This document provides an overview and analysis of key issues related to the Bay Delta Conservation Plan (BDCP) from the perspective of the Metropolitan Water District Program. It summarizes the BDCP's capital and operating cost estimates, outlines the proposed funding sources including contributions from water exporters and state/federal governments, and analyzes potential cost allocation scenarios and their financial impacts. Key uncertainties noted include the lack of a finalized cost allocation and questions around assurances that future state and federal funding will meet regulatory requirements.

1. Amy Chen, Director of MWD Program
Imported Water Committee
January 23, 2014

2.  Public draft of BDCP and
EIR/EIS released December
13, 2013
◦ 120 day formal review period
◦ Public meeting scheduled for
February 6, 2014 in San Diego at
the Convention Center from
3:00pm – 7:00pm
 Staff continues its evaluation
of the public draft
2

3. BDCP Component
Type of Cost1
Capital O&M Total
Water Facilities & Operation (CM1)
$14,571 $1,456 $16,027
Natural Community Restoration (CM2-CM11) $4,170 $237 $4,406
Other stressors (CM12-CM22) $927 $1,735 $2,661
Changed circumstances $184 - $184
Local government revenue replacement - $226 $226
Monitoring & research measures - $913 $913
Plan admin. - $336 $336
Total2
$19,851 $4,902 $24,754
1 in Millions of 2012 dollars
2 Total may not add due to rounding
Source: Bay Delta Conservation Plan, Tables 8-33 and 8-34
3

4.  BDCP envisions costs will be shared between water
export contractors and the state and federal
governments
4
State &
Federal
Contractors
69%
State
funding
17%
Federal
funding
14%
o Exporters:
Conveyance facilities
and related mitigation
costs
o State/Federal:
Ecosystem restoration
costs

5. Funding Source
Water
Facilities &
Operations
Nat.Com.
Protect. &
Mgt.
Nat. Com.
Restoration
Other
Stressors
Monitoring
Research
Etc.
Program
Admin.
Total
Contractors $16,027 $266 $269 $224 $113 $31 $16,930
USBR $0 $50 $602 $1,077 $640 $100 $2,469
Other Fed Funds $0 $346 $460 $10 $200 $60 $1,076
Props 1E & 84 $0 $0 $142 $21 $0 $0 $163
2014 Water Bond $0 $184 $900 $430 $0 $0 $1,514
Future Water Bond $0 $205 $1,200 $840 $0 $0 $2,245
Other State Funds $0 $10 $40 $0 $145 $0 $195
Interest Income $0 $0 $0 $20 $0 $145 $165
Total Funding $16,027 $1,061 $3,613 $2,623 $1,098 $336 $24,758
Total Cost $16,027 $1,061 $3,610 $2,623 $1,097 $336 $24,754
Difference $0 $0 $3 $0 $1 $0 $4
1 In millions of 2012 dollars
Source: Bay Delta Conservation Plan, Public Draft, Chapter 8, December 2013, Table 8-37.
5

6.  State and federal regulations require assurance of
funding to issue permits under the habitat
conservation plan
 Federal ESA requires that HCPs specify “the applicant
will ensure that adequate funding for the plan will be
provided” for conservation actions – courts have
interpreted broadly
 ESA case law strongly supports the notion that
funding must be assured and an HCP “cannot rely on
speculative future actions of others”
6

7.  Cost allocation negotiations between and among
state and federal water export contractors are
ongoing
◦ Water Authority requested, but is not involved in cost
allocation negotiations
 BDCP indicates that the actual funding share
between state and federal contractors will not be
determined until “near the time that permits are
issued for BDCP”
 Lack of cost allocation certainty hinders the
ability to assess cost impacts and risks
7

8.  Because cost allocation has not been finalized, staff
analysis uses a bookend approach to potential cost
allocation scenarios
 Scenarios
1. Contractors pay for only conveyance/mitigation costs of $16.9
billion, with costs shared 55/45 between SWP and CVP
2. All $24.8 billion of BDCP costs paid by contractors, with costs
shared 55/45 between SWP and CVP
3. Contractors pay for only conveyance mitigation costs of $16.9
billion, with urban agencies from SWP and CVP paying 90
percent of costs and agricultural agencies paying 10 percent
- MWD share assumed to be 58 percent of urban share
8

9. Scenario 1 Scenario 2 Scenario 3
Description
Contractors pay for
conveyance
Cost share between
SWP & CVP:
55/45
Contractors pay for
all costs
Cost share between
SWP & CVP:
55/45
Contractors pay for
conveyance;
Urban and
agricultural split:
90/10
Total Cost
(Capital and O&M)
$16,930M $24,754M $16,930M
SWP
(or urban in
scenario 3)
$9,312M $13,617M $15,237M
MWD $4,218M $6,168M $8,832M
Water Authority $1,055M $1,542M $2,208M
9

10. 10
Scenario 1 Scenario 2 Scenario 3
Description
Contractors pay for
conveyance
Cost share between
SWP & CVP
55/45
Contractors pay for all
costs
Cost share between
SWP & CVP
55/45
Contractors pay for
conveyance;
Urban and agricultural
split: 90/10
Annualized Debt
Service
$1,111M $1,563M $1,111M
SWP share (or urban) $611M $859M $1,000M
Annualized Debt
Service to MWD
$277M $389M $579M
BDCP Op Scn. High
Outflow
Low
Outflow
High
Outflow
Low
Outflow
High
Outflow
Low
Outflow
Potential Benefit
(TAF)
299 424 299 424 299 424
Incremental Unit
cost ($/AF)
$926 $653 $1,302 $919 $1,938 $1,368
*Analysis varied the cost obligations only, assumes MWD’s share of the BDCP benefits remains constant –
i.e., 45.3 percent (Table A) of 55 percent (SWP share).

