alllF BERNARDINO

MUNICIPALY WATER DISTRICT

SAN BERNARDINO VALLEY MUNICIPAL WATER DISTRICT 380 E. Vanderbilt Way, San Bernardino, CA 92408

REGULAR MEETING OF THE BOARD OF DIRECTORS

AGENDA

2:30p.m. T uesday, December 3, 2013

CALL TO ORDER/PLEDGE OF ALLEGIANCE/ROLL CALL

1. PUBLIC COMMENT Any person may address the Board on matters within its jurisdiction.

2. APPROVAL OF MINUTES

A. November 19, 2013, Board Meeting (Page 3)

3. DISCUSSION AND POSSIBLE ACTION ITEMS

A. Consider Cost-Sharing Agreement Between Western Municipal Water District and San Bernardino Valley Munidpal Water District Active Recharge Projects (Page 9)

B. Consider Consulting Services for Analysis of Mandatory Electric Reliability Standards (Page 18)

4. REPORTS (Discussion and Possible Action)

A. General Manager's Report

B. Baseline Feeder Committee, November 25

C. Basin Technical Advisory Committee, December 2

D. Directors Activities

5. ANNOUNCEMENTS

A. December 3-6,2013 - ACWA Fall Conference, JW Marriott LA Live

B. December 9, 2013 - Association of San Bernardino County Special District's Dinner, 6:00p.m., Law's Coffee Shop, Oak Glen

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Meeting of the Board of Directors December 3, 2013 Page2

C. December 10, 2013 - Board ofDircctors Workshop, 3:00p.m. at the District Office

D. December 11, 2013 - Reservoir Committee, 11:30 a.m. at the District Office

E. December 12, 2013 - Upper Santa Ana Water Resources Association, 9:30a.m. at San Bernardino Valley Water Conservation District

F. December 12, 2013 - Advisory Commission on Water Policy, 6:30p.m. at the District Office

G. December 16, 2013 - Baseline Feeder Committee Workshop, 3:00p.m. at the District Office

H. December 17,2013 - SAWPA Commission Meeting, 9:30a.m. at SAWPA

T. December 17, 2013 - Board of Directors Meeting, 2:30p.m. at the District Office

.6. CLOSED SESSION The Board may convene/meet in closed session to discuss the following items.

A. Conference with Real Property Negotiators - Pursuant to Government Code Section 54956.8(b) - Property No. APN 0140-143-43 - Owner: Luis Hernesto Ruano - Under Negotiation: Price and Terms of Payment - Property No. APN 0140-143-28 - Owner: Maria G. Hernandez - Under Negotiation: Price and Terms of Payment - Prope1ty No. APN 0140-143-27 - Owners: Daniel Rodriguez and Brandi Madrigal - Under Negotitation: Price and Terms of Payment - Agency Negotiator: Douglas Headrick~ Negotiating Parties: Listed Above

B. Conference with Legal Counsel - Existing Litigation - Pursuant to Government Code Section 54956.9(a),(d)(l) - San Bernardino Valley Municipal Water District et al v. San Gabriel Valley Water Company et al - Case No. CIVDS1311085 (San Bernardino Superior Court

C. Conference with Real Property Negotiators - Pursuant to Government Code Section 54956.8(b) - Property No. APN 0140-042-11,29 - Owner: City of San Bernardino - Under Negotiation: Price and Terms of Payment - Agency Negotiator: Douglas Headrick- Negotiating Parties: Listed Above

D. Conference with Legal Counsel - Existing Litigation - Pursuant to Government Code Section 54956.9(d)(l) - Dear Valley Mutual Water Co. et al v. Salazar, et al (91h Cir. No. 12-57297)

E. Litigation - Initiation of Litigation Pursuant to Government Code Section 54956.9(c) - 1 case.

7. ADJOURNMENT

PLEASE NOTE: Materials related to an item on this Agenda submitted to the Board after distribution of the agenda packet are available for public inspection in the District's office located at 380 E. Vanderbilt Way, San Bernardino, during normal business hours. Also, such documents are available on the District's website at www.sbvmwd.com subject to staffs ability to post the documents before the meeting. The District recognizes its obligation to provide equal access to those individuals with disabilities. Please contact Lillian Jaramillo at (909) 387-9214 two working days prior to the meeting with any special requests for reasonable accommodation. /21

