COMMITTEE AGENDA MEMORANDUM
Water Supply and Demand Management Committee
Government Code § 84308 Applies: Yes ☐ No ☒
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT: title
Receive Update on the B.F. Sisk Dam Raise and Reservoir Expansion Project, including (provisional) agreement on terms of Management and Cost Share Agreement Between San Luis Delta Mendota Water Authority and U.S. Bureau of Reclamation.
End
RECOMMENDATION:
Recommendation
Receive an update on the B.F. Sisk Dam Raise and Reservoir Expansion Project, including (provisional) agreement on terms of Management and Cost Share Agreement Between San Luis Delta Mendota Water Authority and U.S. Bureau of Reclamation.
Body
SUMMARY:
The U.S. Bureau of Reclamation (Reclamation) and the San Luis & Delta-Mendota Water Authority (SLDMWA), acting on behalf of eight members, including Valley Water, are jointly developing the B.F. Sisk Dam Raise and Reservoir Expansion Project (Project). This Project will raise the existing B.F. Sisk Dam by 10 feet and increase the storage capacity of San Luis Reservoir by 130,000 acre-feet (AF), of which 60,000 AF is currently reserved for Valley Water. This Project is separate and distinct from the B.F. Sisk Safety of Dams Modification Project, which is being undertaken by Reclamation and the Department of Water Resources (DWR) to address seismic risks of the existing dam and will not increase the storage capacity. However, in order for this expansion Project to move forward at a desirable cost and timeline, it will need to be constructed concurrently with the seismic retrofit project.
On October 1, 2024, Reclamation, SLDMWA, and Project participants (Participants) concluded negotiations on a Cost Share and Capacity Management Agreement (Management Agreement) and reached an agreement, subject to further formal review and approval by all interested parties. The Management Agreement provides specificity on key operational and cost allocation principles or criteria, allowing staff to analyze expected Project costs, benefits, and risks. Our preliminary analysis supports Valley Water’s continued participation in the Project.
This memorandum contains an estimate of Project costs, a description of key terms of the Management Agreement in advance of an anticipated board action to authorize approval of the Agreement and funding for planning and design in late 2024 or early 2025, and a summary of estimated water supply benefits.
Cost Share and Capacity Management Agreement
The Management Agreement is the primary agreement that defines how the costs and benefits of the Project will be shared. The only parties to the Management Agreement are Reclamation and the SLDMWA. However, SLDMWA negotiated this Agreement acting on behalf of its eight participating agencies, including Valley Water, and Valley Water was represented and very active in negotiations of the Management Agreement. A separate Activity Agreement between the SLDMWA and each Participant details how the costs and benefits are allocated to and among all Participants. SLDMWA’s execution of the Management Agreement is contingent upon all Activity Agreement members first approving and recommending that it be brought to SLDMWA’s Board for execution, and staff will bring this key decision to Valley Water’s full Board shortly.
Key components of the Management Agreement are as follows:
• Reclamation will own and operate the expanded San Luis Reservoir consistent with the terms of the Management Agreement; Participants will be provided a contractual right to 70% of storage capacity in the expanded share of the reservoir while Reclamation will retain control of the remaining 30%.
Ø Staff Analysis: This is a reasonable arrangement.
• Any type of water may potentially be stored, including Valley Water’s Central Valley Project (CVP) and State Water Project (SWP) contractual supplies and supplemental water transfers.
Ø Staff Analysis: The Project can provide significant flexibility to help Valley Water manage wet year CVP and SWP supplies for storage and use during droughts.
• Surplus CVP water will be stored in the expanded storage when available and allocated only to participants, and Valley Water will also be able to store its share of surplus SWP supplies that we rarely take advantage of now because of a lack of storage capability.
Ø Staff Analysis: If Valley Water chooses to fill and drain our share of storage each year, modeling indicates we would capture an average of 14,000 AF of surplus supplies that would not otherwise have been accessible to Valley Water.
• During periods of severe water supply shortage, Reclamation may use, without compensation, Participants’ stored CVP water supplies to satisfy the demands of senior water right holders and refuges or to protect public health and safety.
Ø Staff Analysis: Valley Water may preferentially store its SWP water supplies to significantly reduce these risks.
• Non-CVP water and other types of water are given a much higher level of protection. Reclamation can only use non-CVP water if Participants agree.
Ø Staff Analysis: Valley Water’s SWP supplies and transfer supplies would be protected when stored in the Project.
• None of the water stored in Participants’ share of storage is subject to spill, and Participants may choose to store various types of water at any time as long as storage space is available, and may withdraw its stored water at any time, with the exception of CVP supplies, which are subject to certain limitations in critically water-short periods.
Ø Staff Analysis: Valley Water carryover supplies in San Luis Reservoir are currently at risk of spill. The Project would provide secure carryover storage which would help improve Valley Water’s year to year water supply reliability.
