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~r - 1ji" January 23-24, 2007 Board Meeting Agenda Item 17 Page 2 of6 . Issues Specifically Addressed bv the Al!reement and Proposed Guidelines . Coordinated Reservoir management: Coordinated Reservoir Management during the interim period results in a better balance of storage between Lakes Powell and Mead. It provides Lake Powell operations greater flexibility by reducing the objective minimum release when storage in Lake Powell is low, thereby delaying and reducing the risk of Upper Basin curtailments. It also provides that releases of less than 8.23 MAF annually can be made without violating the provisions of Article III( d) of the Colorado River Compact as long as deliveries to the Lower Basin do not fall below an aggregate of 75 MAF during any consecutive 10 year period. 1. Colorado sought to limit the risk of an Upper Basin violation of Article III(d) by encouraging an annual objective minimum release of7.0 MAF even though releases could legally still be less. 2. Colorado kept intact the 602(a) storage levels, and algorithm by which it is calculated, on an interim basis and avoided the legal and technical arguments associated with this issue. The 602(a) storage algorithm for the interim period is represented in the Equalization Table by values that reflect the calculations made using the 602(a) algorithm and by expressly stating that the Table is presumed to comply with section 602(a) ofthe 1968 Act. This preserves power generation and the power revenues for the Upper Basin Fund that supports Upper Basin projects and other programs like the Upper Colorado Recovery Implementation Program ("UCRIP"). Lower Basin Shortages: 1. The Lower Division recognizes an obligation to accept shortages when storage levels at Lake Mead are drawn down. The proposal provides a stepped shortage mechanism that is better for Arizona and Nevada than that assumed in the Interim Surplus Guidelines. 2. The States could not reach consensus on the distribution of stepped shortages. Generally speaking the Lower Basin wanted to require Mexico to accept 17% of any shortage declared in the Lower Basin. While the Agreement and Guidelines strongly urge the United States to include Mexico in shortage sharing, the proposal does not specify how to distribute the full amount ofthe stepped shortages if Mexico does not share in any shortage, except to clarify that California will not share in any shortage below 600 KAF. Colorado remains convinced that stepped shortages in the full amounts should be provided for. Mexico Deliveries During Shortages: 1. Establishes that Mexico should share in Colorado River shortages generally. 2. Provides the Lower Division rationale for implementing a 17% shortage sharing requirement on Mexico on grounds that Mexico would have to share in a shortage based only on conditions in the Lower Basin mainstem. . This reduces the likelihood that Mexico would. share in any .