Item 28 - Urban Water Management Plan and Water Shortage Contingency Plan

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world’s largest water purification system for indirect potable reuse. It was funded, in part, by Metropolitan’s member agencies through the Local Resources Program. Annually, the GWRS produces approximately 103,000 acre-feet of reliable, locally controlled, drought-proof supply of high-quality water to recharge the Orange County Groundwater Basin and protect it from seawater intrusion. The GWRS is a premier example of a regional project that significantly reduced the need to utilize imported water for groundwater replenishment in Metropolitan’s service area, increasing regional and local supply reliability and reducing the region’s reliance on imported supplies, including supplies from the State Water Project. Metropolitan’s local resource programs have evolved through the years to better assist Metropolitan’s member agencies in increasing local supply production. The following is a description and history of the local supply incentive programs. Local Projects Program In 1982, Metropolitan initiated the Local Projects Program (LPP), which provided funding to member agencies to facilitate the development of recycled water projects. Under this approach, Metropolitan contributed a negotiated up-front funding amount to help finance project capital costs. Participating member agencies were obligated to reimburse Metropolitan over time. In 1986, the LPP was revised, changing the up-front funding approach to an incentive-based approach. Metropolitan contributed an amount equal to the avoided State Water Project pumping costs for each acre-foot of recycled water delivered to end-use consumers. This funding incentive was based on the premise that local projects resulted in the reduction of water imported from the Delta and the associated pumping cost. The incentive amount varied from year to year depending on the actual variable power cost paid for State Water Project imports. In 1990, Metropolitan’s Board increased the LPP contribution to a fixed rate of $154 per acre-foot, which was calculated based on Metropolitan’s avoided capital and operational costs to convey, treat, and distribute water, and included considerations of reliability and service area demands. Groundwater Recovery Program The drought of the early 1990s sparked the need to develop additional local water resources, aside from recycled water, to meet regional demand and increase regional water supply reliability. In 1991, Metropolitan conducted the Brackish Groundwater Reclamation Study which determined that large amounts of degraded groundwater in the region were not being utilized. Subsequently, the Groundwater Recovery Program (GRP) was established to assist the recovery of otherwise unusable groundwater degraded by minerals and other contaminants, provide access to the storage assets of the degraded groundwater, and maintain the quality of groundwater resources by reducing the spread of degraded plumes. Local Resources Program In 1995, Metropolitan’s Board adopted the Local Resources Program (LRP), which combined the LPP and GRP into one program. The Board allowed for existing LPP agreements with a fixed incentive rate to convert to the sliding scale up to $250 per acre-foot, similar to GRP incentive terms. Those agreements that were converted to LRP are known as “LRP Conversions.” Competitive Local Projects Program In 1998, the Competitive Local Resources Program (Competitive Program) was established. The Competitive Program encouraged the development of recycled water and recovered groundwater through a process that emphasized cost- efficiency to Metropolitan, timing new production according to regional need while minimizing program administration cost. Under the Competitive Program, agencies requested an incentive rate up to $250 per acre-foot of production over 25 years under a Request for Proposals (RFP) for the development of up to 53,000 acre-feet per year of new water recycling and groundwater recovery projects. In 2003, a second RFP was issued for the development of an additional 65,000 acre-feet of new recycled water and recovered groundwater projects through the LRP. Seawater Desalination Program Metropolitan established the Seawater Desalination Program (SDP) in 2001 to provide financial incentives to member agencies for the development of seawater desalination projects. In 2014, seawater desalination projects became eligible for funding under the LRP, and the SDP was ended.