Community Integrated Resource Planning

Advisory Committee

Meeting Twelve October 24, 2013

Agenda

Welcome Judie Brailsford, Facilitator September 26 Presentation Clarification Jordan Valley Water Conservancy District’s service population and debt

Presentation District Overview Ron Thompson, General Manager, Washington County Water Conservancy District

Public comment Meeting conclusion and adjournment

Jordan Valley Water Conservancy District • Current bonding debt outstanding $238 million

• Debt paid by JVWCD service area: population 610,000

• Does not include any of the estimated $1.5 billion obligation for the Bear River Project

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Historic PopulationProjected Population

District Overview Providing Water for a Growing Population

Ron Thompson General Manager Washington County Water Conservancy District

Outline

• Overview of District Facilities

• Future Projects

• Supply-Side Risk and Vulnerabilities

• Demand-Side Risk and Vulnerabilities

Where Does Washington County’s Water Come From?

WCWCD Operates More than 20 Production Wells

The Virgin Diversion Diverts River Water Upstream of the LaVerkin Hot Springs

Quail Creek Sand Hollow

Kolob Gunlock Ivins

Reservoirs Total storage of 108,623 acre feet Reliable annual yield of approx. 22,000 acre feet

Capable of producing 48 million gallons of clean, safe water daily

How is water treated and delivered?

Quail Creek Water Treatment Plant

More Than 200 Miles of Existing Pipeline

Secondary Systems

• Toquerville

• St. George municipal

• LaVerkin

• Hurricane

• Partial Systems

• Ivins

• Santa Clara

• Bloomington

• Bloomington Hills

What are WCWCD’s Future Water Supply Projects?

Sand Hollow Regional Line Ash Creek Pipeline & Reservoir

Warner Valley Reservoir Lake Powell Pipeline

Ash Creek

• Water collection, reservoir and pipeline project

• Provides secondary water for outdoor use to Toquerville and LaVerkin

• Allows culinary use of high quality Toquerville Springs

• Estimated annual yield 5,000 acre feet

• Preliminary design and permitting scheduled for a 2014 completion; reservoir scheduled for a 2015 completion.

Warner Valley • Capacity to store up to 50,000 acre feet of water

• Serves as a secondary water regulating pond

• Will enhance water quality in Washington Fields

• Helps to manage flows for endangered fish species

• Considered a potential reservoir site since 1977

• Estimated completion 2020

LaVerkin Hot Springs

• Produces approximately 5,000 gallons per minute of hot, highly mineralized water

• One of three major contaminators of the Colorado River

• Produces 110,000 tons (or 220 million pounds) of salt annually

• Significant impact on downstream water quality and environment

Lake Powell Pipeline

A 138-mile pipeline from Lake Powell to Sand Hollow Reservoir.

Water delivery expected to commence 2025-2030

History and Purpose of Lake Powell

• Upper basin water storage

• Drought protection

• Allows upper basin to meet downstream flow requirements of the Colorado River Compact • Required: 7.5 million acre feet on a 10-year rolling

average

• Actual: 8.8 million acre feet a year since 1998

Lower Basin Impacts on Lake Powell

• Upper basin delivers 1.3 million acre feet a year more than required – 8.8 acre feet

• Lake Mead diverts an average of 9.5 million acre feet every year

• Deficiency can’t be sustained over time

• Water supply shortages only exist in lower basin

• Fill Mead First proposal jeopardizes upper basin water supplies

Colorado River Water Availability

Utah has never used its full legal allocation of water from the

Colorado River.

Utah’s water currently flows downstream to benefit the lower

basin states and ultimately, Mexico.

Colorado River Water Reliability

Lake Powell Pipeline Development Act

Lake Powell Pipeline Water Allocations

Lake Powell Pipeline Timeline 2006

Lake Powell Pipeline Development Act

2007

Preliminary design and environmental

work

2008

Begin environmental study process

2015

NEPA record of decision and permits

2018

Final design

Early 2020s

Construction begins

2025-2030

Water delivery

Lake Powell Pipeline Estimated Cost

~$1 billion

Lake Powell Pipeline Financing

• Legislative-approved repayment structure (see Utah Code Title 73 Section 28)

• District repays state gradually as growth occurs and as impact fees are collected • Not a traditional bond financing with level repayment • District only pays for water as it is used • Up to a 90-year repayment option

What are the risks and vulnerabilities in meeting future

water needs?

