HomeMy WebLinkAboutAppendix 4.17-1, Draft Water Supply AssessmentAppendix 4.17-1:
Draft Water Supply Assessment
July 2021 Page 1 of 52 EKI C00070.00
EKI ENVIRONMENT & WATER, INC.
www.ekiconsult.com
2001 Junipero Serra Blvd, Suite 300 • Daly City, CA 94014
Water Supply Assessment for
the Southline Specific Plan
South San Francisco District
California Water Service
FINAL DRAFT July 2021
EKI C00070.00
July 2021 Page 2 of 52 EKI C00070.00
Water Supply Assessment
Southline Specific Plan
South San Francisco District, California Water Service
TABLE OF CONTENTS
1 INTRODUCTION ................................................................................................................ 4
2 GENERAL REQUIREMENTS FOR THE PREPARATION OF A WATER SUPPLY ASSESSMENT ..... 8
2.1 Applicability of Senate Bill 610 to the Project ................................................................. 8
2.2 Responsibility for Preparation of the Water Supply Assessment .................................... 8
2.3 Components of a Water Supply Assessment .................................................................. 9
3 PROJECT DESCRIPTION ................................................................................................... 10
4 PROJECT WATER DEMAND ............................................................................................. 11
4.1 Cal Water Water Neutral Development Policy ............................................................. 11
4.2 Commercial Water Use ................................................................................................. 12
4.3 Outdoor Water Use ...................................................................................................... 12
4.4 Distribution System Losses ........................................................................................... 14
4.5 Total Project Water Demand ........................................................................................ 14
5 CAL WATER SSF DISTRICT WATER DEMAND .................................................................... 15
5.1 Current and Historical Water Demand Within the Cal Water SSF District Service Area 15
5.2 SSF District Water Demand Projections ........................................................................ 16
5.3 Total Projected SSF District Water Demand (Inclusive of the Proposed Project) .......... 16
6 CAL WATER SSF DISTRICT WATER SUPPLY ....................................................................... 19
6.1 Identification of Water Supply Rights ........................................................................... 19
6.1.1 SFPUC Regional Water System .............................................................................. 19
6.1.2 Surface Water Supply ............................................................................................ 26
6.1.3 Groundwater Supply .............................................................................................. 27
6.1.4 Cal Water Bay Area Water Supply Reliability Study ............................................... 33
6.2 Total Potable Supply in Normal, Single Dry, and Multiple Dry Years ............................ 33
7 COMPARISON OF SUPPLY AND DEMAND ........................................................................ 47
8 CONCLUSIONS ................................................................................................................ 49
9 REFERENCES ................................................................................................................... 50
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Water Supply Assessment
Southline Specific Plan
South San Francisco District, California Water Service
FIGURES
Figure 1 Project Location
Figure 2 Cal Water’s Three Peninsula Districts
Figure 3 Regional Setting and Groundwater Basin
TABLES
Table 1 Summary of Estimated Incremental Annual Project Water Demand
Table 2 Historical Water Demand for South San Francisco District
Table 3 Projected Future Water Demand for the South San Francisco District
Table 4 Historical Water Supply for the South San Francisco District
Table 5 Historical and Projected Groundwater Pumping from the Westside Basin
Table 6 Historical and Projected Supplies by Source
Table 7 Projected Normal Year Water Supply and Demand
Table 8 Single Dry Year Water Supply and Demand
Table 9 Multiple Dry Year Water Supply and Demand
APPENDICES
Appendix A Project Proponent Demand Projections
Appendix B California Water Service Water Neutral Development Policy
Appendix C Documentation of Water Supply Agreements (excluding attachments)
Appendix D SFPUC Memorandum Re: Regional Water System Supply Reliability and
UWMP 2020
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1 INTRODUCTION
Included herein is a Senate Bill 610-compliant water supply assessment (WSA) in support of the
proposed Southline Specific Plan (“Project”; Figure 1). The proposed Project site is comprised of
approximately 26.5 acres located northeast of the intersection of South Maple Avenue and
Tanforan Avenue in the City of South San Francisco, California (City of South San Francisco, 2020).
The proposed Project includes demolition of the existing buildings and development of a
commercial campus comprised of office and/or research and development (R&D) uses of up to
approximately 2.8 million square feet (SF), plus associated irrigated landscaping (BKF Engineers,
2020). The proposed Project is located within the California Water Service (Cal Water) South San
Francisco District (SSF District) service area and Cal Water will be the water service provider for
the proposed Project.
The information provided in this WSA is consistent with California Water Code (CWC or Water
Code) §10910-10912 requirements and the California Department of Water Resources’ (DWR’s)
Guidebook for Implementation of Senate Bill 610 and Senate Bill 221 of 2001: To Assist Water
Suppliers, Cities, and Counties in Integrating Water and Land Use Planning, dated 8 October 2003.
The text of specific sub-sections of the Water Code is included in indented and italicized font at
the beginning of specific sections of this WSA. The information presented in those respective
sections, and the associated tables and figures, respond directly to applicable Water Code
requirements.
The purpose of a WSA is to evaluate whether a water provider has sufficient water supply to
meet the current and planned water demands within its service area, including the demands
associated with the proposed Project, during normal and dry hydrologic years over a 20-year time
horizon.1 Given that the SSF District shares its contractual allocation for its primary supply source
(i.e., the City and County of San Francisco’s Regional Water System [RWS]) with Cal Water’s Bear
Gulch and Mid-Peninsula Districts (referred to as the “three Peninsula Districts”, Figure 2), the
collective projected supplies and demands for all three Peninsula Districts are considered in this
WSA. More specifically, this WSA includes:
• A summary of the WSA requirements articulated in Water Code §10910-10912 and a
description of how they apply to the proposed Project;
• A description and analysis of the current and projected future water demands of the
proposed Project through the year 2045;
• A description and analysis of the historical and current water demands for the SSF District,
and projected future water demands for the three Peninsula Districts’ service areas
through the year 2045;
• A description and analysis of the current and projected future water supplies for the three
Peninsula Districts’ service areas through the year 2045; and
1 The Water Code specifies that a WSA must look at supplies and demand on a 20-year horizon (i.e., to 2040), but
given the available data, this WSA looks beyond that to 2045.
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• A comparison of the water supplies and demands for the three Peninsula Districts’ service
areas, including the projected water demands associated with the proposed Project.
The information contained in this WSA is based primarily on Cal Water’s SSF, Bear Gulch, and
Mid-Peninsula Districts 2020 Urban Water Management Plans (UWMPs), except where updated
with relevant water demand and supply reliability and other information provided by Cal Water,
DWR, the San Francisco Public Utilities Commission (SFPUC), and the Bay Area Water Supply and
Conservation Agency (BAWSCA). As discussed further in Section 4.1, it is expected that the
proposed Project will be in full compliance with the SSF District’s Water Neutral Development
Policy. The findings of this WSA are contingent on the successful completion of the requirements
included in the SSF District’s Water Neutral Development Policy.
This WSA concludes that, through implementation of the SSF District’s Water Neutral
Development Policy, the proposed Project will not result in a net increase in water demands and
thus will not affect supply reliability within the SSF District. Based on currently available
information and conservative estimates of projected demand, Cal Water expects to be able to
meet all future demands within its existing SSF District service area (as well as the Mid-Peninsula
and Bear Gulch Districts) in normal hydrologic years. The shortfalls that are currently projected
during dry years will be addressed through planned implementation of the SSF District Water
Shortage Contingency Plan (WSCP). In addition, as described herein and in Cal Water’s 2020
UWMP, BAWSCA, Cal Water, and SFPUC are exploring the development of additional water
supplies to improve the RWS and SSF District supply reliability.
Path: X:\C00070.00\Maps\Fig1_SPLocation.mxdProject Location
Southline Specific Plan
South San Francisco, CA
July 2021
EKI C00070.00Figure 1
Notes1. All locations are approximate.
Sources
1. Basemap is ESRI's ArcGIS Online world aerial map,
obtained 21 September 2020.
2. Parcels used for the project site were obtained from
Cal Water via email on 28 July 2020.
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Path: X:\C00070.00\Maps\Fig2_3Districts.mxdLegend
Cal Water's ThreePeninsula Districts
Southline Specific Plan
South San Francisco, CA
July 2021
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San Francisco County
San Mateo County
SanMateoCountySanta ClaraCountyAbbreviationsCal Water = California Water Service
Notes
1. All locations are approximate.
Sources
1. Basemap is ESRI's ArcGIS Online world aerial map, obtained 21 September 2020.
2. Boundary data for Cal Water districts' service areas received from Cal Water
on 16 October 2017.
0 4 8
(Scale in Miles)±
Proposed Project
County Boundary
Bear Gulch District
Mid-Peninsula District
South San Francisco District
Project Site
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2 GENERAL REQUIREMENTS FOR THE PREPARATION OF A WATER SUPPLY
ASSESSMENT
The purpose of this section is to outline the types of projects that require the preparation of a
WSA, who is responsible for preparation, and the necessary components of a WSA.
2.1 Applicability of Senate Bill 610 to the Project
Water Code Section 10910
(a) Any city or county that determines that a project, as defined in Section 10912, is subject to the
California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public
Resources Code) under Section 21080 of the Public Resources Code shall comply with this part.
Water Code Section 10912
For the purposes of this part, the following terms have the following meanings:
(a) "Project" means any of the following:
(1) A proposed residential development of more than 500 dwelling units.
(2) A proposed shopping center or business establishment employing more than 1,000 persons or
having more than 500,000 square feet of floor space.
(3) A proposed commercial office building employing more than 1,000 persons or having more
than 250,000 square feet of floor space.
(4) A proposed hotel or motel, or both, having more than 500 rooms.
(5) A proposed industrial, manufacturing, or processing plant, or industrial park planned to house
more than 1,000 persons, occupying more than 40 acres of land, or having more than 650,000
square feet of floor area.
(6) A mixed-use project that includes one or more of the projects specified in this subdivision.
(7) A project that would demand an amount of water equivalent to, or greater than, the amount
of water required by a 500 dwelling unit project.
The approximately 26.5-acre proposed Project Site is located northeast of the intersection of
South Maple Avenue and Tanforan Avenue in the City of South San Francisco (Figure 1), which is
located within San Mateo County (City of South San Francisco, 2020). The proposed Project will
allow for development of new office and research and development buildings totaling up to
approximately 2.8 million SF of space, plus associated irrigated landscaping (BKF Engineers,
2020). The proposed Project meets the definition of a “project” requiring a WSA pursuant to SB
610 (Water Code §10910(a) and 10912(a)(3)).
2.2 Responsibility for Preparation of the Water Supply Assessment
Water Code Section 10910
(b) The city or county, at the time that it determines whether an environmental impact report, a
negative declaration, or a mitigated negative declaration is required for any project subject to the
California Environmental Quality Act pursuant to Section 21080.1 of the Public Resources Code,
shall identify any water system that is, or may become as a result of supplying water to the project
identified pursuant to this subdivision, a public water system, as defined in Section 10912, that
may supply water for the project. If the city or county is not able to identify any public water system
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that may supply water for the project, the city or county shall prepare the water assessment
required by this part after consulting with any entity serving domestic water supplies whose
service area includes the project site, the local agency formation commission, and any public water
system adjacent to the project site.
The proposed Project is located within the Cal Water SSF District service area and the water for
the proposed Project will be supplied by Cal Water. Therefore, in accordance with Water Code
§10910(b), Cal Water is the entity responsible for preparation and adoption of a WSA for the
proposed Project.
2.3 Components of a Water Supply Assessment
Water Code Section 10910
(c) (4) If the city or county is required to comply with this part pursuant to subdivision (b), the water
supply assessment for the project shall include a discussion with regard to whether the total
projected water supplies, determined to be available by the city or county for the project during
normal, single dry, and multiple dry water years during a 20-year projection, will meet the
projected water demand associated with the proposed project, in addition to existing and planned
future uses, including agricultural and manufacturing uses.
As listed above in Water Code §10910(c)(4), the primary purpose of a WSA is to evaluate whether
sufficient water supply is available to meet all future demands within the water supplier’s service
area, including those associated with the proposed Project, during normal and dry hydrologic
years for a 20-year planning horizon.2 Given that the SSF District shares its contractual allocation
for its primary supply source (i.e., the City and County of San Francisco’s RWS) with Cal Water’s
three Peninsula Districts (Figure 2), the collective projected supplies and demands for all three
Peninsula Districts are considered in this WSA. More specifically, this WSA includes:
• A summary of the WSA requirements articulated in Water Code §10910-10912 and a
description of how they apply to the proposed Project;
• A description and analysis of the current and projected future water demands of the
proposed Project through the year 2045;
• A description and analysis of the historical and current water demands for the SSF District,
and projected future water demands for the three Peninsula Districts’ service areas
through the year 2045;
• A description and analysis of the current and projected future water supplies for the three
Peninsula Districts’ service areas through the year 2045; and
• A comparison of the water supplies and demands for the three Peninsula Districts’ service
areas, including the projected water demands associated with the proposed Project.
2 The Water Code specifies that a WSA must look at supplies and demand on a 20-year horizon (i.e., to 2040), but
given the available data, this WSA looks beyond that to 2045.
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3 PROJECT DESCRIPTION
The proposed Project would allow for development of a number of office and research and
development buildings totaling up to approximately 2.8 million SF of space, plus associated
irrigated landscaping on an approximately 26.5-acre site (BKF Engineers, 2020; City of South San
Francisco, 2020). For the purposes of this WSA, it is conservatively assumed that full Project
buildout is achieved by 2025.
The Environmental Impact Report prepared for the proposed Project (Southline Specific Plan)
describes two reasonably foreseeable buildout scenarios: (1) an Office Buildout Scenario, and (2)
a Life Sciences Buildout Scenario. The Office Scenario would include office uses and an amenities
building for a total of 2,800,000 SF (Floor Area Ratio [FAR] of approximately 2.4). The Life Sciences
Scenario would include R&D uses, including laboratory and office spaces, and an amenities
building for a total of 2,025,050 SF (FAR of approximately 1.75). Under both the Office Buildout
Scenario and the Life Sciences Buildout Scenario, the amenity building would include publicly
accessible ground-floor retail, dining, and/or related amenity uses, whereas the upper floors
would include amenity uses only available to the Project campus tenants such as a fitness center
and meeting spaces. To provide for a conservative analysis, this WSA analyzes the water demand
associated with the Life Sciences Scenario, as water demands for that scenario are expected to
be greater than that of the Office Scenario.3
As shown on Figure 1, the proposed Project site is currently developed for industrial uses, which
would be demolished to allow for development of the proposed Project. Historical water use at
the site ranged between 9 to 13-acre feet per year (AFY) between 2018 and 2020, and averaged
11 AFY (Cal Water, 2020b). The proposed Project is located within the Cal Water SSF District
service area and potable water service will be provided by Cal Water (Figure 2).
3 While the Office Scenario would allow for development of more overall square footage as compared to the Life
Science Scenario, the R&D uses that would be developed under the Life Science Scenario generate a higher gallons
per day / square foot of water demand compared to office water demand.
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4 PROJECT WATER DEMAND
The City of South San Francisco has adopted green building standards and water efficient
landscaping ordinances consistent with previous versions of the CalGreen building standards and
the California Model Water Efficient Landscape Ordinance (MWELO). As part of state
requirements, all new developments must comply with these efficiency standards. As such, the
proposed Project development is expected to include a number of water-efficient features,
including, but not limited to:
• Use of low-flow lavatory faucets, kitchen faucets, toilets, and urinals in accordance with
CalGreen Code; and
• Inclusion of low-water use landscaping and high-efficiency irrigation systems to minimize
outdoor water use in accordance with MWELO.
As described below, average annual water demand for the proposed Project was provided by
LPGS Tanforan, LLC (“Project Proponent”; BKF Engineers, 2020; see Appendix A) and evaluated
relative to current water use by similar uses in the Cal Water SSF District. Similar uses within the
Cal Water SSF District are based on the Cal Water WSA Water Factor Tool, which was developed
based on 2016-2018 water use data for the SSF District (Cal Water, 2019b). Table 1 includes a
summary of the water demand projections associated with the proposed land uses at Project
completion. For the purposes of this WSA, it is conservatively assumed that full Project buildout
is achieved by 2025.
4.1 Cal Water’s Water Neutral Development Policy
In July 2021, prior to the date of publish of this WSA, Cal Water adopted a Water Neutral
Development Policy (or Policy) for its three Peninsula Districts, which share the same SFPUC
supply allocation. A copy of this Policy is provided in Appendix B. The purpose of the Water
Neutral Development Policy is to ensure that there is enough water at all times to meet the basic
needs of the community and increase drought resiliency, among other things. The findings of this
WSA are contingent on the proposed Project’s successful completion of the requirements
included in the SSF District’s Water Neutral Development Policy.
The Water Neutral Development Policy requires any new residential, commercial, or industrial
development within the SSF District that is expected to use 100 AFY or more in new demand to
offset its net increase in water demand. The net increase in water demand associated with any
new development is calculated as the expected total water use due to the proposed development
and/or expansion, minus the amount of existing water use, onsite credits (if available), and/or
alternative sources of water supply. Alternative sources may include, but are not limited to:
(1) reused graywater, (2) reused blackwater, (3) reused mixed gray/blackwater, (4) captured
rainwater / stormwater, and (5) air conditioning condensate.
The offset amount is determined using a detailed projection of total annual water demand
resulting from the proposed development, excluding temporary demands such as those required
for landscape establishment. The applicant may choose to comply with the defined offset amount
by any combination of the following activities: (1) paying to the SSF District the required offset
amount calculated according to the offset costs table included in the Policy, (2) conducting offsite
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conservation activities, or (3) conducting other pre-approved demand offset projects. The offset
amount for the Southline Specific Plan is identified in Section 4.5. Cal Water will verify compliance
with this Water Neutral Development Policy (i.e., ensure that all payments for offsets and/or
conservation offset measures are completed) prior to establishing a water service connection.
4.2 Commercial Water Use
As discussed in Section 3, the proposed Project has two possible buildout scenarios. The Project
Proponent provided estimated indoor water use for the Life Science Buildout Scenario, which
would be expected to have greater water demand than the Office Buildout Scenario. The Life
Science Buildout Scenario includes 1,936,850 SF of R&D uses, including laboratory and office
spaces, and an 88,200-SF amenities building, for a total development of 2,025,050 SF.
Table 1 provides a summary of the land uses, unit demand factors, and respective water demand
associated with each land use. The unit demand factor provided by the Project Proponent for the
R&D portions of the proposed Project is 0.21 gallons per day/square feet (GPD/SF) (BKF
Engineers, 2020). The unit demand factors for the amenities building vary from 0.10 GPD/SF to
0.80 GPD/SF depending on specific amenity use type (e.g., restaurant, cafeteria, fitness or
auditorium uses). Based on information provided by the Project Proponent, all unit demand
factors were sourced from published Redwood City water demand assumption, as recommended
by the City of South San Francisco.4 These water demand factors are substantially higher than
that of current non-residential uses within the SSF District, which, based on 2016-2018 data, are
0.063 GPD/SF. Based on demand estimates provided by the Project Proponent, it is estimated
that the total indoor water use for the proposed Project will be approximately 459,779 GPD, or
515 AFY (BKF Engineers, 2020).
4.3 Outdoor Water Use
The Project Proponent provided estimated irrigated landscape water use based on a unit demand
factor of 0.07 GPD/SF (BKF Engineers, 2020; see Appendix A). The proposed Project would
include approximately 260,400 SF of irrigated landscape area, and be in compliance with the City
of South San Francisco’s water efficient landscaping ordinance.5 Based on this methodology, it is
estimated that the total irrigated landscape water use for the proposed Project will be
18,228 GPD or 20 AFY (BKF Engineers, 2020).
4 Annual water demand (AFY) based on 365 days of use per year.
5 The City of South San Francisco Notice Preparation of an EIR indicates that the Project is expected to include
approximately 369,000 SF of open space, which is less than was estimated in BKF Engineers (2020) (City of South San
Francisco, 2020).
Table 1
Summary of Estimated Incremental Annual Project Water Demand
Southline Specific Plan, South San Francisco, California
2025 2030 2035 2040 2045
1,936,850 0.21 456 456 456 456 456
Amenity Building
16,400 0.47 8.7 8.7 8.7 8.7 8.7
9,000 0.80 8.1 8.1 8.1 8.1 8.1
49,000 0.75 41 41 41 41 41
13,800 0.10 1.5 1.5 1.5 1.5 1.5
260,400 0.070 20 20 20 20 20
Distribution System Losses (b)----33 33 33 33 33
Existing Site Demand (c)-----11 -11 -11 -11 -11
557 557 557 557 557
Abbreviations:
"AFY" = acre-feet per year "GPD" = gallons per day
"DWR" = California Department of Water Resources "SF" = square feet
Notes:
(a)Estimated demands for the proposed project per Reference 1.
(b)
(c)
(d)Total may not sum due to rounding.
References:
1.BKF Engineers, 2020. Southline Project - Water Demand, dated 25 November 2020, prepared by BKF Engineers.
2.
3.Data provided by Cal Water via email, 28 July 2020.
Irrigation
Water Use (a)Area
(SF)
Demand Factor
(GPD/SF)
Total Water Demand (AFY)
Research & Development
Restaurant/Dining
Cafeteria
Fitness Center
Auditorium/Other
Net Annual Water Demand (d)
Estimated distribution system water loss is calculated using the 2019 DWR Water Audit Report percent water loss (i.e., 5.8% of project
demands), per Reference 2 and includes both real and apparent losses.
Existing site demands per Reference 3. Existing demands are subtracted from total projected water demands to show the incremental
increase in demands associated with the Project (i.e., the net increase in water demand). Existing demands are estimated as the
average of the last three years of water use at the project site based on available metered data (2018-2020).
DWR, 2021. WUEdata - Water Audit Report Data website, accessed 2 July 2021, (https://wuedata.water.ca.gov/awwa_plans).
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4.4 Distribution System Losses
Water distribution systems experience a degree of water loss over the course of transmission
from the source to the customer. Although distribution system losses from the newly-
constructed portion of the system’s infrastructure associated with the proposed Project would
initially be expected to be minimal, it is conservatively assumed that distribution system losses
associated with delivering water for the proposed Project will ultimately be consistent with the
proportion of non-revenue water loss per the most recent validated water loss audit submitted
to DWR for the SSF District (i.e., 5.8%; DWR, 2021). It should be noted that while these real losses
represent a demand on the system, water lost through the distribution system returns to the
groundwater basin and thus is not a true demand on the groundwater supply. However, for
purposes of this WSA, all water loss is conservatively considered a demand. Table 1 shows the
distribution system losses for the proposed Project, estimated at a total of 33 AFY.
4.5 Total Project Water Demand
Historical water use for the current land use at the proposed Project site over the last three years
(i.e., 2018 – 2020) ranged between 9 AFY and 13 AFY, and averaged 11 AFY (Cal Water, 2020b).
Thus, based on the above methodologies and assumptions, and adjusting for the existing water
use at the site, the incremental increase in water demand associated with the proposed Project
at full buildout and occupancy is estimated to be 557 AFY, as shown in Table 1. However, as
discussed in Section 4.1, in accordance with the SSF District’s Water Neutral Development Policy,
the offset amount for the Southline Specific Plan is equal to the incremental increase in water
demand associated with the proposed Project. Thus, the proposed Project will be required to
offset a total of 557 AFY and is therefore not expected to result in an on-going net increase in
water demands to Cal Water’s SSF District.
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5 CAL WATER SSF DISTRICT WATER DEMAND
Water Code Section 10910
(c) (1) The city or county, at the time it makes the determination required under Section 21080.1 of the
Public Resources Code, shall request each public water system identified pursuant to subdivision
(b) to determine whether the projected water demand associated with a proposed project was
included as part of the most recently adopted urban water management plan adopted pursuant
to Part 2.6 (commencing with Section 10610).
(c) (2) If the projected water demand associated with the proposed project was accounted for in the
most recently adopted urban water management plan, the public water system may incorporate
the requested information from the urban water management plan in preparing the elements of
the assessment required to comply with subdivisions (d), (e), (f), and (g).
(c) (3) If the projected water demand associated with the proposed project was not accounted for in
the most recently adopted urban water management plan, or the public water system has no
urban water management plan, the water supply assessment for the project shall include a
discussion with regard to whether the public water system's total projected water supplies
available during normal, single dry, and multiple dry water years during a 20-year projection will
meet the projected water demand associated with the proposed project, in addition to the public
water system's existing and planned future uses, including agricultural and manufacturing uses.
In support of the development of its 2020 UWMPs, Cal Water updated its estimates of projected
future water demand for the three Peninsula Districts (Cal Water, 2021a). Consistent with the
UWMP Act (Water Code §10610-10656), Cal Water’s projected future water demand is estimated
in five-year increments, between the years 2025 and 2045.
The projections include all existing demands within the SSF District, as well as for other large
projects for which Cal Water has prepared WSAs in the last five years (i.e., 201 Haskins Way,
South SFPUC Site, South San Francisco Downtown Station, Oyster Point Development, and the
2017 Genentech Master Plan Update). In addition, 527 AFY associated with the proposed Project
was included in the 2020 UWMP demand projections for the SSF District. Through
implementation of the Water Neutral Development Policy, the proposed Project will result in a
decrease in demands for the SSF District relative to those projected in the 2020 UWMP. All other
new developments with over 100 AFY of demand within the three Peninsula Districts are also
required to comply with the Water Neutral Development Policy and thus will result in no
incremental increase in demand on the system.
5.1 Current and Historical Water Demand Within the Cal Water SSF District Service
Area
Historical water demand within the Cal Water SSF District service area from 2000 through 2020
is summarized in Table 2. The largest proportion of water demand within the SSF District service
area is from the commercial sector, which represented 45% of the demand in the 2016-2020
period. The remainder of the demand was split between single-family residential (SFR) (37% of
overall demand), industrial (9% of overall demand), multi-family residential (MFR) (5% of the
overall demand), and institutional/government (4% of the overall demand; Cal Water, 2020c).
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Water use from 2000 to 2008 within the SSF District remained fairly consistent, at an average of
9,356 AFY. A slight decrease in water use occurred from 2008 to 2012, which generally
corresponds with the 2007 to 2009 drought and the economic downturn. Then, a significant drop
in water demand occurred in 2014 and 2015, corresponding with the recent historic drought and
mandatory state-wide water use restrictions and water conservation targets. Based on the data
summarized in Table 2, the total water use averaged 6,838 AFY from 2016 through 2020.
5.2 SSF District Water Demand Projections
Projected water demands for the SSF District are documented in the SSF District 2020 UWMP
(2020 UWMP) and presented in Table 3 in 5-year increments. Taking into account historical water
use, expected population increase and other growth, climatic variability, and other assumptions,
water demand within the SSF District is projected to increase to 8,423 AFY by 2045, a change of
23% compared to the 2016-2020 average.
5.3 Total Projected SSF District Water Demand (Inclusive of the Proposed Project)
Table 3 also shows the projected water demands for the SSF District inclusive of the estimated
proposed Project water demands. As shown, due to implementation of the District’s Water
Neutral Development Policy and given the fact that growth associated with the proposed Project
was included in the 2020 UWMP demand projections for the SSF District, the proposed Project is
expected to result in a net decrease in water demands to Cal Water’s SSF District (i.e., inclusive
of the proposed Project the total annual water demand will be approximately 7,896 AFY in 2045).
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Purchased Surface Water 8,632 8,531 8,426 9,245 9,549 8,869 9,101 9,169 9,086 8,397 8,013 7,892 7,644 7,500 6,787 5,751 5,296 5,308 5,322 5,332 5,397
Purchased In-Lieu Groundwater 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 863 1,535 1,535 1,535 1,539
Groundwater 1,106 1,076 1,207 0 0 0 0 0 206 380 452 515 606 995 1,028 1,312 527 0 0 0 0
Total Water Demand 9,738 9,606 9,633 9,245 9,549 8,869 9,101 9,169 9,292 8,777 8,465 8,408 8,250 8,495 7,816 7,064 6,687 6,842 6,857 6,867 6,936
Abbreviations:
"AFY" = acre feet per year
Notes:
(a)Historical water demands for per Reference 1. 2016-2020 water use by customer sector per Reference 2.
References:
1.Cal Water Demand Model for the South San Francisco District, provided 3 March 2021.
2.2021-2025 Conservation Master Plan, South San Francisco District, prepared by California Water Service, dated April 2021.
Cal Water Historical Annual Water Demand
(AFY) (a)
Table 2
Historical Water Demand for South San Francisco District
Southline Specific Plan, South San Francisco, California
Category
0
2,000
4,000
6,000
8,000
10,000
12,000
200020012002200320042005200620072008200920102011201220132014201520162017201820192020Total Water Use (AFY)Historical Water Demand and Supply
Purchased Surface Water Purchased In-Lieu Groundwater Groundwater
Single-Family
Residential, 37%
Commercial, 45%
Institutional/
Government,
4%
Multi-Family
Residential, 5%
Other, 0%
Industrial,9%
2016-2020 Water Demand by Customer
Sector
EKI C00070.00 Page 2 of 14
EKI Environment & Water, Inc.
July 2021
Table 3
Projected Future Water Demand for the South San Francisco District
Southline Specific Plan, South San Francisco, California
2025 2030 2035 2040 2045
SSF District 2020 UWMP (a)7,543 7,483 7,635 8,000 8,423
Southline Specific Plan Project (b)-527 -527 -527 -527 -527
7,016 6,956 7,108 7,473 7,896
Abbreviations:
"AFY" = acre feet per year
"SSF" = South San Francisco
"UWMP" = Urban Water Management Plan
Notes:
(a)
(b)
(c)
References:
1.Cal Water Demand Model for the South San Francisco District, provided 3 March 2021.
Projected Annual Water Demand (a)
(AFY)
Year
Water Demand (c)
Water demand projections for the SSF District were updated in 2021, and are presented per Reference 1.
The total water demand is the sum of total water use and distribution system losses.
527 AFY of water demand associated with the proposed Project was included in the demand projections
developed in support of the SSF District 2020 UWMP. However, in accordance with and through
implementation of Cal Water's Water Neutral Development Policy, the proposed Project will not result in a net
increase in demands for the SSF District. The demand projections included herein have been adjusted
accordingly. 7,0166,9567,1087,4737,8960
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2025 2030 2035 2040 2045Projected Water Demand (AFY)Projected Future Demands
EKI C00070.00 Page 3 of 14 EKI Environment & Water, Inc.
July 2021
July 2021 Page 19 of 52 EKI C00070.00
6 CAL WATER SSF DISTRICT WATER SUPPLY
This section identifies Cal Water SSF District’s water supplies and discusses the vulnerability of
the various supplies to drought and other factors affecting water supply reliability. The Cal Water
SSF District utilizes both groundwater supply from the Westside Basin and imported surface
water supply purchased from the SFPUC. Both sources are expected to constitute the water
supply for the proposed Project.
6.1 Identification of Water Supply Rights
Water Code Section 10910
(d) (1) The assessment required by this section shall include an identification of any existing water
supply entitlements, water rights, or water service contracts relevant to the identified water supply
for the proposed project, and a description of the quantities of water received in prior years by the
public water system, or the city or county if either is required to comply with this part pursuant to
subdivision (b), under the existing water supply entitlements, water rights, or water service
contracts.
Pursuant to Water Code §10910(d)(1), a WSA is required to include identification of all water
supply entitlements, water rights, and water service contracts relevant to the identified water
supply for the proposed Project. In accordance with these requirements, this WSA includes a
summary of Cal Water’s water supply sources in the SSF District service area and the agreements
between Cal Water and its wholesale supplier, the SFPUC, and other parties.
As discussed further below, three Cal Water Districts share one contractual allocation of supply
from the City and County of San Francisco’s RWS, and thus manage the supplies for all three
Peninsula Districts collectively. Therefore, the consideration of supply availability below for the
SSF District considers the collective supply available to all three Peninsula Districts (i.e., the SSF,
Bear Gulch, and Mid-Peninsula Districts).
6.1.1 SFPUC Regional Water System
6.1.1.1 RWS Supply Sources and Allocation
The majority of the water supply to the Cal Water SSF District (i.e., approximately 89% from 2005-
2020) is treated water purchased from the City and County of San Francisco’s RWS, which is
operated by the SFPUC. Within the SSF District, Cal Water takes delivery from eleven active and
two standby metered turnouts from RWS transmission lines.
The RWS supply originates predominantly from the Sierra Nevada but also includes treated water
produced by the SFPUC from its local watersheds and facilities in Alameda and San Mateo
Counties. Approximately 85% of the RWS supply is from the Tuolumne River via the Hetch-Hetchy
Reservoir and aqueducts. The Cal Water RWS supply is sourced from the remaining 15%, which
is derived from local watersheds and the San Antonio, Calaveras, Crystal Springs, Pilarcitos, and
San Andreas Reservoirs.
July 2021 Page 20 of 52 EKI C00070.00
The business relationship between the City and County of San Francisco and its Wholesale
Customers (including Cal Water) is largely defined by the Water Supply Agreement between the
City and County of San Francisco and Wholesale Customers in Alameda County, San Mateo
County, and Santa Clara County (Agreement) entered into in July 2009. The Agreement, which
has a 25-year term, addresses water supply availability for the RWS as well as the methodology
used by the SFPUC in setting wholesale water rates. This Agreement supersedes an earlier 25-
year agreement signed in 1984, and was amended in 2019. The amendments included extending
the deadline for SFPUC to decide whether to make San Jose and Santa Clara permanent
customers, a revision to the drought allocation formula, and a deadline extension for completion
of its Water Supply Improvement Plan, among other things. A copy of this Agreement (without
signatures) is included in Appendix C.
The Agreement provides a 184 million gallons per day (MGD) Supply Assurance to the SFPUC’s
Wholesale Customers collectively (Cal Water, 2021a). This allocation was reached through
negotiation in the early 1990s between the SFPUC and the Bay Area Water Users Association
(BAWUA), the predecessor organization to BAWSCA, and was first signed by Cal Water, along
with 29 other Bay Area water suppliers, as part of the 1984 Settlement Agreement and Master
Water Sales Contract with San Francisco, supplemented by individual Water Supply Contracts
(Cal Water, 2016a). The Supply Assurance is subject to reduction during periods of water shortage
due to drought, emergencies, or other scenarios resulting in a water shortage. Each wholesale
customer’s share of the 184 MGD is referred to as their Individual Supply Guarantee (ISG).
Although the Agreement expires in 2034, the Supply Assurance and ISG continue in perpetuity as
both are subject to separate binding water allocation agreements described above, and would
continue beyond the term of the Agreement. At expiration of the Agreement, it is likely that a
new agreement will be entered into as was done at the termination of the prior 1984 agreement.
Cal Water’s contractual allocation of SFPUC supply is shared among its Bear Gulch, Mid-
Peninsula, and SSF Districts. Cal Water’s ISG for the three Peninsula Districts was originally 35.39
MGD (39,642 AFY). However, the acquisition of the Los Trancos County Water District in July 2005
resulted in the transfer of 0.11 MGD of ISG to Cal Water and in 2009 Cal Water acquired the
Skyline County Water District, which also transferred its 0.181 MGD ISG to Cal Water. These
acquisitions increased Cal Water’s total ISG to 35.68 MGD (39,993 AFY) (Cal Water, 2016a).
Information regarding the Agreement and subsequent amendments was provided by BAWSCA in
coordination with SFPUC in support of 2020 UWMP development and is provided verbatim
below.
In the 2009 Water Supply Agreement, the SFPUC committed to make three decisions
before 2018 that affect water supply development:
• Whether or not to make the cities of San Jose and Santa Clara permanent
customers,
• Whether or not to supply the additional unmet supply needs of the Wholesale
Customers beyond 2018, and
July 2021 Page 21 of 52 EKI C00070.00
• Whether or not to increase the wholesale customer Supply Assurance above 184
mgd.
Events since 2009 made it difficult for the SFPUC to conduct the necessary water supply
planning and CEQA analysis required to make these three decisions before 2018.
Therefore, in the 2018 Amended and Restated Water Supply Agreement, the decisions
were deferred for 10 years to 2028.
Additionally, there have been recent changes to instream flow requirements and customer
demand projections that have affected water supply planning beyond 2018. As a result,
the SFPUC has established an Alternative Water Supply Planning program to evaluate
several regional and local water supply options. Through this program, the SFPUC will
conduct feasibility studies and develop an Alternative Water Supply Plan by July 2023 to
support the continued development of water supplies to meet future needs.
Cal Water’s collective current and projected purchase quantities are approximately equal to an
average of 29.38 MGD in 2020 and 30.35 MGD in 2045,6 respectively (Cal Water, 2021a). Both
current and projected quantities are less than Cal Water’s ISG of 35.68 MGD.
6.1.1.2 RWS Supply Reliability
The RWS has historically met demand in its service area in all year types. Factors that will affect
future reliability of the RWS are discussed below. Detailed information regarding factors that
impact the SFPUC RWS supply reliability are provided in the 2020 UWMP.
The water available to SFPUC’s Retail and Wholesale Customers from the RWS is constrained by
hydrology, physical facilities, and the institutional parameters that allocate the water supply of
the Tuolumne River (Cal Water, 2021a). In addition, statewide regulations and other factors can
impact the system reliability. For example, the adoption of the Water Quality Control Plan for the
San Francisco/Sacramento-San Joaquin Delta Estuary (Bay-Delta Plan Amendment) is anticipated
to impact the reliability of the RWS supplies in the future.
Based on an analysis by BAWSCA, if the current Bay-Delta Plan Amendment (July 2018) is
implemented, the proposed unimpaired flow volumes would significantly reduce water supply
available through the RWS during future drought conditions, and BAWSCA member agencies
(including the Cal Water SSF District) would be required to reduce their water use by as much as
50% during drought years (BAWSCA, 2018b).
In support of 2020 UWMP development, SFPUC provided a detailed discussion of the factors
contributing to the significant uncertainties surrounding the Bay-Delta Plan Amendment. This
discussion is excerpted below:
6 Projected RWS purchase volumes are based on having full local supply (i.e., 840 AFY in the Bear Gulch Reservoir
and 1,534 AFY from the South San Francisco wells).
July 2021 Page 22 of 52 EKI C00070.00
In December 2018, the State Water Resources Control Board (SWRCB) adopted
amendments to the Water Quality Control Plan for the San Francisco Bay/Sacramento-
San Joaquin Delta Estuary (Bay-Delta Plan Amendment) to establish water quality
objectives to maintain the health of the Bay-Delta ecosystem. The SWRCB is required by
law to regularly review this plan. The adopted Bay-Delta Plan Amendment was developed
with the stated goal of increasing salmonid populations in three San Joaquin River
tributaries (the Stanislaus, Merced, and Tuolumne Rivers) and the Bay-Delta. The Bay-
Delta Plan Amendment requires the release of 30-50% of the “unimpaired flow”7 on the
three tributaries from February through June in every year type. In SFPUC modeling of the
new flow standard, it is assumed that the required release is 40% of unimpaired flow.
If the Bay-Delta Plan Amendment is implemented, the SFPUC will be able to meet the
projected water demands presented in this Urban Water Management Plan (UWMP) in
normal years but would experience supply shortages in single dry years or multiple dry
years. Implementation of the Bay-Delta Plan Amendment will require rationing in all single
dry years and multiple dry years. The SFPUC has initiated an Alternative Water Supply
Planning Program (AWSP) to ensure that San Francisco can meet its Retail and Wholesale
Customer water needs, address projected dry years shortages, and limit rationing to a
maximum 20 percent system-wide in accordance with adopted SFPUC policies. This
program is in early planning stages and is intended to meet future water supply challenges
and vulnerabilities such as environmental flow needs and other regulatory changes;
earthquakes, disasters, and emergencies; increases in population and employment; and
climate change. As the region faces future challenges – both known and unknown – the
SFPUC is considering this suite of diverse non-traditional supplies and leveraging regional
partnerships to meet Retail and Wholesale Customer needs through 2045.
The SWRCB has stated that it intends to implement the Bay-Delta Plan Amendment on the
Tuolumne River by the year 2022, assuming all required approvals are obtained by that
time. But implementation of the Plan Amendment is uncertain for multiple reasons.
First, since adoption of the Bay-Delta Plan Amendment, over a dozen lawsuits have been
filed in both state and federal courts, challenging the SWRCB’s adoption of the Bay-Delta
Plan Amendment, including a legal challenge filed by the federal government, at the
request of the U.S. Department of Interior, Bureau of Reclamation. This litigation is in the
early stages and there have been no dispositive court rulings as of this date.
Second, the Bay-Delta Plan Amendment is not self-implementing and does not
automatically allocate responsibility for meeting its new flow requirements to the SFPUC
or any other water rights holders.
…
7 "Unimpaired flow represents the natural water production of a river basin, unaltered by upstream diversions, storage, or by
export or import of water to or from other watersheds." (Water Quality Control Plan for the San Francisco Bay/Sacramento-San Joaquin Delta Estuary (Dec. 12, 2018) p.17, fn. 14, available at: https://www.waterboards.ca.gov/plans_policies/docs/2018wqcp.pdf.)
July 2021 Page 23 of 52 EKI C00070.00
Third, in recognition of the obstacles to implementation of the Bay-Delta Plan
Amendment, the SWRCB Resolution No. 2018-0059 adopting the Bay-Delta Plan
Amendment directed staff to help complete a “Delta watershed-wide agreement,
including potential flow measures for the Tuolumne River” by March 1, 2019, and to
incorporate such agreements as an “alternative” for a future amendment to the Bay-Delta
Plan to be presented to the SWRCB “as early as possible after December 1, 2019.” In
accordance with the SWRCB’s instruction, on March 1, 2019, SFPUC, in partnership with
other key stakeholders, submitted a proposed project description for the Tuolumne River
that could be the basis for a voluntary substitute agreement with the SWRCB (“March 1st
Proposed Voluntary Agreement”). On March 26, 2019, the Commission adopted
Resolution No. 19-0057 to support the SFPUC’s participation in the Voluntary Agreement
negotiation process. To date, those negotiations are ongoing under the California Natural
Resources Agency and the leadership of the Newsom administration.8
The 2020 UWMP further summarized the current sources of uncertainty regarding RWS dry year
water supply projections. This discussion is excerpted (with minor refinements) below:
• Implementation of the Bay-Delta Plan Amendment is under negotiation. The SFPUC is
continuing negotiations with the SWRCB on implementation of the Bay-Delta Plan
Amendment for water supply cutbacks, particularly during droughts. The SFPUC, in
partnership with other key stakeholders, has proposed a voluntary substitute agreement
to the Bay-Delta Plan Amendment, the Tuolumne River Voluntary Agreement (TRVA), that
provides a collaborative approach to protect the environment and plan for a reliable and
high-quality future potable water supply. This is a dynamic situation and the projected
drought cutback allocations may need to be revised before the next (i.e., 2025) UWMP
depending on the outcome of ongoing negotiations.
• Benefits of the AWSP are not accounted for in current supply projections. As discussed in
above, SFPUC is exploring options to increase its supplies through the AWSP.
Implementation of feasible projects developed under the AWSP is not yet reflected in the
supply reliability scenarios presented herein and is anticipated to reduce the projected
RWS supply shortfalls.
• Methodology for Tier One and Tier Two Wholesale drought allocations have not been
established for wholesale shortages greater than 20%. As discussed further in Section
6.1.1.4, the current Tier One and Tier Two Plans are not designed for RWS supply
shortages of greater than 20%. For UWMP planning purposes per BAWSCA guidance, the
Tier One Wholesale share for a 16% to 20% supply reduction (62.5%) has been applied for
reductions greater than 20% and an equal percent reduction has been applied across all
Wholesale Customers. BAWSCA member agencies have not formally agreed to adopt this
shortage allocation methodology and are in discussions about jointly developing an
alternative allocation method that would consider additional equity factors if SFPUC is
8 California Natural Resources Agency, “Voluntary Agreements to Improve Habitat and Flow in the Delta and its Watersheds,”
available at https://files.resources.ca.gov/voluntary-agreements/.
July 2021 Page 24 of 52 EKI C00070.00
unable to deliver its contractual supply volume and cutbacks to the RWS supply exceed
20%.
• RWS demands are subject to change. The RWS supply availability is dependent upon the
system demands. The supply scenarios are based on the total projected Wholesale
Customer purchases provided by BAWSCA to SFPUC in January 2021. Many BAWSCA
agencies have refined their projected demands during the UWMP process after these
estimates were provided to SFPUC. Furthermore, the RWS demand projections are
subject to change in the future based upon future housing needs, increased conservation,
and development of additional local supplies.
• Frequency and duration of cutbacks are also uncertain. While the projected shortfalls
presented in the UWMP appear severe, the actual frequency and duration of such
shortfalls are uncertain. Based on the Hetch Hetchy and Local Simulation Model (HHLSM)
simulations provided by BAWSCA for the with Bay-Delta Plan Amendment scenario,
rationing is anticipated to be required 20% of years for base year 2025 through 2035, 23%
of all years for base year 2040, and 25% of years for base year 2045. In addition to the
supply volumes, the above listed uncertainties would also impact the projected frequency
and duration of shortfalls. As such, in addition to evaluating local options to increase
supply reliability, Cal Water has placed high priority on working with BAWSCA and SFPUC
in the upcoming years to better refine the estimates of RWS supply reliability and may
amend the 2020 UWMP when new information becomes available.
Evidently, numerous uncertainties remain surrounding the implementation of the Bay-Delta Plan
Amendment. The water supply projections presented in the 2020 UWMP likely represent a worst-
case scenario in which the Bay-Delta Plan Amendment is implemented without the SFPUC and
the SWRCB reaching a Voluntary Agreement and do not account for implementation of SFPUC’s
AWSP. Additional information regarding drought allocations can be found in Chapter 7 of the SSF
District’s 2020 UWMP.
6.1.1.3 Efforts to Increase RWS Supply Reliability
On 2 June 2021, the SFPUC released a memorandum which outlines numerous options the SFPUC
is pursuing to improve the supply reliability projected in its 2020 UWMP and meet its Level of
Service (LOS) Goals. This memorandum is included as Appendix D. Furthermore, the SFPUC’s
Water Supply Improvement Program (WSIP) and its Water Management Action Plan (Water
MAP) articulate the SFPUC’s goals and objectives to improve the delivery reliability of the RWS,
including water supply reliability.
The WSIP program goal is to improve the SFPUC’s ability to reliably meet its Retail and Wholesale
Customers water needs in non-drought and drought periods. In 2008, the SFPUC adopted LOS
Goals and Objectives in conjunction with the adoption of the WSIP. The SFPUC’s LOS Goals and
Objectives include: (a) meeting average annual water demand of 265 MGD from the SFPUC
watersheds for Retail and Wholesale Customers during non-drought years for system demands
through 2028; (b) meeting dry-year delivery needs through 2028 while limiting rationing to a
maximum 20% system-wide reduction in water service during extended droughts; (c) diversifying
water supply options during non-drought and drought periods; and (d) improving use of new
July 2021 Page 25 of 52 EKI C00070.00
water sources and drought management, including groundwater, recycled water, conservation,
and transfers (SFPUC, 2018). The anticipated completion date of the overall WSIP is May 2023.
As of September 2020, WSIP local projects are 100% complete and regional projects are 98.8%
complete (SFPUC, 2021c).
The SFPUC also developed a Water MAP in 2016 to provide the information necessary to begin
developing a water supply program for the 2019 to 2040 planning horizon. The SFPUC intends
that the Water MAP will guide its efforts to continue to meet its commitments and
responsibilities to its customers, including the BAWSCA member agencies (BAWSCA, 2017). The
Water MAP was developed with consideration of the 2018 SFPUC’s supply decisions (now
postponed to 2028; as discussed above), as well as recent changes to instream flow requirements
and customer demand projections. The Water MAP has identified water supply needs on the
RWS by 2040 and prioritized those needs in the following order:
1. Meeting existing obligations to existing permanent customers (3.5 MGD).
2. New supply in order to make the City of San Jose a permanent customer of the SFPUC (Up
to 9.5 MGD).
3. New supply in order to make the City of Santa Clara a permanent customer of the SFPUC
(Up to 5.0 MGD).
4. New supply to meet the City of East Palo Alto’s projected needs above its ISG (Up to
1.5 MGD).
Through implementation of its Long-Term Water Supply Reliability Strategy (LTWSRS), BAWCSA
is also actively evaluating opportunities to increase the supply reliability of the RWS (BAWSCA,
2015). The strategy includes short- and long-term implementation plans including water supply
management projects that could be implemented to meet identified needs. Potential projects
include recycled water projects, desalination projects, water transfer projects, and local capture
and reuse projects.
6.1.1.4 RWS Water Shortage Allocations
The Agreement includes a Water Shortage Allocation Plan (WSAP) that allocates water from the
RWS to Retail and Wholesale Customers during system-wide shortages of 20% or less. As
described in detail in the 2020 UWMP, the WSAP has two components:
1. The Tier One Plan, which allocates water between San Francisco and the Wholesale
Customers collectively; and
2. The Tier Two Plan, which allocates the collective wholesale customer share among the
Wholesale Customers.
We note that the dry year supply reliability projections provided herein (Section 6.1.4) are
obtained from the 2020 UWMP based on application of BAWSCA-provided revised methodology
to allocate RWS supplies during projected future single dry and multiple dry years in the instance
July 2021 Page 26 of 52 EKI C00070.00
where the supply shortfalls are greater than 20%.9 However, BAWSCA member agencies are in
discussions about jointly developing an allocation method that would consider additional equity
factors in the event that SFPUC is not able to deliver its contractual supply volume, and its
cutbacks to the RWS supply exceed 20%. While Cal Water is working independently and with the
other BAWSCA agencies to identify regional mitigation measures to improve reliability for
regional and local water supplies and meet its customers’ water needs, Cal Water expects that
SFPUC’s LOS Goals and Objectives will be met and is comfortable assuming its contract with
SFPUC will be honored as written.
6.1.2 Surface Water Supply
Surface water supplies a small portion of the three Peninsula Districts’ water demands. From
2016 to 2020, it supplied an average of 537 AFY, or less than 2% of total supplies (Cal Water,
2021b). Surface water is collected from the Bear Gulch Creek by two diversion facilities and is
stored in Bear Gulch Reservoir prior to use.
