CA WATER COMMISSION: Ensuring the reliability of the State Water Project, part 1: Strategic priorities and programs

One of the California Water Commission’s statutory responsibilities is to conduct an annual review of the construction and operation of the State Water Project and make a report on its findings to the Department of Water Resources and the Legislature, with any recommendations it may have.  Having just finished the 2020 State Water Project review, the Commission has launched its 2021 State Water Project review with a theme focused on creating a resilient State Water Project by addressing climate change and aging infrastructure to provide multiple benefits for California. The goal of this year’s briefings is to deepen the Commission and the public’s awareness of how the State Water Project serves California and the challenges the State Water Project faces.

At the California Water Commission’s March meeting, Commissioners heard a series of presentations on the State Water Project which will be covered in two parts.  In part one, Karla Nemeth, the Director of the Department of Water Resources, discussed the Department’s overall plans for the State Water Project for the upcoming year.  Next, Ted Craddock, Deputy Director for the State Water Project, then discussed the strategic priorities and initiatives that the Department is doing to ensure the reliability of the State Water Project.  In part two, which will be posted tomorrow, John Andrew, Assistant Deputy Director, gave a presentation on the climate change vulnerability for the State Water Project.  Lastly, Behzad Soltanzadeh, Chief of Utility Operations, discussed the Department’s efforts to address issues related to aging infrastructure.

Director Nemeth lays out the plan and vision for the State Water Project

Director Karla Nemeth began by expressing her appreciation for the Water Commission’s role in oversight of the State Water Project. “One of the things I think is important about the Commission’s role is that we really are at a historic moment of change throughout California when it comes to infrastructure, and the State Water Project itself has really served California very well these past many decades,” she said.  “But we need to ask ourselves collectively, how do we prepare the State Water Project to not only deal with aging infrastructure but how do we prepare ourselves to use it to do more and meet the challenges of the 21st century?

The State Water Project provides water supplies for 27 million Californians and about 750,000 acres of farmland, as well as important flood control and recreational benefits.  The State Water Project also supplies water in ways intended to support fish and wildlife habitat protection, such as temperature control, functions she noted that will become increasingly challenging in the future as the state experiences and responds to climate change.   

Among the 27 million Californians served by the State Water Project, about 6 million are in underrepresented communities. The State Water Project itself is the fourth largest power generator as well as the largest power user in California.  Director Nemeth noted that this was important when the state experienced grid stabilization issues last summer, as the State Water Project played a crucial role in helping California get through those crunch times at the end of the day.

Like a lot of industries and sectors, Director Nemeth said the Department and the State Water Project have redoubled efforts to focus on the equity of programs and services; this includes better outreach to traditionally underrepresented communities to make sure their needs are understood and taken into account in the Department’s planning processes.

Aging infrastructure and workforce

The State Water Project is over 60 years old.  With climate change and aging infrastructure, the Department is aware of the elevated risk, she said.  It requires intensive maintenance and innovative technologies in thinking about how to deliver a high level of service that can respond to risks associated with infrastructure and climate change.

There is also the issue of the aging workforce.  Many folks who have been with the Department for a long time and have acquired a lot of knowledge are nearing retirement age.  In response, the Department has been developing a secession plan to transfer that knowledge to the incoming group of leaders.

The Department is pursuing about 150 new positions to help with the work needed to maintain the State Water Project’s reliability.  The Department has also hired a Chief Financial Officer for the State Water Project, which Director Nemeth said speaks to the desire to be as transparent as possible with the State Water Project contractors.  Anticipating a lot of new investment in the State Water Project, they want to make sure their approaches to rate structures are financially sound, she said.

The Department has hired someone who will head up the climate change efforts within the State Water Project.  She noted that John Andrew runs the climate change program for the entire Department, so having one staff person within the State Water Project itself will help meet those challenges.

Creative solutions

Director Nemeth then turned to the ways in which the State Water Project is innovating.

