DWR Releases Draft Environmental Impact Report on State Water Project Contract Extension
The Department of Water Resources (DWR) released for public review a draft Environmental Impact Report (DEIR) on extending the term of its water supply contracts with 29 public agencies in northern California, the Bay Area, San Joaquin Valley, Central Coast and Southern California.
The 29 agencies contract with DWR for the delivery of water supplies from the State Water Project, a network of dams, reservoirs, pumping plants and canals that provides flood protection and supplies water to 29 million people and nearly one million acres of farmland.
The proposed Water Supply Contract Extension project involves extending the State Water Project water supply contracts beyond 2035, which is the year the first such contracts expire. The proposed project would also amend certain financial provisions of the water supply contracts. It would, for example, allow DWR to increase the State Water Project operating reserves from $32 million to $150 million to cover emergencies and short-term cash flow deficiencies. It would also update 55-year-old billing provisions to create a more comprehensive pay-as-you-go repayment methodology.
The public will have 60 days to comment on the DEIR; the public comment period will close on October 17, 2016. DWR will hold a public hearing to gather public comments on September 12, 2016 from 4 p.m. to 8 p.m. at the Tsakopoulos Library Galleria located at 828 I Street in Sacramento.
DWR entered into these water supply contracts in the 1960s to provide water service in exchange for payments that recover the water supply cost of constructing, operating and maintaining the State Water Project. The 29 water supply contracts have the same general provisions, and each has an initial term of 75 years.
From May 2013 to June 2014, DWR and the 29 State Water Project Water Contractors held public negotiations to arrive at the Agreement in Principle, which includes the proposal to extend the expiration date of the water supply contracts to December 31, 2085.
It has become more expensive on an annual cost recovery basis to finance capital expenditures for the State Water Project since DWR does not currently sell State Water Project revenue bonds (the primary financing mechanism for project capital costs) with maturities beyond 2035, the year the first water supply contracts expire.
Each passing year exacerbates the revenue bond compaction problem. This is significant because there is a continuing need to raise capital to pay to refurbish, replace and repair aging State Water Project facilities, including aqueducts and hydroelectric equipment, as well as maintain dams to current seismic safety standards.
The proposed project does not include any changes to the water management provisions or the water allocations in the water supply contracts. Amending the water supply contracts to extend the contract term would need to occur regardless of the outcome of California WaterFix.
For more information, including a copy of the DEIR and the Agreement in Principle, visit DWR’s website at http://www.water.ca.gov/swpao/watercontractextension/
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