The Bear Gulch District diverts water from two points of diversion (PODs) along the creek – the
Upper POD (with an upstream area of 2.5 square miles) and the Lower POD (with an upstream
area of 9.4 square miles). Diversions from the Upper and Lower PODs are each governed by
separate SWRCB-administered water rights (i.e., pre-1914 claimed water rights and post-1914
SWRCB-issues diversion permits/licenses) that specify the volumes, rates, and timing of allowed
diversions at each POD. In addition to these SWRCB-administered water rights, diversions are
further constrained by certain diversion limitations and minimum instream flow requirements
imposed by the California Department of Fish and Wildlife (CDFW) at the Upper POD and by the
National Oceanic and Atmospheric Administration (NOAA) at the Lower POD. There also exists a
1936 agreement with Stanford University that prohibits Cal Water from diverting more than 50%
of the flows that pass by (i.e., are not diverted at) the Upper POD.
Water diverted from the Upper POD flows through a gravity conveyance pipeline to a junction
point where it is joined by water diverted from the Lower POD, at which point the water is
pumped into the Bear Gulch District-owned Bear Gulch Reservoir, a man-made storage facility
impounded by an earthen dam. The Bear Gulch Reservoir is operated to have a minimum “dead
pool” storage of 50 million gallons (MG), or approximately 153 AF. The maximum storage capacity
of the reservoir has been reduced from 149 MG (547 AF) to 142.7 MG (438 AF), a limit imposed
by the California Division of Safety of Dams (DSOD), based on a maximum storage elevation of
230 feet above mean sea level. Cal Water is undertaking capital improvements to Bear Gulch
Reservoir to address DSOD’s seismic safety concerns, and may also considered increasing the
maximum storage capacity. Outflows from Bear Gulch Reservoir are currently limited by the
DSOD to the rate that causes a water surface elevation decline of 0.3 feet per day.
9 The projected SFPUC RWS supplies presented in this WSA are based on dry year allocation projections included in
the SSF, Bear Gulch, and Mid-Peninsula District 2020 UWMPs based on the methodology, assumptions and
information utilized and provided by SFPUC and BAWSCA; however, actual future supply allocations may vary based
on actual shortage levels and the then-applicable allocation methodology being applied by BAWSCA and SFPUC.
July 2021 Page 27 of 52 EKI C00070.00
Water stored in Bear Gulch Reservoir is released and sent through the Bear Gulch District-owned
Bear Gulch Water Treatment Plant (BGWTP) prior to addition to the distribution system. The
BGWTP, which was placed into operation in 1977, has a rated capacity of 6.0 MGD. There the
water is clarified, filtered, and chloraminated in compliance with the Surface Water Treatment
Rule and the Safe Drinking Water Act. Based on data from Water Years 1981 through 2019,
annual production from the reservoir has ranged from a high of 2,809 AF (915 MG) in 1983 to a
low of 0 AF (0 MG) in 2014.
Recent analysis by the Bear Gulch District has shown that the projected long-term average annual
diversion amount by the Bear Gulch District from the Bear Gulch local surface water system is
approximately 840 AFY. This estimate considers the hydrology of the watershed, the various
regulatory constraints that govern diversions (i.e., water rights and instream flow requirements),
and current infrastructure limitations (i.e., pump, pipeline and treatment plant capacity). The
storage capacity of Bear Gulch Reservoir is relatively small compared to average annual
diversion/production, and therefore there is typically no carryover storage from one year to the
next. Furthermore, given the various constraints on diversions at the Bear District’s two PODs
under the SWRCB-administered water rights and the CDFW/NOAA-governed minimum instream
flow requirements, the allowable diversions by the Bear Gulch District are significantly lower
during dry years even though the creek itself maintains flow. Although local surface water
diversions (and subsequent treatment and use of local surface water) have occurred historically
during dry years, and the Bear District’s analysis indicates that some diversions are likely to occur
in future dry years10, for the purposes of its 2020 UWMP the Bear Gulch District conservatively
assumed that local surface water supplies will be zero during single dry and multiple dry years
over the planning horizon.
6.1.3 Groundwater Supply
Water Code Section 10910
(f) If a water supply for a proposed project includes groundwater, the following additional information
shall be included in the water supply assessment:
(1) A review of any information contained in the urban water management plan relevant to the
identified water supply for the proposed project.
(2) (A) A description of any groundwater basin or basins from which the proposed project will be
supplied.
(B) For those basins for which a court or the board has adjudicated the rights to pump
groundwater, a copy of the order or decree adopted by the court or the board and a
description of the amount of groundwater the public water system, or the city or county if
either is required to comply with this part pursuant to subdivision (b), has the legal right
to pump under the order or decree.
(C) For a basin that has not been adjudicated that is a basin designated as high- or medium-
priority pursuant to Section 10722.4, information regarding the following:
10 Diversions from the Bear Gulch Creek system are estimated at 291 AF with a 90% exceedance probability.
July 2021 Page 28 of 52 EKI C00070.00
(i) Whether the department has identified the basin as being subject to critical conditions
of overdraft pursuant to Section 12924.
(ii) If a groundwater sustainability agency has adopted a groundwater sustainability plan
or has an approved alternative, a copy of that alternative or plan.
(D) For a basin that has not been adjudicated that is a basin designated as low- or very low
priority pursuant to Section 10722.4, information as to whether the department has
identified the basin or basins as overdrafted or has projected that the basin will become
overdrafted if present management conditions continue, in the most current bulletin of
the department that characterizes the condition of the groundwater basin, and a detailed
description by the public water system, or the city or county if either is required to comply
with this part pursuant to subdivision (b), of the efforts being undertaken in the basin or
basins to eliminate the long-term overdraft condition.
(3) A detailed description and analysis of the amount and location of groundwater pumped by the
public water system, or the city or county if either is required to comply with this part pursuant
to subdivision (b), for the past five years from any groundwater basin from which the proposed
project will be supplied. The description and analysis shall be based on information that is
reasonably available, including, but not limited to, historic use records.
(4) A detailed description and analysis of the amount and location of groundwater that is projected
to be pumped by the public water system, or the city or county if either is required to comply
with this part pursuant to subdivision (b), from any basin from which the proposed project will
be supplied. The description and analysis shall be based on information that is reasonably
available, including, but not limited to, historic use records.
(5) An analysis of the sufficiency of the groundwater from the basin or basins from which the
proposed project will be supplied to meet the projected water demand associated with the
proposed project. A water supply assessment shall not be required to include the information
required by this paragraph if the public water system determines, as part of the review
required by paragraph (1), that the sufficiency of groundwater necessary to meet the initial
and projected water demand associated with the project was addressed in the description and
analysis required by paragraph (4) of subdivision (b) of Section 10631.
Groundwater pumped from the Westside Basin constitutes a portion of supply to the Cal Water
SSF District. Additional detail regarding basin description, groundwater management, and
historical groundwater use is included below.
6.1.3.1 Basin Description
The Westside Basin (California Department of Water Resources [DWR] Basin No. 2-35) underlies
the proposed Project and the Cal Water SSF District service area, as shown on Figure 3.11 The
Westside Basin (Basin) covers an area of approximately 25,400 acres and is separated from the
Lobos Basin to the north by a northwest trending bedrock ridge through the northeastern part
of Golden Gate Park. The San Bruno Mountains bound the Basin on the east. The San Andreas
11 A very small portion (approximately 8%) of the SSF District service area overlies the Visitacion Valley Basin (DWR
Basin No. 2-32). However, no groundwater is used from this basin and so the basin is not discussed further herein.
July 2021 Page 29 of 52 EKI C00070.00
Fault and Pacific Ocean form its western boundary and its southern limit is defined by bedrock
high that separates it from the San Mateo Plain Subbasin. The Basin is connected to the Pacific
Ocean on the northwest and San Francisco Bay on the southeast (Cal Water, 2021a). The Basin is
not adjudicated and, in its recent evaluation of California groundwater basins, DWR determined
that the Basin was not in a condition of critical overdraft and designated the Basin as low priority
(DWR, 2019).
Geologically, the Basin is comprised of two groups, consisting of bedrock and unconsolidated
materials. The impermeable bedrock is composed of consolidated sediment of the Franciscan
Complex and the Great Valley Sequence of late Jurassic and Cretaceous age. Unconsolidated
materials overlying the bedrock comprise the water bearing formations. These consist of dune
sands, the Colma Formation of Pleistocene age and the Merced Formation of Pleistocene/
Pliocene age (Phillips and others, 1993; DWR, 2006).
Groundwater used for water supply within the Basin is generally pumped from in the Merced and
Colma Formations. The Merced Formation is composed of sand and thin interbedded silt and clay
layers of shallow marine depositional origin. The Colma Formation overlies the Merced
Formation and consists of fine-grained sand, silty sand, and inter-fingered clay layers (DWR, 2006;
2016). Water is produced from the coarse-grained layers within these complex, layered
formations (WRIME, 2012).
The Basin is subdivided for management purposes into northern and southern portions by the
county line separating San Francisco and San Mateo counties. The county-line boundary between
the “North Westside Basin” and the “South Westside Basin” does not have hydrogeological
significance other than influencing the jurisdictional distribution of groundwater pumping. No
geologic features restrict groundwater flow between the northern and southern parts of the
Basin (SFPUC, 2016). Groundwater pumping has historically provided up to 50% of local water
supply in the South Westside Basin for the communities of San Bruno, Daly City, and South San
Francisco (WRIME, 2012), although current usage is significantly less as a proportion.
The Basin is not adjudicated and, in its recent evaluation of California groundwater basins, DWR
determined that the Basin was not in a condition of critical overdraft and was a low priority basin
(DWR, 2019). Recent evaluations by others have also found that current pumping is estimated to
be within the Basin’s safe yield (WRIME, 2012).
Path: X:\C00070.00\Maps\Fig3_DWRGWBasinLocation.mxdLegend
Regional Setting andGroundwater Basin
Southline Specific Plan
South San Francisco, CA
July 2021
EKI C00070.00Figure 3
WESTSIDE BASIN(2-035)Al
ame
da
Coun
tySan F
ran
c
i
s
c
o
C
o
u
n
t
y
Al
am
e
d
a
C
o
u
n
t
y
S
a
n
M
a
t
e
o
C
o
u
n
t
y
San Francisco County
San Mateo County
Abbreviations
Cal Water = California Water Service
DWR = California Department of Water Resources
SSF = South San Francisco
Notes
1. All locations are approximate.
Sources
1. Basemap is ESRI's ArcGIS Online world aerial map, obtained 21 September 2020.
2. DWR groundwater basins are based on the boundaries defined in California's
Groundwater, Bulletin 118-2016 Update.
3. Boundary data for Cal Water districts' service areas received from Cal Water
on 16 October 2017.
0 2.5 5
(Scale in Miles)±
Proposed Project
County Boundary
Groundwater Basin
SSF District Service Area
Project Site
July 2021 Page 31 of 52 EKI C00070.00
6.1.3.2 Groundwater Management
As described below, several groundwater management programs are actively implemented
within the Basin that have relevance to the Cal Water SSF District.
South Westside Basin Groundwater Management Plan
The South Westside Basin Groundwater Management Plan (GWMP) was completed in July 2012
as a joint effort between Cal Water, the SFPUC, and the Cities of Daly City and San Bruno that
superseded prior groundwater management and planning efforts (WRIME, 2012). The GWMP
was prepared pursuant to Assembly Bill 3030 (AB 3030; codified in CWC §10750 et seq.).12
The goal of the GWMP is to ensure a sustainable, high quality, reliable water supply at a fair price
for beneficial uses achieved through local groundwater management (WRIME, 2012). The GWMP
development was supported by a companion effort by the City of Daly City to develop a numerical
groundwater model for the Basin. The GWMP includes the following elements:
• Groundwater Storage and Quality Monitoring
• Control of Saltwater Intrusion
• Conjunctive Use
• Recycled Water
• Source Water Protection
Among other things, the GWMP provides steps for monitoring water quality and quantity in the
South Westside Basin. Each groundwater well identified in the GWMP has defined triggers for
overdraft, seawater intrusion, and various water quality measures. The GWMP also identifies two
levels of trigger thresholds for each groundwater well based on historical water levels, and
actions to address the trigger that is met.
Regional Groundwater Storage and Recovery Project
In a joint effort between SFPUC, Cal Water, Daly City, and San Bruno, the Regional Groundwater
Storage and Recovery Project (RGSR Project) was developed to support groundwater and surface
water management in the South Westside Basin and improve the reliability of the RWS (Cal
Water, 2021a). The RGSR Project agreement was signed in December 2014 following two phases
of successful pilot programs. As part of the RGSR project agreement, the municipal pumpers
within the South Westside Basin agreed to self-limit pumping within the South Westside basin to
no more than 6.9 MGD, of which Cal Water’s designated quantity is an annual average rate of
1.37 MGD or 1,534 AFY.
12 AB 3030 provided a systematic procedure to develop a groundwater management plan by local agencies overlying
DWR Bulletin 118 groundwater basins. Upon adoption of such plan, these agencies could possess the same authority
as a water replenishment district to "fix and collect fees and assessments for groundwater management” (CWC
§10754) (WRIME, 2012).
July 2021 Page 32 of 52 EKI C00070.00
Under the RGSR project, the SFPUC will provide supplemental RWS water to Cal Water and the
other “Partner Agencies” (i.e. Cal Water, Daly City, and San Bruno) during normal and wet years
and in turn the Partner Agencies will reduce their groundwater pumping in their own wells to
allow the Basin to recharge.13 During dry years, the Partner Agencies may pump from RGSR
project wells in addition to resuming use of their own wells up to designated quantities. The in-
lieu recharge (i.e. “put”) and additional groundwater pumping from RGSR wells (i.e. “take”) under
the RGSR project are tracked under the Westside Basin Storage Account. Production wells in the
Basin are considered to be either a RGSR Well Facility or a Partner Agency Facility, where only
production from RGSR Well facilities is tracked under the RGSR project.
The RGSR Project is one of the SFPUC’s WSIP projects and provides additional dry-year water
supply to help achieve the WSIP goals to increate RWS supply reliability. The RGSR Project
consists of the construction of up to 16 new recovery wells and associated facilities, such as
pumping systems, pipelines, and chemical treatment equipment. Construction for this project
began in April 2015 and is anticipated to be complete in winter 2021 (SFPUC, 2021b).
Sustainable Groundwater Management Act
In 2014, the California State Legislature enacted the Sustainable Groundwater Management Act
(SGMA), with subsequent amendments in 2015. The SGMA requires the formation of
Groundwater Sustainability Agencies (GSAs) and the development and implementation of
Groundwater Sustainability Plans (GSPs) for groundwater basins that are designated by DWR as
medium or high priority.
The Basin is currently categorized by DWR as a very low priority basin (DWR, 2019). As such, the
Basin is not subject to the requirements of SGMA. However, as discussed above, the Basin has
been actively managed for years, including the establishment of pumping limitations.
6.1.3.3 Groundwater Use
Cal Water operates five groundwater production wells within its SSF District service area (Cal
Water, 2021a). The Basin is not adjudicated and, in its recent evaluation of California
groundwater basins, DWR determined that the Basin was not in a condition of critical overdraft
and designated the Basin as low priority (DWR, 2019). As shown in Table 4, from 2005 to 2019,
the Cal Water SSF District met up to 19% of its water demand from groundwater, excluding
purchased in-lieu groundwater credits, and up to 22% including in-lieu groundwater credits
purchased from SFPUC. Groundwater use was reduced in 2016 and later due to in-lieu recharge
as part of the RGSR Project discussed above in Section 6.1.3.2.
Historical groundwater pumping from 2010 through 2019 and projected groundwater pumping
through 2045 for the four municipal groundwater users in the Basin are shown in Table 5. From
2010 through 2019, the average total groundwater production by these entities was
approximately 5,329 AFY, of which 550 AFY was by Cal Water. The total projected groundwater
13 Supplemental deliveries do not count towards the Member Agencies’ ISGs.
July 2021 Page 33 of 52 EKI C00070.00
pumping by the RGSR Partner Agencies is conservatively assumed to be equal to each agency’s
agreed-upon pumping limitation from 2020 through 2045, of which Cal Water is projecting to
pump up to 1,534 AFY (Cal Water, 2021a). The projected groundwater pumping by the City of
San Francisco is based on projected pumping values included in Table 6-5 of SFPUC’s 2020 UWMP
(SFPUC, 2021a).
6.1.4 Cal Water Bay Area Water Supply Reliability Study
Cal Water is currently in the process of developing the Bay Area Regional Water Supply Reliability
Study (WSRS), which employs integrated resource planning practices to create a long-term supply
reliability strategy through 2050 for the three Peninsula Districts. The study will create long-term
strategies to address a wide range of water supply challenges including climate change, new
regulatory requirements (e.g., the Bay-Delta Plan Amendment), and potential growth in demands
due to new development. The Bay Area WSRS is anticipated to be complete by 2024.
6.1.4.1 Potential Recycled Water Development
The Bay Area WSRS will explore potential recycled water developments to augment supply in the
three Peninsula Districts. Recycled water is not currently provided in the SSF District service area
and Cal Water has not projected recycled water use in its 2020 UWMP (Cal Water, 2021a).
However, there is currently a coordinated effort between Cal Water and other partners to
potentially develop recycled water for various uses.
Cal Water is participating in the development of the Crystal Springs Purified Water (PREP) Project,
a purified water project that could provide 6 to 12 MGD of water supply through reservoir water
augmentation at Crystal Springs Reservoir, which is a facility of the RWS. Treated wastewater
from Silicon Valley Clean Water (SVCW) and/or the City of San Mateo would go through an
advanced water treatment plant to produce purified water that meets state and federal drinking
water quality standards. The purified water would then be transmitted 10 to 20 miles (depending
on the alignment) to Crystal Springs Reservoir, blended with regional surface water supplies and
treated again at Harry Tracy Water Treatment Plant. Project partners include Cal Water, the
SFPUC, BAWSCA, SVCW, Redwood City, Foster City, and the City of San Mateo. Partner agencies
are contributing financial and staff resources towards the work effort. Potential scenarios include
a direct connection to the Bear Gulch District or the Mid-Peninsula District. The SSF District will
benefit indirectly through increased supply availability to the three Peninsula Districts
collectively. This WSA does not rely on an assumption of recycled water as a supply source.
6.2 Total Potable Supply in Normal, Single Dry, and Multiple Dry Years
Water Code Section 10910
(c) (3) If the projected water demand associated with the proposed project was not accounted for in
the most recently adopted urban water management plan, or the public water system has no
urban water management plan, the water supply assessment for the project shall include a
discussion with regard to whether the public water system's total projected water supplies
available during normal, single dry, and multiple dry water years during a 20-year projection will
meet the projected water demand associated with the proposed project, in addition to the public
water system's existing and planned future uses, including agricultural and manufacturing uses.
July 2021 Page 34 of 52 EKI C00070.00
The projected potable water supply sources, as described above, are surface water purchased
from the RWS, local surface water from the Bear Gulch Reservoir, and groundwater. Historical
supplies from 2016 through 2020 and projected normal year supplies through 2045 for each
source are shown in Table 6.14 This table also shows the historical and projected demand for each
of the three Peninsula Districts, based on updated demand projections included in their
respective 2020 UWMPs. Table 7 shows the projected demand by the three Peninsula Districts,
with the inclusion of the proposed Project, and the total available supply through 2045. The
current and planned future water supply within the three Peninsula Districts for normal
hydrologic years is expected to meet all projected demands, which are estimated to be 35,869
AFY by 2045.
The anticipated dry-year supply estimates presented below are based on the delivery estimates
provided by Cal Water as part of the 2020 UWMP (Cal Water, 2021a).15 As discussed above,
BAWSCA provided a revised methodology to allocate RWS supplies during projected future single
dry and multiple dry years in the instance where the supply shortfalls are greater than 20% in
support of 2020 UWMP development. However, BAWSCA member agencies are in discussions
about jointly developing an allocation method that would consider additional equity factors in
the event that SFPUC is not able to deliver its contractual supply volume, and its cutbacks to the
RWS supply exceed 20%.
During single dry years, the annual supply within the three Peninsula Districts’ service areas will
be reduced to 21,039 AFY by 2045. Supply shortfalls relative to total demands during single dry
years are estimated to range between 33% in 2025 and 43% in 2045 (see Table 8).
During multiple dry years, the 2020 UWMP estimates that annual supply within the three
Peninsula Districts’ service areas will be reduced to 23,615 AFY in 2025 during the first year of a
drought, and 20,492 AFY in 2025 in the second, third, fourth, and fifth years of drought. The 2020
UWMP further estimates that in 2045, annual supply will be reduced to 20,954 AFY during the
first three years of a drought, and 18,061 AFY in fourth and fifth years of drought. Supply
shortfalls relative to total demands are estimated to range between 35% during the first year of
a drought in 2025 to 52% during the fifth year of a drought in 2045 (see Table 9).
If the “worst-case” supply scenario described under Section 6.1.1.2 in which the Bay-Delta Plan
Amendment is implemented without the SFPUC and the SWRCB reaching a Voluntary Agreement
and not accounting for the implementation of actions identified as part of SFPUC’s AWSP,
BAWSCA’s LTWSRS, or Cal Water’s WSRS, shortfalls of up to 52% are projected during drought
years. To address this issue, under Rule 14.1, Cal Water plans to enact its Water Shortage
14 Projected groundwater and Bear Gulch Reservoir supply is shown based on the 2020 UWMP. Projected purchased
SFPUC supply in normal years is based on Cal Water’s contract allocation of 35.68 MGD (39,993 AFY).
15 The projected SFPUC RWS supplies presented in this WSA are based on dry year allocation projections included in
the SSF, Bear Gulch, and Mid-Peninsula District 2020 UWMPs based on the methodology, assumptions and
information utilized and provided by SFPUC and BAWSCA; however, actual future supply allocations may vary based
on actual shortage levels and the then-applicable allocation methodology being applied by BAWSCA and SFPUC.
July 2021 Page 35 of 52 EKI C00070.00
Contingency Plan (WSCP), which includes Mandatory Staged Restrictions of Water Use. The WSCP
systematically identifies ways in which the SSF, Bear Gulch, and Mid-Peninsula Districts can
reduce water demands during dry years. The overall reduction goals in the WSCP are established
for six drought stages and address water demand reductions over 50%. The WSCPs for all three
Peninsula Districts were revised as part of the 2020 UWMP update process, and include detailed
information about how drought risks are evaluated by Cal Water on an annual basis to determine
the potential need for reductions.
Water Supply Source 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Purchased Surface Water 8,869 9,101 9,169 9,086 8,397 8,013 7,892 7,644 7,500 6,787 5,751 5,296 5,308 5,322 5,332 5,397
Purchased In-Lieu Groundwater 0 0 0 0 0 0 0 0 0 0 0 863 1,535 1,535 1,535 1,539
Groundwater 0 0 0 206 380 452 515 606 995 1,028 1,312 527 0 0 0 0
Total Water Supply 8,869 9,101 9,169 9,292 8,777 8,465 8,408 8,250 8,495 7,816 7,064 6,687 6,842 6,857 6,867 6,936
Abbreviations:
"AFY" = acre feet per year
Notes:
(a)Historical water demands for per Reference 1.
References:
1.Cal Water Demand Model for the South San Francisco District, provided by 3 March 2021.
Table 4
Historical Water Supply for the South San Francisco District
Southline Specific Plan, South San Francisco, California
Historical Water Supply (AFY) (a)100%100%100%98%96%95%94%93%88%87%81%79%78%78%78%78%2%4%5%6%7%12%13%19%8%13%22%22%22%22%0
2,000
4,000
6,000
8,000
10,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Water Supply (AFY)Historical Water Supply
Purchased Surface Water Groundwater Purchased In-Lieu Groundwater
EKI C00070.00 Page 4 of 14
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July 2021
Table 5
Historical and Projected Groundwater Pumping from the Westside Basin
Southline Specific Plan, South San Francisco, California
Water Supplier 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2025 2030 2035 2040 2045
Cal Water, SSF District 453 515 606 995 1,028 1,312 528 0.4 35 31 1,534 1,534 1,534 1,534 1,534
Daly City 1,743 2,699 3,772 3,351 3,452 1,980 941 62 59 56 3,840 3,840 3,840 3,840 3,840
San Bruno 2,364 2,129 1,596 2,198 2,025 2,164 937 303 333 277 2,350 2,350 2,350 2,350 2,350
San Francisco Municipal and Irrigation (c)1,256 1,197 1,339 1,651 1,672 1,570 1,359 1,435 1,911 1,960 1,569 2,690 3,811 4,932 4,932
Total Groundwater Supply 5,816 6,540 7,313 8,195 8,177 7,026 3,765 1,800 2,338 2,324 9,293 10,414 11,535 12,656 12,656
Historical Groundwater Production (AFY) (a)Projected Groundwater Production (AFY) (b)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2025 2030 2035 2040 2045Water Supply (AFY)Historical and Projected Groundwater Production
San Francisco Municipal and Irrigation (c)San Bruno Daly City Cal Water, SSF District
EKI C00070.00 Page 5 of 14
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July 2021
Table 5
Historical and Projected Groundwater Pumping from the Westside Basin
Southline Specific Plan, South San Francisco, California
Abbreviations:
"AFY" = acre feet per year
"SSF" = South San Francisco District
Notes:
(a)
(b)
(c)
References:
1.
2.
3.
Historical groundwater pumping as reported on Table 1 in Reference 1.
Projected groundwater pumping by the SSF District, City of Daly City, and City of San Bruno is conservatively estimated as the maximum apportionment for each partner agency
as dictated by the Regional Groundwater Storage and Recovery Project, per Reference 2.
Projected groundwater pumping by San Francisco Municipal and Irrigation provided per Reference 3.
2019 Annual Groundwater Monitoring Report, Westside Basin, San Francisco and San Mateo Counties, California prepared by the San Francisco Public Utilities Commission,
dated April 2020.
Draft Environmental Impact Report for the San Francisco Public Utilities Commission's Regional Groundwater Storage and Recovery Project, dated April 2013.
2020 Urban Water Management Plan for the City and County of San Francisco, prepared by the San Francisco Public Utilities Commission, dated June 2021.
EKI C00070.00 Page 6 of 14
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July 2021
Table 6
Historical and Projected Supplies by Source
Southline Specific Plan, South San Francisco, California
Water Supplier 2016 2017 2018 2019 2020 2025 2030 2035 2040 2045
Historical and Projected Demand (a)
SSF District 6,687 6,842 6,857 6,867 6,936 7,543 7,483 7,635 8,000 8,423
Southline Specific Plan Project (b)-527 -527 -527 -527 -527
Mid-Peninsula District 12,534 13,601 13,924 14,046 14,563 14,418 14,530 14,786 14,977 15,279
Bear Gulch District 10,105 11,395 11,834 11,772 12,972 12,796 12,699 12,730 12,675 12,694
Total Demand 29,326 31,838 32,614 32,684 34,471 34,230 34,185 34,624 35,125 35,869
Historical and Projected Supply (All Districts) (c)
Purchased (SFPUC)27,180 29,204 30,909 30,310 32,932 32,383 32,338 32,777 33,278 34,022
Bear Gulch Reservoir 757 1,100 170 839 0 840 840 840 840 840
Groundwater 1,390 1,535 1,535 1,535 1,539 1,534 1,534 1,534 1,534 1,534
Total Supply 29,326 31,838 32,614 32,684 34,471 34,757 34,712 35,151 35,652 36,396
Supply Minus Demand 0 0 0 0 0 527 527 527 527 527
Abbreviations:
"AFY" = acre feet per year "SSF" = South San Francisco District
"MGD" = millions gallons per day "UWMP" = Urban Water Management Plan
"SFPUC" = San Francisco Public Utilities Commission
Projected Supply and Demand (AFY)Historical Supply and Demand (AFY)
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2016 2017 2018 2019 2020 2025 2030 2035 2040 2045Water Supply (AFY)Historical and Projected Normal Year Supply and Demand
Bear Gulch District Mid-Peninsula District SSF District Total Supply
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Table 6
Historical and Projected Supplies by Source
Southline Specific Plan, South San Francisco, California
Notes:
(a)
(b)
(c)
References:
1.
2.
527 AFY of water demand associated with the proposed Project was included in the demand projections developed in
support of the SSF District 2020 UWMP. However, in accordance with and through implementation of Cal Water's
Water Neutral Development Policy, the proposed Project will not result in a net increase in demands for the SSF
District. The demand projections included herein have been adjusted accordingly.
Cal Water updated its water demand projections for the SSF, Bear Gulch, and Mid-Peninsula Districts in 2021, per
Reference 2.
Projected supply is inclusive of supplies available for all three districts that share the same contractual allocation of
water from SFPUC, per Reference 1. The projected purchase volumes are based on having full local supply (i.e., 840 AFY
in the Bear Gulch Reservoir and 1,534 AFY from the South San Francisco wells), per Reference 1. Projected SFPUC
supply is based on total demand minus local supplies and does not exceed Cal Water's contractual allocation of 35.68
MGD, or 39,993 AFY.
2020 Urban Water Management Plan, South San Francisco District, prepared by California Water Service,
dated June 2021.
Cal Water Demand Model for the South San Francisco District, provided 3 March 2021.
Cal Water Demand Model for the Bear Gulch District, provided 26 February 2021.
Cal Water Demand Model for the Mid-Peninsula District, provided 26 February 2021.
EKI C00070.00 Page 8 of 14 EKI Environment & Water, Inc.
July 2021
2025 2030 2035 2040 2045
Total Supply (All Districts) (a)34,757 34,712 35,151 35,652 36,396
Demand (b)
SSF District 7,543 7,483 7,635 8,000 8,423
Mid-Peninsula District 14,418 14,530 14,786 14,977 15,279
Bear Gulch District 12,796 12,699 12,730 12,675 12,694
Southline Specific Plan Project (c)-527 -527 -527 -527 -527
34,230 34,185 34,624 35,125 35,869
Supply Shortfall (% demand) (d)None None None None None
Abbreviations:
"AFY" = acre feet per year "SFPUC" = San Francisco Public Utilities Commission
"MGD" = millions gallons per day "SSF" = South San Francisco District
"RWS" = Regional Water System "UWMP" = Urban Water Management Plan
Table 7
Projected Normal Year Water Supply and Demand
Southline Specific Plan, South San Francisco, California
Water Supply Source Projected Normal Year Supply and Demand (AFY)
Total Potable Water Demand Inclusive of Project
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2025 2030 2035 2040 2045Projected Water Supply/Demand (AFY)Normal Year -Water Supply and Demand
SSF District Mid-Peninsula District
Bear Gulch District Southline Specific Plan Project (c)
Total Supply (All Districts) (a)
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July 2021
Table 7
Projected Normal Year Water Supply and Demand
Southline Specific Plan, South San Francisco, California
Notes:
(a)
(b)
(c)
(d)
References:
1.
2.Cal Water Demand Model for the South San Francisco District, provided 3 March 2021.
Cal Water Demand Model for the Bear Gulch District, provided 26 February 2021.
Cal Water Demand Model for the Mid-Peninsula District, provided 26 February 2021.
Projected supply is inclusive of supplies available for all three districts that share the same contractual allocation of
water from SFPUC, per Reference 1. The projected purchase volumes are based on having full local supply (i.e., 840
AFY in the Bear Gulch Reservoir and 1,534 AFY from the South San Francisco wells), per Reference 1. Projected SFPUC
supply is based on total demand minus local supplies and does not exceed Cal Water's contractual allocation of 35.68
MGD, or 39,993 AFY.
2020 Urban Water Management Plan, South San Francisco District, prepared by California Water Service, dated June
2021.
Cal Water updated its water demand projections for the SSF, Bear Gulch, and Mid-Peninsula Districts in 2021, per
Reference 2.
527 AFY of water demand associated with the proposed Project was included in the demand projections developed in
support of the SSF District 2020 UWMP. However, in accordance with and through implementation of Cal Water's
Water Neutral Development Policy, the proposed Project will not result in a net increase in demands for the SSF
District. The demand projections included herein have been adjusted accordingly.
Modeling completed in support of SFPUC's 2020 UWMP indicates that the SFPUC RWS will meet all demands during
normal hydrologic years, including those projected in the SSF District 2020 UWMP.
EKI C00070.00 Page 10 of 14
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July 2021
2025 2030 2035 2040 2045
Total Supply (All Districts) (a)23,580 23,546 23,835 23,809 21,039
Demand (b)
SSF District 7,831 7,767 7,925 8,304 8,743
Mid-Peninsula District 14,797 14,908 15,168 15,359 15,662
Bear Gulch District 13,354 13,253 13,285 13,228 13,248
Southline Specific Plan Project (c)-527 -527 -527 -527 -527
35,455 35,401 35,851 36,364 37,126
Supply Shortfall (% demand)33%33%34%35%43%
Abbreviations:
"AFY" = acre feet per year "SSF" = South San Francisco District
"MGD" = millions gallons per day "UWMP" = Urban Water Management Plan
"SFPUC" = San Francisco Public Utilities Commission
Table 8
Single Dry Year Water Supply and Demand
Southline Specific Plan, South San Francisco, California
Water Supply Source Projected Dry Year Supply and Demand (AFY)
Total Potable Water Demand Inclusive of Project
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2025 2030 2035 2040 2045Projected Water Supply/Demand (AFY)Single-Dry Year Water Supply and Demand
SSF District Mid-Peninsula District
Bear Gulch District Southline Specific Plan Project (c)
Total Supply (All Districts) (a)
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EKI Environment & Water, Inc.
July 2021
Table 8
Single Dry Year Water Supply and Demand
Southline Specific Plan, South San Francisco, California
Notes:
(a)
(b)
(c)
References:
1.
2.
3.Cal Water Demand Model for the South San Francisco District, provided 3 March 2021.
Cal Water Demand Model for the Bear Gulch District, provided 26 February 2021.
Cal Water Demand Model for the Mid-Peninsula District, provided 26 February 2021.
2020 Urban Water Management Plan, South San Francisco District, prepared by California Water Service, dated June
2021.
Projected supply is inclusive of supplies available for all three districts that share the same contractual allocation of
water from SFPUC, per Reference 1. The projected purchase volumes are based on having full local supply (i.e., 1,534
AFY) from the South San Francisco wells. Although local surface water diversions in the Bear Gulch District (and
subsequent treatment and use of local surface water) have occurred historically during dry years, the Bear Gulch
District conservatively assumes that local surface water supplies will be zero during single dry and multiple dry years
over the planning horizon, per Reference 2. Projected SFPUC supply is based on dry year allocation projections
included in the SSF, Bear Gulch, and Mid-Peninsula District 2020 UWMPs based on the methodology, assumptions
and information utilized and provided by SFPUC and BAWSCA; however, actual future supply allocations may vary
based on actual shortage levels and the then-applicable allocation methodology being applied by BAWSCA and
SFPUC.
Cal Water updated its water demand projections for the SSF, Bear Gulch, and Mid-Peninsula Districts in
2021, per Reference 3.
2020 Urban Water Management Plan, Bear Gulch District, prepared by California Water Service, dated June 2021.
527 AFY of water demand associated with the proposed Project was included in the demand projections developed in
support of the SSF District 2020 UWMP. However, in accordance with and through implementation of Cal Water's
Water Neutral Development Policy, the proposed Project will not result in a net increase in demands for the SSF
District. The demand projections included herein have been adjusted accordingly.
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EKI Environment & Water, Inc.
July 2021
2025 2030 2035 2040 2045
Supply Source Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5
Total Supply (All Districts) (b)23,615 20,492 20,492 20,492 20,492 23,483 20,383 20,383 20,383 20,383 23,647 20,313 20,313 20,313 18,849 23,762 20,594 20,594 18,424 18,424 20,954 20,954 20,954 18,061 18,061
Demand (c)
SSF District 8,009 8,009 8,009 8,009 8,009 7,943 7,943 7,943 7,943 7,943 8,104 8,104 8,104 8,104 8,104 8,492 8,492 8,492 8,492 8,492 8,940 8,940 8,940 8,940 8,940
Mid-Peninsula District 15,031 15,031 15,031 15,031 15,031 15,143 15,143 15,143 15,143 15,143 15,405 15,405 15,405 15,405 15,405 15,595 15,595 15,595 15,595 15,595 15,900 15,900 15,900 15,900 15,900
Bear Gulch District 13,699 13,699 13,699 13,699 13,699 13,595 13,595 13,595 13,595 13,595 13,629 13,629 13,629 13,629 13,629 13,570 13,570 13,570 13,570 13,570 13,591 13,591 13,591 13,591 13,591
Southline Specific Plan Project (d)-527 -527 -527 -527 -527 -527 -527 -527 -527 -527 -527 -527 -527 -527 -527 -527 -527 -527 -527 -527 -527 -527 -527 -527 -527
36,212 36,212 36,212 36,212 36,212 36,154 36,154 36,154 36,154 36,154 36,611 36,611 36,611 36,611 36,611 37,130 37,130 37,130 37,130 37,130 37,904 37,904 37,904 37,904 37,904
Supply Shortfall (% demand)35%43%43%43%43%35%44%44%44%44%35%45%45%45%49%36%45%45%50%50%45%45%45%52%52%
Total Potable Water Demand
Inclusive of Project
Table 9
Multiple Dry Year Water Supply and Demand
Southline Specific Plan, South San Francisco, California
Projected Water Supply and Demand During Multiple Dry Years (AFY) (a)
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5
2025 2030 2035 2040 2045Projected Water Supply and Demand (AFY)Multiple Dry Year -Water Supply and Demand
SSF District Mid-Peninsula District Bear Gulch District Southline Specific Plan Project (d)Total Supply (All Districts) (b)
EKI C00070.00 Page 13 of 14 EKI Environment & Water, Inc.
July 2021
Table 9
Multiple Dry Year Water Supply and Demand
Southline Specific Plan, South San Francisco, California
Abbreviations:
"AFY" = acre feet per year "SSF" = South San Francisco District
"MGD" = millions gallons per day "UWMP" = Urban Water Management Plan
"SFPUC" = San Francisco Public Utilities Commission "WSA" = Water Supply Assessment
Notes:
(a)
(b)
(c)Cal Water updated its water demand projections for the SSF, Bear Gulch, and Mid-Peninsula Districts in 2021, per Reference 3.
(d)
References:
1.2020 Urban Water Management Plan, South San Francisco District, prepared by California Water Service, dated June 2021.
2.
3.Cal Water Demand Model for the South San Francisco District, provided 3 March 2021.
Cal Water Demand Model for the Bear Gulch District, provided 26 February 2021.
Cal Water Demand Model for the Mid-Peninsula District, provided 26 February 2021.
2020 Urban Water Management Plan, Bear Gulch District, prepared by California Water Service, dated June 2021.
Projected supply is inclusive of supplies available for all three districts that share the same contractual allocation of water from SFPUC, per Reference 1. The projected purchase volumes are based on having full local supply (i.e., 1,534 AFY) from the
South San Francisco wells. Although local surface water diversions in the Bear Gulch District (and subsequent treatment and use of local surface water) have occurred historically during dry years, the Bear Gulch District conservatively assumes that local
surface water supplies will be zero during single dry and multiple dry years over the planning horizon, per Reference 2. Projected SFPUC supply is based on dry year allocation projections included in the SSF, Bear Gulch, and Mid-Peninsula District 2020
UWMPs based on the methodology, assumptions and information utilized and provided by SFPUC and BAWSCA; however, actual future supply allocations may vary based on actual shortage levels and the then-applicable allocation methodology being
applied by BAWSCA and SFPUC.
While WSA regulations only require an analysis of a three-year drought scenario, UWMP regulations were updated in 2018 to include a five-year drought scenario (California Water Code §10635). Therefore, a five-year drought scenario is presented here.
527 AFY of water demand associated with the proposed Project was included in the demand projections developed in support of the SSF District 2020 UWMP. However, in accordance with and through implementation of Cal Water's Water Neutral
Development Policy, the proposed Project will not result in a net increase in demands for the SSF District. The demand projections included herein have been adjusted accordingly.
EKI C00070.00 Page 14 of 14 EKI Environment & Water, Inc.
July 2021
July 2021 Page 47 of 52 EKI C00070.00
7 COMPARISON OF SUPPLY AND DEMAND
Water Code Section 10910
(c) (3) If the projected water demand associated with the proposed project was not accounted for in
the most recently adopted urban water management plan, or the public water system has no
urban water management plan, the water supply assessment for the project shall include a
discussion with regard to whether the public water system's total projected water supplies
available during normal, single dry, and multiple dry water years during a 20-year projection will
meet the projected water demand associated with the proposed project, in addition to the public
water system's existing and planned future uses, including agricultural and manufacturing uses.
Pursuant to CWC §10910c(3), this WSA must include an estimate of the projected water supplies
available to the SSF District under normal, single dry, and multiple dry years, and a discussion of
whether those supplies will meet the projected demand associated with the proposed Project, in
addition to the water system’s existing and planned future uses. This assessment is parallel to
the multiple-dry year supply reliability analysis required for UWMPs under CWC §10635. In 2018,
CWC §10635 was revised to require UWMPs to extend this analysis to consider “a drought lasting
five consecutive water years.” Although CWC §10910c(3) has not yet been updated to require
this for WSAs, a five-year drought scenario is also evaluated herein. However, as discussed in
Section 5, due to implementation of the District’s Water Neutral Development Policy, the
proposed Project is expected to result in a net decrease in water demands to Cal Water’s SSF
District relative to those projected in the 2020 UWMP.
Tables 7 through 9 provide a comparison of the demands and supplies in normal year, single-dry
year, and multiple-dry year hydrologic scenarios for the SSF, Bear Gulch, and Mid-Peninsula
Districts. It is projected that available water supplies will be sufficient to meet the demands under
normal year hydrologic conditions through 2045, inclusive of the proposed Project. However, in
drought periods, shortfalls of up to 52% are possible if, as discussed above, the “worst-case”
supply scenario is realized in which the Bay-Delta Plan Amendment is implemented without the
SFPUC and the SWRCB reaching a Voluntary Agreement and not accounting for the
implementation of actions identified as part of SFPUC’s AWSP, BAWSCA’s LTWSRS, or Cal Water’s
WSRS. As discussed in Section 6.1.1.4, Cal Water is working independently and with the other
BAWSCA agencies to identify regional mitigation measures to improve reliability for regional and
local water supplies and meet its customers’ water needs. As a result, Cal Water expects that
SFPUC’s LOS Goals and Objectives will be met and is comfortable assuming its contract with
SFPUC will be honored as written. Thus, any dry year shortfalls would be expected to be lower
than those shown in Tables 8 and 9.
As described in Section 6, in response to anticipated future dry-year shortfalls, Cal Water has
developed a WSCP that systematically identifies ways in which the SSF District can reduce water
demands during dry years. The overall reduction goals in the WSCP are established for six drought
stages ranging from 10% to greater than 50% shortfalls.
On 12 July 2021, the SFPUC called for voluntary 15% rationing for all wholesale and retail
customers in alignment with Governor Newsom’s Executive Order N-10-21. The RWS has
July 2021 Page 48 of 52 EKI C00070.00
historically met demand in its service area in all year types, and prior to 2021, only called for
voluntary 10% rationing during 2007 to 2009 and 2014 to 2015. Although the SSF District has not
experienced any shortage of RWS deliveries, during the recent drought, it was subject to the
SWRCB’s mandatory water reduction target at 8% between June 2015 and May 2016.16 During
this period, the SSF District surpassed its reduction targets in each month and achieved an
average water demand reduction of 20% compared to its water use in 2013 (SWRCB, 2016). The
Mid-Peninsula and Bear Gulch Districts were required to reduce water use by 16% and 36%,
respectively, and through May 2016 exceeded their targets with cumulative reductions of 24.1%
and 36.7%, respectively (SWRCB, 2016).
While RWS reliability is constrained by hydrology, physical facilities, institutional parameters
including state and federal regulations, the SFPUC is implementing both capital improvement and
planning processes to enhance RWS reliability and meet its contractual commitment to
Wholesale Customers through 2045 (see SFPUC memorandum included as Appendix D). Within
and outside the RWS, BAWSCA is also leading multiple efforts to develop additional water supply
for its member agencies through implementation of its LTWSRS.
Cal Water is also striving to increase the water supply portfolio for the SSF, Mid-Peninsula, and
Bear Gulch Districts through: (1) investment in water conservation, (2) participation in the RGSR
Project and the regional water recycling project (i.e., PREP), and (3) development of a regional
WSRS using integrated resource planning practices to create a long-term supply reliability
strategy through 2050 for Cal Water districts in the Bay Area, among other things as described in
the 2020 UWMPs for each District. As described above, the three Peninsula Districts share access
to Cal Water’s SFPUC supply and, as such, any supply added to one of these Districts will benefit
the others.
16 On 5 May 2015, the SWRCB adopted Resolution 2015-0032 that mandates minimum actions by water suppliers
and their customers to conserve water supplies into 2016 and assigned a mandatory water conservation goal to each
water supplier based on their R-GPCD. The Resolution was adopted pursuant to Executive Order B-29-15 that
directed SWRCB to impose mandatory restrictions on urban water suppliers to achieve a statewide 25% reduction
in potable urban water usage to address California’s severe drought conditions. Based on its R-GPCD, SSF District
was required to reduce water use by 8% relative to its 2013 water use. The Mid-Peninsula and Bear Gulch Districts
were required to reduce water use by 16% and 36%, respectively. All three Peninsula Districts exceeded their
mandatory savings targets by May 2016.
July 2021 Page 49 of 52 EKI C00070.00
8 CONCLUSIONS
As listed in Water Code §10910(c)(4), the primary purpose of this WSA is to evaluate whether
sufficient water supply is available to meet all future water demands within the water supplier’s
service area, including those associated with the proposed Project, during normal and dry
hydrologic years for a 20-year time horizon.
As described in Section 4, the water demand of the proposed Project (i.e., 557 AFY at buildout)
has been conservatively estimated, and as discussed in Section 4.1, due to implementation of the
District’s Water Neutral Development Policy, the proposed Project is not expected to result in a
net increase in water demands to Cal Water’s SSF District. The findings of this WSA are contingent
on the proposed Project’s compliance with the requirements included in the SSF District’s Water
Neutral Development Policy.
It should be noted that if the “worst-case” supply scenario described under Section 6.1.1.2 in
which the Bay-Delta Plan Amendment is implemented without the SFPUC and the SWRCB
reaching a Voluntary Agreement and not accounting for the implementation of actions identified
as part of SFPUC’s AWSP, BAWSCA’s LTWSRS, or Cal Water’s WSRS, shortfalls of up to 52% are
projected during drought years. However, as described in Section 6.1.1, Cal Water expects that
SFPUC’s LOS Goals will be met and is comfortable assuming its contract with SFPUC will be
honored as written. If drought conditions should arise, Cal Water will meet its demands through
the implementation of its WSCP, as described in Section 7. In addition, Cal Water, through local
and regional efforts, is striving to increase its water supply portfolio for the SSF District and the
other two Peninsula Districts.
Therefore, this WSA concludes that, through implementation of the SSF District’s Water
Neutral Development Policy, the proposed Project will not result in a net increase in water
demands and thus will not affect supply reliability within the SSF District. Based on currently
available information and conservative estimates of projected demand, Cal Water expects to
be able to meet all future demands within its existing SSF District service area (as well as the
Mid-Peninsula and Bear Gulch Districts) in normal hydrologic years. The shortfalls that are
currently projected during dry years will be addressed through planned implementation of the
SSF District WSCP. In addition, as described herein and in Cal Water’s 2020 UWMP, BAWSCA,
Cal Water, and SFPUC are exploring the development of additional water supplies to improve
the RWS and SSF District supply reliability.
July 2021 Page 50 of 52 EKI C00070.00
9 REFERENCES
Bay Area Water Supply & Conservation Agency (BAWSCA), 2015. Long-Term Reliable Water
Supply Strategy, Phase II Final Report, dated February 2015.
BAWSCA, 2017. Water Recycling and Potable Reuse, White Paper, prepared by BAWSCA, dated
July 2017.
BAWSCA, 2018a. Fiscal Year 2016-17 Annual Survey, prepared by BAWSCA, dated June 2018.
BAWSCA, 2018b. Statement from Tom Francis, Acting Chief Executive Officer, Before the State
Water Resources Control Board (State Board) in Regards to their “Draft Final Bay-Delta Plan
Update,” Which Could Severely Reduce the Water Supply for Residents and Businesses in
Alameda, San Mateo, and Santa Clara Counties, dated August 2018.
http://bawsca.org/uploads/userfiles/files/08-21-18_BAWSCA's%20SWRCB%20Statement%20-
%20TBF%20Final.pdf
BAWSCA, 2018c. Board Policy Committee Meeting Agenda, December 12, 2018.
http://bawsca.org/uploads/agendas/18_BPC_December12_Agenda_PACKET_FINAL.pdf,
accessed 23 April 2019.
BKF Engineers, 2020. Southline Project – Water Demand, dated 1 May 2020.
Cal Water, 2016a. 2015 Urban Water Management Plan, South San Francisco District, prepared
by California Water Service, dated June 2016.
Cal Water, 2016b. 2015 Urban Water Management Plan, Bear Gulch District, prepared by
California Water Service, dated June 2016.
Cal Water, 2018. SB 610 Water Supply Assessment For 201 Haskins Way Rezoning and General
Plan Amendment Project, prepared by California Water Service, dated September 2018.
Cal Water, 2019a. Water Supply Assessment for South SFPUC Site, dated 24 May 2019, prepared
by EKI Environment & Water, Inc.
Cal Water, 2019b. Cal Water WSA Water Factor Tool, developed by M.Cubed, dated 22 October
2019.
Cal Water, 2020a. Data provided by Cal Water via email, 15 July 2020.
Cal Water, 2020b. Data provided by Cal Water via email, 28 July 2020.
Cal Water, 2020c. 2021-2025 Conservation Master Plan, South San Francisco District, prepared
by California Water Service, dated April 2021.
July 2021 Page 51 of 52 EKI C00070.00
Cal Water, 2021a. 2020 Urban Water Management Plan, South San Francisco District, prepared
by California Water Service, dated June 2021.
Cal Water, 2021b. 2020 Urban Water Management Plan, Bear Gulch District, prepared by
California Water Service, dated June 2021.