MINUTES OF

THE REGULAR BOARD MEETING

SAN BERNARDINO VALLEY MUNICIPAL WATER DISTRICT

November 19, 2013

Directors Present: Patrick Milligan, Mark Bulat, Steve Copelan, and Ed Killgore

Directors Absent: Gil Navarro (attended Special District's Leadership Academy Conference in Napa, California)

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Staff Present: Douglas Headrick, Sam Fuller, Bob Tincher, Wen Huang, Cindy Saks, Bruce Varner and Lillian Jaramillo

Registered Guests:

Benjamin G. Kelly, Western Heights Water Company

Kip Sturgeon, East Valley Water District

Alan Dyer, West Valley Water District

Greg Yanagihara, AECOM

Seth Zielke, Fontana Water Company

Manny Aranda, San Bernardino Valley Water Conservation District

Melody McDonald, San Bernardino Valley Water Conservation District

The regular meeting of the Board of Directors was called to order by President Milligan at 2:30 p.m. at the District office, 380 E. Vanderbilt Way, San Bernardino. A quorum was noted present.

Agenda Item 1. Public Comments.

President Milligan invited any members of the public to address the Board. Kip Sturgeon, Director East Valley Water District, invited the Board and staff to George "Skip" Wilson's retirement function on December 6, 2013, at 2:30p.m. Ron Coats will be welcomed on the same date and time. Mr. Sturgeon presented a book that will be presented to Mr. Wilson for the Board to sign.

Melody McDonald, Director San Bernardino Valley Water Conservation District, informed the Board that there is free training available on healthcare and insurance at the

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Association of California Water Agency's Joint Powers Insurance Authority meeting on December 2nd and 3rd.

There being no further comments, the meeting proceeded with the published agenda items.

Agenda Item 2. Approval of Minutes of the November 5, 2013, Board Meeting.

Director Bulat moved to approve the minutes of the November 5, 2013, Board meeting. Director Copelan seconded. The motion was unanimously adopted with Director Navarro being noted as absent.

Agenda Item 3. Discussion and Possible Action Items.

3 a) Consider Letter Agreement for Cost Share Amendment for Rialto-Colton Basin Groundwater Joint Model Enhancement. Wen Huang stated that this item was discussed at the November 7th Board of Directors Workshop and was being forwarded to the full Board for consideration. Staff requested that the Board authorize the general manager to execute a letter agreement for reallocating costs for the Rialto-Colton Basin Groundwater Joint Model Enhancement Project. At the Board of Directors meeting on September 3rd, the Board approved contracts with Geoscience Support Services, Inc. and Balleau Groundwater, Inc., for the joint groundwater modeling effort and a cost share arrangement for the project with four other entities including West Valley Water District (WVWD), City of Colton, City of Rialto, and United Technologies Corporation. The cost share arrangement was that San Bernardino Valley Municipal Water District (SBVMWD) pay one-half of the cost of the project and the remaining one-half be shared equally by the other four entities. The cost share arrangement authorized up to $500,000 in project cost with SBVMWD responsible for $250,000 and the other four parties paying $62,500 equally. Staff was recently advised that the City of Colton could only commit $25,000 instead of $62,500. The City of Colton remains supportive of the joint effort but is unable to cover its entire share. In light of this deficit, WVWD inquired if SBVMWD would consider splitting the shortfall with them. This will result in the District's share increasing by $18,750 to $268,750 with WVWD's portion increasing to $81,250. A side letter agreement was prepared by WVWD legal counsel to formalize the proposed new cost share arrangement and has been reviewed by the District's special legal counsel. Staff recommended that the Board of Directors authorize the general manager to execute the letter agreement for reallocating $18,750 to SBVMWD.

Director Bulat moved approval of the letter agreement for cost share amendment for Rialto-Colton Basin Groundwater Joint Model Enhancement Project. Director Killgore seconded. The motion was unanimously adopted with Director Navarro being noted as absent.

