An update on potential new water storage projects, part 2: Potential beneficiaries talk about Sites, Temperance Flat and other storage projects

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The CalFed storage investigations have been underway for decades.  As the feasibility studies round to an end, presumably, and a decision point nears, will there be any takers for the water?  In this next panel, Thad Bettner, General Manager for the Glenn Colusa Irrigation District, discusses the North of Delta Offstream Storage  project, more commonly known as Sites Reservoir, Ara Azhderian, Water Policy Administrator for the San Luis Delta Mendota Water Authority, discussed the importance of additional water storage to their water providers, and Mario Santoyo, Assistant General Manager for the Friant Water Authority, explained why the Temperance Flat project is important to the Friant farmers.

(Read part 1 here: An update on potential new water storage projects, part 1: An update on CalFed surface storage investigations and an overview of water storage )

Thad Bettner, General Manager for the Glenn Colusa Irrigation District

DSC3 ThadThad Bettner, General Manager for Glenn Colusa Irrigation District, and an active participant in a JPA formed for the North of Delta Offstream Storage (NODOS) project (more commonly known as Sites Reservoir) updated the Council on their progress.

First, let me tell you I am an engineer, so when I talk about storage, I can build anything, and I like to build stuff, but I also have to be a part-time biologist, a part-time attorney, a part-time economist – there are a lot of decisions riding on the district activities that we do,” he said. “This background gives our folks a unique perspective to look at storage, which will probably be a little bit different than what you heard from the Bureau and DWR earlier on the panels, and potentially more realistic.”

He then presented a slide listing the members of the Joint Powers Authority, noting that the list includes five water agencies and two counties. He emphasizes the importance of including counties in the process. “Once you put a project in a county or in the backyard of a county, they have some significant interests about how the project moves forward,” he said.

The JPA was formed in August of 2010 under the water code, section 79749A which allows for the JPA to design, acquire, manage, operate Sites Reservoir and other facilities, he said. “On the federal side, we had Congressman Garamendi and LaMalfa come together from both parties and put together HR 4300, which is federal legislation currently sitting in the house,” he said. “What’s unique about HR 4300 is that it gives the Bureau the opportunity to complete its studies and make a determination whether it has any federal interest in this project or not, and if it doesn’t, it essentially authorizes the JPA to move forward with the project,” adding that they hope the decision comes sooner rather than later.

Item_9_Sites_Thad_Bettners_Presentation__Page_04He presented a map showing the reservoirs location, noting that the reservoir is located about in the middle of the Sacramento Valley. “One of the things that Sites does based on its location is that it allows Folsom, Oroville, Shasta, and Trinity reservoirs to operate more efficiently, so that water is released at the right time and at the right temperatures for the right species for the right water supplies. You’re optimizing the system to maximize the benefits that all the reservoirs can provide jointly versus current operations where the CVP and the SWP operate as two separate projects. Sites will allow much more integration of the projects, and again improve the efficiency of the whole entire system operation.”

Item_9_Sites_Thad_Bettners_Presentation__Page_05He then presented a slide of the current layout of the facility. He noted that when they started working on this, they recognized that the Bureau had its process to go through, DWR’s had also looked at the project, and there’s some contention between DWR and Reclamation as to who really wants to build it. “So we felt there was a unique role for the JPA so we put together an action plan,” said Mr. Bettner. “The Action Plan was to identify the yields and benefits of the project, with new Delta conveyance and without it. … We performed a cost evaluation and partnered with Reclamation to redo the costs, and we looked at addressing the affordability and the funding options.”

He said the action plan includes doing public outreach to let people know why they should participate, what they were going to get, and what it would cost them; the outreach efforts are continuing both locally and regionally, and they are working to identify what beneficiaries would be interested in the project.

Item_9_Sites_Thad_Bettners_Presentation__Page_07Alternative C is a 1.8 MAF reservoir with 500,000 AF of average annual yield that adds 1 MAF of increased upstream storage through system integration improvements, water supply and ecosystem benefits, renewable power, and recreation, he said. “I could go on – I’ve put a Christmas tree up there on the slide because what we’ve keep hanging more and more ornaments on it and eventually the tree’s not going to stand up,” he said. “I think that’s kind of where we are at with Sites. We’re asking it to do so much, we’ve loaded it up with so much that unfortunately it’s just not a project that’s going to move forward in its current configuration. And I think we have to be honest. I think we can’t be hopeful; we have to be honest.”

