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Delta Flows: August 21, 2013

“You don’t have to do things. Maybe by avoiding doing things you accomplish quite a lot. Maybe if Kennedy had avoided the Bay of Pigs or Vietnam, that would have been quite an accomplishment.”
– Governor Jerry Brown, Thoughts (1976)

Senate hearing looks at BDCP governance and financing

At a Joint Informational Hearing of the Senate Governance and Finance and the Natural Resources and Water Committees on August 13, senators got an overview of BDCP Governance and Financing.

Major themes: It isn’t clear who is in charge, and the financing doesn’t pencil out.

Governance involves:
• An Authorized Entity Group – those getting the permits, deciding how SWP and CVP will be operated, and approving changes to species recovery measures. (It is “unresolved right now” whether contractors will be members of this group, which would allow the fox to oversee the henhouse.)
• A Permit Oversight Group – State and federal agencies issuing the permits and having the theoretical power to revoke them.
• An Implementation Office – DWR, water contractors, and other agencies who are supposed to be sure that everything is working.
• An Adaptive Management Team – Authorized entities, permit oversight folks, water contractors, and some Delta Stewardship Council scientists who will magically agree on how to achieve species recovery.
• A Stakeholder Council – basically, all of the above, plus county governments.

If this doesn’t look to you like a recipe for effective governance, you are in good company. The Legislative Analyst’s Office said that lines of authority and accountability are unclear, and noted that the Implementation Office doesn’t have statutory authority over the agencies whose activities it is supposed to direct.

The Delta Reform Act gave the Delta Stewardship Council responsibility for some of the activities BDCP will pursue (like adaptive management), but it isn’t clear how BDCP will integrate with other Delta processes or how much authority the DSC will actually have over BDCP.

Is that what legislators had in mind when they voted for a reform in Delta governance?

Department of Fish and Wildlife Director Chuck Bonham got to field some of the tough governance questions. Who decides how much water goes through the Delta and how much goes through the tunnels to exporters? asked Senator Pavley. Answer: They’re currently negotiating that. What happens if those charged with making decisions don’t agree? asked Senator Monning. Answer: That topic is currently under discussion. Senator Wolk wondered how the permit oversight group will communicate with other authorized agencies. Answer: They’re negotiating how they see that working.

Overall, the LAO report found a lack of clarity on how coequal goals will be managed. Authority over water operations for fish agencies versus the authority for authorized agencies is still an open question.

And there is not much role for the legislature in BDCP. It may be difficult for the legislature to hold BDCP accountable.

Regarding economic analysis, Natural Resources Secretary John Laird made it clear at the outset that economist Dr. David Sunding of the Brattle Group “took the hand he was dealt.” What we’re talking about here is the Scope of Work document that told the consultants exactly what to include in the cost-benefit analysis of BDCP and instructed them to submit a draft technical report for review by DWR, the Bureau of Reclamation, and the water contractors involved in the BDCP.

This shouldn’t surprise anyone who has ever hired a contractor. You tell the contractor what you want and check to be sure that that is what the contractor is delivering. It has always been a mistake to think of BDCP as a primarily public sector undertaking just because publicly-funded agencies are deeply involved in the process.

But exporters can’t have it both ways, defining the Peripheral Tunnels that they want to build as a conservation strategy they are willing to pay for and then expecting taxpayers and ratepayers to pay for just about everything else. As the LAO report notes, “the BDCP expects 90 percent of the costs of ecosystem restoration and program administration to be shared by the state and federal governments” mostly through state water bonds and congressional appropriations.

(Incidentally, according to the LAO, as of June 2013, $176 million has been spent on BDCP planning activities since 2006-07. This is less than the quarter of a billion dollars that has recently been reported.)

Anton Favorini-Csorba of the LAO’s office enumerated some problems with cost estimates and funding sources:
• Land might cost more to acquire
• Cost overruns are possible
• Cost estimates don’t capture the potential range of costs
• Tunnel costs might outweigh tunnel benefits if, for example, water demand is lower than anticipated because costs of alternatives are lower
• There’s no guarantee that contractors will continue to pay the full costs of the State Water Project
• There’s no guarantee that there will be water bond funds to pay for the early actions on ecosystem restoration that must be taken before the tunnels begin operation
• Proposed ecosystem restoration activities may not offset negative impacts from new conveyance, and the public will have to pay for additional restoration in order to allow additional pumping

In other words, we have to be prepared for BDCP not to solve the identified problems at all. (As Resources Deputy Director Dr. Jerry Meral told the Kern County Water Association awhile back, “We can’t count on the habitat plan working.”)

