The Department of Water Resources has announced negotiation sessions will begin next month for State Water Project contracts to develop amendments that will extend the term and change certain financial provisions of the contracts.
The State Water Project is owned and operated by the Department of Water Resources. In the 1960s, the State of California entered into long-term contracts with the water agencies who would be receiving the water. Under the terms of the contracts, the water agencies pay all the operations and maintenance costs for State Water Project facilities. The majority of the capital costs associated with SWP facilities are financed by DWR selling 30-year revenue bonds and passing the costs on to the water contractors.
With the majority of the contracts set to expire in 2035, financing capital expenditures is becoming more challenging. Without an extension, DWR will have to instead sell bonds with shorter terms, such as 20 years, thereby increasing costs to water contractors, and by extension those consumers who receive SWP water.
The infrastructure of the State Water Project is aging and in need of repairs. Recently, maintenance issues at the Hyatt Power Plant interrupted hydropower generation, and a fire last November destroyed the Thermalito Power Plant. This has not resulted in loss of water supplies, but does increase the costs of running the project as hydropower not generated by the project must be purchased from elsewhere. Besides repairs and upgrades to existing facilities, financing of the new facilities proposed by the Bay-Delta Conservation Plan will also need to be addressed.
Since the contracts were first signed, they have been amended numerous times, most recently and controversially in 1995 in a process termed the Monterey Amendments.
The first negotiation session scheduled for May 1, 2013 from 10am to 3pm at the Tsakopoulos Library Gallery, 828 I Street in Sacramento. The negotiation sessions are expected to last three months. An environmental review will follow with a final CEQA document analyzing possible environmental impacts expected in 2015.