METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA (8)

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�7 N01' 11EQtJ1UDJWMVU) 4()RK MAY Ir')ROCEED UJIliRK 01C*UNGIL' AGREEMENT NO. A04965 REGARDING INCENTIVES FOR SEASONAL SHIFT STORAGE FOR UNDEPRECIATED SUNK FIXED COSTS (Option 3) This Agreement is made and entered into as of this first day of October, 1997, by and between The Metropolitan Water District of Southern California (herein referred to as "Metropolitan"), a metropolitan water district organized under the Metropolitan Water District Act of the State of California, and the City of'Santa Ana (herein referred to as '*Member Agency"), a rricn-iber public agency of Metropolitan, RECITALS WHEREAS, Metropolitan sells water to its member public agencies under the Seasonal Storage Service (SSS) Program for groundwater replenishment by spreading, injection, or in -lieu groundwater replenishment, and for in -lieu reservoir storage, and direct reservoir storage; WHEREAS, water under the SSS Program is stored for either Seasonal Shift Storage (as hereinafter defined) or Long -Term Storage (as hereinafter defined); WHEREAS, Metropolitan sells SSS Program water at discounted rates to encourage its member public agencies to invest in new water production, storage, treatment, and transmission facilities, or to fully utilize existing facilities in a manner that maximizes the local production during the summer months (May I through September 30); WHEREAS, Metropolitan and its member agencies Participated in a Rate Refinement Process (RRP), to review and develop recommendations to refine Metropolitan's rate structure, including pricing for SSS Program water; WHEREAS, in July 1996 Metropolitan's Board approved and adopted RRP recommendations, inClUdill(l ramping down Seasonal Shift Storage incentives annually in 4n equal increments over a five-year period from July 1996 levels to $85/A1 for treated water and $60/AF for untreated water, respectively. WHEREAS, such RRP recommendations approved by Metropolitan's Board authorized an option for its member public agencies to transition to the new incentive levels for seasonal storage programs, by entering into contracts with Metropolitan, which would -furnish fixed incentives for seasonal shift of $14 1 /AF for treated water and $116/AF for untreated water to allow member public agencies to recover their undepreciated sunk fixed costs for that project or portion of project that was designed to take advantage of the MWD SSS Program and for which a construction contract was let prior to December 31, 1, 1996; WHEREAS, in March 1997 Metropolitan's Board adopted water rates and charges for fiscal year 1997-98 to become effective January 1, 1998, increasing the rate for Seasonal