25E - AGMT - WATER DELIEVERIES - Laserfiche WebLink

Home Browse Search

Agreement with MWD and MWDOC for In -Lieu Treated Water Deliveries November 5, 2019 Page 2 years, when surface water supply conditions are less abundant, the City will do the opposite: pump more groundwater out of the basin and save surface water. The City has successfully participated in this type of water banking agreement in the past, most recently in 2017. While past agreements have been for short terms (1 year), this proposed agreement will be in effect until July 1, 2027 allowing for water agencies to actively perform water banking as water conditions in the State change and saves administrative cost and time associated with executing individual annual agreements. A key factor for the City to participate in the program is an overall net neutral fiscal impact. Per the proposed agreement, the City will pay MWD the Treatment Surcharge rate in effect, currently $319 per acre-foot of water while at the same time receive a credit of up to $225 per acre-foot from MWD. By participating in this program the City will receive water directly from our import connections with MWD in lieu of pumping it from the ground and therefore will realize additional cost savings in avoided energy and operations costs associated with pumping groundwater. These avoided pumping cost savings range between $130 per acre foot to $150 per acre foot. The combination of these avoided cost savings and the MWD credit will be applied such that they equal to the MWD Treatment Surcharge resulting in a net $0 cost to the City's Water Enterprise. The water banking process has to be carefully monitored and accounted for to ensure that the participating agencies exchange appropriate amounts of surface water and groundwater to achieve an overall net $0 cost to the City's Water Enterprise. The proposed in -lieu agreement implements a number of administrative procedures to establish proper accounting. In the assigned roles, MWD supplies water to the City, MWDOC verifies volume of water deliveries and carries the balance sheet for all Orange County participants, and the City pays related invoices to MWD. MWD, at the sole discretion of their Board, adopts wholesale water rates. The Treatment Surcharge rate is $319 for calendar year 2019 and will increase to $323 for year 2020. The proposed agreement runs through year 2027 and while no Treatment Surcharge rate has been adopted yet, staff anticipates modest annual increases. Through the proposed agreement, the City maintains the option to participate in the water banking program at any given time. City staff will evaluate the Treatment Surcharge rate in effect in future years along with the available MWD credit and avoided pumping costs to determine if participation in the water banking program will result in an overall net $0 cost to the City's Water Enterprise as intended prior to agreeing to participate. STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's efforts to meet Strategic Plan Goal #5 — Community Health, Livability, Engagement & Sustainability, Objective #2 (expand opportunities for conservation and environmental sustainability). ENVIRONMENTAL IMPACT There is no environmental impact associated with this action. 25E-2