Grid stabilization: The Department has been working with Cal-ISO to ensure that the State Water Project is operated in a manner that can help ease up on the electrical grid during times of heavy use in the late hours of the day.  They are also generating more power up at Oroville at Hyatt and Thermalito to put onto the grid.  They are now working on front-end planning with Cal-ISO and other big power generators in the state.

Forecast Informed Reservoir Operations: The Department has been working to implement Forecast Informed Reservoir Operations, which is a way to utilize recent advancements in weather forecasting technology to align water supply with the flood protection benefits of the facilities.  “The added flexibility also enables us to do more things for the environment as needed,” said Director Nemeth.  “One of the biggest challenges is the rigidity of the system, in terms of how we can provide water at the right volume and timing that helps support native fish and wildlife species. So any flexibility that’s gleaned from more precise Forecast Informed Reservoir Operations is going to help us system-wide with all of the objectives that we’re managing to.”

Improved water transfer process:  The Department has made significant improvements to the water transfer process.  A new contract amendment for the State Water Project was recently adopted that allows for long-term transfers of Table A water supplies among state contractors.  “That kind of flexibility is going to be really important for the future and an important tool that the State Water Project can bring to the table, particularly as it relates to sustainable groundwater management,” said Director Nemeth.

Habitat restoration:  The Department has a focus on habitat restoration, particularly relative to reactivation of floodplains.  The Department is partners in the Yolo Bypass Fishery Enhancement Project, but they are also looking at projects upstream.  “How we manage floodwaters and how we allow for State Water Project waters to go up on those floodplains and return into the system and create this new habitat is going to be important for the State Water Project to balance across multiple needs,” Director Nemeth said.

Climate action

The Department has been focused on reinvesting in the State Water Project, so it’s ready for the challenges presented by climate change. This includes developing their renewable portfolio and hiring a climate action coordinator.

It also includes conducting a near-term rehabilitation and long-term feasibility study for subsidence-related damage to the California Aqueduct. Addressing subsidence on the Aqueduct is essential because the damage from subsidence reduces the ability to move water during the above average and wet water years. 

We were able to do move water in 2017, which was a huge water year and a big drought buster,” said Director Nemeth.  “We know that kind of water year is right around the corner, and we want to make sure that the California Aqueduct is ready to handle those kinds of high flow events, which is hugely important for our drought management in California.”

Discussion highlights

Commissioner Dan Curtin acknowledged that climate change is reducing the snowpack, and SGMA is being implemented, so is the state moving ahead on groundwater capture through new conveyances systems to capture that runoff?  And what about desal?

Director Karla Nemeth acknowledged that as a utility, they need to ensure they are reinvesting in the system so it is reliable.  One of the biggest needs with the SWP contractors and their member agencies is, how do all these pieces fit together?

There’s been a lot of conversation about how ‘it’s an all-of-the-above strategy, and I think we all understand that intuitively, for a whole bunch of reasons,” she said.  “Water reliability is different in different parts of the state.  Coastal communities have access to the ocean water desal.”

In my mind, there are two tasks,” she continued.  “One is, you know, how do we start to articulate how reinvestment in the State Water Project fits with on a more granular level with local water supply plans?  And two, we all have a growing sense of water affordability is a significant issue … we know we have some significant equity issues within our communities.  When we have these broad or intense economic disparities, we know that the affordability of water rates is different for different Californians. And so in my mind, what I think we need to be doing is putting the whole package together as water leaders.”

The State Water Project needs to do its job to lay out the things that we need to do to make this water supply source more reliable from a gray infrastructure perspective, but also from a perspective of how it relates to operating during more extreme events and capturing the extremes,” she continued.  “A lot of our work is annual averaging that affects how we do long term planning, but we do have to open up that kind of aperture on long term planning to accommodate these extreme scenarios and think about what’s a reasonable approach for project investment that accommodates those scenarios, and how does that work better with other local investments that we need water agencies to be making?

Director Nemeth said the report by the PPIC on urban-ag partnerships relating to the Central Valley and the urban areas within the State Water Project was interesting. Still, reinvestment in the State Water Project needs to happen to make those projects effective.

