Maureen Stapleton, General Manager of the San Diego County Water Authority provided a presentation at the September Rice Club Luncheon. Topics included a general overview of the Water Authority and its major programs and projects, a water supply update and information on water rates.

1. San Diego County
Water Issues
2010 Update
Asian Business Association Rice Club Luncheon
A i B i A i ti Ri Cl b L h
September 28, 2010
1

2. What Is the Water Authority?
Wholesale water agency
g y
created by State Legislature in
1944
24 member agencies
membe
36-member board of directors
Se es 3.2
Serves 3 million peop e a d
o people and
region’s $174 billion economy
Service area
950,000 acres
97% of county’s population
2

3. Sources of San Diego County’s Water Supply
LAKE
SHASTA
San Diego County
LAKE imports ~80% of its
OROVILLE
water supply
State Water Project
(Bay-Delta)
30%
Colorado River
50%
Local Supplies
and Conservation
20%
3

4. Regional Water Supply Diversification
1991 2010 2020
5% 10%
6%
3% 4% 11%
16% 3% 7%
4%
95%
10% 6%
10%
9%
29%
50% 22%
Metropolitan Water District Seawater Desalination
Imperial Irrigation District Transfer Local Surface Water
All American & Coachella Canal Lining Recycled Water
Conservation Groundwater
Dry-Year Water Transfers
4

5. Q
Quantification Settlement Agreement
g
Colorado River QSA Supplies
Q pp
Imperial Irrigation District transfer
200,000 acre-feet*/year for 45 to 75
years
Canal-lining projects
C l li i j t
80,000 acre-feet**/year for 110 years
Key to supply diversification
strategy Canal-lining project
C l li i j t
Provides 165,000 acre-feet in 2010;
helps mitigate current shortage
By 2021 will provide 30% of
2021,
region’s supply
Lining the Coachella Canal
*At full implementation in 2021
** Acre-foot = 325,900 gallons
5

6. Groundwater and Recycled Water
Recycled Water
28,000
28 000 af/year today growing to
today,
52,000 af/year by 2020
High-quality, drought-proof water
supply
17 agencies in San Diego produce
recycled water
Primarily used for landscaping irrigation
Groundwater
13,000 f/
13 000 af/year t d
today, growing t
i to
53,000 af/year by 2020
San Diego does not have significant
underground storage basins
Brackish groundwater must be
Sweetwater Authority’s groundwater
desalinated
desalination plant
Six local agencies have groundwater
projects
6

7. Conservation
Comprehensive water
conservation programs
programs,
incentives and school
programs since 1990s
65,000
65 000 af/year today
today,
growing to 94,000+ by
2020
Cumulative savings: more
C l ti i
than 600,000 AF
Water efficient planting and rotating nozzle
Shifting emphasis
g p
from indoor to
outdoor conservation
7

8. Seawater Desalination
Carlsbad Desalination Project
Produce up to 56,000 acre-feet annually
Approved term sheet that will lead to
water purchase agreement to buy output
p g y p
of plant
Camp Pendleton Project
56,000
56 000 to 168,000 af/year
168 000
Feasibility studies under way
Bi-national Desalination Project
Encina Power Station, Carlsbad h d
In conjunction with agencies in Nevada,
Arizona and Mexico
Studying site in Baja California
8

9. Capital Improvement Program
$3.8 billion CIP (1989 – 2030)
$1.5 billion Emergency Storage Program (ESP)
Dozens of major projects – completed or under
construction
2010 debt issuance of $627 million to continue
funding CIP
Olivenhain Reservoir and Lake Hodges 9

10. Water Authority Rates 2011
Water Authority Board d t d
W t A th it B d adopted CY 2011 rates
t
following public hearing in June
Treated water rate – up 11.3% ($1,026/AF)
11 3% ($1 026/AF)
Untreated water rate – up 14.7% ($811/AF)
Primary drivers of rate increases:
y
Costs to purchase, deliver imported water
Costs for operating, maintaining and financing regional
water system
t t
10

