In 2014, voters approved Proposition 1, the Water Quality, Supply, and Infrastructure Improvement Act, which allocated $2.6 billion for the public benefits of water storage projects. The California Water Commission is overseeing the distribution of this funding through the Water Storage Investment Program.
Seven projects have been chosen for funding and have met all interim requirements. These projects are currently completing the remaining necessary steps, such as obtaining permits and completing environmental documents, securing contracts for public benefits administration, and contracts for non-public benefit cost sharing. Once these requirements are fulfilled, each project will be reviewed by the Commission for final approval.
During the June meeting, the Commission requested an update on the Pacheco Reservoir Expansion Project, one of the seven projects chosen for the Water Storage Investment Program. This project aims to expand the existing Pacheco Reservoir in southeast Santa Clara County, increasing its capacity from 6,000 to approximately 140,000 acre-feet. Partners involved in this project include the San Benito County Water District and Pacheco Pass Water District. Ryan McCarter, Acting Deputy Operating Officer, and Julianne O’Brien, Engineering Unit Manager of the Dam Safety and Capital Delivery Division at Valley Water provided this update at the October meeting of the California Water Commission.
The reservoir would function as an off-stream reservoir and receive water from San Luis Reservoir from either the State Water Project or Central Valley Project supplies (Valley Water has contracts for both projects); the reservoir would also collect some water from the watershed.
The water in the reservoir will be used for releases into Pacheco Creek to improve the steelhead habitat and for emergency water supplies in Santa Clara County. The project would also deliver water to wildlife refuges in the Central Valley through an exchange with other project contractors and restore over a mile of a creek channel that was inundated when the original dam was constructed.
Since the Commission originally approved the project, several refinements have been made:
- The dam type has changed from hard fill to an earth fill dam: After working with the Division of Safety of Dams, there were concerns over seismic stability, so the dam was relocated upstream and changed to an earthfill dam.
- Changes were made to the power lines, which were moved two miles further east outside of the project impact area, triggering a recirculation of an EIR because it was outside the project impact area.
- Changes were made to the interchange at SR 152.
Construction costs have escalated due to inflation of land values, construction costs, labor, materials, and services between 2015 and 2023, affecting both project costs and the value of public and non-public benefits.
“In 2021, we evaluated costs for both the hard-filled dam and the earth-filled dam, and the change in dam type did result in a cost increase,” said Julianne O’Brien. “Then, in 2022, when we completed our 30% design in that cost estimate, the cost went down. Because the design has been refined further, we still have about $500 million contingency included in that cost. So as the design levels increase and there are fewer uncertainties with the design, we anticipate that cost will either stay the same or continue to refine down.”
Project benefits include:
- Restore federally threatened steelhead fish habitat (WSIP benefit): South Central California Coast steelhead populations have declined 90%, so the project will improve flow and temperature conditions throughout the year, increasing the likelihood of survival for fish in Pacheco Creek.
- Provide emergency water supplies for Santa Clara County (WSIP benefit): About half of Santa Clara County’s water supplies are imported, so an earthquake could disrupt deliveries of imported supplies. The project would provide a dedicated emergency water supply to mitigate the risk of Delta export and imported water conveyance outages.
- Increases water supplies to Central Valley watershed refuges (WSIP benefit): The project would dedicate 2,000 acre-feet for wetlands in below-normal water years and increase the food supply for migrating waterfowl in the fall and winter.
- Eliminate water quality issues from San Luis Reservoir: Valley Water currently draws their Central Valley Project supplies from an intake in San Luis Reservoir. When the reservoir is drawn down, there are water quality issues due to algae blooms. This occurs in about 57% of the years, most recently in 2022, before the storms of 2023. So, this project could deliver supplies to Pacheco Reservoir earlier in the season.
- Reduce drought risk to agricultural and M&I water users: This project would increase water supply by up to 8,300 acre-feet in critical years and improve groundwater conditions for agricultural water users.
- Reduces flooding in downstream disadvantaged communities: Using a 2023 case study of the January storm events, they determined that the project would have resulted in a 46% reduction of peak flows in Pacheco Creek.
Ms. O’Brien assured the Commissioners that the project remains feasible. “There have been several studies about the feasibility of the project throughout the years,” she said. “We want to emphasize that external groups did various rigorous peer reviews of the economics, and in all cases, they found that the benefit-to-cost ratio remained above one and that the project remained feasible.”
The project continues to work towards completing the environmental documents and meeting the remaining WSIP requirements with the goal of starting construction in late 2027.
