80A - JOINT - SAFA - WATER SYS BONDS

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The Delta Supply Surcharge is applicable to (among other rates) all Tier 1 untreated and treated water rates and reflects the additional supply costs that MWD faces along with other costs due to the pumping restrictions on the State Water Project. Additional charges for the availability of MWD's water are: the Readiness -to -Serve Charge and the Capacity Charge. The Readiness -to -Serve Charge is a variable annual charge of approximately $144.0 million that is divided proportionally among all agencies that receive water from MWD. This money is used by MWD to recover costs associated with standby and peak conveyance capacity and system emergency storage capacity. The Capacity Charge is a fixed annual charge, which is based on the capacity that is requested by the member agency. This charge will be used by MWD to recover the cost of providing peals capacity within the distribution system. Effective January 1, 2014, the capacity charge increased to $8,600 per efs of maximum daily flow. MWD estimates that it can meet its member agencies' supplemental demands through the year 2025, even under a repeat of the worst single -year and multiple -year drought events. MWD has committed to make additional resource and infrastructure improvements in order to maintain reliability and high water quality for at least the next 25 years, as demands grow. MWD's current practices of diversifying water supplies and securing supply reserves allow MWD and its member agencies to adjust to changes in demands and supplies and maintain a high degree of reliability. MWD's storage capacity, which includes reservoirs, conjunctive use and other groundwater and surface storage accounts delivered through the State Water Project or Colorado River Aqueduct, has increased to 5.62 million acre -feet. In 2013, approximately 334,000 acre -feet of stored water is emergency storage that is reserved for use in the event of supply disruption from earthquakes or similar emergencies, as well as extended drought. As of January 1, 2013, MWD had approximately 3.35 million acre - feet of water in storage. The MWD Act provides a preferential entitlement for the purchase of water by each of the MWD member agencies. This preferential right is based on the ratio of all payments made to MWD by each agency compared to total payments made by all member agencies on tax assessments and otherwise, except purchases of water, toward the capital cost and operating expenses of MWD. Historically MWD has not used this criterion in allocating water. The MWD Act provides that water surplus to MWD's needs for domestic and municipal uses may be sold for other beneficial uses. AIWD Scheduling and Operations. MWD member agencies request water from MWD at various delivery points within.MWD's system and pay for such water at uniform rates established by the MWD Board for each class of service. No member is required to purchase water from MWD, but all member agencies are required to pay readiness -to -serve charges (as described below) whether or not they purchase water from MWD. The current rate structure provides for a member agency's agreement to purchase water from MWD by means of a voluntary purchase order. In consideration of executing its purchase order, the member agency is entitled to purchase a greater amount of water at the lower "Tier 1 Water Supply Rate," as described under " — MWD Rates" above. Under each purchase order, a member agency agrees to purchase, over the ten -year term of the contract, an amount of water equal to at least 60% of its highest firm demand for MWD water in any Fiscal Year from 1989 -90 through 2001 -02 multiplied by ten. MWD Member agencies are allowed to vary their purchases from year to year, but a member agency will be obligated to pay for the full amount committed under the purchase order, even if it does not take its full purchase order commitment by the end of the ten -year period. Water is delivered to the member agencies on demand and is metered at the point of delivery. Member agencies are billed monthly and a late charge of 1% of the delinquent payment is assessed for delinquent payments not exceeding five business days. A late charge of 2% of the amount of the delinquent payment is charged for a payment that is delinquent for more than five business days for each month or portion of a month that the payment remains delinquent. MWD has the authority to suspend service to any agency delinquent for more than 30 days. Delinquencies have been rare; in uch in tances late charges have been collected No service has been suspended because of delinquencies. 8U –� 27