To: Honorable Mayor and Members of City Council
From: Phil Brun, Utilities Director
Prepared By: Joy Eldredge, Deputy Utilities Director
TITLE:
Title
Sale of State Water Project Carryover Water
LABEL
RECOMMENDED ACTION:
Recommendation
Approve and authorize the Utilities Director to execute the sale of State Water Project Article 56 (c) water (carryover water) with Tulare Lake Basin Water Storage District and the Westside Districts for a total sale of 4,528 acre feet (AF) and determine that this action is exempt from CEQA.
Body
DISCUSSION:
The City of Napa is a sub-contractor to Napa County Flood Control and Water Conservation District (NCFCWCD) for the contract with the State of California for the water received from the State Water Project (SWP) via the North Bay Aqueduct. The terms of the agreement with NCFCWCD are specified in City Agreement No. 1482 (NCFCWCD Agreement No. 1573), entered into on April 5, 1966, and subsequent amendments Nos. 1 - 15. The NCFCWCD is a member of the State Water Contractors Association, which is comprised of 29 contractors for State Water Project water.
The City of Napa has invested in SWP Water Supplies since 1968 when it purchased its original entitlements to the State Water Project known as Table A water. The City of Napa has 21,900 Acre-Feet (AF) of Table A SWP Entitlements. Each year the California Department of Water Resources (DWR) assesses the reservoir levels, snowpack, and overall state of the water supply in the SWP system and establishes a percent allocation of Table A entitlements that will be delivered that year.
In select years, if the City does not consume all of its Table A entitlements, and the San Luis Reservoir located south of delta does not spill, the unused water is reclassified as Article 56(c) water, or carryover water and can be used in future years. If the San Luis Reservoir spills, carryover water is reduced by the amount that spills until the balance of carryover water is zero. In this case the water would be lost without being put to beneficial use. There is also a cap on the amount of carryover water based on the current year’s Table A allocations. If the allocation is greater than 50%, as it is in 2024, then the maximum carryover amount is 50% of an agency’s Table A allocations, which is 10,950 acre-feet for City of Napa.
Staff have been maximizing the use of State water, however due to the high allocations in water year 2023 (100%) and 2024 (65%), it is projected that over 19,000 acre-feet of carryover will be available at the end of 2024. DWR has changed operations to pump water to the San Luis Reservoir this fall, ahead of the winter rains, in part to maintain operational flexibility to move water to southern California SWP contractors without pumping at Banks Pumping Plant which has been subject to restrictions in recent years based on biological monitoring in the San Joaquin-Sacramento River delta during winter months. This operational change increases the likelihood of San Luis Reservoir spilling and subsequent loss of the City’s stored carryover water. As part of operational changes, DWR is also allowing for the sale of water amongst SWP contractors.
NCFCWCD on behalf of City staff have developed term sheets and framework to execute the sale of water to Tulare Lake Basin Water Storage District (Tulare) and the Westside Districts (Westside) who have capacity for groundwater banking this wet year. The term sheets for the sale include the sale of 1,000 AF of water at $300/AF to Tulare (Attachment 1) and 4,000 AF of water at $250/AF to Westside (Attachment 2) from all three subcontractors (Cities of Napa, American Canyon, and Calistoga) for a total of 5,000 AF. Napa’s share in the sale is 755 AF to Tulare and 3,773 AF to Westside for a total of 4,528 AF.
Staff is comfortable that this sale of State water will not affect the City’s ability to reliably meet normal demands of 13,000 AF (demands were 12,400 AF in 2024) while making normal withdrawals from Lake Hennessey of 5,000 - 8,000 AF, even if SWP allocations are in the 5-10% range for the next three years. City has access to additional SWP sources including Article 21 water which has been available during the winter months in recent drought years, and a minimum of 3,772 AF Advanced Table A water. Lake Hennessey is currently at 81% capacity at the end of October with 25,200 AF of water available.
Staff recommends taking advantage of this option to sell SWP carryover water since it would be lost if San Luis Reservoir spills. With this sale, the City recovers some of the financial investment of the annual SWP entitlements.
FINANCIAL IMPACTS:
Pursuant to the terms of the term sheet, the price of the water is $300 per AF for 755 AF delivered to Tulare Basin and $250 per AF for 3,773 AF delivered to Westside Water Authority. At those prices, the sale of 4,528 AF of water will bring in one-time revenues of approximately $1,169,750 to the water enterprise fund.
CEQA:
City staff recommend that the City Council determine that the Recommended Action is exempt from CEQA (Section 15301) in accordance with the Notice of Exemption filed by the Napa County Flood Control Water Conservation District (Attachments 3 and 4.)
DOCUMENTS ATTACHED:
ATCH 1 - Term Sheet for a water purchase from Napa County Flood Control and Water Conservation District to Tulare Lake Basin Water Storage District
ATCH 2 - Term Sheet for water purchase between Napa County Flood Control and Water Conservation District and the Westside Districts
ATCH 3 - Notice of Exemption for water purchase and sale between Tulare Lake Basin Water Storage District and Napa County Flood Control and Water Conservation District
ATCH 4 - Notice of Exemption for water purchase and sale between Kern County Water Agency, Westside Districts and Napa County Flood Control and Water Conservation District
NOTIFICATION:
None.