In his presentation, Dr. Sunding was at pains to make clear that in analyzing “alternatives to take,” the Brattle Group had to compare all alternatives to the same standards, not to each other. He was NOT asked to compare alternatives to each other, as a cost-benefit analysis would do.

But Dr. Jeff Michael of UOP dragged the discussion of costs, benefits, and funding back to where it needs to be since the Peripheral Tunnels can never be operated without bond funding for ecosystem restoration. (A comprehensive cost-benefit analysis is not required by the permits but is, he noted “desirable.”)

Among the points Dr. Michael made:
• BDCP’s projection of future demand is overly aggressive and doesn’t consider low-growth scenarios.
• The argument that exporters will get more water with BDCP depends on projections of future water supply that are unnecessarily pessimistic. Using other conservation measures in BDCP besides the Peripheral Tunnels, exports could be stabilized.
• BDCP hasn’t put an economic value on threatened species.
• A valid habitat conservation plan does not require the Peripheral Tunnels. In fact, there are environmental benefits to the EIR no-action alternative.

And of course, any alternative will cost less.

Senator Pavley, who represents urban ratepayers in Southern California, asked for a clear separation of agricultural from urban beneficiaries. “When you say exporters will pay, you mean ratepayers will pay.” She correctly noted that money spent by ratepayers on Peripheral Tunnels is money not available for local water projects.

Senator Wolk asked Dr. Sunding how his analysis would change if some of the contractors decide BDCP isn’t worth it to them. Said Sunding, “That is an imponderable at this point. . . . If contractors opt out, I’m not even sure what that means.”

Here’s what it means. As the Planning and Conservation League’s Jonas Minton pointed out in public comments, if agricultural agencies opt out, a matter now under discussion, then costs are reapportioned to other users, who in turn may choose not to pay. Right now, Metropolitan Water District member agencies don’t have “take-or-pay” contracts. A major member agency like Los Angeles Water and Power can say they’ll invest $900 million in alternative supplies to reduce their take from MWD by 50%. So the costs would be reapportioned among the remaining member agencies, like San Diego County Water Authority, which is already suing MWD over water rates.

Once commitments are made to build the Peripheral Tunnels, who’s going to finish paying for them? Minton told the senators, “It will be you.”

That means all of us.

Backup plans

Since 2003, five Bay Area water agencies have been working on a project to desalinate water at Contra Costa Water District’s (CCWD’s) Mallard Slough Pump Station on Suisun Bay in the Bay-Delta Estuary. The facility would supply drinking water to users served by CCWD, East Bay Municipal Utility District (EBMUD), Santa Clara Valley Water District (SCVWD), San Francisco Public Utilities Commission (SFPUC), and Zone 7 Water Agency in eastern Alameda County. For each agency, the facility would be part of a water supply portfolio that includes increased conservation.

CCWD, SCVWD, and Zone 7 all get State Water Project water, and this desal facility would supplement what they hope to get from the Peripheral Tunnels project. The five agencies decided to locate the facility on Suisun Bay rather than farther west on San Francisco Bay or on the ocean partly because less power is required to desalinate brackish water.

But at a recent presentation, a Zone 7 representative admitted that modeling for the project did not take into consideration the altered salinity in the estuary if the Peripheral Tunnels are diverting most of the system’s freshwater to the pumps in the South Delta. That information hasn’t been available to desal facility planners.

Brine produced by the facility would be added to effluent from two nearby wastewater treatment plans and discharged back into Suisun Bay. Planners argue that this would be better than the current system of releasing freshwater into a salty environment. But one wonders whether the agencies considered treating the effluent here and at other Bay Area wastewater facilities to a drinking water standard instead of building a desal plant. One wonders how the costs would compare.

One also wonders whether planners have been using the same unrealistically high population projections that BDCP consultants have used to calculate benefits of the Peripheral Tunnels.

Projected costs for this desal project do not include costs for fisheries mitigation, although planners assume these will be minor.

Clearly, Bay Area water agencies recognize that it is unwise to rely so much on the State Water Project, which is putting all its eggs in the Peripheral Tunnels basket.

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