Water Management Plan Semiannual Report

Transcription

1 Water Management Plan Semiannual Report July-December 2014

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3 Water Management Plan Semiannual Report July-December Water Management Plan Semiannual Report July - December Executive Summary 6 Water Supply Summary 9 Featured Projects 12 Pumping to Customers Financial Report Glossary About the cover: SAWS and Abengoa officials signed a 54-inch diameter pipe on Dec. 3, 2014 to celebrate the launch of the new Vista Ridge water project, which will be a game changer for water supplies in San Antonio. The ceremonial pipe segment represents the width of the actual infrastructure to be used in the first part of the 142-mile pipeline running from Burleson County to San Antonio. The Vista Ridge project will convey 16.3 billion gallons of new non-edwards Aquifer water annually to San Antonio.

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5 Water Management Plan Semiannual Report July-December Executive Summary The Semiannual Report to San Antonio City Council is a requirement of Chapter 34 of the Municipal Code, Section This report is submitted to City Council twice each year, covering the January through June and July through December time frames. San Antonio Water System (SAWS) was created by an act of the City Council in May 1992, through Ordinance The District Special Project (DSP) was authorized in October 2011 by City Ordinance to enable the transfer of assets, liabilities, rights, duties and obligations of the former Bexar Metropolitan Water District (BexarMet) to SAWS. SAWS and DSP combined serve approximately 1.7 million people which includes more than 475,000 water connections and 424,000 wastewater connections. The service area covers 927 square miles primarily in Bexar County and in limited areas of Atascosa, Medina and Comal counties. This report documents the water resources activities pertaining to the implementation of San Antonio Water System s 2012 Water Management Plan covering the period of July 1 through Dec. 31, The report will: Review the progress on the Water Management Plan, Provide a status report on the utility s water production at year s end, Recap the water supplies developed and costs during the reporting period, Provide an update on the acquisition of additional water supplies, Summarize revenues generated from the water supply fee, capital spending on water supply projects, and summarize the maintenance and operational expenses for completed projects, and, Outline the status on the awarding of contracts. SAWS (including DSP) had a total potable production of 237,395 acre-feet for all of One acre-foot of water is equal to 325,851 gallons. Included in this total is 183,526 acrefeet of Edwards Aquifer production. Our Edwards Aquifer supply in 2014 accounted for 77 percent of the total potable demand. Water from non-edwards Aquifer sources and ASR was 23 percent of the water pumped into distribution. The current water supply portfolio consists of groundwater supplies from the Edwards Aquifer, the Trinity Aquifer in Bexar County, the Carrizo Aquifer in southern Bexar County and from Gonzales County for the Regional Carrizo Program. Additionally, groundwater is obtained from Carrizo Aquifer wells in Guadalupe and Gonzales counties via the Wells Ranch Project by Canyon Regional Water Authority (CRWA). SAWS surface water supplies include the Guadalupe-Blanco River Authority s Western Canyon Project,

