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<br />be covered by a state loan guarantee. Further, the risk of sharing shortages with <br />Arizona carries forward even ifthe QSA ends prematurely. <br /> <br />6. <br /> <br />The benefits of the special surplus water from the Interim Surplus Guidelines are <br />substantially less than anticipated when we began negotiations almost 7 years ago. <br />The probabilities of surplus water are shown on page 5 and 6 of Tab 8. <br /> <br />7. <br /> <br />While San Diego and others seeking state funding may argue that Metropolitan is <br />not reliable, the facts are that Metropolitan is meeting demands during one of the <br />highest demand years in our history and with only about 600,000 acre-feet of <br />Colorado River supply. We will continue to meet demands because that is what is ~ <br />expected of us and we have planned for this contingency. I will be the first to tell <br />you that the sudden loss of over 600,000 acre-feet of Colorado River supplies in <br />2003 made this task more difficult. However, the QSA does not provide <br />immediate solutions - particularly given the risks of water quality and hydrology. <br /> <br />1.11.) .J.l,. <br />~ )I( <br />i; <br /> <br />8. <br /> <br />Metropolitan will stay engaged to develop a QSA, but will manage our system <br />and meet our demands based on the possibility that a QSA will not be executed <br />and Interim Surplus Guidelines special surplus water are not reinstated. We <br />expect that the cost to the Authority's ratepayers will not be higher in the event <br />that a QSA is not executed. <br /> <br />Thank you, Mr. Chairman and members of the committee for the opportunity to respond <br />to your questions and share our perspective on the QSA. I would be happy to answer any <br />further questions of the committee. <br /> <br />-6- <br />