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<br />Private Interests <br /> <br />In recent years private companies interested in <br />investing in water as a commodity have sprung up <br />across the state. These companies are in the <br />business of buying land and/or the subsequent water <br />rights in order to sell water at a time when it is needed <br />most. These companies also can provide storage, <br />much in the same way one would rent a garage, for <br />other entities to bank their water. Among these <br />emergent companies are names like Western Water <br />Co., Cadiz Inc., Vidler Water Co., and Azurix. <br /> <br />In order to move water from where it is located to <br />where is needed, many of the private companies <br />contend they need access to the state and tederal <br />water facilities branching throughout the state. These <br />companies also contend that a key policy issue keeps <br />them at bay trom being able to compete with state <br />and federally managed water projects: those <br />agencies decide when capacity in their conveyance <br />systems is available and what price a private <br />company must pay to use that space to deliver water, <br />State law requires that if space in existing water <br />infrastructure is available, parties interested in trans. <br />ferring water (provided financial compensation is <br />made) have a right to use the facilities. Many state <br />and federal wafer contractors strongly object to the <br />notion of subsidizing private interests' use of state <br />and federal water facilities without those interests <br />being required to pay the full costs of using such <br />facilities. Some private interests concur that one way <br />to address this issue is by forming partnerships with <br />the public entities. <br /> <br />In December 1998, Western Water Co. became the <br />first private company in California to complete a water <br />sale using public facilities. The company made a one. <br />time transfer of 1,000 acre. feet of water to the Santa <br />Margarita Water District in Orange County from a <br />Kings County water district in the Central Valley. <br />Though the company contends it would have netted <br />S50,OOO from the transfer, it instead lost about <br />S100,OOO because it was forced to pay MWD more <br />than planned in order to use MWD's facilities to wheel <br />the water. This, some private companies say, is an <br />example of what is stifling a "true" water market: <br />monopolization of conveyance systems. MWD <br />contends it made no profit on the transaction and <br />only set its tee based on its costs. <br /> <br />One year later, Western Water Co. was denied a <br />permit by the Slate Board to transfer 30,000 acre. <br />feet from Natomas, a water district specializing in <br />rice farming just north of Sacramento. According to <br />the State Board, farmers with the Natomas Central <br />Mutual Water Co. had failed to conserve the full <br />30,000 acre.feet and therefore, could not sell it. <br /> <br />Cadiz Inc. has been developing a water banking <br />agreement with MWD. Under the proposed 50.year <br />Cadiz Groundwater Storage and Dry-Year Supply <br />Program, MWD would bank up to 700,000 acre-feet <br />of water with Cadiz (at a location located in the <br />eastern Mojave Desert, 35 miles north of MWD's <br />Colorado River Aqueduct) during wet years. During <br />dry years, up to 150,000 acre.feet could be <br />withdrawn annually and <br />delivered to MWD. Addi- <br />tionally, MWD would <br />agree to purchase up to <br />1.5 million acre-feet <br />of indigenous water from <br />Cadiz during dry periods. <br />dependent on the basin's <br />natural recharge. A <br />groundwater monitoring <br />and management plan <br />also has been developed. <br />The estimated S 150 <br />million in costs for infra. <br />structure necessary to <br />support the program <br />would be cost-shared <br />between the two parties. <br />Funding from the S2 <br />billion waterbond passed <br />in 2000 also may support <br />the program. A draft EIR/ <br />EIS was released for the <br />project in November 1999, <br /> <br />In other cases, plans <br />of private interests <br />to market water have <br />been derailed by <br />opposition from local <br />water users, such as the <br />case of Madera Ranch. <br /> <br />-1 <br /> <br /> <br />Purchasing waterfor the <br />elll'hvnment is a relath'ely <br />new take on water <br />marketing. <br /> <br />A 1998 proposal by the Bureau to develop 13,600 <br />acres of farmland at Madera Ranch for underground <br />storage encountered heavy opposition from some <br />area farmers, The site is said to be capable of holding <br />nearly 1 million acre-feet of groundwater and would <br />cost between S90 and $120 million to develop. Fears <br />by some about the project included a rising water <br />table thaf could push high alkaline soils to the <br />suriace, reducing crop yields and property values <br />and groundwater overdraft that could force farmers <br />to pay more for their water because of the need to <br />pump deeper. In 1999. fhe land was purchased by <br />Azurix Corp., which plans to develop the land as a <br />400,000 acre.feet water bank. The projecf is still in <br />the planning phase. <br /> <br />n <br />