So we took a hard look at the project, said Mr. Bettner. “We looked at the project, we looked at the cost and asked is it affordable? Is anyone going to pay for it? No, so we changed the yield, we changed the benefits, we changed the costs, is it affordable? No. And we went through this iteration to until we got to affordable, so we have defined an alternative D. … It’s a 1.3 MAF reservoir. Since we can’t fill the 1.8 MAF reservoir every year, let’s just build it smaller, save the costs there. We reduced the yield, we put in fewer facilities, and we lowered the cost risk of different facilities.”

Item_9_Sites_Thad_Bettners_Presentation__Page_11Instead of making the project work for ten different benefits, we chose to focus on and make it work for two, much like anchor tenants in a shopping center, and we can add others later, he said. “We want to make it affordable, containable, implementable, and buildable; simplify the operations and then allow it to be expanded,” he said. He gave the example of hydropower: rather than burdening the project with the costs first and then looking for someone to purchase the power, instead if someone is interested, it can be added later on with the new participants would bear the costs of the add-on to the project.

We’re working on identifying beneficiaries right now, Mr. Bettner said. “We’re trying to say, does it fit into your water portfolio, does it fit in the environmental portfolio, and we’re trying to redesign the project around that.”

Mr. Bettner then gave some closing thoughts. “When we think about this project, first of all, we have to be really focused on what’s the project, what’s the end goal, and not about process,” he said. “Unfortunately, we’re kind of stuck in process and we lose the vision of ultimately what are we trying to build and what are we trying to provide benefits for so that focus is important.

It’s financing, not feasibility, he said. “Anything’s feasible, but the question is can you make the financing work to where the project will pay for itself, and that has to be one of the project fundamentals that you always have to incorporate in,” he said. “We’ve been focusing on a finance plan, making sure the finance plan equals the project being built versus having a project that’s overbuilt and you can’t make the finances work out.”

Delays are deadly,” he said, noting that in a project of this size, a four to a six month delay equals 1% in interest for financing, so it’s important to deliver these projects on schedule and at cost.

Lastly, free money costs, he said. “If Congress is going to pay for some of the public benefits, that’s basically free money – it’s non-reimbursable, but the time it would take to get Congress to make that decision is probably six to ten years out, and while you’re chasing that money, project costs are escalating, everything escalates over that period,” he said. “The question is if it’s really worth the wait to try and get that money. There’s just some things we may just not want to get, like federal money, and we’ll try to do all the financing without federal money in the project, so those are things we’re currently looking at.”

I’ll end there …

During the discussion period, Thad Bettner is asked who is likely to buy the water. He says there are agencies in the region who are looking to buy water, but currently the cost of water for Alternative C is $500 – $700, and nobody wants to pay that. He said that they are shooting for $300 – $400 per acre-foot, and he thinks local district will buy the water at that price.

In our region, water supply is important, but the environment is huge, so we have issues this year with operations for protection of winter run fish and instream flows,” he said. “We see this project as being a significant improvement in our system to be able to provide additional benefits for cold water pool and for salmon, so there are some environmental benefits that could originate out of this project.”

Ara Azhderian, Water Policy Administrator for the San Luis & Delta Mendota Water Authority

Ara Azhderian began by saying that the San Luis Delta Mendota Water Authority is a JPA, serving 28 member districts on the west side of the San Joaquin Valley from the City of Tracy south to Kettleman City and then Santa Clara and San Benito Counties. One thing that all of our members have in common is contracts with the CVP for some portion of their water supply, which gets delivered primarily to agriculture, managed wetlands, and urban agencies from large ones, such as a couple of million people over in the Silicon Valley, to small rural communities like Huron and Avenal, he said.

DSC3 Ara 2“We have been experiencing for over 20 years now steady declines both in the supply of water that we’re receiving and the reliability of that water, and have viewed increasing storage throughout the state as a vital tool in helping to remedy that problem, so we have been a participant in much of the conversation in terms of new storage,” he said. “We have executed a cost-share agreement with the US to participate in the CalFed studies: Shasta, Sites, Los Vaqueros, Temperance Flat, and more recently, of course, San Luis Reservoir – increasing the capacity there has become part of the conversation and we would be willing to be a part of that as well.”

