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HomeMy WebLinkAbout11.18.19 Email from Paul Gosselin - Agenda Item 4.03 - Part 2 Snyder, Ashley From: Gosselin, Paul Sent: Monday, November 18, 2019 8:31 AM To: BOS Cc: McCracken, Shari; Buck, Christina; Clerk of the Board; Hatcher, Casey Subject: Agenda Item 4.03 Attachments: 079_November 13 DCP Negotiations_Live Edits_20191115.docx Board Members One additional document for tomorrow's item. The attachment is the latest draft offer of the State Water Project Contracts from last Friday. The Contractors were asked to indicate whether they would recommend to their Boards to support the draft. Of the 29 contractors, 11 indicated that they would not recommend support to their Boards. I also reported that I would not recommend that the Board of Supervisors support this draft. Tomorrow's discussion is information only and will provide an opportunity to provide direction. Thank you. Paul Taut cosset-in, Director Butte County Department of Water and Resource Conservation 308 Nelson Avenue Oroville, CA 95965 Office: (530)552-3590 Cell: (530) 574-7443 1 DCP Negotiation#f€ O78 DWR Fifth Offer November 153,2019 Page 1 of 11 AGREEMENT IN PRINCIPLE DRAFT WORKING DOCUMENT Draft—November 2019 COMPREHENSIVE TRACK-CHANGES VERSION This working document for an agreement in principle is developed from the State Water Contractor Public Water Agencies'offers presented from July 24,2019 to present,the Department of Water Resources'offers presented from July 31,2019 to present,and information discussed and presented by the technical work groups.The content and format of this document are preliminary in nature and subject to modification. Language in this document is formatted in order to aid the reader in distinguishing new text of PWA's sixth offer based on the text of DWR's fifth offer and includes the live edit language from November 14, 2019. • Blue underlined text or strikeouts indicates PWA's sixth offer Agreement in Principle for the State Water Project Water Supply Contract Amendment on a Delta Conveyance Project This Agreement in Principle(AIP)is by and between the undersigned State Water Project Public Water Agencies(PWAs)and the State of California through the Department of Water Resources(DWR)for the purpose of amending the State Water Project Water Supply Contracts. I. AIP Objectives A. Develop an agreement between the State Water Project Contractor Public Water Agencies and Department of Water Resources to equitably allocate costs and benefits of a potential Delta Conveyance Facility that preserves operational flexibility such that the Department of Water Resources can manage the State Water Project to meet regulatory requirements,contractual responsibilities,and State Water Project purposes. II. Definitions A. Delta shall mean the Sacramento-San Joaquin Delta as defined in Section 12220 of the California Water Code on the date of approval of the Bond Act by the voters of the State of California. B. State Water Project(SWP)shall mean the State Water Resources Development System as described in California Water Code section 12931. DRAFT The content and format of this document are preliminary in nature and subject to modification. DCP Negotiation# D7S„ DWR Fifth Offer November 154,2019 Page 2 of 11 C. State Water Project Contractor Public Water Agencies(PWAs)shall include the 29 entities holding State Water Project Water Supply Contracts with the Department of Water Resources. D. North of Delta Public Water Agencies shall mean the public water agencies of County of Butte,Plumas County Flood Control and Water Conservation District,City of Yuba City, Solano County Water Agency,and Napa County Flood Control and Water Conservation District. E. Delta Conveyance Facility(DCF)shall mean those facilities of the State Water Project consisting of a water diversion intake structure,or structures,located on the Sacramento River and connected by facilities to Banks Pumping Plant in the southern Delta with a single tunnel that will,in whole or in part,serve the purposes of this AIP. Delta Conveyance Facility Water(DCF Water)shall mean Project Water diverted at and attributable to the Delta Conveyance Facility rt tl„u`�!i^��r,�„ti�n7 d I a\ill . �'� ACurrent Year DCF Water shall mean DCF water diverted(liarii7f tfu`( 1hPi7�!Ir.Y"`1r I Formatted:Not Strikethrou gh c,rN/-rJ J(J(. yrII J d i`i7 `,( t/Il»I cubccquenty a rbctwecn October Formatted:Not Stnkethrough ? -wr�e�! a�p�t��r��G���P ?.61 i:��t tfe��ti�ffa��en✓ir1F ym����P (G�,� a�aJ..a�ra tfe��m��;-wtu�rJ����P:?