Agenda Number 9. Update on MOU and Pilot System Conservation Program including Discussion and Consideration of Action Concerning Possible Pilot System Conservation Agricultural Pool Program CAWCD Board Meeting November 5, 2015 David Johnson, Senior Attorney L owe r Basin Pilot Dr ought Re sponse Ac tions MOU Pilot Syste m Conse r vation Agr e e me nt ION - Sto re o r c o nse rve 740 kaf Cre a te SYST R in L a ke Me a d / L a ke Po we ll Goal RE SE RVOIR PROT E CT E M WAT E in L a ke Me a d (e st. 75 kaf) Near ‐ term Efforts: Structural Deficit Par tie s BOR, ADWR, CAP, SNWA, CRCN, MWD, CRBC BOR, CAP, MWD, SNWA, De nve r Wa te r 2014 – 2017 2015 – 2016, o r until funds e xpe nde d T e r m Sc ope L owe r Basin Co lo ra d o Rive r c o ntra c to rs (AZ, CA, Basin-wide : c o ntra c to rs a nd e ntitle me nts ho lde rs NV) a nd e ntitle me nt ho lde rs Commitme nts Re s. Pro te c tio n T o ta l = 740 kaf T otal = $11M CAP = 345 kaf, BOR = $3M, MWD = 300 ka f, CAP = $2M, SNWA = 45 ka f, MWD = $2M, BOR = 50 ka f SNWA = $2M, ADWR, CRCN, CRBC = 0 De nve r Wa te r = $2M Cre a te 345 ka f thro ug h c o nse rva tio n/ sto ra g e in Co ntrib ute funding ($2M) CAP Commitme nts L a ke Me a d b y E OY '17 - All Syste m wa te r ‐ ICS Pr ogr ams : Ag Po o l, a nd L o c a l Supply Re pla c e me nt Syste m Wate r : YMIDD, AZ Unuse d (Art. II .B.6), ‐ T urnb a c k CAWCD Boar d De c . '14 Bo a rd Appro va l o f Ag re e me nt – inc luding April '14 Bo a rd Appro va l o f Ag re e me nt a utho rizing CAP Re se rvo ir Pro te c tio n Pla n c o mpo ne nts, $2M c o ntrib utio n a nd to imple me nt ne c e ssa ry Ac tivitie s Oc t. '14 Bo a rd Appro va l o f Ag Po o l pro g ra m (~$5M a g re e me nts re se rve s), No v. '14 b rie fing o n ICS pro g ra m inc luding L o c a l Supply Re pla c e me nt De ve lo p L o c a l Supply Re pla c e me nt ICS pro je c t fo r Pa rtic ipa te with funde rs in re vie w/ a ppro va l o f Additional CAP '16, c o nse rva tio n pro je c ts. Arizo na Co lo ra do Rive r Ac tions c o nse rva tio n pro je c ts must o b ta in CAP fo rb e a ra nc e to b e a ppro ve d/ funde d. CAP ha s ve to a utho rity fo r a ny pro je c ts in Arizo na . 1
MOU ‐ Reservoir Protection Plan: CAP’s Status NAME ‘14 ‘15 ‘16 ‘17 Total Note YMIDD 7,000 7,000 7,000 0 21,000 System Fallowing water Ag Pool 0 81,000 80,000 0 161,000 11 CAP Ag EC ‐ ICS Districts Supply 0 15,000 15,000 0 30,000 PHX in ‘15, Replacement PHX + Others EC ‐ ICS ’16 Create On ‐ River 18,000 74,000 40,000 0 132,000 System Turnback + CAP water Turnback APS – CAP 0 500 500 1,000 System Forbearance water TOTAL 25,000 177,500 142,500 0 345,000 Pilot System Conservation Project Locations • 10 Upper Basin Projects (~4,000 af) 5 Wyoming – deficit irrigation • 4 Colorado – deficit irrigation • 1 Colorado ‐ municipal conservation • • 5 Lower Basin Projects (37,000 af) Bullhead City reuse • Tohono O’odham Nation conservation • Nevada fallowing • California ‐ turf and irrigation efficiency • 2
CAP Pilot System Conservation Agricultural Pool Program • Two goals: 1. Generate at least 25,000 af of system conservation in Lake Mead; 2. Establish a source of funding to mitigate increases in the Pumping Energy Rate in 2017 and 2018 CAP PSC Agricultural Pool Program – Goal 1 • The Pilot System Conservation Program would pay participating irrigation districts to reduce their use of CAP water through the use of deficit irrigation, new conservation, fallowing or reliance on local supplies • Irrigation districts may only participate in this conservation program if they are currently participating in the MOU Agricultural Pool Forbearance Program 3
CAP PSC Agricultural Pool Program – Goal 2 • In 2016, irrigation districts participating in the MOU Agricultural Pool Forbearance Program will pay $38/af for Ag Pool Water • Without this Conservation Program, costs per acre ‐ foot of Ag Pool Water are projected to rise to $61 in 2017 and $65 in 2018, increases of 60% and 71% respectively • With this Conservation Program, costs per acre ‐ foot are projected to rise only to $53 in 2017 and $57 in 2018, which correspond to smaller increases of 39% and 50% respectively • If the Conservation Program is approved, rates for Ag Pool Water will return to the published rate schedule in 2019 CAP PSC Agricultural Pool Program – Funding + + + 4