Supply Side

Demand Side

Supply-Side Risks & Vulnerabilities

• Financial

• Water rights

• Agricultural conversions

• Ground water supplies

• Surface water supplies

• Mechanical/electrical failures

• Transmission interruptions

• Transmission pipeline capacity reductions

• Environmental issues

• Climate change

• Long-term drought

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Demand-Side Risks & Vulnerabilities

• Population projection errors

• Water demand “surges”

• Weather variations

• Heat island effects

• Demand management and per capita water use

• Land use trends and density changes

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Supply-Side Risks & Vulnerabilities

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Financial

• Impacts to credit rating and bond capacity

• Example: Senate Bill 78 (2012), originally proposed to repeal water conservancy district property tax levy authority

• Newly mandated financial/reserve policies

• Example: Senate Bill 276 (2012), requiring establishment of reserve fund(s) for management and replacement of aging infrastructure

• State financing for state water projects

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Financial

• Existing infrastructure will eventually need to be replaced. The cost of replacing aging infrastructure will be significant

• Example: Findings of Asset Replacement Study:

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Asset Replacement Timeframes

Total Asset

Replacement Costs

Annual Payment Needed for

Asset Replacement

30 years or less $6.5 M $144,500

30 to 40 years $8.4 M $144,200

40 to 50 years $7.8 M $70,800

50 years or more $961.6 M $3,006,100

TOTAL $984.3 M $3.4 M

Barnum, Barry. Proposed Asset Replacement Plan Presentation. August 27, 2013.

Water Rights

• Court decisions can create risks in water supply yield

• Example: The Utah Supreme Court decision in Jensen vs. Jones in 2011 removed state engineer authority to review non-use of water. Utah water law provides for forfeiture of water rights that are generally not used for more than seven years.

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Water Rights Surface water supplied by the Virgin River is the only WCWCD water supply

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Agricultural Conversions

• Salinity levels of agricultural water are often too high to be suitable for other purposes

• Example: The total dissolved solids in the Virgin River downstream from the LaVerkin Hot Springs ranges between 2,000 and 4,000 ppm compared with the state standard for drinking water of 1,000 ppm

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Washington Diversion Dam

Groundwater Supplies

• Contaminants, both natural and man-made, are present in most aquifers

• As communities grow and age, the potential for man-made contamination increases (fuel storage tank or septic system leaks, chemical spills, etc.)

• Labs are detecting smaller and smaller concentrations of contaminants, and regulations are becoming more and more stringent

• Example: The maximum contaminant level for arsenic was dropped from 50 ppb to 10 ppb in 2006

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Groundwater Supplies

• The safe yield of a groundwater basin is a “moving target”

• Wells drilled into the Navajo sandstone need to be refurbished every few years

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Surface Water Supplies

• Contaminants, both natural and man-made, are present in most surface water sources

• Example: Blue-green algae in both Quail Creek and Sand Hollow Reservoirs produce earthy/musty tastes and odors which affect the aesthetic appeal of the water and warrant additional treatment

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• Example: Quagga and zebra

mussels have infested many western waters damaging hydropower plants, plugging off pipelines, and impacting overall water quality

Mechanical/Electrical Failures

• Mechanical and electrical failures limit the firm water supply yield in any given year

• Examples: Major equipment failure at wells, pump stations, or water treatment plant

• The risk of some wells, pump stations, and water treatment plant capacity can be hedged by use of large generator sets for stand-by electric power

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Transmission Interruptions

• Major conveyance facilities are subject to interruption from natural disasters and man-caused damage

• Example: Flooding in December 2010 damaged the Regional Pipeline and forced St. George and other cities to temporarily utilize wells with arsenic concentrations above the maximum contaminant level in order to continue providing drinking water

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Transmission Interruptions

Damage from the 2005 flood

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Transmission Pipeline Capacity Reductions

• Biofilm on interior walls of major raw water conveyance facilities, and inorganic deposits on the interior of finished water pipelines, limit their capacity and require frequent attention

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• Example: Several WCWCD pipelines are “pigged” on an annual or biannual basis

Environmental Issues

• The Virgin River is home to four threatened and two endangered species which compete for the water supply

• Approx. 8,000 acre feet of water a year is released below the diversion dams on the Santa Clara and Virgin Rivers to supply in-stream flow to sustain native fish populations

• The Virgin River Program has successfully addressed the often conflicting water needs of the river environmental and the community

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• Fish Barriers

• Red Shiner Eradication

• Woundfin and Virgin River Chub Stocking

• Native Fish Monitoring

• Addressing River Flow & Temperature Issues

• Washington Fields Diversion Fish Screens

• Pumpback Project

Virgin River Gorge

fish barrier Washington Fields Diversion

Fish Screens

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Environmental Issues

• WCWCD water supplies are tied to the Virgin River

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Climate Change

Climate Change

• Trends in climate change project diminished water supply yields in the future

• Example: Lower Colorado River Basin models predict warmer temperatures, with increased rainfall and decreased snowpack resulting in about a 10% reduction in firm yield in the Virgin River