At the end of the day though, the most important point of whether or not these projects will be of interest really gets to having the need to answer the question, what do we have, he said. “Right now we have a lot of ideas on the table, but we don’t have a whole lot of focus,” he said. “They began studying enlarging Shasta Reservoir in 1972, so entire careers have been initiated and retired in the time that’s been looked at. The most recent feasibility study is unfortunately based on outdated information and looks at the project in ways that makes it hard for folks to stand behind it as is and say, that they want to be a part of that, so folks need to get real about whether or not a particular project is a good idea and then develop very focused conversations around that, and iterative conversations around that to be able to define the answer of what do we have. Once you understand that, I think it becomes pretty easy to figure out who’s interested in it, and how should the benefits trickle out.”

It’s also important to sit down and consider how are we utilizing the storage that we have today, he said. “We haven’t built substantial new storage in decades, and decades ago, it was able to satisfy project purposes with great regularity,” he said. “Today we see in the CVP at least, an inability to do that. The reservoirs haven’t changed, nor have any of the other infrastructure pieces; it’s the regulatory environment that’s changed and how we operate those facilities. So in trying to understand the question of what do we have, fundamental to that is how is that going to be operated and what can we do to ensure that those operations will be maintained through some period of time that makes the financing, the risk of the financing reasonable.”

This is a good example of a year when having Sites Reservoir or greater access to Los Vaqueros would have been highly useful, he said. “Since the first storm in early February, we’ve seen on order of 1.5 MAF go out to the sea; that’s a pretty precious resource in a year like this and being able to 100,000 acre-feet up in Sites or into Los Vaqueros would have been fantastic. … You can’t use it if you don’t have it, is one observation.”

2013 is another great example, he said. “We rolled into 2013 with above average storage in the CVP. Ag service contractors south of Delta only had a 25% allocation and even that couldn’t be held. Reclamation had to cut that allocation down to 20% in March. There was 2 MAF of water sitting there, where did it go, how was it used, and how did that get us in the situation that we’re in this year, and how much further could we have gotten in terms of managing the drought we’re in now if we had been able to take advantage of a year like a 2011.”

I think there are operations and regulatory reform that could be examined that could better maximize the storage that we have today, because the fact of the matter is if we can find the right cost benefit balance that’s spot-on, we could break ground tomorrow, and it’s still ten or fifteen years away before we have a functioning facility, so how do we better use the capacity that we have between now and then,” he said.

DSC Council 2Legislation was recently introduced by Congressmen Miller and Costa to examine the feasibility of the federal government utilizing storage in non-federal facilities and conveyance in non-federal facilities to be able to enhance CVP yield and its ability to meet the projects, so there are other ideas out there that are new that I think deserve to be considered, such as how we better integrate through contractual arrangements with the different systems that are in place,” he said.

We’ve been very consistent and clear in terms of our commitment to pay for water storage if the benefit is there, he said. “If it’s a CVP facility, we believe that the first priority should be yield replacement under the CVPIA,” he said. “The CVPIA passed in 1992, which reprioritized and rededicated many CVP resources with the promise that someday that would be rebalanced or reset, and certainly any federal facilities going forward in the future should address that issue first and foremost. Other CVP project purposes including fish and wildlife protection and enhancement also need to be a part of the mix. I think once we’ve gotten through those checks and have met the established needs of the project, then we can sit down and consider how other non-CVP uses can benefit.”

Regarding the potential for local projects, Mr. Azhedrian said that within their service area, there are a couple of small storage projects that are being considered under the IRWM planning process. “There is a lot of benefit that can be had there – we’re not a region that can be self-sustaining, but in terms of improving flexibility and making more water available when its needed, small local projects are great.”

Lastly, it’s taken decades to get here and these sort of opportunities won’t present themselves again anytime soon, so size does matter, and the right mix matters, he said. “It’s not just groundwater banking or just surface water supply, but it’s how can we take advantage of local geographic features to utilize one or the other and how do we better integrate the systems we already have.”

And I’ll conclude there.

Mario Santoyo, Assistant General Manager of the Friant Water Authority

Mario Santoyo began by saying his would be different presentation than the others. “By getting you to understand our area and how we’ve been involved in storage in general, not only above ground storage but below ground storage, and the projects that we’re doing in a very progressive way, you’ll have a much better appreciation as to why this above-ground storage project [Temperance Flat] is important to us.”

Item_9_Friant_Division_Water_Supply_and_Water_Storage_Presentation_by_Mario_Santoyo-1_Page_01He then presented a slide depicting reservoirs across the state, and directed their attention to the circled graph, which is Millerton Reservoir. “If you compare it to the other reservoirs around California, immediately you see it’s a tiny little reservoir and then if you look at how much water is in that tiny little reservoir, not much,” he said. “It has runoff that goes into it that’s not much different than a lot of those other bigger projects, it just wasn’t designed to do a lot of the things it’s being asked to do today.”

Our JPA represents about one million acres, about 15,000 farmers, and includes both ag and municipal,” he said. “In our area, we are number one, two, and three for ag production in the nation,” he said. “We have permanent crops, – trees, vines, and things along those lines that if you don’t have water on them, they die and you don’t recover the next year.”

Item_9_Friant_Division_Water_Supply_and_Water_Storage_Presentation_by_Mario_Santoyo-1_Page_04He then gave some history about the exchange contract. “The Friant Division is the cornerstone of the Central Valley Project – we were the first boys on the block,” he said. “If it wasn’t for us, Ara here wouldn’t exist because what happened is that the water that we deliver on the east side of the valley does not belong to us on the east side of the valley; it belongs to the exchange contractors that are on the west side of the valley, so the federal government had to enter into an agreement that would provide them substitute water from the Delta and so the federal pumping station and the Delta Mendota Canal was built so that we could meet that obligation. So Friant not only pays for the capital costs of the Friant Division, it pays for a substantial amount of the capital costs of the project that Ara and his company also run, including the O&M of all those things.”

Mr. Santoyo said that they are required to provide them 840,000 acre-feet every year, but this year, they are nearly one-third short. “We’re in what I call a sub-zero allocation condition this year – permanent crops and sub-zero,” he said. “Right now, we’re in a 300,000 acre-foot deficit; in other words, we have a gap that has to be filled with the exchange contractors before we get a single drop of water from Millerton. It can’t get worse than that.”

Part of that is due to the fact there are now issues associated with storage, particularly at Shasta, he said. “Shasta currently has storage that meets or exceeds what there was in 1976-77 and they were able to meet the requirements of the exchange contractors, and Friant was able to get 25% of its water supply, yet today, the Bureau is only giving the exchange contractors 40%, which means were in that big gap. This is a crisis. This is the first time in 60+ years that the Friant Division is going to be in major hurts,” he said, adding that the impact to citrus will be about $3 billion over the next five years, and that’s only one of the many permanent crops that we have on the east side.

Item_9_Friant_Division_Water_Supply_and_Water_Storage_Presentation_by_Mario_Santoyo-1_Page_07 Conjunctive use is not new for us, he said. “Everybody talks about groundwater projects as a new thing. It’s not a new thing; we’ve been doing it for 60 years. The reason Friant Division was built was because of that exact reason,” he said. He explained that there are two allocations of water in our system: class 1 and class 2. Class 1 meets the demand of both the cities and the farmers, and Class 2 is the supplemental supply, which can range from 0 to 1.4MAF and is what was intended to be recharge into the ground regularly so that groundwater levels will be maintained; the surface water would be used by the farmers in lieu of the groundwater.”

Item_9_Friant_Division_Water_Supply_and_Water_Storage_Presentation_by_Mario_Santoyo-1_Page_08In the 1920s when groundwater pumps were invented, farmers were pumping the water and the groundwater levels plummeted, he said. “Friant was able to stop that subsidence about 1950, but that was resolved only because once you started supplying water, it started bringing back the groundwater table, so that was the objective and we met that objective.”

Item_9_Friant_Division_Water_Supply_and_Water_Storage_Presentation_by_Mario_Santoyo-1_Page_09He then presented a slide depicting the relationship between the supplemental water and underground storage. “That’s the way we’ve always operated. This is not rocket science for us.”

So what has changed? “Starting in 1988 and ending in 2006, there was some litigation relative to restoring the San Joaquin River,” he said. “The project was not designed for that additional feature.”

 

Item_9_Friant_Division_Water_Supply_and_Water_Storage_Presentation_by_Mario_Santoyo-1_Page_10He then presented a slide with a chart showing how Friant’s water is distributed currently and under restoration flows, noting that the red bars are the water that is now dedicated to restoration. “What that does is it eliminates a big portion of the water we were using to supplement the groundwater to maintain the groundwater condition. We’re now heading back to what we call pre-project days, where we can meet most of the demand most of the time, but we’re not putting money into the savings account.

Item_9_Friant_Division_Water_Supply_and_Water_Storage_Presentation_by_Mario_Santoyo-1_Page_11He then presented a slide showing the amount of water that Friant has to release for flood control. “If you look at the frequency of blue bars, and if you look at the magnitude of those blue bars, especially those with the star above them, that represents over 1MAF that had to be released due to flood control.   So when we’re talking about building a reservoir, we’re talking about trying to preserve that water and if you can only imagine how our people today are thinking, when they are getting sub-zero no water and how all this water continues to go away; it’s not a good thing.”

Our districts not only have thousands of acres of recharge basins, but they haven’t stopped doing what they have in the past, he said. “The Fresno Irrigation District is partnering with the city of to build a recharge basin so that it can help each other out. The Tulare Irrigation District in the Central area of Friant is working with the city of Visalia with the wastewater to exchange it for water from the District … Kaweah Water Conservation District is building hundreds of acres of recharge basins … my point here is this. We have never been satisfied with everything we’ve been doing with groundwater. We know that it’s a valuable tool and we continue to build those tools.”

Item_9_Friant_Division_Water_Supply_and_Water_Storage_Presentation_by_Mario_Santoyo-1_Page_25(Millerton Reservoir Surface Conditions slide) “Most of my career has been handling operations,” he said. “A lot of times the argument is, instead of putting it above ground, why don’t you put it all below ground,” he said. “Let me tell you the operational reality here. In 2006, we had 17000 cfs coming into the reservoir, the reservoir gets filled, I’ve got to figure out how to keep that reservoir from overtopping. So, what do I do? I use what I’ve got. I’ve got two canals. Those two canals combined capacity is 6000 cfs … so I get on the phone and start calling all around and say can you take some of this water because I have to move it and I have to move it now, what do you think people are telling me? ‘Are you crazy, I’ve got my own flooding problems, I don’t need your water!’ So during the periods that I have tons of water coming into the reservoir, most of the water I’m losing it, because nobody wants it.”

My point there is that unless we’re able to hold that water back for a future period when you have time to send it through your capacity lines and percolate it into the recharge basins, you can’t maximize groundwater,” he said. “We would love to do it instantaneously but it doesn’t work that way. I just wanted to point that out to you the physical reality that I have lived with for over 30 years. If there was a way of doing it, I’d do it.

Item_9_Friant_Division_Water_Supply_and_Water_Storage_Presentation_by_Mario_Santoyo-1_Page_26For us, again the answer is that we have to expand Millerton. It has to be increased because of the new challenges of meeting river restoration, and the fact that we just have to find a way to manage the millions of acre-feet that we’ve been losing due to flood control,” he said. “We don’t have another option … the question you might have is do you have interest by people wanting to invest in this project? Why don’t you come to our valley and talk to our farmers right now and see if they are interested in trying to figure out how to save water for years like this. The answer is yes, there is no question about it.”

We still have to go through the process; the Bureau has to finish their feasibility study and at the end of the day, even though there are a lot of people who are interested, it still has to pencil out, he said.

There’s more data to do to figure out if that works, and that includes the water bond,” he said. “I’ll be honest with you. If the water bond does not move forward and if there isn’t that opportunity to get the public benefits paid for this project or any other project, it’s just not going to be affordable. No project that exists in California in terms of storage has ever been done without having public benefits paid for by the general public. That’s the way it worked. It didn’t matter whether it was a federal project or a joint project, it was all done that way. Again, for us, we need to have that water bond passed. That money is critical for us at the end of the day to be able to afford this.”

From my perspective, to be able to move forward with Temperance Flat, 50% of the project is eligible under public benefits,” said Mr. Santoyo. “Will the State of California provide all of that? I doubt it, so what happens is that we then go to the federal government and say, we need you to weigh in to help us complement on the public benefits so that we can get to 50%, and the other 50% becomes the beneficiaries … whoever is going to get the power, whoever is going to get the water, they become responsible for that. That’s the reality of things and that’s what we’re pushing.”

Discussion highlights

DSC3 Mario 2Mario Santoyo:The picture I’m painting to you is this. We’re not just waiting around for a big reservoir; we’re doing as much as we can to supplement all the conjunctive use projects we have out there, but bottom line is that when we continue to lose millions of acre-feet because we can’t get it to all these basins, we’re forced to build a bigger cup. That’s the only answer that we have. I wish there were a different answer because it’d be a lot easier than the road we’re going, but for us, that’s the only answer.

Mario Santoyo:Sixty years, we’ve been doing a good job in growing the nation’s food. We now have a situation where our small reservoir is being required to operate in a different way to meet new environmental challenges, so it pulls water from what we had. All we want to do is take advantage of the millions of acre feet that we otherwise lose due to flood control to try and harness it and bring it back for beneficial use. That’s what we’re trying to do here.”

Mario Santoyo on the water bond:From our perspective, the worst thing we can do is somehow confuse the public that in California’s historical dry year that we don’t need to fix water infrastructure. We should be focused in that this is the year that California makes a difference in doing what Pat Brown and what others did in making California what it is today, because we’re not going to get a second shot. If we can’t pass a water bond when we’re in the driest year California has experienced, then forget it, we’re never going to do it. So I’m not going to change my position, I’m going to drive as hard as I can to build storage and get the water bond through.”

Ara Azhderian on growing subsidized crops in a desert:If you go and look at the hundreds of crops that are grown in the San Joaquin Valley, you will find very few program crops are in fact grown there, and you’ll find of those program crops, numbers have only been declining over the last couple of decades, so it isn’t an area that is deep in the entire farm program. The reason we grow crops there is that is it unique primarily in its climate. It’s one of only five Mediterranean climates in the world and it’s the only one in North America, and that fact allows us to grow the hundreds of different types of fruits and vegetables and nuts that we do grow, producing over 50% of the nation’s supply. … In terms of making comparisons about growing food in the desert, I don’t think that’s exactly accurate. I think what we have here is in fact a very unique and irreplaceable asset and we should view it as such.

Ara Azhderian on oversubscribed water:The other notion that I find interesting is that we’re oversubscribed on water. I like to go back to the 2000 California Water Plan, and look at the state accounting there, and I like the 2000 water plan because they use an average year. … So what does that illustration tell us? It tells us that on any given average year – although we all know in California there is no such thing as an average year – about 200 MAF of water falls on this state in some form of precipitation: snow hail fog rain, whatever. About 10 MAF is used for urban, about 35 MAF or so by ag, and you have something like 150 MAF that is evapotranspired by forests, by meadows, natural vegetation. You have water that’s percolated back into the ground, and you have 43 – 44MAF that flows out into the ocean, so I think what that clearly demonstrates isn’t that we have a water supply problem, we have a water management problem. We have these systems that have been in place, but it isn’t the systems themselves that are the problem. It’s that we’ve changed how we operate the systems to achieve purposes that they weren’t originally designed to meet, and so the question we have before us is now are we going to go back and undo these changes we’ve made over the last two decades or so. I don’t think that’s likely, so then we need to develop a new set of solutions. … There’s a future for groundwater banking, and we have projects that we are working on as well, but they are limited by geology, geography and operationally, and so it’s really finding the right mixture of surface storage supply and increasing that, and that in turn, allowing us to better utilize the groundwater banking opportunities that do exist and that we continue to work on and expand. … “

For more information …

  • For Thad Bettner’s power point, click here.
  • For Mario Santoyo’s power point, click here.
  • For more information on the North of Delta Offstream Storage Project (more commonly referred to as Sites Reservoir), click here. (Note: look for links to documents on the left hand side of the page.)
  • For more information on the Upper San Joaquin Storage Investigation (more commonly known as Temperance Flat), click here.  (Note: look for links to documents on the left hand side of the page.)
  • For the staff report for this item, click here.
  • Click here for the meeting agenda and all meeting materials.  This is agenda item 9.

 

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