minutes

Regular Meeting

Governing Board of Sweetwater Authority

October 20, 2003

The Governing Board of Sweetwater Authority held a Special Meeting on October 20, 2003, at the Sweetwater Authority Administrative Office, 505 Garrett Avenue, Chula Vista, California. Chair Doud called the meeting to order at 2:00 p.m.

· ROLL CALL

Directors Present: Beauchamp, Doud, Pocklington, Reynolds, Welsh, and Wright.

Directors Absent: Inzunza.

Others Present: General Manager Bostad, Operations Manager Rogers, Treasurer Avery, and Board Secretary Farpón-Friedman. Staff members Michael Garrod, Hank Gaus, Mary Ann Mann, Scott McClelland, Paula Roberts and Jim Smyth.

· PLEDGE OF ALLEGIANCE TO THE FLAG
Director Pocklington conducted the pledge of allegiance to the flag.

· OPPORTUNITY FOR PUBLIC COMMENT (Government Code Section (54954.3)
There were no members of the public present for comment.

1. WATER RESOURCES MASTER PLAN WORKSHOP

General Manager Bostad indicated to the board the importance of this document for planning our current and future water needs and how we might fulfill those needs through developing local projects versus working on regional projects with CWA and MWD. He then introduced Michael Garrod as the Project Manager of the Master Plan.

Mr. Garrod thanked the board and said that the Master Plan outlines what Sweetwater Authority will be doing the next couple of decades. He thanked General Manager Bostad, Operations Manager Rogers, and Chief Engineer Jim Smyth for their help, and he added that Nina Jazmadarian, from McGuire Envinronmental Consultants, would review the proposed supplies and some of the new projects.

Sweetwater Authority serves about 25,000 acre-feet of water per year, and in 2020 the demand will go up only about 500 acre-feet since our service area is practically built out. The only projected development is the Bay Front. Sweetwater Authority's supply sources are the Sweetwater and Loveland Reservoirs; National City Wells, with a constant supply of 2,400 acre-feet per year; the Reynolds Demineralization Facility, which will be producing about 3,000 acre-feet; and imported supplies from MWD and CWA.

Mr. Garrod displayed a slide that showed demands during a wet, normal, and dry year. He stated that in a wet year we get most of our water from Sweetwater Reservoir. During a normal year, we have to import about 8,000 acre-feet, and in a dry year we must take 17-20,000 acre-feet from MWD.

NOTE: Director Inzunza entered the meeting at 2:09 p.m.

Mr. Garrod then reviewed the current supply costs. The cost of our local water is about $216 an acre-foot. The National City Wells is our cheapest water to produce, $76 an acre-foot, as it requires very little treatment. The cost of the water produced at the Reynolds Demineralization is about even with the cost for MWD water. He stated that Sweetwater Authority had just signed an agreement with MWD for the Surface Storage Operating Agreement that will run for five years. Under this agreement, we get water at $70 discount, and MWD pays for any evaporation or spill. Sweetwater Authority was the first agency to sign the agreement and, as of this date, we are still the only ones who are receiving water from that program. Finally, there is the imported raw water that is treated at the Perdue plant. Those are the four existing supplies. Mr. Garrod introduced Nina Jazmadarian who would review the possible future water supplies.

Ms. Jazmadarian said that the key question is whether Sweetwater wants to invest in resource options and, if yes, what quantity of new supplies does it seek and what should it do with the excess supplies developed in wet years. She talked about the resource options available to Sweetwater. They include conservation, which is not really a new supply but it offsets the need for new supply; the expansion of National City Wells production; expansion of the Reynolds Demineralization facility; the Otay brackish groundwater desalination; MWD/CWA Reservoir surface storage agreement, the Tier 1/Tier 2 supplies from MWD/CWA; Department of Water Resources (DWR) dry year water transfers; outside of MWD service area transfers; ocean desalination; recycling; storage and treatment at Loveland; MWD area transfers; and Aquifer Storage and Recovery (ASR) in National City Well field.

She reviewed the costs for the different types of supplies. Conservation has the lowest cost at $44 per acre-foot; National City Wells is $96; expanding the Reynolds Demineralization Facility is $420; the Otay River Desalination Plant is $420. DWR supplies range from $463-$552, depending on the power and the cost of the water. Out of MWD area transfers range from $479-$691. The ocean desalination rates are $744 with an incentive from MWD of $250. Recycling rates are $887. MWD area transfers can have a wide range, $606-$1,217, depending on how many facilities need to be put in and how the water is going to be transferred. Storage and treatment at Loveland also has a huge variable, $939-$1,508. Finally, the ASR in National City Well field rate is $1,498.

Ms. Jazmadarian referred to MWD'S rate projections. She displayed a chart that showed the various components of MWD's rates. These components are Tier 1 or Tier 2 rates, a System Access Rate, Water Stewardship Rate, and System Power Rate. Presently the cost for Tier 1 is $326 per acre-foot; with slow growth in local resources, in 2013 the cost goes to $425 per acre-foot. With aggressive development in local resources, that cost goes up to $457 per acre-foot. The cost for Tier 2 is $407 per acre-foot. With slow growth in local resources, it goes up to $506 per acre-foot and with aggressive development in local resources it goes to $538 per acre-foot.

The treatment surcharge is $82 per acre-foot. With slow growth in local resources, it goes up to $179 and with aggressive development in local resources it goes to $193 per acre-foot. If Sweetwater ever needed to take treated water, Tier 1 with slow growth would be $604 per acre-foot and with aggressive development in local resources it would be $650 per acre-foot. Tier 2 would be $685 per acre-foot and $731 per acre-foot with aggressive development in local resources.

The Readiness-to-Serve charge is based on a 10-year average of water delivery. Ten years from now we will be paying for water that we are taking now through an averaging process from MWD. The Capacity Reservation Charge is based on cubic feet per second used. It is $6,100 per CFS right now and it will increase up to $12,400 per CFS. The CWA, because of the Surface Storage Operating Agreement, has agreed to pay for the full amount of water that it can take from MWD and not use the peak historic amount, which is $1,296 CFS divided among the agencies.

Ms. Jazmadarian displayed a chart that showed the CWA charges. The Transportation Cost is $74 per acre-foot. The Customer Service Charge is calculated upon the average amount of water imported from CWA. It has been estimated at $30 per acre-foot based on a usage of 14,000 acre-feet per year. The Storage Charge is $38 and is based on a historic delivery of 14,000 acre-feet. The Readiness-to-Serve charge is a stand-by charge on the tax rolls. The amount assessed to Sweetwater Authority is lower than the water being collected and, consequently, we have been getting a credit of about $22 per acre-foot. The Infrastructure Access Charge is based on the amount of retail connections, and we have calculated that to be about $56 per acre-foot. With those charges included, the total for untreated Tier 1 is $633 per acre-foot, and for untreated Tier 2 is $714 per acre-foot. Treated Tier 1 is $826 per acre-foot and treated Tier 2 is $907 per acre-foot.

Ms. Jazmadarian then talked about wet year excess. The question is, if Sweetwater Authority invested in new resources, what to do with those supplies in wet years? Sweetwater Authority could sell water storage and treatment services to Otay Water District, it could invest in resources that can be reduced in capacity in wet years, or it could sell excess water to local agencies.

The strategies to be considered would be upgrading and expanding the Perdue Treatment Plant, expanding National City Well Production, stabilizing and expanding the demineralization plant, constructing the Otay River Brackish Groundwater Desalination, and continuing groundwater studies with USGS.
Director Welsh inquired about storage and treatment at Loveland compared to transfers from MWD, which she thought would be less expensive. Ms. Jazmadarian noted that there would be costs associated with building facilities at Loveland. General Manager Bostad said that the estimate on the storage and treatment at Loveland does not take into consideration the complexities of potential federal involvement, which would make it less costly. It also does not take into consideration some of the cost benefits to some of the other agencies.

Director Pocklington asked if the costs for the different strategies could vary once the studies being done are finalized. Ms. Jazmadarian noted that the upgrade and expansion of the Perdue Treatment Plant is one strategy that has to be done because of the disinfection by-products for the THM requirements. General Manager Bostad noted that there are many factors to be considered before we can determine where we might continue to move forward in the future. He added that the construction of the Otay River brackish is still more conceptual and is dependent on some of the relationships with potential partners interested in that facility.

Director Wright was disappointed that seawater desalination was not mentioned as one of the strategies. General Manager Bostad said that we are dealing with a very fluid and changing environment regarding water resources and costs. For instance, the QSA was just signed and it has had significant impacts on the overall mix and pricing. These are the five most logical strategies that we are considering at this time. Given the cost of imported water going up, seawater desalination may rank higher into these strategies in a near future. On the other hand, potential issues associated with the Coastal Commission not encouraging but discouraging desalination plants may have a different impact.

Director Beauchamp talked about groundwater and expressed concerns regarding the exhaustability of the National City Well Field. He also talked about the possibility of damaging the aquifers and drawing seawater instead of brackish water up the Otay river. General Manager Bostad said that we are relying heavily on the groundwater studies with USGS to get a better understanding of the amount of water that we can pump. Through that research effort, we are finding that there is even some additional water at lower depths. Through the results of that study, our water resource staff will be doing additional monitoring to develop a better understanding of the safe yield.

Director Reynolds asked what percentage of imported water would be reduced if we were to develop the strategies that use groundwater. Ms. Jazmadarian said that Sweetwater Authority would need to make a decision on how much it wants to invest versus how reliable it wants to be, and there is no easy answer.

General Manager Bostad believes that the studies with USGS will help support a partnering effort between stakeholders in the San Diego Formation that goes from the border up to the San Diego River.

2. DIRECTORS' COMMENTS

Director Beauchamp thanked Ms. Jazmadarian for her expertise in guiding us through some of these issues and providing the board with this information. He said it is good to know that there are professional women out there that are with it.

Director Reynolds also thanked Ms. Jazmadarian and Mr. Garrod. He said that he just got back from a trip to Lake Powell, which is down 100 feet at half capacity about 13 million acre feet, the same as Lake Meade. Twenty-six million acre-feet in those two major reservoirs do not last for two years unless we get some snow pack and runoff in the Rockies. We should keep an eye on that.

Director Wright commended staff for getting the agreement with MWD and being one of the first agencies to lock it up. He said that before the South Bay board meeting, staff would give the board a seven-page press release from the Tampa paper with the latest information on the Tampa plant. One of the things discussed was the brine discharge, which is a big problem for us. There are lots of companies involved that were already in financial trouble when they took a piece of this contract. The main point from his standpoint is that there are SWRO plants all over the world and powered by different sources. He is not moving from his position that with the problems in the Colorado it is our only solution. It may not happen tomorrow and it may take a whole bunch of people and a lot of agencies with a lot of money to get one going. But that is the answer.

Director Doud said he got his California Groundwater bulletin in the mail yesterday. He spent a half-hour this morning digesting it and he would pass it over to staff.

3. ADJOURNMENT

With no further business before the Board, Chair Doud adjourned the meeting at 2:54 p.m., to the hour of 3:30 p.m. on October 22, 2003.