[env-trinity] A nearly $17-billion water project is being planned for California. What will it cost the Southland?

Thu Aug 17 17:23:33 PDT 2017

Bill – the cost projections in Bulletin 132-15 for Operations and Maintenance and capital costs for the original State Water Project facilities also appear to be ridiculously low.   I dug the numbers out of the Bulletin 132-15 and made some graphs after the Oroville spillway disaster.

The capital costs appear to assume no major repairs or seismic remediation of either Oroville or San Luis will be needed, although they’ve borrowed $800 million for the Oroville spillway repair, and major seismic remediation is known to be needed for San Luis. 

Operating costs also grow more slowly than the 2.75% annual rate of inflation assumed in the State Water Resources Development system accounting.

Deirdre Des Jardins

 <mailto:ddj at cah2oresearch.com> ddj at cah2oresearch.com

831 423-6857 v

831 566-6320 c

 <http://cah2oresearch.com/> 

From: Kier Associates [mailto:kierassociates at att.net] 
Sent: Thursday, August 17, 2017 5:11 PM
To: ddj at cah2oresearch.com; 'Tom Stokely' <tstokely at att.net>; 'Env-trinity' <env-trinity at velocipede.dcn.davis.ca.us>
Cc: bettina boxall <bettina.boxall at latimes.com>; robin abcarian at the la times <robin.abcarian at latimes.com>
Subject: RE: [env-trinity] A nearly $17-billion water project is being planned for California. What will it cost the Southland?

Thanks, Deirdre - if ‘Stage 1’ of the SWP has cost 3.8 times as much as the 1960 voters were told that it would cost - and notwithstanding that overruns seem to be just getting more and more spectacular (how about Caltrans’ 1995 $250 million estimate for repairs to both SF Bay Bridge spans ending up at $6.5 billion for the 2013-completed east span alone ! ) and DWR’s performance is consistent, that would put a $64.6 billion price tag on the CA WaterFix.  

‘Close enough for government work’ as we used to say when I was laboring on dam projects.   

Bill  

From: Deirdre Des Jardins [mailto:ddj at cah2oresearch.com] 
Sent: Thursday, August 17, 2017 4:17 PM
To: 'Kier Associates'; 'Tom Stokely'; 'Env-trinity'
Subject: RE: [env-trinity] A nearly $17-billion water project is being planned for California. What will it cost the Southland?

Bill – here’s the total cost Capital Expenditures reported in Bulletin 132-15 (2015):

Original Facilities* (Burns-Porter Act):        $1.8 billion

California Aqueduct:                                      $3.1 billion

East Branch enlargement and extension         $790 million

Power plants:                                                  $622 million

Total (including misc)                                    $6.6 billion

*Oroville and Feather River facilities, Delta facilities, North Bay Aqueduct and South Bay Aqueduct, State share of San Luis

There are still billions in outstanding CVP revenue bonds.  DWR used a Resolution in 2006 to grab “surplus” revenue from water sales from the original Burns-Porter Act facilities to finance revenue bonds for the California Aqueduct and Off-Aqueduct power facilities.    

I think the use of revenues from water sales for the California Aqueduct, East Branch Enlagement, and Power Plants is one of the reasons DWR has been short of funds to maintain Oroville and San Luis dams, even though the revenue from water sales is pledged first to operations & maintenance of the facilities.    

Excerpts below from 2006 resolution below.  

http://www.water.ca.gov/swpao/docs/notices/07-04.pdf

WHEREAS, the State of California Deparbnent of Water Resources (hereinafter the "Department") has issued its Central Valley Project Water System Revenue Bonds (the "Bonds") under the Central Valley Project Water System Revenue Bonds, General Bond Resolution, adopted as of July 1, 1986, as amended (the "Resolution"); 

WHEREAS, Section 101 of the Resolution defines the term "Revenues" to include not only all moneys received by the Department under the Water Supply Contracts resulting fiom the construction, acquisition or operation of Projects, but also all moneys received by the Deparbnent from any other legally available source which the Department in its discretion determines to be "Revenues" and so designates in a Certificate of the Department filed with the Treasurer.(as those terns are defmed in the Resolution);’

WHEREAS, Section 101 of the Resolution defines the term "Revenues" to include not only all moneys received by the Department under the Water Supply Contracts resulting from the construction, acquisition or operation of Projects, but also all moneys received by the Department from any other legally available source which the Department in its discretion determines to be "Revenues" and so designates in a Certificate of the Department filed with the Treasurer.(as those terns are defmed in the Resolution); 