PUBLIC COMMENT
The Commissioners then took public comment.
Osha Meserve with the Stop Pacheco Dam Coalition told the Commissioners that Valley Water glossed over a lot of information that has come to light that shows the project becoming less and less feasible. She disputes the flood control benefits.
“This project, according to an August 22 presentation at a Valley Water meeting, is a $5.5 billion project. The only project partners that Valley Water has obtained so far are the two tiny water districts that are already affiliated with the existing Pacheco dam. Nobody on board has the additional capacity to offset the costs, which were assumed to be a 35% cost share from other districts. So I think part of the problem is other districts and water purveyors see the see the infeasibility of this project as well, and that’s why they haven’t signed up.” Here is the Coalition’s comment letter to the Commission.
Ron Stork with Friends of the River noted that when the reservoir was first proposed, there was no inundation of Henry Coe State Park by the reservoir. “Valley Water told you today that their idea is to mitigate the invasion of the park by their facility. However, if you were to review the public resources code, section 5019.53, Section 5001.9 B, and 5019.53, you will see that the Parks Department doesn’t really have the discretion to permit an invasion of a reservoir by Valley Water at Henry Coe State Park. So at least as the project is conceived right now, there is no legal feasibility for the project – not as it was originally presented to the Commission but as it is conceived presently.”
Katya Irvin, Sierra Club, Loma Prieta Chapter, was also concerned about the project’s costs. “The estimated cost inclusive of financing cost is $3.27 billion net of the $504 million Proposition One grant and assuming 35% partnership level, or $5.5 billion without partners. The staff has also reported that mitigation costs are not included in the project cost estimates … the environmental impacts that will result from this project mitigation costs will be very substantial.”
DISCUSSION HIGHLIGHTS
Commissioner Andrew Makler asked about the flood control benefit that wasn’t part of the original application. Are you continuing to study it? Will there be further quantification or assessment of that potential benefit?
Ryan McCarter said it’s not a goal of the project, and they aren’t claiming it. “It’s just an incidental benefit. We are not planning on operating the dam for flood control, but just by it being there, it will provide some flood control benefits. We used the case study to demonstrate that it would provide some benefit – again, an incidental benefit.”
Commissioner Makler asked what percentage of their water supply would come from this reservoir.
“The main benefit is really the emergency water supply,” said Mr. McCarter. “In our modeling, we’re looking at Pacheco as being a last resort. So we’d want to keep it as full as possible. That also helps keep the cold water pool for the ecosystem benefits. But basically, it’s for an emergency or an extreme drought case where we could use this additional supply that we have, so it’s not really going to be an integral part of our year-after-year annual water supply cycle. Once we have all of our other projects we’re working on online, we’re looking okay, but really, the benefit is the emergency water supply.”
Commissioner Sandi Matsumoto focused on the costs. You have a $2 billion expected capital cost estimate and an MCED (the WSIP funding amount) of $500 million. Where is the other $1.5 billion coming from?
“Just for a clarification on the numbers in the presentation, that’s just for the construction costs,” said Ryan McCarter. “There are other costs, of course; mitigation, design costs, engineering services during construction, real estate costs – all those things lump up to what we have in our CIP, which is $2.78 billion. The other numbers that are being thrown out there include the financing over the full 40 years that we’ll be paying off the financing through bonds and the WIFIA loan. But to answer your question about where the remainder of the costs will be funded from, currently, without any other grants or funding, it would be through our water rates and what we charge to our retailers.”
Commissioner Matsumoto asked what that number looks like for the ratepayers. Is it a feasible number?
“It’s about a 2% increase for just Pacheco alone, year after year, through the lifecycle of the project and through the financing times, about 35 to 40 years from now. 2% each year.”
Regarding mitigation costs, Mr. McCarter acknowledged it was not included in the $2 billion figure shown on the slides, but it is included in the $2.8 billion number for total project costs.
Vice Chair Fern Steiner noted that one comment often made since she’s been on the Commission is that there is no new water. “I didn’t hear new water, but I hear repurposing of water. Do you want to address that?
“There won’t be new water in the sense that we’re not using this as a regular supply, but it will allow us greater opportunity to take full advantage of our current allotments,” said Julianne O’Brien. “There are often times in very wet years that we can take additional water, but we have nowhere to put it. This project would allow us to take that water in those wet years for supply in emergency supply, whether it’s a drought or a failure with any of our other facilities.”