That is interesting and important integrated thinking,” she said.  “The more that we can have these conversations in these transparent public settings, I think the better off we’ll be because the system is complicated.  The State Water Project is a big part of it; it was constructed in an era where we had a different ethos. But water fundamentally is really managed at the local level in California. So it’s incumbent upon all of us to generate that picture of water resilience where the State Water Project and investments connect to all these other water supply choices, and water quality choices that we know need to be made at the local level.”

State Water Project priorities and initiatives

Ted Craddock, Deputy Director of the California State Water Project, then discussed the specific strategic priorities and programs that the Department is implementing to ensure the reliability of the State Water Project.

As an organization, it’s essential to lay out a strategic plan with a vision and mission, Mr. Craddock began.  The Department has an overall strategic plan in which one of the key guiding principles is to secure the State Water Project for future generations.  This strategic plan gives them a focus; additionally, there is a complimentary strategic plan for the State Water Project.

The mission we’re working towards here at our organization is the safely supplied quality water to the people and environment of California,” he said.  “It is our succinct way of saying our mission, but it helps to ensure our team is working towards a common goal.  Then we’ve identified as a collective team, the importance of working together as one team to ensure we’re being good stewards of the system, keeping it operable, and then also building partnerships.  In our strategic plan, that is a theme that we build on, besides our priorities.”

The Department is working to support the Governor’s Water Resilience Portfolio; this includes working on Delta conveyance, looking at subsidence impacts along the California Aqueduct as well as the impacts on other water systems, and making it easier for water contractors to do transfers and exchanges and utilize the State Water Project infrastructure as part of their overall water supply reliability at a regional perspective.

The Department is taking a holistic look at the State Water Project system from a risk perspective and set up a risk-informed planning system to ensure that limited financial resources are being spent wisely to maintain and improve system reliability.  The Department is also working on Forecast Informed Reservoir Operations for the State Water Project at Lake Oroville and Lake del Valle.  The Department has a partnership with the Army Corps of Engineers, Scripps Institute, and water agencies focused on the cutting edge of understanding the atmospheric rivers and how advanced forecasting can improve water resources management with the State Water Project.

Challenges to the continued operation of the State Water Project

Mr. Craddock presented a list of the challenges to the State Water Project’s continued operation.  Aging infrastructure is a challenge, as well as the affordability of reinvesting in the system.  The current estimate is that $10 billion in reinvestment in the system is needed over the next 20 years.  The Department is developing a 20-year capital investment plan that identifies the specific investments necessary so that the State Water Project contractors, who are responsible for paying for those costs, can plan for the eventual future financial needs of the system.

Mr. Craddock noted that our understanding of natural hazards such as earthquakes has improved over the years. So there are a series of seismic reassessments and retrofits being done throughout the system. 

As the population has grown in the state, the reliance upon the State Water Project has likewise increased. As a result, the periods of time when maintenance activities can occur have become smaller, so planning when that work will happen is critical.  The Department just held its annual maintenance planning workshop with representatives of the State Water Project contractors to layout the maintenance plan for the upcoming year.

Workforce and safety initiatives

There are several succession planning and workforce initiatives underway within the State Water Project.  There is an initiative called the One Team initiative, which is focused on ensuring the management team for the State Water Project understands the important roles that each of the functional areas does to get the work done, and how everyone works together for the common mission. There is also a succession planning element included to ensure an exchange of knowledge from senior leaders to the more junior managers.

They have asked the eight operating divisions on the State Water Project to put together succession plans specific to their divisions.  These plans will include strategies, such as rotating staff in different positions and providing opportunities to overlap responsibilities to ensure transfer of knowledge.  Mr. Craddock said they have an additional focus on new engagement with the industry and our colleagues in the university system.

The Department is also going through an organizational review called the Baldrige approach, an assessment and benchmarking review of the Department to identify areas for further improvement moving forward.