WHEREAS, moneys available under California Water Code Section 12937(b)(4) are available for use by the Department for acquisition and construction of the State Water Resources Development System, including for use as Revenues under the Resolution; 

WHEREAS, moneys received by the Department as a result of Article 51(c)(2)(i) of the Water Supply Contracts (or the equivalent article in Water Supply Contracts other than that of the Metropolitan Water District of Southern California) and relating to the Bonds are from facilities financed by the Bonds and are Revenues under the Resolution whether or not such moneys are the result of charges under the amendments commonly known as the Off-Aqueduct Power Facilities Amendment, the East Branch Enlargement Amendment, the Water System Revenue Bond Amendment, the Coastal Branch Extension Amendment and the East Branch Extension Amendment

The Department hereby confirms, and to the extent necessary, determines. and designates that moneys available under California Water Code Section 12937(b)(4) are available for use by the Department for acquisition and construction of the State Water Resources Development System and, to the extent necessary to satisfy the requirements of the 

Resolution (taking into account other Revenues),are Revenues under the Resolution, and that all moneys received by the Department that fall under the revenue need category specified in Article , 5 l(c)(2)(i) of the Water Supply Contracts (or the equivalent article in Water Supply Contracts other than that of the Metropolitan Water District of Southern California) and relating to the Bonds are from facilities financed by Bonds and are Revenues under the Resolution whether or not such moneys are the result of charges under the amendments commonly known as the Off- Aqueduct Power Facilities Amendment, the East Branch Enlargement Amendment, the Water System Revenue Bond Amendment, the Coastal Branch Extension Amendment and the East Branch Extension Amendment.

Deirdre Des Jardins

 <mailto:ddj at cah2oresearch.com> ddj at cah2oresearch.com

831 423-6857 v

831 566-6320 c

 <http://cah2oresearch.com/> 

From: env-trinity [mailto:env-trinity-bounces at velocipede.dcn.davis.ca.us] On Behalf Of Kier Associates
Sent: Thursday, August 17, 2017 1:44 PM
To: 'Tom Stokely' <tstokely at att.net <mailto:tstokely at att.net> >; 'Env-trinity' <env-trinity at velocipede.dcn.davis.ca.us <mailto:env-trinity at velocipede.dcn.davis.ca.us> >
Cc: bettina boxall <bettina.boxall at latimes.com <mailto:bettina.boxall at latimes.com> >; robin abcarian at the la times <robin.abcarian at latimes.com <mailto:robin.abcarian at latimes.com> >
Subject: Re: [env-trinity] A nearly $17-billion water project is being planned for California. What will it cost the Southland?

The State Water Project (SWP) was presented to California voters on the fall 1960 ballot, for approval of the bonds with which to build it, as a $1.75 billion project. 

SWP proponents have maintained ever since that the 1960 voters OK-ed the Project’s Delta facilities even though such facilities, unlike the rest of the Project, hadn’t been defined/ couldn’t be spelled out in the ballot measure.

Somewhere over the nearly 57 years since, SWP proponents have named the Delta facilities ‘Stage 2’ of the SWP - not part-and-parcel, apparently, of that for which voters approved financing in 1960 – demonstrating that you can have it both ways if your position in Sacramento is lofty enough.

So how much do you reckon the SWP - oops, ‘Stage 1’ of the SWP – cost to build? 

That’s a question you can bet the State Water Contractors http://www.swc.org have the answer to – but I’ll betcha they’re not about to share it with you (in my youth the Contractors had permanent accounting/auditing staffs housed in the Resources Building at 9th and N Sts. going over every penny spent on SWP construction – and they may to this day). Or you could put a request to DWR – though it might have to be in the form of a Public Records Act request, and then you’re likely going to go nuts trying to interpret what you get back from DWR.

If I had to bet how much SWP construction costs have overrun that mythical $1.75 billion on the 1960 ballot I’d go with the scale of that overrun Tom Stokely reported earlier today that occurred with Santa Barbara’s SWP ‘coastal stub’. ‘Told that their coastal stub was going to cost them $270 million before interest it ended up costing $1.76 billion with interest (‘get that? that Santa Barbara’s coastal stub cost as much as the entire SWP price tag presented to the 1960 voters.)

Six-and-a-half times the current engineer’s estimate.. let’s see, that would put the potential price of the CA WaterFix at $110.5 billion – not $17 billion.