• The agreement is between Reclamation and the SLDMWA only.
Ø Staff Analysis: SLDMWA negotiated this Management Agreement on behalf of the eight participating member agencies. A separate activity agreement between the SLDMWA and Participants will be amended to provide authorization for SLDMWA to sign the Management Agreement and to better define Participants’ roles, rights, and obligations with respect to the Project.
Project Costs
The capital cost estimate for the Project is $942 million in 2023 dollars, not including financing costs. The estimate includes a 15 percent design contingency and 20 percent construction contingency. Total annual O&M costs are anticipated to be approximately $3.9 million.
Cost savings are anticipated to be achieved because the Project involves the modification of an existing facility rather than construction of an entire new facility, and because it would occur concurrently with the B.F. Sisk Safety of Dam Modification Project. However, the Project would also require significant upgrades to State Route 152 to bring the road up to current safety standards, which adds significant costs. SLDMWA is pursuing alternative funding sources, but the success in securing these funds is uncertain. Assuming no additional transportation funding is secured, the costs of major project elements are shown below in Table 1:
Table 1: Sisk Dam Raise Capital Costs
|
Project Feature |
Capital Cost ($2023) |
|
Dam Raise |
$439M |
|
State Route 152 Improvement |
$432M |
|
Design, Permitting, Project Management |
$70M |
|
Total Capital |
$942M |
If Valley Water’s participation level is 60,000 AF, Valley Water would be responsible for approximately $435 million in capital costs. At this level of participation, the Project could cause groundwater rates in North County Zone W-2 M&I to increase by up to $227/AF by FY 34, which would translate to an incremental $7.81 per month to the average household.
Water Supply Reliability Improvements
The Water Supply Master Plan 2050 (WSMP) analysis has identified the Sisk Dam Raise as a potential option to diversify existing storage programs. This project would improve our ability to make use of our allocated CVP and SWP supplies and improve Valley Water’s overall water supply reliability.
Staff performed an analysis to evaluate the improvement in water supply reliability both with and without the Project over the 6-year 1987-1992 drought using the WSMP’s 2050 stable demand and severely impacted imported supply scenario. The analysis assumes that Valley Water is able to maintain an out of County groundwater banking program identical to our current Semitropic groundwater bank, but other than that, no other significant new water supply or storage projects are assumed. The results indicate that a significant amount of shortage could be avoided with the Sisk Dam Raise Project alone. For example, at a 60,000 AF participation level, the total shortage over that time period would be reduced by 66 percent. However, if our interest in the Semitropic Banking Program is reduced in the future, we would need to supplement with other storage opportunities, which have not yet been identified.
In addition to providing storage for existing supplies, the Project can also capture additional Delta surplus which Valley Water’s existing infrastructure cannot currently capture. The amount of Delta surplus that could be captured by the Project is dependent on how the Project is operated and whether it’s paired with other WSMP water supply or storage projects. Staff analysis indicates that the Sisk Dam Raise Project pairs well with many other projects being evaluated in the WSMP. For example, when paired with local purified water projects, such as the San José Purified Water Project (Phase 2), it enhances the overall water supply reliability provided by those projects. Another example is the Delta Conveyance Project, which produces water primarily in wetter years that can be captured by the Sisk Dam Raise project.
Next Steps
The immediate next step is an amendment of the current SLDMWA Activity Agreement to better define participants’ rights and obligations in the Project, as provided by the Management Agreement through SLDMWA’s participation, including development of financing and governance options. SLDMWA intends to bring the Management Agreement and amended Activity Agreement to its Board immediately after completion of the amended Activity Agreement for approval contingent on approval by each Participant’s individual board. Reclamation is currently developing the schedule and milestones for the Project.
Staff anticipates seeking a recommendation from the Water Supply and Demand Management Committee for continued participation in the Project in late 2024 or early 2025. A Valley Water Board action to authorize execution of the Management Agreement and Activity Agreement, and an additional funding request for planning and design costs is expected in January 2025.
______________________
This rate analysis includes adopted CIP projects including the Anderson Dam Seismic Retrofit, Pacheco Reservoir Expansion, and San José Purified Water Project (SJPWP) Phase 1 Demonstration Facility, and placeholders for upcoming WSMP projects, including the Delta Conveyance Project at 3.23% participation, Los Vaqueros Reservoir Expansion, and the SJPWP Phase 2 Full-Scale Facility, and assumes SWP tax continues to pay for SWP costs.
ENVIRONMENTAL JUSTICE AND EQUITY IMPACT:
The B.F. Sisk Dam and Reservoir Expansion Project addresses water supply equity by ensuring a cost-effective, high-quality supply is available for all of Santa Clara County, including disadvantaged communities.
ATTACHMENTS:
Attachment 1: PowerPoint
UNCLASSIFIED MANAGER:
Manager
Vincent Gin, 408-630-2633