-wie�!�la�fle�a�r��a Contracted Proportionate Share(CPS)shall mean each PWA's agreed upon level of participation to allocate costs and benefits as specified in section IV. 14,IClifton Court Forebay Diversion shall mean the existing diversion at Clifton Court Forebay facility through its intake located on Old River in the southern Delta and the associated Skinner Fish Facility. Banks Pumping Plant shall mean the existing Banks Pumping Plant facility located near the town of Tracy,CA that pumps water into the existing State Water Project California Aqueduct. I..,I<.; Participating Table A Percentage(PTAP)shall be that portion of a Partial Participating PWA's Table A that is participating in the DCF. Participating PWA shall mean a PWA with a CPS greater than zero or the participating portion of a Partially Participating PWA that is indicated by a PTAP of greater than zero.- \ll Partial Participating PWA shall mean a PWA with a PTAP less than 100%but greater than zero. Non-Participating PWA shall mean a PWA with a CPS of zero or the non- participating portion of a Partial Participating PWA that is indicated by a PTAP of less than 100 percent. 1`4 0 Non-Participant PWA Storage shall mean a PWA's proportionate share of available storage in San Luis Reservoir multiplied by the calculation of 100%less than the PTAP. T,I!;' Non-project water shall have the meaning as defined in the State Water Project Water Supply Contracts. DCF Available Capacity means capacity in the DCF that is in excess of State Water Project purposes and available to move non-project water,given physical and regulatory constraints,as determined by DWR. DRAFT The content and format of this document are preliminary in nature and subject to modification. DCP Negotiation#f€ O78 DWR Fifth Offer November 153,2019 Page 3 of 11 d,I;;> Table A Water shall mean water supply available for current year Table A allocation. III. Cost Allocation,Charges,and Participation Framework A. Proposed Framework The PWAs propose an"Opt-In"approach where each"Participating PWA"opts to participate in a DCF at a level in proportion to its CPS.A PWAs CPS shall be the proportion of at least its Agricultural or M&I Table A amount of its contract. The five North of Delta Public Water Agencies will not directly benefit from and will not participate in any DCF and will be excluded from payment of capital,operations, maintenance,power,and,replacement costs for any DCF. B. Delta Conveyance Project Capacity:The capacity of the SWP share of a potential Delta Conveyance Project assumed for this AIP is 6000 cubic feet per second. C. General principles for charges associated with any DCF are that capital costs and fixed Operations,Maintenance,Power and Replacement(OMP&R)costs of any DCF will be billed to and collected from each of the PWAs through the annual Statements of Charges consistent with each PWA's CPS in any DCF.Variable costs of conveying water through any DCF will be equitably allocated as described in detail in this section. 1.DCF Fixed Charge Components a. All fixed capital and minimum OMP&R costs associated with any DCF will be 100%reimbursable and recoverable by DWR from PWAs through a separately stated line item in the annual Statement of Charges referencing a separate DCF invoice.All such costs will be charged in proportion to each PWA's Contracted Proportionate Share in any DCF. These costs shall be allocated to and billed under two new charges as follows: i. DCF Capital Charge Component ii. DCF Minimum OMP&R Component b. Use of any DCF by or on behalf of a Participating PWA to convey that PWA's non-project water and transfers and exchanges under V.C,shall not result in additional DCF Fixed Charges. c. DCF Capital Charge Component is comprised of four categories i. Charges to recover the annual Financing Costs of Water Systems Facility Revenue Bonds,the proceeds of which are used to pay DCF Capital Costs. ii. Charges pursuant to pending Article 61(6)(5)of the SWP Water Supply Contracts to recover DCF Capital Costs paid with DRAFT The content and format of this document are preliminary in nature and subject to modification. DCP Negotiation#f€ O78 DWR Fifth Offer November 153,2019 Page 4 of 11 amounts in the State Water Resources