‘Sounds about right – unless you’re the guy that has to pay for it.

Bill Kier

From: env-trinity [mailto:env-trinity-bounces at velocipede.dcn.davis.ca.us] On Behalf Of Tom Stokely
Sent: Thursday, August 17, 2017 11:25 AM
To: Env-trinity
Subject: [env-trinity] A nearly $17-billion water project is being planned for California. What will it cost the Southland?

http://www.latimes.com/local/lanow/la-me-tunnels-cost-20170814-story.html

A nearly $17-billion water project is being planned for California. What will it cost the Southland?

 <http://www.latimes.com/la-bio-bettina-boxall-staff.html#nt=byline> Bettina Boxall <mailto:bettina.boxall at latimes.com?subject=Regarding:%20%22A%20nearly%20$17-billion%20water%20project%20is%20being%20planned%20for%20California.%20What%20will%20it%20cost%20the%20Southland?%22> Contact Reporter

After years of planning for one of the biggest California water projects in decades, a key question remains unanswered: Who exactly will pay for it?

Decision time is approaching for the agencies that will have to pick up the nearly $17-billion tab for building two massive water tunnels under the Sacramento-San Joaquin Delta, the heart of the state’s water works.

Whether the board of the Metropolitan Water District of Southern California commits to paying roughly a quarter of the bill could make or break the project.

Metropolitan management has been a consistent cheerleader for the tunnels, arguing they are vital to stabilizing deliveries of Northern California water that on average provide the Southland with about a third of its supplies.

“The costs of California WaterFix are substantial,” the staff wrote in a report reviewed Monday by two MWD committees. “However…the costs that would be allocated to Metropolitan are reasonable and affordable, given the water supply reliability improvements.”

The staff estimated that the project would cost MWD about $4.3 billion, increasing residential water rates an average of roughly $23 to $38 a year — depending on interest rates on the project debt.

Committee members appeared generally receptive to the presentation. But several indicated they wanted more time before the final project vote, which is scheduled for Sept. 26.

“The 26th is not realistic,” said board vice chair John Murray Jr., who represents Los Angeles.

Public comments at the Monday meeting were divided.

Speakers representing business and labor endorsed the project, saying it was needed to maintain reliable water supplies for the state’s most populous region. Charley Wilson, executive director of the nonprofit Southern California Water Committee, called the staff’s white paper a “prudent, conservative and responsible financial plan.”

But opponents predicted that MWD would wind up paying far more than the staff estimate, and argued the money would be better spent developing local supplies. The staff analysis “understates the costs and risks” to MWD, said Doug Obegi, an attorney with the Natural Resources Defense Council, an environmental group that has been involved in numerous lawsuits over endangered species protections in the delta.

As outlined by the MWD staff, the largely urban customers of the State Water Project would pay 55% of its cost, or $9.2 billion. The largely agricultural customers of the federal Central Valley Project would pay for 45%, or $7.5 billion.

Obegi and others said that breakdown was unrealistic for a couple of reasons.

First, growers can’t afford to pay that much. And irrigation districts with senior water rights and wildlife refuges — which both receive water from the delta — would not have to share the tunnel costs.

The State Water Project could wind up paying for 65% to 75% of the tunnels, driving up MWD’s cost, according to critics.

By diverting water from the Sacramento River in the north delta and sending it through twin tunnels to the south delta pumps, proponents hope, the project will diminish environmental impacts that have restricted water exports.

State water managers say the tunnels will not significantly boost average delta exports. Rather, they argue, the project will avert future restrictions that could slash delta deliveries to 1970s levels.

According to the MWD paper, if the tunnels are built, future delta supplies would be 1.3 million acre-feet greater than without the tunnels. The staff used that number to estimate the per-acre-foot cost of the tunnel water, concluding it would be far cheaper than new supplies from recycling projects or seawater desalination.

(An acre-foot is enough to supply two average households for a year.)

But in a recent blog post, Jeff Michael, a tunnel critic and director of the Business Forecasting Center at the University of the Pacific in Stockton, called MWD’s supply projections “wildly optimistic.” He said the board should demand more plausible cost comparisons with other water sources.

At Monday’s committee meeting, MWD general manager Jeffrey Kightlinger said that regardless of how the tunnel water supply is calculated, MWD’s project costs would stay the same

Other water agencies are expected to vote soon on whether to participate in the tunnel project. If too many say no, the project could die — or the agencies that say yes would have to up their stake to keep it alive.

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