AGENDA WEDNESDAY, MARCH 03, :00 AM. DIRECTORS PRESENT: Guglielmana Lloyd Ryan Wicke Williams
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1 AGENDA STUDY SESSION WEDNESDAY, MARCH 03, :00 AM DIRECTORS PRESENT: Guglielmana Lloyd Ryan Wicke Williams PUBLIC COMMENTS DISCUSSION ITEMS 1. Hoover Dam Legislation Support 2. Santa Rosa Water Reclamation Facility - Joint Operating Agreement 3. Board Committee Updates 4. Project Updates 5. Adjournment To request a disability-related modification or accommodation regarding agendas or attendance, contact Terese Quintanar, at (951) , extension 8223 at least 48 hours before the meeting. Posted Chaney Street 2/25/10 8:14 AM Lake Elsinore, CA 92530
2 STUDY SESSION DISCUSSION OUTLINE Date: March 3, 2010 Originator: Subject: Greg Morrison Public Affairs HOOVER DAM LEGISLATION SUPPORT BACKGROUND AND RECOMMENDATION Hoover Dam power is a vital resource for consumers in Arizona, California and Nevada. Over 29 million people rely on this power. Since its construction, Hoover Dam power has been allocated by Act of Congress. Hoover power was first allocated by Congress in the Boulder Canyon Project Act of In 1984, Congress again allocated power through contracts with state, municipal and utility contractors. These contracts will expire in Support for legislation to authorize a new 50-year contract is being rallied by The Metropolitan Water District. With EVMWD Board support and following the sample letter of support, staff would like to prepare a letter supporting the efforts of a new 50-year contract. ENVIRONMENTAL WORK STATUS NA FISCAL IMPACT Within Budget - NA Attachments: Hoover Power Allocation Act of 2009 Fact Sheet Hoover Power Legislation Support Letter dtd. 12/03/09 Draft Support Letter Template Item #1. -1-
3 THE HOOVER POWER ALLOCATION ACT Delivering Clean Renewable Hydropower to Southwest States and Cities Fact Sheet Overview Hoover power is a vital power resource for consumers in Arizona, California, and Nevada. Over 29 million people rely on this power, which is a clean renewable source of energy. Since its construction, Hoover Dam power has been allocated by Act of Congress. Hoover power was first allocated by Congress in the Boulder Canyon Project Act of In 1984, Congress again allocated Hoover power through contracts with state, municipal and utility contractors. These contracts will expire in Passage of the proposed Hoover Power Allocation Act of 2009 is critical to ensuring the continued availability and reliability of Hoover power to the citizens of Arizona, California and Nevada. The 1984 Hoover Power Plant Act distributed Hoover power to the following contractors under three schedules: Schedule A includes the original purchasers of Hoover power as authorized in the Boulder Canyon Project Act of 1928: Metropolitan Water District of Southern California; Cities of Los Angeles, Glendale, Pasadena and Burbank; Southern California Edison Company; Arizona Power Authority; Colorado River Commission of Nevada; and City of Boulder City, Nevada Schedule B includes contractors that advance funded the Hoover power turbine upratings as authorized in the Hoover Power Plant Act of 1984: State of California (Cities of Glendale, Pasadena, Burbank, Anaheim, Azusa, Banning, Colton, Riverside, Vernon), and States of Arizona and Nevada Schedule C governs allocations of excess energy, if any, to Arizona, California and Nevada as negotiated between the states and the federal government. Distribution of Power under the Proposed Legislation Under the proposed legislation, Congress would distribute Hoover power pursuant to Schedules A, B and C ; however, each of the current Hoover contractors would contribute 5% of their Schedules A and B power to a pool that would be distributed under a new Schedule D. Schedule D power would be allocated to federally recognized Indian Tribes and other eligible entities that do not currently purchase Hoover power. Two thirds of the Schedule D pool would be allocated through the Western Area Power Administration ( Western ); the remaining one third of the Schedule D pool would be -2- Item #1.