6 4 Water Management Plan Semiannual Report July-December 2014 Medina Lake and River system, and CRWA s Lake Dunlap Project. In addition, SAWS maintains as part of its diversified water supply portfolio the largest direct recycled water system in the country, and the largest groundwater-based ASR in the nation. SAWS experienced a 35 percent cumulative year-end cutback to its Edwards pumping permits, the most severe in the history of Edwards Aquifer regulation. However, as a result of the community s investment in diversified water resources, water conservation programs, and strict adherence to Stage 2 drought restrictions, ratepayers have been able to offset the need for Stage 3 or 4 restrictions. Implementation of SAWS four planned water supplies (Brackish Groundwater Desalination Program, Expanded Bexar County Carrizo Aquifer, acquisition of additional Edwards Aquifer Water Rights and the Vista Ridge Project) will add up to an additional 110,937 acre-feet of firm water supply by the year Together, the capital costs of these proposed projects, including the construction of the Water Resources Integration Program, would total approximately $740 million. The new Vista Ridge partnership may add an additional $100 million of capital costs to support the integration of the Vista Ridge water into our system. On July 1, 2014 SAWS Board of Trustees formally selected the Vista Ridge proposal to supply water to San Antonio and scheduled negotiation sessions for the delivery contract. The proposal is for a long-term supply of water that will be delivered as early as 2019 and provide San Antonio an additional 50,000 acre-feet of water annually or twenty percent of its annual demand from a non-edwards Aquifer source. Under the proposal, the Vista Ridge Consortium has secured sufficient rights in Burleson County, northeast of Austin, and will develop the well field and construct the pipeline to San Antonio. The San Antonio City Council unanimously approved the project Oct. 30, 2014 and the Water Transmission and Purchase Agreement was executed on Nov. 4, On Dec. 3, 2014 SAWS and Abengoa officials signed a 54-inch diameter pipe to celebrate the launch of the new Vista Ridge water project SAWS broke ground for its brackish groundwater desalination (BGD) project in South Bexar County in July. Phase one of the project, scheduled for completion in 2016, will deliver a desalination plant capable of producing 12 million gallons of drinking water per day by treating moderately salty groundwater water from the Wilcox Aquifer. The Regional Carrizo Program has been delivering water from Gonzales County since November The project delivered 7,624 acre-feet of Carrizo water to SAWS during 2014 from SAWS Buckhorn wellfield, along with the purchase of groundwater from Schertz- Seguin Local Government Corporation. SAWS expects the project to yield up to 16,700 acre-feet annually. The Water Supply Fee is a multi-year funding mechanism for the development, construction and management of additional water supply. Since its implementation in 2001, the Water Supply Fee has generated over $1 billion to support the expansion and diversification of SAWS water portfolio. The money generated from the Water Supply

7 Water Management Plan Semiannual Report July-December Fee has been used to fund capital investments, operating and maintenance expenses, and debt service associated with new water supply projects. SAWS capital investment in water supply projects since 2001 totals $877 million.

8 6 Water Management Plan Semiannual Report July-December 2014 Water Supply Summary The matrix below summarizes the status and activities for each water resource project from July through December For current water supplies, numbers are provided reflecting the total production for 2014 at the end of year (EOY). Section 3.0 presents summaries and activities for some of the more significant projects during the second half of Current Supply Edwards Aquifer Supplies (SAWS & DSP) Groundwater supply Medina Lake and River System (DSP) Surface water supply Direct Recycled Water (SAWS) Recycled water Supply Status Edwards potable water demand EOY2014 was 183,526 acre-feet 2014 EOY inventory 289,026 acre feet (No cutbacks) 2014 EOY inventory 188,182 acre-feet (35 % cutbacks) Procurement process (both purchase & lease) have changed Future Edwards acquisitions will be through lease No water deliveries during 2014 On April 25, 2013, SAWS requested Bexar Medina Atascosa (BMA) Water District to discontinue delivery due to decreased water quality as a result of declining Medina Lake levels. At the time the lake was at 6% capacity Lake levels were at 3.3% full on Dec. 31, 2014 System total capacity: 35,000 acre-feet Assigned to CPS Energy (from total of 10,000 acre-feet 50,000 acre-feet supplied to CPS Energy) System Supply 25,000 acre-feet o Current commitments (consumptive) 12,999 acre-feet o Available supply 12,001 acre-feet Trinity Aquifer (SAWS & DSP) Groundwater supply Total 2014 production: 4,761 acre-feet Canyon Regional Water Authority (DSP) Surface/Groundwater supply Total 2014 delivery 3,476 acre-feet Canyon Lake (SAWS) Surface water supply Total 2014 delivery 9,056 acre-feet Twin Oaks Aquifer Storage and Recovery Ground Water Supply Total 2014 water recovered: 19,563 acre-feet ASR water in storage (Dec. 31, 2014): 72,236 acre-feet SAWS Edwards water to storage totaled 783 acre-feet in 2014 EAHCP Edwards water to storage totaled 4,031 acre-feet in 2014 and 5,899 acre-feet cumulatively