3 b) Consider Big Bear Lake In-Lieu Storage Program Memorandum of Understanding Amendment. Douglas Headrick stated that the District has been cooperating with Big Bear Municipal Water District (BBMWD) since the early 1990's on an in-lieu program where water from the State Water Project is exchanged for water

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staying in the lake for the benefit of the people that live around the lake. That agreement has been modified several times most recently in July 2012 under a demonstration project to allow the District to store additional water in Big Bear Lake. In addition to short-term storage, the Memorandum of Understanding (MOU) from July 2012 also included the possibility of a long-term storage program. For the past 18 months the District has been working with BBMWD on a permanent storage program. The District has stored an additional 3,000 acre-feet of water in the lake and released 600 acre-feet under a programmed testing release in October 2013. Additional time is needed to fully evaluate the permanent storage program so staff requested that the Board consider a one-year extension to the July 2012 MOU to December 31, 2014. Mr. Headrick directed the Board's attention to a revised amendment placed at the dais with non-substantive changes for the Board's consideration.

Director Bulat moved approval of Amendment No. 1 to July 2012 Memorandum of Understanding Between Big Bear Municipal Water District and San Bernardino Valley Municipal Water District. Director Copelan seconded. The motion was unanimously adopted with Director Navarro being noted as absent.

3 c) Consider Notice Regarding Procedures for Upcoming Elections of ACWA Officers at Fall Conference. Douglas Headrick stated that the Association of California Water Agencies (ACWA) had made changes to its process for election of officers at their fall conference. ACWA will be issuing proxy cards to the chosen representative of each agency for the casting of each agency's vote. Mr. Headrick informed the Board that they may wish to designate a voting delegate to represent the District at the ACWA General Session on December 4, 2013.

Director Copelan moved nomination of Director Killgore to be the District's voting delegate at the ACWA General Session on December 4, 2013. Director Bulat seconded. The motion was unanimously adopted with Director Navarro being noted as absent.

3 d) Receive and File Annual Audit Report for Fiscal Year Ending June 30, 2013. Brad Welebir, C.P.A. from Rogers, Anderson, Malady and Scott, LLP reviewed and summarized the Independent Auditors Report and the Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. There were no significant findings or adjustments that were necessary to be posted. Mr. Welebir indicated that the auditors received full cooperation from District staff. The Board received and filed the annual audit report for fiscal year ending June 30, 2013.

Director Bulat moved approval of receiving and filing the annual audit report for fiscal year ending June 30, 2013. Director Copelan seconded. The motion was unanimously adopted with Director Navarro being noted as absent.

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Agenda Item 4. Reports (Discussion and Possible Action).

4 a) Joint Board Workshop with Big Bear Municipal Water District, November 6, 2013. No oral report was given.

4 b) Board of Directors Workshop, November 7, 2013. No oral report was given as a written report was contained in the Board packet.

4 c) San Bernardino Regional Water Resources Authority, November 12, 2013. President Milligan and Vice-President Bulat summarized the topics covered at the meeting. Mr. Headrick provided an update on the "E" Street Park Project. The Authority authorized an amendment to the contract with David Evans and Associates to perform lot mergers and boundary record research services in the amount of $6,500. Cindy Saks gave a Treasurer's Report noting that the District had expended $25,417 to date and would be reimbursed when the grant drawn down is received.

4 d) Reservoir Committee, November 13, 2013. No oral report was given as a written report was contained in the Board packet.

4 e) Upper Santa Ana Water Resources Association, November 14, 2013. No oral report was given.

4 f) Association of San Bernardino County Special Districts Dinner, November 18, 2013. Director Copelan reported that the dinner was hosted by the Helendale Community Services District. The speaker was Marci Aguirre who gave a presentation on Keeping up with Changes in Healthcare.

4 g) SAWPA Commission Meeting, November 19, 2013. Director Bulat reported on the following matters:

1) Accepted the Comprehensive Annual Financial Report for Fiscal Year Ending June 30, 2013.

2) Appointed Terry Catlin to vote on SAWPA's behalf at the ACWA Fall Conference election of officers.

3) Deferred action on employee compensation matters to the December 17, 2013, meeting. Gave staff direction to obtain more information.

4) Received a status report on the pretreatment program and authorized a second Pretreatment Program staff position.

5) Briefed on discussions with the Department of Water Resources regarding fixing errors in the Proposition 84, Round 2 draft funding recommendations.

4 h) Operations Reports. No oral report was given as a written report was contained in the Board packet.

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4 i) Treasurer's Report. After discussion, Director Copelan moved approval of the following expenses for the month of October 2013. The State Water Contract Fund $1 ,797,781.00, Devil Canyon/Castaic Fund $81,438.00, and General Fund $1 ,559,071.79. Director Bulat seconded. The motion was unanimously adopted with Director Navarro being noted as absent.

