Water Talks: Emergency Storage Project

Frank Belock

Deputy General Manager January 31, 2012

$3.5 billion CIP (1989 – 2030) $1.5 billion Emergency Storage Program (ESP)

Dozens of major projects – completed or under construction

2 Olivenhain Reservoir and Lake Hodges

Four Phases

System of pipelines, pump stations and reservoirs

Store water locally

Provide more flexible water deliveries

Over 90,000 AF

Meet needs through 2030

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Pipeline

Dam and Reservoir

Pump Station

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Project: Olivenhain Pipeline

Completed: 2002

Cost: $33 million

Benefit: Improved Water Delivery

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Project: Olivenhain Dam & Reservoir

Completed: 2003

Cost: $198 million

Benefit: 24,000 AF of storage

Completed: 2004

Olivenhain Pump Station Project: Olivenhain Pump Station

Completed: 2005

Cost: $45 million

Benefit: 24,000 AF of storage

Pipeline

Pump Station

Transmission Line

Hydroelectric Power generation

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Project: Lake Hodges Pump Station and Pumped

Storage Projects

Completed: 2012

Cost: $181 million

Benefits: 20,000 AF ESP storage; 40MW power 10

120 feet deep

Equivalent to a 10 story building underground

Helps to capture runoff

Pumps up 770 feet to Olivenhain Reservoir

Generate hydroelectric power during peak power demands

25-year Power Purchase and Sale Agreement with SDG&E

SDG&E Revenues + Energy Savings

~ $6 M / yr

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Project: San Vicente Pipeline, Pump Station &

Surge Tank

Completed: 2011

Cost: $459 million

Benefit: Improved Water Delivery

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Project: San Vicente Dam Raise Complete: 2013 Cost: $449.5 million

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Benefit: Increase reservoir capacity by 152,000 acre-feet

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Rendering of Dam Raised by 117 Feet

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San Vicente Reservoir After Fill

Marina RCC Batch Plant

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RCC Conveyor System

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Dam Raise RCC Placement

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San Vicente Marina Facilities

2004 OLIVENHAIN

24,000 AF

HODGES

20,000 AF 2010

SAN VICENTE

152,000 AF 2013

TOTAL- 196,000 AF (90K Emergency + 100K

Carryover + 6K Operational)

Enhancing Regional Water Supply Reliability

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Construction of first facilities began in 2000

Final phase complete in 2014

Costs spread out over several decades to minimize

water rate impacts

Provides 90,100 acre-feet of water storage for

emergency use

Environmental mitigation is included to make up for

construction impacts

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San Diego County Water Authority

The amount of money at stake in the Water Authority’s rate lawsuit vs. MWD (over 45 years):

$1.3 billion to $2.1 billion

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In October 2003, Colorado River QSA is executed: ◦ Water Authority signs 45- to 75-year deal to buy 200,000

AF annually from the Imperial Irrigation District

◦ Water Authority agrees to line the All American and Coachella canals and receive 80,000 AF annually for 110 years

◦ Requires transportation rate from MWD to move supplies to San Diego through MWD’s system

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MWD had to disaggregate its uniform water rate to develop a transportation charge for the Water Authority’s transfer supplies

Facing a loss of water sales revenues due to the Water Authority’s supply diversification, MWD took vast majority of its water supply costs and misallocated them to its transportation charge to move the Water Authority’s IID and Canal Lining transfer supplies

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Charged for Transportation

Charged for Purchase of MWD Water 31

< 2003 2003>

System

Access

Rate

Power

Rate

Water

Stewardship

Rate

Water

Supply

Rate

Uniform

Water

Rate

MWD

System

Costs

Water

Supply

Costs

Water Supply Costs

MWD System Costs

MWD Must

Disaggregate

Its Costs

New Rate Structure Misallocates Water Supply

Costs to Transportation Charge

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Charged for Transportation

Charged for Purchase of MWD Water

System

Access

Rate

Power

Rate

Water

Supply

Rate

Water Supply Costs

MWD System Costs

MWD is required to place disputed payments made by the Water Authority into an escrow account ◦ By end of 2012, escrow balance will grow to

approximately $78 million

◦ By the end of 2013, escrow balance will grow to approximately $135 million

If the Water Authority wins the case, MWD must return the money to the Water Authority

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Case assigned to San Francisco Superior Court Judge Richard Kramer ◦ Case has been designated as “complex” Assigned to single judge for all purposes

Complex cases generally get more attention and resources from the court

Estimated trial court decision in late 2012

Imperial Irrigation District and Utility Consumers’ Action Network (UCAN) are litigants on Water Authority’s side

Jan. 6, 2012: Court granted Water Authority and IID motion to allow discovery in case

Next hearing: Feb. 17, 2012 (case management conference)

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