Cal Water, 2021c. 2020 Urban Water Management Plan, Mid-Peninsula District, prepared by
California Water Service, dated June 2021
City of South San Francisco, 2020. Notice of Preparation of an EIR and Scoping Meeting for the
Proposed Southline Specific Plan and Related Offsite Improvements, dated 22 May 2020.
Department of Water Resources (DWR), 2003. Guidebook for Implementation of Senate Bill 610
and Senate Bill 221 of 2001: To Assist Water Suppliers, Cities, and Counties in Integrating Water
and Land Use Planning, dated 8 October 2003.
DWR, 2006. California’s Groundwater Bulletin 118, Westside Groundwater Basin, dated January
2006.
DWR, 2016. California’s Groundwater Bulletin 118, Interim Update 2016, dated 22 December
2016.
DWR, 2019. Sustainable Groundwater Management Act 2018 Basin Prioritization, State of
California, dated January 2019.
DWR, 2021. WUEdata - Water Audit Report Data website, accessed 2 July 2021,
(https://wuedata.water.ca.gov/awwa_plans).
Phillips, Steven P., Scott N. Hamlin, Eugene B. Yates. Geohydrology, Water Quality, and
Estimation of Ground-Water Recharge in San Francisco, California 1987-92. US Geological Survey
Water-Resources Investigations Report 93-4019, 1993.
San Francisco Public Utilities Commission, 2016. 2015 Urban Water Management Plan, City and
County of San Francisco District, prepared by the San Francisco Public Utilities Commission, dated
June 2016.
SFPUC, 2018. Amended and Restated Water Supply Agreement between the City and County of
San Francisco and Wholesale Customers in Alameda County, San Mateo and Santa Clara County,
prepared by SFPUC, dated November 2018.
SFPUC, 2019. Water Supply Assessment for the 655 4th Street Project, prepared by the San
Francisco Public Utilities Commission, dated 17 April 2019.
SFPUC, 2021a. 2020 Urban Water Management Plan for the City and County of San Francisco,
prepared by the San Francisco Public Utilities Commission, dated June 2021.
July 2021 Page 52 of 52 EKI C00070.00
SFPUC, 2021b. Regional Groundwater Storage & Recovery,
https://sfwater.org/index.aspx?page=982, accessed 2 July 2021.
SFPUC, 2021c. WSIP Quarterly Reports https://sfwater.org/index.aspx?page=307, accessed 2 July
2021.
SWRCB, 2016. May 2016 Supplier Conservation Compliance, State Water Resources Control
Board, Water Conservation Portal
https://www.waterboards.ca.gov/water_issues/programs/conservation_portal/conservation_r
eporting.html.
WRIME, 2012. South Westside Basin Groundwater Management Plan, City and County of San
Francisco, prepared by the San Francisco Public Utilities Commission, City of San Bruno, Daly City,
and Cal Water South San Francisco District, dated July 2012.
Appendix A
Project Proponent Demand Projections
IRRIGATION5AMENITY3R&D1(GPD)0.21 0.071 6 113 317,495 317,49566,674 66,674234 71 88,200 88,200 53,0400 53,0407 6 113 295,220 295,22061,996 61,9963 6 113 447,335 447,33593,940 93,9404 6 113 411,000 411,00086,310 86,3106 6 113 465,800 465,80097,818 97,818TOTAL:2,025,05088,2001,936,85053,040406,739459,77918,228515AFY420 AFYNotes:1Demand factors based on Redwood City values for Water Demand per SF: R&D = 0.21 GPD / SF2Building heights include 15' mechanical roof screen34Annual indoor water demand (Acre-Feet per Year) based on 365 days of use per year.5Irrigation demand = 3.5 CF / SF / Year (0.07 GPD/SF), per Redwood City demand factors.6Landscape area based on conceptual landscape plans as contemplated under Southline Specific Plan; calculated across entire project site.7Fire Flow requirement to be 3,000 GPM, 4-hour duration, per hydrant.See Table A "Amenity Building - Water Demand" for modeling of Amenity Building water uses based on Redwood City demand factors.Total Annual Indoor Demand =Total Annual Irrigation Demand =260,400LANDSCAPE AREA (SF)618,228SOUTHLINE PROJECT - WATER DEMAND11/25/2020PROPOSED DOMESTIC WATER DEMAND - LIFE SCIENCEPROPOSED BUILDINGNO. OF STORIESBUILDING HEIGHT2 (FT)TOTAL AREA (GSF)DESIGN USE (SF) DEMAND (GPD)INDOOR DEMAND (GPD)AMENITY R&D11/25/2020BKF Engineers#180624
IRRIGATION4OFFICE1R&D1(GPD)0.13 0.21 0.0716101323,975194,385129,59025,27027,214 3,78056,264234 71 88,200 88,200 0 11,4660 1,54413,01036101560,525336,315224,21043,72147,084 6,53997,34547115439,175263,505175,67034,25636,891 4,39275,53857115325,885195,531130,35425,41927,374 3,25956,05267115707,975424,785283,19055,22259,470 7,080121,77276101301,245180,747120,49823,49725,305 3,51552,316TOTAL:2,746,9801,683,4681,063,512218,851223,33830,108472,296Notes:1Demand factors based on Redwood City values for Water Demand per SF:Office = 0.13 GPD / SF; R&D = 0.21 GPD / SF2Building heights include 15' mechanical roof screen3Building 2, the Amenity Building (Retail / Event / Fitness), is modeled as Office4Irrigation demand = 3.5 CF / SF / Year (0.07 GPD/SF); Area assumed to be footprint of one floor for multi-story buildings5Fire Flow requirement to be 3,000 GPM, 4-hour duration, per hydrant.SOUTHLINE PROJECT - WATER DEMANDWSA SUPPORT INFORMATIONPROPOSED DOMESTIC WATER DEMAND - 60% OFFICE / 40% R&D MIXPROPOSED BUILDINGBUILDING HEIGHT2 (FT)TOTAL AREA (GSF)TOTAL DEMAND (GPD)DEMAND (GPD)OFFICE R&DNO. OF STORIESDESIGN USE (SF)5/1/2020BKF Engineers#180624
Appendix B
California Water Service Water Neutral Development Policy
Appendix C
Documentation of Water Supply Agreements (excluding attachments)
1 15118728.1
AMENDED AND RESTATED
WATER SUPPLY AGREEMENT
between
THE CITY AND COUNTY OF SAN FRANCISCO
and
WHOLESALE CUSTOMERS
in
ALAMEDA COUNTY, SAN MATEO COUNTY AND
SANTA CLARA COUNTY
NOVEMBER 2018
2 15118728.1
TABLE OF CONTENTS
Article 1. Parties, Effective Date, And Defined Terms .............................................................. 1
1.01. Definitions ................................................................................................................. 1
1.02. Parties ...................................................................................................................... 1
1.03. Effective Date ........................................................................................................... 2
Article 2. Term; Amendments During Term .............................................................................. 4
2.01. Term ......................................................................................................................... 4
2.02. Extension and Renewal of Term ............................................................................... 4
2.03. Amendments ............................................................................................................ 5
Article 3. Water Supply ............................................................................................................ 8
3.01. Supply Assurance ..................................................................................................... 8
3.02. Allocation of Supply Assurance ................................................................................. 9
3.03. Wholesale Customer Service Areas ........................................................................10
3.04. Permanent Transfers of Individual Supply Guarantees ............................................12
3.05. Restrictions on Resale .............................................................................................13
3.06. Conservation; Use of Local Sources; Water Management Charge ..........................13
3.07. Restrictions on Purchases of Water from Others; Minimum Annual Purchases .......14
3.08. Water Quality ...........................................................................................................15
3.09. Completion of WSIP ................................................................................................15
3.10. Regional Water System Repair, Maintenance and Operation ..................................16
3.11. Shortages ................................................................................................................16
3.12. Wheeling of Water from Outside SFPUC System ....................................................19
3.13. Limits on New Customers ........................................................................................19
3.14. Measurement of Water ............................................................................................21
3.15. New Sources of Water Supply to Maintain Supply Assurance .................................23
3.16. New Sources of Water Supply to Increase Supply Assurance .................................24
3.17. Westside Basin Groundwater Storage and Recovery Project ..................................24
3.18. Water Supply Agreement Amendment Required. ....................................................29
Article 4. Implementation of Interim Supply Limitation. ............................................................31
4.01. Interim Supply Limitation Imposed by SFPUC .........................................................31
4.02. Retail and Wholesale Customer Allocations Under Interim Supply Limitation ..........31
4.03. Transfers of Interim Supply Allocations ....................................................................31
4.04. Environmental Enhancement Surcharge ..................................................................32
4.05. San Jose/ Santa Clara Interim Supply Allocation and Process for Reduction/ Termination. .............................................................................................................34
4.06. San Francisco Decisions in 2028 Regarding Future Water Supply ..........................36
3 15118728.1
4.07. Retained Discretion of SFPUC and Wholesale Customers ......................................36
Article 5. Wholesale Revenue Requirement ...........................................................................38
5.01. Scope of Agreement ................................................................................................38
5.02. General Principles ...................................................................................................38
5.03. Capital Cost Recovery - Existing Regional Assets ...................................................40
5.04. Capital Cost Contribution - New Regional Assets ....................................................42
5.05. Water Enterprise Operation and Maintenance Expenses .........................................44
5.06. Water Enterprise Administrative and General Expenses ..........................................46
5.07. Water Enterprise Property Taxes .............................................................................48
5.08. Hetch Hetchy Enterprise Expenses .........................................................................48
5.09. Hetch Hetchy Enterprise Capital Costs ....................................................................50
5.10. Additional Agreements Related to Financial Issues .................................................51
5.11. Classification of Existing System Assets. .................................................................54
Article 6. Integration of Wholesale Revenue Requirement with SFPUC Budget Development and Rate Adjustments .............................................................................................57
6.01. General ....................................................................................................................57
6.02. Budget Development ...............................................................................................57
6.03. Rate Adjustments ....................................................................................................57
6.04. Rate Structure .........................................................................................................59
6.05. Balancing Account ...................................................................................................60
6.06. Wholesale Revenue Coverage Reserve ..................................................................62
6.07. Working Capital Requirement ..................................................................................64
6.08. Wholesale Capital Fund ...........................................................................................65
6.09. SFPUC Adoption of Regional Water System 10-Year Capital Improvement Program .............................................................................................67
Article 7. Accounting Procedures; Compliance Audit ..............................................................72
7.01. SFPUC Accounting Principles, Practices .................................................................72
7.02. Calculation of and Report on Wholesale Revenue Requirement ..............................73
7.03. Appointment of Compliance Auditor .........................................................................74
7.04. Conduct of Compliance Audit ..................................................................................75
7.05. Issuance of Compliance Auditor’s Report ................................................................77
7.06. Wholesale Customer Review ...................................................................................78
Article 8. Other Agreements of the Parties ..............................................................................79
8.01. Arbitration and Judicial Review ................................................................................79
8.02. Attorneys’ Fees ........................................................................................................83
8.03. Annual Meeting and Report .....................................................................................84
8.04. 8.04 Administrative Matters Delegated to BAWSCA ................................................85
4 15118728.1
8.05. Preservation of Water Rights; Notice of Water Rights Proceedings .........................86
8.06. SFPUC Rules and Regulations ................................................................................86
8.07. Reservations of, and Limitations on, Claims ............................................................87
8.08. Prohibition of Assignment ........................................................................................89
8.09. Notices ....................................................................................................................90
8.10. Incorporation of Attachments ...................................................................................91
8.11. Interpretation ...........................................................................................................91
8.12. Actions and Approvals by San Francisco .................................................................91
8.13. Counterparts ............................................................................................................91
8.14. Limitations on Damages ..........................................................................................92
8.15. Force Majeure .........................................................................................................92
8.16. No Third-Party Beneficiaries ....................................................................................93
8.17. Good Faith and Fair Dealing ....................................................................................93
Article 9. Implementation and Special Provisions Affecting Certain Wholesale Customers .....94
9.01. 9.01 General; Individual Water Sales Contracts .......................................................94
9.02. California Water Service Company ..........................................................................94
9.03. City of Hayward .......................................................................................................96
9.04. Estero Municipal Improvement District .....................................................................97
9.05. Stanford University ..................................................................................................97
9.06. City of San Jose and City of Santa Clara .................................................................98
9.07. City of Brisbane, Guadalupe Valley Municipal Improvement District, Town of Hillsborough.............................................................................................................99
5 15118728.1
LIST OF ATTACHMENTS
A Definitions
B Wholesale Customer Regional Water System Purchases 2007-2008 (Section 1.03)
C List of Agencies and Individual Supply Guarantees (Section 3.02)
D Procedure for Pro Rata Reduction of Individual Supply Guarantees if Total Use Exceeds 184 MGD (Section 3.02)
E Minimum Quantities for Dual Source Agencies (Section 3.07.C)
F Sample Individual Water Sales Contract (Section 9.01)
G Water Quality Notification and Communications Plan (Section 3.08.B)
H Tier 1 Shortage Plan (Section 3.11.C)
I NOT USED
J Water Use Measurement and Tabulation (Section 3.14)
K-1 Wholesale Customers’ Share of Net Book Value of Existing Assets (Section 5.03)
K-2 Wholesale Customers’ Share of the Revenue-Funded Capital Expenditures (Section 5.03)
K-3 Annual Payments for Wholesale Share of 6/30/09 Net Plant & CWIP (Water Assets) (Section 5.03)
K-4 Annual Payments for Wholesale Share of 6/30/09 Net Plant & CWIP (Hetch Hetchy Assets) (Section 5.03)
K-5 10-Year Payoff Schedules for Existing Rate Base (Section 5.03)
L-1 Identification of WSIP Projects as Regional/Retail (Section 5.04)
L-2 Certificate of Use of Proceeds (Section 5.04.A)
L-3 Annual Report on Expenditures of and Earnings on Proceeds (Section 5.04.A)
M-1 Revenue-Funded Capital Additions (Section 5.04.B)
M-2 Revenue-Funded Capital Annual Reporting Requirements (Section 5.04.B)
M-3 Wholesale Capital Fund and Balancing Account Adjustment (Section 6.08)
N-1 Balancing Account/Rate Setting Calculation Table (Section 6.03.A.3.a)
N-2 Wholesale Revenue Requirement Schedules (Section 6.03.A.3.b)
6 15118728.1
N-3 Schedule of Projected Water Sales, Wholesale Revenue Requirement and Wholesale Rates (Section 6.03.A.3.c)
O Statement of Wholesale Revenue Requirement/Changes in Balancing Account (Section 7.02.B.1)
P Management Representation Letter (Section 7.02.B.5)
Q-1 San Jose Service Area (Section 9.06)
Q-2 Santa Clara Service Area (Section 9.06)
R Classification of Existing System Assets (Section 5.11)
1 15118728.1
AMENDED AND RESTATED
WHOLESALE WATER SUPPLY AGREEMENT
Introductory Statement
Both San Francisco, as the Regional Water System owner and operator, and its Wholesale
Customers share a commitment to the Regional Water System providing a reliable supply of
high quality water at a fair price, and achieving these goals in an environmentally sustainable
manner.
Article 1. Parties, Effective Date, And Defined Terms
1.01. Definitions
The capitalized terms used in this Agreement shall have the meanings set forth in Attachment
A.
1.02. Parties
The parties to this Agreement are the City and County of San Francisco and such of the
following entities (all of which purchase water from San Francisco) as have executed this
Agreement:
Alameda County Water District
California Water Service Company
City of Brisbane
City of Burlingame
City of Daly City
City of East Palo Alto
City of Hayward
City of Menlo Park
City of Millbrae
City of Milpitas
City of Mountain View
City of Palo Alto
2 15118728.1
City of Redwood City
City of San Bruno
City of San José
City of Santa Clara
City of Sunnyvale
Coastside County Water District
Estero Municipal Improvement District
Guadalupe Valley Municipal Improvement District
Mid-Peninsula Water District
North Coast County Water District
Purissima Hills Water District
Stanford University
Town of Hillsborough
Westborough Water District
The entities listed above which have executed this Agreement shall be collectively referred to as
the “Wholesale Customers.”
1.03. Effective Date
A. Except as provided in subsection C, this Agreement shall become effective only
when it has been approved by San Francisco and by each of the entities listed in Section 1.02
and when San Francisco and each of those entities (except for the City of Hayward) have
entered into an Individual Water Sales Contract as provided in Section 9.01.
B. If San Francisco and all of the entities listed in Section 1.02 approve this
Agreement and (except for the City of Hayward) an Individual Water Sales Contract on or before
July 1, 2009, the effective date shall be July 1, 2009. If San Francisco and all of the entities
listed in Section 1.02 approve this Agreement and (except for the City of Hayward) an Individual
Water Sales Contract after July 1, 2009 but on or before September 1, 2009, the effective date
shall be the date on which the last entity listed in Section 1.02 approves this Agreement and, if
required, an Individual Water Sales Contract.
C. If by September 1, 2009 this Agreement has been approved by fewer than all of
the entities listed in Section 1.02 or fewer than all of such entities (other than the City of
Hayward) have entered into an Individual Water Sales Contract, but it has been approved by
entities representing at least 75% in number and 75% of the water purchased from SFPUC by
3 15118728.1
all listed agencies during FY 2007-08 (i.e., 173.39 MGD), then San Francisco shall have the
option to waive the requirement in subsection A that all listed agencies have approved this
Agreement and an Individual Water Sales Contract as a condition precedent to this Agreement
and any Individual Water Sales Contract becoming effective. San Francisco shall have 60 days
from September 1, 2009 (i.e., until October 31, 2009) within which to decide whether or not to
waive the condition. If San Francisco decides to waive the condition, those listed agencies that
have approved this Agreement and Individual Water Sales Contract before October 31, 2009
will be bound thereby and this Agreement and Individual Water Sales Contracts will become
effective as to them, as of the date of San Francisco’s waiver. For purposes of determining
whether listed agencies that have approved this Agreement represent at least 75% of the water
purchased during FY 2007-08, the quantity of water attributable to each listed entity shall be as
set forth on Attachment B.
D. he provisions of Article 9 that apply to fewer than all Wholesale Customers (i.e.,
Sections 9.02 - 9.07) shall not become effective unless San Francisco and the entity to which
the section applies have each approved (1) this Agreement, and (2) the underlying Individual
Water Sales Contract, unless otherwise provided in Article 9. This provision does not affect the
continued enforceability of provisions in those sections that derive from independently
enforceable judgments, orders or agreements.
4 15118728.1
Article 2. Term; Amendments During Term
2.01. Term
The term ("Term") of this Agreement shall be twenty five (25) years. The Term shall begin on
July 1, 2009, regardless of whether the Effective Date is before or after that date, and shall end
on June 30, 2034. Except as provided in Article 9, the term of all Individual Water Sales
Contracts shall also begin on July 1, 2009 and end on June 30, 2034.
2.02. Extension and Renewal of Term
A. In December 2031, the SFPUC may provide written notice to the Wholesale
Customers that it is willing to extend the Term of this Agreement. Between January 1, 2032 and
June 30, 2032, any Wholesale Customer may accept the SFPUC's offer to extend the Term by
providing a written notice of extension to the SFPUC. If such notices of extension are received
from Wholesale Customers representing at least two-thirds in number as of June 30, 2032 and
seventy five percent (75%) of the quantity of water delivered by the SFPUC to all Wholesale
Customers during fiscal year 2030-31, the Term shall be extended for another five (5) years
("First Extension Term"), through June 30, 2039. No party to this Agreement which does not
wish to remain a party during the Extension Term shall be compelled to do so by the actions of
other parties under this section.
B. In December 2036, the SFPUC may provide written notice to the Wholesale
Customers that it is willing to extend the Term of this Agreement. Between January 1, 2037 and
June 30, 2037, any Wholesale Customer may accept the SFPUC's offer to extend the Term by
providing a written notice of extension to the SFPUC. If such notices of extension are received
from Wholesale Customers representing at least two-thirds in number as of June 30, 2037 and
seventy five percent (75%) of the quantity of water delivered by the SFPUC to all Wholesale
Customers during fiscal year 2035-36, the Term shall be extended for another five (5) years
("Second Extension Term"), through June 30, 2044. No party to this Agreement which does not
wish to remain a party during the Extension Term shall be compelled to do so by the actions of
other parties under this section.
C. After the expiration of the Term, and, if applicable, the Extension Terms, this
Agreement may be renewed by mutual consent of the parties, subject to any modifications
thereof which may be determined at that time. If fewer than all of the parties desire to renew
this Agreement beyond its Term, with or without modifications, the SFPUC and the Wholesale
5 15118728.1
Customers who wish to extend the Agreement shall be free to do so, provided that no party to
this Agreement which does not wish to become a party to such a renewed Agreement shall be
compelled to do so by the actions of other parties under this section.
2.03. Amendments
A. Amendments to Agreement; General
1. This Agreement may be amended with the written consent of all parties.
2. This Agreement may also be amended with the written consent of San
Francisco and of Wholesale Customers representing at least two-thirds in number (i.e., 18 as of
July 1, 2009) and seventy five percent (75%) of the quantity of water delivered by San Francisco
to all Wholesale Customers during the fiscal year immediately preceding the amendment.
3. No amendment which adversely affects a Fundamental Right of a
Wholesale Customer may be made without the written consent of that customer. Amendments
to Article 5 which merely affect the allocation of costs between City Retail customers on the one
hand and Wholesale Customers collectively on the other, and amendments to Articles 6 and 7
which merely alter budgetary, accounting and auditing procedures do not affect Fundamental
Rights and may be made with the consent of parties meeting the requirements of Section
2.03.A.2.
4. When an amendment has been approved by San Francisco and the
number of Wholesale Customers required in Section 2.03.A.2, San Francisco shall notify each
of the Wholesale Customers in writing of the amendment's adoption. Notwithstanding any
provision of law or this Agreement, any Wholesale Customer that claims that the amendment
violates its Fundamental Rights under Section 2.03.A.3, shall have 30 days from the date San
Francisco delivers the notice of its adoption in which to challenge the amendment’s validity
through a judicial action. If no such action is filed within 30 days, the amendment shall be finally
and conclusively deemed to have been adopted in compliance with this section.
B. Amendments to Article 9
1. Notwithstanding the provisions of Sections 2.03.A.2 and 2.03.A.3, any
provision of Article 9 which applies only to an individual Wholesale Customer may be amended
with the written concurrence of San Francisco and the Wholesale Customer to which it applies;
6 15118728.1
provided that the amendment will not, directly or indirectly, adversely affect the Fundamental
Rights of the other Wholesale Customers.
2. Before making any such amendment effective, San Francisco shall give
notice, with a copy of the text of the proposed amendment, to all other Wholesale Customers.
The Wholesale Customers shall have 30 days in which to object to the amendment on the
ground that it is not permissible under this subsection. If no such objection is received by San
Francisco, the proposed amendment shall become effective. If one or more Wholesale
Customers object to the amendment, San Francisco, the individual Wholesale Customer with
which San Francisco intends to effect the amendment, and the Wholesale Customer(s) which
lodged the objection shall meet to discuss the matter.
3. If the dispute cannot be resolved and San Francisco and the Wholesale
Customer involved elect to proceed with the amendment, either San Francisco or the Wholesale
Customer shall give written notice of such election to each Wholesale Customer that has
objected. Any Wholesale Customer that has objected to such amendment shall have 30 days
from receipt of this notice within which to commence an action challenging the validity of such
amendment, and such amendment shall be deemed effective as of the end of this 30-day period
unless restrained by order of court.
C. Amendments to Attachments. The following attachments may be amended
with the written concurrence of San Francisco and BAWSCA on behalf of the Wholesale
Customers:
Attachment Name
G January 2006 Water Quality Notification and Communications
Plan
J Water Use Measurement and Tabulation
L-1 Identification of WSIP Projects as Regional/Retail
N-1 Balancing Account/Rate Setting Calculation Table
N-2 Wholesale Revenue Requirement Schedules
N-3 Schedule of Projected Water Sales, Wholesale Revenue
Requirement and Wholesale Rates
P Management Representation Letter
7 15118728.1
R Classification of Existing System Assets (subject to Section
5.11)
Amendments to these attachments shall be approved on behalf of San Francisco by the
Commission and on behalf of BAWSCA by its Board of Directors, unless the Commission by
resolution delegates such authority to the General Manager of the SFPUC or the Board of
Directors by resolution delegates such authority to the General Manager/CEO of BAWSCA.
D. Amendments to Individual Water Sales Contracts. Individual Water Sales
Contracts described in Section 9.01 may be amended with the written concurrence of San
Francisco and the Wholesale Customer which is a party to that Individual Water Sales Contract;
provided that the amendment is not inconsistent with this Agreement or in derogation of the
Fundamental Rights of other Wholesale Customers under this Agreement.
8 15118728.1
Article 3. Water Supply
3.01. Supply Assurance
A. San Francisco agrees to deliver water to the Wholesale Customers up to the
amount of the Supply Assurance. The Supply Assurance is for the benefit of the entities listed
in Section 1.02, irrespective of whether or not they have executed this Agreement. Water
delivered by San Francisco to Retail Customers shall not be included in the Supply Assurance.
Until December 31, 2018, the foregoing commitment is subject to Article 4.
B. Both the Supply Assurance and the Individual Supply Guarantees identified in
Section 3.02 are expressed in terms of daily deliveries on an annual average basis and do not
themselves constitute a guarantee by San Francisco to meet peak daily or hourly demands of
the Wholesale Customers, irrespective of what those peak demands may be. The parties
acknowledge, however, that the Regional Water System has been designed and constructed to
meet peak daily and hourly demands and that its capacity to do so has not yet been reached.
San Francisco agrees to operate the Regional Water System to meet peak requirements of the
Wholesale Customers to the extent possible without adversely affecting its ability to meet peak
demands of Retail Customers. This Agreement shall not preclude San Francisco from
undertaking to meet specific peak demand requirements of individual Wholesale Customers in
their Individual Water Sales Contracts.
C. The Supply Assurance is perpetual and shall survive the expiration or earlier
termination of this Agreement. Similarly, the Individual Supply Guarantees identified in Section
3.02 and/or the Individual Water Sales Contracts are perpetual and shall survive the expiration
or earlier termination of this Agreement or the Individual Water Sales Contracts.
D. Notwithstanding the Supply Assurance established by this section, the Individual
Supply Guarantees identified in Section 3.02 and the Individual Water Sales Contracts, the
amount of water made available by San Francisco to the Wholesale Customers is subject to
reduction, to the extent and for the period made necessary by reason of water shortage,
Drought, Emergencies, or by malfunctioning or rehabilitation of facilities in the Regional Water
System. Any such reduction will be implemented in accordance with Section 3.11. The amount
of water made available to the Wholesale Customers may not be reduced, however, merely
because the water recycling and groundwater projects which the WSIP envisions to be
constructed within San Francisco, or the conservation programs intended to reduce water use
9 15118728.1
by Retail Customers that are included in the WSIP, do not generate the yield or savings (10
MGD combined) anticipated by San Francisco.
3.02. Allocation of Supply Assurance
A. Pursuant to Section 7.02 of the 1984 Agreement, a portion of the Supply
Assurance has been allocated among 24 of the 26 Wholesale Customers. These Individual
Supply Guarantees are also expressed in terms of annual average metered deliveries of
millions of gallons per day and are listed in Attachment C.
B. Three Wholesale Customers do not have Individual Supply Guarantees. The
cities of San Jose and Santa Clara do not have an Individual Supply Guarantees because San
Francisco has provided water to them on a temporary and interruptible basis as described in
Sections 4.05 and 9.06. The City of Hayward does not have an Individual Supply Guarantee
because of the terms of the 1962 contract between it and San Francisco, as further described in
Section 9.03.
C. If the total amount of water delivered by San Francisco to Hayward and to the
Wholesale Customers that are listed on Attachment C exceeds 184 MGD over a period of three
consecutive fiscal years (i.e., July 1 through June 30), then the Individual Supply Guarantees of
those Wholesale Customers listed on Attachment C shall be reduced pro rata so that their
combined entitlement and the sustained use by Hayward does not exceed 184 MGD. The
procedure for calculating the pro rata reduction in Individual Supply Guarantees is set out in
Attachment D.
1. The provisions of this subsection C are not in derogation of the
reservation of claims to water in excess of the Supply Assurance which are contained in Section
8.07. Nor do they constitute an acknowledgement by Wholesale Customers other than
Hayward that San Francisco is obligated or entitled to reduce their Individual Supply
Guarantees in the circumstances described herein. The provisions of this subsection C shall,
however, be operative unless and until a court determines that its provisions violate rights of the
Wholesale Customers derived independently of this Agreement.
2. The foregoing paragraph is not intended to and shall not constitute a
contractual commitment on the part of San Francisco to furnish more water than the Supply
Assurance to the Wholesale Customers or a concession by San Francisco that the provisions of
this subsection violate any rights of the Wholesale Customers.
10 15118728.1
D. Notwithstanding the reservation of claims contained in Sections 3.02.C and 8.07,
it shall be the responsibility of each Wholesale Customer to limit its purchases of water from
San Francisco so as to remain within its Individual Supply Guarantee. San Francisco shall not
be liable to any Wholesale Customer or be obligated to supply more water to any Wholesale
Customer individually or to the Wholesale Customers collectively than the amount to which it or
they are otherwise entitled under this Agreement due to the use by any Wholesale Customer of
more water than the amount to which it is entitled under this Agreement.
E. San Francisco shall install such new connections between the Regional Water
System and the distribution system of any Wholesale Customer that are necessary to deliver
the quantities of water to which the Wholesale Customer is entitled under this Agreement. San
Francisco shall have the right to determine the location of such connections, in light of the need
to maintain the structural integrity of the Regional Water System and, where applicable, the
need to limit peaking directly off of Regional Water System pipelines by a Wholesale Customer's
individual retail customers, the need to ensure that a Wholesale Customer's individual retail
customers have access to alternative sources of water in the event of a reduction in San
Francisco's ability to provide them with water, and other factors which may affect the desirability
or undesirability of a particular location. San Francisco's decisions regarding the location of
new connections and the location, size and type of any new meters shall not be reviewable by a
court except for an abuse of discretion or failure to provide a Wholesale Customer with
connections and meters adequate to deliver the quantity of water to which it is entitled under
this Agreement.
3.03. Wholesale Customer Service Areas
A. Each of the Individual Water Sales Contracts described in Section 9.01 will
contain, as an exhibit, a map of the Wholesale Customer’s service area. A Wholesale
Customer may not deliver water furnished to it by San Francisco outside the boundary of its
service area without the prior written consent of San Francisco, except for deliveries to another
Wholesale Customer on an emergency and temporary basis pursuant to Section 3.07.B.
B. If a Wholesale Customer wishes to expand its service area, it shall request San
Francisco's consent to the expansion and provide information reasonably requested by San
Francisco about the amount of water projected to be purchased from San Francisco to meet
demand within the area proposed to be added to the service area.
11 15118728.1
C. San Francisco may refuse a Wholesale Customer's request to expand its service
area on any reasonable basis. If San Francisco denies a request by a Wholesale Customer to
expand its service area, or fails to act on the request for six months after it has been submitted,
the Wholesale Customer may challenge San Francisco's denial or delay in court. Such a
challenge may be based on the Wholesale Customers’ claim, reserved in Section 8.07, that San
Francisco is obligated under federal or state law to furnish water, included within its Individual
Supply Guarantee, to it for delivery outside its then-existing service area and that it is entitled to
enlarge its service area to supply water to such customers. San Francisco reserves the right to
contest any such claim on any applicable ground. This subsection does not apply to San Jose
and Santa Clara, whose maximum service areas are fixed pursuant to Section 9.06.
D. This section will not prevent San Francisco and any Wholesale Customer, other
than San Jose and Santa Clara, from agreeing in an Individual Water Sales Contract or an
amendment thereto that:
• the Wholesale Customer may expand its service area without subsequent San Francisco approval to a definitive size but no larger, or
• the Wholesale Customer will not expand its service area beyond its present limits without San Francisco approval
and waiving the provisions of this section with respect to any additional expansion.
E. If two or more Wholesale Customers agree to adjust the boundaries of their
respective service areas so that one assumes an obligation to serve customers in an area that
was previously within the service area of another Wholesale Customer, they may also
correspondingly adjust their respective Individual Supply Guarantees. Such adjustments are
not subject to the requirements of Section 3.04 and shall require only the consent of San
Francisco and the Wholesale Customers involved, so long as the Supply Assurance and the
Individual Supply Guarantees of other Wholesale Customers are not affected. Service area
boundary adjustments that would result in the expansion of any California Water Service
Company service areas are subject to the requirements of Section 9.02.D. Any adjustment of
service area boundaries that would result in the supply of water in violation of this Agreement or
the Act shall be void.
F. San Francisco acknowledges that it has heretofore consented in writing to
deliveries of water by individual Wholesale Customers outside their service area boundaries and
12 15118728.1
agrees that nothing in this Agreement is intended to affect such prior authorizations, which
remain in full force and effect according to their terms. Such authorizations shall be identified in
the Individual Water Sales Contracts.
3.04. Permanent Transfers of Individual Supply Guarantees
A. A Wholesale Customer that has an Individual Supply Guarantee may transfer a
portion of it to one or more other Wholesale Customers, as provided in this section.
B. Transfers of a portion of an Individual Supply Guarantee must be permanent.
The minimum quantity that may be transferred is 1/10th of a MGD.
C. Transfers of portions of Individual Supply Guarantees are subject to approval by
the SFPUC. SFPUC review is limited to determining (1) whether a proposed transfer complies
with the Act, and (2) whether the affected facilities in the Regional Water System have sufficient
capacity to accommodate delivery of the increased amount of water to the proposed transferee.
D. The participants in a proposed transfer shall provide notice to the SFPUC
specifying the amount of the Individual Supply Guarantee proposed to be transferred, the
proposed effective date of the transfer, which shall not be less than 60 days after the notice is
submitted to the SFPUC, and the Individual Supply Guarantees of both participants resulting
from the transfer. The SFPUC may require additional information reasonably necessary to
evaluate the operational impacts of the transfer. The SFPUC will not unreasonably withhold or
delay its approval; if the SFPUC does not act on the notice within 60 days, the transfer will be
deemed to have been approved.
E. Within 30 days after the transfer has become effective, both the transferor and
the transferee will provide notice to the SFPUC and BAWSCA. By September 30 of each year
during the Term, the SFPUC and BAWSCA will prepare an updated Attachment C to reflect
transfers occurring during the immediately preceding fiscal year.
F. Amounts transferred will remain subject to pro rata reduction under the
circumstances described in Section 3.02.C and according to the formula set forth in
Attachment D.
13 15118728.1
3.05. Restrictions on Resale
Each Wholesale Customer agrees that it will not sell any water purchased from San
Francisco to a private party for resale by such private party to others in violation of the Act.
Each Wholesale Customer also agrees that it will not sell water purchased from San
Francisco to another Wholesale Customer without prior written approval of the SFPUC, except
on a temporary and emergency basis as permitted in Section 3.07.B.2. The SFPUC agrees that
it will not unreasonably withhold its consent to a request by a Wholesale Customer to deliver
water to another Wholesale Customer for resale.
3.06. Conservation; Use of Local Sources; Water Management Charge
A. In order to support the continuation and expansion of water conservation
programs, water recycling, and development of alternative supplies within the Wholesale
Customers’ service areas, the SFPUC will, if requested by BAWSCA, include the Water
Management Charge in water bills sent to Wholesale Customers. The SFPUC will deliver all
Water Management Charge revenue to BAWSCA monthly and shall deliver an annual
accounting of Water Management Charge revenue to BAWSCA within 90 days after the end of
each fiscal year. The SFPUC’s obligations to collect and deliver Water Management Charge
revenue to BAWSCA under this subsection are conditioned on BAWSCA’s delivery to the
SFPUC of an annual report describing the projects and programs on which Water Management
Charge funds received from the SFPUC during the previous fiscal year were expended and an
estimate of the amount of water savings attributable to conservation programs and of the yield
of alternative supplies developed. This report will be due within 180 days after the end of each
fiscal year during which Water Management Charge funds were received.
B. The SFPUC will work together with BAWSCA to explore ways to support water
conservation programs, recycling projects, and conjunctive use alternatives outside the
Wholesale Service Area, in particular projects and programs that have the potential to increase
both flows in the lower Tuolumne River (downstream of New Don Pedro Reservoir) and water
deliveries to the Regional Water System.
C. Each Wholesale Customer shall take all actions within its legal authority related
to water conservation that are necessary to insure that the SFPUC (a) remains eligible for (i)
state and federal grants and (ii) access to the Drought Water Bank operated by the California
Department of Water Resources, as well as other Drought-related water purchase or transfer
14 15118728.1
programs, and (b) complies with future legal requirements imposed on the Regional Water
System by the federal government, the State, or any other third party as conditions for receiving
funding or water supply.
D. San Francisco and each Wholesale Customer agree that they will diligently apply
their best efforts to use both surface water and groundwater sources located within their
respective service areas and available recycled water to the maximum feasible extent, taking
into account the environmental impacts, the public health effects and the effects on supply
reliability of such use, as well as the cost of developing such sources.
3.07. Restrictions on Purchases of Water from Others; Minimum Annual Purchases
A. Each Wholesale Customer (except for Alameda County Water District and the
cities of Milpitas, Mountain View and Sunnyvale) agrees that it will not contract for, purchase or
receive, with or without compensation, directly or indirectly, from any person, corporation,
governmental agency or other entity, any water for delivery or use within its service area without
the prior written consent of San Francisco.
B. The prohibition in subsection A does not apply to:
1. recycled water;
2. water necessary on an emergency and temporary basis, provided that the
Wholesale Customer promptly gives San Francisco notice of the nature of the emergency, the
amount of water that has been or is to be purchased, and the expected duration of the
emergency; or
3. water in excess of a Wholesale Customer’s Individual Supply Guarantee.
C. Alameda County Water District and the cities of Milpitas, Mountain View and
Sunnyvale may purchase water from sources other than San Francisco, provided that San
Francisco shall require that each purchase a minimum annual quantity of water from San
Francisco. These minimum quantities are set out in Attachment E and shall also be included in
the Individual Water Sales Contracts between San Francisco and each of these four Wholesale
Customers. The minimum purchase requirement in these Individual Water Sales Contracts will
be waived during a Drought or other period of water shortage if the water San Francisco makes
available to these Wholesale Customers is less than its minimum purchase quantity.
15 15118728.1
3.08. Water Quality
A. San Francisco shall deliver treated water to Wholesale Customers (except
Coastside County Water District, which receives untreated water from Crystal Springs and
Pilarcitos Reservoirs) that complies with primary maximum contaminant level and treatment
technique standards at the regulatory entry points designated in the San Francisco Regional
Water System Domestic Water Supply Permit (currently Permit No. 02-04-04P3810001) issued
by the California Department of Public Health (CDPH).
B. San Francisco will provide notice to the Wholesale Customers in accordance with
the Water Quality Notification and Communications Plan (current version dated January 2006),
attached hereto as Attachment G. San Francisco will regularly update its plan in consultation
with the Wholesale Customers and the CDPH. The next update will be completed one year
after the Effective Date and include expanded coverage of secondary maximum contaminant
level exceedances and water quality communication triggers. The plan will note that the
Wholesale Customers will receive the same notification no later than the San Francisco water
system (currently Permit No. 02-04-01P3810011) except for distribution-related issues.
C. San Francisco and the Wholesale Customers will establish a Water Quality
Committee. The Water Quality Committee will meet at least quarterly to collaboratively address
water quality issues, such as Water Quality Notification and Communications Plan updates,
regulatory issues, and water quality planning studies/ applied research. San Francisco and
each Wholesale Customer will designate a representative to serve on the committee. There will
be a Chair and Vice Chair position for the Water Quality Committee. The Chair and Vice Chair
positions will be held by San Francisco and the Wholesale Customers and rotate between them
on an annual basis.
3.09. Completion of WSIP
San Francisco will complete construction of the physical facilities in the WSIP by
December 30, 2021. The SFPUC agrees to provide for full public review and comment by local
and state interests of any proposed changes that delay previously adopted project completion
dates or that delete projects. The SFPUC shall meet and consult with BAWSCA before
proposing to the Commission any changes in the scope of WSIP projects which reduce their
capacity or ability to achieve adopted Level of Service Goals and Objectives. The SFPUC
16 15118728.1
retains discretion to determine whether to approve the physical facilities in the WSIP until after it
completes the CEQA process as set forth in Section 4.07.
3.10. Regional Water System Repair, Maintenance and Operation
A. San Francisco will keep the Regional Water System in good working order and
repair consistent with prudent utility practice.
B. San Francisco will submit reports to its Retail and Wholesale Customers on the
"State of the Regional Water System," including reports on completed and planned
maintenance, repair or replacement projects or programs, by September of every even-
numbered year, with reports to start in September 2010.
C. San Francisco will cooperate with any audit of the SFPUC's asset management
practices that may be initiated and financed by BAWSCA or the Wholesale Customers.
BAWSCA may contract with third parties to conduct the audits. San Francisco will consider the
findings and recommendations of such audits and will provide a written response indicating
agreement with the recommendations, or disagreement with particular recommendations and
the reasons why, within 90 calendar days after receipt.
D. San Francisco will continue to operate its reservoirs in a manner that assigns
higher priority to the delivery of water to the Bay Area and the environment than to the
generation of electric power. The SFPUC, as the Regional Water System operator, is solely
responsible for making day-to-day operational decisions.
3.11. Shortages
A. Localized Water Reductions. Notwithstanding San Francisco's obligations to
deliver the Supply Assurance to the Wholesale Customers collectively and the Individual Supply
Guarantees to Wholesale Customers individually, San Francisco may reduce the amount of
water available or interrupt water deliveries to specific geographical areas within the Regional
Water System service area to the extent that such reductions are necessary due to
Emergencies, or in order to install, repair, rehabilitate, replace, investigate or inspect equipment
in, or perform other maintenance work on, the Regional Water System. Such reductions or
interruptions may be imposed by San Francisco without corresponding reductions or
interruptions in the amount of water available to SFPUC water users outside the specific
geographical area where reductions or interruptions are necessary, if the system's ability to
supply water outside the specific geographical area has not been impaired. In the event of such
17 15118728.1
a reduction or interruption, San Francisco will restore the supply of water to the specific
geographical area as soon as is possible. Except in cases of Emergencies (during which oral
notice shall be sufficient), San Francisco will give the affected Wholesale Customer(s)
reasonable written notice of such localized reductions or interruptions, the reasons therefor, and
the probable duration thereof.
B. System-Wide Shortages and SFPUC Response to Regional Emergencies.
Following a major system emergency event, the SFPUC will work closely with its Wholesale
Customers to monitor customer demand, including the demand source. In the event that any
individual Wholesale Service Area or Retail Service Area customer’s uncontrolled distribution
system leaks could result in major water waste and endanger the supply provided by the
Regional Water System as a whole, flow through some customer connections may need to be
temporarily reduced or terminated. SFPUC will work closely with customers to assess the
nature of the demand (e.g. fire-fighting versus leakage), so that public health and safety
protection can be given top priority.
1. All emergencies that require use of non-potable source water will require
use of chlorine, or other suitable disinfectant, if feasible.
2. San Francisco will use its best efforts to meet the seismic reliability and
delivery reliability Level of Service Goals and Objectives adopted by the Commission in
conjunction with the WSIP. San Francisco will distribute water on an equitable basis throughout
the Regional Water System service area following a regional Emergency, subject to physical
limitations caused by damage to the Regional Water System.
3. San Francisco's response to Emergencies will be guided by the then-
current version of the ERRP. The SFPUC shall periodically review, and the Commission may
amend, the ERRP to ensure that it remains an up-to-date and effective management tool.
4. The SFPUC will give the Wholesale Customers notice of any proposal to
amend the ERRP in a manner that would affect them. The notice will be delivered at least thirty
days in advance of the date on which the proposal is to be considered by the Commission and
will be accompanied by the text of the proposed amendment.
C. Shortages Caused by Drought; Acquisition of Dry Year Supplies.
Notwithstanding San Francisco's obligations to deliver the Supply Assurance to the Wholesale
Customers collectively and the Individual Supply Guarantees to Wholesale Customers
18 15118728.1
individually, San Francisco may reduce the amount of water available to the Wholesale
Customers in response to Drought.
1. The Tier 1 Shortage Plan (Attachment H) will continue to be used to
allocate water from the Regional Water System between Retail and Wholesale Customers
during system-wide shortages of 20% or less.
2. San Francisco and the Wholesale Customers may negotiate in good faith
revisions to the Tier 1 Shortage Plan to adjust for and accommodate anticipated changes due to
demand hardening in the SFPUC's Wholesale and Retail Service Areas. Until agreement is
reached, the current Tier 1 Shortage Plan will remain in effect.
3. The SFPUC will honor allocations of water among the Wholesale
Customers (“Tier 2 Allocations”) provided by BAWSCA or if unanimously agreed to by all
Wholesale Customers. If BAWSCA or all Wholesale Customers do not provide the SFPUC with
Tier 2 Allocations, then the SFPUC may make a final allocation decision after first meeting and
discussing allocations with BAWSCA and the Wholesale Customers. For Regional Water
System shortages in excess of 20%, San Francisco shall (a) follow the Tier 1 Shortage Plan
allocations up to the 20% reduction, (b) meet and discuss how to implement incremental
reductions above 20% with the Wholesale Customers, and (c) make a final determination of
allocations above the 20% reduction. After the SFPUC has made the final allocation decision,
the Wholesale Customers shall be free to challenge the allocation on any applicable legal or
equitable basis.
4. San Francisco will use its best efforts to identify potential sources of dry
year water supplies and establish the contractual and other means to access and deliver those
supplies in sufficient quantity to meet a goal of not more than 20 percent system-wide shortage
in any year of the design drought.
5. San Francisco will cooperate with BAWSCA to improve water supply
reliability. As an example of such cooperation, San Francisco may invite a representative of
BAWSCA to attend and participate in meetings with third parties for development of dry year
water supplies. If San Francisco does not invite a BAWSCA representative to attend a specific
scheduled meeting, it will promptly (within 30 days of any such meeting) provide BAWSCA with
a written or oral report on the meeting, including any decisions reached at it, as well as
information about planned subsequent meetings. Progress in securing dry year water supplies
19 15118728.1
will be reported to the SFPUC and the BAWSCA board of directors during the first quarter of
each calendar year.
3.12. Wheeling of Water from Outside SFPUC System
Subject to the Wheeling Statute, the SFPUC will not deny use of Regional Water System
unused capacity for wheeling when such capacity is available for wheeling purposes during
periods when the SFPUC has declared a water shortage emergency under Water Code Section
350 if the following conditions are met:
A. The transferor pays reasonable charges incurred by the SFPUC as a result of the
wheeling, including capital, operation, maintenance, administrative and replacement costs (as
such are defined in the Wheeling Statute).
B. Wheeled water that is stored in the Regional Water System spills first.
C. Wheeled water will not unreasonably: (1) impact fish and wildlife resources in
Regional Water System reservoirs; (2) diminish the quality of water delivered for consumptive
uses; or (3) increase the risk of exotic species impairing Regional Water System operations.
The transferor may at its own expense provide for treatment to mitigate these effects.
D. Priority will be given to wheeling by Wholesale Customers or BAWSCA over
arrangements for third-party public entities.
3.13. Limits on New Customers
A. New Wholesale Customers Prior to December 31, 2028. Until December 31,
2028, San Francisco will not enter into contracts to supply water to any entity other than a
Wholesale Customer (whether permanent or temporary, firm or interruptible) unless:
1. It completes any necessary environmental review under CEQA of the
proposed new wholesale water service obligations as provided in Section 4.07;
2. It concurrently completes any necessary environmental review under
CEQA as provided in Section 4.07 and commits to make both San Jose and Santa Clara
permanent customers with Individual Supply Guarantees equal to at least 9 MGD; and
3. This Agreement is amended to incorporate any commitments to proposed
new wholesale customers and to San Jose and Santa Clara, and to address the effects, if any,
20 15118728.1
of the new customer(s) on water supply reliability, water quality and cost to existing customers
of the Regional Water System.
B. New Wholesale Customers After December 31, 2028. As of January 1, 2029,
San Francisco will not enter into contracts to supply water to any entity other than a Wholesale
Customer (whether permanent or temporary, firm or interruptible) unless:
1. It completes any necessary environmental review under CEQA of the
proposed new wholesale water service obligations as provided in Section 4.07;
2. It concurrently completes any necessary environmental review under
CEQA as provided in Section 4.07 and commits to make both San Jose and Santa Clara
permanent customers with Individual Supply Guarantees equal to at least 9 MGD;
3. Doing so increases the reliability of the Regional Water System; and
4. This Agreement is concurrently amended (a) to reflect that increased
reliability by means of an increased commitment by San Francisco to deliver water during
Droughts and (b) to address the effects, if any, of the new customer(s) on water supply, water
quality and cost to existing customers of the Regional Water System.
C. New Retail Customers. San Francisco may enter into new retail water service
obligations outside of the City and County of San Francisco:
1. Only in Alameda, San Mateo, Santa Clara, San Joaquin and Tuolumne
Counties;
2. That are within or immediately adjacent to areas in which it currently
serves other Retail Customers; and
3. Until the aggregate additional demand represented by the new retail
customers reaches 0.5 MGD.
The limitations on serving new Retail Customers described in this subsection do not apply to
historical obligations to supply water that may be contained in prior agreements between the
SFPUC or its predecessor the Spring Valley Water Company, and individual users or property
owners located adjacent to Regional Water System transmission pipelines.
D. Water Exchanges and Cost Sharing Agreements with Other Water
Suppliers. Subject to completion of necessary environmental review under CEQA, San
21 15118728.1
Francisco may at any time enter into water exchanges or cost sharing agreements with other
water suppliers to enhance dry year or normal year water deliveries, provided that San
Francisco cannot incur new water service obligations to such other water suppliers unless the
requirements for taking on new wholesale customers in subsections A and B above are met.
3.14. Measurement of Water
A. The parties recognize that continuous and accurate measurement of water
deliveries to and from the Regional Water System and maintenance of complete and accurate
records of those measurements is necessary (1) for the costs of the Regional Water System to
be allocated in accordance with this Agreement, (2) for implementation of other provisions of
this Agreement, and (3) for effective operation and maintenance of a water system serving a
large urbanized region.