There is a proposal to add new positions to the State Water Project workforce to implement the Department’s asset management programs.  “Over the last five to seven years, we’ve developed an asset management program,” he said.  “We’re now transitioning from the strategy, policy phase to implementation, and we need the people to implement asset management and then what’s associated with that as a maintenance management system, which will have a greater focus on preventative maintenance.”

There is a continued focus on workforce safety, the safety of the public, and emergency preparedness.  Mr. Craddock said these areas that require very close attention.  They are operating a ‘no-fail utility and things do happen, so it’s important to be prepared.

Subsidence on the aqueduct

Addressing subsidence along the California aqueduct is a major focus area. A team has been established to start planning the work.  They are currently in the feasibility study phase. There is a two-phase approach to addressing the problem: a near-term five-year plan for immediate improvements and a 10-15 year plan for the significant capital investments.

What’s happened is in the San Joaquin Valley is that subsidence has occurred over many decades, but was exacerbated during the last drought period with a loss of the Aqueduct’s conveyance capacity on the order of 20% in some areas,” said Mr. Craddock.  “The Aqueduct pools have a volume of water that allows us to use that water as a buffer as we move flow through the system. We now have to operate the Aqueduct at higher levels closer to the top of the concrete liner.  The loss of the buffer has taken away some of our ability to operate the Aqueduct in a flexible way with our pumping plants throughout the system.”

About half of the subsided Aqueduct portion is within the joint state-federal facilities, so they are working with Reclamation and other federal partners to determine how best to leverage State Water Project funding with federal funding to complete the needed work on the California Aqueduct over the next decade.

Water supply contracts

The Department just executed a contract amendment with many of the State Water Project contractors that include water management tools that provide greater flexibility for water transfers amongst the State Water Project contractors by providing a mechanism for multi-year transfers, which was not in the previous contracts.  This is intended to provide greater ability for state contractors to manage their water supplies over a more extended period.

The Department is currently working to extend the current contracts, set to expire in 2035, through 2085.  They are currently going through a court validation process with the water supply contract extensions and expect those to be in place in 2024.  They will also be transitioning to a simpler billing process for their water contractors.

Environmental activities

Mr. Craddock said that operating the system in an environmentally responsible way is very important and part of the State Water Project’s mission statement.  So the Department is working on fishery improvement projects on the Feather River and around Lake Oroville, implementing the biological opinions for Delta operations, and investing in science, monitoring, and reporting. 

There are numerous projects in the Delta to help threatened and endangered species related to shallow water habitat and in fish passage, like the Yolo Bypass project.  The scientific work of monitoring and sampling that the Department does is very important for the system and knowledge of delta water quality.

Discussion highlights

Commissioner Fern Steiner noted that many agencies are looking to develop local supplies, some of which are expensive, such as desal and recycled water.  “You’re going to have to invest in this aging infrastructure, which is, of course, a fixed asset and will have to be paid for as these agencies roll off.  I know that all of our agencies in the south face the issue of how to pay for these fixed assets as everyone rolls off and develops these local projects?  Usually, they’re developed by the larger agencies who can afford them, so the smaller agencies are left with the problem of paying for the fixed assets.  So in the extension of the contracts to 2085, is that issue being addressed in advance rather than as you’re building?

That was one of the drivers for getting out ahead on the extension of the contracts, because we are in that period where the current repayment period is getting shorter and shorter under the existing contracts,” said Mr. Craddock.  “So it’s extremely important that we transition over to the new contracts that we’re targeting for 2024, to provide that mechanism to spread out payments over a longer period. The way our State Water Project finances are set up, there are some balloon payments at the end of the current contract term. Under the new contracts, that goes away, which provides more of the consistent revenue requirements, what we’re currently working on.   Our 20-year forecast is to put that together in a way that considers the affordability concerns for the agencies we’re delivering water to.  We envision that will be partnered with the State Water contractors to ensure we’re doing it in a way that is an incremental increase that’s planned over time that folks can plan for because we understand the concerns you’re mentioning, Commissioner.”

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