Brief on April 18, 2009 on Regression & Master Water Sales Agreement

Brief and quick comments for 4.18.09

Regression analysis
Using Sunshine I asked for the SFPUC's database/equations for estimating demand elasticities. What I received was the usual convoluted hodgepodge of disparate and unspecified spreadsheets. A challenge to figure out. Most regulatory oversight bodies would send this nonsense back and demand it be fully explained. They said they would do this in one page later. Yep! And the Hetch Hetchy system might really deliver on average 265 mgd (millions of gallons per day). More later.

Master Water Sales Agreement

It appears the General Manager is asking the SFPUC if he can sign this contract asis. In that it was sent to us as "final."

"Authorize the General Manager of the San Francisco Public Utilities Commission (SFPUC) to execute on behalf of the City and County of San Francisco, a Water Supply Agreement with the Wholesale Customers and negotiate and approve Individual Water Wholesale contracts with the wholesale customers whose contracts will expire."

The current split for allocating Hetch Hetchy water is 2/3rds peninsula and 1/3rd SF. The 25 years between the past and previous Master Water Sales Agreement (1984-2009) -- averages are 66% peninsula and 34% SF. The average delivered volumes for the inter MWSA period system were 249.9 mgd. For the 1959/6 - 2007/8 period the system averaged 237.9 mgd. SF averaged 100.8mgd and the peninsula 125.5 mgd. For the period 1959/60-1983/4, when the first MWSA was signed, the system on average delivered 226.3 mgd - SF took 100.8 mgd and the peninsula 125.5 mgd.



Q: In 1984 why did SF "assure" the 184 mgd based on historical or hydrological data? This number is now regarded as a perpetual commitment. Now in the 2009-MWSA the peninsula will really get promised 193 mgd. Read on.

The MWSA states:

"The phased WSIP variant adopted by the SFPUC in Resolution No. 08-200 limits total system deliveries from existing watershed supplies to an average of 265 MGD through to an average of 265 mgd through the year 2018." If 265 mgd is exceeded the SFPUC will collect an allocated Environmental Enforcement Surcharge and plow this back into designated watershed improvement programs in the Sierra and local watershed."

In the MWSA of 2009 the cities of San Jose and Santa Clara retain their temporary "interruptible status." Under the 2009 MWSA the SFPUC agrees to supply an allocated annual average of 9 mgd to these two cities. This is not part of the BAWSCA assurance of 184, The assurance for the peninsula cities is thus not 184 but in reality 193. There is debate among the negotiators to make San Jose and Santa Clara non-interruptible customers. This would mean they would claim to deliver more than 265 mgd.

Just say my statistics are correct and the system can only deliver 240 -- based on storage, riparian rights, system integrity and hydrology --- this means SF will go from an average of supply of 88 mgd (1984-2007) to a future supply of 47 mgd from pristine HH sources, however, SF will still apparently still be obligated to pay 1/3rd the total cost. Replacing HH water with alternative source water will increase our city gate whoolesale price by 15% - more now that we realize the volumes going to the peninsula are 193 mgd not 184 mgd. These numbers are both unrealistic. The split should be approximately 163 to 88.

Funding for jointly owned projects will be on a debt service other costs basis. Not the former "utility approach." More on this later. The big issue here is "jointly owned." It makes clearer with every line of the MWSA that we are indeed letting BAWSCA become a majority partner. Raker indicates we can be a cograntee with other municipalities. If we don't agree to such it is unclear that they automatically become a cograntee. If we share co-own system facilities it would appear that the 2009 MWSA gives BAWSCA a full management share. Read Raker.

The 100 percent completion of the CIP albeit WSIP albeit Variant remains 2015. No mention of AB1823 and now AB2437 with the 50 milestone of 2010. brian@h2oecon.com