Delta Conveyance: Update on the Planning Process and Analysis of Water Supply and Costs CCWA Board of Directors February 25, 2010

Delta Conveyance: Analysis of Water Supply and Costs Delta Conveyance Status Significant progress has been made on Delta Conveyance planning Significant additional steps are needed The planning process will run out of money by the end of 2010 SWP Contractors need to decide on continuing the planning process

Delta Conveyance: Analysis of Water Supply and Costs All of the information and data are preliminary and subject to revision. About this Presentation… DRAFT! Preliminary Subject to Revision

Delta Conveyance: Analysis of Water Supply and Costs Going from Plan to Permits Preliminary Subject to Revision The Delta Habitat Conservation and Conveyance Program Process BDCP Develops HCP Proposed Project (Includes habitat projects and conveyance) DHCCP Team Creates the EIR/EIS Record of Decision / Notice of Determination

Delta Conveyance: Analysis of Water Supply and Costs Going from Plan to Permits Preliminary Subject to Revision BDCP/DHCCP Processes Bay Delta Conservation Plan (BDCP) Initiated 2006 Focus on conveyance and restoring habitat for fisheries within the Sacramento-San Joaquin Delta Products  Habitat Conservation Plan  Natural Communities Conservation Plan Delta Habitat Conservation and Conveyance Program (DHCCP) Initiated 2008 Funding Agreements – $140 Million (50% SWP Share) Develops EIR/EIS Documents and Record of Decision (ROD)/Notice of Determination (NOD)

Delta Conveyance: Analysis of Water Supply and Costs Going from Plan to Permits Preliminary Subject to Revision DHCCP Program Status Original Final EIR/EIS Completion – December 2010 Current Status:  Conceptual Engineering Design Completed  Tunnels Identified as New Alternative Require Additional Engineering Analysis  BDCP Preferred Program Delayed – December 2008 Target Delayed until 2010, Causing Delays in DHCCP Project Delayed and Tunnels Added  Costs Increased Original Budget – $150 Million (Including BDCP) Actual Costs to Date – $58 Million Additional Planning Costs – $98 Million Starting 2011

Delta Conveyance: Analysis of Water Supply and Costs DHCCP/BDCP – Going from Plan to Permits Preliminary Subject to Revision

Delta Conveyance: Analysis of Water Supply and Costs Going from Plan to Permits Preliminary Subject to Revision Funding Next Steps May Need to amend existing Funding Agreement No increase in expenditures for 2010; Additional revenue collected in 2011, Commitments needed in 2010 Financing for planning costs being considered Schedule (if amendment required):  February 2010 – DHCCP Executive Committee reviews cost share proposal  March 2010 – Funding Amendment provided to SWP Contractors  April 2010 – SWP Contractors sign amendments

What will the project look like? o Where is the project? o How will it operate? Can we afford a new Delta Conveyance Facility? Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision The three questions that everyone wants answers to: What are the benefits? o What can be delivered with new conveyance? o How does this compare with what supplies we currently receive? What will it cost? o How do we finance the costs? o How do we split the costs?

What will the Project look like? Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision Three alignment options: For more information: All Tunnel Alignment & Option Comparisions Presented to: BDCP Steering Committee December 3, 2009

What will the Project look like? Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision

What will the Project look like? Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision M-30 By-Pass Sur Túnel Norte, Madrid EPB Shield – m diameter

What will it cost? Construction costs: Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision WARNING: ACTUAL COSTS ARE SUBJECT TO CHANGE

Long-term Bond o 40 years o 5% Cost Assumption o $10 Billion – Current Tunnel Cost Estimate o Costs being updated – likely +/- 15% Annual Debt Service (SWP & CVP Combined) o $583 Million What will it cost? Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision Financing the construction costs:

What will it cost? Annual O&M and Power costs: Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision 1 – Estimated Average Year Power Costs Eastern Alignment All TunnelWestern Alignment O&M$17.6 Million$13.7 Million$16.0 Million Power 1 $33 Million$21.7 Million$26.9 Million Total Cost$50.6 Million$35.4 Million$42.9 Million

What will it cost? Delta Conveyance: Analysis of Water Supply and Costs Possible Aproaches to Split costs between the Projects Using conveyance capacity: o CVP: 39% o SWP: 61% Preliminary Subject to Revision Using contract amounts: o CVP: 45% o SWP: 55% Total Water Supply o CVP: 40.6% o SWP: 59.4% Firm Deliveries (other some other method)

Project Cost Estimate o $10 Billion Annual Capital Repayment o $583 Million Estimated SWP Share – 60% Annual Costs (including Capital & O&M) o SWP – $346 Million o CVP – $237 Million What will it cost? Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision Financing the construction costs:

To San Francisco Sacramento River  Stockton San Joaquin River Clifton Court Forebay The Delta What are the benefits? Delta Conveyance: Analysis of Water Supply and Costs Compare With and Without new Delta conveyance 2005 SWP Reliability Report (Pre-Wanger): o Average Table A: 77% Without Conveyance 2009 SWP Reliability Report (Post BOs): o Average Table A: 60% o Subject to Reductions due to Regulatory Actions, Earthquakes, etc. With Conveyance BDCP Proposed Operation: o Average Table A: 79% Preliminary Subject to Revision

What will we get and what will it cost? Annual Cost & Supply Impacts of Delta Conveyance Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision Without Delta Conveyance Condition With Delta Conveyance Difference Supply MAF MAF MAF Annual Cost$1,022 Million$1,449 Million$427 Million Melded Cost$408/AF$439/AF$31/AF Incremental Cost $538/AF 1 – Supply Estimates do not Include Article 21 Water Availability 2 – Assumes 60% SWP Reliability (2009 SWP Reliability Report) 3 – Assumes 79% SWP Reliability (with BDCP Proposed Operations)

Water Quality: o Major reduction in salinity, chlorides, TOCs, bromides o Reduced Treatment Costs o Reduced Service Area Costs (e.g., reduced homeowner costs for water heaters) Improved Reliability: o Existing Supply Through Delta Potentially Unusable in Future due to Significant Probability of Delta Levee Failure from Earthquakes, etc. o Short term loss of supply (Table A and Article 21 Water) without Delta Conveyance o Long term reduction without Delta Conveyance o Delta Conveyance avoids potential future Delta Regulatory restrictions Delta Conveyance: Analysis of Water Supply and Costs What are the benefits for me? Other benefits of a new Delta Conveyance Preliminary Subject to Revision

What are the Next Steps? Delta Conveyance: Analysis of Water Supply and Costs If DWR Financing of Planning Costs is Not Successful Key SWP Contractors Personnel Get Ready Access to DHCCP Documents including Environmental Material DHCCP developing a Funding Amendment with additional $49 Million ($98 Million total SWP & CVP) in costs to be billed in 2011 Funding Amendments to be provided to SWP Contractors in March 2010 Additional Costs for SWP Contractors Collectively -- $49 million Signed Funding Agreement Amendments needed by April 2010 SWP Contractors working with DWR to finance planning costs – if successful, would eliminate need for Funding Agreements Preliminary Subject to Revision

Questions? Delta Conveyance: Analysis of Water Supply and Costs Preliminary Subject to Revision