4 distributed in equal shares through the Arizona Power Authority (for new contractors in Arizona), through the Colorado River Commission of Nevada(for new contractors in Nevada), and through Western (for new contractors in California). Why is the Proposed Legislation Necessary? The proposed legislation is critical to consumers in Arizona, California and Nevada. These consumers have invested in this clean renewable source of energy over the past 75 years and they are committed to investing in it for another 50 years. To date, Hoover contractors have invested over $1.3 billion to construct, upgrade, operate, maintain, and replace Hoover Dam power equipment. From 2010 to 2017, these contractors will continue to invest more than $600 million in Hoover Dam. If the proposed legislation is enacted, the contractors would pay an additional $1.6 billion, beginning in 2017, for operation, maintenance, replacement, and equipment upgrades. Hoover contractors have also committed to providing over $150 million over 50 years to support the Lower Colorado River Multi Species Conservation Program (MSCP) for the protection of 26 endangered, threatened and sensitive species on the lower Colorado River. Legislation authorizing the MSCP was enacted by Congress in the 110 th Congress and signed into law on March 30, Congressional action is needed to provide certainty to the 29 million beneficiaries of Hoover power and to avoid disruption of decades of careful generation resource planning, procurement and integration by contractors in the three states. Resource planning laws require utilities to provide long term certainty when meeting future needs for generation. Hoover power is an important component in meeting these future planning requirements. Certainty in the allocation of Hoover power is also needed for effective regional transmission planning, as states work with the Federal government to redesign and upgrade the regional electric transmission grid. Finally, water providers depend on Hoover power to ensure efficient and reliable Colorado River water deliveries. Where are Hoover Power Customers Located Today? Customers receiving Hoover power are located in the Boulder City Project Marketing Area as shown on the following map. Item #
5 Municipalities California 1 Anaheim 2 Azusa 3 Banning 4 Burbank 5 Colton 6 Glendale 7 Los Angeles 8 Pasadena 9 Riverside 10 Vernon Nevada 11 Boulder City State Agencies 12 Arizona Power Authority Aguila Irrigation District Avra Valley Irrigation & Drainage District Buckeye Water Conservation District Central Arizona Water Conservation District Chandler Heights Citrus Irrigation District Cortaro Marana Irrigation District E D #2, Pinal, E D #3, Pinal, E D #4, Pinal E D #5, Maricopa, E D #5, Pinal, E D #6, Pinal E D #7, Maricopa, E D #8, Maricopa City of Safford Harquahala Valley Power District Maricopa County Municipal Water District McMullen Valley Water Conservation & Drainage District Ocotillo Water Conservation District City of Page Queen Creek Irrigation District Roosevelt Irrigation District Roosevelt Water Conservation District Salt River Project San Tan Irrigation District Silverbell Irrigation District Town of Thatcher Tonopah Irrigation District Wellton Mohawk Irrigation & Drainage District Town of Wickenburg 13 Colorado River Commission of Nevada NV Energy Southern Nevada Water Authority Boulder City Lincoln County Power District No.1 Overton Power District No. 5 Valley Electric Association Entities at the Basic Management Industrial Complex 14 Metropolitan Water District of Southern California Investor Owned Utilities 15 Southern California Edison Company -4- Item #1. 3
6 Office of the General Manager December 4, 2009 The Honorable Grace Napolitano Chair House Natural Resources Subcommittee on Water and Power 1324 Longworth House Office Building Washington, D.C Dear Representative Napolitano: On behalf of the Metropolitan Water District, I want to thank you for your leadership in sponsoring legislation in the 111 th Congress that will authorize a new 50-year contract for hydropower generated at Hoover Dam. Because of the importance Hoover Dam represents to constituents of California, Nevada and Arizona, we have been working together to help formulate and support legislation that would ensure that beneficiaries of Hoover Dam power