11. Cost of Water Drives Treated
Water Rate* Increases
“All-in” Increase
All-in Water Authority Melded Supply
Distribution Rate Increase
Transportation MWD
8% 75%
Storage
S
21%
Customer
Service Supply
9% 62%
Water Authority
25%
*Municipal and Industrial Rate
11

12. Wholesale Monthly Cost of Water
to Households
Estimated CY 2011
Wholesale Costs per Household *
p
Cost of water purchases is
62.7% of the wholesale cost of
water
MWD Costs $23.70
$23 70 62.7% is the
h
Cost of Water For an estimated $16.04/month
the Water Authority:
IID/QSA Costs $3.26 Delivering water and maintaining
Water Authority
the system
$4.09
Operating Costs
Rapidly diversifying the region’s
Water Authority 37.3% is Water water supplies
$11.95 Authority Costs
Capital Costs
Providing in-region emergency
water storage
TOTAL: $43/month
* Based upon 0.5 AF of consumption a year
Developing in-region water storage
D l i i i t t
capacity
12

13. Mitigating Rate Impacts –
Water Authority Actions
Current budget eliminated more than a dozen
positions
$2.4M reduction made mid-year in FY 2010 &
2011
Reduction in spot water purchases
Rate stabilization draw – up to $10.7M
$10 7M
MWD rate challenge
Lawsuit challenging MWD’s rates and how they’re
allocated
13

14. Supply Challenges
pp y g
Regulatory restrictions
g y
Fish protections limit State
Water Project deliveries
Lingering effects of
drought
Lake Oroville – April 2010 Storage still recovering
Heading into another dry
winter? (La Niña?)
Effects of climate change
14

15. Response to Supply Challenges
p pp y g
Water Shortage and
Drought Response Plan
Implementation
8% regional target
beginning July 1, 2009
1
Target in effect through
June 30, 2011
30
15

16. Region Succeeding in Saving Water
September 2009 - August 2010
Acre-feet Urban W t U *
U b Water Use*
18%
below
600,000 FYs
FY 08/09
602,300 11%
below
550,000 FYs 09/10
552,100
552 100
500,000
493,100
450 000
450,000
400,000 FYs 2008/ FYs 2009/ FYs 2010/
2009 2010 2011
*12-month periods overlap two fiscal years. 16

17. San Diego County: 1991 vs 2010
vs.
$174
$1026
3.2 1.3
578 $323 2.5 1.08 $65 566
1991 2010
Water use (thousand acre-feet) Population (millions)
Cost of water per acre-foot (full
p ( Jobs (millions)
( )
service treated water rate)
Gross Domestic Product (billions)
17

18. MWD Rate Challenge
Water Authority filed it i J
W t A th it fil d suit in June against MWD
i t
over its 2011-2012 rates
Violates California law, standard practices
law
MWD improperly overcharges for transporting
water through its facilities
g
MWD improperly subsidizes the price of water it
sells
18

19. Impacts to Local Ratepayers
*Based on 600,000 AF annual sales; 2021 figure includes
$40B Delta fix share
19

20. QSA Litigation
January 2010: Superior Court ruling invalidated 13
agreements
Includes IID transfer and canal-lining agreements
Ruling based on single sentence in one agreement
State’s bli ti t fund
St t ’ obligation to f d
Salton Sea mitigation found
unconstitutional
Water Authority and other
agencies appealed ruling
Temporary stay allowing
transfers to continue
Appellate Court decision
expected in 2011
All-American Canal 20

21. Co t u g Challenges
Continuing C a e ges
Achieving Bay Delta fixes
Bay-Delta
that restore reliability
Rising water rates
g
Sustaining new water use
ethic
Resolving MWD and QSA
legal disputes
g p
Water bond passage in Bay-Delta waterways
2012?
21

22. Questions
22