Delta Conveyance: Update on the Planning Process and Analysis of Water Supply and Costs

1. Delta Conveyance: Update on the Planning Process and Analysis of Water Supply and Costs • CCWA Board of Directors • February 25, 2010

2. Delta Conveyance Status • Significant progress has been made on Delta Conveyance planning • Significant additional steps are needed • The planning process will run out of money by the end of 2010 • SWP Contractors need to decide on continuing the planning process Delta Conveyance: Analysis of Water Supply and Costs

3. About this Presentation… DRAFT! All of the information and data are preliminary and subject to revision. Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision

4. Going from Plan to Permits The Delta Habitat Conservation and Conveyance Program Process BDCP Develops HCP Proposed Project (Includes habitat projects and conveyance) DHCCP Team Creates the EIR/EIS Record of Decision / Notice of Determination Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision

5. Going from Plan to Permits BDCP/DHCCP Processes • Bay Delta Conservation Plan (BDCP) • Initiated 2006 • Focus on conveyance and restoring habitat for fisheries within the Sacramento-San Joaquin Delta • Products • Habitat Conservation Plan • Natural Communities Conservation Plan • Delta Habitat Conservation and Conveyance Program (DHCCP) • Initiated 2008 • Funding Agreements – $140 Million (50% SWP Share) • Develops EIR/EIS Documents and Record of Decision (ROD)/Notice of Determination (NOD) Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision

6. Going from Plan to Permits DHCCP Program Status • Original Final EIR/EIS Completion – December 2010 • Current Status: • Conceptual Engineering Design Completed • Tunnels Identified as New Alternative Require Additional Engineering Analysis • BDCP Preferred Program Delayed – December 2008 Target Delayed until 2010, Causing Delays in DHCCP • Project Delayed and Tunnels Added  Costs Increased • Original Budget – $150 Million (Including BDCP) • Actual Costs to Date – $58 Million • Additional Planning Costs – $98 Million Starting 2011 Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision

7. DHCCP/BDCP – Going from Plan to Permits Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision

8. Going from Plan to Permits Funding Next Steps • May Need to amend existing Funding Agreement • No increase in expenditures for 2010; Additional revenue collected in 2011, Commitments needed in 2010 • Financing for planning costs being considered • Schedule (if amendment required): • February 2010 – DHCCP Executive Committee reviews cost share proposal • March 2010 – Funding Amendment provided to SWP Contractors • April 2010 – SWP Contractors sign amendments Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision

9. Can we afford a new Delta Conveyance Facility? The three questions that everyone wants answers to: • What will the project look like? • Where is the project? • How will it operate? • What will it cost? • How do we finance the costs? • How do we split the costs? • What are the benefits? • What can be delivered with new conveyance? • How does this compare with what supplies we currently receive? Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision

10. What will the Project look like? Three alignment options: For more information: All Tunnel Alignment & Option Comparisions Presented to: BDCP Steering Committee December 3, 2009 Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision

11. What will the Project look like? Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision

12. What will the Project look like? M-30 By-Pass Sur Túnel Norte, Madrid EPB Shield – 15.200 m diameter Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision

13. What will it cost? Construction costs: WARNING: ACTUAL COSTS ARE SUBJECT TO CHANGE Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision

14. What will it cost? Financing the construction costs: Long-term Bond • 40 years • 5% Cost Assumption • $10 Billion – Current Tunnel Cost Estimate • Costs being updated – likely +/- 15% • Annual Debt Service (SWP & CVP Combined) • $583 Million Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision

15. What will it cost? Annual O&M and Power costs: 1 – Estimated Average Year Power Costs Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision

16. What will it cost? Possible Aproaches to Split costs between the Projects • Using conveyance capacity: • CVP: 39% • SWP: 61% • Using contract amounts: • CVP: 45% • SWP: 55% • Total Water Supply • CVP: 40.6% • SWP: 59.4% • Firm Deliveries (other some other method) Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision

17. What will it cost? Financing the construction costs: Project Cost Estimate • $10 Billion • Annual Capital Repayment • $583 Million Estimated SWP Share – 60% • Annual Costs (including Capital & O&M) • SWP – $346 Million • CVP – $237 Million Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision

18. Sacramento River To San Francisco l Stockton Clifton Court Forebay San Joaquin River What are the benefits? Compare With and Without new Delta conveyance The Delta • 2005 SWP Reliability Report (Pre-Wanger): • Average Table A: 77% • Without Conveyance • 2009 SWP Reliability Report (Post BOs): • Average Table A: 60% • Subject to Reductions due to Regulatory Actions, Earthquakes, etc. • With Conveyance • BDCP Proposed Operation: • Average Table A: 79% Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision

19. What will we get and what will it cost? Annual Cost & Supply Impacts of Delta Conveyance 1 – Supply Estimates do not Include Article 21 Water Availability 2 – Assumes 60% SWP Reliability (2009 SWP Reliability Report) 3 – Assumes 79% SWP Reliability (with BDCP Proposed Operations) Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision

20. What are the benefits for me? Other benefits of a new Delta Conveyance • Water Quality: • Major reduction in salinity, chlorides, TOCs, bromides • Reduced Treatment Costs • Reduced Service Area Costs (e.g., reduced homeowner costs for water heaters) • Improved Reliability: • Existing Supply Through Delta Potentially Unusable in Future due to Significant Probability of Delta Levee Failure from Earthquakes, etc. • Short term loss of supply (Table A and Article 21 Water) without Delta Conveyance • Long term reduction without Delta Conveyance • Delta Conveyance avoids potential future Delta Regulatory restrictions Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision

21. What are the Next Steps? If DWR Financing of Planning Costs is Not Successful • Key SWP Contractors Personnel Get Ready Access to DHCCP Documents including Environmental Material • DHCCP developing a Funding Amendment with additional $49 Million ($98 Million total SWP & CVP) in costs to be billed in 2011 • Funding Amendments to be provided to SWP Contractors in March 2010 • Additional Costs for SWP Contractors Collectively -- $49 million • Signed Funding Agreement Amendments needed by April 2010 • SWP Contractors working with DWR to finance planning costs – if successful, would eliminate need for Funding Agreements Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision

22. Questions? Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision