At the November committee meeting, Program Manager Shanti Rosset was again on hand to discuss further details of the plan, as well as touching on the developments that led to the development of Drought Contingency Plans (DCPs) and how those Plans will work to keep Lake Mead above critical reservoir elevations.
In the year 2000, Lake Mead was nearly full, but since then, the Colorado River basin has been in a historic 19 year drought; during this same period of time, Arizona and Nevada fully developed their Colorado River allocations.
There have been a number of significant developments since 2000, the first of which was the Quantification Settlement Agreement (QSA) in 2003. There was increased pressure on California’s access to Colorado River water, both due to the drought and as a result of Nevada and Arizona developing full use of their allocations. Prior to that time, California had frequently been able to take more than 4.4 MAF from the Colorado River in any given year. The QSA committed California to keep the state’s diversions of Colorado River water within its 4.4 MAF allocation, requiring significant tightening of California’s Colorado River budget.
As reservoir elevations at Lake Mead continued to decline, the first-ever shortage declaration in the lower basin loomed. In 2007, the seven basin states and the Department of Interior worked together to develop shortage and surplus sharing interim guidelines meant to govern reservoir operations from 2007 through 2026. However, the actual hydrology and reservoir conditions proved to be worse than what the modeling that was done for the development of the guidelines had predicted. Ms. Rosset noted that every year since the guidelines were adopted in 2007 except for one, there have been releases from Lake Powell that were above the minimum 8.23 MAF release required under the Long Range Operations Criteria, but even with these releases, Lake Mead elevation has continued to decline.
So given the fact the guidelines weren’t enough to keep Lake Mead at elevations that were stable and above the shortage tiers, the seven basin states and the Department of the Interior have been working together to develop approaches to keep both Lake Mead and Lake Powell above critical elevations through the end of the interim period in 2026.
Ms. Rosset presented a map of the Colorado River basin, noting that water users in the lower basin get Colorado River water through deliveries from Lake Mead; Lake Mead is filled primarily by releases from Lake Powell. While there is a small amount of inflow into the river between Glen Canyon Dam and Hoover Dam, the large majority of inflow into the river comes from runoff of snowmelt in the upper basin. The amount of water that flows into Powell is affected by both the amount of runoff into the system, as well as demands in the upper basin, which currently stands at about 4 to 4.5 MAF of consumptive use annually; this does include evaporative losses, Ms. Rosset said.
A combination of factors, including the effects of climate change, increasing temperatures in the Colorado River basin, decreased snow accumulation in the upper basin, and reduced runoff have all contributed to decreasing inflows into the Colorado River’s mainstem reservoirs.
While the lower basin Drought Contingency Plan focuses on elevations at Lake Mead, the elevations at Lake Mead and Lake Powell are interconnected. Pursuant to the 2007 guidelines, the coordinated operation of these two reservoirs, and elevations of Lake Powell and Lake Mead in combination with the most likely inflow into the system in a given year are what determine the releases to Lake Mead.
“This interconnectedness and Lake Mead’s reliance on Lake Powell is why the package of interstate agreements includes both an upper basin DCP and a lower basin DCP,” said Ms. Rosset. “Reclamation’s modeling of the DCPs shows that when the upper basin DCP and lower basin DCP are implemented together, it would benefit elevations in both reservoirs on average.”
The DCP package includes numerous implementation agreements. Metropolitan would be a signatory to interstate agreements, including the lower basin agreement, which includes the guidance document for operations at Lake Mead, and the seven states companion agreement, as well as four implementation agreements within California.
The DCP also includes two interstate agreements that make up the Upper Basin’s DCP which Metropolitan would not be signatory to.
Reclamation’s recent modeling has shown that implementation of the DCPs would significantly reduce the risk of Lake Mead declining to elevation 1020’ to about where it was when the interim guidelines were modeled, dropping the risk below 10% by the end of 2026.
The lower basin DCP requires Arizona and Nevada to make DCP contributions starting at Lake Mead elevation 1090’ through 1045’, and will require all three lower division states, including California, to make DCP contributions if Lake Mead’s elevation falls below elevation 1045’.
Ms. Rosset presented a slide showing the required DCP contributions plus the shortages under the interim guidelines of each of the lower division states between Lake Mead elevation 1090’ and 1025’. Arizona contributions for the shortages under the guidelines in addition to the DCP contributions are shown in purple; Nevada’s shortage and DCP contributions in orange, and California’s DCP contributions in light blue.
She then explained how the Lower Basin DCP would be implemented and what it means for Metropolitan. “There are four implementation agreements that would be necessary to implement the lower basin DCP within California,” she said. “These agreements establish how California’s DCP contribution would be divided and other related provisions. The division of responsibility for making California’s DCP contribution among Imperial Irrigation District, Metropolitan, Coachella, and Palo Verde irrigation districts roughly reflects the consumptive use percentages of California’s Colorado River allocation in 2026 as described in the QSA.”
“Metropolitan’s lower priority to California’s Colorado River allocation under the seven party agreement was also a consideration in capping IID’s total DCP contribution’s volume at 250,000 acre-feet,” she continued. “Given Metropolitan’s lower priority to Colorado River water within California, if a delivery cut were imposed on California without any other agreement in place, it is possible that Metropolitan would have to take that full cut. Under the draft agreements, Metropolitan would share that obligation with IID, Coachella, and PVID, making 25% of California’s contributions initially.”
The total volume of California’s DCP contributions in a single year ranges from a low of 200,000 acre-feet to a high of 350,000 acre-feet.
She presented a slide showing the results of modeling scenarios for California being required to make DCP contributions. “During the period of the agreement which was pretty short, 2020-2026, in about half of the traces, there would be no requirement for California to make contributions,” she said. “In the other half, the contributions would, over the term of the agreement, average about 1 MAF.”
The DCP agreement allows for a number of ways that entities can make their DCP contribution, the most significant of which going forward will be the extraordinary conservation ICS and conversion of that, she said. “If California’s DCP contributions totaled 1 MAF over the term of the agreements, we could get to that million acre-feet volume with IID’s contribution which is 250,000 acre-feet, Coachella’s contribution which is 70,000 acre-feet, PVID’s contribution of 80,000 acre-feet, and combine that with Metropolitan’s existing expected ICS account balance after the DCPs become effective, which is 335,000 acre-feet. Applying Metropolitan’s existing ICS and the other entities share of California’s obligation gets us almost three-quarters of the way already to that million acre-feet, before we even include the potential to borrow up to 100,000 AF of ICS from IID, which would be permitted under the agreements, and the opportunity to enter into DCP and ICS sharing agreements in other lower division states.”
“Metropolitan can also create new extraordinary conservation ICS through conservation programs within our service area going forward,” she said. “These new savings would be used to meet California’s DCP contributions and convert it into DCP ICS that would be stored in Lake Mead and available for Metropolitan to take in subsequent years under specified reservoir conditions.”
The Drought Contingency Plans are a short-term set of agreements designed to restore the risk projected at the time the guidelines were developed and to keep Lake Mead and Lake Powell above critical reservoir elevations through the end of 2026. “Beginning no later than 2020, the Secretary and the seven basin states and contractors, including Metropolitan, will begin work on renegotiation of the guidelines,” she said. “The process is expected to result in new rules for management and operation of the Colorado River that will end in the interim period that ends in 2026. Implementation of the DCP would shore up the guidelines through the end of the interim period, given the parties ability to get to those renegotiations. It would do this by providing additional certainty in Lake Mead operations through 2026, reducing the risk of Lake Mead declining below elevation 1020’, enhancing ICS storage capacity and accessibility, and protecting the ability to continue hydropower generation.”
Ms. Rosset noted that boards and stakeholder groups across the Upper and Lower Basin are currently reviewing and discussing the DCPs with most entities are anticipating seeking board approval during November and early December, including Metropolitan. Congressional authorization for implementation of the DCPs may happen later this fall.
General Manager Jeff Kightlinger then added some thoughts. “When we entered in to what we called the interim period discussions in 2007, the real focus there was on a couple of things: Prepare for shortage, which Arizona and Nevada would do, and allow for storage of water in Lake Mead in what we called Intentionally Created Surplus (ICS), understanding that was primarily a tool for Metropolitan. No one else was really expected to be able to store much water, and that was always geared for Metropolitan. Between those tools, the shortage, and the ability to store water, we basically felt we had 20 years of pretty good coverage in Lake Mead, and that would go through 2026.”
“Here we are, basically a decade later, and we’ve found a lot of those calculations and thoughts were wrong,” continued Mr. Kightlinger. “Clearly we are at a much greater risk. Once you get down to 1020’, that’s considered critically low, because you’re only at that point 30 feet above dead pool in Lake Mead, and we’ve seen it can drop 30 feet rather rapidly. So part of the goal here was to make sure we didn’t get down to 1020’ during this period while we continue to study what’s going on. The chances of getting to 1020’ in 2007 when we entered into these guidelines, it was less than 10% – something like 6 to 7% chance that you could get there under any foreseeable hydrology. We’re now sitting at a 50/50 chance of getting there if we continue to go on as we are, by 2026. It’s a little less than a 50/50 chance, which is way too high of risk.”
“If you do this DCP where, even if the hydrology goes bad, Arizona and Nevada are making greater contributions and California kicking in at 1045’, you’ll see in the scenario, we reduce the risk that we get there back to where we were in 2007, which is less than 10%. If you look at the chart that the Bureau of Reclamation is looking at, it’s a very high likelihood – almost a 50/50 chance that you can get down to well below 1020’ and that red line is that possibility.”
“Metropolitan has 6 feet of water in Lake Mead; that’s our ICS,” continued Mr. Kightlinger. “If you don’t do a Drought Contingency Plan, what happens is once we hit shortage, Metropolitan’s bank account is frozen. And I’ve made it very clear to the other basin states and to Reclamation, we’re not going to live with uncertainty and get our bank account frozen. That’s very important water to Metropolitan; it’s around half a million acre-feet almost. So we will start withdrawing that and moving it into our service area, putting that into Coachella account, putting that into Diamond Valley Lake and not leave it potentially stranded for decades in Lake Mead, so this agreement is pretty critical for our flexibility, but also, we would be making the situation that much worse if we don’t have that flexibility.”
“I consider this a tourniquet,” Mr. Kightlinger said. “Right now we are bleeding on the Colorado River, and this basically would stop some of the bleeding, but we’re going to have to find long-term solutions. We’re really going to have to augment the river in various ways, which means more programs like the Palo Verde program, more rotational fallowing throughout the system. We’ve shown the ability to conserve water in the upper basin and elsewhere through our system conservation pilot programs, we’re going to have to put those programs on steroids and figure out how to cost share those with the federal government, so we have a decade of work cut out for us, but this is a first step. We need this in place so then we can start to move towards some of these long-term solutions on the Colorado River. The idea is we’re bringing it forward here for input, comment, discussion, and hopefully action in December.”
“We don’t really know if all the parties are going to get there,” acknowledged Mr. Kightlinger. “This will be discussed with the IID board, the Coachella Valley and Palo Verde boards within California; they are having a very public long convoluted process in Arizona and we don’t know if Arizona is going to reach a successful conclusion or not. Similar process going on in Colorado, so this is very ambitious schedule we have to move this, and bring it forward by December, but all seven states are working that.”
A director asked if there is a risk with climate change and the continued drought and that the water elevation never goes back up and our water simply sits in Lake Mead and evaporates away?
“One of the benefits is that this water that we contribute helps prevent depreciable shortage, and it’s also there to be drawn upon in future years,” said Mr. Kightlinger. “We get the full water back if the system recovers. … there’s a significant risk if the system doesn’t really fully recover and we don’t get the water back. But there is a high likelihood that it cuts to a certain band within there, and if it’s within that band, we can pull the water out with an ability to repay it, and there’s a 20% loss on that, so we’ll show you the risks [at December meeting] and percentages on the scenarios on that. The evaporation doesn’t continue to evaporate on the water we’ve already contributed, so once that block of water we put in there even past 2026, doesn’t start 3%, that would be new ICS water.”
“On that point, the DCP does give us a new benefit,” added Ms. Rosset. “It takes all of the current ICS balances and applies the one-time 10% evaporative system charge, and if for water that’s already been stored like a lot of Metropolitan’s water has been for awhile, if we’ve already contributed an 8% system charge, there will only be only 2% added to that and it will be capped at that. There won’t be any more system assessments through 2026. We won’t have any losses from evaporation through the interim period. After 2026, whatever water is left in that DCP ICS will only be charged 3%, so there is a benefit here that we weren’t getting before in terms of lower evaporative costs.”
Director also asks about the financial implications of the DCP, how much water is lost and how much would that cost?
Jeff Kightlinger says they tried to provide that information, but it isn’t easy to convey. “What we tried to compare was a world without a DCP, and you suddenly had to make up a similar type of cut that would be required by the Secretary of the Interior in a world with a DCP where you have to plan for it and fund it and do it on a schedule of your choosing. There’s a lot of ways to look at that … I think some of the things we can think about are, generally when we generate the water like in the Palo Verde Valley and other programs, we’re generally in the $200 to $300 an acre-foot range when we can do it thoughtfully, plan it, and have it under a long-term contract. What you looked at in 2014-2015 when you have people in the market to buy water in California’s record drought, water was going for $2000 an acre-foot, so Metropolitan passed and didn’t buy any water that year; we relied on our own storage. In a world in which the Secretary of the Interior is exercising his or her role as Watermaster, we’re probably in that 2014-2015 scenario where water is six or seven times more than it would normally be. That’s one way of being able to plan and put water in advance versus having to react immediately and do it in an emergency situation.”
Director Russell LeFevre asked about Arizona … what happens if Nevada and California are ready to sign and Arizona is not?
“We would not have this proposal,” said Mr. Kightlinger. “We would only be approving this contingent on all seven states reaching closure, so if you don’t, this agreement would not go into action. Now the Secretary of Interior has indicated that he might consider doing a six state agreement and some how leaving Arizona out of the fold and somehow leaving them to secretarial discretion – it’s not an ideal situation. It doesn’t make a lot of sense, but I think it’s important that we get our act together … They have a challenging situation. Not only as we have in California with differences between agricultural contractors and the urban contractors, you add a whole new layer of complexity with major tribal contractors … “
“I appreciate all the work that’s put into this,” said Director Glen Peterson. “I however think it’s like putting a tourniquet on. Some parties aren’t even bleeding yet so it’s difficult to get to that point. I really think we have to be looking at 2026 – that should be our goal. We think this has been a bloodbath, that is going to be a major bloodbath, and I think we need to address the issues up front, and one of the major issues is the overallocation of water, quite frankly. It doesn’t affect us as much; we’re hurting at Lake Mead now, but at some point, the Upper Basin is going to have a responsibility to supply water they may not be able to, so I hope we really work diligently for the next eight or nine years on that so it doesn’t hit us like a lead balloon. I think our philosophy is absolutely perfect about squirrelling water away for future use. That’s the only way we can exist.”
“We’ve already agreed as seven states to start negotiating the successor agreement in 2020 which is basically tomorrow, so the idea is to get this done by 2019 and then we’re pretty much into starting to plan for 2026 once we can get that done,” said Mr. Kightlinger.