9 Water Management Plan Semiannual Report July-December Current Supply Carrizo Aquifer (Bexar County) (SAWS) Groundwater supply Regional Carrizo Program (SAWS) Groundwater supply Planned Projects ( ) Additional Edwards Aquifer Groundwater supply (Acquisition) Expanded Carrizo (Bexar County) Groundwater Supply (Design) Brackish Groundwater Desalination Program Brackish Groundwater (Construction) Supply Status Total 2014 production 9,389 acre-feet 2014 production from SAWS Buckhorn wellfield, Gonzales County plus water purchase from Schertz-Seguin Local Government Corporation Gonzales County wellfield production: 7,624 acre-feet Project Status See comments on Current Edwards leasing/purchases above Project Kickoff Meeting was held on Oct. 24, 2014 with the design team Aquifer modeling efforts have commenced and are expected to be completed in Jan Design for Phase I in progress Construction to commence in 2016, for 7,000 acre-feet per year by 2017 Groundbreaking for construction of plant took place on July 2, 2014 Construction of the treatment plant, conveyance system, and Phase I production and injection wells is in progress and is expected to be completed by the end of 2016 Vista Ridge (formerly Regional Water Supply/RFCSP) Ground Water Supply (See Featured Projects) On July 1, 2014, SAWS formally selected a water supply proposal submitted by the Vista Ridge Consortium to provide 50,000 acrefeet of water annually to San Antonio On Oct. 30, 2014, the Vista Ridge proposal was approved by the San Antonio City Council On Nov. 4, 2014, the Water Transmission and Purchase Agreement between SAWS and Abengoa Vista Ridge was executed Vista Ridge Consortium will develop the well field and construct the pipeline SAWS will invest approximately $100 million in infrastructure to integrate Vista Ridge water into the system SAWS will only pay for water made available for delivery Delivery anticipated by 2019/2020

10 8 Water Management Plan Semiannual Report July-December 2014 Planned Mid-Term Projects ( ) Project Status Conservation Programming Water Conservation Programming to maintain dry year consumption at 135 gallons per capita per day (GPCD) beyond demand was approximately 121 GPCD Brackish Groundwater Desalination Program Phases II and III Brackish Groundwater Supply Expanded Carrizo (Bexar County) Project Phases II and III Groundwater Supply Future expansion of brackish groundwater production in south Bexar County Phases II and III are anticipated to provide an additional 13,440 acre-feet annually by 2021 and an additional 6,720 acre-feet annually by 2026, respectively Hydrologic modeling has been conducted to determine the amount of additional Wilcox Aquifer production and number of wells that could be supported This analysis also examined whether the project would remain within the limits set by the Desired Future Conditions (DFCs) for the groundwater management area (GMA9) as required by the state Future expansion of Local Carrizo production in south Bexar County Phases II and III are anticipated to provide an additional 7,000 acrefeet annually for each phase, by 2022 and 2027

11 Water Management Plan Semiannual Report July-December Featured Projects Vista Ridge Regional Water Supply Project Status: Planned Project for ; Project approved, Contract signed Water Supply: Groundwater, Carrizo and Simsboro Aquifers in Burleson County Background: In January 2011, SAWS requested competitive sealed proposals for a water supply project to supplement future water inventory. Nine proposals were received, resulting in four of the projects being deemed responsive to the utility s request. Each proposal was analyzed to determine overall responsiveness and qualifications utilizing predetermined criteria, including ownership and control of water, proposed solution for delivery, price, financial strength, project management and quality control/assurance. SAWS updated its needs for the RFCSP and issued Addendum I to the RFCSP to the four finalists in March This addendum included consideration of recent critical factors such as the integration of DSP, the Edwards Aquifer Habitat Conservation Plan and 2010 Census data in making the final determination of the size and timing of the RFCSP. The addendum requested 50,000 acre-feet per year with delivery in The responses were carefully reviewed by SAWS staff and forwarded to a management selection committee for further evaluation and potential selection. One submittal was deemed non-responsive. The three remaining finalists, Vista Ridge Consortium, Dimmit Utilities, and V. V. Water Supply Company were invited to participate in interviews which took place Oct. 18, On June 17, 2014, the Vista Ridge proposal was deemed responsive to the Request for Competitive Sealed Proposals. Their proposal had been clarified to address specific SAWS concerns that included a requirement for payment even in cases when water was not delivered, automatic price escalation, and payment of a $5 million annual reservation fee that would have started upon the signing of the contract. Many of these concerns have been eliminated or addressed in an equitable manner during clarification meetings. As a result, the total project cost over 30 years was reduced by over $700 million and Vista Ridge Consortium agreed to assume the delivery risk, including regulatory, technical and financial risk at a fixed price for the duration of the project. Under the terms of the contract, San Antonio will not pay for any water that is not made available for delivery, shifting major regulatory risks to the private developer instead of San Antonio ratepayers.