Development System Reinvestment Account. iii. Charges to recover on a current basis DCF Capital Costs paid annually for assets that will have a short economic useful life or will not have a substantial cost. iv. Charges to allocate appropriately,if necessary,DCF Capital Costs prepaid or otherwise advanced. To the extent legally and otherwise feasible,DWR will use Revenue Bond proceeds to reimburse DCF Capital Costs advanced by DWR,PWAs,or others prior to the commencement of construction and will include the financing costs of such revenue bonds in DCF Capital Charges. d. DCF Minimum OMP&R Charge Component:Charges under this component will recover the estimated and/or actual annual fixed OMP&R costs of any DCF. 2.DCF Variable OMP&R Charges:Charges under this component will recover the DCF estimated and/or actual annual variable OMP&R costs. a. The DCF power costs are 100%reimbursable by the Participating PWAs unless recovered as variable costs for Non-Participants use specified in section V.D. b. Joint DWR/PWA Technical Committee: Within five years after commencing construction of the DCF,a Joint DWR/PWA Technical Committee will be convened to develop a cost allocation and recovery methodology for the DCF.The methodology shall reflect a charge in dollars/acre-ft,returning to DWR the total DCF variable OMP&R cost. 3.Power Costs Incurred During Construction:Per the DWR capitalization policy, any power costs(for example,power supply,grid connections,transmission) incurred to construct any DCF shall be capitalized during Construction Work in Progress,as used in DWR's financial statements,and costs are 100% reimbursable recovered through the DCF Capital Charge Component. 4.Charge Redetermination:All DCF charges shall be subject to redetermination. DRAFT The content and format of this document are preliminary in nature and subject to modification. DCP Negotiation#f€ O78 DWR Fifth Offer November 153,2019 Page 5 of 11 IV. Public Water Agencies Proportionate Share A. Contracted Proportionate Share Contracted Public Water Agency(PWA) Proportionate Share (%) Alameda County Flood Control and Water Conservation District Zone 7 Alameda County Water District Antelope Valley-East Kern Water Agency City of Yuba City 0 Coachella Valley Water District County of Butte 0 County of Kings-Government Center 0 Crestline-Lake Arrowhead Water Agency Desert Water Agency Dudley Ridge Water District Empire West Side Irrigation District Kern County Water Agency Littlerock Creek Irrigation District Metropolitan Water District of Southern California Mojave Water Agency Napa County Flood Control and Water Conservation District 0 Oak Flat Water District 0 Palmdale Water District Plumas County Flood Control and Water Conservation District 0 San Bernardino Valley Municipal Water District San Gabriel Valley Municipal Water District San Gorgonio Pass Water Agency San Luis Obispo County Flood Control and Water Conservation District Santa Barbara County Flood Control and Water Conservation District Santa Clara Valley Water District Santa Clarita Valley Water Agency Solano County Water Agency 0 Tulare Lake Basin Water Storage District 0 Ventura County Watershed Protection District Total: 100 DRAFT The content and format of this document are preliminary in nature and subject to modification. DCP Negotiation#f€ O78 DWR Fifth Offer November 1,53,2019 Page 6 of 11 B. Alternative Framework For purposes of CEQA analysis,the PWAs may propose that an alternative cost allocation be included in the AIP and evaluated in the EIR. V. Accounting and Administration of Operations Related to the Delta Conveyance Facility A. Recognition that administration of the resulting contract amendment,including accommodating the tracking of DCF Water on a calendar year basis, may result in potentially substantial increases in costs and resource needs,to be borne by Participants.DWR and the Participants have a joint interest in minimizing costs and improving efficiencies. B. Integration into the State Water Project Generally 1.DWR will continue to operate the SWP,including any DCF,at its sole discretion, considering all applicable regulatory and contractual requirements and restrictions,and coordinate with PWAs in a timely manner. 