B. It is the responsibility of the SFPUC to obtain and record these measurements.
To do so, the SFPUC shall install, maintain and operate measuring and recording equipment at
the following locations: (1) inputs to the Regional Water System from all water sources (“System
Input Meters”), (2) internal flow meters to support operation of the Regional Water System (“In-
Line Meters”), (3) deliveries to the City at the San Francisco-San Mateo County line (“County-
Line Meters”) and to three reservoirs in San Francisco (“In-City Terminal Reservoir Meters”), (4)
deliveries to SFPUC Retail Customers located outside the boundaries of the City, and (5)
deliveries to the Wholesale Customers, as described and illustrated in Attachment J.
C. The SFPUC shall inspect, test, service, and calibrate the measuring and
recording equipment installed at the locations described in subsection B and will repair or
replace them when necessary, in order to ensure that their accuracy is consistent with
specifications provided in Attachment J.
D. The SFPUC shall continue to contract with a qualified independent metering
consultant to perform periodic inspection, testing, servicing and calibration of the County-Line
Meters, the In-City Terminal Reservoir Meters, and the System Input and In-Line Meters
described in Attachment J, as well as the portion of the SFPUC’s Supervisory Control and Data
Acquisition (SCADA) system that utilizes the flow signals produced by that measuring and
recording equipment. The method, schedule and frequency for calibration and maintenance of
the County-Line Meters and the In-City Terminal Reservoir Meters are specified in Attachment
J. The SFPUC shall provide copies of the metering consultant's reports to BAWSCA.
22 15118728.1
E. System Input Meters measure water deliveries into the Regional Water System
from sources such as Hetch Hetchy and the SFPUC’s water treatment plants. System Input
Meters also measure deliveries from the Regional Water System to outside sources or from
such sources to the Regional Water System through interties with the Santa Clara Valley Water
District and the East Bay Municipal Utility District. In-Line Meters measure internal system flows
and are located on the Bay Division Pipelines and other main transmission pipelines. These
meters are collectively referred to as the “System Input and In-line Meters.” Similar to the
County-Line Meters, the System Input and In-Line Meters have secondary metering equipment,
such as differential pressure transmitters and flow recorders. The System Input and In-Line
Meters, and all associated secondary metering equipment, shall be calibrated and maintained
according to the method, schedule, and frequency specified in the Procedures Manual
described in subsection G, below.
F. The locations of the smaller and more numerous meters described in subsection
B (4) and (5) are not illustrated in Attachment J; however, they are also critical in the
determination of cost allocations, and accordingly require continued maintenance and
calibration. It is the responsibility of the SFPUC to maintain the accuracy of these meters and
their secondary metering equipment.
G. The SFPUC will prepare a Procedures Manual which will describe in detail the
procedures for periodic inspection, testing, servicing and calibration of the measuring and
recording equipment described in subsection B. Once the Procedures Manual is completed, the
SFPUC and BAWSCA may agree that it should supersede some or all of the requirements in
Attachment J regarding the County-Line and the In-City Terminal Reservoir Meters. Unless and
until such an agreement is reached and documented, however, the requirements in Attachment
J, Section D will continue in force as minimum standards for meter maintenance and calibration
of the County-Line and In-City Terminal Reservoir Meters (subject to modification under the
circumstances described in Attachment J, Section A.4).
H. If BAWSCA and the SFPUC are unable to agree on the water use calculations
required by Attachment J for a particular year, the Wholesale Customers may file a demand for
arbitration challenging the SFPUC's determination of the Wholesale Revenue Requirement for
that year on the basis of its reliance on disputed water use calculations. Such a challenge must
be brought in the manner and within the time specified in Section 8.01.
23 15118728.1
3.15. New Sources of Water Supply to Maintain Supply Assurance
A. Urgent Reductions of Existing Surface Water Supplies. Sudden and
unanticipated events may require San Francisco to act promptly to protect the health, safety and
economic well-being of its Retail and Wholesale Customers. Such sudden events include, but
are not limited to drought, earthquakes, terrorist acts, catastrophic failures of facilities owned
and operated by San Francisco, and other natural or man-made events. If such events diminish
San Francisco’s ability to maintain the Supply Assurance, San Francisco may increase the
Wholesale Revenue Requirement to pay for planning, evaluation and implementation of
replacement sources of supply when such needs arise and without the prior approval of the
Wholesale Customers. San Francisco will keep the Wholesale Customers informed of actions
being taken under this subsection, progress made, and contingency actions the Wholesale
Customers may need to consider taking. To the extent appropriate and applicable, San
Francisco will act in accordance with Section 3.11 and the ERRP. Nothing in this subsection
limits San Francisco’s obligations under Section 3.11 to pursue additional sources of supply to
augment supplies available during drought.
B. Non-Urgent Reductions of Existing Surface Water Supplies. Climate
change, regulatory actions and other events may impact San Francisco’s ability to maintain the
Supply Assurance from its existing surface water supplies, but on timescales long enough to
permit San Francisco to collaborate with its Wholesale Customers on how best to address
possible impacts to water supply. If such events diminish San Francisco’s ability to maintain the
Supply Assurance, San Francisco may increase the Wholesale Revenue Requirement to pay
for planning, evaluation and implementation of replacement sources of supply when such needs
arise and without the prior approval of the Wholesale Customers. San Francisco will keep the
Wholesale Customers informed of actions being taken under this subsection, progress made,
and contingency actions the Wholesale Customers may need to consider taking. San Francisco
will solicit input and recommendations from BAWSCA and the Wholesale Customers, and take
those recommendations into consideration. Prior to Commission approval of plans or taking
other actions that would impact the Wholesale Revenue Requirement, San Francisco will hold a
public hearing to receive written and oral comments. Nothing in this subsection modifies San
Francisco’s obligation to maintain the ability to provide the Supply Assurance under this
Agreement.
24 15118728.1
3.16. New Sources of Water Supply to Increase Supply Assurance
A. Surface Water Supplies From Existing Watersheds After 2018. The
Commission action in SFPUC Resolution Number 08-0200, adopted October 30, 2008 requires
certain decisions by San Francisco regarding whether to supply more than 265 MGD from its
watersheds following 2018. Such decisions are to be made by December 31, 2018, subject to
the exercise of San Francisco's retained CEQA discretion in Section 4.07. San Francisco's
future decisions may include an offer to increase the Supply Assurance at the request of some
or all of its Wholesale Customers. Costs associated with providing additional water from its
existing water supplies in San Mateo, Santa Clara, Alameda, Tuolumne, and Stanislaus
Counties shall be allocated to Wholesale and Retail Customers as described in Article 5.
B. New Water Supplies. If San Francisco seeks to develop additional water
supplies from new sources to increase the Supply Assurance available to Wholesale
Customers, studies and resulting water supply projects will be conducted jointly with BAWSCA
under separate agreement(s) specifying the purpose of the projects, the anticipated regional
benefits and how costs of studies and implementation will be allocated and charged. Nothing in
this Agreement shall serve as precedent for the allocation of such new supply capital costs
between Retail and Wholesale Customers or associated operational expenses, which shall only
occur following approval of both parties and amendment of this Agreement, if necessary, under
Section 2.03.
3.17. Westside Basin Groundwater Storage and Recovery Project
In August 2014, the SFPUC approved a WSIP project called the Groundwater Storage
and Recovery Project (“Project”), which authorized the SFPUC to enter into an agreement
governing the operation of the Project with the Participating Pumpers entitled “Agreement for
Groundwater Storage and Recovery from the Southern Portion of the Westside Groundwater
Basin by and among the San Francisco Public Utilities Commission, the City of Daly City, the
City of San Bruno, and California Water Service Company” (“Project Operating Agreement”),
which became effective on December 16, 2014. The Project produces Regional benefits for all
customers of the Regional Water System by making use of available groundwater storage
capacity in the Southern portion of the Westside Basin through the supply of additional surface
water (“In Lieu Water”) to the Participating Pumpers from the Regional Water System, in
exchange for a corresponding reduction in groundwater pumping at existing wells owned by the
Participating Pumpers. The new groundwater supply that accrues to storage as a result of
25 15118728.1
delivery of In Lieu Water will be recovered from the SFPUC Storage Account during water
shortages using new Regional Project Facilities or Shared Facilities operated by the
Participating Pumpers and the SFPUC. Project mitigation capital costs and annual Project
operations and maintenance expenses and water supplies shall be allocated as follows:
A. All In Lieu Water delivered to the Participating Pumpers shall be (1) temporary
and interruptible in nature and (2) at the sole discretion of the SFPUC based on the total volume
of water available to the Regional Water System.
B. All In Lieu Water delivered to the Participating Pumpers shall be considered a
delivery of water to storage and shall not be construed to affect or increase the Individual
Supply Guarantees of these Wholesale Customers or to otherwise entitle them to any claim of
water in excess of their Individual Supply Guarantees.
C. In the event that it is necessary to reduce the Participating Pumpers’ aggregate
designated quantity of groundwater production allocation pursuant to Section 4.7 of the Project
Operating Agreement, the SFPUC may supply an annual maximum of up to 500 acre feet of
Participating Pumper Replacement Water from the Regional Water System at a price
comparable to the Participating Pumpers’ then-current groundwater cost, as may be adjusted
annually as provided for in Section 4.7 of the Project Operating Agreement. Each of the
Participating Pumpers may elect to take delivery of its share of Participating Pumper
Replacement Water either as interruptible surface water deliveries from the Regional Water
System or as a transfer of storage credits from the SFPUC Storage Account. All revenue
received from such water sales or transfers shall be considered revenue related to the sale of
water and allocated between Retail Customers and Wholesale Customers on the basis of
Proportional Water Use. All volumes of Participating Pumper Replacement Water delivered
shall not be construed to affect or increase the Individual Supply Guarantees of these
Wholesale Customers or to otherwise entitle them to any claim of water in excess of their
Individual Supply Guarantees.
D. Any operation and maintenance expenses incurred by the Participating Pumpers
and the SFPUC that are related to the operation of Project Facilities and Shared Facilities for
Project purposes shall be included as Regional pumping expenses under Section 5.05.B of this
Agreement and included as part of the Wholesale Revenue Requirement. For rate setting
purposes, estimated Project operation and maintenance expenses shall be used as set forth in
26 15118728.1
Section 6.01 of this Agreement. Operation and maintenance expenses associated with the
Participating Pumpers' Existing Facilities that do not provide Regional benefits shall not be
included in the Wholesale Revenue Requirement. On a case-by-case basis, the SFPUC may
include operation and maintenance expenses associated operation of the Participating
Pumpers’ Existing Facilities in the Wholesale Revenue Requirement provided that such
expenses (1) are solely attributable to Project operations for a Regional benefit and (2) are not
caused by the Participating Pumper's failure to operate and maintain its existing wells in a
reasonable and prudent manner consistent with water utility industry standards. The SFPUC
shall provide the Wholesale Customers with copies of Project Operation and Maintenance
Expenses documentation provided by the Participating Pumpers under Section 9.2 of the
Project Operating Agreement.
E. The Project Mitigation, Monitoring and Reporting Program (“MMRP”) adopted by
the SFPUC included mitigation measure HY-6 to prevent well interference impacts to the
Irrigation Well Owners. In mitigation measure HY-6, the SFPUC agreed to provide standby
supplies of Irrigation Well Owner Replacement Water from the Regional Water System, to alter
Project operations, and implement other actions (e.g., well replacement) to avoid well
interference impacts that require the consent of the Irrigation Well Owners. The SFPUC’s
Project mitigation and other obligations to the Irrigation Well Owners are memorialized in
substantially identical “Groundwater Well Monitoring and Mitigation Agreements” with one or
more of the Irrigation Well Owners. For purposes of this Agreement, water supplies, and the
capital costs and operations and maintenance expenses associated with providing Irrigation
Well Owner Replacement Water and implementing other mitigation actions identified in the
Project MMRP, shall be allocated as follows:
1. Irrigation Well Owner Replacement Water shall be limited to a cumulative
maximum of 1.76 mgd and shall be delivered only in volumes necessary for mitigating well
interference impacts as provided in the Project MMRP. The supply of Irrigation Well Owner
Replacement Water by the SFPUC shall not be considered a new water supply commitment to
Retail Customers or Wholesale Customers under Section 3.13 of this Agreement. The annual
volume of Irrigation Well Owner Replacement Water supplied shall be metered and allocated as
water from the Regional Water System during shortages between Retail Customers and
Wholesale Customers in proportion to and consistent with the provisions of the Shortage
Allocation Plan. All revenue received from Irrigation Well Owners for metered deliveries of
Irrigation Well Owner Replacement Water shall be considered revenue related to the sale of
27 15118728.1
water and allocated between Retail Customers and Wholesale Customers on the basis of
Proportional Water Use.
2. All Project capital costs incurred by the SFPUC in complying with the
mitigation measures in the Project MMRP shall be considered Regional capital costs under
Section 5.04 of this Agreement.
3. Operations and maintenance expenses incurred by the SFPUC in
maintaining Project mitigation assets described in the Project MMRP shall be considered
Regional transmission and distribution expenses under Section 5.05.D of this Agreement. Well
pumping expenses that are required to be paid by the SFPUC in the agreements with the
Irrigation Well Owners shall be considered Regional pumping expenses under Section 5.05.B of
this Agreement.
4. Any wheeling charges imposed by California Water Service Company for
delivery of Irrigation Well Owner Replacement Water shall be considered Regional transmission
and distribution expenses under Section 5.05.D of this Agreement.
F. F. The SFPUC will audit (1) operation and maintenance expenses submitted
by the Participating Pumpers, and (2) well pumping expenses submitted by the Irrigation Well
Owners, for reimbursement to confirm that such costs were incurred, respectively, as a result of
(1) operating Project Facilities and Shared Facilities for a Regional benefit and (2) complying
with mitigation obligations in the Project MMRP. Costs associated with the use of Project
Facilities or Shared Facilities for Direct Retail or Direct Wholesale purposes, or that do not
otherwise provide Regional benefits, shall not be included in the Wholesale Revenue
Requirement. The SFPUC is responsible for resolving disputes with the Participating Pumpers
and Irrigation Well Owners concerning expense allocations. Project expense documentation,
including documentation of negotiation and settlement of disputed costs, will be available for
review during the Compliance Audit described in Section 7.04 of this Agreement. The
Wholesale Customers may dispute the SFPUC’s resolution of expense allocations through the
arbitration provisions in Section 8.01 of this Agreement.
G. The SFPUC may direct the Participating Pumpers to recover water from the
SFPUC Storage Account for any type of shortage referenced in Section 3.11 of this Agreement.
Water recovered from the SFPUC Storage Account using Project Facilities and Shared Facilities
may be used for (1) the benefit of all Regional Water System customers; (2) Retail Customers;
or (3) one or more of the Participating Pumpers. The Wholesale Revenue Requirement shall
28 15118728.1
only include operation and maintenance expenses incurred due to the operation of Project
Facilities and Shared Facilities for Regional benefits, including expenses incurred due to
compliance with mitigation measures in the Project MMRP.
H. All water recovered during shortages caused by drought from the SFPUC
Storage Account for Regional benefit, by the Participating Pumpers and by the SFPUC for
delivery to Retail and Wholesale Customers, shall be used to free up a comparable volume of
surface water from the Regional Water System for allocation in accordance with the Tier 1
Shortage Plan.
I. If the Project is terminated for any reason, including breach of the Project
Operating Agreement by one or more of the Participating Pumpers or the SFPUC, a force
majeure event as specifically defined by the Project Operating Agreement, or due to regulatory
action or legal action, then:
1. Any water remaining in the SFPUC Storage Account shall be used for the
benefit of all customers of the Regional Water System;
2. Outstanding eligible operation and maintenance expenses, including
costs incurred during recovery of remaining stored water, will be allocated as provided in this
Section 3.17 of this Agreement; and
3. If Project Facilities are no longer capable of being used for a Regional
benefit, the Wholesale Customers will be credited with their share of proceeds from disposition
of Project Facilities or reimbursed their share of such capital costs for any Project Facilities
which are retained by the SFPUC for Direct Retail benefit and not used for the benefit of the
Wholesale Customers, on the basis of (a) original cost less depreciation and outstanding related
Indebtedness or (b) original cost less accumulated depreciation for revenue funded Project
Facilities.
J. In the event that a Participating Pumper establishes the occurrence of a force
majeure event as defined in the Project Operating Agreement, the SFPUC may enter into
negotiations with the Participating Pumper to take over the operation of the portion of any
Shared Facilities used for Project purposes for continued Regional use. If the SFPUC cannot
reach agreement regarding the continued use of Shared Facilities for ongoing Regional benefit,
the Participating Pumper shall reimburse the SFPUC and the Wholesale Customers for their
respective shares of previously incurred Project capital costs used to upgrade the Shared
29 15118728.1
Facilities on the basis of (a) original cost less depreciation and outstanding related
Indebtedness or (b) original cost less accumulated depreciation for revenue funded Shared
Facilities. In the event that the SFPUC seeks to take over the operation of Shared Facilities for
Direct Retail use, or one or more Wholesale Customers seeks to negotiate with a Participating
Pumper to take over the operation of Shared Facilities for individual use or Direct Wholesale
use, the party or parties benefiting from such transfer of Shared Facilities shall reimburse the
other parties to this Agreement with their respective shares of previously incurred Project capital
costs on the basis described in the previous sentence, or as the parties may otherwise agree.
3.18. Water Supply Agreement Amendment Required.
San Francisco may not change the existing condition of the Hetch Hetchy Reservoir by:
1. Abandoning or decommissioning O'Shaughnessy Dam; or
2. Draining Hetch Hetchy Reservoir, except for purposes of (i) repair,
rehabilitation, maintenance, improvement, or reconstruction of
O'Shaughnessy Dam or appurtenances, (ii) supplying water to the Bay
Area during drought, or (iii) meeting water release requirements under the
Raker Act, or federal or state law,
unless the parties enter into an amendment to the Water Supply Agreement, in full force and
effect, adopted in accordance with Section 2.03.
The amendment shall state, or restate, as the case may be:
A. The level of service goals for seismic reliability and delivery reliability
adopted by the Commission in conjunction with such proposed changes
to the Regional Water System, provided such goals are at least as
protective of the Wholesale Customers as the Level of Service Goals and
Objectives;
B. The level of water quality to be delivered, which is currently provided for
in Section 3.08, and
C. The specific cost allocation procedures, written as an amendment to
Article 5, which apply to (1) the abandonment or decommissioning of
O'Shaughnessy Dam, or (2) the draining of Hetch Hetchy Reservoir, and
(3) the development, operation and maintenance of New Regional Assets
30 15118728.1
that may be required to replace water supplied by Hetch Hetchy
Reservoir and delivered to the Bay Area.
In the event that the parties are not able to agree upon and approve an amendment to the
Water Supply Agreement as set forth above, San Francisco may not abandon or decommission
O'Shaughnessy Dam or drain Hetch Hetchy Reservoir.
31 15118728.1
Article 4. Implementation of Interim Supply Limitation.
4.01. Interim Supply Limitation Imposed by SFPUC
In adopting the WSIP in Res. No. 08-0200, the Commission included full implementation of all
proposed WSIP capital improvement projects to achieve Level of Service Goals and Objectives
relating to public health, seismic safety, and delivery reliability, but decided to adopt a water
supply element that includes the Interim Supply Limitation. This article describes how the
parties will implement the Interim Supply Limitation imposed by the SFPUC between the
Effective Date and December 31, 2018, and how the SFPUC will conduct water supply planning
after December 31, 2018.
4.02. Retail and Wholesale Customer Allocations Under Interim Supply Limitation
The Interim Supply Limitation is allocated as follows between Retail and Wholesale
Customers:
Retail Customers' allocation: 81 MGD
Wholesale Customers' allocation: 184 MGD
The Wholesale Customers' collective allocation of 184 MGD under the Interim Supply
Limitation includes the demand of the cities of San Jose and Santa Clara, whose demand is not
included in the Supply Assurance, as provided in Section 3.02.B. By December 31st, 2010, the
Commission will establish each Wholesale Customer's Interim Supply Allocation at a public
meeting.
4.03. Transfers of Interim Supply Allocations
A. Any Wholesale Customer, including Hayward, may transfer a portion of its
Interim Supply Allocation to one or more other Wholesale Customers, as provided in this
section. All Wholesale Customers are also eligible transferees, including California Water
Service Company up to its Individual Supply Guarantee.
B. Transfers of a portion of an Interim Supply Allocation must be prospective. The
duration of a transfer cannot be less than the balance of the fiscal year. The minimum quantity
that may be transferred is 1/10th of a MGD.
C. Transfers of portions of Interim Supply Allocations are subject to approval by the
SFPUC. SFPUC review is limited to determining (1) whether a proposed transfer complies with
32 15118728.1
the Act, and (2) whether the affected facilities in the Regional Water System have sufficient
capacity to accommodate delivery of the increased amount of water to the proposed transferee.
D. The participants in a proposed transfer shall provide notice to the SFPUC
specifying the amount of the Interim Supply Allocation proposed to be transferred and the
proposed effective date of the transfer, which shall not be less than 60 days after the notice is
submitted to the SFPUC. The SFPUC may require additional information reasonably necessary
to evaluate the operational impacts of the transfer. The SFPUC will not unreasonably withhold
or delay its approval; if the SFPUC does not act on the notice within 60 days, the transfer will be
deemed to have been approved.
E. Within 30 days after the transfer has become effective, both the transferor and
the transferee will provide written notice to the SFPUC and BAWSCA.
F. Transfers of Interim Supply Allocations shall continue in effect until the earlier of
(1) delivery of written notice to the SFPUC by the transfer participants that the transfer has been
rescinded or (2) December 31, 2018.
4.04. Environmental Enhancement Surcharge
A. Establishment of Environmental Enhancement Surcharge. Beginning with
wholesale water rates for fiscal year 2011-2012, and continuing for the duration of the Interim
Supply Limitation, the Commission will establish the Environmental Enhancement Surcharge
concurrently with the budget-coordinated rate process set forth in Article 6 of this Agreement.
The monetary amount of the Environmental Enhancement Surcharge per volume of water, such
as dollars per acre-foot, will be equivalent for Retail Customer use in excess of 81 MGD and
Wholesale Customer use in excess of 184 MGD. The Environmental Enhancement Surcharge
will be simple to calculate so that Wholesale Customers can estimate potential surcharges for
budgeting purposes and establish retail rates within their service areas.
B. Application of Environmental Enhancement Surcharge. Beginning in fiscal
year 2011-12, the Environmental Enhancement Surcharge will be levied only if and when
combined Retail Customer and Wholesale Customer purchases exceed the Interim Supply
Limitation of 265 MGD and if the fund described in subsection D below has been established by
the San Francisco Board of Supervisors. In that event, the Environmental Enhancement
Surcharge will apply to Retail Customers for use in excess of 81 MGD and to individual
33 15118728.1
Wholesale Customers for use in excess of their Interim Supply Allocations established by the
Commission pursuant to Section 4.02.
1. Environmental Enhancement Surcharges related to the Retail Customers’
use in excess of their 81 MGD Retail Customer Allocation will be paid by the SFPUC, and no
portion of such surcharges may be allocated to Wholesale Customers. The method of
recovering the Environmental Enhancement Surcharges imposed upon Retail Customers shall
be within the sole discretion of the SFPUC.
2. Environmental Enhancement Surcharges related to the individual
Wholesale Customers’ use in excess of their respective Interim Supply Allocations will be paid
to the SFPUC by individual Wholesale Customers.
C. Collection of Environmental Enhancement Surcharge. Notwithstanding the
budget-coordinated rate setting process contemplated in Article 6 of this Agreement, the
Environmental Enhancement Surcharge for any given year will be determined retrospectively
based on actual annual usage during the fiscal year in excess of the Interim Supply Allocation
and paid in equal monthly installments over the remainder of the immediately following fiscal
year.
D. Establishment of Fund for Environmental Enhancement Surcharge
Proceeds. Environmental Enhancement Surcharges paid by the SFPUC and by Wholesale
Customers will be placed into a restricted reserve fund. The SFPUC will request the San
Francisco Board of Supervisors to establish this fund by ordinance and, if adopted, the fund will
be subject to the following restrictions:
1. Interest earnings will stay in the reserve fund.
2. The reserve fund shall (a) be subject to automatic appropriation; (b)
require unexpended and unencumbered fund balances to be carried
forward from year to year; and (c) not be transferred to the San Francisco
General Fund.
3. The reserve fund may be used only for specific environmental restoration
and enhancement measures for the Sierra and local watersheds, such as
those included in the Watershed Environmental Improvement Program.
4. Environmental Enhancement Surcharge proceeds shall be expended in
an expeditious manner. Any Environmental Enhancement Surcharge
34 15118728.1
proceeds that remain in the reserve fund as of December 31, 2018 shall
be used to complete projects previously approved under subsection E.
Upon completion of the identified projects, the balance of any
unexpended sums in the reserve fund shall be distributed to BAWSCA
and the SFPUC in proportion to the total amount of surcharges assessed
to the Wholesale and Retail Customers, respectively.
E. Use of Environmental Enhancement Surcharge Proceeds. Specific uses of
Environmental Enhancement Surcharges will be decided by the SFPUC and BAWSCA General
Managers following input from environmental stakeholders and other interested members of the
public. If parties are unable to agree, then they will jointly select a third person to participate in
making the decision.
4.05. San Jose/ Santa Clara Interim Supply Allocation and Process for Reduction/ Termination.
San Francisco will supply a combined annual average of 9 MGD to the cities of San
Jose and Santa Clara through 2028. Water supplied by San Francisco may only be used in the
defined service areas of San Jose and Santa Clara shown on Attachment Q-1 and Q-2,
respectively. San Francisco may reduce the quantity of water specified in this section when it
establishes the Interim Supply Allocations for Wholesale Customers in Section 4.02. The
establishment of Interim Supply Allocations for San Jose and Santa Clara shall not be
considered a reduction of supply within the meaning of this section, provided that the Interim
Supply Allocations assigned to San Jose and Santa Clara do not effect a reduction greater than
the aggregate average reduction in Individual Supply Guarantees for Wholesale Customers that
have such guarantees. The application of Interim Supply Allocations to San Jose and Santa
Clara, and water supply planning after December 31, 2018, are subject to the following
provisions:
A. In December 2010 and in each December thereafter through 2027, the SFPUC
shall prepare and the Commission shall consider, at a regularly scheduled public meeting, a
Water Supply Development Report detailing progress made toward (1) meeting the Interim
Supply Limitation by June 30, 2018 and (2) developing additional water supplies that will allow
the Commission to designate San Jose and Santa Clara as permanent Wholesale Customers of
the Regional Water System with a combined Individual Supply Guarantee of up to 9 MGD by
the end of the Term on June 30, 2034.
35 15118728.1
B. The annual Water Supply Development Report shall be based on water purchase
projections and work plans prepared by the SFPUC for the Retail Customers and by BAWSCA
for the Wholesale Customers, respectively, and submitted to the Commission in June of each
year beginning in 2010.
C. If the Commission finds that the projections in the Water Supply Development
Report show that (1) the Interim Supply Limitation will not be met by June 30, 2018, as a result
of Wholesale Customers' projected use exceeding 184 MGD, or (2) the purchases of the
Wholesale Customers, including San Jose and Santa Clara, are projected to exceed 184 MGD
before June 30, 2028, the Commission may issue a conditional ten year notice of interruption or
reduction in supply of water to San Jose and Santa Clara.
D. Upon issuance of the conditional notice of interruption or reduction, the SFPUC
will prepare a new analysis of water supply that will be utilized by the San Francisco Planning
Department in its preparation of any necessary documentation under CEQA pursuant to Section
4.07 on the impacts of interrupting or reducing service to San Jose and Santa Clara.
E. Such notice of interruption or reduction will be rescinded if the Commission finds,
based upon a subsequent annual Water Supply Development Report, that (1) sufficient
progress has been made toward meeting the Interim Supply Limitation, or (2) projections show
that the projected purchases of the Wholesale Customers, including San Jose and Santa Clara,
will not exceed 184 MGD by June 30, 2028.
F. In no case shall any interruption or reduction of service to San Jose or Santa
Clara pursuant to this section become effective less than two years from the completion of the
CEQA process (not including resolution of any appeals or litigation) or ten years from the notice,
whichever is longer. If the ten year notice is issued after 2018, such interruption or reduction
would be effective after 2028.
G. If deliveries to San Jose and Santa Clara are interrupted, existing turnout
facilities to San Jose and Santa Clara will remain in place for possible use during emergencies.
H. San Francisco and the cities of San Jose and Santa Clara will cooperate with
BAWSCA and the Santa Clara Valley Water District in the identification and implementation of
additional water sources and conservation measures for the cities’ service areas that are
36 15118728.1
relevant to the water supply and the possible offer of permanent status for the two cities by the
SFPUC.
4.06. San Francisco Decisions in 2028 Regarding Future Water Supply
A. By December 31, 2028, San Francisco will have completed any necessary
CEQA review pursuant to Section 4.07 that is relevant to making San Jose and Santa Clara
permanent customers of the Regional Water System and will decide whether or not to make
San Jose and Santa Clara permanent customers of the Regional Water System with a
combined Individual Supply Guarantee of 9 MGD allocated equally between the two cities, as
well as how much water in excess of 9 MGD it will supply to San Jose and Santa Clara. San
Francisco will make San Jose and Santa Clara permanent customers only if, and to the extent
that, San Francisco determines that Regional Water System long term water supplies are
available. In the event that San Francisco decides to afford permanent status to San Jose and
Santa Clara, this Agreement will be amended pursuant to Section 2.03.
B. By December 31, 2028, San Francisco will have completed any necessary
CEQA review pursuant to Section 4.07 and will decide how much water, if any, in excess of the
Supply Assurance it will supply to Wholesale Customers from the Regional Water System to
meet their projected future water demands until the year 2040, and whether to offer a
corresponding increase in the Supply Assurance as a result of these determinations.
4.07. Retained Discretion of SFPUC and Wholesale Customers
A. This Agreement contemplates discretionary actions that the SFPUC and the
Wholesale Customers may choose to take in the future that could result in physical changes to
the environment ("Discretionary Actions"). The Discretionary Actions include decisions to:
1. Develop additional or alternate water resources by the SFPUC or one or
more Wholesale Customers;
2. Implement the physical facilities comprising the WSIP by December 30,
2021;
3. Approve wheeling proposals by Wholesale Customers;
4. Approve new wholesale customers and water exchange or cost sharing
agreements with other water suppliers;
5. Provide additional water to San Jose and/or Santa Clara;
6. Offer permanent status to San Jose and/or Santa Clara;
37 15118728.1
7. Reduce or terminate supply to San Jose and/or Santa Clara;
8. Provide additional water to Wholesale Customers in excess of the Supply
Assurance to meet their projected future water demands;
9. Offer a corresponding volumetric increase in the Supply Assurance; and
10. Implement the Hetch Hetchy Water and Power projects listed in
Attachment R-2.
The Discretionary Actions may require the SFPUC or Wholesale Customers to prepare
environmental documents in accordance with CEQA prior to the SFPUC or the Wholesale
Customers determining whether to proceed with any of the Discretionary Actions. Accordingly,
and notwithstanding any provision of this Agreement to the contrary, nothing in this Agreement
commits the SFPUC or the Wholesale Customers to approve or carry out any Discretionary
Actions that are subject to CEQA. Furthermore, the SFPUC’s or Wholesale Customers’
decisions to approve any of these Discretionary Actions are subject to the requirement that San
Francisco and each Wholesale Customer, as either a “Lead Agency” (as defined in Section
21067 of CEQA and Section 15367 of the CEQA Guidelines) or a “Responsible Agency” (as
defined in Section 21069 of CEQA and Section 15381 of the CEQA Guidelines) shall have
completed any CEQA-required environmental review prior to approving a proposed
Discretionary Action.
B. In considering any proposed Discretionary Actions, the SFPUC and Wholesale
Customers retain absolute discretion to: (1) make such modifications to any of the proposed
Discretionary Actions as may be necessary to mitigate significant environmental impacts; (2)
select feasible alternatives to the proposed Discretionary Actions that avoid significant adverse
impacts; (3) require the implementation of specific measures to mitigate the significant adverse
environmental impacts as part of the decision to approve the Discretionary Actions; (4) balance
the benefits of the proposed Discretionary Actions against any significant environmental impacts
before taking final actions to approve the proposed Discretionary Actions if such significant
impacts cannot otherwise be avoided; or (5) determine not to proceed with the proposed
Discretionary Actions.
38 15118728.1
Article 5. Wholesale Revenue Requirement
5.01. Scope of Agreement
This Article shall be applicable only to the water rates charged by San Francisco to the
Wholesale Customers. Nothing contained in this Agreement shall limit, constrain, or in any way
affect the rates which San Francisco may charge for water sold to Retail Customers or the
methodology by which such rates are determined.
5.02. General Principles
This Article sets forth the method by which the Wholesale Customers’ collective share of
expenses incurred by the SFPUC in delivering water to them will be determined. This collective
share is defined as the “Wholesale Revenue Requirement.”
A. The SFPUC currently operates several enterprises, including the Water
Enterprise, the Wastewater Enterprise, and the Hetch Hetchy Enterprise.
B. The Wastewater Enterprise is responsible for treating sewage within San
Francisco and provides no benefit to the Wholesale Customers.
C. The Hetch Hetchy Enterprise is responsible for storing and transmitting water to
the Water Enterprise, generating hydroelectric power and transmitting it to San Francisco,
generating electric power within San Francisco, and distributing electricity and steam heat within
San Francisco. Its water supply operations provide benefits to the Wholesale Customers.
D. The Water Enterprise delivers water to both Retail Customers, which are located
both within and outside San Francisco, and to the Wholesale Customers, all of which are
located outside San Francisco.
E. This Article implements two general principles as follows: (1) the Wholesale
Customers should not pay for expenses of SFPUC operations from which they receive no
benefit and (2) the Wholesale Customers should pay their share of expenses incurred by the
SFPUC in delivering water to them on the basis of Proportional Annual Use unless otherwise
explicitly provided in this Agreement.
F. To implement these general principles, the Wholesale Revenue Requirement will
consist of, and be limited to, the Wholesale Customers’ shares of the following categories of
expense:
39 15118728.1
1. Capital cost recovery of Water Enterprise Existing Assets, and Hetch
Hetchy Enterprise Existing Assets classified as Water-Only and the Water-Related portion of
Joint assets (Section 5.03)
2. Contribution to the capital cost of Water Enterprise New Regional Assets
(Section 5.04)
3. Water Enterprise operation and maintenance expenses, including power
purchased from the Hetch Hetchy Enterprise that is used in the operation of the Water
Enterprise (Section 5.05)
4. Water Enterprise administrative and general expenses (Section 5.06)
5. Water Enterprise property taxes (Section 5.07)
6. The Water Enterprise’s share of the Hetch Hetchy Enterprise’s operation
and maintenance, administrative and general, and property tax expenses (Section 5.08)
7. The Water Enterprise’s share of the Hetch Hetchy Enterprise’s capital
cost of New Assets classified as Water-Only and the Water-Related portion of Joint assets
(Section 5.09)
In each of these cost categories, Direct Retail Expenses will be allocated entirely to
Retail Customers. Direct Wholesale Expenses will be allocated entirely to the Wholesale
Customers. Regional Expenses will be allocated between Retail Customers and Wholesale
Customers as provided in this Article.
G. For purposes of establishing the rates to be charged Wholesale Customers,
expenses will be based on the budget for, and estimates of water purchases in, the following
fiscal year, as provided in Article 6. For purposes of accounting, the Wholesale Revenue
Requirement will be determined on the basis of actual expenses incurred and actual water use,
as provided in Article 7.
H. In addition, rates charged to Wholesale Customers may include the Wholesale
Customers’ contribution to a Wholesale Revenue Coverage Reserve, as provided in Section
6.06, which is not included in the Wholesale Revenue Requirement itself.
40 15118728.1
5.03. Capital Cost Recovery - Existing Regional Assets
A. SFPUC has previously advanced funds to acquire or construct Existing Assets
used and useful in the delivery of water to both Wholesale Customers and Retail Customers.
The parties estimate that the Wholesale Customers’ share of the net book value of these
assets, as of the expiration of the 1984 Agreement on June 30, 2009, will be approximately
$366,734,424, as shown on Attachment K-1.
B. In addition, SFPUC has also previously advanced funds received from Retail
Customer revenues to acquire or construct assets included in Construction-Work-In-Progress
(CWIP) as of June 30, 2009. The parties estimate that the Wholesale Customers’ share of the
book value of these revenue funded capital expenditures, as of the expiration of the 1984
Agreement on June 30, 2009, will be approximately $15,594,990, as shown on Attachment K-2.
The Wholesale Customers shall pay their share of the cost of Existing Assets and revenue-
funded CWIP by amortizing the amounts shown on Attachment K-1 and Attachment K-2 over 25
years at an interest rate of 5.13 percent. The amounts to be included in the Wholesale
Revenue Requirement pursuant to this section shall be the sum of the annual principal and
interest amounts shown on Attachments K-3 (for Water Enterprise Regional Assets and the one
Direct Wholesale Asset) and K-4 (for Hetch Hetchy Enterprise Water-Only Assets and the
Water-Related portion [45 percent] of Joint assets) calculated on the basis of monthly
amortization of principal as set forth on Attachments K-3 and K-4.
C. In addition, the Commission has previously appropriated funds, advanced
through rates charged to Retail Customers, for construction of capital projects. Some of these
projects are active, and have unexpended balances of appropriated funds that are not included
in CWIP as of June 30, 2009. These projects, and the associated balances, are shown on
Attachment K-5. Expenditures of funds from these balances during FY 2009-10, FY 2010-11
and FY 2011-12 will be reviewed in FY 2012-13. The SFPUC will prepare a report showing the
amount expended in each year on each project and the total expended during all years on all
projects that are categorized as Regional or, in the case of Hetch Hetchy Enterprise, are
categorized as either Water-Only or Joint. The wholesale share of that total will be determined
using the allocation principles in this Agreement based on Proportional Water Use during those
three years. The result, plus accrued interest at the rate specified in Section 6.05.B, will be
calculated by the SFPUC and its calculation reviewed by the Compliance Auditor as part of the
Compliance Audit for FY 2012-13. The audited total will be paid based on a schedule of level
41 15118728.1
annual principal and interest amounts over ten years at an interest rate of 4.00%, calculated on
a monthly amortization basis. All or any portion of the balance may be prepaid. The first year’s
payment will be included in the Wholesale Revenue Requirement for FY 2014-15.
D. The parties agree that the Wholesale Customers’ share of the net book values of
Existing Regional Assets as of June 30, 2008 as shown on Attachment K-1 are accurate. The
compliance audit conducted on the calculation of the FY 2008-09 Suburban Revenue
Requirement required by the 1984 Agreement will determine the actual amounts of depreciation
on, and capital additions to, plant in service during that fiscal year. Those amounts will be
compared to the corresponding estimates shown on Attachments K-1 and K-2. The differences
will be added to or subtracted from the estimated asset values shown on Attachments K-1 and
K-2 and the amortization schedules in Attachments K-3 and K-4 will be recalculated. The
wholesale allocation factors shall be fixed at 70.1% for the Water Enterprise Existing Assets and
64.2% for Hetch Hetchy Enterprise Existing Assets for both the preliminary and final payment
schedules. The SFPUC will prepare and provide to the Wholesale Customers revised
Attachments K-1 through K-4 based on the Wholesale Customers’ share of the net book value
of the assets placed in service as of June 30, 2009 used to provide water service to the
Wholesale Customers and the net book value of revenue-funded CWIP expended as of June
30, 2009. The revised Attachments K-1 through K-4 shall be approved by the General Manager
of the SFPUC and the General Manager/CEO of BAWSCA and will be substituted for the
original Attachments K-1 through K-4.
E. The original Attachments K-1 through K-4, based on estimates, shall be used for
estimating the Wholesale Revenue Requirement for the fiscal year beginning July 1, 2009. The
revised Attachments, based on audited actuals, shall be used to determine the actual
Wholesale Revenue Requirement for FY 2009-10 and to determine the Wholesale Revenue
Requirement(s) in all subsequent years, except as may be provided elsewhere in this
Agreement.
F. The Wholesale Customers, acting through BAWSCA, may prepay the remaining
unpaid Existing Assets principal balance, in whole or in part, at any time without penalty or early
payment premium. Any prepayments will be applied in the month immediately following the
month in which the prepayment is made and the revised monthly amount(s) will be used to
calculate the Wholesale Revenue Requirement. Any partial prepayments must be in an amount
at least equal to $10 million. In the event of a partial prepayment, an updated schedule for the
42 15118728.1
remaining payments shall be prepared reflecting the unpaid balance after prepayment,
amortized through the end of FY 2034, calculated as provided in this section. The updated
schedule, approved by the General Manager of the SFPUC and the General Manager/CEO of
BAWSCA, will be substituted for Attachment K-3 and/or Attachment K-4.
5.04. Capital Cost Contribution - New Regional Assets
A. Debt-Funded Capital Additions. The Wholesale Customers shall pay the
wholesale share of Net Annual Debt Service for New Regional Assets. The Regional projects in
the WSIP are identified in Attachment L-1.
1. The amount of Net Annual Debt Service for New Regional Assets will be
determined for each series of Indebtedness issued. Until the proceeds of a particular series are
Substantially Expended, the amount attributable to specific projects will be based on the
expected use of proceeds shown in the “Certificate Regarding Use of Proceeds” executed by
the SFPUC General Manager on behalf of the Commission in connection with the sale of the
Indebtedness, provided such certificate identifies the use of proceeds at a level of detail
equivalent to that shown on Attachment L-2, which is a copy of the certificate prepared for the
2006 Revenue Bonds, Series A. If a certificate does not identify the use of proceeds at that
level of detail, the SFPUC General Manager shall prepare and execute a separate certificate
which does identify the use of proceeds at the level of detail shown on Attachment L-2 and
deliver it to BAWSCA within 15 days from the closing of the sale of the Indebtedness.
2. After the proceeds of a series are Substantially Expended, the SFPUC
General Manager will prepare and execute a certificate showing the actual expenditure of
proceeds at a level of detail equivalent to the initial General Manager certificate. The resulting
allocation of Net Debt Service to New Regional Assets for a series of bonds will be used in the
fiscal year in which the proceeds have been Substantially Expended and thereafter. Differences
between the amount of Net Debt Service paid by Wholesale Customers prior to that year and
the amount of Net Debt Service that they should have paid during that time based on the actual
expenditure of proceeds will be taken into account in calculation of the balancing account for the
fiscal year in which the proceeds were Substantially Expended. The application of the
remaining proceeds shall be proportionate to the allocation of the Net Debt Service to New
Regional Assets.
3. The Wholesale Customers’ share of Net Annual Debt Service for the New
Regional Assets that are categorized as Direct Wholesale will be 100 percent. (None of the
43 15118728.1
projects in the WSIP are categorized as Direct Wholesale.) The Wholesale Customers’ share of
Net Annual Debt Service for all other New Regional Assets will be determined each year and
will be equal to the Wholesale Customers’ Proportional Annual Use.
4. If Indebtedness is issued by the SFPUC to refund the 2006 Revenue
Bonds, Series A or to refund any other long-term Indebtedness issued after July 1, 2009, the
Net Annual Debt Service attributable to proceeds used for refunding will be allocated on the
same basis as the Indebtedness being refunded.
5. The SFPUC will prepare an annual report showing for each issue of
Indebtedness and through the most recently completed fiscal year: (1) net financing proceeds
available to pay project costs, (2) actual earnings on proceeds, (3) actual expenditures by
project. The report shall be substantially in the form of Attachment L-3 and shall be delivered to
BAWSCA on or before November 30 of each year, commencing November 2009.
6. In addition to Net Debt Service, Wholesale Customers will pay a
proportionate share of annual administrative costs associated with Indebtedness, such as bond
trustee fees, credit rating agency fees, letter of credit issuer fees, San Francisco Revenue Bond
Oversight Committee fees, etc., but only to the extent such fees are neither paid from proceeds
of Indebtedness nor included in SFPUC operation and maintenance or administrative and
general expenses.
B. Revenue-Funded Capital Additions. The Wholesale Customers shall pay the
wholesale share of the appropriation contained in the SFPUC annual budget for each year to be
used to acquire or construct New Regional Assets. If such appropriations are reimbursed from
proceeds of Indebtedness, the Wholesale Customers will be credited for prior payments made
under this Section 5.04.B.
The Wholesale Customers’ share of the annual appropriation for revenue-funded New Regional
Assets that are categorized as Direct Wholesale will be 100 percent. (None of the Repair and
Replacement projects in the SFPUC’s most recent capital improvement program updated on
February 10, 2009, is categorized as Direct Wholesale.) The Wholesale Customers’ share of
the annual appropriation for all other revenue-funded New Regional Assets will be determined
each year and will be equal to the Wholesale Customers’ Proportional Annual Use in each fiscal
year. The amount appropriated in each fiscal year for the wholesale share of New Regional
Assets shall be contributed to the Wholesale Capital Fund described in Section 6.08 and
reported on and administered as shown in that section and Attachments M-1 through M-3.
44 15118728.1
5.05. Water Enterprise Operation and Maintenance Expenses
There are five categories of Water Enterprise Operation and Maintenance Expenses, described
below:
A. Source of Supply
1. Description: This category consists of the costs of labor, supervision and
engineering; materials and supplies; and other expenses incurred in the operation and
maintenance of collecting and impounding reservoirs, dams, wells and other water supply
facilities located outside San Francisco; watershed protection; water supply planning; and the
purchase of water.
2. Allocation: Direct Retail expenses, including water supply planning for
Retail operations (such as City Retail water conservation programs), will be assigned to the
Retail Customers. Regional expenses will be allocated between Retail Customers and
Wholesale Customers on the basis of Proportional Annual Use. Direct Wholesale expenses will
be assigned to the Wholesale Customers. (As of the Effective Date there are no Direct
Wholesale expenses in the Source of Supply category.)
B. Pumping
1. Description: This category consists of the costs of labor, supervision and
engineering; materials and supplies; and other expenses incurred in the operation and
maintenance of water pumping plants, ancillary structures and equipment and surrounding
grounds; and fuel and power purchased for pumping water.
2. Allocation: Direct Retail expenses will be assigned to the Retail
Customers. Regional expenses will be allocated between Retail Customers and Wholesale
Customers on the basis of Proportional Annual Use. Direct Wholesale expenses will be
assigned to the Wholesale Customers. (As of the Effective Date there are no Direct Wholesale
expenses in the Pumping category.)
C. Treatment
1. Description: This category consists of the costs of labor, supervision and
engineering; materials and supplies and other expenses incurred in the operation and
maintenance of water treatment plants and drinking water quality sampling and testing. The
cost of water quality testing will not include expenses incurred on behalf of the Wastewater
45 15118728.1
Enterprise. Any remaining costs, after adjusting for the Wastewater Enterprise, will be reduced
by the amount of revenue received for laboratory analyses of any type performed for agencies,
businesses and/or individuals other than the Water and Hetch Hetchy Enterprises.
2. Allocation: Direct Retail expenses will be assigned to the Retail
Customers. Regional expenses will be allocated between Retail Customers and Wholesale
Customers on the basis of Proportional Annual Use. Direct Wholesale expenses will be
assigned to the Wholesale Customers. (As of the Effective Date there are no Direct Wholesale
expenses in the Treatment category.)
D. Transmission and Distribution
1. Description: This category consists of the cost of labor, supervision and
engineering; materials and supplies; and other expenses incurred in the operation and
maintenance of transmission and distribution pipelines, appurtenances, meters (other than
those expenses payable by individual Wholesale Customers pursuant to Section 5.10.C.3),
distribution reservoirs storing treated water, craft shops and auto shops servicing vehicles used
for operation and maintenance of the Regional Water System rather than for Direct Retail
facilities, and miscellaneous facilities related to the transmission and distribution of water.
2. Allocation: Direct Retail Transmission and Distribution expenses will be
assigned to the Retail Customers. Regional Transmission and Distribution expenses will be
allocated between Retail and Wholesale Customers on the basis of Proportional Annual Use.
Expenses incurred for the operation and maintenance of three terminal reservoirs, i.e., Sunset
Reservoir (North and South Basins), University Mound Reservoir (North and South Basins), and
Merced Manor Reservoir, as well as transmission pipelines delivering water to them, are
classified as Regional expenses notwithstanding the location of the reservoirs within San
Francisco. Direct Wholesale expenses will be assigned to the Wholesale Customers. (As of
the Effective Date the only Direct Wholesale expenses in the Transmission and Distribution
category are associated with the Palo Alto pipeline.)
E. Customer Services
1. Description: This category consists of labor; materials and supplies; and
other expenses incurred for meter reading, customer record keeping, and billing and collection
for the Water Enterprise.
46 15118728.1
2. Allocation: Customer Services expenses will be allocated among the
Water Enterprise, the Wastewater Enterprise, and Hetch Hetchy Enterprise in proportion to the
time spent by employees in Customer Services for each operating department/enterprise. The
Water Enterprise’s share of Customer Services expense will be allocated 98 percent to the
Retail Customers and two percent to the Wholesale Customers, as illustrated on Attachment N-
2, Schedule 1.
5.06. Water Enterprise Administrative and General Expenses
Administrative and General expenses consist of the Water Enterprise’s share of the cost of
general government distributed through the full-cost Countywide Cost Allocation Plan, the
services of SFPUC support bureaus, Water Enterprise administrative and general expenses that
cannot be directly assigned to a specific operating and maintenance category, and the cost of
the Compliance Audit. These four subcategories, and the method by which costs in each are to
be calculated and allocated, are as follows:
A. Countywide Cost Allocation Plan
1. Description: This subcategory consists of the Water Enterprise’s share of
the costs of San Francisco general government and other City central service departments
which are not directly billed to the Water Enterprise or other operating departments. All San
Francisco operating departments are assigned a prorated share of these costs through the full-
cost Countywide Cost Allocation Plan (COWCAP) prepared annually by the San Francisco
Controller.
