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. would be met with Colorado River water during a dry year. This compares to 11 % without the QSA and Interim Surplus Guidelines. Not surprising, 13% of demands would be met with Colorado River supplies, with a QSA and no additional supplies. The estimated supply for the Colorado River Aqueduct through 2016, given recent Bureau forecasts is shown in Tab 5. It is anticipated that about 2.5 million acre-feet of surplus would be available absent shortage sharing with Arizona. The most important variable is hydrology. The sobering impact of that variable on surplus water is shown in Tab 6. As you can see, our expectation for surplus water from 2003-2016 (before any shortage sharing) has declined from almost 5 million acre-feet when we were in 2000 to about 2.5 million acre-feet today. . Before I address water rates, I would like to conclude on water supply by repeating what has been our consistent message over the past several years. We believe a QSA and reinstatement of the access to Interim Surplus Guidelines special surplus water would be desirable, but not at any cost and not at the expense of compromising fundamental water policy principles. Metropolitan will plan to meet future water demands in our service area within the limits of our current State Water Project contract and California's Colorado River water allocation, supplemented by investments as needed in local proj ects and water transfers, exchanges, storage and conjunctive use programs. Others have said the sky will fall if we don't get a QSA on terms acceptable to the Imperial Irrigation District. Metropolitan has not, and as a matter of prudent public policy, will not put our service area at risk of crippling supply shortages with or without a QSA. We should pursue development of a QSA in a transparent and open process, without a rush to judgment or criticism against those who ask good faith questions about the QSA' s relevance or value compared to alternatives. The projected impact on Metropolitan water rates with and without the QSA and the Interim Surplus Guidelines is expected to be within a close range. This is shown in Tab 7. A more detailed description of the costs, benefits and risks is shown in the presentation made at the April 22, 2003 Metropolitan board workshop, which is included uuder Tab 8. Water rates today and next year are uuaffected by the QSA and Interim Surplus Guidelines, or the lack of a QSA and Interim Surplus Guidelines. By 2016, we estimate that rates are relatively the same with or without the QSA. But, we believe that rates could be about $2-4 per acre-foot lower with the QSA, although this difference is within the bands of uucertainty associated with these estimates. In short, we see no material impact on Metropolitan's water rates with or without the QSA and Interim Surplus Guidelines. This analysis is based on a number of assumptions, most of which have been agreed to by the San Diego Couuty Water Authority. However, there is a difference of opinion on some points and those points are addressed in Tab 9. Our conclusion is that regardless of who's crystal ball is better, the gross costs to Metropolitan ratepayers, including San Diego, both as a Metropolitan ratepayer and a purchaser of lID water, will be higher without a QSA and Interim Surplus Guidelines, barring worse than expected Colorado River hydrology. This is because substantial funds are proposed to be contributed by the State of California uuder the proposed QSA to subsidize transportation and . -4-