2.The DCF will provide benefits to the SWP as a whole,including potentially enhanced water supply reliability. The DCF shall be operated to equitably balance the overall improvements with the significant investments being made by the Participating PWAs,while recognizing the significant investments that all PWAs have made and will continue to make. 3.After any use by DWR for conveyance of Table A water or DCF Water,and to the extent DWR determines capacity is available,use of DCF is available to each PWA as specified in section V.D of this AIP. 4.DWR forecasting and planning processes will incorporate any DCF. a. DWR will continue to produce Table A allocation forecasts. b. DWR will provide DCF Water forecasts on a timeframe similar to the Table A allocation forecasts,or more frequently where SWP operations and hydrological conditions warrant. 5.DWR operational scheduling and accounting processes will incorporate any DCF and will distinguish between Table A water(that which can be delivered absent the DCF)and DCF Waters il( a.i,.d rwr1 0,,,1 4,,), 1 t4 ),4441 14,44- 6.Article 21 Administration: a. Except as provided below,Article 21 will be offered and administered by DWR following the existing process. b. Article 21 availability for South-of-Delta PWAs will be determined by DWR using the DCF accounting and administration process as further described below: i. Article 21 may be made available once that volume of Current Year DCF water stored in SLR is displaced with Table A Water. ii. When SLR would have physically filled absent any Current Year DCF Water stored in SLR,Article 21 will be made available to all PWAs. DRAFT The content and format of this document are preliminary in nature and subject to modification. DCP Negotiation# D97S8. DWR Fifth Offer November 15,,,x,2019 Page 7 of 11 7.Operational Constraints and Priorities a. Article 12(f)of the SWP Water Supply Contracts will be assessed and,if necessary,modified to specifically establish the equitable priority for conveyance of water as outlined below. b. Clifton Court Forebay Diversion Priority:In the event that DWR uses its discretion to move Table A Water through the DCF,participants will be given a first priority of available capacity to move up to that same amount of non-project water at Clifton Court Forebay Intake. Except as provided here,there shall be no other changes to the use and operation of Clifton Court Forebay Intake. c. Banks Pumping Plant Priority:Diversions for Table A Water shall have the highest priority. d. San Luis Reservoir: i. Participating PWAs can store DCF water in San Luis Reservoir as provided in Article 56(c)(2)for later delivery subject to spill. ii. San Luis Spill and Availability of DCF Water to Non-Participating PWAs. a)San Luis spill will remain consistent with Article 56(c) (3)except as described below. thui the SWP�ka wr�a,�t1 twat tJa rt\Nfu'i DWR determines that 4.San Luis Reservoir en✓ill physically full and when all non-SWP-Contractor storage has been evacuated or spilled as provided in Article 56(c)(3) III,_I_✓ iiPiil„/� Formatted:Font color:Purple 1. ...,I17,'^4' v(dHru' irir-✓rr<< 11('(',J(-,J Formatted:Note Highlight 1`11„1)„101('' III/„ "J ,i�✓inr1'4'P/11'14'4II1 %Formatted:Font color:Purple rr, l uuirirdr o"iii'�” i" '31,111 Format : i o u �� �� IA/VA's n'� ted:Font color.Purple,Not Highlight r ,t"i��'t Formatted:Font color:Purple,Not Highlight ....I It I; if�ll itiuri " toi tl7 I it I Wit Am" f"' Formatted:Font color.Purple,Not Hi f i� i7t r� �, ni uu ! .. p Highlight S , \N A fl. Formatted:Not Highlight pill tiIM"�Id�r�abavc in excess of I 11�if,' vAnllfiu';avaMakld 'for uir�u'� "u'�4u'ry Formatted:Space After: 8 pt,Line sPaong Multp Ie I lit, i1 d tN,itu"i-hits't i,'hv,'r}�"Ls"tIls? 1.08 li t'Irt(ilr,;tii7J,Pw A^,,,,),11ir P,i' ,,HP H('1Pir-r,iirrG ril Formatted:Font color.Purple dd111irii',Irr,l1011 /1`,iiWL irG11(did, /'.rJ1(I( J:I. Formatted:Indent:Left: 3.01", No bullets or b) duisi iulIp to 50 percent of the water within each numbering of the PWAs'Non-Participant Storage shall not Formatted be subject to spill until the point that 1)DWR DRAFT The content and format of this document are preliminary in nature and subject to modification. DCP Negotiation# D97S8. DWR Fifth Offer November 154,2019 Page 8 of 11 determines through the accounting process that San Luis Reservoir would have filled absent current year DCF water,2)the volume of current year DCF water in San Luis Reservoir at the point DWR determines San Luis Reservoir will be physically full has been evacuated or spilled,or 