2. Allocation: The Water Enterprise’s assigned share of central government
costs as shown in the annual full-cost COWCAP prepared by the San Francisco Controller, will
be allocated between Retail Customers and Wholesale Customers on the basis of the
composite percentage of the allocated expenses in the five categories of operation and
maintenance expense described in Section 5.05. The composite wholesale percentage shown
on Attachment N-2, Schedule 1 is 42.07 percent, derived by dividing the wholesale share of
Operation and Maintenance expenses ($46,573,883) by total Operation and Maintenance
expenses ($110,700,133).
B. Services of SFPUC Bureaus
1. Description: This subcategory consists of the support services provided
to the Water Enterprise by the SFPUC Bureaus, which presently consist of the General
47 15118728.1
Manager’s Office, Business Services, External Affairs, and Infrastructure Bureau. Business
Services presently includes Financial Services, Information Technology Services, Human
Resource Services, Fleet Management, and Customer Services.
2. Allocation: There are three steps involved in determining the Wholesale
Customers’ share of SFPUC Bureau costs.
a. Step One: Bureau expenses which have either been recovered
separately or which provide no benefit to Wholesale Customers will be excluded. Examples of
Bureau expenses recovered separately include (1) Customer Services expenses, which are
recovered as provided in Section 5.05.E, and (2) Infrastructure expenses, which are assigned to
individual projects and capitalized. An example of a Bureau expense that provides no benefit to
Wholesale Customers is Information Technology Services expenses for support of the San
Francisco Municipal Railway. In addition, the SFPUC will continue its practice of assigning City
Attorney Office expenses charged to the General Manager's Office for projects or lawsuits that
relate to only one enterprise directly to that enterprise. For example, costs related to a lawsuit
involving the Wastewater Enterprise will not be assigned to the Water Enterprise.
b. Step Two: Bureau expenses adjusted as provided in Step One
will be allocated among the Water Enterprise, the Wastewater Enterprise and the Hetch Hetchy
Enterprise on the basis of the actual salaries of employees in each enterprise or department, as
illustrated on Attachment N-2, Schedule 7.
c. Step Three: The amount allocated to the Water Enterprise
through Step Two will be allocated between Retail Customers and Wholesale Customers on the
basis of Proportional Annual Use.
C. Water Enterprise Administrative and General
1. Description: This category includes expenses incurred by the Water
Enterprise that are not readily assignable to specific operating divisions. This category includes
the following expenses:
a. Water Administration: This includes the costs of labor and other
expenses of the administrative section of the Water Enterprise, supervision and engineering
expenses, professional services, travel and training, equipment purchases, and materials and
supplies not directly assignable to a specific operating unit.
b. Services Provided by Other City Departments: This includes
charges of other San Francisco departments directly billed to the Water Enterprise
48 15118728.1
administration by other San Francisco departments for services ordered by the Water
Enterprise, such as legal services, risk management, telecommunications, employee relations,
purchasing, mail services, and workers compensation claims paid.
c. Litigation and Claims Paid: This includes charges incurred for
attorney services and claims and judgments paid in litigation arising from the operation of the
Water Enterprise.
2. Allocation: In each of these three subcategories, expenses that benefit
only Retail Customers will be excluded. For example, the cost of claims and judgments
resulting from a break in or leak from pipelines or reservoirs in the Retail Service Area (with the
exception of the three terminal reservoirs and pipelines delivering water to them) will be
assigned to the Retail Customers. Remaining Water Enterprise Administrative and General
expenses will be allocated between Retail Customers and Wholesale Customers on the basis of
the composite percentage of allocated operation and maintenance expense categories
described in Section 5.05.
D. Compliance Audit. The cost of the Compliance Audit described in Section 7.04
will be assigned 50 percent to the Retail Customers and 50 percent to the Wholesale
Customers.
5.07. Water Enterprise Property Taxes
A. Description: This category consists of property taxes levied against property
owned by San Francisco located in Alameda, San Mateo and Santa Clara counties and used
and managed by the SFPUC.
B. Allocation: All property taxes paid, net of (1) reimbursements received from
lessees and permit holders, and (2) refunds from the taxing authority, are Regional expenses.
Net property taxes will be allocated between Retail Customers and Wholesale Customers on
the basis of Proportional Annual Use.
5.08. Hetch Hetchy Enterprise Expenses
A. Introduction. There are two steps involved in determining the amount of the
Wholesale Customers’ share of Hetch Hetchy Enterprise expenses.
49 15118728.1
1. The first step is to determine the Water Enterprise’s share of Hetch
Hetchy Enterprise operation expenses, maintenance expenses, administrative and general
expenses, and property taxes.
2. The second step is to determine the Wholesale Customers’ share of
expenses allocable to the Water Enterprise.
B. Determination of the Water-Related Portion of Hetch Hetchy Enterprise
Expenses
1. Operation and Maintenance Expenses: This category consists of the cost
of labor, materials and supplies, and other expenses incurred in operating and maintaining
Hetch Hetchy Enterprise physical facilities.
a. Description: Expenses associated exclusively with the production
and distribution of hydroelectric power (e.g., generating plants and power transmission lines and
towers, transformers and associated electric equipment, purchased power, wheeling charges,
rental of power lines, etc.) are categorized as Power-Only and are allocated to power.
Expenses associated exclusively with the operation and maintenance of facilities that serve only
the water function (e.g., water transmission pipelines and aqueducts, activities related to
compliance with federal and state drinking water quality laws, etc.) are categorized as Water-
Only and are allocated entirely to water. Expenses associated with the operation and
maintenance of facilities that serve both the water and power functions (e.g., dams, security
programs, etc.) are categorized as Joint and are reallocated as 55 percent Power-Related and
45 percent Water-Related.
2. Administrative and General Expenses: There are three subcategories of
Hetch Hetchy Enterprise Administrative and General expenses.
a. Full-Cost Countywide Cost Allocation Plan: This subcategory
consists of the cost of San Francisco general government and other City central service
departments which are not directly billed to operating departments but allocated through the full-
cost Countywide Cost Allocation Plan described in Section 5.06.A. Costs in this subcategory
are classified as Joint, and are reallocated as 55 percent Power-Related and 45 percent Water-
Related.
b. SFPUC Bureau Costs: This subcategory consists of the expenses
described in Section 5.06.B. One hundred percent of Customer Services expenses allocated to
the Hetch Hetchy Enterprise are categorized as Power-Only. The remaining amount of Bureau
50 15118728.1
expenses allocated to the Hetch Hetchy Enterprise pursuant to Section 5.06.B will be
reallocated between power and water in proportion to the salaries of Hetch Hetchy Enterprise
employees assigned to each function as shown on Attachment N-2, Schedule 7.1.
c. Other Administrative and General: This subcategory includes
payments to the United States required by the Act, labor, supervision and engineering and other
costs not readily assignable to a specific operation or maintenance function or program. Costs
related to power administration (such as long range planning and policy analysis for energy
development, administration of power contracts, and administration of work orders to City
departments for energy services) are Power-Only costs. Costs related to water administration
(such as legal and professional services for the protection of the City's water rights) are Water-
Only costs and will be assigned to the Water Enterprise. Costs related to both power
administration and water administration (such as general administration, office rents, office
materials and supplies, and services of other City departments benefitting to both power and
water are Joint administrative and general costs and are reallocated as 55 percent Power-
Related and 45 percent Water-Related.
3. Property Taxes. This category consists of property taxes levied against
property owned by San Francisco in Tuolumne, Stanislaus, San Joaquin, and Alameda counties
and operated and managed by the Hetch Hetchy Enterprise.
Allocation: Property taxes are classified as Joint costs. They will be reallocated as 55
percent Power-Related and 45 percent Water-Related.
C. Calculation of Wholesale Customers’ Share of Hetch Hetchy Enterprise
Expenses. The Water Enterprise’s share of Hetch Hetchy Enterprise expenses consist of 100
percent of Water-Only expenses and the Water-Related portion (45%) of Joint expenses.
The Wholesale Customers’ share of the sum of the Water Enterprise’s share of Hetch
Hetchy Enterprise expenses determined under subsection B shall be calculated by multiplying
that dollar amount by Adjusted Proportional Annual Use.
5.09. Hetch Hetchy Enterprise Capital Costs
A. Introduction. Wholesale Customers are also allocated a share of Hetch Hetchy
Enterprise capital costs.
B. Components of Capital Costs. The components of Hetch Hetchy Enterprise
capital costs are as follows:
51 15118728.1
1. Existing Assets Cost Recovery. The Wholesale Customers’ repayment of
their share of Hetch Hetchy Existing Assets (Water-Only and the Water-Related portion [45
percent] of Joint assets) is shown on Attachment K-4 accompanying Section 5.03.
2. Debt Service on New Assets. The Water Enterprise will be assigned 100
percent of Net Annual Debt Service attributable to acquisition and construction of New Hetch
Hetchy Enterprise assets that are Water-Only and the Water-Related portion (45 percent) of Net
Annual Debt Service on New Hetch Hetchy Enterprise Joint assets. The provisions of Section
5.04.A apply to debt service on New Hetch Hetchy Enterprise assets.
3. Revenue-Funded Capital Additions. The Water Enterprise will be
assigned 100 percent of capital expenditures from revenues for New Hetch Hetchy Enterprise
assets that are Water-Only and the Water-Related portion (45 percent) of such expenditures for
new Hetch Hetchy Enterprise Joint assets. The provisions of Section 5.04.B apply to the
payment of New revenue-funded Hetch Hetchy Enterprise assets.
C. Calculation of Wholesale Customers’ Share of Hetch Hetchy Enterprise
Capital Costs. The Wholesale Customers’ share of the Net Annual Debt Service and revenue
funded capital expenditures determined under subsections B.2 and 3 shall be calculated by
multiplying that dollar amount by Adjusted Proportional Annual Use.
5.10. Additional Agreements Related to Financial Issues
A. Wholesale Customers Not Entitled to Certain Revenues. The Wholesale
Customers have no entitlement to any of the following sources of revenue to the SFPUC.
1. Revenues from leases or sales of SFPUC real property.
2. Revenues from the other utility services such as the sale of electric
power, natural gas and steam.
3. Revenues from the sale of water to customers and entities other than the
Wholesale Customers.
4. Revenues earned from the investment of SFPUC funds other than funds
contributed by the Wholesale Customers to the Wholesale Revenue Coverage Reserve
described in Section 6.06 or the Wholesale Capital Fund described in Section 6.08. Wholesale
Customers are also entitled to the benefit of earnings on proceeds of Indebtedness (through
52 15118728.1
expenditure on New Regional Assets and /or application to Debt Service) and to interest on the
Balancing Account as provided in Section 6.05.B.
5. Revenues not related to the sale of water.
B. Wholesale Customers Not Charged with Certain Expenses. The Wholesale
Customers will not be charged with any of the following expenses:
1. Capital costs for assets constructed or acquired prior to July 1, 1984 other
than Existing Asset costs that are repaid pursuant to Section 5.03.
2. Expenses incurred by the SFPUC for generation and distribution of
electric power, including Hetch Hetchy Enterprise Power-Only expenses and the Power-Related
share of Hetch Hetchy Enterprise Joint expenses. An exception to this is Regional energy costs
incurred by the Water Enterprise, for which Wholesale Customers are charged on the basis of
Proportional Annual Use.
3. Expenses incurred by SFPUC in providing water to Retail Customers.
4. Expenses associated with the SFPUC’s accruals or allocations for
uncollectible Retail Water accounts.
5. Attorneys’ fees and costs incurred by the Wholesale Customers that a
court of competent jurisdiction orders San Francisco to pay as part of a final, binding judgment
against San Francisco as provided in Section 8.03.B.2.
6. Any expenses associated with funding any reserves (other than the
required Wholesale Revenue Coverage Reserve described in Section 6.06) accrued and not
anticipated to be paid within one year unless such reserve is established by mutual agreement
of the SFPUC and BAWSCA.
7. Any expenses accrued in respect to pending or threatened litigation,
damage or personal injury claims or other loss contingencies unless projected to be paid within
one year. Otherwise, such expenses will be charged to the Wholesale Customers when
actually paid.
8. Any expense associated with installing, relocating, enlarging, removing or
modifying meters and service connections at the request of an individual Wholesale Customer.
9. The Retail Customers’ portion of any Environmental Enhancement
Surcharges imposed to enforce the Interim Supply Limitation set forth in Section 4.04.
53 15118728.1
C. Revenues Not Credited to Payment of Wholesale Revenue Requirement.
The following payments by Wholesale Customers, individually or collectively, are not credited as
Wholesale revenues for purposes of Section 6.05.B:
1. Payments by individual Wholesale Customers of the Environmental
Enhancement Surcharge imposed to enforce the Interim Supply
Limitation set forth in Section 4.04.
2. Payments of attorneys’ fees and costs incurred by San Francisco that a
court of competent jurisdiction orders the Wholesale Customers to pay as
part of a final, binding judgment against the Wholesale Customers, as
provided in Section 8.03.B.3.
3. Payments by individual Wholesale Customers for installation, relocation,
enlargement, removal or modification of meters and service connections
requested by, and charged to, a Wholesale Customer.
4. Payments applied to the amortization of the ending balance in the
balancing account under the 1984 Agreement, pursuant to Section
6.05.A.
5. Payments of the Water Management Charge which are delivered to
BAWSCA pursuant to Section 3.06.
6. Payments directed to the Wholesale Revenue Coverage Reserve
pursuant to Section 6.06.
7. Prepayments authorized by Sections 5.03.C and 5.03.F.
D. Other
1. The Wholesale Customers will receive a proportional benefit from funds
received by the SFPUC from (a) governmental grants, rebates, reimbursements or other
subventions, (b) private-sector grants for Regional capital or operating purposes of the Water
Enterprise and the Water-Only and Water-related portion of Joint Hetch Hetchy Water
Enterprise expenses, or (c) a SFPUC use of taxable bonds.
2. The Wholesale Customers will receive a proportionate benefit from
recovery of damages, including liquidated damages, by SFPUC from judgments against or
settlements with contractors, suppliers, sureties, etc., related to Regional Water System projects
and the Water-Only and Water-Related portion of Joint Hetch Hetchy Enterprise projects.
54 15118728.1
3. The SFPUC will continue to charge Wholesale Customers for assets
acquired or constructed with proceeds of Indebtedness on which Wholesale Customers paid
Debt Service during the Term of this Agreement on the “cash” basis (as opposed to the “utility”
basis) after the expiration or earlier termination of this Agreement. The undertaking in this
Section 5.10.D.3 will survive the expiration or earlier termination of this Agreement.
5.11. Classification of Existing System Assets.
Existing System Assets of the Regional Water System include the water storage,
transmission, and treatment systems owned and operated by San Francisco in Tuolumne,
Stanislaus, San Joaquin, Alameda, Santa Clara, San Mateo and San Francisco Counties.
These assets are managed by either the Water Enterprise or the Hetch Hetchy Enterprise and
the assets have been classified for purposes of cost allocation.
A. Water Enterprise Assets. Water Enterprise assets are currently managed,
operated, and maintained by the Water Enterprise and are generally located west of Alameda
East Portal, in addition to the treatment facilities located at Tesla and the Thomas Shaft
Emergency Disinfection Facility. These assets are classified as Direct Retail, Direct Wholesale,
or Regional.
B. Hetch Hetchy Enterprise Assets. Hetch Hetchy Enterprise assets are currently
managed, operated and maintained by the Hetch Hetchy Enterprise and are generally located
east of the Alameda East Portal of the Coast Range Tunnel in Sunol Valley, Alameda County.
These assets are classified as Power-Only, Water-Only, or Joint, in accordance with Sections
5.08 and 5.09. Through the Wholesale Revenue Requirement, the Wholesale Customers pay
Existing System Asset capital costs and operating expenses in accordance with Section 5.02.F
and do not pay capital costs or operating expenses associated with assets classified as Direct
Retail, Power-Only, and the Power-Related portion of Joint assets.
C. Attachment R Documents Classifications. To facilitate WSA administration,
Attachment R documents the classification of major Existing System Assets operated by the
Hetch Hetchy Enterprise. Attachment R consists of three documents: R-1 Introduction, R-2
Special Classification of Discrete Projects for 2018 Amendment Purposes, and R-3 Major Hetch
Hetchy Enterprise Existing System Assets. Attachment R may be modified as specified in
Section 5.11.D and in the manner set forth in Section 2.03.C.
55 15118728.1
D. Attachment R-3, Major Hetch Hetchy Enterprise Existing System Assets is
Not Exhaustive. Existing System Assets include, but are not limited to, land; fixed infrastructure
such as dams, tunnels, buildings, water treatment plants and pipelines; equipment such as
pumps and vehicles; and related appurtenances. Major Hetch Hetchy Enterprise Existing
System Assets, and their classifications, are listed in Attachment R-3. Attachment R-3 does not
include all assets of the Regional Water System, but represents the parties' best efforts to
document major Hetch Hetchy Enterprise Existing System Assets that would incur capital costs
and operating expenses subject to cost allocation. The classification of assets listed on R-3
may not be changed during the Term, any Extension Term, and any renewal of the Agreement,
however, Attachment R-3 may be modified by mutual agreement in accordance with Section
2.03.C to (1) add an asset that was inadvertently omitted, (2) to add a new asset, and (3)
remove a destroyed or obsolete asset. In the event that the parties cannot agree on the
classification of any omitted or new assets, the dispute shall be subject to arbitration under
Section 8.01.
E. Attachment R-3, Major Hetch Hetchy Enterprise Existing System Assets
Classifications are Fixed. The classification of the major Hetch Hetchy Enterprise Existing
System Assets is fixed and shall control the allocation of capital costs and operating expenses
for the remainder of the Term, any Extension Terms, and any renewal of the Agreement.
However, changes may be proposed in accordance with subsection G below. Capital costs and
operating expenses are meant to be inclusive of all costs related to assets, including, but not
limited to, any alterations, additions, improvements, rehabilitation, replacement of assets, and
equipment that is appurtenant thereto. Since asset classifications are fixed in Attachment R-3,
asset classifications may not be modified by mutual agreement in accordance with Section
2.03.C.
F. Attachment R-2, Special Classification of Discrete Projects for 2018
Amendment Purposes. Past, ongoing and future capital projects involving five Hetch Hetchy
Enterprise Existing System Assets defined in Attachment R-2 have classifications that differ
from the underlying asset classifications. These project-related classification changes shown on
Attachment R-2, are part of the 2018 amendments to the Agreement and are not precedential
for any other asset-related capital cost or operating expense. With the exception of the defined
projects related to the five assets listed on R-2, the capital projects for all assets follow the asset
classifications. Capital projects listed on Attachment R-2 must be approved by the SFPUC
following necessary CEQA review.
56 15118728.1
G. Five Year Notice of Intent to Renegotiate Cost Allocation. In the event San
Francisco or the Wholesale Customers, which may be represented by BAWSCA, wish to
propose and negotiate a change in Existing System Asset classifications, or a change in the
Water-Related portion (45 percent) of Joint expenses, for the next Water Supply Agreement,
such party must provide the other at least 5 years' written notice prior to the expiration of the
Term or Extension Term, or the renewal of the Agreement. At a minimum, the noticing party
must provide a comprehensive analysis of the financial and rate impacts of the proposed
change at least two years prior to the expiration of the Term or Extension Term, or the renewal
of the Agreement.
To meet this requirement, the parties may agree to jointly analyze, under a separate agreement,
system capacity and usage and/or new assets, as well as other possible alternative cost
allocation methodologies. Either party may also unilaterally initiate such studies by consultants
of their choice and bear all their own costs.
57 15118728.1
Article 6. Integration of Wholesale Revenue Requirement with
SFPUC Budget Development and Rate Adjustments
6.01. General
A. The purpose of the allocation bases set forth in Article 5 is to determine the
Wholesale Revenue Requirement for each fiscal year. The Wholesale Revenue Requirement
can only be estimated in advance, based on projected costs and water deliveries. These
projections are used to establish water rates applicable to the Wholesale Customers.
B. After the close of each fiscal year, the procedures described in Article 7 will be
used to determine the actual Wholesale Revenue Requirement for that year, based on actual
costs incurred, allocated according to the provisions of Article 5, and using actual water delivery
data. The amount properly allocated to the Wholesale Customers shall be compared to the
amount billed to the Wholesale Customers for the fiscal year, other than those identified in
Section 5.10.C. The difference will be entered into a balancing account to be charged to, or
credited to, the Wholesale Customers, as appropriate.
C. The balancing account shall be managed as described in Section 6.05.
6.02. Budget Development
The SFPUC General Manager will send a copy of the proposed SFPUC budget to
BAWSCA at the same time as it is sent to the Commission. In addition, a copy of materials
submitted to the Commission for consideration at meetings prior to the meeting at which the
overall SFPUC budget is considered (including (a) operating budgets for the Water Enterprise
and the Hetch Hetchy Enterprise, (b) budgets for SFPUC Bureaus, and (c) capital budgets for
the Water Enterprise and the Hetch Hetchy Enterprise) will also be sent to BAWSCA
concurrently with their submission to the Commission.
6.03. Rate Adjustments
A. Budget Coordinated Rate Adjustments. Adjustments to the rates applicable to
the Wholesale Customers shall be coordinated with the budget development process described
in this section except to the extent that Sections 6.03.B and 6.03.C authorize emergency rate
increases and drought rate increases, respectively.
If the SFPUC intends to increase wholesale water rates during the ensuing fiscal year, it
will comply with the following procedures:
58 15118728.1
1. Adjustments to the wholesale rates will be adopted by the Commission at
a regularly scheduled meeting or at special meeting, properly noticed, called for the purpose of
adjusting rates or for taking any other action under the jurisdiction of the Commission.
2. The SFPUC will send a written notice by mail or electronic means to each
Wholesale Customer and to BAWSCA of the recommended adjustment at least thirty (30) days
prior to the date of the meeting at which the Commission will consider the proposed adjustment.
The notice will include the date, time and place of the Commission meeting.
3. The SFPUC shall prepare and provide to each Wholesale Customer and
to BAWSCA the following materials: (a) a table illustrating how the increase or decrease in the
Wholesale Revenue Requirement and wholesale rates were calculated, substantially in the form
of Attachment N-1, (b) a schedule showing the projected expenses included in the Wholesale
Revenue Requirement for the fiscal year for which the rates are being proposed, and supporting
materials, substantially in the form of Attachment N-2, and (c) a schedule showing projected
water sales, Wholesale Revenue Requirements and wholesale rates for the fiscal year for which
rates are being set and the following four years, substantially in the form of Attachment N-3.
These materials will be included with the notification required by Section 6.03.A.2.
4. Rate adjustments will be effective no sooner than thirty (30) days after
adoption of the wholesale rate by the Commission.
5. San Francisco will use its best efforts to provide the Wholesale
Customers with the information described above. San Francisco's failure to comply with the
requirements set forth in this section shall not invalidate any action taken by the Commission
(including, but not limited to, any rate increase or decrease adopted). In the event of such
failure, the Wholesale Customers may either invoke arbitration, as set forth in Section 8.01, or
seek injunctive relief, to compel San Francisco to remedy the failure as soon as is reasonably
practical, and San Francisco shall be free to oppose the issuance of the requested judicial or
arbitral relief on any applicable legal or equitable basis. The existence of this right to resort to
arbitration shall not be deemed to preclude the right to seek injunctive relief.
6. Because delays in the budget process or other events may cause San
Francisco to defer the effective date of Wholesale Customer rate adjustments until after the
beginning of San Francisco's fiscal year, nothing contained in this Agreement shall require San
Francisco to make any changes in the water rates charged to Wholesale Customers effective at
59 15118728.1
the start of San Francisco's fiscal year or at any other specific date. Nothing in the preceding
sentence shall excuse non-compliance with the provisions of Section 6.02 and this section.
B. Emergency Rate Increases. The Commission may adjust the Wholesale
Customers’ rates without complying with the requirements of Section 6.03.A in response to an
Emergency that damages the Regional Water System and disrupts San Francisco’s ability to
maintain normal deliveries of water to Retail and Wholesale Customers. In such an Emergency,
the Commission may adopt an emergency rate surcharge applicable to Wholesale Customers
without following the procedures set forth in this section, provided that any such rate surcharge
imposed by the Commission shall be applicable to both Retail and Wholesale Customers and
incorporate the same percentage increase for all customers. Any emergency rate surcharge
adopted by the Commission shall remain in effect only until the next-budget coordinated rate-
setting cycle.
C. Drought Rates. If the Commission declares a water shortage emergency under
Water Code Section 350, implements the Tier 1 Shortage Plan (Attachment H) described in
Section 3.11.C, and imposes drought rates on Retail Customers, it may concurrently adjust
wholesale rates independently of coordination with the annual budget process. Those
adjustments may be designed to encourage water conservation and may constitute changes to
the structure of the rates within the meaning of Section 6.04. The parties agree, however, that,
in adopting changes in rates in response to a declaration of water shortage emergency, the
Commission shall comply with Section 6.03.A.1 and 2 but need not comply with Section 6.04.B.
Drought Rate payments and payments of excess use charges levied in accordance with the Tier
1 Shortage Plan described in Section 3.11.C constitute Wholesale Customer Revenue and
count towards the Wholesale Revenue Requirement. The SFPUC may use these revenues to
purchase additional water for the Wholesale Customers from the State Drought Water Bank or
other willing seller.
6.04. Rate Structure
A. This Agreement is not intended and shall not be construed to limit the
Commission’s right (a) to adjust the structure of the rate schedule applicable to the Wholesale
Customers (i.e., the relationship among the several charges set out therein) or (b) to add,
delete, or change the various charges which make up the rate schedule, provided that neither
such charges nor the structure of the rate schedule(s) applicable to the Wholesale Customers
shall be arbitrary, unreasonable, or unjustly discriminatory as among said customers. The
60 15118728.1
SFPUC will give careful consideration to proposals for changes in the rate schedule made jointly
by the Wholesale Customers but, subject to the limitations set out above, shall retain the sole
and exclusive right to determine the structure of the rate schedule.
B. If the SFPUC intends to recommend that the Commission adopt one or more
changes to the structure of wholesale rates (currently set forth in SFPUC Rate Schedule W-25),
it shall prepare and distribute to the Wholesale Customers and BAWSCA a report describing the
proposed change(s), the purpose(s) for which it/they are being considered, and the estimated
financial effect on individual Wholesale Customers or classes of customers. Wholesale
Customers may submit comments on the report to the SFPUC for sixty (60) days after receiving
the report. The SFPUC will consider these comments and, if it determines to recommend that
the Commission adopt the change(s), as described in the report or as modified in response to
comments, the SFPUC General Manager shall submit a report to the Commission
recommending specific change(s) in the rate structure. Copies of the General Manager’s report
shall be sent to all Wholesale Customers and BAWSCA at least thirty (30) days prior to the
Commission meeting at which the changes will be considered.
C. The SFPUC may recommend, and the Commission may adopt, changes in the
structure of wholesale rates at any time. However, the new rate schedule implementing these
changes will become effective at the beginning of the following fiscal year.
6.05. Balancing Account
A. Balancing Account Established Under 1984 Agreement. The amount of
credit in favor of San Francisco as of the expiration of the term of 1984 Agreement (June 30,
2009) is not known with certainty as of preparation and execution of this Agreement. It will not
be known with certainty until the Compliance Audit for FY 2008-09 is completed and disputes, if
any, that the Wholesale Customers or the SFPUC may have with the calculation of the
Suburban Revenue Requirement for that fiscal year and for previous fiscal years have been
settled or decided by arbitration.
The parties anticipate that the amount of the credit in favor of San Francisco as of June
30, 2009 may be within the range of $15 million to $20 million.
In order to reduce the credit balance due San Francisco under the 1984 Agreement in
an orderly manner, while avoiding unnecessary fluctuations in wholesale rates, the parties
agree to implement the following procedure.
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1. In setting wholesale rates for FY 2009-10, SFPUC will include a balancing
account repayment of approximately $2 million.
2. In setting wholesale rates for FY 2010-11 and following years, SFPUC will
include a balancing account repayment of not less than $2 million and not more than $5 million
annually until the full amount of the balance due, plus interest at the rate specified in Section
6.05.B, is repaid.
3. The actual ending balance as of June 30, 2009 will be determined, by the
parties’ agreement or arbitral ruling, after the Compliance Audit report for FY 2008-09 is
delivered to BAWSCA. That amount, once determined, will establish the principal to be
amortized through subsequent years’ repayments pursuant to this Section 6.05.A.
B. Balancing Account Under This Agreement
1. Operation. After the close of each fiscal year, the SFPUC will compute
the costs allocable to the Wholesale Customers for that fiscal year pursuant to Article 5, based
on actual costs incurred by the SFPUC and actual amounts of water used by the Wholesale
Customers and the Retail Customers. That amount will be compared to the amounts billed to
the Wholesale Customers for that fiscal year (including any Excess Use Charges, but excluding
revenues described in Section 5.10.C). The difference will be posted to a “balancing account”
as a credit to, or charge against, the Wholesale Customers. Interest shall also be posted to the
balancing account calculated by multiplying the amount of the opening balance by the average
net interest rate, certified by the Controller as earned in the San Francisco Treasury for the
previous fiscal year on the San Francisco County Pooled Investment Account. Interest, when
posted, will carry the same mathematical sign (whether positive or negative) as carried by the
opening balance. The amount posted to the balancing account in each year shall be added to,
or subtracted from, the balance in the account from previous years. The calculation of the
amount to be posted to the balancing account shall be included in the report prepared by the
SFPUC pursuant to Section 7.02.
The opening balance for fiscal year 2009-10 shall be zero.
2. Integration of Balancing Account with Wholesale Rate Setting Process. If
the amount in the balancing account is owed to the Wholesale Customers (a positive balance),
the SFPUC shall take it into consideration in establishing wholesale rates. However, the
SFPUC need not apply the entire amount to reduce wholesale rates for the immediately ensuing
62 15118728.1
year. Instead, the SFPUC may prorate a positive ending balance over a period of up to three
successive years in order to avoid fluctuating decreases and increases in wholesale rates.
a. If a positive balance is maintained for three successive years and
represents 10 percent or more of the Wholesale Revenue Requirement for the most recent
fiscal year, the SFPUC shall consult with BAWSCA as to the Wholesale Customers’ preferred
application of the balance. The Wholesale Customers shall, through BAWSCA, direct that the
positive balance be applied to one or more of the following purposes: (a) transfer to the
Wholesale Revenue Coverage Reserve, (b) amortization of any remaining negative balance
from the ending balancing account under the 1984 Agreement, (c) prepayment of the existing
asset balance under Section 5.03, (d) water conservation or water supply projects administered
by or through BAWSCA, (e) immediate reduction of wholesale rates, or (f) continued retention
for future rate stabilization purposes. In the absence of a direction from BAWSCA, the SFPUC
shall continue to retain the balance for rate stabilization in subsequent years.
b. If the amount in the balancing account is owed to the SFPUC (a
negative balance), the SFPUC shall not be obligated to apply all or any part of the negative
balance in establishing wholesale rates for the immediately ensuring year. Instead, the SFPUC
may prorate the negative balance in whole or in part over multiple years in order to avoid
fluctuating increases and decreases in wholesale rates.
6.06. Wholesale Revenue Coverage Reserve
A. The SFPUC may include in wholesale rates for any fiscal year an additional
dollar amount (“Wholesale Revenue Coverage”), which for any fiscal year shall equal the
following:
1. The lesser of (i) 25% of the Wholesale Customers’ share of Net Annual
Debt Service for that fiscal year determined as described in Section 5.04.A, or (ii) the amount
necessary to meet the Wholesale Customers’ proportionate share of Debt Service coverage
required by then-current Indebtedness for that fiscal year, minus
2. A credit for (i) the actual amounts previously deposited in the “Wholesale
Revenue Coverage Reserve” (as defined in subsection B below), (ii) accrued interest on the
amounts on deposit in the Wholesale Revenue Coverage Reserve, and (iii) an amount equal to
any additional interest that would have accrued on the actual amounts previously deposited in
the Wholesale Revenue Coverage Reserve assuming no withdrawals had been made
therefrom.
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B. During each fiscal year, the SFPUC will set aside and deposit that portion of
revenue equal to Wholesale Revenue Coverage into a separate account that the SFPUC will
establish and maintain, to be known as the “Wholesale Revenue Coverage Reserve.” Deposits
into the Wholesale Revenue Coverage Reserve shall be made no less frequently than monthly.
The Wholesale Revenue Coverage Reserve shall be credited with interest at the rate specified
in Section 6.05.B. The SFPUC may use amounts in the Wholesale Revenue Coverage Reserve
for any lawful purpose. Any balance in the Wholesale Revenue Coverage Reserve in excess of
the Wholesale Revenue Coverage amount as of the end of any fiscal year (as calculated in
subsection 6.06(A) above) shall be applied as a credit against wholesale rates in the
immediately following fiscal year unless otherwise directed by BAWSCA.
C. Within 180 days following the later of expiration of the Term or final payment of
Debt Service due on Indebtedness issued during the Term to which Wholesale Customers were
contributing, SFPUC shall rebate to the Wholesale Customers an amount equal to the
Wholesale Revenue Coverage amount in effect for the fiscal year during which the Term expires
or the final payment of Debt Service on Indebtedness is made based on each Wholesale
Customer’s Proportional Annual Use in the fiscal year during which the Term expires or the final
payment of debt service on Indebtedness is made.
D. SFPUC shall provide a schedule of debt issuance (with assumptions), and the
Wholesale Customers’ share of Net Annual Debt Service (actual and projected) expected to be
included in wholesale rates starting in 2009-10 through the expected completion of the WSIP.
The schedule is to be updated annually prior to rate setting. If estimated Debt Service is used in
rate setting, the SFPUC must be able to demonstrate that the Water Enterprise revenues will be
sufficient to meet the additional bonds test for the proposed bonds and rate covenants for the
upcoming year.
E. Conditions in the municipal bond market may change from those prevailing in
2009. If, prior to expiration of the Term, the SFPUC determines that it would be in the best
financial interest of both Retail Customers and Wholesale Customers of the Regional Water
System for the Debt Service coverage requirement to be increased in one or more series of
proposed new Indebtedness above 1.25%, or for the coverage covenant to be strengthened in
other ways, it will provide a written report to BAWSCA. The report will contain (1) a description
of proposed covenant(s) in the bond indenture; (2) an explanation of how savings are expected
to be achieved (e.g., increase in the SFPUC’s credit rating over the then-current level; ability to
64 15118728.1
obtain credit enhancement, etc.); (3) the estimated all-in true interest cost savings; (4) a
comparison of the Wholesale Revenue Requirements using the Debt Service coverage
limitation in subsection A and under the proposed methodology; and (5) a comparison of the
respective monetary benefits expected to be received by both Retail and Wholesale Customers.
The SFPUC and BAWSCA agree to meet and confer in good faith about the proposed changes.
F. Any increase in Debt Service coverage proposed by the SFPUC shall be
commensurate with Proportional Water Use by Retail and Wholesale Customers. If the SFPUC
demonstrates that an increase in Debt Service coverage will result in equivalent percentage
reductions in total Wholesale and Retail Debt Service payments over the life of the proposed
new Indebtedness, based on Proportional Water Use, BAWSCA may agree to a modification of
the Wholesale Revenue Coverage requirement in subsection A. If BAWSCA does not agree to
a proposed modification in coverage requirements in the covenants for new Indebtedness,
SFPUC may nevertheless proceed with the modification and the issuance of new Indebtedness.
Any Wholesale Customer, or BAWSCA, may challenge an increase in the Wholesale Revenue
Requirement resulting from the modification in Debt Service coverage through arbitration as
provided in Section 8.01.A. If the arbitrator finds that the increase in Debt Service coverage (1)
did not and will not result in equivalent percentage reductions in total Wholesale and Retail Debt
Service payments over the life of the proposed new Indebtedness, based on Proportional Water
Use, or (2) was not commensurate with Proportional Water Use, the arbitrator may order the
Wholesale Revenue Requirement to be recalculated both retrospectively and prospectively to
eliminate the differential impact to Wholesale or Retail Customers, subject to the limitation in
Section 8.01.C.
6.07. Working Capital Requirement
A. The SFPUC maintains working capital in the form of unappropriated reserves for
the purpose of bridging the gap between when the SFPUC incurs operating expenses required
to provide service and when it receives revenues from its Retail and Wholesale Customers.
The Wholesale Customers shall fund their share of working capital as part of the annual
Wholesale Revenue Requirement calculation. The amount of wholesale working capital for
which the Wholesale Customers will be responsible will be determined using the 60-day
standard formula approach.
B. Applying this approach, annual wholesale working capital equals one-sixth of the
wholesale allocation of operation and maintenance, administrative and general, and property tax
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expenses for the Water and Hetch Hetchy Enterprises. Wholesale working capital shall be
calculated separately for the Water and Hetch Hetchy Enterprises.
C. Each month, the sum of the Water Enterprise and Hetch Hetchy Enterprise
working capital components will be compared with the ending balance in the Wholesale
Revenue Coverage Reserve to determine if the Wholesale Customers provided the minimum
required working capital. If the Wholesale Revenue Coverage Reserve is greater than the total
Water Enterprise and Hetch Hetchy Enterprise working capital requirement, the Wholesale
Customers will have provided their share of working capital. If the Wholesale Revenue
Coverage Reserve is less than the total Water Enterprise and Hetch Hetchy Enterprise working
capital requirement, the Wholesale Customers will be charged interest on the difference, which
will be included in the adjustment to the Balancing Account under Section 6.05.B for the
subsequent fiscal year.
6.08. Wholesale Capital Fund
A. The SFPUC currently funds revenue-funded capital projects through annual
budget appropriations that are included in rates established for that fiscal year and transferred
to a capital project fund from which expenditures are made. Consistent with the San Francisco
Charter and Administrative Code, the SFPUC appropriates funds in advance of construction in
order to maintain a positive balance in the capital project fund. The capital project fund also
accrues interest and any unspent appropriations in excess of total project costs. It is the
SFPUC’s practice to regularly monitor the capital project fund balance to determine whether a
surplus has accumulated, which can be credited against the next fiscal year’s capital project
appropriation.
B. The SFPUC shall establish a comparable Wholesale Revenue-Funded Capital
Fund (Wholesale Capital Fund) to enable the Wholesale Customers to fund the wholesale share
of revenue-funded New Regional Assets. The Wholesale Capital Fund balance is zero as of
July 1, 2009. The SFPUC may include in wholesale rates for any fiscal year an amount equal to
the wholesale share of the SFPUC’s appropriation for revenue funded New Regional Assets for
that year, which sum will be credited to the Wholesale Capital Fund. The wholesale share of
other sources of funding, where legally permitted and appropriately accounted for under GAAP,
will also be credited to the Wholesale Capital Fund, together with interest earnings on the
Wholesale Capital Fund balance.
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C. The SFPUC will expend revenues appropriated and transferred to the Wholesale
Capital Fund only on New Regional Assets. The annual capital appropriation included in each
fiscal year’s budget will be provided to BAWSCA in accordance with Section 6.02 and will take
into account the current and projected balance in the Wholesale Capital Fund, as well as current
and projected unexpended and unencumbered surplus, as shown on attachment M-1, which will
be prepared by the SFPUC each year.
D. Commencing on November 30, 2010 and thereafter in each fiscal year during the
Term, the SFPUC will also provide an annual report to BAWSCA on the status of individual
revenue-funded New Regional Assets, substantially in the form of Attachment M-2.
E. In order to prevent the accumulation of an excessive unexpended and
unencumbered balance in the Wholesale Capital Fund, the status of the fund balance will be
reviewed through the annual Compliance Audit, commencing in FY 2018-19. The FY 2018-19
Compliance Audit and the Wholesale Customer/BAWSCA review under Section 7.06 shall
include Wholesale Capital Fund appropriations, expenditures and interest earnings for FY 2014-
15 through 2017-18 for the purpose of determining whether a Balancing Account transfer is
required. If the June 30 unencumbered balance of the Wholesale Capital Fund exceeds the
lesser of the following: (i) the Target Balance; (ii) the unencumbered remaining cumulative
appropriations, the amount of such excess shall be transferred to the credit of the Wholesale
Customers to the Balancing Account described in Section 6.05.
In order to avoid funding delays for New Regional Asset capital projects resulting from
prior year transfers of excess Wholesale Capital fund balances to the Wholesale Customers, if
the June 30 unencumbered balance of the Wholesale Capital Fund is below the lesser of the
following: (i) the Target Balance; (ii) the unencumbered remaining cumulative appropriation,
such deficiency shall be posted to the Balancing Account described in Section 6.05 as a charge
to the Wholesale Customers. Notwithstanding the foregoing, no such charge to the Wholesale
Customers shall exceed $4 million annually.
Amended Attachment M-3 illustrates the process for determining the Wholesale Capital
Fund balance as of June 30, 2019.
F. Three years prior to the end of the Term, the SFPUC and BAWSCA will discuss
the disposition of the Wholesale Capital Fund balance at the end of the Term. Absent
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agreement, any balance remaining in the Wholesale Capital Fund at the end of the Term shall
be transferred to the Balancing Account, to the credit of the Wholesale Customers.
6.09. SFPUC Adoption of Regional Water System 10-Year Capital Improvement Program
A. Established Level of Service Goals and Objectives. In approving the WSIP,
the Commission adopted Level of Service Goals and Objectives that are, in part, used to
develop capital programs related to water, including the 10-Year Capital Improvement Program
for the Regional Water System (“10-Year CIP”). BAWSCA and the Wholesale Customers shall
have the opportunity to review and provide written or oral comments on any changes to the
Level of Service Goals and Objectives that may be submitted to the Commission for approval.
B. Submittal of an Asset Management Policy. Prior to December 31, 2020, the
SFPUC shall develop and submit to the Commission for approval an Asset Management Policy
applicable to the Regional Water System.
C. Coordination of 10-Year CIP and SFPUC Budget Meetings. The Commission
annually reviews, updates, and adopts a 10-Year CIP pursuant to Section 8B.123 of the San
Francisco Charter. At two-year intervals, the Commission holds two budget meetings
concerning the 10-Year CIP. Over the course of the two budget meetings, the SFPUC reviews
its budget priorities, potential changes to projects in the previously adopted 10-Year CIP, and
the potential financial implications of such changes. In the event that Charter amendments are
placed on the ballot that could alter or amend the City’s budget preparation and adoption efforts,
BAWSCA shall be notified in advance of any proposed change that could result in a less robust
CIP development effort, and BAWSCA and the SFPUC shall meet to consider BAWSCA’s
comments on maintaining a robust CIP development effort.
D. Mid-cycle Changes to the 10-Year CIP. The SFPUC shall include within the
Water Enterprise Capital Improvement Program Quarterly Projects Reports that it provides to
the Commission (“CIP Quarterly Projects Reports”) discussion of any material changes
proposed to projects that are included in the most recently adopted 10-Year CIP. The SFPUC
defines a material change as a change that applies to a CIP project whose approved CIP
budget is equal to or greater than $5,000,000 that results in one or more of the following:
1. Increases the cost of the CIP project by more than 10%.
2. Increases the schedule of the CIP project by extending said schedule by 12 calendar months or greater.
68 15118728.1
3. Affects the SFPUC’s ability to meet the Level of Service Goals and Objectives.
The SFPUC shall also include within the CIP Quarterly Projects Reports discussion of
any new capital project that is not included in the most recently adopted 10-Year CIP if the
SFPUC has 1) begun spending on the project and 2) anticipates that it will require total funding
in excess of $5,000,000. For such projects, the parties recognize that the work may be of an
urgent nature and that details of those projects may be developing quickly to address a critical
need. The SFPUC commits that, for these projects, an expanded discussion will be provided in
quarterly reports generated 6 months following the creation of the project in the City’s finance
and accounting system. At a minimum, the discussion will include: 1) a detailed scope of work,
2) schedule, 3) cost breakdown, and 4) proposed source of funding. This level of detail shall
continue to be included in subsequent quarterly reports through either the completion of the
work or until the work is included as part of an adopted 10-Year CIP.
E. BAWSCA and Wholesale Customer Notice and Review. Beginning in 2020,
at least 30 days before the first budget meeting, the SFPUC shall provide BAWSCA and the
Wholesale Customers with written notice of the dates of the two budget meetings. At least 30
days before the first budget meeting, the SFPUC shall also provide BAWSCA and the
Wholesale Customers with a draft of the 10-Year CIP and meet with those same parties to
review potential candidate projects that it is considering for inclusion in the 10-Year CIP. Final
materials for the first budget meeting will be made available to BAWSCA and the Wholesale
Customers no less than 14 days prior to that budget meeting. Final materials for the second
budget meeting will be made available to BAWSCA and the Wholesale Customers on the same
date that they are made available to the Commission. Prior to the Commission’s adoption of the
10-Year CIP at the second budget meeting, San Francisco shall respond, in writing, to all written
comments by BAWSCA and the Wholesale Customers on the 10-Year CIP that were submitted
prior to the date of the first budget meeting.
F. Contents of Draft 10-Year CIP – Projects in Years One and Two of 10-Year
Schedule. The SFPUC’s CIP projects generally fall into three categories: defined projects,
placeholder concepts that could become projects, and programmatic spending for expenses
likely to be made but for which there is no schedule. Projects in the near-term years of the 10-
Year CIP have more definition than those in the outer years, and as a result more detailed
information is available for them. For each project listed that has significant expected
69 15118728.1
expenditures identified in the first two years of the 10-Year CIP, the draft 10-Year CIP made
available to BAWSCA and the Wholesale Customers shall include the following elements:
1. Project name.
2. Project description and justification.
3. Description of the project’s relationship to the Level of Service Goals and
Objectives.
4. Project asset classification for cost-allocation purposes, pursuant to
Attachment R for Hetch Hetchy Enterprise assets, or as Regional or
Retail for Water Enterprise assets.
5. Project schedule where applicable, broken down by phase, through to
completion.
6. Total project budget estimate including a proposed inflation rate.
G. Contents of Draft 10-Year CIP – Projects Listed After First Two Years of 10-
Year Schedule. For each project that is listed in years three through ten of the 10-Year CIP,
the draft 10-Year CIP made available to BAWSCA and the Wholesale Customers shall include
the following elements:
1. Project name.
2. Project description and justification.
3. Description of the project’s relationship to the Level of Service Goals and
Objectives.
4. Project asset classification for cost-allocation purposes, pursuant to
Attachment R for Hetch Hetchy Enterprise assets, or as Regional or
Retail for Water Enterprise assets.
5. Project schedule information that forms the basis for project planning if
available.
6. Total project budget estimate.
H. Additional Contents of Draft 10-Year CIP. The draft 10-Year CIP made
available to BAWSCA and the Wholesale Customers shall also include the following:
1. A discussion of any changes to projects in the previously adopted 10-
Year CIP, the reasons for such changes, any impact of the proposed
changes on the SFPUC’s ability to achieve the Level of Service Goals
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and Objectives, and the SFPUC’s proposal for meeting the specific Level
of Service Goals and Objectives in question.
2. A discussion of factors that have influenced the 10-Year CIP budget or
identified projects, or have the potential to influence the overall budget or
the number, cost and scale of identified projects, such as rate increase
considerations, local rate setting policies, etc.
3. A discussion of how the CIP will be staffed.
4. A cash flow estimate for each project included as part of the first five
years of the 10-Year CIP that considers historical spending and changes
in the amount of work to be done.
5. Project spreadsheets that separate new projects from existing projects.
6. A summary roll-up for Regional costs, including all programmatic costs
budgeted in the 10-Year CIP.
I. Quarterly Reporting and Meetings.
1. CIP Quarterly Projects Reports. The SFPUC shall include within the CIP
Quarterly Projects Reports a detailed status update of each Regional project in the 10-Year CIP
that has an estimated cost greater than $5 million and a summary of the work completed to date
for such projects. The CIP Quarterly Projects Reports shall focus on the first two years’ projects
in the 10-Year CIP, but shall also demonstrate a connection to the 10-Year CIP asset
classification and the Level of Service Goals and Objectives. The CIP Quarterly Projects
Reports shall identify any Regional project in the 10-Year CIP with an estimated cost greater
than $5 million that is behind schedule, and, for each project so identified, shall describe the
SFPUC’s plan and timeline for either making up the delay or adopting a revised project
schedule. In each fourth quarter of the fiscal year CIP Quarterly Projects Report, the SFPUC
will also address the status of Regional projects in the 10-Year CIP that have an estimated cost
of less than $5 million, noting any such projects that are behind schedule and describing the
SFPUC’s plan and timeline for either making up the delay or adopting a revised project
schedule.
2. Quarterly Meetings. If requested by BAWSCA, the SFPUC shall hold
quarterly meetings with BAWSCA to review each CIP Quarterly Projects Report, during which
the SFPUC shall present information and detail about the individual projects and overall
implementation of the 10-Year CIP, as well as the need for re-prioritization and/or the proposal
71 15118728.1
of new candidate projects for consideration as part of the next update of the 10-Year CIP. As
part of the meeting held in each fourth quarter of the fiscal year, the SFPUC shall provide
additional information and detail regarding the CIP development schedule and associated
coordination proposed with BAWSCA.
72 15118728.1
Article 7. Accounting Procedures; Compliance Audit
7.01. SFPUC Accounting Principles, Practices
A. Accounting Principles. San Francisco will maintain the accounts of the SFPUC
and the Water and Hetch Hetchy Enterprises in conformity with Generally Accepted Accounting
Principles. San Francisco will apply all applicable pronouncements of the Governmental
Accounting Standards Board (GASB) as well as statements and interpretations of the Financial
Accounting Standards Board and Accounting Principles Board opinions issued on or before
March 30, 1989, unless those pronouncements or opinions conflict with GASB pronouncements.
B. General Rule. San Francisco will maintain the accounting records of the SFPUC
and the Water and Hetch Hetchy Enterprises in a format and level of detail sufficient to allow it
to determine the annual Wholesale Revenue Requirement in compliance with this Agreement
and to allow its determination of the Wholesale Revenue Requirement to be audited as provided
in Section 7.04.
C. Water Enterprise. San Francisco will maintain an account structure which
allows utility plant and operating and maintenance expenses to be segregated by location
(inside San Francisco and outside San Francisco) and by function (Direct Retail, Regional and
Direct Wholesale).
