METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA (4)

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imposition or reimposition, as applicable, of annexation standby charges for fiscal year 2012/13. Table 6 lists parcels annexed, or to be annexed, to Metropolitan and to electing member agencies during ICY 2012/13, such parcels being subject to the annexation standby charge upon annexation. Parcels annexed prior to FY 2012/13 are subject to annexation standby charges as described in the Engineer's Report for the fiscal year of their annexation. These parcels and parcels that are subject to the pre-1997 standby charges are identified in a listing filed. with the Executive Secretary. The estimated potential benefits of Metropolitan's water supply program, which could be paid by a standby charge, exceed $322 million for fiscal year 2012/13, as shown in Table 1. An average total standby charge of about $74.4 per acre of land or per parcel of less than one acre would be necessary to pay for the total potential program benefits. Benefits in this amount will accrue to each acre of property andparcel within Metropolitan, as these properties are eligible to use water from. the Metropolitan system. Because only properties located within Metropolitan's boundaries may receive water supplies from Metropolitan (except for certain contractual deliveries as permitted under Section 131 of the Metropolitan Water District Act), any benefit received by the public at large or by properties outside of the proposed area to be annexed is merely incidental. Table 5 shows that the distribution of standby charge revenues from the various member agencies would provide net revenue flow of approximately $43.5 million for fiscal year 2012/13. This total amount is less than the estimated benefits shown in Table 1. Metropolitan will use other revenue sources, such as water sales revenues, readiness -to -serve charge revenues (except to the extent collected through standby charges, as described above), interest income, and revenue from sales of hydroelectric power, to pay for the remaining program benefits. Thus, the benefits of Metropolitan's investments in water conveyance, storage, distribution, and demand management programs far exceed the recommended standby charge. Equity The RTS charge is a firm revenue source. The revenues to be collected through this charge will not vary with sales in the current year. This charge is levied on Metropolitan's member agencies and is not a fee or charge upon real property or upon persons as an incident of property ownership. It ensures that agencies that only occasionally purchase water from Metropolitan but receive the reliability benefits of MetropoIitan's system pay a greater share of the costs to provide that reliability. Within member agencies that elect to pay the RTS charge through Metropolitan's standby charges, the standby charge results in lower water rates than would otherwise be necessmy due to the amount of revenue collected from lands which benefit from the availability of Metropolitan's water supply. With the standby charge, these properties are now contributing a more appropriate share of the cost of importing water to Southern California. Metropolitan's water supply program increases the availability and reliable delivery of water throughout Metropolitan's service area. Increased water supplies benefit existing consumers and land uses through direct deliveries to consumers and properties, and through the replenishment of groundwater basins and reservoir storage as reserves against shortages due to droughts, natural emergencies, or scheduled facility shutdowns for maintenance. The benefits of reliable water supplies from the SWP, CRA, DVL, and system improvements accrue to more than 250 cities and communities within Metropolitan's six -county service area. Metropolitan's regional water system is iilterconnectcd, so water supplies from the SWP and CRA can be used throughout most of the service area and therefore benefit water users and properties system -wide. Additional Metropolitan deliveries required in the corning fiscal year due to the demands of properly development will be reduced by the implementation of demand management projects, including water conservation, water recycling, and groundwater recovery projects. As with the SWP, CRA and DVL and the conveyance and distribution facilities, demand management programs increase the future reliability of water supplies. In addition, demand management programs provide system -wide benefits by effectively decreasing the demand for imported water, which helps to defer construction of additional system conveyance and distribution capacity. However, the 12