Joint Recovery Plan Update ADWR, AWBA & CAP AWBA Quarterly Meeting September 4 th, 2013

“Effective planning and coordination among AWBA, ADWR, CAP, CAP customers, recovery partners and others is essential to successful recovery…” --Recovery of Water Stored by the Arizona Water Banking Authority: A Joint Plan by AWBA, ADWR and CAP. August 2013 Draft, page 3. 2

Progress to Date  Drafted Sections 1-4  Shared with the Ad Hoc group  Received initial feedback  Waiting for written edits/comments  Developing Sections 5-7  Broader distribution will occur when the remaining sections of the draft document are complete 3

Today’s Focus  Review first 4 Sections of Plan - set the stage for the who, what, where, when and why  Emphasis on Section 4 “Likelihood, Timing & Magnitude”  Before the end of the year, we will present the remaining Sections that address how recovery will occur (implementation) 4

Section 1: Background, Scope and Purpose  Section provides broad context  Scope includes recovery of the AWBA’s credits in support of its goals and obligations:  To firm CAP M&I priority subcontractors and P-4 on-River M&I users during shortage  To meet the State’s obligations to firm up to 23,724 AF of NIA priority CAP pursuant to Indian water rights settlements  To meet interstate water banking obligations with Nevada 5

Section 1: Background, Scope and Purpose (continued)  Clarify roles of the primary institutions  Establish planning-level certainty  Analyze and project the timing & magnitude of potential recovery (through 2045)  Identify potential recovery partnerships and opportunities  Identify key recovery decision points and actions within the planning horizon 6

Section 2: Roles and Responsibilities  AWBA  CAP  ADWR  Reclamation  CAP’s Recovery Partners  Beneficiaries  Other Interested Parties 7

Section 3: Funding, Purpose, and Location of Credits  AWBA has accrued 3.8 million AF of credits through 2012 (3.2 MAF for intrastate and 600,000 MAF interstate needs)  Several factors determine where recovery of these credits will occur  Funding Sources  Statutory Purposes  Location of Storage 8

Credits By AMA & Funding Source 9

Location of Credits 10

Section 4: Likelihood, Timing & Magnitude of Recovery  Factors Affecting Recovery  Modeling Approach  Synthesizing Results 11

Section 4: Likelihood, Timing & Magnitude of Recovery  Factors affecting Recovery  Shortage  Non-shortage 12

Shortage Factors  Recovery of AWBA credits will be required when the reduction in Arizona’s supply intersects demand of users (pools) for which the AWBA has firming goals or obligations 13

Shortage: Supply Factors  To Arizona  Basin Hydrology  Upper Basin Demands  Initial Reservoir Condition  Reservoir Operations  Within Arizona  Colorado River Uses and Priorities  CAP Uses and Priorities 14

Shortage: Demand Factors  On-River  Agricultural Use  Rate of municipal growth  CAP  Use of long-term entitlements  Rate of municipal growth  Use of Indian contracts 15

Non-Shortage Factors  Outage on the CAP system (outside scope of this Plan)  Interstate ICUA Requests  Rate of Nevada’s municipal growth 16

Modeling  Analysis of recovery factors requires use of models  The Joint Plan relies on two models  Reclamation’s Colorado River Simulation System (CRSS)  Custom recovery model that calculates the probability of specific recovery volumes through time based on range of supply and demand conditions 17

CRSS Modeling Assumptions “Arizona Baseline” 18

Basin Hydrology 1906 to

Upper Basin Demands Arizona Baseline Historical Use Trendline 20

Reservoir Operations Interim Guidelines (2007) and Minute

Shortages to Arizona “Arizona Baseline” 22

Recovery Model  The recovery model incorporates the 105 different water supply traces from the CRSS model and matches those against a range of projected on-River and CAP demands. 23

On-River Demand 24

On-River P-4 Demand Muni Ag Muni 25

CAP Demand Long-Term Contracts Excess  HistoricProjected  MAF Full Use 26

CAP Demand Long-Term Contracts Excess MAF Full Use  HistoricProjected  27

Nevada Demand 28

Scenarios On-River Demand CAP Demand Nevada Request Scenario A Increase to 1.22 MAF by 2045; Ag steady, Muni growth per 2006 Census, no conversion of P-4 agricultural use (ADWR's Scenario A for NIA reallocation) Full long-term contract use by 2045 A1 : Start in 2025; steady to 2063 (~15 kAF/yr); no shortage request A2 : Start in 2035; steady to 2063 (~21 kAF/yr); no shortage request Scenario B Increase to 1.22 MAF by 2045; Ag steady, Muni growth per 2006 Census, full conversion of P-4 agricultural use to M&I by 2035 Full long-term contract use by 2035 B1 : Start in 2025; max request; additional shortage request B2 : Start in 2035; max request; additional shortage request 29

Model Results Near-Term Mid-Term Long-Term 30

In 2023, there is a 35% probability of needing 7,000 AF of recovery, and a 17% probability of needing 14,000 AF Model Results 31

>25% Probability There is a 75% probability that recovery needs will be less than this line. 32

Scenario A 33

Scenario A 34

Scenario A 35

Scenario A 36

Scenario A1 37

Scenario A2 38

Scenario B 39

Scenario B1 40

Scenario B2 41

Summary Table Water UserEarliest Maximum Probability Maximum Near-Term (AF) Maximum Mid-Term (AF) Maximum Long-Term (AF) Indian NIA %10,30022,70023,700 On-River %6,80015,50019,900 M&I %0042,000 Total Intrastate % 17,00038,20084,200 Interstate %060,000 Total with Interstate 17,00098,200144,200 42

Remaining Credits Scenario B2 43

Summary of Results  Earliest projected intrastate recovery is 2017 (1% probability; Indian NIA and On-River)  Less than 35% probability of needing any recovery before the Mid-Term planning period ( )  No M&I recovery projected until Long-Term planning period ( )  Bulk of intrastate credits remain past 2045  Timing and magnitude of Nevada’s request plays significant role in Mid-Term and Long- Term planning periods 44

Next Steps  Develop Sections 5-7 which deal with how the recovery will occur  Recovery Methods  Opportunities by AMA  General Costs  Implementation  Future Activities & Commitments 45