12 10 Water Management Plan Semiannual Report July-December 2014 Activities this Period The SAWS Board of Trustees approved the Water Transmission and Purchase Agreement (WTPA) with Abengoa Vista Ridge on Sept. 29, In a unanimous vote Oct. 30, 2014, San Antonio City Council approved the contract to bring 16.3 billion gallons of non-edwards Aquifer water annually for 30 years. At the end of the agreement the well field and pipeline infrastructure will transfer to SAWS. The WTPA was executed on Nov. 4, 2014 which began the Development Phase of the project. Abengoa Vista Ridge now has up to 30 months for development phase activities and to arrange long-term financing. Once financing has been obtained, the Construction phase begins and Abengoa Vista Ridge has 42 months to construct the project and begin delivery water to San Antonio.

13 Water Management Plan Semiannual Report July-December Other Significant Developments Non-Revenue Water SAWS Board approved a professional services contract in November 2013 between SAWS and Water Systems Optimization, Inc. (WSO), a proven national and international leader in water loss control, utility metering and supply side conservation. As was mentioned in the last semi-annual reporting period, development of cost-effective water loss-control and optimized utility management practices are a high priority for SAWS but will require longterm sustained efforts. An independent verification by WSO of SAWS non-revenue water (NRW) auditing practices and seven significant investigative tasks were completed during July-December In collaboration with WSO, SAWS staff have identified a potential slate of cost effective efforts that might reduce losses. These include (but are not limited to): Continuing with annual standardized auditing, State reporting, and trend analyses. Bolstering detailed proactive leak detection in the short term, covering half of SAWS water distribution system annually for the next four years. This effort will be a cost effective way to both reduce real water loss during those four years, as well as inform SAWS on areas within its system to target leak detection efforts beyond the four years. Educating policy makers and ratepayers that NRW does not equal water lost. There are many legitimate business uses of water (such as firefighting, line flushing, etc.) that are vitally important to the health and safety of the community, but are not paid for. Investigating whether pressure management might be responsible for a portion of SAWS main breaks. With continued assistance from WSO, SAWS staff will work on further implementing strategies and a water loss control program. Additionally, revisiting a third party independent review of SAWS water loss control program in 2017 will help document progress.

14 12 Water Management Plan Semiannual Report July-December 2014 Pumping to Customers In 2014, SAWS had a total potable production of 237,395 acre-feet (AF). This includes the demand of SAWS District Special Project (DSP, former BexarMet), and does not include the 4,814 AF of Edwards Aquifer water that was stored in SAWS Aquifer Storage & Recovery Twin Oaks facilities (ASR). This total demand was supplied by:

15 Water Management Plan Semiannual Report July-December Financial Report Integration of Bexar Metropolitan Water District Assets, Operations and Personnel In November 2011, 74 percent of voters in the Bexar Metropolitan Water District (BexarMet) voted to dissolve the utility and for transferring the responsibility for its assets and operations to SAWS. The election was authorized by the Texas Legislature through Senate Bill (SB) 341, adopted in May Effective Jan. 28, 2012, the assets, liabilities, rights, duties and obligations of BexarMet were transferred to an entity known as the San Antonio Water System District Special Project (SAWS DSP). Management and control of SAWS DSP is vested in the SAWS Board of Trustees (Board), however, in accordance with the District Special Project Ordinance, SAWS DSP is not a part of SAWS. Instead, SAWS DSP will be reported as a discrete component unit of the City of San Antonio until full integration with SAWS has been completed. Full integration with SAWS will be considered to have occurred when the rates paid by SAWS DSP customers for water service are the same as those paid by SAWS customers and no SAWS DSP debt remains outstanding. SAWS has been tasked with rebuilding a water utility that was facing severe financial and budgetary constraints, infrastructure needs, non-firm water sustainability, relatively high water rates, relatively low employee compensation, lack of appropriate employee resources due to layoffs, and a generally poor relationship with the public. Through concerted efforts during 2012 and 2013, SAWS resolved most of the challenges facing the prior utility. While full integration of SAWS DSP rates with those of SAWS may not be complete for a few more years, the operational integration is mostly complete. Future efforts will focus primarily on ways to develop one integrated rate structure for all customers as well as redeem all outstanding debt of SAWS DSP. Once that has been accomplished, SAWS DSP will be dissolved. Complete integration with SAWS is required to occur by January 2017 unless SAWS requests an extension from the Texas Commission on Environmental Quality. Water Supply Fee On Oct. 19, 2000, the San Antonio City Council via Ordinance #92753 approved a funding mechanism for the construction and development of additional water resources to meet projected water demands for the City of San Antonio and Bexar County for the next 50 years. The Water Supply Fee assists in funding expenditures for the development of new water resources to include all operating, maintenance, research and development, and capital costs (including debt service when capital expenditures are debt funded). As mentioned earlier, SAWS has the largest direct recycled water systems in the nation, which reduces the need for additional

16 14 Water Management Plan Semiannual Report July-December 2014 water supplies and therefore reduces the size of the Water Supply Fee. The Water Supply Fee is tiered for residential and irrigation customers. A residential customer using the average of 7,788 gallons in a month paid a total Water Supply Fee in 2014 of $ The Water Supply Fee per 100 gallons in 2014 for each customer class is summarized below. RATE CLASS Usage Blocks Gallons Assessed Fee RATE PER 100 GALLONS Residential First 5,985 $ Next 6,732 $ Next 4,488 $ Over 17,205 $ General All blocks $ Wholesale All blocks $ Irrigation 0 Gallons $ Next 6,732 $ Next 10,473 $ Over 17,205 $0.4735

17 Water Management Plan Semiannual Report July-December On Dec. 2, 2014, the SAWS Board of Trustees approved a 5.1 percent increase in the Water Supply Fee effective for water used beginning Jan. 1, This increase was in line with the 2015 rate request pre-approved by City Council in Nov Water Supply Fee Financial Reports The following tables provide an accounting of the collection and uses of the Water Supply Fee since its inception in San Antonio Water System Sources and Uses of Funds Water Supply 2001-December 2014 ($ in Millions) Water Supply Fee $1, Operating Transfer from Water Delivery Non-operating income & Other Recycle Water Revenues Water Supply Impact Fees Bond Proceeds Water Supply O&M (550.31) Debt Service (397.29) Capital Funding (877.49) Funds Provided Restrictions on Cash Designations on Cash Unrestricted/Undesignated Funds $ 64.55

18 16 Water Management Plan Semiannual Report July-December 2014 San Antonio Water System Operating & Maintenance Expenditures 2001-December 2014 ($ in Millions) Operating and Maintenance Costs Western Canyon Project - GBRA $ Oliver Ranch - Lease Payments & Production Costs BSR - Lease Payments & Production Costs 4.59 Regional Carrizo - Water Sales Agreements & Other Brackish Desalination 1.32 Edwards - Lease Expense & Other Aquifer Storage & Recovery Project Aquifer Protection & Compliance Vista Ridge Recycled Water Operations Conservation Program - net loss 7.27 Stormwater program - net loss 4.52 LCRA - Study Period and Other, Net of Cash Recovery Lower Guadalupe Water Supply Project 6.26 Simsboro Aquifer 4.41 Recharge Initiative 0.80 Other Water Resources Cost Facilities Maintenance Communication & Outreach Legal - Water Law 7.44 Billing & Collections Finance & Information Systems Corporate Facilities 9.90 Human Resources, Safety, Other Benefits Other Support Services Transfer to COSA Total Operating & Maintenance $ Includes workers compensation and dependent and retiree health insurance. 2 Includes executive management, Board of Trustees, Internal Audit, Legal (corporate) and other miscellaneous. 3 Includes a $12.4 million write-off of pipeline design costs made obsolete with the agreement with Schertz Seguin Local Government Corporation to transport water from Gonzales county to SAWS. 4 Total program cost net of cash recovered from LCRA settlement. 5 Development Stage costs paid by SAWS.

