EARIP Background

2. EARIP Background • EARIP • “Balances the recovery of listed species with water use and development through a multi-stakeholder process” • Ongoing process since 2007 • Parameters and timelines solidified in Senate Bill (SB) 3 (2007) • Stakeholders specifically identified in legislation (26 Member Steering Committee)

3. EARIP Background • Consensus-based approach that uses available science to develop a program document that: • Protects identified endangered species • Contributes to long-term species recovery • Balances regional interests • Human water use, environmental sustainability • Provides Incidental Take protection for interested stakeholders • Protection for covered activities through a permit issued by the U.S. Fish and Wildlife Service (FWS) with an approved plan

4. Phase I – Bottom Up Activities Activities Approved by the EARIP Steering Committee to Accomplish its Goals • Habitat Management Phase I Components • Improve habitat surrounding both spring complexes • Environmental restoration and protection areas with research component – protection in the wild • Refugia - protection in captivity • Bio-Monitoring • Low impact development considerations around critical habitat (water quality) • Implement specific species protection measures (i.e. Recreation Management) • Flow Management Phase I Components • VISPO Dry Year Option • Regional conservation • SAWS ASR commitment • Stage V additional 4% water use curtailments If necessary, Phase II Components • Expanded use of the ASR through SAWS Water Resources Integration Pipeline • Additional pumping reductions to be determined

5. Phase I – Bottom Up Activities SAWS ASR • SAWS ASR recovery commitment • 126,000 acre-feet of recovered water is delivered to SAWS customers to replace pumping on the Edwards Aquifer during a future drought similar to the 1950s • Drought of Record (DOR) Determination • Ten-year rolling Edwards Aquifer recharge average • As identified in the annual EAA Hydrogeologic Data Report • Regional Advisory Group • Coordination of 50,000 acre-feet of regional leases

6. Phase I – Bottom Up Activities Stage V Restrictions • Last layer of the activities to provide spring flow protection • Triggered when J-17 is at 625’ msl or below • July 1990 (most recent occurrence) • Permits will be reduced to a total cutback of 44% • Stage V reduces firm yield of the aquifer to 320,000 acre-feet

7. SAWS ASR Commitment

8. Introduction and Overview • The capabilities of the ASR are greater than originally anticipated and continue to develop • All water in the ASR continues to serve SAWS ratepayers • The EARIP plan and SAWS intended use of the ASR in drought stages are generally consistent

9. EARIP Leased Water and ASR • EARIP will lease 50,000 acre-feet of water annually • The leased water will be available for SAWS to store in the ASR • 16,000 acre-feet will be available annually • 34,000 acre-feet will be available based on DOR triggers

10. Using ASR through Drought

11. Protecting Comal Spring Flows Model Simulation shows 39 months of zero spring flow at Comal Springs cfs

12. Phase I Program and Reduced SAWS Pumping cfs

13. ASR Phase II • Models are predictive tools only and are built with conservative assumptions • If additional protections are needed, SAWS is committed for Phase II • To meet Phase II commitments using the ASR, SAWS will need to construct the integration pipeline • As a fall back position, Phase II could impose additional cutbacks

14. SAWS Challenges with ASR in EARIP • SAWS must manage the ASR for long-term storage and produce from the ASR once DOR is identified • SAWS will need to evaluate produced water quality under extended drought and maximum production operation • SAWS Edwards annual water rights will be reduced proportionally to the annual volume of ASR water produced in a DOR

15. Benefits with ASR in EARIP • Potentially less expensive than other EARIP projects considered • SAWS makes all operational decisions on use of the ASR prior to DOR • All ASR water is used by SAWS ratepayers

16. Implications to SAWS Water Resources

17. WMP – Current Status DOR Occurring Late in Scenario 7/26/11 Alt. Scenario (136 GPCD) Normal (116 GPCD)

18. EARIP Commitment Assumptions • EARIP Assumptions • SAWS ASR • Becomes a base loaded supply in future DOR based on modeled recovery regime • ASR recovery will replace Edwards pumping totaling 126,000 acre-feet over a ten-year period • 46,300 acre-feet in worst year of DOR • Portion of regional leases to be used for ASR storage • SAWS initially contributing 8,000 acre-feet per year • Water will be restored back to SAWS as the other water conservation efforts across the region begin to achieve results • Estimated commitment to be ten years

19. EARIP Commitment Assumptions • Edwards Aquifer Proposed Cutbacks • Additional reductions in Phase II if necessary

20. Implications of EARIP Bottom Up DOR Occurring Late in Scenario Alt. Scenario (136 GPCD) Normal (116 GPCD)

21. Funding Options and Costs

22. Funding Likely increase in the EAA Aquifer Management Fee • July 19th letter from EAA • “…the maximum projected total aquifer management fee rate would be $116 per acre-foot beginning in 2012” • Represents an increase of $77 per acre-foot for municipal and industrial users • Implement and sustain programs in the HCP – $64 per acre-foot • Maintain the long-term sustainability of the aquifer management rebate program – $12 per acre-foot • Enhanced water quality regulations – $1 per acre-foot

23. Funding EAA Fee Pass-Through to Monthly Water Bill • Ordinance #87042 – passed by City Council in 1997 • Instructs SAWS to pass the EAA Aquifer Management fee through to customers based on volume of water used • The Aquifer Management fee appears as a line item on each SAWS bill • Current rate – approximately 1.4 cents per 100 gallons • Average 2011 residential customer: $1.10 per month • Average 2011 commercial customer: $7.03 per month

24. EAA Fee Calculation 2011 Fee with EARIP Projection

25. The Edwards Aquifer Would Remain the Most Economical Source of Water

26. Funding Other Potential Sources of Funding • Federal Contribution • FWS • Possibility of $2 million per year • Downstream Contribution • Goal of $1 million of funding • GBRA - $400,000 • Others - $250,000 (CPS Energy - $100,000) • Outstanding - $350,000

27. Costs to SAWS Largest EAA Municipal Permit Holder • Given the legislative cap on agricultural Aquifer Management fees and the likely limited contributions from federal sources and downstream stakeholders, most of the funding for the EARIP will come from Municipal and Industrial EAA permit holders • SAWS pays approximately 65% of the total Aquifer Management fees collected by EAA • Other Municipalities and Industries pay 34% • Agricultural irrigators pay 1%

28. Next Steps

29. Next Steps – Moving Forward • Bottom Up activities are meaningful programs with merit • Four years of regional cooperation and understanding • Unprecedented four-year effort with all stakeholders involved in negotiations • HCP approval is promising • FWS very engaged in process

30. Cap of 400,000 acre-feet Cap of 572,000 acre-feet CPM per EAA CPM codified Owned water 159,000 acre-feet Owned water 227,000 acre-feet Constrained water market Vigorous market ASR limited ASR at 95,000 acre-feet High litigation risks Low litigation risks Gaps filled with non-Edwards Gaps filled with Edwards and non-Edwards 172,000 acre-feet loss = $950 million Next Steps – Moving Forward Without SB 3 With SB 3

31. Next Steps – Moving Forward • Impacts to SAWS Water Resources is manageable • SAWS should be applicant to the HCP • Funding commitment is high, but benefits are long-term and provide much needed protection to Edwards water rights as well as resolution to ongoing issues • Staff will continue to work on key issues and develop recommendation for Board consideration