11.  Funding
◦ Federal and state share – dependent on future bond
passage and/or appropriation
◦ Exporters share
 Allocation not yet finalized
 BDCP “Big Gulp”
◦ Contractors’ ability and willingness to capture and
store wet year supply for dry year use critical
◦ Storage fill plan and financing strategy needed at
MWD
11

12. Meeting Imported Water Committee/Board Activity
7/25/2013 Provide input on scope of proposed Water Authority analysis of
BDCP alternatives; provide input on policy questions to be addressed
√
8/8/2013
Special
Meeting
Overview of Bay-Delta and proposals for Delta fix, including
description of alternatives
√
8/22/2013 Review of technical analysis – demand assumptions; alternative
project yield assumptions; projected costs
√
9/12/2013
Special
Meeting
BDCP economic study on cost-benefit of BDCP preferred alternative √
9/26/2013 Review of technical analysis (cont.), including yield review √
10/24/2013 Information: Review of technical analysis (cont.), including baselines;
BDCP timeline and processes impacting implementation
√
11/14/2013
Special
Meeting
Supply and demand evaluation and analysis √

13. Meeting Imported Water Committee/Board Activity
1/9/2014
Special Meeting
Identification of BDCP Physical features and facilities;
supply/demand risk assessment
√
1/23/2014 Preliminary cost estimates and risk assessment to Water
Authority
√
2/13/2014
Special Meeting
Engineering assessment of BDCP cost estimates; BDCP
Governance
2/27/2014 Economic and risk assessment (cont.)
3/13/2014
Special Meeting
Summary presentation of BDCP issues; Identification of issues to
be addressed in the EIR/EIS comment letter
3/27/2014 Action: Consider action on final EIR/EIS comment letter
4/24/2014 Revise BDCP schedule; discuss outstanding policy issues; timeline
for future board meetings

14. 14

15.  BDCP Update
 Overview of BDCP Economic Assessment
Issues
◦ Cost Estimates
◦ Funding Sources
◦ Cost Allocation
 Preliminary assessment of potential
financial impacts
 Summary
 Next Steps
15

16. 16
$-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
1-5 6-10 11-15 16-20 21-25 26-30 31-35 36-40 41-45 46-50
Program Costs (Administration,
Monitoring, Research, Other)
Other Stressors Conservation
Measures (CM13 to CM 21)
Habitat Protection and
Restoration Conservation
Measures (CM2 to CM12)
Water Facility Conveyance
(CM1, CM22)
CapitalCosts
(MillionsofUndiscounted2012Dollars)
Plan Years
Estimated Capital Costs in 5-Year Increments
Source: BDCP Executive Summary, Page 28

17. 17
$-
$100
$200
$300
$400
$500
$600
1-5 6-10 11-15 16-20 21-25 26-30 31-35 36-40 41-45 46-50
Habitat Protection and
Restoration
Conservation Measures
(CM2 to CM12)
Other Stressors
Conservation Measures
(CM13 to CM 21)
Water Facility
Conveyance (CM1,
CM22)
Program Costs
(Administration,
Monitoring, Research,
Other)
CapitalCosts
(MillionsofUndiscounted2012Dollars)
Plan Years
Estimated Operational Costs in 5-Year Increments
Source: BDCP Executive Summary, Page 28

18.  Unclear whether reliance on federal funding and
future state bonds will meet the “adequate funding”
test for permit issuance
 BDCP public draft indicates that if a shortfall in
state or federal funding occurs
◦ Authorized entities will not be required to provide land,
water, or monetary resources beyond their commitment
in the Plan
18

19.  BDCP public draft indicates the SWP share of new
water conveyance system costs could be paid similar
to how existing SWP is being paid for
◦ DWR-issued revenue bonds
◦ Take-or-pay contracts for participating SWP contractors
◦ SWP contracts will need to be amended to allow costs to be
financed beyond current term of 2035
 Individual contractors may issue their own revenue
bonds or collectively through a JPA
◦ BDCP public draft identifies State and Federal Water Contractors
Water Agency as possible JPA to finance project
 JPA formed in 2009 – majority of SWP/CVP contractors are
members
19

20.  Incremental unit costs for MWD depend on
benefit it receives from BDCP yield
◦ Consumptive need for water
◦ Ability to place water in storage when available
 High outflow scenario = 1.2 MAF average annual
benefit compared with no action
 Low outflow scenario = 1.7 MAF average annual
benefit compared with no action
 Range of potential average annual benefit to
MWD = 299,000 acre-feet to 424,000 acre-feet
20

21.  Aggregate annual debt service and operations costs for the
conveyance facility only
◦ Average annual capital debt service costs are approx $1.1 billion from
2021 through 2055
21
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 2052 2054 2056 2058 2060 2062 2064
$inMillions
Figure 4
Aggregate Debt & Operations
(Conveyance only)
Debt serv O&M

22.  Aggregate annual debt service and operations costs for
conveyance plus habitat restoration
◦ Average annual capital debt service costs are approx $1.6 billion from
2021 through 2055
22
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 2052 2054 2056 2058 2060 2062 2064
$inMillions
Figure 5
Aggregate Debt & Operations
(Conveyance and Habitat)
Debt Serv (CM1) Debt Serv (Habitat) O&M (CM1) O&M (Habitat)