AWBA Board Meeting, March 20, 2002Tucson AMA Institutional and Policy Advisory Group (IPAG) CAP Storage & Recovery in the Tucson AMA Preliminary Observations.

AWBA Board Meeting, March 20, 2002Tucson AMA Institutional and Policy Advisory Group (IPAG)

CAP Storage & Recovery in the Tucson AMA

Preliminary Observations & Policy Options from the Institutional

and Policy Advisory Group (IPAG)

Informational Briefing

AWBA Board Meeting, March 20, 2002

AWBA Board Meeting, March 20, 2002Tucson AMA Institutional and Policy Advisory Group (IPAG)

IPAG Background

Regional Recharge Plan (1998)

AWBA Facilities Plan for TAMA (1998)

Ongoing examination• Recharge capacity & sites

» Kai-Avra proposal (2000)

• Subcontract firming • Recovery

AWBA Board Meeting, March 20, 2002Tucson AMA Institutional and Policy Advisory Group (IPAG)

Analysis

Re-examination of the 1998 Regional Recharge Plan

• Much of the report remains valid and useful

• Partially outdated due to additional facilities and other factors

Updated analysis• More comprehensive exploration of physical

& financial variables

• Emphasis on AWBA activities

AWBA Board Meeting, March 20, 2002Tucson AMA Institutional and Policy Advisory Group (IPAG)

Analytic Tool

• DEMAND by sector & provider

• USF & GSF capacities & fees

• AWBA funding & storage

• STORAGE by facility, storer & year

• SUMMARY

Series of linked, interactive spreadsheets

AWBA Board Meeting, March 20, 2002Tucson AMA Institutional and Policy Advisory Group (IPAG)

AWBA Spreadsheet Cost of water, cost of

storage, 4-cent tax revenue & carryover, withdrawal fees, etc.

Cost of water, cost of storage, 4-cent tax revenue & carryover, withdrawal fees, etc.

Incentive Priced CAP

$-

$10

$20

$30

$40

$50

$60

$70

$80

1996 1999 2002 2005 2008 2011 2014

year

$/A

F

Firm

Advisory

Projected

Ad Valorem tax

$0.0 mil.

$0.5 mil.

$1.0 mil.

$1.5 mil.

$2.0 mil.

$2.5 mil.

$3.0 mil.

1996 1999 2002 2005 2008 2011 2014

year

$/A

F

Projected

Actual

Annual & cumulative

storage

Annual AWBA storage (all sources)

0 kAF

25 kAF

50 kAF

75 kAF

2002 2006 2010 2014

Annual AWBA storage (all sources)

0 kAF

25 kAF

50 kAF

75 kAF

2002 2006 2010 2014

Cumulative AWBA storage (by source)

0 kAF

250 kAF

500 kAF

750 kAF

1,000 kAF

2002 2006 2010 2014

Cumulative AWBA storage (by source)

0 kAF

250 kAF

500 kAF

750 kAF

1,000 kAF

2002 2006 2010 2014

“Baseline” Assumptions• Cost of water: CAP advisory rates through 2007, 3% growth thereafter

• Ad valorem tax: $1.6 million base, 3% annual growth

• Facility charge: flat $12, based on average cost at TAMA USFs and 2% GSF

“Baseline” Assumptions• Cost of water: CAP advisory rates through 2007, 3% growth thereafter

• Ad valorem tax: $1.6 million base, 3% annual growth

• Facility charge: flat $12, based on average cost at TAMA USFs and 2% GSF

AWBA Board Meeting, March 20, 2002Tucson AMA Institutional and Policy Advisory Group (IPAG)

CAP Firming

• 200,000+ AF shortfall (30% below target)

• Shortfall reflects revenue constraints and cost of credits

• Will likely result in future groundwater mining

The AWBA’s firming target for the Tucson AMA will not be met with projected revenue

AWBA Board Meeting, March 20, 2002Tucson AMA Institutional and Policy Advisory Group (IPAG)

Firming Options

Bridging the firming gap {options under consideration}

– Lower the cost of credits• Continue to lower water costs

• Seek low-cost energy

• Continue to lower storage costs at USFs • Spread fixed costs by utilizing available capacity

• Increase utilization of TAMA GSFs• Invest in infrastructure to GSFs willing to pay $21/AF

• Use Withdrawal Fee money to buy-down the $21

• Lower the AWBA GSF price for the Tucson AMA

AWBA Board Meeting, March 20, 2002Tucson AMA Institutional and Policy Advisory Group (IPAG)

Firming Options

Bridging the firming gap {options under consideration}

– Restructure existing TAMA revenue sources

• Extend ad valorem revenue stream• Use Withdrawal Fee money for firming

– Other

It is likely that a combination of solutions will be required

AWBA Board Meeting, March 20, 2002Tucson AMA Institutional and Policy Advisory Group (IPAG)

• Lowering the cost of credits through buy-down of the $21/AF80% USF; 20% GSF with $4/AF buy-down

“Baseline” 98% USF

Firming Options

Hypothetical Example

30% USF; 70% GSF with $4/AF buy-down

AWBA Board Meeting, March 20, 2002Tucson AMA Institutional and Policy Advisory Group (IPAG)

CAP Recharge Locations

Pima Mine Rd.Pima Mine Rd.

ClearwaterClearwater

Lower Santa Cruz USF

Lower Santa Cruz USF

Avra USFAvra USF

BKWBKW

Kai-Red RockKai-Red Rock

Service Areas/CC&Ns

Operational USFs

Operational GSFs

Central Arizona Project

Groundw

aterflow

CMIDCMID

AWBA Board Meeting, March 20, 2002Tucson AMA Institutional and Policy Advisory Group (IPAG)

• Encourage & participate in dialog with CAWCD, AWBA, ADWR, et al.

• Further identify TAMA subcontractors’ recovery needs

• Explore the recovery implications of interstate storage

Recovery

There is strong interest in where water is stored and how it will be recovered

Recovery planning activities

AWBA Board Meeting, March 20, 2002Tucson AMA Institutional and Policy Advisory Group (IPAG)

Next Steps

Continue to refine analysis• Develop recommendations

Participate in recovery discussions