25C - AGMT - WATER PURCHASE ORDER

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REQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: DECEMBER 16, 2014 TITLE: WATER PURCHASE ORDER AGREEMENT WITH METROPOLITAN WATER DISTRICT {STRATEGIC PLAN NO. 6,1, & 4,1} CITY IMNAGER RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: r,J ,.,.riLa ❑ As Recommended ❑ As Amended ❑ Ordinance on 15' Reading ❑ Ordinance on 2ntl Reading ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO FILE NUMBER Authorize the City Manager and Clerk of the Council to execute a Current Base Purchase Order Agreement with the Metropolitan Water District of Southern California to purchase imported water during the 10 -year period from January 1, 2015, through December 31, 2024, subject to nonsubstantive changes approved by the City Manager and City Attorney. DISCUSSION The Metropolitan Water District of Southern California (MWD) is a wholesale water district supplying imported water to Southern California cities and water districts. To better plan long -term water needs, MWD offers its member agencies the opportunity to participate in 10 -year water purchase agreements. These water purchase agreements are 10 -year commitments to purchase a minimum quantity of water on an annual basis and a minimum quantity of water over the course of the 10 -year commitment. In return for these minimum purchase commitments, MWD assesses a greater percentage of purchased water at a lower, Tier 1 rate. Agencies opting to forego the commitments are assessed at a higher, Tier 2 rate for the greater percentage of their water purchases. Commitments are on a "take or pay" basis; if actual water purchases are less than the purchase commitment during the 10 -year period, participants are still required to pay for the unused portion. In December 2002 the City of Santa Ana, a member agency of MWD, entered into a 10 -year purchase order agreement with MWD to assure that the City would be able to purchase up to 12,128 acre -feet (AF) of water at the Tier 1 rate. The Purchase Order Agreement was extended for two years and will end on December 31, 2014. During both the 10 -year agreement period and the 2 -year extension, the City fulfilled its water purchase commitments and benefitted from Tier 1 rates for additional water purchases. At its November 18, 2014, meeting, the MWD Board authorized issuance of new water purchase orders for the 10 -year period from January 1, 2015, through December 31, 2024. MWD is offering three purchase order options for member agencies. As summarized below, each option affects 25C -1