BACKGROUND INFORMATION:

Item No.:4

Marin Municipal Water District
Meeting Date:
Board of Directors
August 10, 2005

Subject: Request for Information re: Potter Valley Project, etc.

Submitted by: Jared Huffman, Board of Directors
Recommended Action:

Direct staff to prepare a letter to Sonoma County Water Agency requesting information about the cost of and plans for acquisition by SCWA of the Potter Valley Project and expressing support for restoring fisheries in the Russian and Eel Rivers.

Summary:
In 1996, MMWD revised its contracts with the Sonoma County Water Agency (SCWA), to provide for additional water supplies to MMWD. The contract revision also specified that the other purpose was to accommodate SCWA's interest in ensuring continued deliveries of water from the Eel River to the Russian River through the Potter Valley Project. MMWD committed to providing funding to SCWA to accomplish this latter objective via the Russian River Projects Charge. Relevant portions of the contract are included as Attachment 1.

SCWA is currently in the process of revising its contracts with its prime contractors via a revision to the 11th Amended Agreement it currently has in place. The new agreement, called the Restructured Agreement, includes a provision that specifies that SCWA may acquire all or part of the Potter Valley Project, but only with the prior approval of the Water Advisory Committee. Various parties have objected to this provision of the contract, stating their support for restoration of the Eel River anadromous fishery and the termination of diversions to the Russian River.

Sonoma County Water Agency has represented to the Federal Energy Regulatory Commission that continued diversions of water from the Eel River into the Russian River are necessary to support efforts to restore anadromous fisheries in the Russian River, to meet instream flow requirements and to guarantee continued full deliveries of contracted water to its contractors. The General Manager of SCWA reiterated this position to Paul Helliker on August 1, 2005, noting that eliminating diversions of Eel River water into the Russian River would result in automatic reductions of deliveries to SCWA contractors of 30%.

In April, 2005, the Sonoma County Water Agency testified before the State Water Resources Control Board that it could meet the instream flow requirements in the Russian River at Guerneville by releasing water from Lake Sonoma, and that consequently, flow volumes in the Russian River above Healdsburg would have no bearing on compliance with flow requirements at Guerneville. SCWA stated further that, because of the safe yield of Lake Sonoma and water releases available from the lake, SCWA could not only meet instream flow requirements at Guerneville, but also its full contractual deliveries of water to MMWD and the other contractors in Marin and southern Sonoma Counties.

Acquisition and operation of the Potter Valley Project is projected to be quite expensive, due to the age of the facilities, degree of siltation behind the dams, and the potential need to provide retrofits to the facilities to assure adequate fish passage upstream to support a healthy anadromous fishery. To date, SCWA has not developed a projected estimate of the cost of continuing to provide flows through this facility.

MMWD is currently evaluating its supplemental water supply options, and needs to be informed of potential significant liabilities which it is contractually obligated to assist SCWA in funding. MMWD needs information from SCWA on any plans it may have and the timing of such plans to acquire and operate the Potter Valley Project, or to pay for continued operations of it by Pacific Gas and Electric Company (the current owner) or any subsequent owners. MMWD also needs to know what plans SCWA or its contractors have to assure that supplemental supply from groundwater resources will continue to be available, should such resources be needed in a future drought.

Attachments:
Draft letter:
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Mr. Randy Poole

General Manager
Sonoma County Water Agency

Dear Randy:
As you know well, the Marin Municipal Water District is currently pursing diligently a variety of strategies to assure that its customers will have adequate water supplies in normal as well as in drought years. As part of this effort, we are evaluating the desalination of San Francisco Bay water as the principal source of supplemental water supply. Our recent action to shift our final block of "as-available" water to "firm" status pursuant to our Supplemental Water Supply Agreement does not change this approach, nor does it diminish our interest in assuring that water deliveries from the Russian River will continue to be reliable and with the minimal environmental impact possible.

mMMWD has a strong commitment to sustainably managing the water resources on which we rely, including the river systems from which our SCWA imports originate. We appreciate SCWA's recent efforts to improve the anadromous fisheries on the Russian River, but we also urge SCWA to support restoration of the Eel River, including substantially reducing or eliminating Eel River diversions via the PVP, and potentially de-commissioning diversions facilities on that river if necessary to restore it to good environmental health.

In addition to the health of the Russian and Eel Rivers, MMWD is concerned about the increasing signs of groundwater problems and shortages on the Santa Rosa Plain. We urge SCWA to support meaningful groundwater management on the Santa Rosa plain, including adopting a groundwater management plan as recommended by the Sonoma County Grand Jury. The overdrafting of groundwater on the Santa Rosa plain has direct adverse impacts to all SCWA contractors, since SCWA's "emergency" wells in that basin are an important component of the long-term reliability of the SCWA supply system.

To assist us in our evaluation of long-term supplemental supply alternatives, we respectfully request a written response from you to the following questions:

1. Regarding the Eel River, we have received mixed messages - several years ago, we were told by SCWA that the PVP diversion was essential to the long-term reliability of SCWA deliveries to Marin. SCWA made similar statements to FERC in the context of hydropower relicensing proceedings. However, in recent years, including during testimony in April of this year before the State Water Resources Control Board, you have stated that diversions from the Eel River are not necessary to meet instream flow requirements in the Russian River at Guerneville, nor are such diversions necessary to allow SCWA to meet its full contractual obligations for water deliveries to MMWD and other SCWA contractors in Marin and southern Sonoma Counties. You have stated that such requirements and deliveries can be met by releases from Lake Sonoma. Obviously, it is important for us to know which of these two contradictory assertions is the case. By clearly confirming that deliveries to Marin are not dependent on the PVP diversion, SCWA can help dispel persistent concerns by Marin residents and others that reliance on SCWA imports can be detrimental to the Eel River. Please clarify.

2. More specifically, our contract with SCWA contains language regarding SCWA's potential acquisition of the Potter Valley Project (PVP), an acquisition which we presume would be quite substantial (in the hundreds of millions of dollars). We need to understand what that means in terms of possible costs that may be passed through to MMWD. In light of your recent statements that MMWD's contractual deliveries do not depend on diversions through the PVP diversions and would not be effected by curtailment of those diversions, we trust that MMWD would not be asked to pay for an acquisition of the PVP by SCWA. Please tell us whether SCWA has any plans to purchase or pay for continued operations of the PVP, and whether or not SCWA plans to pass on to MMWD any costs related to these actions. Please update us on SCWA's current plans and intentions in that regard, including the likely cost of any PVP acquisition by SCWA and how that cost would be met.

3. Regarding Sonoma County groundwater generally, and SCWA's emergency wells specifically, please provide an assurance to us that these "emergency" wells will indeed provide a reliable backup supply in the event of a severe drought. As we understand it, the wells have been operating full-time in recent years and groundwater levels are dropping faster than projected rates of recharge. What are SCWA's plans for ensuring sustainable management of groundwater and reliable backup supplies to meet the needs of contractors in the next drought?

Thank you for your assistance in answering our questions on these matters. We look forward to a reply at your earliest convenience.

Sincerely,