D. Hetch Hetchy Enterprise. San Francisco will maintain an account structure
which allows utility plant and operating and maintenance expenses to be segregated into Water
Only, Power Only and Joint categories.
E. SFPUC. San Francisco will maintain an account structure which allows any
expenses of SFPUC bureaus that benefit only the Wastewater Enterprise, the Power-Only
operations of the Hetch Hetchy Enterprise or Retail Customers to be excluded from the
Wholesale Revenue Requirement.
F. Utility Plant Ledgers. San Francisco will maintain subsidiary plant ledgers for
the Water and Hetch Hetchy Enterprises that contain unique identifying numbers for all assets
included in the rate base and identify the original cost, annual depreciation, accumulated
depreciation, date placed in service, useful life, salvage value if any, source of funding (e.g.,
bond series, revenues, grants), and classification for purposes of this Agreement.
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G. Debt. San Francisco will maintain documentation identifying:
1. The portion of total bonded debt outstanding related to each series of
each bond issue.
2. The portion of total interest expense related to each series of each bond
issue.
3. The use of proceeds of each bond issue (including proceeds of
commercial paper and/or other interim financial instruments redeemed or expected to be
redeemed from bonds and earnings on the proceeds of financings) in sufficient detail to
determine, for each bond issue, the proceeds and earnings of each (including proceeds and
earnings of interim financing vehicles redeemed by a bond issue) and the total amounts
expended on Direct Retail improvements and the total amounts expended on Regional
improvements.
H. Changes in Accounting. Subject to subsections A thru G, San Francisco may
change the chart of accounts and accounting practices of the SFPUC and the Water and Hetch
Hetchy Enterprises. However, the allocation of any expense to the Wholesale Customers that is
specified in the Agreement may not be changed merely because of a change in (1) the
accounting system or chart of accounts used by SFPUC, (2) the account to which an expense is
posted or (3) a change in the organizational structure of the SFPUC or the Water or Hetch
Hetchy Enterprises.
I. Audit. San Francisco will arrange for an audit of the financial statements of
Water and Hetch Hetchy Enterprises to be conducted each year by an independent certified
public accountant, appointed by the Controller, in accordance with Generally Accepted Auditing
Standards.
7.02. Calculation of and Report on Wholesale Revenue Requirement
A. Within five months after the close of each fiscal year, San Francisco will prepare
a report showing its calculation of the Wholesale Revenue Requirement for the preceding fiscal
year and the change in the balancing account as of the end of that fiscal year. The first such
report will be prepared by November 30, 2010 and will cover fiscal year 2009-10 and the
balancing account as of June 30, 2010.
B. The report will consist of the following items:
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1. Statement of changes in the balancing account for the fiscal year being
reported on, and for the immediately preceding fiscal year, substantially in the form of
Attachment O.
2. Detailed supporting schedules 8.1 through 8.2 substantially in the form of
Attachment N-2.
3. Description and explanation of any changes in San Francisco’s
accounting practices from those previously in effect.
4. Explanation of any line item of expense (shown on Attachment N-2,
schedules 1 and 4) for which the amount allocated to the Wholesale Customers increased by
(a) ten percent or more from the preceding fiscal year, or (b) more than $1,000,000.
5. Representation letter signed by the SFPUC General Manager and by
other SFPUC financial staff shown on Attachment P, as the General Manager may direct,
subject to change in position titles at the discretion of the SFPUC.
C. The report will be delivered to the BAWSCA General Manager by the date
identified in Subsection A.
Once the report has been delivered to BAWSCA, San Francisco will, upon request:
1. Provide BAWSCA with access to, and copies of, all worksheets and
supporting documents used or prepared by San Francisco during its calculation of the
Wholesale Revenue Requirement;
2. Make available to BAWSCA all supporting documentation and
calculations used by San Francisco in preparing the report; and
3. Promptly provide answers to questions from BAWSCA staff about the
report.
7.03. Appointment of Compliance Auditor
A. Purpose. The purpose of this section is to provide for an annual Compliance
Audit by an independent certified public accountant of the procedures followed and the
underlying data used by San Francisco in calculating the Wholesale Revenue Requirement for
the preceding fiscal year. The annual Compliance Audit shall also determine whether the
Wholesale Revenue Requirement has been calculated in accordance with the terms of the
Agreement and whether amounts paid by the Wholesale Customers in excess of or less than
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the Wholesale Revenue Requirement have been posted to the balancing account, together with
interest as provided in Section 6.05.
B. Method of Appointment. The Controller shall select an independent certified
public accountant (“Compliance Auditor”) to conduct the Compliance Audit described below.
The Compliance Auditor may be the same certified public accountant engaged by the Controller
to audit the financial statements of the Water and Hetch Hetchy Enterprises. Subject to
approval by the Controller and the General Manager of the SFPUC, the Compliance Auditor
shall have the authority to engage such consultants as it deems necessary or appropriate to
assist in the audit. The terms of this Article shall be incorporated into the contract between San
Francisco and the Compliance Auditor, and the Wholesale Customers shall be deemed to be
third-party beneficiaries of said contract.
7.04. Conduct of Compliance Audit
A. Standards. The Compliance Auditor shall perform the Compliance Audit in
accordance with Generally Accepted Auditing Standards. In particular, its review shall be
governed by the standards contained in Section AU 623 (Reports on Specified Elements,
Accounts or Items of a Financial Statement) of the AICPA, Professional Standards, as amended
from time to time.
B. Preliminary Meeting; Periodic Status Reports; Access to Data. Prior to
commencing the audit, the Compliance Auditor shall meet with San Francisco and BAWSCA to
discuss the audit plan, the procedures to be employed and the schedule to be followed. During
the course of the audit, the Compliance Auditor shall keep San Francisco and BAWSCA
informed of any unforeseen problems or circumstances which could cause a delay in the audit
or any material expansion of the audit’s scope. The Compliance Auditor shall be given full
access to all records of the SFPUC and the Water and Hetch Hetchy Enterprises that the
Auditor deems necessary for the audit.
C. Audit Procedures. The Compliance Auditor shall review San Francisco’s
calculation of the Wholesale Revenue Requirement and the underlying data in order to carry out
the purpose of the audit described in Section 7.03.A and to issue the report described in Section
7.05. At a minimum, the Compliance Auditor shall address the following:
1. Water Enterprise Operating and Maintenance Expenses. The
Compliance Auditor shall review Water Enterprise cost ledgers to determine whether the
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recorded operating and maintenance expenses fairly reflect the costs incurred, were recorded
on a basis consistent with applicable Generally Accepted Accounting Principles, and were
allocated to the Wholesale Customers as provided in this Agreement.
2. Water Enterprise Administrative and General Expenses. The Compliance
Auditor shall review Water Enterprise cost ledgers and other appropriate financial records,
including those of the SFPUC, to determine whether the recorded administrative and general
expenses fairly reflect the costs incurred by or allocated to the Water Enterprise, whether they
were recorded on a basis consistent with applicable Generally Accepted Accounting Principles,
whether SFPUC charges were allocated to the Water Enterprise in accordance with this
Agreement, and whether the amount of administrative and general expenses allocated to the
Wholesale Customers was determined as provided by this Agreement.
3. Property Taxes. The Compliance Auditor shall review Water Enterprise
cost ledgers to determine whether the amount of property taxes shown on the report fairly
reflects the property tax expense incurred by San Francisco for Water Enterprise property
outside of San Francisco and whether there has been deducted from the amount to be allocated
(1) all taxes actually reimbursed to San Francisco by tenants of Water Enterprise property under
leases that require such reimbursement and (2) any refunds received from the taxing authority.
The Compliance Auditor also shall determine whether the amount of property taxes allocated to
the Wholesale Customers was determined as provided in this Agreement.
4. Debt Service. The Compliance Auditor shall review SFPUC records to
determine whether debt service, and associated coverage requirements, were allocated to the
Wholesale Customers as provided in this Agreement.
5. Amortization of Existing Assets in Service as of June 30, 2009. The
Compliance Auditor shall review both Water and Hetch Hetchy Enterprise records to determine
whether the payoff amount for Existing Assets allocated to the Wholesale Customers as shown
on Attachment K-1 through K-4 was calculated as provided in Section 5.03 of this Agreement.
6. Revenue-Funded Capital Appropriations/Expenditures. The Compliance
Auditor shall review San Francisco’s calculation of actual expenditures on the wholesale share
of revenue-funded New Regional Assets and remaining unexpended and unencumbered project
balances in the “Wholesale Capital Fund” described in Section 6.08, to determine whether the
procedures contained in that section were followed.
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7. Hetch Hetchy Expenses. The Compliance Auditor shall determine
whether Hetch Hetchy Enterprise expenses were allocated to the Wholesale Customers as
provided in this Agreement.
D. Use of and Reliance on Audited Financial Statements and Water Use Data
1. In performing the audit, the Compliance Auditor shall incorporate any
adjustments to the cost ledgers recommended by the independent certified public accountant,
referred to in Section 7.01.I, which audited the financial statements of the Water and Hetch
Hetchy Enterprises. The Compliance Auditor may rely upon the work performed by that
independent certified public accountant if the Compliance Auditor reviews the work and is willing
to take responsibility for it as part of the compliance audit.
2. In performing the Compliance Audit and issuing its report, the Compliance
Auditor may rely on water use data furnished by the Water Enterprise, regardless of whether the
Wholesale Customers contest the accuracy of such data. The Compliance Auditor shall have
no obligation to independently verify the accuracy of the water use data provided by San
Francisco; however, the Compliance Auditor shall disclose in its report any information which
came to its attention suggesting that the water use data provided by San Francisco are
inaccurate in any significant respect.
E. Exit Conference. Upon completion of the audit, the Compliance Auditor shall
meet with San Francisco and BAWSCA to discuss audit findings, including (1) any material
weakness in internal controls and (2) adjustments proposed by the Compliance Auditor and San
Francisco’s response (i.e., booked or waived).
7.05. Issuance of Compliance Auditor’s Report
A. San Francisco will require the Compliance Auditor to issue its report no later than
nine months after the fiscal year under audit (i.e., March 31 of the following calendar year). The
Compliance Auditor’s report shall be addressed and delivered to San Francisco and BAWSCA.
The report shall contain:
1. A statement that the Auditor has audited the report on the calculation of
the Wholesale Revenue Requirement and changes in the balancing account, and supporting
documents, prepared by San Francisco as required by Section 7.02.
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2. A statement that the audit was conducted in accordance with auditing
standards generally accepted in the United States of America, and that the audit provides a
reasonable basis for its opinion.
3. A statement that in the Compliance Auditor’s opinion the Wholesale
Revenue Requirement was calculated by San Francisco in accordance with this Agreement and
that the change in the balancing account shown in San Francisco’s report was calculated as
required by this Agreement and presents fairly, in all material respects, changes in and the
balance due to (or from) the Wholesale Customers as of the end of the fiscal year under audit.
7.06. Wholesale Customer Review
A. One or more Wholesale Customers, or BAWSCA, may engage an independent
certified public accountant (CPA) to conduct a review (at its or their expense) of San Francisco’s
calculation of the annual Wholesale Revenue Requirement and a review of changes in the
balancing account.
B. If a Wholesale Customer or BAWSCA wishes such a review to be conducted it
will provide written notice to SFPUC within 30 days of the date the Compliance Auditor’s report
is issued. The notice will identify the CPA or accounting/auditing firm that will conduct the
review and the specific aspects of the Compliance Auditor’s report that are the subject of the
review. If more than one notice of review is received by the SFPUC, the requesting Wholesale
Customers shall combine and coordinate their reviews and select a lead auditor to act on their
behalf for the purposes of requesting documents and conducting on-site investigations.
C. San Francisco will cooperate with the CPA appointed by a Wholesale Customer
or BAWSCA. This cooperation includes making requested records promptly available, making
knowledgeable SFPUC personnel available to timely and truthfully answer the CPA’s questions
and directing the Compliance Auditor to cooperate with the CPA.
D. The Wholesale Customer’s review shall be completed within 60 days after the
date the Compliance Auditor’s report is issued. At the conclusion of the review, representatives
of San Francisco and BAWSCA shall meet to discuss any differences between them concerning
San Francisco’s compliance with Articles 5 or 6 of this Agreement during the preceding fiscal
year or San Francisco’s calculation of the Wholesale Revenue Requirement for the preceding
fiscal year. If such differences cannot be resolved, the dispute shall be submitted to arbitration
in accordance with Section 8.01.
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Article 8. Other Agreements of the Parties
8.01. Arbitration and Judicial Review
A. General Principles re Scope of Arbitration. All questions or disputes arising
under the following subject areas shall be subject to mandatory, binding arbitration and shall not
be subject to judicial determination:
1. the determination of the Wholesale Revenue Requirement, which shall
include both the calculations used in the determination and the variables used in those
calculations;
2. the SFPUC’s adherence to accounting practices and conduct of the
Compliance Audit; and
3. the SFPUC’s classification of new or omitted assets for purposes of
determining the Wholesale Revenue Requirement.
All other questions or disputes arising under this Agreement shall be subject to judicial
determination. Disputes about the scope of arbitrability shall be resolved by the courts.
B. Demand for Arbitration. If any arbitrable question or dispute should arise, any
Wholesale Customer or the SFPUC may commence arbitration proceedings hereunder by
service of a written Demand for Arbitration. Demands for arbitration shall set forth all of the
issues to be arbitrated, the general contentions relating to those issues, and the relief sought by
the party serving the Demand. Within 45 days after service of a Demand upon it, any
Wholesale Customer or the SFPUC may serve a Notice of Election to become a party to the
arbitration and a Response to the issues set forth in the Demand. The Response shall include
the party’s general contentions and defenses with respect to the claims made in the Demand,
and may include any otherwise arbitrable claims, contentions and demands that concern the
fiscal year covered by the Demand. If a timely Notice of Election and Response is not filed by
any such entity, it shall not be a party to the arbitration but shall nonetheless be bound by the
award of the arbitrator. If no party to this Agreement serves a timely Notice of Election and
Response, the party seeking arbitration shall be entitled to the relief sought in its Demand for
Arbitration without the necessity of further proceedings. Any claims not made in a Demand or
Response shall be deemed waived.
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If a Demand or Notice of Election is made by the SFPUC, it shall be served by personal
delivery or certified mail to each Wholesale Customer at the address of such customer as set
forth in the billing records of the SFPUC. If a Demand or Notice of Election is made by a
Wholesale Customer, service shall be by certified mail or personal delivery to the General
Manager, SFPUC, 525 Golden Gate Avenue, 13th Floor, San Francisco, California 94102, and
to each of the other Wholesale Customers. If arbitration is commenced, the Wholesale
Customers shall use their best efforts to formulate a single, joint position with respect thereto.
In any event, with respect to the appointment of arbitrators, as hereinafter provided, all
Wholesale Customers that take the same position as to the issues to be arbitrated shall jointly
and collectively be deemed to be a single party.
C. Limitations Period. All Demands For Arbitration shall be served within twelve
months of receipt by BAWSCA of the Wholesale Revenue Requirement Compliance Auditor’s
Report for that year. If a party fails to file a Demand within the time period specified in this
subsection, that party waives all present and future claims with respect to the fiscal year in
question. If no such Demand is served within the twelve month period specified above, the
SFPUC’s determination of the Wholesale Revenue Requirement for that year shall be final and
conclusive. Whether any particular claim is barred by the twelve month limitations period
provided for herein shall be for the arbitrator to determine. Prior to the expiration of the twelve
month limitations period, the parties to the dispute may agree by written stipulation to extend the
period by up to six additional months.
The Arbitrator may order the alteration or recalculation of underlying Water Enterprise
and/or Hetch Hetchy Enterprise accounts or asset classifications. Such changes shall be used
to calculate the Wholesale Revenue Requirement for the fiscal year in dispute and shall also be
used to determine future Wholesale Revenue Requirements, if otherwise applicable, even
though the existing entries in such accounts or the asset classifications, in whole or in part,
predate the twelve month period described above, so long as a timely arbitration Demand has
been filed in accordance with this subsection.
D. Number and Appointment of Arbitrators. All arbitration proceedings under
this section shall be conducted by a single arbitrator, selected by the SFPUC and a designated
representative of the Wholesale Customers or each group of Wholesale Customers that take
the same position with respect to the arbitration, within 75 days after service of the Demand. If
the parties to the arbitration cannot agree on an arbitrator within 75 days, any party may petition
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the Marin County Superior Court for the appointment of an arbitrator pursuant to Code of Civil
Procedure Section 1281.6 (or any successor provision).
E. Guidelines for Qualifications of Arbitrators. The Wholesale Customers and
the SFPUC acknowledge that the qualifications of the arbitrator will vary with the nature of the
matter arbitrated, but, in general, agree that such qualifications may include service as a judge
or expertise in one or more of the following fields: public utility law, water utility rate setting,
water system and hydraulic engineering, utility accounting methods and practices, and water
system operation and management. The parties to the arbitration shall use their best efforts to
agree in advance upon the qualifications of any arbitrator to be appointed by the Superior Court.
F. Powers of Arbitrator; Conduct of Proceedings
1. Except as provided in this section, arbitrations under this section shall be
conducted under and be governed by the provisions of California Code of Civil Procedure
Sections 1282.2 through 1284.2 (hereinafter, collectively, “Code sections”), and arbitrators
appointed hereunder shall have the powers and duties specified by the Code sections.
2. Within the meaning of the Code sections, the term “neutral arbitrator”
shall mean the single arbitrator selected by the parties to the arbitration.
3. Unless waived in writing by the parties to the arbitration, the notice of
hearing served by the arbitrator shall not be less than 90 days.
4. The lists of witnesses (including expert witnesses), and the lists of
documents (including the reports of expert witnesses) referred to in Code of Civil Procedure
Section 1282.2 shall be mutually exchanged, without necessity of demand therefore, no later
than 60 days prior to the date of the hearing, unless otherwise agreed in writing by the parties to
the arbitration. Upon application of any party, or on his or her own motion, the arbitrator may
schedule one or more prehearing conferences for the purposes of narrowing and/or expediting
resolution of the issues in dispute. Strict conformity to the rules of evidence is not required,
except that the arbitrator shall apply applicable law relating to privileges and work product. The
arbitrator shall consider evidence that he or she finds relevant and material to the dispute, giving
the evidence such weight as is appropriate. The arbitrator may limit testimony to exclude
evidence that would be immaterial or unduly repetitive, provided that all parties are afforded the
opportunity to present material and relevant evidence.
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5. Within thirty days after the close of the arbitration hearing, or such other
time as the arbitrator shall determine, the parties will submit proposed findings and a proposed
remedy to the arbitrator. The parties may file objections to their adversary’s proposed findings
and remedy within a time limit to be specified by the arbitrator. The arbitrator shall not base his
or her award on information not obtained at the hearing.
6. The arbitrator shall render a written award no later than twelve months
after the arbitrator is appointed, either by the parties or by the court, provided that such time
may be waived or extended as provided in Code of Civil Procedure Section 1283.8.
7. The provisions for discovery set forth in Code of Civil Procedure Section
1283.05 are incorporated into and made part of this Agreement, except that: (a) leave of the
arbitrator need not be obtained for the taking of depositions, including the depositions of expert
witnesses; (b) the provisions of Code of Civil Procedure Section 2034.010 et seq., relating to
discovery of expert witnesses, shall automatically be applicable to arbitration proceedings
arising under this Agreement without the necessity for a formal demand pursuant to Section
2034.210 and the date for the exchange of expert discovery provided by Sections 2034.260 and
2034.270 shall be not later than 60 days prior to the date for the hearing; and (c) all reports,
documents, and other materials prepared or reviewed by any expert designated to testify at the
arbitration shall be discoverable. In appropriate circumstances, the arbitrator may order any
party to this Agreement that is not a party to the arbitration to comply with any discovery
request.
8. For the purposes of allocation of expenses and fees, as provided in Code
of Civil Procedure Section 1284.2, if any two or more Wholesale Customers join together in a
single, joint position in the arbitration, those Wholesale Customers shall be deemed to be a
single party. If any Wholesale Customer or customers join together with the SFPUC in a single
joint position in the arbitration, those Wholesale Customers and the SFPUC together shall be
deemed to be a single party.
9. Subject to any other limitations imposed by the Agreement, the arbitrator
shall have power to issue orders mandating compliance with the terms of the Agreement or
enjoining violations of the Agreement. With respect to any arbitration brought to redress a
claimed wholesale overpayment to the SFPUC, the arbitrator’s power to award monetary relief
shall be limited to entering an order requiring that an adjustment be made in the amount posted
to the balancing account for the fiscal year covered by the Demand.
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10. All awards of the arbitrator shall be binding on the SFPUC and the
Wholesale Customers regardless of the participation or lack thereof by any Wholesale
Customer or the SFPUC as a party to the arbitration proceeding. The parties to an arbitration
shall have the power to modify or amend any arbitration award by mutual consent. The
arbitrator shall apply California law.
8.02. Attorneys’ Fees
A. Arbitration or Litigation Between San Francisco and Wholesale Customers
Arising under the Agreement or Individual Water Sales Contracts. Each party will bear its
own costs, including attorneys’ fees, incurred in any arbitration or litigation arising under this
Agreement or the Individual Water Sales Contracts between San Francisco and the Wholesale
Customers. Notwithstanding the foregoing, and subject to the limitations contained herein, the
SFPUC may allocate to the Wholesale Customers as an allowable expense, utilizing the
composite rate used for allocating other Water Enterprise administrative and general expenses,
any attorneys’ fees and costs incurred by the SFPUC in connection with arbitration and/or
litigation arising under this Agreement and/or the Individual Water Sales Contracts. Attorneys’
fees incurred by the SFPUC for attorneys employed in the San Francisco City Attorney’s office
shall be billed at the hourly rates charged for the attorneys in question by the San Francisco City
Attorney’s Office to the SFPUC. Attorneys’ fees incurred by the SFPUC for attorneys other than
those employed in the San Francisco City Attorney’s Office shall be limited to the hourly rates
charged to the SFPUC for attorneys and paralegals with comparable experience employed in
the San Francisco City Attorney’s office and in no event shall exceed the highest hourly rate
charged by any attorney or paralegal employed in the City Attorney’s Office to the SFPUC.
B. Arbitration or Litigation Outside of Agreement Concerning the SFPUC
Water System or Reserved Issues
1. The attorneys’ fees and costs incurred by the SFPUC in litigation between
San Francisco and one or more of the Wholesale Customers arising from matters outside of the
Agreement, including, without limitation, litigation and/or arbitration concerning the issues
specifically reserved in the Agreement, shall be allocated between the Retail Customers and the
Wholesale Customers utilizing the composite rate used for allocating other Water Enterprise
administrative and general expenses.
2. If, in any litigation described in subsection B.1 above, attorneys’ fees and
costs are awarded to one or more of the Wholesale Customers as prevailing parties, the
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SFPUC’s payment of the Wholesale Customers’ attorneys’ fees and costs shall not be an
allowable expense pursuant to subsection A.
3. If, in any litigation described in subsection B.1, the SFPUC obtains an
award of attorneys’ fees and costs as a prevailing party against one or more of the Wholesale
Customers, any such award shall be reduced to offset the amount of the SFPUC’s fees and
costs, if any, that have already been paid by the Wholesale Customers in the current or any
prior fiscal years pursuant to subsection B.1 and the provisions of Articles 5 and 6 of the
Agreement.
4. Nothing contained in this Agreement, including this subsection, shall
authorize a court to award attorneys’ fees and costs to a prevailing party as a matter of contract
and/or the provisions of Civil Code Section 1717, in litigation between San Francisco and one or
more of the Wholesale Customers arising from matters outside of the Agreement, including,
without limitation, litigation and/or arbitration concerning the issues specifically reserved in the
Agreement.
C. Attorneys Fees and Costs Incurred by the SFPUC in Connection with the
Operation and Maintenance of the SFPUC Water Supply System. All attorneys’ fees and
costs incurred by the SFPUC in connection with the operation and maintenance of the SFPUC’s
water supply system shall be allocated between Retail Customers and the Wholesale
Customers utilizing the composite rate used for allocating other Water Enterprise administrative
and general expenses.
8.03. Annual Meeting and Report
A. The parties wish to ensure that the Wholesale Customers may, in an orderly way,
be informed of matters affecting the Regional Water System, including matters affecting the
continuity and adequacy of their water supply from San Francisco.
For this purpose, the General Manager of the SFPUC shall meet annually with the
Wholesale Customers and BAWSCA during the month of February, commencing February
2010. At these annual meetings, the SFPUC shall provide the Wholesale Customers a report
on the following topics:
1. Capital additions under construction or being planned for the Regional
Water System, including the status of planning studies, financing plans, environmental reviews,
permit applications, etc.;
85 15118728.1
2. Water use trends and projections for Retail Customers and Wholesale
Customers;
3. Water supply conditions and projections;
4. The status of any administrative proceedings or litigation affecting San
Francisco’s water rights or the SFPUC’s ability to deliver water from the watersheds which
currently supply the Regional Water System;
5. Existing or anticipated problems with the maintenance and repair of the
Regional Water System or with water quality;
6. Projections of Wholesale Revenue Requirements for the next five years;
7. Any other topic which the SFPUC General Manager places on the
agenda for the meeting;
8. Any topic which the Wholesale Customers, through BAWSCA, request be
placed on the agenda, provided that the SFPUC is notified of the request at least 10 days
before the meeting.
B. The General Manager of the SFPUC, the Assistant General Manager of
the Water Enterprise, and the Assistant General Manager of Business Services-CFO will use
their best efforts to attend the annual meetings. If one or more of these officers are unable to
attend, they will designate an appropriately informed assistant to attend in their place.
8.04. 8.04 Administrative Matters Delegated to BAWSCA
A. The Wholesale Customers hereby delegate the authority and responsibility for
performing the following administrative functions contemplated in this Agreement to BAWSCA:
1. Approval of calculations of Proportional Annual Water Use required by
Section 3.14 and Attachment J, “Water Use Measurement and Tabulation”;
2. Approval of amendments to Attachments J and K-3 and K-4, “25-Year
Payoff Schedules for Existing Rate Base”;
3. Agreement that the Water Meter and Calibration Procedures Manual to
be prepared by the SFPUC may supersede some or all of the requirements in Attachment J, as
described in Section 3.14;
86 15118728.1
4. Conduct of Wholesale Customer review of SFPUC’s calculation of annual
Wholesale Revenue Requirement/Change in Balancing Account described in Section 7.06;
5. Approval of an adjustment to Wholesale Revenue Coverage as described
in Section 6.06.
B. A majority of the Wholesale Customers may, without amending this Agreement,
delegate additional administrative functions to BAWSCA. To be effective, such expanded
delegation must be evidenced by resolutions adopted by the governing bodies of a majority of
the Wholesale Customers. In 2014, all twenty-six Wholesale Customers adopted resolutions
delegating authority to BAWSCA to initiate, defend and settle arbitration for the matters that,
pursuant to Section 8.01 of this Agreement, are subject to mandatory, binding arbitration.
C. Unless otherwise explicitly stated, the administrative authority delegated to
BAWSCA may be exercised by the General Manager/CEO of BAWSCA, rather than requiring
action by the BAWSCA Board of Directors. In addition, the Wholesale Customers may, with the
consent of BAWSCA, delegate to BAWSCA the initiation, defense, and settlement of arbitration
proceedings provided for in Section 8.01.
8.05. Preservation of Water Rights; Notice of Water Rights Proceedings
A. It is the intention of San Francisco to preserve all of its water rights, irrespective
of whether the water held under such water rights is allocated under this Agreement. Nothing in
this Agreement shall be construed as an abandonment, or evidence of an intent to abandon,
any of the water rights that San Francisco presently possesses.
B. San Francisco shall use its best efforts to give prompt notice to BAWSCA of any
litigation or administrative proceedings to which San Francisco is a party involving water rights
to the Regional Water System. The failure of San Francisco to provide notice as required by
this section, for whatever reason, shall not give rise to any monetary liability.
8.06. SFPUC Rules and Regulations
The sale and delivery of all water under this Agreement shall be subject to such of the
“Rules and Regulations Governing Water Service to Customers” of the Water Enterprise
adopted by the Commission, as those rules and regulations may be amended from time to time,
as are (1) applicable to the sale and delivery of water to the Wholesale Customers, (2)
reasonable, and (3) not inconsistent with either this Agreement or with an Individual Water
87 15118728.1
Sales Contract. The SFPUC will give the Wholesale Customers notice of any proposal to
amend the Rules and Regulations in a manner that would affect the Wholesale Customers. The
notice will be delivered at least thirty days in advance of the date on which the proposal is to be
considered by the Commission and will be accompanied by the text of the proposed
amendment.
8.07. Reservations of, and Limitations on, Claims
A. General Reservation of Raker Act Contentions. The 1984 Agreement
resolved a civil action brought against San Francisco by certain of the Wholesale Customers.
Plaintiffs in that action contended that they, and other Wholesale Customers that are
municipalities or special districts, were “co-grantees” within the meaning of Section 8 of the Act
and were entitled to certain rights, benefits and privileges by virtue of that status. San Francisco
disputed those claims.
Nothing in this Agreement, or in the Individual Water Sales Contracts, shall be construed
or interpreted in any way to affect the ultimate resolution of the controversy between the parties
concerning whether any of the Wholesale Customers are “co-grantees” under the Act and, if so,
what rights, benefits and privileges accrue to them by reason of that claimed status.
B. Claims Reserved but not Assertable During Term or Portions Thereof. The
following claims, which San Francisco disputes, are reserved but may not be asserted during
the Term (or portions thereof, as indicated):
1. The Wholesale Customers’ claim that the Act entitles them to water at
cost.
2. The Wholesale Customers’ claim that San Francisco is obligated under
the Act or state law to supply them with additional water in excess of the Supply Assurance.
This claim may not be asserted unless and until San Francisco decides not to meet projected
water demands of Wholesale Customers in excess of the Supply Assurance pursuant to Section
4.06.
3. The claim by San Jose and Santa Clara that they are entitled under the
Act, or any other federal or state law, to permanent, non-interruptible status and to be charged
rates identical to those charged other Wholesale Customers. This claim may not be asserted
unless and until San Francisco notifies San Jose or Santa Clara that it intends to interrupt or
terminate water deliveries pursuant to Section 4.05.
88 15118728.1
4. he Wholesale Customers’ claim that the SFPUC is not entitled to impose
a surcharge for lost power generation revenues attributable to furnishing water in excess of the
Supply Assurance. This claim may not be asserted unless and until SFPUC furnishes water in
excess of the Supply Assurance during the Term and also includes such a surcharge in the
price of such water.
5. Claims by Wholesale Customers (other than San Jose and Santa Clara,
whose service areas are fixed) that SFPUC is obligated under the Act or state law to furnish
water, within their Individual Supply Guarantee, for delivery to customers outside their existing
service area and that Wholesale Customers are entitled to enlarge their service areas to supply
those customers. Such claims may be asserted only after compliance with the procedure set
forth in Section 3.03, followed by SFPUC’s denial of, or failure for six months to act on, a written
request by a Wholesale Customer to expand its service area.
C. Waived Activities. The Wholesale Customers (and the SFPUC, where
specified) will refrain from the following activities during the Term (or portions thereof, as
specified):
1. The Wholesale Customers and the SFPUC will not contend before any
court, administrative agency or legislative body or committee that the methodology for
determining the Wholesale Revenue Requirement (or the requirements for (a) amortization of
the ending balance under the 1984 Agreement, or (b) contribution to the Wholesale Revenue
Coverage) determined in accordance with this Agreement violates the Act or any other provision
of federal law, state law, or San Francisco’s City Charter, or is unfair, unreasonable or unlawful.
2. The Wholesale Customers will not challenge the transfer of funds by the
SFPUC to any other San Francisco City department or fund, provided such transfer complies
with the San Francisco City Charter. The transfer of its funds, whether or not permitted by the
City Charter, will not excuse the SFPUC from its failure to perform any obligation imposed by
this Agreement.
3. The Wholesale Customers and the SFPUC will not assert monetary
claims against one another based on the 1984 Agreement other than otherwise arbitrable
claims arising from the three fiscal years immediately preceding the start of the Term (i.e., FYs
2006-07, 2007-08 and 2008-09). Such claims, if any, shall be governed by the dispute
resolution provisions of this Agreement, except that the time within which arbitration must be
commenced shall be 18 months from delivery of the Compliance Auditor’s report.
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D. Other
1. This Agreement shall determine the respective monetary rights and
obligations of the parties with respect to water sold by the SFPUC to the Wholesale Customers
during the Term. Such rights and obligations shall not be affected by any judgments or orders
issued by any court in litigation, whether or not between parties hereto, and whether or not
related to the controversy over co-grantee status, except for arbitration and/or litigation
expressly permitted in this Agreement. No judicial or other resolution of issues reserved by this
section will affect the Wholesale Revenue Requirement which, during the Term, will be
determined exclusively as provided in Articles 5, 6 and 7 of this Agreement.
2. Because delays in the budget process or other events may cause the
SFPUC to defer the effective date of changes in wholesale rates until after the beginning of the
fiscal year, this Agreement does not require the SFPUC to make changes in wholesale rates
effective at the start of the fiscal year or at any other specific date.
3. he Wholesale Customers do not, by executing this Agreement, concede
the legality of the SFPUC’s establishing Interim Supply Allocations, as provided in Article 4 or
imposing Environmental Enhancement Surcharges on water use in excess of such allocations.
Any Wholesale Customer may challenge such allocation when imposed and/or such surcharges
if and when levied, in any court of competent jurisdiction.
4. The furnishing of water in excess of the Supply Assurance by San
Francisco to the Wholesale Customers shall not be deemed or construed to be a waiver by San
Francisco of its claim that it has no obligation under any provision of law to supply such water to
the Wholesale Customers, nor shall it constitute a dedication by San Francisco to the Wholesale
Customers of such water.
8.08. Prohibition of Assignment
A. This Agreement shall be binding on, and shall inure to the benefit of, the parties
and their respective successors and permitted assigns. Each Wholesale Customer agrees that
it will not transfer or assign any rights or privileges under this Agreement, either in whole or in
part, or make any transfer of all or any part of its water system or allow the use thereof in any
manner whereby any provision of this Agreement will not continue to be binding on it, its
assignee or transferee, or such user of the system. Any assignment or transfer in violation of
this covenant, and any assignment or transfer that would result in the supply of water in violation
of the Act, shall be void.
90 15118728.1
B. Nothing in this section shall prevent any Wholesale Customer (except the
California Water Service Company and Stanford) from entering into a joint powers agreement or
a municipal or multi-party water district with any other Wholesale Customer (except the two
listed above) to exercise the rights and obligations granted to and imposed upon the Wholesale
Customers hereunder, nor shall this section prevent any Wholesale Customer (except the two
listed above) from succeeding to the rights and obligations of another Wholesale Customer
hereunder as long as the Wholesale Service Area served by the Wholesale Customers involved
in the succession is not thereby enlarged.
8.09. Notices
A. All notices and other documents that San Francisco is required or permitted to
send to the Wholesale Customers under this Agreement shall be sent to each and all of the
Wholesale Customers by United States mail, first class postage prepaid, addressed to each
Wholesale Customer at the address to which monthly water bills are mailed by the Water
Enterprise.
B. All notices or other documents which the Wholesale Customers are required or
permitted to send to San Francisco under this Agreement shall be sent by United States mail,
first class postage prepaid, addressed as follows:
General Manager San Francisco Public Utilities Commission 525 Golden Gate Avenue, 13th Floor San Francisco, CA 94123
C. Each Wholesale Customer is a member of BAWSCA. San Francisco shall send
a copy of each notice or other document which it is required to send to all Wholesale Customers
to BAWSCA addressed as follows:
General Manager/CEO Bay Area Water Supply and Conservation Agency 155 Bovet Road, Suite 650
San Mateo, CA 94402 The failure of San Francisco to send a copy of such notices or documents to BAWSCA
shall not invalidate any rate set or other action taken by San Francisco.
91 15118728.1
D. Any party (or BAWSCA) may change the address to which notice is to be sent to
it under this Agreement by notice to San Francisco (in the case of a change desired by a
Wholesale Customer or BAWSCA ) and to the Wholesale Customer and BAWSCA (in the case
of a change desired by San Francisco).
The requirements for notice set forth in Section 8.01 concerning arbitration shall prevail
over this section, when they are applicable.
8.10. Incorporation of Attachments
Attachments A through R, referred to herein, are incorporated in and made a part of this
Agreement.
8.11. Interpretation
In interpreting this Agreement, or any provision thereof, it shall be deemed to have been
drafted by all signatories, and no presumption pursuant to Civil Code Section 1654 may be
invoked to determine the Agreement’s meaning. The marginal headings and titles to the
sections and paragraphs of this Agreement are not a part of this Agreement and shall have no
effect upon the construction or interpretation of any part hereof.
8.12. Actions and Approvals by San Francisco
Whenever action or approval by San Francisco is required or contemplated by this
Agreement, authority to act or approve shall be exercised by the Commission, except if such
action is required by law to be taken, or approval required to be given, by the San Francisco
Board of Supervisors. The Commission may delegate authority to the General Manager in
accordance with the San Francisco City Charter and Administrative Code, except for actions
that this Agreement requires to be taken by the Commission.
8.13. Counterparts
Execution of this Agreement may be accomplished by execution of separate
counterparts by each signatory. San Francisco shall deliver its executed counterpart to
BAWSCA and the counterpart which each Wholesale Customer executes shall be delivered to
San Francisco. The separate executed counterparts, taken together, shall constitute a single
agreement.
92 15118728.1
8.14. Limitations on Damages
A. Unless otherwise prohibited by this Agreement, general or direct damages may
be recovered for a breach of a party’s obligations under this Agreement. No party is liable for,
or may recover from any other party, special, indirect or consequential damages or incidental
damages, including, but not limited to, lost profits or revenue. No damages may be awarded for
a breach of Section 8.17.
B. The limitations in subsection A apply only to claims for damages for an alleged
breach of this Agreement. These limitations do not apply to claims for damages for an alleged
breach of a legal duty that arises independently of this Agreement, established by constitution or
statute.
C. If damages would be an inadequate remedy for a breach of this Agreement,
equitable relief may be awarded by a court in a case in which it is otherwise proper.
D. This section does not apply to any claim of breach for which arbitration is the
exclusive remedy pursuant to Section 8.01.A.
8.15. Force Majeure
A. Excuse from Performance. No party shall be liable in damages to any other
party for delay in performance of, or failure to perform, its obligations under this Agreement,
including the obligations set forth in Sections 3.09 and 4.06, if such delay or failure is caused by
a “Force Majeure Event.”
B. Notice. The party claiming excuse shall deliver to the other parties a written
notice of intent to claim excuse from performance under this Agreement by reason of a Force
Majeure Event. Notice required by this section shall be given promptly in light of the
circumstances, and, in the case of events described in (c), (d) or (e) of the definition of Force
Majeure Event only, not later than ten (10) days after the occurrence of the Force Majeure
Event. Such notice shall describe the Force Majeure Event, the services impacted by the
claimed event, the length of time that the party expects to be prevented from performing, and
the steps which the party intends to take to restore its ability to perform.
C. Obligation to Restore Ability to Perform. Any suspension of performance by a
party pursuant to this section shall be only to the extent, and for a period of no longer duration
93 15118728.1
than, required by the nature of the Force Majeure Event, and the party claiming excuse shall
use its best efforts to remedy its inability to perform as quickly as possible.
8.16. No Third-Party Beneficiaries
This Agreement is exclusively for the benefit of the parties and not for the benefit of any
other Person. There are no third-party beneficiaries of this Agreement and no person not a
party shall have any rights under or interests in this Agreement.
No party may assert a claim for damages on behalf of a person other than itself,
including a person that is not a party.
8.17. Good Faith and Fair Dealing
San Francisco and the Wholesale Customers each acknowledge their obligation under
California law to act in good faith toward, and deal fairly with, each other with respect to this
Agreement.
94 15118728.1
Article 9. Implementation and Special Provisions Affecting Certain
Wholesale Customers
9.01. 9.01 General; Individual Water Sales Contracts
A. As described in Section 1.03, San Francisco previously entered into Individual
Water Sales Contracts with each of the Wholesale Customers. The term of the majority of
Individual Water Sales Contracts will expire on June 30, 2009, concurrently with the expiration
of the 1984 Agreement. Except as provided below in this Article, each of the Wholesale
Customers will execute a new Individual Water Sales Contract with San Francisco concurrently
with its approval of the Agreement.
B. The Individual Water Sales Contracts will describe the service area of each
Wholesale Customer, identify the location and size of connections between the Regional Water
System and the Wholesale Customer’s distribution system, provide for periodic rendering and
payment of bills for water usage, and in some instances contain additional specialized
provisions unique to the particular Wholesale Customer and not of general concern or
applicability. A sample Individual Water Sales Contract is provided at Attachment F. The
Individual Water Sales Contracts between San Francisco and the Wholesale Customers will not
contain any provision inconsistent with Articles 1 through 8 of this Agreement except (1) as
provided below in this Article or (2) to the extent that such provisions are not in derogation of the
Fundamental Rights of other Wholesale Customers under this Agreement. Any provisions in
an Individual Water Sales Contract which are in violation of this section shall be void.
9.02. California Water Service Company
A. The parties recognize that the California Water Service Company is an investor-
owned utility company and, as such, has no claim to co-grantee status under the Act, which
specifically bars private parties from receiving for resale any water produced by the Hetch
Hetchy portion of the Regional Water System. Accordingly, the following provisions shall apply
to the California Water Service Company, notwithstanding anything to the contrary elsewhere in
this Agreement.
B. The total quantity of water delivered by San Francisco to the California Water
Service Company shall not in any calendar year exceed 47,400 acre feet, which is the
estimated average annual production of Local System Water. If San Francisco develops
additional Local System Water after the Effective Date, it may (1) increase the maximum
95 15118728.1
delivery amount stated herein; and (2) increase the Supply Assurance, but not necessarily both.
San Francisco has no obligation to deliver water to California Water Service Company in excess
of the maximum stated herein, except as such maximum may be increased by San Francisco
pursuant to this subsection. The maximum annual quantity of Local System Water set forth in
this subsection is intended to be a limitation on the total quantity of water that may be allocated
to California Water Service Company, and is not an Individual Supply Guarantee for purposes of
Section 3.02. The maximum quantity of Local System Water set forth in this subsection is
subject to reduction in response to (1) changes in long-term hydrology or (2) environmental
water requirements that may be imposed by or negotiated with state and federal resource
agencies in order to comply with state or federal law or to secure applicable permits for
construction of Regional Water System facilities. San Francisco shall notify California Water
Service Company of any anticipated reduction of the quantity of Local System Water set forth in
this subsection, along with an explanation of the basis for the reduction.
C. Notwithstanding anything in Section 8.08 to the contrary, California Water
Service Company shall have the right to assign to a public agency having the power of eminent
domain all or a portion of the rights of California Water Service Company under any contract
between it and San Francisco applicable to any individual district of California Water Service
Company in connection with the acquisition by such public agency of all or a portion of the water
system of California Water Service Company in such district. In the event of any such
assignment of all the rights, privileges and obligations of California Water Service Company
under such contract, California Water Service Company shall be relieved of all further
obligations under such contract provided that the assignee public agency expressly assumes
the obligations of California Water Service Company thereunder. In the event of such an
assignment of a portion of the rights, privileges and obligations of California Water Service
Company under such contract, California Water Service Company shall be relieved of such
portion of such obligations so assigned thereunder provided that the assignee public agency
shall expressly assume such obligations so assigned to it.
D. Should California Water Service Company seek to take over or otherwise
acquire, in whole or in part, the service obligations of another Wholesale Customer under
Section 3.03.E, it will so inform San Francisco at least six months prior to the effective date of
the sale and provide information concerning the total additional demand proposed to be served,
in order that San Francisco may compare the proposed additional demand to the then-current
estimate of Local System Water. In this regard, California Water Service Company has notified
96 15118728.1
the SFPUC that it has reached an agreement to acquire the assets of Skyline County Water
District (“Skyline”) and assume the responsibility for providing water service to customers in the
Skyline service area. California Water Service Company has advised the SFPUC that, on
September 18, 2008, the California Public Utilities Commission approved California Water
Service Company’s acquisition of Skyline. The SFPUC anticipates approving the transfer of
Skyline’s Supply Guarantee as shown on Attachment C to California Water Service Company
and the expansion of California Water Service Company’s service area to include the current
Skyline service area before the Effective Date of this Agreement. All parties to this Agreement
authorize corresponding modifications of Attachment C, as well as any of the Agreement’s other
provisions, to reflect the foregoing transaction without the necessity of amending this
Agreement.
E. Nothing in this Agreement shall preclude San Francisco from selling water to any
county, city, town, district, political subdivision, or other public agency for resale to customers
within the service area of the California Water Service Company. Nothing in this Agreement
shall require or contemplate any delivery of water to California Water Service Company in
violation of the Act.
F. Nothing in this Agreement shall alter, amend or modify the Findings of Fact and
Conclusions of Law and the Judgment dated May 25, 1961, in that certain action entitled City
and County of San Francisco v. California Water Service Company in the Superior Court of the
State of California in and for the County of Marin, No. 23286, as modified by the Quitclaim Deed
from California Water Service Company to San Francisco dated August 22, 1961. The rights
and obligations of San Francisco and California Water Service Company under these
documents shall continue as therein set forth.
9.03. City of Hayward
A. San Francisco and the City of Hayward (“Hayward”) entered into a water supply
contract on February 9, 1962 (“the 1962 contract”) which provides, inter alia, that San Francisco
will supply Hayward with all water supplemental to sources and supplies of water owned or
controlled by Hayward as of that date, in sufficient quantity to supply the total water needs of the
service area described on an exhibit to the 1962 contract “on a permanent basis.” The service
area map attached as Exhibit C to the 1962 contract was amended in 1974 to remove an area
of land in the Hayward hills and in 2008 to make minor boundary adjustments identified in
SFPUC Resolution No. 08-0035.
97 15118728.1
B. The intention of the parties is to continue the 1962 contract, as amended, in
effect as the Individual Water Sales Contract between San Francisco and Hayward.
Accordingly, it shall not be necessary for San Francisco and Hayward to enter into a new
Individual Water Sales Contract pursuant to this Article and approval of this Agreement by
Hayward shall constitute approval of both this Agreement and an Individual Water Sales
Contract for purposes of Section 1.03. The 1962 contract, as amended, will continue to
describe the service area of Hayward, while rates for water delivered to Hayward during the
Term shall be governed by Article 5 hereof. The 1962 contract, as amended, will continue in
force after the expiration of the Term.
9.04. Estero Municipal Improvement District
A. San Francisco and the Estero Municipal Improvement District (“Estero”) entered
into a water supply contract on August 24, 1961, the term of which continues until August 24,
2011 (“the 1961 Contract”). The 1961 Contract provides, inter alia, that San Francisco will
supply Estero with all water supplemental to sources and supplies of water owned or controlled
by Estero as of that date, in sufficient quantity to supply the total water needs of the service area
described on an exhibit to the 1961 Contract.
B. The intention of the parties is to terminate the 1961 Contract and replace it with a
new Individual Water Sales Contract which will become effective on July 1, 2009. The new
Individual Water Sales Contract will describe the current service area of Estero. The Individual
Supply Guarantee applicable to Estero shall be 5.9 MGD, rather than being determined as
provided in the 1961 Contract.
9.05. Stanford University
A. The parties recognize that The Board of Trustees of The Leland Stanford Junior
University (“Stanford”) operates a non-profit university, and purchases water from San
Francisco for redistribution to the academic and related facilities and activities of the university
and to residents of Stanford, the majority of whom are either employed by or students of
Stanford. Stanford agrees that all water furnished by San Francisco shall be used by Stanford
only for domestic purposes and those directly connected with the academic and related facilities
and activities of Stanford, and no water furnished by San Francisco shall be used in any area
now or hereafter leased or otherwise used for industrial purposes or for commercial purposes
98 15118728.1
other than those campus support facilities that provide direct services to Stanford faculty,
students or staff such as the U.S. Post Office, the bookstore and Student Union.
Nothing in this Agreement shall preclude San Francisco from selling water to any county,
city, town, political subdivision or other public agency for resale to Stanford or to customers
within the service area of Stanford.
B. Notwithstanding anything in Section 8.08 to the contrary, Stanford shall have the
right to assign to a public agency having the power of eminent domain all or a portion of the
rights of Stanford under this Agreement or the Individual Water Sales Contract between it and
San Francisco in connection with the acquisition by such public agency of all or a portion of
Stanford’s water system. In the event of any such assignment of all the rights, privileges, and
obligations of Stanford under such contract, Stanford shall be relieved of all further obligations
under such contract, provided that the assignee public agency expressly assumes Stanford’s
obligations thereunder. In the event of such an assignment of a portion of the rights, privileges,
and obligations of Stanford under such contract, Stanford shall be relieved of such obligations
so assigned thereunder, provided that the assignee public agency shall expressly assume such
obligations so assigned to it.
Nothing in this Agreement shall require or contemplate any delivery of water to Stanford
in violation of the Act.
9.06. City of San Jose and City of Santa Clara
A. Continued Supply on Temporary, Interruptible Basis. During the term of the
1984 Agreement, San Francisco provided water to the City of San Jose (“San Jose”) and the
City of Santa Clara (“Santa Clara”) on a temporary, interruptible basis pursuant to SFPUC
Resolution No. 85-0256. Subject to termination or reduction of supply as provided in Section
4.05 of this Agreement, San Francisco will continue to supply water to San Jose and Santa
Clara on a temporary, interruptible basis pending a decision by the Commission, pursuant to
Section 4.05.H, as to whether to make San Jose and Santa Clara permanent customers of the
Regional Water System. San Francisco will furnish water to San Jose and Santa Clara at the
same rates as those applicable to other Wholesale Customers pursuant to this Agreement.
Water delivered to San Jose and Santa Clara after July 1, 2009 may be limited by the SFPUC’s
ability to meet the full needs of all its other Retail and Wholesale Customers. The service areas
of San Jose and Santa Clara set forth in their Individual Water Sales Contracts may not be
99 15118728.1
expanded using the procedure set forth in Section 3.03. The combined annual average water
usage of San Jose and Santa Clara shall not exceed 9 MGD. The allocation of that total
amount between San Jose and Santa Clara shall be as set forth in their Individual Water Sales
Contracts.