CAP PSC Agricultural Pool Program – Existing PSC Funding Approximately $11 million was originally contributed to the Pilot • System Conservation Program by Reclamation, CAWCD, Metropolitan Water District of Southern California, Southern Nevada Water Authority, and Denver Water Approximately $8.35 million targets projects in the Lower Basin • At this time, only about $6.825 million has been allocated for use in • the Lower Basin, leaving approximately $1.51 million for use in additional Lower Basin projects On October 20, 2015, Reclamation informed CAWCD that this project • met PSC objectives and requirements and that the PSC wants to move forward with the project using existing PSC funds Upon project completion, those monies will be transferred to • CAWCD to be applied to rates in 2017 and 2018 CAP PSC Agricultural Pool Program – California Funding • Metropolitan Water District of Southern California (MWD) and the Colorado River Board of California (CRBC) have agreed to contribute $500,000 to the PSC for use in this project • CRBC will meet on November 18 to seek approval to transfer $500,000 to MWD which MWD can contribute to the PSC • If the transfer to MWD is approved, MWD will contribute these monies to the PSC. Upon project completion, those monies will be transferred to CAWCD to be applied to rates in 2017 and 2018 5
CAP PSC Agricultural Pool Program – CAP Additional Funding The 2016 ‐ 2017 CAWCD budget includes $1 million in spending in each of • 2016 and 2017 for Colorado River conservation projects The $1 million for 2016 Colorado River conservation projects is already • dedicated for use in the PSC ‐ CAWCD agreed to contribute a total of $2 million of which $1 million was already contributed in 2015. The remaining $1 million is this portion of the 2016 budget The $1 million for 2017 Colorado River conservation projects was originally • anticipated to be used for expansion of the PSC in 2017 At this time, the CAP PSC Agricultural Pool Program is understood to be • the last project in the PSC If approved for use in this project, CAWCD will contribute these monies to • the PSC. Upon project completion, those monies will return to CAWCD to be applied to rates in 2017 and 2018 CAP PSC Agricultural Pool Program – Ag Forbearance Program Savings • In 2016, the published Pumping Energy Rate is anticipated to be $76/af • In 2016, irrigation districts participating in the MOU Agricultural Pool Forbearance Program will pay $38/af for Ag Pool Water • The difference between these rates is $38, which is the cost to CAP to deliver Ag Pool Water water to irrigation districts participating in the MOU 6
CAP PSC Agricultural Pool Program – Ag Forbearance Program Savings The PSC Conservation Program contemplates irrigation districts • receiving up to 12% less CAP water in 2016 Each acre ‐ foot of water conserved pursuant to the conservation • program is an acre ‐ foot of water on which CAWCD does not have to spend $38 to deliver If all eleven districts that can participate in the conservation program • choose to do so, CAWCD would conserve 25,265 acre ‐ feet of water in Lake Mead At the same time, CAWCD would save $960,070 by not delivering • that water (25,265 acre ‐ feet * $38/af) If approved for use in this project, CAWCD will not contribute these • funds to the PSC. Rather, CAWCD will retain the savings and apply directly to rates in 2017 and 2018 CAP PSC Agricultural Pool Program – Total Funding • If all sources of funding are approved, approximately $3.96 million will be available to reduce the Pumping Energy Rate in 2017 and 2018 • $1.5 million of existing PSC funds • $500,000 of additional PSC contributions from MWD/CRBC • $1.0 million of additional PSC contributions from CAWCD • $960,000 saved in the Ag Pool Forbearance Program 7
CAP PSC Agricultural Pool Program – 2017 and 2018 Rate Discounts • Following the stepdown in the Ag Pool in 2017, the participating irrigation districts will hold contracts for 235,778 acre ‐ feet of Ag Pool Water • If there is no declaration of shortage in 2017 and 2018 and the irrigation districts order all 235,778 acre ‐ feet in 2017 and 2018, they would each receive a $8.40 discount on those deliveries • $3,960,000 ÷ (235,778 acre ‐ feet delivered * 2 years of deliveries) = $8.3977 CAP PSC Agricultural Pool Program – Amend PSC • The final step necessary to authorize this project is to amend the PSC to allow MWD and CAWCD to contribute the additional $500,000 and $1 million respectively to the PSC • Currently, local funding agencies are limited to a $2 million contribution 8
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