3) ,��a I 'I 1 ;,9irl l,r lrr Formatted:Font color Purple ruPPJ'IJI Irlr i 1..... rlrJrlllilI„Irrllr/IrJI�Jir Formatted:Font color:Purple �I reach;,,,its highest elevation for the,;,/(,,,t4, Formatted:Font color:Purple whichever occurs earliest. )/1 -Until the point that 1)DWR determines Formatted:Font color Purple through the accounting process that San Luis Formatted:Font color:Purple Reservoir would have filled absent current year Formatted:Font color:Purple DCF water,2)the volume of current year DCF Formatted water in San Luis Reservoir at the point DWR determines San Luis Reservoir has been evacuated or spilled,or 3).;11' it n Illrlurl, I Ir siSas Iu lrII[IiiI it lr/ lrr ^r^dr 11 II;111J'llr ,l r'Ir'/tllr,ll Ir,^ Illy, ,r_ rill crr ri ,/^«t,whichever occurs earliest,DCF water exceeding a Participating PWA's demands shall be made available as direct deliveries as follows: i Commented[LF1]:For further consideration 1 First,to other Participating PWAs. If Formatted demands exceed the available DCF water,it shall be allocated in proportion to the Participating PWAs'CPS. Direct deliveries up to[four]times a Participating PWA's CPS of DCF water in a month shall be charged as DCF Variable as defined in Section III.C.2. Any direct deliveries of more than[four] times a Participating PWA's CPS of DCF water in a month shall be charged as DCF Variable plus DCF Minimum as defined in Section III.C.1.d. 1.). Second,t+ Non-Participating PWAs I ^r/cir�s-fids r7i,V;t ifr� �tliLl t(� y,'i t vvi^!t1...?.f:..::Irl!114:il.....J:f...fn(^^...G19''. 11^^M^'^i It t^' 1141:;,,A/in ifrl,;.,,r its i t^mtr.l. DRAFT The content and format of this document are preliminary in nature and subject to modification. DCP Negotiation# D78„ DWR Fifth Offer November 154,2019 Page 9 of 11 ��air�a�ierot..ta•a�t ti�•��,Ki;ui�:� �i t�aa.e,�+,�liQirn a:,,.��� �� H'�at�,�.�;�,�e�eh�etN���• If demands exceed the available DCF V\/water,it shall be allocated in proportion to the Non-Participating PWAs'Table A Amounts. At any time that acquisition at the DCF Variable Charge is not available,Non-Participating PWAs may acquire DCF water that exceeds Participating PWA demands for DCF water at fair compensation as defined in section VI„G di below.If demands exceed the available DCF water,it shall be allocated in proportion to the Non-Participating PWAs'Table A Amounts. ')d) Charges collected under this Section at the DCF Formatted:Font color:Purple Minimum and as fair compensation shall be credited back to the Participating PWAs according to their CPS. iii. DCF Water Remaining in Storage at Year's End. a)Additions to SL.I),m d iw,Storage 1. DCF Water may be added to a Participating PWA's Storage in SI 1;.H d naaunder Article 56(c)(1) 2. The Final Water Supply Allocation in column 1 of the table in Article 56(c)(1)shall be calculated to include DCF water made available in a calendar year as follows: Final Water Allocation=Table A Water Supply Allocation+CPS*(Total DCF Waterd�+;Mie,�31`.t�7„l;�rt;s/Total Participation Table A) b)If there is available storage space in SI I;ued,�,+��a�,after additions to Storage,DCF Water above the limitation in Article 56(c)(1)shall be accounted for as: 1. 50 percent of the water will remain in the Participating PWAs'name,will be subject to spill after any water stored for noncontractors pursuant to Article 56(c)(3)has been evacuated or spilled,and must be delivered within the calendar year. 2. 50 percent shall be designated as LeCurrent Year DCF water subject to the same DRAFT The content and format of this document are preliminary in nature and subject to modification. DCP Negotiation# D,7S8. DWR Fifth Offer November�5. ,2019 Page 10 of 11 accounting and administration of operations provisions applicable to DCF water as provided in this Section V. iv. The spill priorityrate will follow the current procesr3r deccribcd an Article 56(c)(3,). C. Water Accounting 1. DWR will implement a timely accounting process to determine water supply benefits associated with any DCF. a. An accounting process shall consist of validating the operational scheduling processes with actual deliveries in order that DCF Water is benefitting Participating PWAS consistent with their respective CPS. 2. Carriage water savings that DWR determines are realized during its operation of any DCF for purposes of conveying Table A water will be credited to Participating PWAS consistent with their respective CPS in any DCF. DCF Water will be allocated to Participating PWAS consistent with their respective CPS in any DCF. „IL(' 11(1 x11111111 1 11 'r- Formatted:Not Highlight I11sir( ( 1 d(I1(1icl,( 111 11 u�!