4 j) Directors Activities. Director Killgore reported that he attended the Association of San Bernardino County Special Districts dinner.

Director Bulat reported that he attended the funeral of Joe Bonadiman.

Director Copelan gave an update on Jay Bogh's recovery from a workplace fall.

Agenda Item 5. Announcements. Lillian Jaramillo announced that a Board of Directors Workshop had been scheduled for December 9, 2013, at 3:00 p.m. at the District office.

Agenda Item 6. Closed Session.

President Milligan adjourned the meeting to Closed Session at 3:27 p.m.

A. Conference with Real Property Negotiators - Pursuant to Government Code Section 54946.8(b) - Property No: APN 0140-143-43 - Owner: Luis Hernesto Ruano - Under Negotiation: Price and Terms of Payment - Agency Negotiator: Douglas Headrick- Negotiating Parties: Listed Above.

B. Conference with Legal Counsel - Existing Litigation - Pursuant to Government Code Section 54956.9(a),(d)(1)- San Bernardino Valley Municipal Water District et al v. San Gabriel Valley Water Company et al- Case No. CIVDS1311 085 (San Bernardino Superior Court)

C. Conference with Real Property Negotiators - Pursuant to Government Code Section 54946.8(b) - Property No: APN 0140-042-11,29 - Owner: City of San Bernardino - Under Negotiation: Price and Terms of Payment - Agency Negotiator: Douglas Headrick- Negotiating Parties: Listed Above.

D. Conference with Legal Counsel - Existing Litigation - Pursuant to Government Code Section 54956.9(d)(1)- Bear Valley Mutual Water Company et al v Kenneth L. Salazar, et al (91

h Cir. No. 12-57297)

E. Conference with Legal Counsel - Existing Litigation - Pursuant to Government Code Section 54956.9(a) - San Bernardino Valley Municipal Water District v. Larry Walker/San Bernardino County Auditor-Controller - Case No. CIVDS 1305441 (San Bernardino Superior Court)

F. Conference with Legal Counsel- Initiation of Litigation Pursuant to Government Code Section 54956.9(c)- 1 case.

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Pursuant to Government Code Section 54956.9 President Milligan returned the meeting to Open Session at 3:46p.m. and reported that during Closed Session the Board took no reportable action.

There being no further business, President Milligan adjourned the meeting at 3:46 p.m.

APPROVAL CERTIFICATION I hereby certify to approval of the foregoing Minutes of San Bernardino Valley Municipal Water District.

Secretary Dale_:_ __________ _

Respectfully submitted,

Lillian Jaramillo Board Secretary

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all(! BERNARDINO

MUNICII'ALY WATER DISTRJCT

DATE: December 3, 201 3

TO: Board of Directors

FROM: Sam Fuller, Chief Engineer Member, Western-San Bernardino Watermaster

SUBJECT: Cost-Sharing Agreement Between Western Municipal Water District and San Bernardino Valley Municipal Water District, Active Recharge Projects

This item is a request for the Board of Directors to enter into the COST-SHARING

AGREEMENT, BETWEEN WESTERN MUNICIPAL WATER DISTRICT OF

RIVERSIDE COUNTY AND SAN BERNARDINO VALLEY MUNICIPAL WATER

DISTRICT, ACTIVE RECHARGE PROJECTS.

Background:

The Active Recharge Projects is a concept consisting of development of diversion and

recharge facilities along many of the streams that enter and traverse the San

Bernardino Basin Area. San Bernardino Valley Municipal Water District initiated an

investigation to evaluate the feasibility of the active recharge projects and identified the

numerous locations shown on the attached illustration that could be developed into

storm water capture and recharge projects.

The capture of additional storm flow water that would have otherwise exited the San

Bernardino Basin Area will provide additional water supplies in the region. A large

portion of the additional water supplies will be within the definition new conservation

under the April1969 Judgment for Western Municipal Water District et al. vs. East San

Bernardino County Water District et al. Riverside County Superior Court Case Number

78426, (Western Judgment). Under the terms and conditions of the Western Judgment,

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the Riverside plaintiff entities are entitled to participate in development and use of new

conservation water provided that the entities pay their respective proportionate share of

the costs of development of the projects. Western Municipal Water District acts on

behalf of all the Riverside plaintiff entities. Western Municipal Water District contracts

separately with Riverside plaintiff entities; City of Riverside, Riverside Highland Water

Company, Agua Mansa Water Company and Meeks and Daley Water Company, and

The Regents of the University of California. The Board of Directors of Western

Municipal Water District approved the agreement and a separate agreement among the

Riverside Plaintiff entities at their meeting on Wednesday November 20, 2013.