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Acceptable Shortage Firm Yield (AFY)

20% 28,535

0.1% 23,303

Long-Term Drought

Long-term reductions in water supply will limit water reliability

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Aquifer Recharge

WCWCD hedges this risk by use of groundwater recharge and underground storage

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Aquifer Recharge

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Demand-Side Risks & Vulnerabilities

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Population Growth Will Continue

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Population Projection Errors

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91,104

138,115

196,762

280,558

371,743

472,567

581,731

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Population projections have had varying levels of accuracy in the past

Water Demand “Surges”

Surges can be unpredictable or can occur during an economic recovery period.

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Weather Variation

In 2012 and 2013, late summer rains shifted the traditional timing of peak summer demand

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2012 Regional Pipeline Deliveries: More than 5:1 Seasonal Variation

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Indoor Outdoor

*Wholesale deliveries only. Municipal water not included.

Heat Island Effect

• The heat island effect can ultimately lead to increased water use although maybe not locally

• Removing trees and other landscaping can increase the temperature surrounding a home as much as 10°F

• For each additional degree in ambient temperature, power usage increases 1.5 to 2% resulting in a potential power usage increase of 20%

• It takes on average 25.1 gallons of water to produce 1 kWh

EPA Website. www.epa.gov/heatisland/about/index.htm. October 23, 2013.

Per Capita Water Use

• Water demands can be managed through water conservation programs

• The WCWCD is aggressively pursuing a wide range of water conservation programs, including water checks, demonstration gardens, and an annual water fair for area grade school students.

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Per Capita Water Use

• The WCWCD is working diligently, not only to meet the Governor’s conservation goal of 25% reduction by 2025,

. . . but also to reach a 35% reduction by 2060

• However, the past experience demonstrates reductions in use do not occur smoothly . . .

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Land Use Density Trends

• Water conservancy districts do not have land use jurisdiction but provide water needed by municipalities based on their land use jurisdictions and planning

• As the county grows in population, an increase in land use density is anticipated

• The impact to water needs and per capita use related to an increase in land use density is unknown at this time

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WCWCD considers a wide range of supply-side and demand-side risks and vulnerabilities in planning and scheduling new water supplies

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Water Economics

Water District Funding Three primary sources

Bond Rating Why does it matter?

Fitch Affirms Washington County Water Conservancy Dist, UT's LTGOs at 'AA+'; Outlook Stable June 06, 2013 02:07 PM Eastern Daylight Time SAN FRANCISCO--(BUSINESS WIRE)--Fitch Ratings has affirmed the following Washington County Water Conservancy District, UT's (the district's) obligations at 'AA+‘…

Washington County’s Total Taxable Property Values

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$2,000,000,000

$4,000,000,000

$6,000,000,000

$8,000,000,000

$10,000,000,000

$12,000,000,000

$14,000,000,000

Supports:

156,400 Washington County Residents

55,200 Washington County Households

50,600 Washington County Employees

4,600 Washington County Business Establishments

$4.19 billion in Personal Income to Local Residents

*2012 deliveries in regional service system

46,000 acre feet of water*

Water Price Comparisons

Average cost per 1,000 gallons based on a 30,000 gallon per month usage Seattle $12.41 San Diego $6.42 Tucson $11.85 Denver $7.68 Phoenix $6.68 Las Vegas $3.59 Portland $7.52 Colorado Springs $10.59 St. George $1.58

Projected 2060 population of 581,731 equates to 200,000 residential ERUs, not including commercial and industrial ERUs

Regional Cities Acre Feet per Year

(AFY) Yield

ERUs based on Division Drinking

Water Requirement (0.89 AFY/ERU or 273 gpcd)

ERUs with 35% conservation goal by

2060 (0.46 AFY/ERU or 273 gpcd)

Current* ~73 K 82 K 158 K

LPPP ~82 K 92 K 177 K

TOTAL ~155 K 174 K 335 K

• How much risk are we willing to take when it comes to providing water for our people?

• How much are we willing to pay to remove that risk?

• How much should new growth pay?

• How much should current users pay?

*Current yield does not take climate change models into account

Public Comment

Next Meeting November 21

Water Development Financing Models

Jeremy Aguero Principal Analyst, Applied Analysis

Meeting conclusion and adjournment

Thank you for attending