B. Reservation of Rights. In signing this Agreement, neither San Jose nor Santa
Clara waives any of its rights to contend, in the event that San Francisco (1) elects to terminate
or interrupt water deliveries to either or both of the two cities prior to 2028 using the process set
forth in Section 4.05, or (2) does not elect to take either city on as a permanent customer in
2028, that it is entitled to permanent customer status, pursuant to the Act or any other federal or
state law. Santa Clara's reservation of rights is limited to its existing Service Area A, as shown
on Attachment Q-2. Service Area B, south of Highway 101, was added in 2018 solely for the
operational convenience of Santa Clara. Santa Clara waives its right to make claims described
in this Section 9.06.B and Section 8.07.B.3 with respect to Service Area B. In signing this
Agreement, San Francisco does not waive its right to deny any or all such contentions.
9.07. City of Brisbane, Guadalupe Valley Municipal Improvement District, Town of Hillsborough
A. The parties acknowledge that San Francisco has heretofore provided certain
quantities of water to the City of Brisbane (“Brisbane”), Guadalupe Valley Municipal
Improvement District (“Guadalupe”) and the Town of Hillsborough (“Hillsborough”) at specified
rates or without charge pursuant to obligations arising out of agreements between the
predecessors of San Francisco and these parties, which agreements are referred to in judicial
orders, resolutions of the SFPUC and/or the 1960 contracts between San Francisco and
Brisbane, Guadalupe and Hillsborough. The parties intend to continue those arrangements and
accordingly agree as follows:
1. Nothing in this Agreement is intended to alter, amend or modify the terms
of SFPUC Resolution No. 74-0653 or the indenture of July 18, 1908 between the Guadalupe
Development Company and the Spring Valley Water Company.
2. Nothing in this Agreement is intended to alter, amend or modify the
Findings of Fact and Conclusions of Law and Judgment dated May 25, 1961 in that certain
action entitled City and County of San Francisco v. Town of Hillsborough in the Superior Court
of the State of California in and for the County of Marin, No. 23282, as modified by the
Satisfaction of Judgment filed October 23, 1961 and the Compromise and Release between
100 15118728.1
Hillsborough and San Francisco dated August 22, 1961. The rights and obligations of
Hillsborough under these documents shall continue as therein set forth.
3. Nothing in this Agreement is intended to affect or prejudice any claims,
rights or remedies of Guadalupe or of Crocker Estate Company, a corporation, or of Crocker
Land Company, a corporation, or of San Francisco, or of their successors and assigns,
respectively, with respect to or arising out of that certain deed dated May 22, 1884, from
Charles Crocker to Spring Valley Water Works, a corporation, recorded on May 24, 1884, in
Book 37 of Deeds at page 356, Records of San Mateo County, California, as amended by that
certain Deed of Exchange of Easements in Real Property and Agreement for Trade in
Connection Therewith, dated July 29, 1954, recorded on August 4, 1954, in Book 2628, at page
298, Official Records of said San Mateo County, or with respect to or arising out of that certain
action involving the validity or enforceability of certain provisions of said deed entitled City and
County of San Francisco v. Crocker Estate Company, in the Superior Court of the State of
California in and for the County of Marin, No. 23281.
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AGREEMENT
FOR GROUNDWATER STORAGE AND RECOVERY FROM
THE SOUTHERN PORTION OF THE WESTSIDE BASIN
BY AND AMONG
THE SAN FRANCISCO PUBLIC UTILITIES COMMISSION,
THE CITY OF DALY CITY,
THE CITY OF SAN BRUNO
AND
CALIFORNIA WATER SERVICE COMPANY
120514 FINAL.docx
1.28. "Recovery Notice" ................................................................................................... 7
1.29. "Recovery" or "Recovery Periods" .......................................................................... 7
1.30. "Replacement Water" ............................................................................................... 7
1.31 . "SFPUC System" ..................................................................................................... 8
1.32. "SFPUC System Water" .......................................................................................... 8
1.33. "SFPUC Storage Account" ..................................................................................... 8
1.34. "Shared Facilities" .......................................................................... 8
1.35. "Shortage" ................................................................................................................ 8
1.36. "Shortage Allocation" .............................................................................................. 8
1.3 7. "Shortage Allocation Plan" ...................................................................................... 8
1.38. "Storage" or "Storage Periods" ................................................................................ 8
1.39. "Supply Assurance" ................................................................................................. 8
1.40. "Supply Year" .......................................................................................................... 9
1.41. "Undesirable Effects" ............................................................................................... 9
1.42. "Wholesale Water" .................................................................................................. 9
1.43 . "WSA" ..................................................................................................................... 9
ARTICLE 2: EFFECTIVE DATE, TERM AND AMENDMENT .......................................... 9
2.1. Effective Date ........................................................................................................... 9
2.2. Term ......................................................................................................................... 9
2.3. Amendment .............................................................................................................. 9
2.4. Conditions Precedent in Article 3; Termination .................................................... 10
2.5. Consequences of Non-Extension or Termination .................................................. 10
ARTICLE 3: CONDITIONS PRECEDENT TO IMPLEMENTATION OF PROJECT ... 10
3. l. Permits and Approvals ........................................................................................... 10
3.2. No Force Majeure Event ........................................................................................ 11
ARTICLE 4: GROUNDWATER STORAGE PERIODS ....................................................... 11
4.1. SFPUC Storage Through In Lieu Water Deliveries ............................................... 11
4.2. Notice of In Lieu Deliveries; Duty to Take Delivery of In Lieu Water. ............... .11
4.3. Reduction in Pumping from Existing Facilities; Minimum Groundwater
Requirements ......................................................................................................... 11
4.4. Location of Delivery of In Lieu Water to Participating Pumpers .......................... 12
ii
4.5. Aggregate Designated Quantity; Initial Designated Quantities Assigned to
Participating Pumpers ........................................................................ 12
4.6. Increase of Aggregate Designated Quantity .......................................... 13
4.7. Reduction in Aggregate Designated Quantity; Provision of Replacement Water
by the SFPUC ........................................................................................................ 13
4.8. Over Production of Water in Excess of Aggregate Designated
Quantity ................................................................................................................. 14
ARTICLE 5: RECOVERY OF SFPUC STORAGE ACCOUNT WATER FROM
PROJECT WELLS ...................................................................................................................... 15
5.1 . Circumstances Triggering Recovery of SFPUC Storage Account Water by
Participating Pumpers ............................................................................................ 15
5.2. Timing of Recovery of Water from SFPUC Storage Account ............................. .15
5.3. Issuance of Recovery Notice by the SFPUC .......................................................... 16
5.4. Quantities of Water Available to Participating Pumpers from Project Facilities
and SFPUC System Connections During Shortages Caused by Drought.. ............ 16
5.5. Minimum SFPUC System Water Deliveries to Participating Pumpers
during Recovery Periods ........................................................................................ 16
5.6. Recovery of Stored Water by the SFPUC .............................................................. 16
5.7. Limitations on Recovery ........................................................................................ 17
ARTICLE 6: PROJECT WATER ACCOUNTING .............................................................. .17
6.1. Accounting for Storage and Recovery ................................................................... 17
6.2. Accounting for Wholesale Water .......................................................................... 18
6.3. Accounting for In Lieu Water Delivered during Conjunctive Use
Pilot Program ......................................................................................................... 18
6.4. Deferred Payment for Stored In Lieu Water Supplies ........................................... 20
6.5. Accounting for Losses ............................................................................................ 20
ARTICLE 7: OWNERSHIP, OPERATION, MAINTENANCE AND
I
REPLACEMENT OF EXISTING FACILITIES ..................................................................... 21
7 .1. Ownership, Operation, Maintenance and Replacement of Existing Facilities ....... 21
7.2. Operation and Maintenance of Existing Facilities ................................................. 21
7.3. Failure to Maintain, Repair, or Replace Existing Facilities ................................... 22
7.4. Measurement of Water Pumped Using Existing Facilities .................................... 22
7.5. Drilling and Operation of New Wells by Parties ................................................... 22
lll
ARTICLE 8: OWNERSHIP, INSTALLATION, OPERATION, AND
MAINTENANCE OF PROJECT FACILITIES ...................................................................... 23
8.1 . Project Facilities ..................................................................................................... 23
8.2. Real Property Interests Required for Project Implementation ............................... 23
8.3. Ownership of Project Facilities ............................................................................. .23
8.4. Installation of Project Facilities ............................................................................ .23
8.5. Provision of As-Built Drawings; Modifications to Project Facilities
Following Completion ........................................................................................... 24
8.6. Operation and Maintenance of Project Facilities; Potential Undesirable
Effects Associated with Operation of Project Facilities as Designed ................... 24
8.7. Modifications to Participating Pumpers' Water Supply Permits
Issued by the California State Water Resources Control Board ............................ 24
8.8. Use of Project Facilities by Participating Pumpers for Non-Project
Purposes ................................................................................................................. 25
8.9. Use of Project Facilities During an Emergency .................................................... 25
ARTICLE 9: PROJECT COST RECOVERY ......................................................................... 26
9.1. Project Capital Costs .............................................................................................. 26
9.2. Project Operation and Maintenance Expenses ....................................................... 26
9.3. Use of Project Facilities by Participating Pumpers for Non-Project
Purposes ................................................................................................................. 27
9.4. Metering of Project Facilities Operated During Recovery Periods by the
SFPUC .................................................................................................................... 27
ARTICLE 10: OPERATING COMMITTEE .......................................................................... 27
10.1. Composition of Operating Committee ................................................................... 27
10.2. Duties and Powers of Operating Committee .......................................................... 27
10.3. Operating Committee Decision-Making ................................................................ 29
10.4. Schedule for Meetings of Operating Committee ................................................... 30
10.5. Minutes of Operating Committee Meetings ........................................................... 30
10.6. Duty of Each Party to Monitor Conjunctive Use Project Performance ................. 30
ARTICLE 11: DEFAULTS AND REMEDIES ........................................................................ 30
11.1. Remedies upon Termination ................................................................................. 30
11.2. Remedies are Cumulative ...................................................................................... 31
IV
ARTICLE 12: MISCELLANEOUS PROVISIONS ............................................................... .3 1
12.1. Dispute Resolution ................................................................................................. 31
12.2. Mutual Indemnity ................................................................................................... 31
12.3. Insurance and Indemnity Provisions Applicable to Construction
of Project Facilities ................................................................................................ 32
12.4. Workers' Compensation Insurance for Project Operation ..................................... 32
12.5. Right to Adjudicate; Limited Waiver of Prescriptive Rights Claims; No
Intent to Abandon ................................................................................................... 32
12.6. Nonparticipating Pumpers ..................................................................................... .33
12.7. More Favorable Terms ........................................................................................... 33
12 .8. Assignment ............................................................................................................. 33
12 .9. Successors .............................................................................................................. 34
12 .10. Entire Agreement ................................................................................................... 34
12 .11. Severability ............................................................................................................ 34
12.12. Counterparts ........................................................................................................... 34
12.13. Notice .................................................................................................................... .34
12.14. Force Majeure ....................................................................................................... .35
12.15. Maintenance and Inspection of Books, Records and Reports ................................ 36
, 12.16. Governing Law; Venue .......................................................................................... 36
12.17. Effect of Agreement on WSA ................................................................................ 36
12.18. Compliance with Raker Act .................................................................................. .37
12.19. Cooperation in Implementation of Project Mitigation Measures .......................... .37
V
ATTACHMENT A
Map of southern portion of Westside Groundwater Basin ................................................ .40
ATTACHMENT B
Maps Showing Existing Facilities Within Service Areas of Each Participating Pumper . .41
ATTACHMENTC
Map of southern portion of Westside Groundwater Basin showing Project Facilities ..... .42
ATTACHMENT D -1
Daly City ............................................................................................................................ 43
ATTACHMENT D -2
Cal Water -South San Francisco and Colma Service Areas ............................................ .44
ATTACHMENT D -3
San Bruno ........................................................................................................................... 45
ATTACHMENT E
List of Project Facilities and Assets .................................................................................. .46
ATTACHMENT F
Accounting of Joint Expenses ............................................................................................ 4 7
ATTACHMENT F-1
Annual Report, Actual Project Operations and Maintenance Expenses .................... .48
ATTACHMENTG
Form of Licenses Exchanged by Parties ......................................................... 50
VI
AGREE1\1ENT
FOR GROUNDWATER STORAGE AND RECOVERY FROM THE
SOUTHERN PORTION OF THE WESTSIDE BASIN
This Agreement for Groundwater Storage and Recovery from the Southern Portion of the
Westside Basin ("Agreement") is entered into by and among the San Francisco Public Utilities
Commission ("SFPUC"), a department of the City and County of San Francisco ("San
Francisco"), a California chaiter city, the City of Daly City ("Daly City"), a municipal
corporation of the State of California, the City of San Bruno ("San Bruno"), a municipal
corporation of the State of California, and California Water Service Company ("Cal Water"), a
California investor-owned utility providing water service to the City of South San Francisco.
Daly City, San Bruno and Cal Water are collectively referred to as "Participating Pumpers." The
SFPUC and the Participating Pumpers are collectively referred to as "Parties" and individually as
a "Party".
RECITALS
A. The SFPUC provides water ("SFPUC System Water") to San Francisco retail
customers and 26 Bay Area wholesale customers, including the Participating
Pumpers, through the operation of an integrated local Bay Area surface water
supply system and a Tuolumne River surface water supply system. Deliveries to
suburban wholesale customers are pursuant to the Water Supply Agreement
between the City and County of San Francisco and Wholesale Customers in
Alameda, San Mateo and Santa Clara Counties dated July 1, 2009 ("WSA"). The
SFPUC's wholesale customers extend from Daly City south through the Peninsula
to Santa Clara County, and up the southeast .side of San Francisco Bay through
Alameda County to Hayward. Some wholesale customers, such as the
Participating Pumpers, pave also developed other water supplies, including local
surface water and groundwater, and some import surface water from the State
Water Project.
B. The SFPUC has adopted a Water System Improvement Program (WSIP) to
increase the reliability of the SFPUC water system through 2030 and to provide
water to meet retail and wholesale water demands through the year 2018. The
WSIP included the groundwater storage and recovery project ("Project") that is
the subject of this Agreement, proposed by the SFPUC to benefit all customers
purchasing SFPUC System Water. The environmental effects of WSIP
implementation were analyzed in a Program environmental impact report (PEIR)
certified by the San Francisco Planning Commission in Motion No. 17734 dated
October 30, 2008, and approved by the SFPUC in Res. No. 08-200 dated October
30, 2008.
C. On August 7, 2014, the San Francisco Planning Commission certified the
completion of the Final Environmental Impact Report for the Project in its Motion
No. M-19209, and the SFPUC approved the Project on August 12, 20 14 in
resolution no. 14-0127, including the adoption of a mitigation, monitoring and
reporting program. SFPUC resolution no. 14-0127 authorized the SFPUC
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General Manager to negotiate and execute this Agreement following approval by
the Participating Pumpers.
D. The Participating Pumpers supply water to retail customers within their respective
service areas in San Mateo County through a combination of purchased water
from the SFPUC ("Wholesale Water"); their own groundwater wells in the Basin;
and recycled water. The Participating Pumpers purchase Wholesale Water
pursuant to the terms of the WSA and Individual Water Supply Contracts. The
southern portion of the Westside Groundwater Basin, shown on the map attached
hereto as Attachment A, (hereinafter "Basin") has been a source of municipal
and irrigation water supply for northern San Mateo County water users, including
the Participating Pumpers. Groundwater from the Basin has also been a portion
of the historical water supply for irrigation at golf courses in San Mateo County
and around Lake Merced in San Francisco, and at cemeteries in Colma and San
Bruno.
E. Groundwater pumping from the Basin over the past half-century has from time to
time lowered water levels within the Basin, resulting in vacant storage capacity in
the Basin. The purpose of the Project described in this Agreement is to enhance
the use of the Basin as an underground reservoir to store water during periods
when surface water supply can be made available to offset pumping by the
Participating Pumpers, leading to an accumulation of stored groundwater in the
Basin. The Sf PUC would augment recharge in the Basin by delivering surface
water to the Participating Pumpers to be used in lieu of groundwater pumping,
thus allowing groundwater to accumulate in the Basin. Stored water would be
recaptured by pumping during periods of insufficient surface water supplies,
thereby increasing the overall supply of potable water from the Basin.
F. A Conjunctive Use Pilot Program conducted by the Parties demonstrated that
water can be stored in the Basin through the SFPUC's delivery of In Lieu Water
to replace groundwater that the Participating Pumpers refrain from pumping. The
Project objective is to develop enough additional groundwater pumping capacity
in order to produce up to an additional 8, l 00 acre feet per year (pumped at an
annual average rate of 7.2 million gallons per day, or "mgd") for an anticipated
total extraction of 61,000 acre feet of stored water under the Project to meet
Sf PUC System demands during a possible 8.5 year drought cycle.
G. In addition to being available during shortages caused by drought, Project
Facilities would be available for use during shortages caused by natural disasters,
SFPUC System rehabilitation, scheduled maintenance, or malfunction of the
Sf PUC System as provided for in the WSA, as well as for certain non-Project
purposes by Participating Pumpers, as described in this Agreement.
H. The SFPUC, through its consulting engineering firm MWH, has completed the
"South Westside Basin Conjunctive Use Program Alternatives Analysis Report"
dated October 2007 ("AAR"), and the "South Westside Basin Conjunctive Use
Program Conceptual Engineering Report dated November 2008 ("CER"). The
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AAR evaluated well sites and distribution connection alternatives for Project Well
sites, taking into account the availability of disinfection and treatment facilities,
water quality blending options, and costs. The CER recommended 16 Project
Well sites, and included preliminary site layouts and a schedule for subsequent
phases of project design and potential implementation (i.e., pre-design site
investigations, environmental review, design, and construction). The
configuration of Project Facilities and Project Wells reflects the technical and
engineering analyses contained in the CER and DEIR, and is as shown on the map
attached hereto as Attachment C.
I. The CER updated the AAR well siting plan based upon well interference analyses
conducted by the firm of Luhdorff & Scalmanini in a report entitled "Conceptual
Estimate of Static Water Level Response to Planned Conjunctive Use Operations
South Westside Basin" dated April 18, 2008. Based on this work, the
Participating Pumpers and the SFPUC have improved their understanding of the
possible effects associated with the operation of Project Wells.
J. A Groundwater Management Plan ("Management Plan") has been developed for
the South Westside Basin with participation by San Bruno, Daly City, and Cal
Water, and in collaboration with the SFPUC, under California Water Code section
10750 et. seq. The Management Plan has been adopted by San Bruno and Daly
City, accepted by Cal Water, and has been received by the SFPUC.
K. It is the intent of the Parties that this Agreement be interpreted to apply only to the
Groundwater Storage and Recovery Project contemplated herein and that this
Agreement will have no effect whatsoever on the land use planning or land use
permitting authority or decision-making of Daly City, San Bruno, South San
Francisco or the City and County of San Francisco.
L. It is the intent of the Parties that this Agreement, unless expressly stated
otherwise, shall not create, alter or impact the rights of the Parties to pump or
utilize water from the Basin or the rights of the Participating Pumpers or
Nonparticipating Pumpers as overlying owners, pumpers, appropriators,
prescriptors or otherwise.
NOW, THEREFORE, in consideration of the foregoing Recitals, the Parties hereby agree
as follows:
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ARTICLE 1
DEFINITIONS
As used in this Agreement, each of the following capitalized terms shall have the
respective meaning given to it in this section unless expressly stated to the contrary where such
term is used.
1.1. "Aggregate Designated Quantity" is the groundwater production allocation
set forth in Section 4.5 that the Participating Pumpers can pump from their
Existing Facilities and any New Wells during the Term of this Agreement.
1.2. "Agreement" shall refer to this Agreement for Groundwater Storage and
Recovery from the Southern Portion of the Westside Basin.
1.3. "Basin" shall refer solely to the 31 square mile southern portion of the Westside
Groundwater Basin, as delineated on the map attached hereto as Attachment A.
1.4. "Basin Management Objectives" refers to the groundwater quality and
quantity objectives set forth in the Management Plan.
1.5. "Conjunctive Use Pilot Program" is the program reflected in the First and
Second Amendments to Individual Water Supply Contract between the City and
County of San Francisco and the City of Daly City for Purposes of Conducting
an Aquifer Recharge Study, along with any subsequent letter agreements
between the SFPUC and the Participating Pumpers prior to the Effective Date of
this Agreement, that authorized the continued delivery of In Lieu Water for
study purposes. San Bruno and Cal Water also participated in the Conjunctive
Use Pilot Program under respective amendments to their [ndividual Water
Supply Contracts dated December 11, 2002 and December 20, 2002.
1.6. "Consumer Price Index" refers to the United States Department of Labor's
Bureau of Labor Statistics Consumer Price Index for All Urban Consumers, San
Francisco-Oakland-San Jose, California, excluding the shelter component of
said index. If the aforesaid Consumer Price Index ceases to be published, any
similar index published by any other branch or department of the U.S.
government shall be used as the index in this Agreement, and if none is
published, another index generally recognized as authoritative shall be
substituted therefore by the Parties.
1.7. "Designated Quantity" refers to each Participating Pumper's initial production
allocation of the Aggregate Designated Quantity identified in Section 4.5,
subject to adjustment by agreement of the Participating Pumpers as provided in
Section 4.5.
1.8. "Emergency" means a sudden, non-drought event, such as an earthquake or
other catastrophic event that results in an insufficient supply of water available
to all or part of a Party's service area, or to the combined SFPUC System
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Cal Water, and adopted by San Bruno and Daly City, accepted by Cal Water
and received by the SFPUC.
1.15. "Minimum Groundwater Requirements" means either (1) the minimum
quantity of groundwater pumping that cannot be replaced by delivery of In Lieu
Water due to constraints in a Participating Pumper's distribution system that a
Participating Pumper must continue to pump from its Existing Facilities
combined with pumping from any New Wells during Storage Periods; or (2) the
minimum quantity of groundwater pumping needed for Existing Facility or New
Well maintenance in accordance with prudent operating parameters, as set forth
on Attachments D-1 through D-3.
1.16. "Minimum Surface Water Requirements" means the minimum quantity of
SFPUC System Water that must continue to be supplied to each Participating
Pumper during Recovery Periods for purposes of (1) blending with groundwater
as may be required to meet drinking water standards promulgated by the
California State Water Resources Control Board; or (2) meeting demands in an
individual Participating Pumper's service area whose distribution system may
not be configured to permit delivery of groundwater to all of its customers, as
set forth in Attachments D-1 through D-3.
1.17. "New Well" means a new groundwater production well in the Basin proposed
by a Party that is not intended to replace an existing well, subject to any
necessary environmental review under CEQA as set forth in Section 7.5.
1.18. "Nonparticipating Pumpers" are groundwater users pumping water from the
Basin that are not participating in this Agreement.
1.19. "Operating Committee" is the committee of SFPUC and Participating Pumper
representatives formed pursuant to Article 10 of this Agreement.
1.20. "Over Production" refers to the combined average pumping rate of the
Participating Pumpers using their Existing Facilities, including pumping from
any proposed New Wells, that exceeds the Aggregate Designated Quantity over
the course of a five year period, as explained in Section 4.5.
1.21. "Participating Pumpers" are the groundwater pumpers in the Basin that are
participating in this Agreement: Daly City, San Bruno and Cal Water.
1.22. "Preexisting Conditions" refers to conditions in Existing Facilities that, if not
properly managed by a Participating Pumper, have the potential to reduce the
extraction of Designated Quantities from its Existing Facilities, irrespective of
the intermittent operation of Project Wells.
1.23. "Project" refers to the proposed Groundwater Storage and Recovery Project
described in this Agreement.
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1.24. "Project Capital Costs" means costs incurred for the construction and
acquisition of Project Facilities along with all Project-related planning costs,
such as engineering costs, engineering services, costs to obtain Project-related
regulatory permits, fees for environmental consultants, legal fees, and other
costs that are required to construct and acquire Project Facilities.
1.25. "Project Facilities" includes all Project assets, such as Project Wells and all
related fixed assets (e.g., real property, water treatment, connecting pipelines)
that are acquired or constructed by the SFPUC pursuant to this Agreement and
operated as Regional Water Enterprise assets for the allocation of capital costs
and operation and maintenance expenses under the WSA, as shown on the map
attached as Attachment C and listed on Attachment E.
1.26. "Project Operation and Maintenance Expenses" means the cost of operating
and maintaining Project Facilities and Shared Facilities in good working order
or repairing those Facilities when necessary, including all Project-related
expenses, such as labor, materials and supplies, water treatment, permitting,
energy, water quality monitoring and other expenses directly attributable to
operation of Project Facilities for Project purposes. Project Operation and
Maintenance Expenses may also include expenses incurred by the Participating
Pumpers in operating Existing Facilities and new wells provided that such
expenses are recommended in advance by the Operating Committee under
Section 9.2.
1.27. "Project Wells" are the wells proposed to be installed for Project purposes, as
shown on the map attached as Attachment C.
1.28. "Recovery Notice" is the written notice issued by the SFPUC declaring a
forecasted shortage of water in the SFPUC Water System due to drought,
scheduled maintenance, or an Emergency, triggering Recovery of water stored
in the SFPUC Storage Account by the Parties to this Agreement at such time as
the SFPUC may direct.
1.29. "Recovery" or "Recovery Periods" refers to the act of pumping or to periods
of pumping of water from the SFPUC Storage Account for Project purposes
using Project Facilities as may be directed by the SFPUC or recommended by
the Operating Committee under Section 5.1. Recovery does not include the
pumping of Project Wells for non-Project purposes as described in Section 8.8,
the pumping of Project Wells for non-Project Emergency purposes under
Section 8.9, or any volume of Over Production by a Participating Pumper.
1.30. "Replacement Water" means the quantity of SFPUC System Water made.
available by the SFPUC, in accordance with Section 4.7, to some or all of the
Participating Pumpers based on a determination by the Operating Committee
that the Aggregate Designated Quantity in Section 4.5 should be reduced based
on the criterion set forth in Section 4. 7.
7
1.31. "SFPUC System" is the surface water importation system operated by the
SFPUC that diverts, delivers, and accounts for SFPUC System Water to
wholesale and retail customers in the SFPUC service area.
1.32. "SFPUC System Water" is the water the SFPUC diverts from local Bay Area
watersheds and the Tuolumne River for use within the SFPUC service area, and
includes any positive balance in the SFPUC Storage Account that is available
for pumping using Project Wells connected to SFPUC System transmission
mains or to the Participating Pumpers' water distribution systems.
1.33. "SFPUC Storage Account" means the book account maintained by the SF PUC
showing the amount of water stored in the Basin during Storage Periods under
this Agreement, and the amounts described in Section 6.3 that were previously
stored as a result of participation in the Conjunctive Use Pilot Project, less the
amount of water pumped by the Participating Pumpers and the SFPUC from
Project Wells during Recovery Periods and less losses from the Basin, as
determined by the Operating Committee as provided in Section 6.5.
1.34. "Shared Facilities" refers to an Existing Facility that is owned by a
Participating Pumper, as upgraded though the expenditure of Regional capital
costs under section 5.04 of the WSA and operated in part as a Project Facility.
1.35. "Shortage" means a reduction in SFPUC System Water available to the SFPUC
System or portions thereof caused by drought, Emergencies, scheduled
maintenance activities, or malfunction of the SFPUC System.
1.36. "Shortage Allocation" refers to each Participating Pumper's allocation of
SFPUC System Water during periods of mandatory rationing as determined by
the wholesale customers in Tier 2 of the Shortage Allocation Plan or any
successor plan that may be agreed to by the SFPUC and its wholesale customers
during the Term of this Agreement.
1.37. "Shortage Allocation Plan" is the Water Shortage Allocation Plan attached as
Attachment H to the WSA that describes a method for allocating water between
the SFPUC retail and wholesale customer classes during system-wide water
shortages that require an average system-wide reduction in water use of up to
twenty percent.
1.38. "Storage" or "Storage Periods" refers to the act of storing water, or to
periods of time when such storage occurs, through the provision of In Lieu
Water to the Participating Pumpers, as may be directed by the SFPUC in
accordance with Section 4.3.
1.39. "Supply Assurance" is the total amount (184 mgd) that the Sf PUC guarantees
it will make available to its wholesale customers on an annual average basis
under §3.01 of the WSA.
8
1.40. "Supply Year" refers to the period from July l to June 30.
1.41. "Undesirable Effects" means a substantial adverse physical change to the
Basin caused by Project operation that would result in (1) seawater intrusion,
land subsidence, or water quality degradation; (2) material reductions in well
yield at, or the inability to pump from, without experiencing excessive pump
lifts, one or more wells owned and operated by a Participating Pumper; (3)
lowering of groundwater levels such that there would be a substantial (greater
than 5%) reduction in the amount of water available in the SFPUC Storage
Account; ( 4) a substantial lowering of groundwater levels such that the impacts
identified in subparts (1), (2) or (3) above would result, or any other material
adverse physical change on the water supply or operations of a participating
pumper. For purposes of this Agreement, "Undesirable Effects" also includes
material increases in the cost of operation of Existing or ~roject Facilities.
1.42. "Wholesale Water" is SFPUC System Water that the SFPUC delivers to a
Participating Pumper pursuant to the WSA within a Participating Pumper's
Individual Water Supply Guarantee, and does not include supplies ofln Lieu
Water delivered to the Participating Pumpers on an interruptible basis.
1.43. "WSA" refers to the Water Supply Agreement between the City and County of
San Francisco and Wholesale Customers in Alameda, San Mateo and Santa Clara
Counties dated July 1, 2009.
ARTICLE2
EFFECTIVE DATE, TERM AND AMENDMENT
2.1. Effective Date
This Agreement shall be effective as of December 16, 2014, the date that the General Manager of
the SFPUC signed this Agreement following approval by the Participating Pumpers (the
"Effective Date").
2.2. Term
The term ("Term") of this Agreement shall be co extant with the term of the WSA, subject to the
limitations and terms and conditions set forth herein. The Term shall begin on the Effective
Date, and shall end on the expiration of the WSA, June 30, 2034. If the term of the WSA is
extended as provided in section 2.02 thereof through the addition of any Extension Term(s), the
term of this Agreement shall be automatically extended for an identical Extension Term.
2.3. Amendment
The Parties may agree to amend this Agreement in writing from time to time following duly
authorized approval of their governing bodies. The matters to be determined by the Operating
Committee under Section 10.2, and amendments to Attachments A through G, do not require
the approval of the Parties' governing bodies.
9
2.4. Conditions Precedent in Article 3; Termination
In the event of the failure or non-waiver of any of the conditions precedent in Article 3, the
Parties shall meet and confer on the feasibility of satisfying or waiving the conditions. If, after
reasonable efforts by the Parties, the conditions precedent in Article 3 cannot be satisfied or
waived, this Agreement shall terminate automatically.
2.5. Consequences of Non-Extension or Termination
If the term of the WSA is not extended pursuant to Section 2.2, or if this Agreement terminates
pursuant to Sections 11.1 or 12.14, the SFPUC shall continue to own and have access to all
Project Facilities, and shall have the right to direct the Participating Pumpers to extract and use
any remaining water reflected as a credit balance in the SFPUC Storage Account as provided in
Article 5 of this Agreement, until there is no remaining water in the SFPUC Storage Account.
Alternatively, the SFPUC may in its sole discretion pump any remaining stored water reflected
as a credit balance in the SFPUC Storage Account, subject only to the limitations contained in
this Agreement until there is no remaining water in the SFPUC Storage Account. The SFPUC
shall allocate the water supply benefit that accrues as a result of such pumping in accordance
with Section 3.17 of the WSA. Upon the expiration of this Agreement, the SFPUC shall
otherwise have no right, claim or interest in the Basin, or to water in the Basin, pursuant to this
Agreement.
ARTICLE3
CONDITIONS PRECEDENT TO IMPLEMENTATION OF PROJECT
The construction of Project Facilities, the Parties' obligations to operate Project Facilities,
Existing Facilities and Shared Facilities in accordance with this Agreement, and the taking of
any discretionary actions by any Party in accordance with this Agreement, are subject to the
following conditions precedent:
3.1. Permits and Approvals
Compliance with CEQA (California Public Resources Code Section 21000 et seq.) and any other
authorizations, consents, licenses, permits and approvals from any governmental authority or
person required by applicable law to construct and operate the Project shall have been obtained.
In considering any proposed future discretionary actions that may be proposed in this
Agreement, the Parties retain absolute discretion to: (1) make such modifications to any of the
proposed discretionary actions as may be necessary to mitigate significant environmental
impacts; (2) select feasible alternatives to the proposed discretionary actions that avoid
significant adverse impacts; (3) require the implementation of specific measures to mitigate the
significant adverse environmental impacts as part of the decision to approve the discretionary
actions; ( 4) balance the benefits of the proposed discretionary actions against any significant
environmental impacts before taking final actions to approve the proposed discretionary actions
if such significant impacts cannot otherwise be avoided; or (5) determine not to proceed with the
proposed discretionary actions.
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3.2. No Force Majeure Event
No Force Majeure Event (as defined in Section 1.10) shall have occurred and be continuing.
ARTICLE4
GROUNDWATER STORAGE PERIODS
4.1. SFPUC Storage Through In Lieu Water Deliveries
During Storage Periods the SFPUC may require the Participating Pumpers to store In Lieu Water
in the Basin up to a maximum rate of 5.52 mgd. All quantities ofln Lieu Water stored in the
Basin shall be added to the SFPUC Storage Account, up to a total maximum storage of 61,000
acre feet. All quantities of In Lieu Water delivered to Cal Water shall be in accordance with the
terms of the Raker Act and the requirements of WSA section 9.02.
4.2. Notice of In Lieu Deliveries; Duty to Take Delivery ofln Lieu Water
The amount of In Lieu Water available for delivery to the Participating Pumpers shall be at the
, sole discretion of the SFPUC, taking into account hydro logic, operational and other conditions of
concern to the SFPUC as the operator of the SFPUC System. If the SFPUC elects to declare a
Storage Period and deliver In Lieu Water, the Participating Pumpers shall accept In Lieu Water
delivered by the SFPUC in accordance with the terms and conditions of this Agreement.
In accordance with the schedule set forth in the Shortage Allocation Plan, the SFPUC informs its
wholesale customers, including the Participating Pumpers, of its final estimate of available
SFPUC System Water by April 15th ( or sooner if adequate snow survey measurement data is
available) to form a robust estimate of the water supply available to the retail and wholesale
customer classes for the coming Supply Year. As a part of that annual determination, the
SFPUC will give written notice to the Participating Pumpers and the Operating Committee on or
before April 151h of the availability, anticipated quantities, and timing of SFPUC In Lieu Water
deliveries.
4.3. Reduction in Pumping from Existing Facilities; Minimum Groundwater
Requirements
If the SFPUC's notice of available SFPUC System Water states that In Lieu Water is available
for delivery to the Participating Pumpers at the maximum total rate of 5.52 m~d, the
Participating Pumpers shall each respond to the SFPUC in writing by May 15 regarding
whether and to what extent they can accept delivery of In Lieu Water over the course of the
coming Supply Year by reducing pumping of their Designated Quantities from their Existing
Facilities to the amounts of their respective Minimum Groundwater Requirements shown in
Attachments D-1, D-2 and D-3.
The Participating Pumpers' may indicate in their responses that they elect to pump groundwater
from their Existing Facilities at rates higher than their individual Minimum Groundwater
Requirements, up to a cumulative total exceedance of 1.9 rngd, as may be allocated based on
mutual agreement of the Participating Pumpers. The Participating Pumpers shall take delivery of
a minimum of 5 mgd of In Lieu Water during Storage Periods, or of any smaller quantity of In
Lieu Water that is made available by the SFPUC in the notice issued on or before April 15th.
11
The Participating Pumpers shall decrease pumping from their Existing Facilities on such date as
the Parties may agree but no later than July l, at which time the SFPUC will commence delivery
of In Lieu Water up to the amount made available by the SFPUC, and as requested by the
Participating Pumpers. All quantities of In Lieu Water delivered by the SFPUC up to a rate of
5.52 mgd will be accounted for as credits in the SFPUC Storage Account.
The Participating Pumpers may operate their Existing Facilities to pump less than their
individual Minimum Groundwater Requirements during Storage Periods. Deliveries of SFPUC
System Water to offset pumping reductions below a Participating Pumper's Minimum
Groundwater Requirement shall not be considered In Lieu Water and are subject to the
provisions of Section 6.4. Increases in Minimum Groundwater Requirements may be made only
with the approval of the Operating Committee under Section 10.2.5.
4.4. Location of Delivery ofln Lieu Water to Participating Pumpers
The SFPUC shall deliver In Lieu Water to the Participating Pumpers at the existing service
connections detailed in each Participating Pumper's Individual Water Supply contract with the
SFPUC. To the extent that delivery of In Lieu Water under the Project requires additional
service connections to the SFPUC System, such connections shall be considered Project
Facilities for cost allocation purposes under Article 9 of this Agreement.
4.5. Aggregate Designated Quantity; Initial Designated Quantities Assigned to
Participating Pumpers
The Participating Pumpers agree to restrict the pumping of groundwater from the Basin utilizing
their Existing Facilities, combined with any pumping from proposed New Wells, to the
Aggregate Designated Quantity of 7,724 acre feet per year, extracted at an annual cumulative
rate of 6.9 mgd. Subject to the limitation on Over Production expressed in Section 4.8, the
Participating Pumpers may in their sole discretion exceed the 6.9 mgd annual cumulative
pumping rate provided that the five-year moving average cumulative pumping rate, computed
solely with reference to the previous five years of Recovery and Hold periods, shall not exceed
6.9 mgd. The initial Designated Quantities assigned to each of the Participating Pumpers over
the first Supply Year during the Term of this Agreement are as follows:
4.5.1. Daly City: 3,842 acre feet per year, extracted at an annual average rate of
3.43 mgd.
4.5 .2. Cal Water: 1,534 acre feet per year, extracted at an annual average rate of
1.37 mgd.
4.5.3. San Bruno: 2,350 acre feet per year, extracted at an annual average rate of
2.1 mgd.
The Designated Quantities set forth in this section may be freely altered, transferred, adjusted or
allocated by agreement (collectively, "adjustments") of the Participating Pumpers in each Supply
Year during the Term of this Agreement, provided that (1) the Aggregate Designated Quantity is
not increased above 6.9 mgd using the five-year moving average described in this section; (2) the
adjustments in Designated Quantities are reflected, to the extent possible, in the annual operating
plans developed by the Operating Committee under Section 8.6; and (3) such adjustments do not
exceed 10%, of each Participating Pumper's agreed upon Designated Quantity, plus or minus, for
that Supply Year. The Operating Committee may consider an increase to the 10% limitation on
adjustments to Designated Quantities expressed in this section in accordance with the criteria set
forth in Sections 4.6.1 and 4.6.2.
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4.6. Increase of Aggregate Designated Quantity
The future operation of the Basin for Project purposes, and continued water level monitoring by
the Parties in accordance with the Management Plan, may result in mutual agreement that the
Aggregate Designated Quantity set forth in Section 4.5 may be below the yield of the Basin.
Requests by the Participating Pumpers to extract groundwater above the Aggregate Designated
Quantity may be approved by the Operating Committee as set forth in Section 10.2.12. As of the
Effective Date of this Agreement, the Participating Pumpers are not planning to extract
groundwater above the Aggregate Designated Quantity, but are incorporating a process for
adjusting the Aggregate Designated Quantity should the Operating Committee decide to exercise
its discretion to do so in the future, following compliance with CEQA to the extent required.
Potential increases in the Aggregate Designated Quantity may be considered by the Operating
Committee under any of the following circumstances:
4.6.1. Based on actual water level data and operational experience, or changed
conditions, following the completion and acceptance of Project Facilities as
reflected in a resolution of the SFPUC.
4.6.2. At any time following the permanent replacement of groundwater pumped
by a Nonparticipating Pumper with water from another source, e.g. recycled
water.
4.7. Reduction in Aggregate Designated Quantity; Provision of Replacement
Water by the SFPUC
The Operating Committee may determine under Section 10.2.12 that it is necessary to reduce the
Aggregate Designated Quantity set forth in Section 4.5. Any decision of the Operating
Committee to reduce the Aggregate Designated Quantity shall be based solely on a
determination that continued pumping of the Aggregate Designated Quantity will result in the
long term decline of Basin water levels absent Project operations in a manner that substantially
interferes with the ability to extract water from the SFPUC Storage Account during Recovery
Periods.
The determination of each Participating Pumper's share of any reduction in the Aggregate
Designated Quantity shall be by agreement of the Paiticipating Pumpers. In the event the
Participating Pumpers are unable to reach agreement, Section 12.1 shall apply. Following such
agreement, the SFPUC agrees that it will provide a total of up to 500 acre feet of Replacement
Water per year to the Participating Pumpers at a cost of $226.53 per acre foot within 60 days of
receipt of written notification by the affected Participating Pumper(s). The price of Replacement
Water may be adjusted annually by the SFPUC based on the Consumer Price Index.
The supply of Replacement Water by the SFPUC shall not increase a Participating Pumper's
Individual Water Supply Guarantee under the WSA and shall be consistent with section 9.02 of
the WSA. In the event that the SFPUC offers to increase the Supply Assurance under section
4.06 of the WSA, and one or more Participating Pumpers receiving Replacement Water requests
and receives an increase in its Individual Water Supply Guarantee, then the SFPUC's obligation
to provide Replacement Water shall cease to the extent of the increase in the Participating
Pumper's Individual Water Supply Guarantee that is offered by the SFPUC, and the
corresponding amount of Replacement Water formerly supplied by the SFPUC shall be priced at
the then-current SFPUC wholesale water rate. Alternatively, the SFPUC's obligation to provide
a Replacement Water supply to one or more Participating Pumpers may be retired in whole or
part if the SFPUC pays a mutually agreed upon one-time capital cost contribution towards a
permanent replacement of groundwater pumped by a Nonparticipating Pumper with water from
13
another source in the Basin as provided in Section 4.6.2. Prior to making any decision to retire a
Replacement Water obligation by making a capital cost contribution towards a permanent
replacement of groundwater pumped from the Basin, the SFPUC agrees that it will solicit input
and recommendations from the Bay Area Water Supply and Conservation Agency and the
wholesale customers under WSA section 3.15.B. The provision of Replacement Water described
in this section shall not be construed as precedent fo r the allocation of surface water by the
SFPUC in any future water transfer or SFPUC System capital project involving other wholesale
water customers of the SFPUC.
The notice(s) from the affected Participating Pumper(s) requesting delivery of Replacement
Water shall, on an annual basis, select one of the following options:
4.7.l. An annual transfer of storage credits in the SFPUC Storage Account.
4.7.2. Provision of interruptible supplies of surface water from the SFPUC
System, provided that the Sf PUC determines, in its sole discretion, that such
supplies are available.
4.8. Over Production of Water in Excess of Aggregate Designated Quantity
At the close of each Supply Year, beginning in the fifth year of Project operations, the Operating
Committee will determine whether the Participating Pumpers engaged in Over Production, and if
so, identify which Participating Pumper(s) were responsible for the Over Production by pumping
more than its agreed upon Designated Quantity during the previous five year averaging period.
Over Production shall never exceed an amount that is 10% over the Aggregate Designated
Quantity (7 .6 mgd) in any Supply Year or the five-year moving average amount of 6.9 mgd
calculated as provided in Section 4.5 above. No volume of Over Production shall result in any
deduction of water from the SFPUC Storage Account. Any Participating Pumper determined by
the Operating Committee to be responsible for Over Production shall take one of the following
corrective actions:
4.8.1. reduce pumping below its Designated Quantity, not including Storage
Periods, by a commensurate amount to restore water to the Basin in the amount of
the Over Production which will result in the five year moving average basis of 6.9
mgd being achieved;
4.8.2. replace the quantity of water pumped in excess of the Designated Quantity
with water from another source or supply, resulting in an equivalent amount of
water being stored in the Basin, subject to the approval of the Operating
Committee under Section 10.2.12; or
4.8.3. other appropriate measures proposed by the Parties, subject to the approval
of the Operating Committee under Section 10.2.12.
A Participating Pumper that engages in Over Production shall propose its preferred method for
remedying the Over Production by August 1st of the succeeding Supply Year and shall so inform
the other members of the Operating Committee. If the proposed remedy for Over Production
requires a decision of the Operating Committee under Section 10.2.12, the Operating Committee
shall convene within 30 days of receipt of the proposal. The corrective measures set forth in
Sections 4.8.1 through 4.8.3 shall not be applicable to Over Production required solely due to an
Emergency or for Project Management purposes as directed by the Operating Committee under
Section 5.2.3.
14
ARTICLE 5
RECOVERY OF SFPUC STORAGE ACCOUNT WATER FROM PROJECT WELLS
5.1. Circumstances Triggering Recovery of SFPUC Storage Account Water by
Participating Pumpers
Pursuant to Section 5.2, the SFPUC will determine the quantity of groundwater to be pumped
from the SFPUC Storage Account using Project Wells in any of the following circumstances:
5.1.1. During Shortages caused by drought using the process set forth in the
Shortage Allocation Plan, and as set forth in Section 5.2.1; or
5.1.2. During Shortages caused by an Emergency, SFPUC System rehabilitation,
scheduled maintenance, or malfunction of the SFPUC System, any of which
permit the SFPUC to temporarily reduce deliveries of Wholesale Water to all or
some of its wholesale customers as set forth in WSA §3 .11; or
5.1.3. Upon recommendation of the Operating Committee, including for purposes
of managing the SFPUC Storage Account.
5.2. Timing of Recovery of Water from SFPUC Storage Account
5.2.1. Drought Recovery
The SFPUC may issue a Recovery Notice during droughts when the SFPUC
determines that available water supplies from the SFPUC System are insufficient
to meet customer purchase projections using the process set forth in the Shortage
Allocation Plan. During Shortages caused by drought, the SFPUC may choose to
exercise its dry year water supply options, including but not limited to Recovery
of water from the SFPUC Storage Account; requesting voluntary reductions in
water use or imposition of mandatory rationing; or any combination of these
measures. Upon issuance of a Recovery Notice by the SFPUC, the Parties and the
Operating Committee shall make plans and preparations for the possible Recovery
of SFPUC Storage Account water commencing on July 1 or such later date as the
Recovery Notice shall direct, pursuant to Section 5.3 below. In successive dry
years, the SFPUC's initial determination of water availability under the Shortage
Allocation Plan shall include the remaining volume of water in the SFPUC
Storage Account, and the SFPUC may direct the Participating Pumpers to
continue Recovery from Project Wells under their operational control in each
successive dry year until the total volume in the SFPUC Storage Account is
exhausted.
5.2.2. Non-Drought Shortages
During Shortages that would be caused by SFPUC System rehabilitation or
scheduled maintenance, the SFPUC's Recovery Notice shall provide not less than
60 days' advance notice to the Participating Pumpers and the Operating
Committee that water must be pumped from the SFPUC Storage Account using
Project Wells. During Emergencies or malfunctioning of the SFPUC System that
15
prevent the SFPUC from meeting water demands in its combined retail and
wholesale service areas at established level of service goals for the delivery of
SFPUC System Water, the SFPUC may issue a written Recovery Notice that
requires Recovery by the Participating Pumpers as soon as is reasonably
practicable.
5.2.3. Management of SFPUC Storage Account
For purposes of managing the SFPUC Storage Account, the Operating Committee
may authorize pumping outside of Recovery Periods and shall develop a schedule
of pumping pursuant to Section 10.2.2 that provides adequate notice to the Parties
of the need to pump water from the SFPUC Storage Account.
5.3. Issuance of Recovery Notice by the SFPUC
Based on the circumstances and timing set forth in Sections 5.2.1 and 5.2.2, the SFPUC may, in
order to manage the limited supply of SFPUC System Water during Shortage, issue a Recovery
Notice directing that groundwater be pumped by Participating Pumpers from Project Wells in the
Basin, up to the cumulative total amount available in the SFPUC Storage Account and in
accordance with the Operating Committee's (1) operating schedule developed pursuant to
Section 10.2.2 and (2) rules for accounting for storage losses from the Basin pursuant to
Sections 6.5 and 10.2.10.
5.4. Quantities of Water Available to Participating Pumpers from Project
Facilities and SFPUC System Connections During Shortages Caused by
Drought
During Shortages caused by drought that require mandatory rationing, the quantity of
groundwater pumped by each Participating Pumper from the SFPUC Storage Account using
Project Facilities, plus each Participating Pumper's Minimum Surface Water Requirement, shall
not exceed the volume of the Wholesale Water allocation that would have been available to that
Participating Pumper under the methodology adopted by all of the wholesale customers under
section 2.2 of the Shortage Allocation Plan. During Shortages caused by drought that require
mandatory rationing, the Participating Pumpers may not take delivery of SFPUC Surface Water
in excess of the volumes that would have been available to them under section 2.2 of the
Shortage Allocation Plan as a substitute for reduced pumping from their Existing Facilities or
from Project Wells under their operational control.
5.5. Minimum SFPUC System Water Deliveries to Participating Pumpers during
Recovery Periods
During Recovery Periods, the SFPUC shall continue to supply each Participating Pumper with its
Minimum Surface Water Requirements, as set forth in Attachment D. Changes in Minimum
Surface Water Requirements may be made only with the approval of the SFPUC, which shall not
be unreasonably withheld.
5.6. Recovery of Stored Water by the SFPUC
Project Facilities include Project Wells located on SFPUC System transmission line rights of
way which may, in addition to Project Wells operated by the Participating Pumpers, be operated
by the SFPUC for the Recovery of SFPUC Storage Account water pursuant to Section 5.1.
These Project Wells are shown on Attachment C.
16
6.1.3. Water Accounting for Use of Project Facilities for Non-Project Purposes
or During Emergencies. The Participating Pumpers' use of Project Facilities for
non-Project purposes under Section 8.8 shall not result in a corresponding debit
to the volume of water stored in the SF PUC Storage Account. A Participating
Pumper' s use of Project Facilities during a local Emergency under Section 8.9
shall not result in a corresponding debit to the volume of water stored in the
SFPUC Storage Account, unless the SFPUC determines, in its sole discretion,
that such pumping is required under Section 5.2.2 in order to maintain water
deliveries from the SFPUC System to its combined wholesale and retail service
area at the SFPUC's established level of service goals.
