BOARD00320

• Board Meeting Date: 3/21/2006
• Description: WSP Section - Colorado River Update on 7-State Proposal to Reclamation
• Board Meetings - Doc Type: Memo

Agenda Item 6
March 21-22 Board Meeting
Page 4 of5

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Interim Surplus Guidelines (ISG) that expanded the range of "normal operation" by
eliminating the "partial domestic surplus" step and capped a "domestic surplus" at
450,000 AF.

The computer modeling that was done to develop these criteria relied on Reclamation's
CRSS program using the current Upper Basin depletion schedule (6,0 MAF) and the
current 602(a) storage algorithm, which determines the storage required to protect current
Upper Basin depletions and reservoir power pools during the critical drought period. The
Upper Basin was insistent on these modeling parameters, which Arizona in particular
objected to. The "2025 termination unless renewed" provision associated with the
coordinated Powell-Mead operations proposal is the principal reason that the 7 -states
allowed the proposed coordinated operations to move forward. Reclamation, with
assistance from the 7 -state technical workgroup, as indicated that they will prepare a
report that documents the modeling runs and results used to develop the proposed
operations plan,

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The recommendations in the proposed 7-state agreement address system efficiency,
extraordinary conservation and augmentation projects. Svstem efficiencv projects are
those projects that conserve, or salvage, water that is being lost to the Colorado River
System where there is not a Section 5 Boulder Canyon Project Act water service contract
associated with the use of the water that is being lost. An example of such a project is the
conservation, or salvage, of water that is currently flowing to Mexico, that is above the
United States' delivery requirement to Mexico in accordance with the 1944 Mexican
Water Treaty. Extraordinarv conservation proiects are associated with the conservation
of water that is being lost to the Colorado River System where there is a Section 5
Boulder Canyon Project Act water service contract associated with the use of the water
that is being lost. An example of an extraordinary conservation project is the fallowing
of a parcel of land within an irrigation district that has had a history of use. Augmentation
proiects are projects, such as weather modification and desalination that provide
additional water for use within the Colorado River System.

The Basin states have proposed that the Secretary develop a policy and accounting
procedure that allows water that is conserved through extraordinary conservation
measures or efficiency projects or that is imported into the Colorado River System from
non-Colorado River sources to be transferred under certain conditions to the project
beneficiary through Articles II(B)(2) and II(B)(6) of the 1964 Decree in Arizona v.
California. The Basin states have suggested an accounting mechanism that allows this to
occur through the concept of creating "Intentionally Created Surplus" (ICS) credits, The
ICS pool in Lake Mead would be limited to a combined total of2.l MAF at any time.
All ICS water would be reduced by 5% in order to provide a benefit to the system as a
whole. IeS water would be subject to upto a 3% evaporation charge as well and subject
to spill under certain storage conditions in Lake Mead. In a specific year through
forbearance agreements, these ICS credits could be used by the Section 5 contractor in
addition to the water that was apportioned to the contractor.

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