today will continue to have access to this important source of power well into the future. This legislation will also provide an opportunity for new beneficiaries to access this source of power. The clean energy resource that Hoover Dam provides is essential as a stable and sustainable source of power for the region and its water supply. Congressional action is now necessary to provide certainty for Hoover Dam contractors and the ratepayers they serve. It will help avoid litigation over the distribution of power; assist federal government efforts, working with states and other entities, to redesign and upgrade the transmission system; and complement efforts currently underway to protect endangered, threatened and sensitive species on the Lower Colorado River. Metropolitan supports this important legislation and our staff is pleased to serve as a resource as you move this legislation forward. Please call me if I can be of any assistance. Sincerely, Jeffrey Kightlinger General Manager 700 N. Alameda Street, Los Angeles, California Mailing Address: Box 54153, Los Angeles, California Telephone (213) Item #1. -5-
7 December XX, 2009 The Honorable Grace Napolitano U.S. House of Representatives 1610 Longworth House Office Building Washington, D.C RE: Hoover Power Legislation Dear Representative Napolitano, On behalf of water ratepayers throughout our service area, we want to thank you for your leadership and commitment to sponsor legislation that will retain Hoover Dam power for beneficiaries in Southern California. This action will preserve low-cost, emission-free Hoover Dam hydropower currently used to move Colorado River water across the Southern California region. Hoover Dam power contractors in California, Nevada, and Arizona have reached a compromise after two years of negotiations to ensure beneficiaries of Hoover Dam power today will continue to have access to this power source well into the future. Congressional action is necessary to provide certainty for these contractors. It will avoid costly litigation over the distribution of this crucial resource and complement environmental mitigation efforts already underway along the Lower Colorado River. That environmental commitment extends for 50 years the same amount of time now being sought to extend Hoover Dam power allocations. Should California contractors lose their historic Hoover Dam power allocation, they will be forced to pay a premium for additional power supplies that may not be emission free. That would be a tremendous financial and environmental setback for the State, and for numerous Southern California cities, and would also result in dramatically more expensive imported water. Once again, your leadership is greatly appreciated. Sincerely, cc: Southern California Congressional Delegation Members The Honorable Dianne Feinstein The Honorable Barbara Boxer -6- Item #1.
8 STUDY SESSION DISCUSSION OUTLINE Date: March 3, 2010 Originator: Subject: Norris Brandt - Administration SANTA ROSA WATER RECLAMATION FACILITY -- JOINT OPERATING AGREEMENT BACKGROUND AND RECOMMENDATION Currently, wastewater from a large portion of EVMWD's Southern Wastewater Division is being treated by Rancho California Water District's (Rancho's) Santa Rosa Water Reclamation Facility (SRWRF). Rancho has informed EVMWD that it will be replacing the existing plant with a new, more conventional treatment plant that is expected to significantly reduce annual operation and maintenance costs. The purpose of this item is to review the attached presentation in preparation for a multiagency board meeting on March 4, ENVIRONMENTAL WORK STATUS This item is not a project under CEQA. All CEQA compliance related to the proposed treatment plant is the responsibility of Rancho. FISCAL IMPACT Within Budget - The potential impact of the proposed agreement is discussed in the presentation. Attachments: Attachment--Draft Powerpoint Presentation Item #2. -7-
9 Santa Rosa Water Reclamation Facility Joint Operating Agreement 3-Agency Meeting March 4, 2010 Background Successful Partnership Over Last 25 Years Existing Plant Has Met All Agencies Needs Regional Facilities Provide Efficiencies For All Agencies Use of Variable Rate Financing Has Significantly Reduced Financing Costs New Opportunity to Reduce Long Term O&M Costs New Plant -8- Item #2.