6.2. Accounting for Wholesale Water
Wholesale Water deliveries shall continue to be paid for by the Participating Pumpers pursuant
to the WSA and shall not increase the credit balance in the SFPUC Storage Account. The
SFPUC's delivery of Replacement Water, and interruptible supplies ofln Lieu Water to a
Participating Pumper in excess of its Individual Water Supply Guarantee, shall not be construed
to create any liability, dedication to public use, or obligation on the part of the SFPUC to provide
a greater volume of water to that Participating Pumper than its Individual Water Supply
Guarantee, as set forth in Attachment C to the WSA.
Apart from changes in the timing of SFPUC System Water delivery and payment therefore in
accordance with conjunctive operation of the Basin, and as is set forth in Section 12.18 of this
Agreement, nothing in this Agreement is intended to affect the Participating Pumpers' rights to,
and payment for, Wholesale Water, including each Participating Pumper's share of payment for
SFPUC System Regional asset capital costs and associated operating expense categories under
the WSA.
6.3. Accounting for In Lieu Water Delivered during Conjunctive Use Pilot
Program
During the Conjunctive Use Pilot Program, the SFPUC delivered In Lieu Water to the
Participating Pumpers. The following quantities of water have been added to the SFPUC
Storage Account as a result of the Conjunctive Use Pilot Program:
6.3.1. Daly City -During the Conjunctive Use Pilot Program, up until April 1,
2006, the SFPUC delivered 9,573 acre feet of In Lieu Water to Daly City, which
paid for that water at the $0.35 per unit rate established under the Conjunctive
Use Pilot Program. That water, which is included as a credit balance to the
SFPUC Storage Account, shall be pumped first at no charge to Daly City upon the
future initiation of Recovery.
From April 1, 2006 through March 31, 2011, the SFPUC continued to
periodically deliver In Lieu Water to Daly City at no charge, resulting in an
additional credit of 7,864 acre feet in the SFPUC Storage Account. Those
deliveries shall be credited to the SFPUC Storage Account, and, when Recovery
is initiated, and after Daly City has received, at no charge, 9,573 acre feet stored
under the Conjunctive Use Pilot Program, Daly City shall pay for groundwater
18
pumped from the SFPUC Storage Account as provided in Section 6.4 of this
Agreement.
6.3 .2. Cal Water -During the first phase of the Conjunctive Use Pilot Program,
between February 1, 2003 and November 30, 2003, the SFPUC delivered 802
acre feet of In Lieu Water to Cal Water, which paid for that water at the $0.35 per
unit rate established under the Conjunctive Use Pilot Program.
When the Conjunctive Use Pilot Program restarted on April 1, 2004, Cal Water
did not participate and did not resume pumping any part of its Designated
Quantity, but continued to rely on Wholesale Water for all of its water needs in its
South San Francisco service area. This resulted in an increase in Basin water
levels as if Cal Water had continued to participate in the Conjunctive Use Pilot
Program, and a corresponding increase in the SFPUC Storage Account of 938
acre feet between April 1, 2004 and March 1, 2005. The SFPUC will reduce Cal
Water's FY 2014-15 Wholesale Water billings by $315,323 (three hundred fifteen
thousand three hundred twenty three dollars), representing the difference between
the rate charged for 938 acre feet of water delivered under the Conjunctive Use
Pilot Program and the estaqlished FY 2003-04 and FY 2004-05 SFPUC
Wholesale Water rates paid by Cal Water, as if Cal Water had continued to
participate in the Conjunctive Use Pilot Program between April 1, 2004 and
March 1, 2005. The SFPUC will make the credit adjustment to Cal Water's FY
2014-15 Wholesale Water account by no later than June 30, 2015. Following the
SFPUC's adjustment of Cal Water's Wholesale Water payment balance to reflect
the previous storage of 938 acre feet in the SFPUC Storage Account, the total
quantity of water delivered to Cal Water between February I, 2003 -November
30, 2003 and April 1, 2004 -March 1, 2005 (1,740 acre feet) shall be pumped
first at no charge to Cal Water upon the future initiation of Recovery. The
SFPUC shall reimburse Cal Water an amount not to exceed $80,000 (eighty
thousand dollars), based on invoices submitted and approved by the SFPUC, for
design costs previously incurred by Cal Water as Project Capital Costs to evaluate
the feasibility of co-locating Shared Facilities for Project Well no. 13 at Cal
Water's existing South San Francisco water treatment facilities. Should Cal
Water ultimately approve construction of these Shared Facilities, the SFPUC will
contribute an additional amount not to exceed $500,000 (five hundred thousand
dollars) towards the total costs of Cal Water's Shared Facilities as a Project
Capital Cost, and shall reimburse Cal Water for design and construction costs as a
lump sum payment prior to construction, for a total potential not to exceed
amount of $580,000 (five hundred eighty thousand dollars). Operation and
maintenance expenses incurred by Cal Water as a result of operating Shared
Facilities for Project purposes as a Project Facility shall be reimbursed by the
SFPUC as Project Operations and Maintenance Expenses in accordance with
Section 9.2.
When Recovery is initiated, and after Cal Water has received, at no charge, 1,740
acre feet stored between February 1, 2003 and March 1, 2005, Cal Water shall
19
pay for groundwater pumped from the SFPUC Storage Account as provided in
Section 6.4 of this Agreement.
6.3.3. San Bruno -During the Conjunctive Use Pilot Program, up until March 1,
2005, the SFPUC delivered 3,915 acre feet of In Lieu Water to San Bruno, which
paid for that water at the $0.35 per unit rate established under the Conjunctive
Use Pilot Program. That water, which is included as a credit balance to the
SFPUC Storage Account, shall be pumped first at no charge to San Bruno upon
the future initiation of Recovery.
When Recovery is initiated, after San Bruno has received, at no charge, 3,915
acre feet stored under the Conjunctive Use Pilot Program, San Bruno shall pay for
groundwater pumped from the SFPUC Storage Account as provided in Section
6.4 of this Agreement.
San Bruno and SFPUC agree to execute a memorandum of understanding that
reflects the SFPUC's intent to provide for, or to construct at the SFPUC's expense,
facilities for the emergency storage of one million gallons of water in pressure
zone 1/4, or equivalent, during Storage Periods since San Bruno's Existing
Facilities would not be immediately available to supply water during an
emergency.
6.4. Deferred Payment for Stored In Lieu Water Supplies
Except as expressly provided in Section 6.3 of this Agreement, a Participating Pumper will not
pay for In Lieu Water at the time of delivery. Rather, payment will be deferred until Recovery
by pumping. The SFPUC will bill, and the Participating Pumper will pay, for groundwater
pumped by the Participating Pumper from the SFPUC Storage Account using Project Facilities at
the then-applicable Wholesale Water rate established by the SFPUC. During Storage Periods,
each Participating Pumper shall pay the established SFPUC Wholesale Water rate for all
quantities of Wholesale Water that are delivered to it as a result of pumping from Existing
Facilities at a rate less than its Minimum Groundwater Requirement.
6.5. Accounting for Losses
Groundwater modeling performed by the Parties as well as the Management Plan have
determined that the Basin is not a closed basin. Therefore, the Operating Committee shall
develop and adopt, and periodically revise, if necessary, a proposal for accounting for losses
from the Basin under Section 10.2.10, including, if necessary, a reduction in the Aggregate
Designated Quantity under Section 4.7 or to the volume of water in the SFPUC Storage
Account, which shall be consistent with generally accepted principles of groundwater accounting
and management.
20
ARTICLE7
OWNERSIDP, OPERATION, MAINTENANCE AND REPLACEMENT
OF EXISTING FACILITIES
7.1. Ownership, Operation, Maintenance and Replacement of Existing Facilities
Each Participating Pumper will continue to own, operate, maintain and replace, if necessary, its
Existing Facilities during the Term of this Agreement. This Agreement does not authorize nor
prohibit the replacement of Existing Facilities, which shall be based solely on the discretion of
each Participating Pumper following environmental review under CEQA, if necessary. Each
Participating Pumper further agrees that it is solely responsible for all costs associated with the
operation, maintenance, rep.air and replacement of its Existing Facilities, except to the extent
authorized in Section 9.2.
7 .2. Operation and Maintenance of Existing Facilities
Each Participating Pumper agrees, to the extent practicable and economically feasible, to
operate, maintain, repair and replace its Existing Facilities (1) in accordance with this Agreement
and applicable laws, rules, regulations, guidelines, well encrustation studies and prudent utility
operator standards, including management of any Preexisting Conditions to avoid interference
with Recovery of water from the SFPUC Storage Account; (2) in accordance with its agreed
upon share of the Aggregate Designated Quantity set forth in Section 4.5; and (3) in a manner
that will not cause Undesirable Effects on Project Wells or the wells of other Participating
Pumpers. The Participating Pumpers agree to use best efforts to maintain their Existing
Facilities in good repair so as to be fully capable of producing the Aggregate Designated
Quantity set forth in Section 4.5 during Recovery Periods.
7 .2.1 . During the period following the SFPUC's issuance of a Recovery Notice
for a potential drought pursuant to Section 5.2.1, each Participating Pumper shall
conduct such testing and perform all maintenance or rehabilitation work on its
Existing Facilities that may be required to produce its agreed upon Designated
Quantity by the date specified in the Recovery Notice and over successive years if
the drought continues. Within 30 days of receipt of the initial Recovery Notice
under Section 5.2.1, and during each successive drought year, each Participating
Pumper shall submit a written report to the Operating Committee signed by its
licensed system operator that describes (1) the condition of its Existing Facilities;
(2) whether its Existing Facilities are capable of producing its Designated
Quantity by the date specified in the Recovery Notice; and (3) what steps must be
undertaken by the Paiticipating Pumper to improve its Existing Facilities in the
event that it cannot produce its Designated Quantity by the date specified in the
Recovery Notice.
7.2.2. In the event that the initial or subsequent reports reveal that a Participating
Pumper's Existing Facilities are not capable of producing its share of the
Aggregate Designated Quantity, the Participating Pumper shall provide additional
reports on a quarterly basis to the Operating Committee until it has resolved the
problem, as certified by its licensed system operator.
7.2.3. In the event of the temporary outage of Existing Facilities,the Participating
Pumper owning the Existing Facility shall notify the Operating Committee of the
21
nature and extent of the outage. To the extent the Participating Pumper is able to
obtain permission for the use of alternative facilities owned by Nonparticipating
Pumpers (such as cemetery or golf course wells) for the production of its
Designated Quantity, the Participating Pumper may utilize such alternative
facilities after notification to and review by the Operating Committee.
7.3. Failure to Maintain, Repair, or Replace Existing Facilities
In the event that a Participating Pumper cannot provide certification by its licensed system
operator that it has undertaken and completed the work identified in the initial report to the
Operating Committee under Section 7.2 by the date specified in the SFPUC's Recovery Notice
under Section 5.2.1, the SFPUC shall have no obligation to increase the quantity of Wholesale
Water available to the Participating Pumper under the Shortage Allocation Plan to make up any
shortfall in the production of that Participating Pumper's Designated Quantity caused by the
unavailability of its Existing Facilities.
7.4. Measurement of Water Pumped Using Existing Facilities
All Parties shall install, maintain and use adequate measuring devices on all water pumped from
Existing Facilities, New Wells, and Project Wells, and shall report accurate measurements of all
water pumped from Existing Facilities, New Wells and Project Wells to any Party and the
Operating Committee upon request. All meters shall be maintained to be accurate within plus or
minus 2%.
7.5. Drilling and Operation of New Wells by Parties
The SFPUC agrees not to construct or operate New Wells in the Basin other than (1) pursuant to
this Agreement; (2) the certified Project final environmental impact report, and any addenda or
supplements thereto; and (3) with the approval and agreement of the Participating Pumpers
following amendment of this Agreement as provided in Section 2.3. Prior to drilling a test hole
that may result in construction of a New Well, each Party proposing to construct and operate a
New Well shall (i) provide written notice to the Operating Committee and the other Parties of its
intent to do so; (ii) conduct environmental review to the extent required under CEQA of the
impacts associated with construction and operation of the proposed New Well; (iii) if necessary,
provide the Operating Committee with an analysis of mutual pumping interference effects
between the proposed New Well and potentially affected Project Facilities and Existing Facilities
operated by other Parties; and (iv) obtain a well construction permit from San Mateo County or
the public entity with jurisdiction over well construction permits for the proposed New Well, if
necessary. The Parties shall be given written notice and opportunity to comment on any
environmental documentation prepared for a New Well within the time frame allowed for public
comment under CEQA, and shall also be copied on any CEQA notices of exemption or notices
of determination filed by a Party in connection with carrying out the approval of a New Well.
All New Wells proposed by the Parties shall be located, constructed and operated in a manner
that will not cause Undesirable Effects. Once operational, New Wells installed by the
Participating Pumpers shall be considered to be Existing Facilities.
22
ARTICLES
OWNERSHIP, INSTALLATION, OPERATION, AND MAINTENANCE OF PROJECT
FACILITIES
8.1. Project Facilities
Project Facilities, shown on the map attached as Attachment C and listed on Attachment E, are
required to make use of 61,000 acre feet per year of the available storage capacity in the Basin
by facilitating the simultaneous extraction of the Aggregate Designated Quantity by the
Participating Pumpers from their Existing Facilities and stored SFPUC System Water by the
Parties from Project Wells during Recovery Periods.
8.2. Real Property Interests Required for Project Implementation
Project Facilities may be located on lands within the service areas of the Participating Pumpers
and/or on lands owned or acquired by the SFPUC. The SFPUC will acquire all real property
interests that are necessary for the installation of, and access to, Project Facilities. The SFPUC
agrees to grant suitable licenses to each Participating Pumper to the extent required for access to
Project Facilities connected to a Participating Pumper's water distribution system. Each
Participating Pumper agrees to grant the SFPUC suitable licenses for all Project Facilities on or
across land owned by that Participating Pumper. All licenses exchanged by the Parties will
follow the format used in Attachment G, subject to modification as necessary to address site
specific needs and conditions. Each Participating Pumper further agrees to use reasonable best
efforts to assist the SFPUC in securing fee title or easements for Project Facilities that may be
located on property owned by other governmental entities within the service areas of the
Participating Pumpers.
8.3. Ownership of Project Facilities
All Project Facilities will be owned by the SFPUC, subject to the limitations and restrictions
within this Agreement.
8.4. Installation of Project Facilities
The SFPUC shall be solely responsible for the permitting, licensing, design, construction, and
installation of Project Facilities under this Agreement. Each Participating Pumper shall have the
right to approve the location of Project Facilities on land owned by such Participating Pumper,
along with the design and the construction schedule for installation of any Project Facilities in its
service area, which approvals shall not be unreasonably delayed or withheld. At the 10, 35, 65,
95 and 100% stages of design, the SFPUC will provide each Participating Pumper with the plans
and specifications of work to be performed on the Participating Pumper' s property or within its
service area. Pending completion of design, the proposed location of Project Facilities is
generally shown on the map attached as Attachment C and described in Attachment E. As set
forth in Section 12.3 of this Agreement, the SFPUC will require in all construction contracts for
Project Facilities that the Participating Pumpers, and their respective officers, agents and
employees, be named (1) as additional insureds on all required insurance policies, and (2) as
additional indemnitees in any contractual indemnity provisions. Project Facilities constructed on
land owned or acquired by the SFPUC shall be immune from San Bruno and Daly City planning,
23
zoning and building permit requirements pursuant to the doctrine of intergovernmental immunity
set forth in the case law interpreting California Government Code §§53090 et seq.
8.5. Provision of As-Built Drawings; Modifications to Project Facilities Following
Completion
Within three (3) months of completion and acceptance of Project Facilities (as reflected in a
Resolution adopted by the SFPUC), the SFPUC shall deliver to each Participating Pumper a
complete set of as-built drawings and specifications for all Project Facilities located within its
service area. Should improvements and/or modifications be made to Project Facilities, the
SFPUC will provide each Participating Pumper with revised as-built drawings and specifications
within three (3) months of completing the improvements and/or modifications to Project
Facilities.
8.6. Operation and Maintenance of Project Facilities; Potential Undesirable
Effects Associated with Operation of Project Facilities as Designed
The Operating Committee will develop annual operation, maintenance and monitoring plans
under the Project pursuant to Section 10.2.1. The Operating Committee will also develop annual
operating schedules for each Supply Year during Recovery Periods, including projected
groundwater storage and/or Recovery from Project Wells of any water available in the SFPUC
Storage Account and pursuant to Section l 0.2.2. Each Participating Pumper agrees to operate,
maintain, and repair Project Facilities (except those Project Facilities connected to the SFPUC
System transmission mains) that are connected to its distribution system as necessary to comply
with the terms of this Agreement and to further the aims of the Project in accordance with
applicable laws, rules, regulations, guidelines, and prudent utility operator and asset management
standards, and in accordance with the annual operation, maintenance and monitoring plans
approved by the Operating Committee under Sections 10.2.1 and 10.2.2. The SFPUC will
operate, maintain and repair all Project Facilities connected to SFPUC System transmission
mains. When the Project Facilities reach the end of their useful service lives, the SFPUC shall
reasonably determine whether to replace or abandon all or any portion of Project Facilities.
8.6.1. The estimated pumping level drawdown effects upon Existing Facilities
resulting from the future operation of Project Wells over a hypothetical seven and
one-half year drought are set forth in Attachments D-1, D-2 and D-3. The
Participating Pumpers agree that the estimated pumping water levels shown in
Attachments D-1, D-2 and D-3 are acceptable and will not cause any
Undesirable Effects to their Existing Facilities.
8.6.2. Should actual operating experience of Project Wells cause greater
pumping level drawdown effects than estimated in Attachments D-1, D-2 or D-
3, that are determined by the Operating Committee to be Undesirable Effects, the
Operating Committee shall have the authority to require the measures outlined in
Section 10.2.8 in order to eliminate or reduce the Undesirable Effect(s) to a less
than significant level.
8.7. Modifications to Participating Pumpers' Water Supply Permits Issued by the
California State Water Resources Control Board
Installation and operation of Project Facilities may require amendments to the Parties' drinking
water supply permits issued by the Division of Drinking Water and Environmental Management
24
(DDWEM). The Parties will be solely responsible for obtaining any DDWEM permit
modifications and for permit compliance related to the operation of Project Facilities connected
to their water transmission and distribution systems. The SFPUC will assist in preparing exhibits
required for the Participating Pumpers' permit amendment packages submitted to DDWEM. All
costs incurred by the Parties in obtaining such permit modifications shall be considered Project
Capital Costs. Each Party that operates Project Wells, and the downstream facilities that receive
water from those Project Wells, shall be named as the Operator of Record in the modified water
supply permits issued by DDWEM.
8.8. Use of Project Facilities by Participating Pumpers for Non-Project Purposes
The Participating Pumpers may use Project Facilities for non-Project purposes upon satisfaction
of all of the following conditions precedent:
(a) the SFPUC has not issued a Recovery Notice directing the Participating Pumpers to
pump water from the SFPUC Storage Account under Section 5.3 of this Agreement;
(b) use of Project Facilities for non-Project purposes does not interfere with future
Recovery under the Project, as determined by the Operating Committee;
(c) the quantity of water pumped using Project Facilities for non-Project purposes does
not, when combined with pumping from Existing Facilities, exceed the Participating Pumper's
Designated Quantity; and
(d) the Operating Committee has approved the proposed use of Project Facilities for non-
Project purposes.
The Operating Committee will consider all requests for use of Project Facilities for non-Project
purposes within 30 days. As of the Effective Date of this Agreement, the Parties do not
contemplate any specific use of Project Facilities for non-Project purposes, but the Parties desire
to incorporate a process for allowing such use should they decide to exercise their discretion to
do so in the future following compliance with CEQA to the extent required. Except as approved
by the Operating Committee, use of Project Facilities for non-Project purposes pursuant to this
section shall not exceed thirty (30) days' duration. The approved use of Project Facilities for
non-Project purposes is not subject to the limitation on Recovery set forth in Section 5.7, and
groundwater pumped pursuant to this section will not be debited against the SFPUC Storage
Account as provided in Section 6.1.3.
8.9. Use of Project Facilities During an Emergency
The Parties may use Project Facilities within their service areas without the advance approval of
the Operating Committee for non-Project purposes during a local Emergency that does not result
in the SFPUC issuing Recovery Notice under Section 5.3, provided that the Project Facilities are
capable of operation during an Emergency. Such pumping may continue only for the duration of
the Emergency. Within 48 hours of such Emergency, the Party or Parties shall notify and
explain to the Operating Committee the basis of the Emergency. The Party will, at intervals
established by the Operating Committee, report on its efforts to resolve the Emergency.
25
Fiscal Year. Disputes between the SFPUC and one or more Participating Pumpers concerning
the reimbursement or accuracy of accounting of annual Project Operation and Maintenance
Expenses will be resolved by the Operating Committee, or pursuant to Section 12.1.
9.3. Use of Project Facilities by Participating Pumpers for Non-Project Purposes
If the temporary use of Project Facilities by a Participating Pumper for non-Project purposes is
approved by the Operating Committee under Section 8.8 of this Agreement, or is approved by
the SFPUC during a local Emergency under Section 8.9, the Participating Pumper shall deduct a
proportionate share of operation and maintenance expenses reflecting such operation from the
annual total of Project Operations and Maintenance Expenses submitted to the SFPUC for
reimbursement under Section 9.2.
9.4. Metering of Project Facilities Operated During Recovery Periods by the
SFPUC
The metered volume of water pumped from Project Wells connected to SFPUC transmission
mains pursuant to Section 5.6 shall be used to account for pumping of water for Project purposes
as provided in Section 6.1.2. Meters that measure the flow of water pumped during Recovery
Periods that is added to SFPUC transmission lines shall be considered new "System Input
Meters" in accordance with Section 3.14 and Attachment J of the WSA.
ARTICLE 10
OPERATING COMMITTEE
10.1. Composition of Operating Committee
Upon the Effective Date of this Agreement, the Parties shall form a four member Operating
Committee comprised of one representative each from the Participating Pumpers and the
SFPUC. For decisions requiring a majority vote, the Operating Committee shall select a neutral
fifth member not currently employed by or serving as a consultant to any of the Parties to serve
as a tie-breaker as necessary in the event of a deadlock between the other members of the
Operating Committee. The neutral fifth member may be employed by, or a consultant to, the
Bay Area Water Supply anQ Conservation Agency. If a majority of members of the Operating
Committee cannot agree to the identity of the neutral fifth member, the name shall be selected at
random from the list of names proposed by members of the Operating Committee. The fifth
member of the Operating Committee shall have no voting authority apart from serving as a tie-
breaker. All 5 members of the Operating Committee shall have experience and technical
expertise in water supply, groundwater wells and pump operations.
10.2. Duties and Powers of Operating Committee
The Management Plan contains Basin Management Objectives that are consistent with the
sustainable management of the Basin. The Operating Committee will consider, but not be bound
by, (1) the Basin Management Objectives and (2) the Mitigation, Monitoring and Reporting
Program adopted by the SFPUC as a binding commitment in Resolution No. 14-0127 in making
the decisions authorized in Article 10 of this Agreement. The duties and powers of the
Operating Committee are limited to the following.
27
10.2. l.
10.2.2.
10.2.3.
10.2.4.
10.2.5.
10.2.6.
10.2.7.
Development of annual Project operation, maintenance and monitoring
plans, and estimated budgets for these activities, as set forth in Section 8.6
and Section 9.2, to ensure proper management of the Project, including
protocols for reporting collected data back to the Operating Committee by
the Parties, review of operation, maintenance and monitoring plans
submitted by the Parties, and recovery of Project Operations and
Maintenance Expenses. The annual plans required by this section shall be
completed by December 1 of each year.
Development of Project Well operating schedules during Recovery
Periods by May 1st of each drought year that projects Recovery, including
where such pumping shall occur, in what quantities, and any redirection or
reduction in pumping to avoid Undesirable Effects or well interference
impacts identified in the Project Mitigation, Monitoring and Reporting
Program, subject to the sole discretion of the SFPUC to determine the
volumes ofln Lieu Water available for Storage and subsequent Recovery
of any water available in the SFPUC Storage Account under Articles 4
and 5 of this Agreement. Project Well operating schedules for non-
drought Shortages under Sections 5.2.2 and 5.2.3 shall be developed and
approved by the Operating Committee on an as-needed basis.
Review of (1) annual reports submitted by the Participating Pumpers'
licensed operators certifying that the Existing Facilities within their
respective service areas are capable of operation during droughts in
compliance with the standards set forth in Section 7.2 of this Agreement;
and (2) a Participating Pumper's proposed use of facilities owned by
Nonparticipating Pumpers as required to pump Designated Quantities due
to the unavailability of the Participating Pumper's Existing Facilities
referenced in Section 7 .2 of this Agreement.
Review and approval of a request by a Participating Pumper to use Project
Facilities for non-Project purposes, under the conditions set forth in
Section 8.8.
Review and approval of a Participating Pumper' s request for an increase
in its Minimum Groundwater Requirement, pursuant to Section 4.3.
Monitoring pumping from all Existing and Project Facilities within the
Basin to evaluate water quality trends and whether increases in the volume
of water produced are occurring, including any Over Production in
pumping from Existing Facilities resulting from higher Basin operating
levels attributable to Storage under the Project. In response to changed
conditions within the Basin, the Operating Committee may make
recommendations to the Parties as to whether any action or changes in
Project water accounting rules set forth in Section 6.1 may be necessary to
protect the Recovery of SFPUC Storage Account Water and Designated
Quantities or to ensure the recovery of Project costs in accordance with
Article 9 of this Agreement.
Approval of pumping Project Wells outside of Recovery Periods for
Project management pursuant to Section 5.2.3.
28
l 0.2.8. Determining whether the operation of Project Wells caused Undesirable
Effects on Existing Facilities under Section 8.6 and identifying measures
that the SFPUC must take to reduce or eliminate such Undesirable Effects
and otherwise avoid harm to the Participating Pumpers and ensure long-
term viability of the Basin as a drinking water supply. To the extent that
the Operating Committee determines that the pumping of any Project Well
caused Undesirable Effects, the Operating Committee may require one or
more of the following actions, subject to necessary CEQA compliance: (1)
redirect pumping to other Project Facilities; (2) reduce pumping at
particular Project Well(s) while preserving the cumulative ability of the
SFPUC to order the extraction of up to 8,100 acre feet annually from the
SFPUC Storage Account; (3) modification of Existing Facilities as a
Project Capital Cost (e.g., resetting pumps, installing water treatment
facilities, vacuum pumps etc.); (4) reimbursement of additional cost as a
Project Operation and Maintenance Expense under Section 9.2; or (5)
such other remedy as may be appropriate.
10.2.9. Request and approval of studies and such technical support as is necessary
to assist in Project management, conduct required monitoring, to refine
Project goals and operations, to use the Basin more effectively, and to
identify and address potential problems. Technical support may be
provided by employees of the Parties or by third-party contractors. The
costs of all technical support authorized by the Operating Committee shall
be deemed a Project Operations and Maintenance Expense.
10.2.10. Determine the appropriate methodology of accounting for losses from the
Basin under Section 6.5.
10.2.11. Review of information provided by the Parties required under Section 7.5
concerning proposed New Wells.
10.2.12. Increases in the limitation on adjustments to Designated Quantities
expressed in Section 4.5 and the Aggregate Designated Quantity, using
the criteria set forth in Section 4.6; reductions in the Aggregate
Designated Quantity as provided in Section 4.7, and the approval of
actions to remedy Over Production that is delegated to the Operating
Committee under Section 4.8.3.
10.3. Operating Committee Decision-Making
The development of Project Well operating schedules under Section 10.2.2 during Recovery
Periods, and the decisions delegated to the Operating Committee in Sections 10.2.5, 10.2.7,
10.2.10, and 10.2.12, shall require unanimous approval of the Operating Committee. All other
decisions of the Operating Committee shall be by majority vote of the members of the Operating
Committee, utilizing the fifth tie-breaker vote as necessary. For all matters, each member of the
Operating Committee shall: (a) act in good faith; (b) utilize the best available scientific evidence
relevant to the matter including but not limited to data and analysis generated by numeric models
that meet prevailing industry standards for accuracy and reliability; and (c) ensure that the
Storage and Recovery of water under the Project avoids Undesirable Effects to the Basin as well
as ensure the long-term viability of the Basin as a drinking water supply. A minority of
Operating Committee members may request voluntary mediation of certain disputes as described
in Section 12.1 of this Agreement.
29
10.4. Schedule for Meetings of Operating Committee
The Operating Committee shall meet within thirty days after the Effective Date of this
Agreement, and thereafter as often as necessary to implement operations and take other action
under this Agreement, but shall meet at least twice a year.
10.5. Minutes of Operating Committee Meetings
Minutes of all Operating Committee Meetings shall be kept and shall reflect a summary of all
proceedings, actions and recommendations taken by the Operating Committee. Copies thereof
shall be furnished to all Parties.
10.6. Duty of Each Party to Monitor Conjunctive Use Project Performance
Each Party has an independent obligation to review all monitoring information reported to the
Operating Committee. If any Party believes that the Storage and Recovery of water under the
Project is causing Undesirable Effects to its Existing Facilities, that Party shall promptly advise
the Operating Committee.
ARTICLE 11
DEFAULTS AND REMEDIES
11.1. Remedies upon Termination
Notwithstanding anything to the contrary herein, if one or more of the Participating Pumpers
breaches any provision of this Agreement, or invokes the existence of a Force Majeure Event
under Section 12.14, the SFPUC may terminate this Agreement with respect to the Party or
Parties by written notice to the Participating Pumpers.
11.1.1. If the SFPUC terminates this Agreement due to the occurrence of a Force
Majeure Event or breach by one or more of the Participating Pumpers, any credit
balance in the SFPUC Storage Account shall remain the property of the SFPUC,
along with the ownership of all Project Facilities within such Party or Party's
service area(s). Upon such termination, the SFPUC may in its sole discretion
extract any stored water reflected as a credit balance in the SFPUC Storage
Account using the Project Wells referenced in Section 5.6 of this Agreement until
there is no remaining water in the SFPUC Storage Account. Alternatively, in its
sole discretion, the SFPUC may require the breaching Party or Parties, or
Party(ies) subject to a Force Majeure Event, to purchase from the SFPUC the
remaining balance of any water in the SFPUC Storage Account that is attributable
to Storage of In Lieu Water by that Party, based on the applicable wholesale water
rate for that water as provided in Section 6.4 of this Agreement.
11 .1.2. In the event that this Agreement is terminated under this section 11.1 or
Section 12.14, the provisions of WSA Section 3.17, as it may be amended by the
SFPUC and its wholesale customers, shall govern (1) the disposition of the
balance of water in the SFPUC Stored Water Account; (2) the allocation of
outstanding eligible Project Operations and Maintenance Expenses; and (3) the
disposition of investments in Project Capital Costs by the SFPUC should the
Project Facilities no longer be used to benefit wholesale or retail customers of the
30
SFPUC System. Upon the termination of this Agreement the SFPUC shall
otherwise have no right, claim or interest in the Basin, credit or storage balances
in the Basin, or water in the Basin, pursuant to this Agreement.
11.2. Remedies are Cumulative
The rights and remedies or the Parties are cumulative, and the exercise by any Party of one or
more of such rights or remedies shall not preclude the exercise by it, at the same or different
times, of any other rights or remedies for the same breach or any other breach by the other Party.
ARTICLE 12
MISCELLANEOUS PROVISIONS
12.1. Dispute Resolution
If (1) any dispute arises between or among the Parties regarding interpretation or implementation
of this Agreement that does not concern a decision of the Operating Committee; or (2) one or
more Parties file a written appeal with the Operating Committee within 14 days of an Operating
Committee decision or action subject to majority vote; or (3) the members of the Operating
Committee cannot achieve unanimity as described in Section 10.3; or ( 4) one or more Parties
decline to follow a decision or action of the Operating Committee; or (5) one or more Parties
asserts that the Operating Committee is acting beyond the scope of its authority as specified in
this Agreement, the Parties will, in the first instance, attempt in good faith to resolve the dispute
through their chief executive officers or their designees. If the chief executive officers cannot
forge a consensus on the disputed issue, the matter shall be referred for non-binding mediation to
a single mediator who will have technical expertise in groundwater management and/or public
utility accounting practices. The mediator will be selected by unanimous consent of the Parties,
but if unanimous consent of the Parties cannot be obtained the mediator will be selected by a
majority vote of the Parties from a list of mediators maintained by the Operating Committee
based on the qualifications set forth in this Section 12.1. Any Party may commence mediation
by providing to the other Parties a written request for mediation, setting forth the subject of the
dispute and the relief requested. The non-binding mediation will be governed by the American
Arbitration Association's Commercial Mediation Procedures. If the dispute is not resolved by
mediation, each Party will be free to pursue whatever legal or equitable remedies may be
available. The fees and expenses incurred as a result of any dispute resolution activities,
including attorney's fees, mediator fees and costs, expert costs, and other expenses, shall be
borne solely by the Parties involved in the dispute. The Parties involved in the dispute will share
the mediator's expenses on an equal basis.
12.2. Mutual Indemnity
Each Party agrees to indemnify, defend, and hold the other Parties and their respective officers,
employees and agents free and harmless from and against any and all loss, liability, expense,
claims, costs, suits and damages, including attorney's fees, arising out that Party's willful
misconduct or negligent acts, errors, or omissions in its operation and maintenance of Existing
Facilities, Shared Facilities or Project Facilities under Articles 7 and 8 of this Agreement.
31
12.3. Insurance and Indemnity Provisions Applicable to Construction of Project
Facilities
The SFPUC and the Participating Pumpers agree to the following prov1s1ons concerning -
insurance coverage and indemnity during the construction of Project Facilities.
12.3.1. Commencing from the date of Project approval by the SFPUC, every
contract issued by the SFPUC for construction of Project Facilities (including
associated professional services, environmental consultants, and other contracts
required for construction of Project Facilities) shall require the contractor to
maintain in force during the course of the contract all customary insurance
required by the SFPUC, and shall include coverage for worker's compensation,
commercial general liability insurance, automobile liability insurance and
professional liability insurance. Each contractor's general, automobile, and
professional liability insurance policies shall name as additional insured each
Participating Pumper, and its officers, agents and employees.
12.3.2. Commencing from the date of Project approval by the SFPUC, every
contract issued by the SFPUC for construction of Project Facilities (including
associated professional services, environmental consultants, and other contracts
required for construction of the Project) shall contain language requiring the
contractor to indemnify, defend and hold harmless the SFPUC and each
Participating Pumper for any and all claims for bodily injury or property damage
arising out of the contractor's performance of work in constructing or installing
Project Facilities or providing support services required for Project
implementation.
12.4. Workers' Compensation Insurance for Project Operation
Each Party will provide to the other Parties evidence of Workers' Compensation insurance prior
to entering into this Agreement. With respect to employees of a particular Party who are
employed as operators of Project Facilities, the other Parties shall not be considered joint
employers of any such employees, who shall be solely managed and controlled by each
individual Party. Each Party agrees to maintain in force, during the term of this Agreement,
Workers' Compensation insurance, in statutory amounts, with Employers' Liability Limits of not
less than $1,000,000 each accident.
The cost of Workers' Compensation insurance applicable to the Parties' operation of
Project Facilities shall be considered a Project Operations and Maintenance Expense. Approval
of Workers' Compensation insurance by the SFPUC shall not relieve or decrease the liability of
each Participating Pumper hereunder. In the event that any employee of a Party files a Workers'
Compensation claim against another Party, the Party whose employee filed the claim agrees to
indemnify, defend and hold harmless the other Parties for any such claims as provided in Section
12.2 of this Agreement.
12.5. Right to Adjudicate; Limited Waiver of Prescriptive Rights Claims; No
Intent to Abandon
12.5 .1. Each Party reserves all rights to initiate or participate in a general
adjudication of Basin groundwater rights. Nothing in this Agreement shall limit
in any way any rights or interests that the Parties may assert related to the use or
management of the Basin in the event of a general adjudication of Basin
32
groundwater rights, apart from the waiver of prescriptive rights claims set forth in
section 12.5.2 .
12.5.2. In the event of a general adjudication of Basin groundwater rights,
including adjudication of issues pertaining to Basin use or management, (i) unless
directed otherwise by a court or regulatory agency, the Participating Pumpers ·
agree that the SFPUC will retain the right to any credit balance in the Stor~ge
Account, and the right to continue Storage and Recovery of up to 61,000 acre feet
of water in the Basin using Project Facilities; (ii) the SFPUC expressly waives the
right to store additional water in the Basin without the express written consent of
all Parties effective through written amendment of this Agreement in accordance
with Section 2.2; and (iii) each Party to this Agreement expressly waives any and
all claims to prescriptive groundwater rights against the other Parties based on the
production or use of groundwater pursuant to this Agreement; provided, however,
that the Participating Pumpers reserve and retain all other claim s to prescriptive
groundwater rights which they may possess as of the Effective Date.
12.5.3. The failure of any Participating Pumper to use all of its Designated
Quantity for any amount of time during periods of In Lieu Water delivery shall
not be deemed to be or constitute an abandonment of such Participating Pumper's
Designated Quantity.
12.5.4. The Parties agree that each Participating Pumper may file notices of
reduction of groundwater use as a result of the use of an alternative supply of
water from a nontributary source, pursuant to California Water Code Section
1005.1.
12.5.5. The SFPUC recognizes that it cannot and will not assert any claim to
water in the Basin, including, but not limited to, as an overlying owner, pumper,
or appropriator, except as expressly authorized under this Agreement or to the
extent any such right exists as a result of the SFPUC's rights to the North
Westside Basin. -
12.6. Nonparticipating Pumpers
A Nonparticipating Pumper may become a Party to this Agreement if agreed to by all Parties in a
written modification to this Agreement, as provided for in Section 2.3, subject to any additional
terms or conditions agreed to by the Parties.
12.7. More Favorable Terms
If, at any time during the term of this Agreement, the SFPUC enters into an agreement with
another party who is not signatory to this Agreement with respect to use of the Basin for a
conjunctive use Project, and such agreement contains price, quantity, or other material terms that
are more favorable than the terms extended to a Participating Pumper under this Agreement, the
Parties will immediately modify this Agreement to extend the more favorable terms to
Participating Pumpers.
12.8. Assignment
No Party shall transfer this Agreement, in whole or in part, or any of its interests, to any other
person or entity without the prior written consent of the other Parties. Any attempt to transfer or
33
assign this Agreement, or any privilege hereunder, without such written consent shall be void
and confer no right on any person or entity not a Party to this Agreement.
12.9. Successors
This Agreement shall bind and inure to the benefit of the Parties and their respective successors
and permitted assigns.
12.10. Entire Agreement
This Agreement constitutes the entire agreement between the Parties pertaining to the matters
provided for herein and, except as herein provided, supersedes all prior and/or contemporaneous
agreements and understandings, whether written or oral, between the Parties related to the
matters provided for herein.
12.11. Severability
Should any provision of this Agreement prove to be invalid or illegal, such invalidity or illegality
shall in no way affect, impair or invalidate any other provisions hereof, and such remaining
provisions shall remain in full force and effect; provided, however, if the illegality or invalidity
of any provision undermines the intent of the Parties, then the Parties shall attempt in good faith
to amend the Agreement in order to fulfill the intent of the Parties. If the Parties are unable to so
amend the Agreement, then the Agreement shall terminate and be of no further force or effect.
12.12. Counterparts
This Agreement, and any document or instrument entered into, given or made pursuant to this
Agreement or authorized hereby, and any amendment or supplement thereto, may be executed in
two or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same agreement.
12.13. Notice
Formal written notices, demands, correspondence and communications between the Parties
authorized by this Agreement shall be sufficiently given if personally delivered or dispatched by
registered or certified mail, first-class, postage prepaid, return receipt requested, to the Parties as
follows:
To the SFPUC: Steve Ritchie
Assistant General Manager, Water Enterprise
San Francisco Public Utilities Commission
525 Golden Gate Avenue, 13th Floor
San Francisco, CA 94102
email: sritchie@sfwater.org
With a copy to:
San Francisco City Attorney's Office
Attn.: Utilities General Counsel
Room 234 City Hall
1 Carlton B. Goodlett Place
San Francisco, CA 94102
34
To Daly City:
To San Bruno:
To Cal Water:
Patrick Sweetland
Director of Water and Wastewater Resources
City of Daly City
153 Lake Merced Blvd.
Daly City, CA 94015
email: psweetland@dalycity.org
With a copy to:
Rose Zimmerman
City Attorney
City of Daly City
233 90th Street
Daly City, CA 94015
email: rzimmerman@dalycity.org
Constance C. Jackson
City Manager
567 El Camino Real
San Bruno, CA 94066
With a copy to:
Marc Zafferano
City Attorney
567 El Camino Real
San Bruno, CA 94066
Anthony Carrasco, District Manager
California Water Service Company
Bayshore District
341 North Delaware A venue
San Mateo, CA 94401-1727
email: acarrasco@calwater.com
With a copy to:
Lynne McGhee, Corporate Secretary and Associate
Corporate Counsel
1720 North First Street
San Jose, CA 95112-4508
email: lmcghee@calwater.com
12.14. Force Majeure
12.14.1. Excuse from Performance. No Party shall be liable in damages to any
other Paiiy for delay in performance of, or failure to perform, its obligations
under this Agreement, if such delay or failure is caused by a Force Majeure Event.
12.14.2. Notice. The Party claiming excuse shall deliver to the other Parties a
written notice of intent to claim excuse from performance under this Agreement
by reason of a Force Majeure Event. Notice required by this section shall be
35
given as promptly and as reasonably possible in light of the circumstances. Such
notice shall describe the Force Majeure Event, the services impacted by the
claimed event, the length of time that the Party expects to be prevented from
performing, and any steps which the Party intends to take to attempt to restore its
ability to perform.
12.14.3. Ability to Perform. Any suspension of performance by a Party pursuant
to this section shall be only to the extent, and for a period of no longer duration
than, required by the nature of the Force Majeure Event, and the Party claiming
excuse shall use its best efforts to remedy its inability to perform as quickly as
possible.
12.14.4. If the Party claiming a Force Majeure Event is not able to restore its
ability to perform its obligations within one year after giving notice pursuant to
Section 12.14.2, it may elect to terminate its participation in the Project. The
Party claiming excuse will thereafter give an additional 60 days written notice of
said termination to the Parties and the Operating Committee.
12.14.5. In the event that a Party terminates participation in this Agreement
under section 12.14.4, the provisions of WSA Section 3 .1 7 and section 11. l of
this Agreement shall govern the disposition of investments in Project Capital
Costs, allocation of outstanding eligible Project Operations and Maintenance
Expenses, and the balance of water in the SFPUC Storage Account.
12.15. Maintenance and Inspection of Books, Records and Reports
The Participating Pumpers shall maintain careful, accurate and complete records of all receipts
and disbursements made for (1) reimbursable Project Operations and Maintenance Expenses
authorized under Section 9.2 and detailed in Attachment F; and (2) expenses related to use of
Project Facilities for non-Project purposes authorized under Section 9.3. During regular office
hours, and upon reasonable notice, the Parties shall have the right to inspect and make copies of
any books, records, and reports pertaining to this Agreement or related matters in the possession
of the other Parties at the inspecting Party's cost. The SFPUC and its agents may conduct audits
of the Participating Pumpers during the term of this Agreement for the purpose of ensuring that
Project Operations and Maintenance Expenses incurred by the Participating Pumpers are eligible
for reimbursement in accordance with Attachment F, and to ensure that any expenses incurred
by the SFPUC due to the Participating Pumpers' operation of Project Wells for non-Project
purposes are repaid to the SFPUC. The Participating Pumpers agree to cooperate with the
SFPUC in connection with any such audit. All costs incurred by the Participating Pumpers that
are associated with responding to an audit by the Sf PUC shall be considered Project Operation
and Maintenance Expenses.
12.16. Governing Law; Venue
The laws of the State of California shall govern the interpretation and enforcement of this
Agreement. The Parties agree that Santa Clara County is an appropriate neutral county in the
event one Party seeks to change venue under Code of Civil Procedure section 394.
12.17. Effect of Agreement on WSA
The provisions of this Agreement do not affect, change or modify any section, term or condition
of the WSA. In the event of any conflict between this Agreement and the terms of the WSA, the
terms of the WSA shall control.
36
12.18. Compliance with Raker Act
Nothing in this Agreement shall be construed to authorize or result in delivery of SFPUC System
Water to the California Water Service Company in violation of section 6 of the Raker Act (38
Stat. 242).
12.19. Cooperation in Implementation of Project Mitigation Measures
The Participating Pumpers acknowledge the mitigation measures set forth in the Project final
environmental impact report and Mitigation, Monitoring and Reporting Program adopted by the
SFPUC as part of Project approval, and agree to cooperate with the SFPUC in complying with
such measures to the extent that they are under the control of, or are the responsibility of, one or
more of the Participating Pumpers. Any costs or expenses associated with such compliance and
cooperation shall be the responsibility of the SFPUC, and the SFPUC must reimburse the
Participating Pumpers for such costs and expenses as a component of Project Capital Costs.
[This space left intentionally blank; signature pages follow]
37
Appendix D
SFPUC Memorandum Re: Regional Water System Supply Reliability and
UWMP 2020
San Francisco
Water Power Sewer
Services of the San Francisco Public Utilities Commission
525 Golden Gate Avenue, 13th Floor
San Francisco, CA 94102
T 415.554.3155
F 415.554.3161
Try 415.554.3488
London N. Breed
Mayor
Sophie Maxwell
President
Anson Moran
Vice President
Tim Paulson
Commissioner
Ed Harrington
Corn rn issioner
Newsha AJaml
Corn missioner
Michael Carlin
Acting
General Manager
TO: SFPUC Wholesale Customers
FROM: Steven R. Ritchie, Assistant General Manager, Water
DATE: June 2. 2021
RE: Regional Water System Supply Reliability and UWMP 2020
This memo is in response to various comments from Wholesale Customers we
have received regarding the reliability of the Regional Water System supply and
San Francisco's 2020 Urban Water Management Plan (UWMP).
As you are all aware, the UWMP makes clear the potential effect of the
amendments to the Bay-Delta Water Quality Control Plan adopted by the State
Water Resources Control Board on December 12, 2018 should it be
implemented. Regional Water System-wide water supply shortages of 40-50%
could occur until alternative water supplies are developed to replace those
shortfalls. Those shortages could increase dramatically if the State Water
Board's proposed Water Quality Certification of the Don Pedro Federal Energy
Regulatory Commission (FERC) relicensing were implemented.
We are pursuing several courses of action to remedy this situation as detailed
below.
Pursuing a Tuolumne River Voluntary Agreement
The State Water Board included in its action of December 12, 2018 a provision
allowing for the development of Voluntary Agreements as an alternative to the
adopted Plan. Together with the Modesto and Turlock Irrigation Districts, we
have been actively pursuing a Tuolumne River Voluntary Agreement (TRVA)
since January 2017. We believe the TRVA is a superior approach to producing
benefits for fish with a much more modest effect on our water supply.
Unfortunately, it has been a challenge to work with the State on this, but we
continue to persist, and of course we are still interested in early implementation
of the TRVA.
Evaluating our Drought Planning Scenario in light of climate change
Ever since the drought of 1987-92, we have been using a Drought Planning
Scenario with a duration of 8.5 years as a stress test of our Regional Water
System supplies. Some stakeholders have criticized this methodology as being
too conservative. This fall we anticipate our Commission convening a workshop
OUR MISSION: To provide our customers with high-quality, efficient and reliable water, power and sewer
services in a manner that values environmental and community interests and sustains the resources entrusted
to our care.
regarding our use of the 8.5-year Drought Planning Scenario, particularly in
light of climate change resilience assessment work that we have funded through
the Water Research Foundation. We look forward to a valuable discussion with
our various stakeholders and the Commission.
Pursuing Alternative Water Supplies
The SFPUC continues to aggressively pursue Alternative Water Supplies to
address whatever shortfall may ultimately occur pending the outcome of
negotiation and/or litigation. The most extreme degree of Regional Water
System supply shortfall is modeled to be 93 million gallons per day under
implementation of the Bay-Delta Plan amendments. We are actively pursuing
more than a dozen projects, including recycled water for irrigation, purified
water for potable use, increased reservoir storage and conveyance, brackish
water desalination, and partnerships with other agencies, particularly the
Turlock and Modesto Irrigation Districts. Our goal is to have a suite of
alternative water supply projects ready for CEQA review by July 1, 2023.
In litigation with the State over the Bay-Delta Plan Amendments
On January 10, 2019, we joined in litigation against the State over the adoption
of the Bay-Delta Water Quality Control Plan Amendments on substantive and
procedural grounds. The lawsuit was necessary because there is a statute of
limitations on CEQA cases of 30 days, and we needed to preserve our legal
options in the event that we are unsuccessful in reaching a voluntary agreement
for the Tuolumne River. Even then, potential settlement of this litigation is a
possibility in the future.
In litigation with the State over the proposed Don Pedro FERC Water
Quality Certification
The State Water Board staff raised the stakes on these matters by issuing a
Water Quality Certification for the Don Pedro FERC relicensing on January 15,
2021 that goes well beyond the Bay-Delta Plan amendments. The potential
impact of the conditions included in the Certification appear to virtually double
the water supply impact on our Regional Water System of the Bay-Delta Plan
amendments. We requested that the State Water Board reconsider the
Certification, including conducting hearings on it, but the State Water Board
took no action. As a result, we were left with no choice but to once again file
suit against the State. Again, the Certification includes a clause that it could be
replaced by a Voluntary Agreement, but that is far from a certainty.
I hope this makes it clear that we are actively pursuing all options to resolve this
difficult situation. We remain committed to creating benefits for the Tuolumne
River while meeting our Water Supply Level of Service Goals and Objectives
for our retail and wholesale customers.
cc.: SFPUC Commissioners
Nicole Sandkulla, CEO/General Manager, BAWSCA