Vista Ridge Project. Robert R. Puente. President / Chief Executive Officer. July 25, 2014

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1 Robert R. Puente President / Chief Executive Officer

2 San Antonio s Water Challenge SAWS provides water and wastewater services to over 1.6 million people and growing expected to grow to almost 2.8 by 2070 Regulatory restrictions cost SAWS 20-40% of supply Regulations are getting stricter New supplies are expensive and challenging to obtain Page 2

3 Managing a Historic Drought Mother Nature s Impact Challenges Edwards supplies cut by 30% Medina Lake under 5% capacity Trinity Aquifer levels decline Medina Lake 2013 Successful Water Management International Model of Conservation Aquifer Storage & Recovery success Increased supplies by 77% since 2004 with ASR Page 3

4 Innovation & Efficiency Track Record of Success Award-winning Environmental Trifecta Seamless transition of BexarMet system Negotiated Consent Decree with EPA/DOJ Successfully saved ratepayers over $200 million Highest Bond Rating in SAWS history Seeking continuous improvement Efficiency initiatives saved $10M in 2014 Page 4

5 2012 Water Management Plan Water supplies through 2040 Balances conservation and new supplies Meets the water needs of dynamic community for continued economic growth Resolves water crises in developing areas of former BexarMet Aggressive conservation efforts Reduce GPCD to 135 by 2020 Page 5

6 Water Management Strategies Filling the Supply Needs Planned Supply Source Qty (ac-ft) Time Additional Edwards Rights 10,900 By 2017 Brackish Desal Plant Expanded Local Carrizo 12,210 24,420 30,525 7,000 14,000 21, Regional Water Supply Project (RFCSP) Up to 50,000 Starting in 2018 Demand Reduction - Reduce dry year GPCD from 143 to ,500 By 2020 Page 6

7 Managing Water Demand Per Capita Water Use Gallons per Person per Day (GPCD) % Reduction in the last 30 years Page 7

8 Long Term Water Supply Request For Competitive Sealed Proposals (RFCSP) RFCSP solicited in 2011 Nine Respondents Thorough review process Three finalists were interviewed in October 2013 Vista Ridge Consortium (Abengoa & Blue Water) deemed responsive Page 8

9 Long-Term Water Project Goals Water security for decades Tomorrow s diverse supply at today s cost Supports vibrant regional economy Abundance vs adequacy More effective drought management Effectively eliminate need for Stages 3 and 4 Environmental benefit for the Edwards Aquifer Commercial relationship opportunities Development of infrastructure for regional use Page 9

10 142-mile Pipeline from Burleson County Page 10

11 Vista Ridge Consortium Project Summary Water Source Location Ownership, Control of Water Carrizo-Wilcox (Simsboro) Aquifer Burleson County Controls over 50,000 acft/yr of water leased from over 3400 landowners with production & transportation permits (30 year term) Page 11

12 Vista Ridge Current Proposal Terms 50,000 ac-ft from Burleson County from Carrizo/Simsboro Aquifers within 61 months of Contract approval All Risks of water availability are assumed by Vista Ridge SAWS to pay only for water delivered (or made available) SAWS assumes ownership of wellfield, pipeline, and pump station assets at end of 30 year period SAWS retains no interest in water rights at end of term O&M and Power are passed through at actual cost Page 12

13 Contract Negotiation Underway Open & Transparent Process Posted work sessions open to the public Key issues discussed: Project cost Project Financing Infrastructure Delivery point Performance guarantees O&M requirements Water chemistry requirements Page 13

14 Proposal Costs and Assumptions Price Components Escalation 2020 Cost of Infrastructure and Water (1) None $1,852 Power (2) Pass-Through $191 O&M (2) Pass-Through $196 Total Price of Proposal $2,239 (1) Assumes an interest rate of 5.67% (2) Variable based on actual cost SAWS capital integration costs ~$100 M Page 14

15 Projected 2020 Average Residential Bill $ $90.00 $80.00 $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 $- $12.09 $5.05 $4.60 $1.64 $9.12 $55.72 Bill Impact Vista Ridge Other Operating Costs Governmental, Treatment & Other CIP Desal & Integration EPA Consent Decree Avg Bill Assumes 7,778 gallons of water and 6,178 gallons of sewer (standard/icl) Page 15

16 Contract Negotiation Timeline Negotiation period Days First Meeting July 1, 2014 September SAWS Contract approval October 2014 City Council Contract approval Page 16

17 Robert R. Puente President / Chief Executive Officer

18 2020 Residential Bill: 0 to 30,000 Gallons Impact of Vista Ridge $400 $350 $300 84% of customers use less than 12,000 gallons during seasonal period (May-Sept) $ $250 $ $200 $ $150 $100 $50 $0 $49.15 $37.06 $77.21 $56.56 $ ,000 2,000 3,000 4,000 5,000 6,000 7,000 7,788 8,000 9,000 10,000 11,000 12,000 13,000 14,000 15,000 16,000 17,000 18,000 19,000 20,000 21,000 22,000 23,000 24,000 25,000 26,000 27,000 28,000 29,000 30,000 Average Residential Bill With Vista Ridge Without Vista Ridge Residential Seasonal - 5/8 Meter; Includes EAA and TCEQ Fees Page 18

19 2020 Commercial Water Bill: 0 to 100,000 Gallons Impact of Vista Ridge $ $ $ $ $ $ $ $ $ $ $ $ $ $ $- Commercial 2 Meter; Includes EAA and TCEQ Fees With Vista Ridge Without Vista Ridge Page 19