10 List of Topics Existing Agreement Historic Costs and Payments Proposed New Agreement Future Costs Existing and New Debt EVMWD s Perspective Proposed Governance Alternatives Original Agreement year Term 2 Parties -- Rancho and EVMWD Basic Terms Amendments 3-Party Transmission Agreement (Rancho, Eastern, EVMWD) Item #2. -9-
11 Historic Costs and Payments Capital Costs Financed to Date EVMWD Portion Capacity Fee History EVMWD Payments to Date Outstanding debt Existing Plant Capital Costs Financed To Date 90,000 Costs (x $1,000) 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, ,500 10,600 10,600 6,700 13,200 23,500 4,800 3,600 3,600 2,300 4,500 8,000 Total $87,100 EVMWD $26,800 Notes 1. Based on information provided by Rancho 2. EVMWD pays 34% of 4 MGD 3. Advanced Treatment Cost Uncertain Advanced Treatment 2005 Facility Improvements 2001 Facility Improvements 1998 Facility Improvements 1991 Additional Plant 1987 Original Plant -10- Item #2.
12 Historical Capacity Fees ($ per EDU) $6,000 $5,000 $4,000 $3,000 $2, Cost per EDU Year Capacity Fee Payments To Rancho To Date $25,000 Cost per EDU $20,000 $15,000 $10,000 $5,000 $ Year One Time Catchup for Advanced Treatment $2,786,000 Item #
13 Existing Plant Remaining Debt Costs (x $1,000) 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 22,500 48,600 Advanced Treatment Wastewater 10, ,700 10,100 Total $71,1000 EVMWD $12,800 Notes 1. Based on information provided by Rancho 2. EVMWD pays 34% of 4 MGD Proposed Agreement In Summary 2 Parties Rancho and EVMWD 50-year Term Life of Plant Capital Costs Facility Replacement Costs O&M Costs Financing EVMWD Funds Held By Rancho ($8.1 M) Recycled Water Ownership Other -12- Item #2.
14 Total Existing + New Debt 150,000 Costs (x $1,000) 120,000 90,000 60,000 30,000 22,500 12,600 48,600 46,900 35,100 95,500 Advanced Treatment Wastewater 0 Existing New Total Notes 1. Based on information provided by Rancho 2. EVMWD pays 34% of 4 MGD EVMWD Existing + New Debt 30,000 Costs (x $1,000) 25,000 20,000 15,000 10,000 2,700 2,700 5,400 20,500 Advanced Treatment Wastewater 5,000 10,400 10,100 0 Existing New Total Notes 1. Based on information provided by Rancho 2. EVMWD pays 34% of 4 MGD Item #
15 EVMWD Considerations Debt Load Doubles Only 8% of EDU s Remaining All Debt Service to Be Paid Thru Monthly Fees High Dependence on Reduction of Monthly O&M Costs ($6,100/MG vs $3,700/MG) Without O&M Savings, Other Alternatives Are Competitive EVMWD Perspective Historically, Capital Cost Estimates Have Proven Uncertain Going Forward, O&M Savings Are Uncertain Uncertainty = Risk Ongoing Governance Must Allow Each Agency to Manage Its Own Risk Range of Shared Governance Alternatives -14- Item #2.
16 Landlord/Tenant Landlord Owns Facilities Tenant Rents/Leases Facilities Terms Set By Agreement Risks Determined/Assigned by Landlord No Voting; Landlord Has Sole Discretion Low Administrative Costs Coop Primary Agency Owns Facilities Secondary Agencies Purchase Permanent Capacity in Facilities Benefits Shared Based on Capacity Ownership Risks Shared Based on Capacity Ownership Voting Based on Capacity Ownership Low Administrative Costs Item #
17 Joint Powers Authority (JPA) Separate, But Joint, Governmental Agency Joint Ownership of Facilities Benefits Shared Risks Shared Voting Based on Agreement Terms or Capacity Ownership Moderate to High Administrative Costs Recommendations Use the Coop Alternative Set Up Management Committee Approval of Annual Budget Approval of Non-Budgeted Expenditures Voting Based on Ultimate Capacity Committed by Agreement Combine Agreements (EVMWD, Western) Into Single Agreement -16- Item #2.
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