In a workshop meeting of the San Bernardino Valley Municipal Water District Board of

Directors on July 8, .2013 and in the Board of Directors regular meeting on July 16,

2013, the Board of Directors considered and approved a similar agreement with

Western Municipal Water District for the sharing of costs associated with the

development of new conservation related to Seven Oaks Dam and the Enhanced

Recharge Project.

The cost-sharing document was prepared by Western Municipal Water District's

counsel for matters pertaining to the Western Judgment, Ms. Jill Willis. Mr. Bruce

Varner, counsel for the District and Mr. David Aladjem, special counsel for the District

have reviewed the document and reported that they support approval of this document.

Recommendation:

Staff requests that the Board of Directors approve the agreement and authorize

the President and Secretary to sign the COST-SHARING AGREEMENT BETWEEN

WESTERN MUNICIPAL WATER DISTRICT OF RIVERSIDE COUNTY AND SAN

BERNARDINO VALLEY MUNICIPAL WATER DISTRICT ACTIVE RECHARGE

PROJECTS

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Attachments:

• Map illustrating the Active Recharge Projects potential facility locations

• COST-SHARING AGREEMENT BETWEEN WESTERN MUNICIPAL

WATER DISTRICT OF RIVERSIDE COUNTY AND SAN BERNARDINO

VALLEY MUNICIPAL WATER DISTRICT ACTIVE RECHARGE

PROJECTS

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Active Recharge Project

~ Potential New Recharge Basin

(:::3 Proposed Modifications in Existing Basin

Source: SBVMWD, Aerial Imagery Date: Feb., 2012

1 0.5 0 2

~~liiiU~•§itJ~~§iiiiiiiii .. 1 Miles

COST-SHARING AGREEMENT

BETWEEN WESTERN MUNICIPAL WATER DISTRICT OF RIVERSIDE COUNTY AND SAN BERNARDINO VALLEY MUNICIPAL WATER DISTRICT

ACTIVE RECHARGE PROJECTS

This Agreement is entered into this 20th day ofNovember, 2013, by and between WESTERN MUNICIPAL WATER DISTRICT OF RIVERSIDE COUNTY ("WESTERN") AND SAN BERNARDINO VALLEY MUNICIPAL WATER DISTRICT ("VALLEY DISTRICT").

1. Recitals

(a) Valley District and Westem are considering development of groundwater recharge projects ("Active Recharge Projects") that may be constructed in or adjacent to tributary streams of the Santa Ana River for the purpose of increasing replenishment to the San Bemardino Basin Area ("SBBA"). The design , construction and operation of "Active Recharge Facilities" will be necessary to implement the Active Recharge Projects.

(b) Under the Judgment in Westem Municipal Water District of Riverside County v. East San Bemardino County Water District, et al., Riverside County Superior Comi Case No. 78426 (1969) ("Westem Judgment" or "Judgment"), "New Conservation" is defined as "[a]ny increase in replenishment from natural precipitation which results from operation of works and facilities not now in existence, other than those works installed and operations which may be initiated to offset losses caused by increased flood control channelization."

(c) Valley District and Westem anticipate that the operation ofthe Active Recharge Facilities may result in an increase in replenishment of the SBBA, consistent with the Judgment's definition ofNew Conservation. Such Facilities will not replace any existing facilities used to offset loss of replenishment caused by channelization or any facilities existing during the period 1934 through 1960 that were considered operational for purposes of determining Safe Yield of the SBBA.

(d) Pursuant to section VI(b)(2) of the Judgment, each Plaintiff1 has the right to participate in the yield of New Conservation projects in proportion to each Plaintiffs share of the Safe Yield under the Judgment, provided that Plaintiff pays its proportionate share of the costs thereof.

(e) Westem has a longstanding practice of representing the interests of Plaintiffs and entering into agreements with Valley District regarding cost-sharing for New Conservation, while subsequently entering into separate agreements with Plaintiffs to provide reimbursement of costs and distribution ofbenefits to Plaintiffs.