19 Water Management Plan Semiannual Report July-December San Antonio Water System Water Supply Capital Spending 2001-December 2014 ($ in Millions) FUNDING Pay-as-you-go Debt Total Water Supplies: Non-Edwards Water Supplies Western Canyon Project - GBRA $ 3.31 $ $ Trinity Aquifer Projects (Oliver Ranch/BSR) Local Carrizo Brackish Desalination Regional Carrizo Aquifer Storage & Recovery Project (ASR) Recycled Water System Total Non-Edwards Edwards Aquifer Water Rights Total Water Supply Capital Spending Other Capital Spending: Integration Unallocated Project Overhead Land, Buildings & Equipment Total Capital Spending $ $ $

20 18 Water Management Plan Semiannual Report July-December San Antonio Water System Cash Restrictions/Designations Water Supply 2001-December 2014 ($ in Millions) Restrictions on Cash: Operating Reserve $ Reserve Fund Construction Funds: Bond Funds Impact Fees Designations on Cash: Future Reserve Fund deposits 0.30 PGA Monitoring/WQEE 1.27 Interest Mitigation Fund & Prior CIP program (cash funds) Unrestricted/Undesignated Funds Total Water Supply Funds Available $ Represents bond proceeds currently on hand. These proceeds have all been committed to be used on existing projects. 2 Represents unspent impact fees. These have all been committed to fund CIP projects in the 2014 & prior CIP program or they will be used to help fund future CIP programs. 3 Represents funds accumulated as a result of favorable variances in debt service. Funds may be used for CIP or to otherwise reduce debt service costs.

21 Water Management Plan Semiannual Report July-December Glossary AF/yr Acre-Foot per year (325,851 gallons) ASR Aquifer Storage & Recovery Facility / underground storage facility BGDP Brackish Groundwater Desalination Program BMA Bexar-Medina-Atascosa Improvement District #1 BMWD Bexar Metropolitan Water District BSR Bulverde Sneckner Ranch CCN Certificate of Convenience and Necessity CRWA Canyon Regional Water Authority DFC Desired Future Condition DOR Drought of Record DSP District Special Project (former BexarMet) EAA Edwards Aquifer Authority EAHCP Edwards Aquifer Habitat Conservation Plan EOY End of Year GCD Groundwater Conservation District GBRA Guadalupe-Blanco River Authority GPCD Gallon Per Capita Per Day HCP Habitat Conservation Plan MGD Million Gallons per Day OR Oliver Ranch RCP Regional Carrizo Project RFCSP Request For Competitive Sealed Proposals SAWS San Antonio Water System SB Senate Bill SSLGC Schertz-Seguin Local Government Corporation TWDB Texas Water Development Board WMP 2012 Water Management Plan WSC Water Supply Corporation WTPA Water Transmission and Purchase Agreement Firm Yield The volume of water which can be produced from a defined source during a repeat of the drought of record under existing regulatory, legal, contractual, hydrological or infrastructure constraints. Desired Future Condition Defined by Title 31, Part 10, (6) of Texas Administrative Code as "the desired, quantified condition of groundwater resources (such as water levels, spring flows or volumes) within a management area at one or more specified future times as defined by participating groundwater conservation districts within a groundwater management area as part of the joint planning process."

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24 2800 U.S. Hwy 281 North P.O. Box 2449 San Antonio, Texas SAWS (7297)