the impact of MWD s supply curtailment, this reduction had serious impacts on San Diego County because of its limited local supplies and high dependence on MWD. To better mitigate the impact of future droughts on supply and to improve the region s water supply reliability, the Water Authority implemented a water supply diversification strategy to lessen its reliance on a single source of water. A cornerstone of that diversification strategy was the successful execution and implementation of the Colorado River Quantification Settlement Agreement (QSA) in The MWD Board adopted a more severe water curtailment of 50 percent in March 1991; if not for the March miracle rains, MWD s water curtailment would have been worse. Figure 2.6 Projected 2020 Water Supply from the Metropolitan Water District 30 % Metropolitan Water District 24 % Imperial Irrigation District Transfer 13 % Conservation 10 % Canal Lining Transfer 7 % Seawater Desalination 6 % Local Surface Water 6 % Recycled Water 4 % Groundwater 2-14 WATER SUPPLY PORTFOLIO Metropolitan Water District

33 The All-American and Coachella canal lining projects are critical components of the Quantification Settlement Agreement. By constructing concrete-lined canals alongside the existing canal, the Water Authority obtained rights to canal lining water for 110 years. The QSA included the water conservation and transfer agreement with the Imperial Irrigation District, and the All-American Canal and Coachella Canal Lining projects. When fully implemented in 2021, QSA supplies will constitute one-third of the region s overall supply. The Water Authority s diversification effort has reduced its water purchases from MWD to more closely align with its preferential right 2 to MWD water. In 2013, the Water Authority purchased about 300,000 acre-feet of water from MWD, approximately 46 percent of the San Diego region s water portfolio. This amount represents about 18 percent of MWD s water sales, closely matching the Water Authority s preferential right to MWD water of percent as of June Although San Diego County s reliance on MWD supplies has been reduced through water supply diversification, MWD remains an important source of imported water for the region. The Water Authority also uses MWD s transportation facilities to wheel its QSA water to San Diego County. By 2020, MWD supplies will comprise approximately 30 percent of the Water Authority s water supply and the QSA supplies will be about 34 percent of the region s water supply portfolio. For these reasons, MWD s long-term fiscal sustainability and long-term supply reliability are of vital interest to the Water Authority and must be protected. 2 Under the Metropolitan Water District Act, each MWD member agency has a statutory water right called a preferential right to a percentage of MWD s available supplies. WATER SUPPLY PORTFOLIO Metropolitan Water District 2-15