LADWP WATER SYSTEM CAPITAL PROGRAM UPDATE July 25 th 2013

1. LADWP WATER SYSTEM CAPITAL PROGRAM UPDATE July 25th 2013

2. Los Angeles’ Water System • Established in 1902 • Largest municipally- owned utility in the U.S. • Operating Revenue = $ 1.08 billion (FY2012/13) • 3.86 million customers within 473 sq. mi. service area • 679,000 active metered services • Service elevation from sea level to over 2,400 feet • 7,225 miles of pipeline, 114 tanks & reservoirs, 78 pump stations, 421 regulator stations • 340-mile long Los Angeles Aqueduct System The Los Angeles Aqueduct

3. Water System Priorities • Regulatory Compliance • Safe Water Supply and Compliance with Regulatory Requirements • Infrastructure Reliability • Sustainable Infrastructure Replacement • and Upgrade • Sustainable Water Supply • Increase Local Supply and Protect the • Environment • Investments that address these priorities are • interdependent and interconnected. Los Angeles Aqueduct Cascades

4. Current and Projected Capital Expenditures CAPITAL Next 10 years $ in millions Total $8.5B Total $484M

5. Water System Priority:Regulatory Compliance • Safety of the water we provide to our customers is LADWP’s #1 Priority • Drinking Water Regulations Require Major Investment in Water Infrastructure – two major water initiatives: • 1) Open Reservoirs: cover, replace, or provide add. treatment • Regulation: Long Term 2 Surface Water Treatment Rule (LT2, April 1, 2014) • 2) Chloramine Disinfection: system-wide change will reduce harmful disinfection byproducts • Regulation: Stage 2 Disinfection By-Products Rule (DBP2, June 30, 2021) • Failure to comply with regulatory requirements is NOT an option.

6. Water System Priority: Regulatory Compliance Gravel dust mitigation • Owens Lake Dust Mitigation Project • 90% of dust is controlled and Owens Lake is no longer in the top 10 list of PM10 (dust) emissions • 42 square miles of dust control in operation • Over $1.2 billion spent to date in capital (since Sep. 2000); $72 million in annual O&M (including cost of replacement water) • Using up to 95,000 acre-feet per year of water from Los Angeles Aqueduct Shallow flooding dust mitigation

7. Water System Priority:Regulatory Compliance Current and Projected Expenditures: ($ in Millions) Includes Water Quality Improvement Program and Owens Lake Dust Mitigation Project

8. Water System Priority:Infrastructure Reliability • LADWP’s Water System is large and complex • Continually aging (233 miles of pipe are over a century old and 70% of pipes are more than 50 years old) • Maintenance and replacement is an ongoing and continuous effort • Water System Annual Leak Rate • 15 leaks per 100-miles is below N. America • average of 25 leaks per 100-miles of pipe • Current 315-year Pipe Replacement • Cycle - severely deficient of frequency • required for continued reliability Our 7,200 miles of water distribution pipeline is the backbone of our delivery infrastructure – we work very hard to keep its service reliability

9. Water System Priority:Infrastructure Reliability Water Main Replacement Program

10. Water System Priority:Infrastructure Reliability Current and Projected Expenditures: ($ in Millions)

11. Water System Priority:Sustainable Water Supply • The City of Los Angeles plans to meet all new water demands through local resource development. • Environmental regulatory challenges and impacts of climate change requires continued focus on four major water initiatives: • Stormwater Capture • Water Conservation • Water Recycling • San Fernando Basin Groundwater Remediation

12. Water System Priority:Sustainable Water Supply Fiscal Year 2034 – 35 Total: 711,000 AFY FYE 2008 –2012 Average Total: 574,600 AFY Local GW 64,466 11% LA Aqueduct 206,815 37% Recycled Water 6,706 1% MWD 297,945 51% Goal is to reduce our dependence on purchased supplemental imported water by 50 percent by 2035 or sooner Charts do not reflect 100,000 AF of existing conservation 11

13. Water System Priority:Sustainable Water Supply Current and Projected Expenditures: ($ in Millions)