Letter: Environmental groups express concern over State Water Project contract renegotiations

letter mailboxInterest groups monitoring the State Water Project contract renegotiations say that the project scope and financial risk to ratepayers and taxpayers needs to be disclosed, expansion of the scope needs to be clearly prohibited, contracts that default should return the water to the public, and the urban preference should be reinstated.

The State of California and the Department of Water Resources own and operate the State Water Project facilities.  The contractors who purchase water from the State Water Project pay for the costs of the project under the terms of contracts that were signed in the 1960s.  Most of these contracts are set to terminate in 2035, although a few do extend to 2042.  The contracts are being renegotiated in part because bonds used to finance capital expenditures are limited to terms that would be satisfied by the end of the contract term.

In a letter addressed to the Deputy Director of the State Water Project, Carl Torgersen, the Planning & Conservation League, the Sierra Club, the Environmental Water Caucus and numerous others express their concern over the transparency and the protection of public interests during the negotiations.

Among their concerns, the letter points out that it has been said that the Bay Delta Conservation Plan and the Delta Habitat Conservation and Conveyance Program are ‘not part of this negotiation’, yet the water supply contracts do not clearly state this.  “Any extension of the water supply contracts should clearly state that any new Delta conveyance or Peripheral Tunnels planning, construction, and associated mitigation costs are not allowable charges under the contract extension,” the letter states.  “This water supply contract extension needs to be transparent on this and other potential expansions of scope – and should not hide financing of the Peripheral Tunnels or any other new conveyance project in the Delta Estuary.”  Furthermore, the groups say that all elements of the package need to be disclosed for public comment and review pursuant to the Monterey Settlement Agreement.

The groups say that if a water contractor defaults on the contract, instead of reallocating the water among the other contractors, this water should be used to reduce the amount of “paper water” instead.  “Since the public has paid a substantial portion of the State Water Project (about $2 billion), any failure to pay should be viewed as an opportunity to reduce the paper water promises and dedicate the “freed-up” water to public trust values,” the letter states.

Urban water ratepayers have paid a disproportionate amount of the costs for the SWP, the groups point out.  The urban preference was an insurance policy that those that have borne such a large portion of the costs should receive water on a priority basis during times of shortage, but this preference was removed in closed door sessions in 1995. This urban preference needs to be reinstated, the groups say.  “This urban preference requirement would ensure that decades of promises, contract obligations, and ratepayer investments by these users, who pay the bulk of the project costs, would not be abrogated.”

Read the full text of the letter here:  PCLetalSWPWaterSupplyContractExtensionCommentLtr3-1

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