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Q&A San Diego County Water Authority & Imperial Irrigation District Q. What happens if there is a shortage on the Colorado River? A. The Authority and lID would share any declared Colorado River shortages proportionally - that is, if lID deliveries to the Authority repre- sent 6 percent of lID's total annual Colorado River supplies, water trans- ferred to the Authority would be reduced by'6 percent in a shortage. Any reduction in lID's legal rights to Colorado River water would not affect the transfer agreement. Q. Would water transferred from lID be more reliable during a shortage than water the Authority buys from MWD? A. Yes. Water transferred under the Authority-lID agreement results from lID's Colorado River rights, which are among the most senior in the Lower Colorado River Basin. In recognition of the value added by this reliability, the contract requires the Authority to pay a premium on lID transfer water if either the Authority declares a water shortage and imposes mandatory conserva- tion and ra tioning, the State Water Project declares a critically dry year, or the Interior Department declares a shortage for the Lower Colorado River Basin, Q. How long would the trans- fer contract last? A. 110 and its agricultural cus- tomers would conserve water and sell it to the Authority for at least 45 years. Either agency may extend the contract for another 30 years beyond the initial term. Q. How much would this water cost? A. The cost of transferred water . would be competitive with other water supplies available to the Authority. The Authority would , pay an amount for the water that equals the cost of conserving the water plus an incentive to encour- age participation by farmers. The water's price reflects considerable effort by the Authority and lID to , confirm the cost of on-farm conser- vation measures. The contract includes a formula thai indexes the water's price to MWD water rate, , less the cost of conveying (or wheel- ing) the water to San Diego County. A discount is applied to the price that begins at 25 percent in year one and declines gradually over 17 years to stabilize at 5 percent for the remainder of the contract. Q. How about an example of the pricing formula? A. Keep in mind that the'nUl1)- bers below are only examples for the first year of the contract. There also is a provision under which the Authority and lID share the difference between the estimat- ed cost and the actual cost of wheel- ing the water. In the example above, if the actual wheeling cost is $78.50 per acre-foot and the estimated cost is $68.50, the Authority and liD would split the, $10 difference. The Authority would subtract its $5 from the $248.63 total, making the transfer rate $243.63 per acre-foot. Q. Would the water's price remain steady throughout the con- tract? A. Either the Authority or 110 may request a redetermination of the water's price after the first 10 years of the contract, and at 10-year intervals thereafter. As the market for water transfers expands, the price redetermination will be tied to the price of comparable water trans- fers. Until the market matures, the price will be redetermined based on a comparison with the cost of com- parable transfers, Authority water supply projects and MWD's water rates. These provisions bring flexi- bility to the contract's pricing provi- sions. (The discount on transfer prices and the shortage premium' mentioned above are eliminated once prices are tied to the transfer market.) Q. When would the contract go into effect? MWD untreated water rate A. IID,would begin transferring $349/ AF water to the Authority in the first Other MWD charges (i.e. year after a series of contingencies readiness-to-serve charge) are satisfied. The State Water +51 Resources Control Board and the MWD "full rate" 400 federal Bureau of Reclarriation must Estimated wheeling rate approve the contract. The Authority -68.50 must arrange cost-effective and reli- 331.50 able coriveyance for the water. lID 25 percent discount (year I) must meet a specified target for par- -82.87 ticipation by its farmers. Both agen- $248.63/ AF cies must be able to reasonably mit- ~ (\ igate environmental impacts of the 250 zqo::o) transfer. ;d# 5" /'1) I:J (/201:11-':::