�J1 1r 111110,/U1i, 1m1111111011i1 11�,1i ,lni1( 111,(,;ls ii 1,1,,;1 r(YYi1r,11r�,Y1 I` i( 1dYr,Yi1i(11Y11,,IYi1 )i(Y1r,11,r-i 111 I111r )('I 10d 01 111V,1111;11`r,(11 (11,t,,, 11.111(-,`,11(11 r,' HI('r'11)1 i(I 1P1('rr,lr r1iJr,r/r-r,r II'1( /" d11)1 Ii V1',°.'Y1II IJJ(r11i1y rrr,,1111(,111(-,,3in drrr(1)1d1)I('r-,)r/r.(1r,11011r,101 dr'I1 ('r+/1111111011114110111)('1,))('('(7 ' ' 111( i -I„7(11) I sl1 U ',I,,,;f111 Iv111J;,,,ll1r rrrrlr11i111r, 111 (11111111,?1 i1 (,,, 1I1Ir1rril`ri'1°1 111l1rll'( 1����. ' Formatted:Indent:Left: 1.56", No bullets or numbering IFormatted:Normal, No bullets or numbering D. Transfers or exchanges 1.Transfers and exchanges are not intended to be modified under this AIP,and shall be subject to the provisions of the then existing State Water Project Water Supply Contracts addressing transfers and exchanges. 2. For all potential non-participant capacity use,DWR will coordinate with Participating PWAS on their need for DCF capacity to determine if there is any available capacity for others. 3.When there is DCF Available Capacity,a Participating PWA shall have the first priority to use its CPS. 4.To the extent there is remaining Available Capacity,it shall be allocated among the Participating PWAS on a second priority basis.If the requests to use such capacity exceed the amount available,that capacity shall be allocated in proportion to those requesting Participating PWAS'CPS. DRAFT The content and format of this document are preliminary in nature and subject to modification. DCP Negotiation#f€ O78 DWR Fifth Offer November 153,2019 Page 11 of 11 5. If unused capacity is available after all Participating PWA requests,it shall be offered to Non-Participating PWAs on a third priority basis subject to execution of a contract with DWR. 6.Any remaining unused capacity shall be available to any person on a fourth priority basis subject to execution of a contract with DWR under Water Code section 1810. VI. Fair compensation will include but is not limited to capital recovery,operations and maintenance,replacement,and variable charges associated with the use of the DCF capacity.All fair compensation fees collected for use of capacity would be credited back to the Participating PWAs in proportion to their CPS. Any policy issues regarding fair compensation for use of the DCF will follow the process for the SWRDS Finance Committee as specified in pending Article 61(e). VII. Dispute Resolution Process Prior to Execution of a Delta Conveyance Contract Amendment VIII. Relation to an Environmental Review Process A. DWR and the PWAs agree that this AIP is intended to be used during the environmental review process for the California Environmental Quality Act(CEQA),to define the proposed project description for the purposes of CEQA,and to permit the next steps of the SWP water supply contract amendment process,including scoping and the preparation of the EIR.The AIP principles are not final contract language and do not represent a contractual commitment by either DWR or the PWAs to approve any proposed project or to sign contract amendments.By concurring with the AIP,DWR and the PWAs express their intent to move forward with the CEQA process with DWR as lead agency and the PWAs as responsible agencies,and ultimately develop a proposed project consisting of contractual amendments consistent with the AIP principles and prepare the EIR for consideration by DWR and the PWAs. B. At the end of the CEQA process and in compliance with CEQA,DWR and the PWAs will each individually evaluate the EIR and Contract Amendment,exercise their independent judgment,and determine whether or not to certify the EIR,approve the proposed project and sign the contract amendment or to approve an alternative project. Consequently,even though DWR and the PWAs have agreed to the AIP for the purposes described in the preceding paragraphs,DWR and each PWA retain their full discretion under CEQA to consider and adopt mitigation measures and alternatives,including the alternative of not going forward with the proposed project. DRAFT The content and format of this document are preliminary in nature and subject to modification.