80A - JOINT - SAFA - WATER SYS BONDS

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system that has formed the basis for the distribution of Colorado River water made available to California, MWD holds the fourth priority right to 550,000 acre -feet per year. This is the last priority within California's basic apportionment. In addition, MWD holds the fifth priority right to 662,000 acre -feet of water, which is in excess of California's basic apportionment. Until 2003, MWD had been able to take full advantage of its fifth priority right as a result of the availability of surplus water and apportioned but unused water. However, during the 1990s Arizona and Nevada increased their use of water from the Colorado River, utilizing their respective basic apportionments by 2002 and significantly reducing unused apportionment available for California. In addition, a severe drought in the Colorado River Basin reduced storage in system reservoirs, such that MWD stopped taking surplus deliveries in 2003 in an effort to mitigate the effects of the drought. Prior to 2003, MWD could divert over 1.2 million acre -feet in any year, but since that time, MWD's net diversions of Colorado River water have been limited to a low of nearly 633,000 acre -feet in 2006 and a high of 1,105,232 acre -feet in 2009. Average annual net deliveries for 2003 through 2013 were approximately 838,000 acre -feet, with annual volumes dependent primarily on programs to augment supplies, including transfers of conserved water from agriculture. MWD has entered into agreements with the Imperial Irrigation District, Central Arizona Water Conservation District and Palo Verde Irrigation District and is seeking additional agreements with other agencies to reduce their diversions from the Colorado River, thereby augmenting MWD's available supply. hi January 2001, the Secretary of the Interior adopted guidelines (the "Interim Surplus Guidelines ") for use through 2016 in determining if there is surplus Colorado River water available for use in California, Arizona and Nevada. The purpose of the Interim Surplus Guidelines is to provide a greater degree of predictability with respect to the availability and quantity of surplus water through 2016. The Interim Surplus Guidelines were later extended through 2026. Under the Interim Surplus Guidelines, MWD initially expected to divert up to 1.25 million acre -feet of Colorado River water annually under foreseeable runoff and reservoir storage scenarios from 2004 through 2016. However, an extended drought in the Colorado River Basin reduced these initial expectations. From 2000 to 2004, snowpack and runoff in the Colorado River Basin were well below average. Although runoff was slightly above average in 2005, the runoff in 2006 and 2007 was again below average, making 2000 through 2007 the driest eight -year period on record. Although 2008 and 2009 runoff was near normal, combined storage in Lake Mead and Lake Powell remains at 50% of capacity. MWD's initial 2010 diversion approval from the Bureau of Reclamation totaled 935,700 acre -feet plus any unused Priority 1 through 3 water. MWD anticipates its ultimate 2010 diversion approval from the Bureau of Reclamation will exceed 1 million acre -feet. The Southern Nevada Water Authority ( "SNWA ") and MWD entered into an Agreement Relating to Implementation of Interim Colorado River Surplus Guidelines on May 16, 2002, in which SNWA and MWD agreed on the allocation of unused Arizona apportionment and on the priority of SNWA for interstate banking in Arizona. SNWA and MWD entered into a storage and interstate release agreement on October 21, 2004. Under this program, Nevada can request MWD to store unused Nevada apportionment of Colorado River water in California. The amount of water stored through 2009 under this agreement was 70,000 acre -feet. In subsequent years, Nevada may request recovery of this stored water. As part of a recently executed amendment, it is expected that Nevada will not request return of this water until 2022. The stored water provides flexibility to MWD for blending Colorado River water with State Water Project water and improves near -term water supply reliability. MWD Rates. MWD water rates are established by majority vote of the MWD board in March of each year, after a public hearing held in February. Rates are not subject to regulation by any local, state or federal agency. Under the MWD Act, MWD must, so far as practicable, fix such rates for water as will result in revenue which, together with revenue from any water standby or availability of service charge or assessment, will pay the operating expenses of MWD, provide for repairs and maintenance, provide for payment of the purchase price or other charges for property or services or other rights acquired by MWD and provide for the payment of the interest and principal of the bonded debt of MWD. 80A -165 25