1Plaintiffs are the City of Riverside, Meeks and Daley Water Company (formerly Agua Mansa Water Company and Meeks & Daley Water Company), Riverside Highland Water Company, The Regents of the University of California, and Western Municipal Water District. Under the Judgment, Western does not possess any water rights and is excluded from references to "Plaintiff' or "Plaintiffs" herein.

01376.00079\8340801.1

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(f) Valley District has entered into contracts with Geoscience Support Services, Inc. and others for the planning and preliminary design ofthe Active Recharge Facilities. Valley District has incurred $228,431 through December 31, 2012 for planning and preliminary design work. Western has reimbursed Valley District for Plaintiffs' share of the incurred costs (27.95 percent) through December 31, 2012, in the amount of $63,846.

(g) Valley District and Western have not previously entered into a cost-sharing agreement for costs related to the Active Recharge Projects.

(h) The primary purpose of this Agreement is to establish a mechanism for cost-sharing between Western and Valley District for feasibility analysis, design, permit and/or environmental work associated with the Active Recharge Projects ("Active Recharge Project Costs").

NOW, THEREFORE, the parties agree as follows:

1. Valley District and Western agree that the Active Recharge Projects, if constructed and operated, are expected to result in an increase of replenishment of the SBBA, that such increase is consistent with "New Conservation" as defined in the Judgment, and that Plaintiffs are entitled to participate in and benefit from such New Conservation, as provided in the Judgment, provided that Plaintiffs pay their proportionate share of the costs of such facilities.

2. Valley District acknowledges and agrees that Western has reimbursed Valley District for Plaintiffs' share of all incurred costs associated with the Active Recharge Projects through December 31, 2012.

3. Western will reimburse Valley District for Plaintiffs' share of costs incuned by Valley District after December 31, 2012 for any Active Recharge Project Costs, in accordance with the terms provided herein.

4. No later than June 30 of each year, Valley District will provide Western and Plaintiffs with a proposed annual budget for Active Recharge Project Costs.

5. Valley District will invoice Western for Plaintiffs' share of the Active Recharge Project Costs on a quarterly basis. Western will pay the invoice within ninety (90) days of receipt of the invoice. The invoice will be accompanied by supporting documentation showing invoices for the work performed and evidence of payment.

6. Valley District will provide Western and Plaintiffs written notification at least seven (7) days prior to authorizing or increasing the authorization of any feasibility, pre-design, design, construction, environmental or permitting work in excess of $50,000, or any change orders in excess of $50,000. Such notification will include a copy of the proposed work and the proposed authorization.

7. Valley District will provide quarterly updates to Western and Plaintiffs regarding the status of and progress of the Active Recharge Projects.

0137 6.00079\8340801.1 2 14/21

8. Valley District and Western, after consultation with Plaintiffs, will jointly determine if Active Recharge Projects should be constructed. Valley District and Western will enter into a supplemental cost-sharing agreement for costs associated with construction and operation of Active Recharge Facilities, if Western and Valley District, after consultation with Plaintiffs, determine such facilities should be constructed.

9. General Provisions

(a) Authority. Each signatory of this Agreement represents that s/he is authorized to execute this Agreement on behalf of the Party for which s/he signs. Each Party represents that it has legal authority to enter into this Agreement and to perform all obligations under this Agreement.

(b) Amendment. This Agreement may be amended or modified only by a written instrument executed by each of the Parties to this Agreement.

(c) Jurisdiction and Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of California, except for its conflicts of law rules. Any suit, action, or proceeding brought under the scope of this Agreement shall be brought and maintained to the extent allowed by law in the County of Riverside, California.

(d) Headings. The paragraph headings used in this Agreement are intended for convenience only and shall not be used in interpreting this Agreement or in dete1mining any of the rights or obligations of the Parties to this Agreement.

(e) Construction and Interpretation. This Agreement has been anived at through negotiations and each Party has had a full and fair opportunity to revise the terms of this Agreement. As a result, the normal rule of construction that any ambiguities are to be resolved against the drafting Party shall not apply in the construction or interpretation of this Agreement.

(f) Entire Agreement. This Agreement constitutes the entire agreement of the Parties with respect to the subject matter of this Agreement and, save as expressly provided in this Agreement, supersedes any prior oral or written agreement, understanding, or representation relating to the subject matter of this Agreement.

(g) Partial Invalidity. If, after the date of execution of this Agreement, any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future laws effective during the term of this Agreement, such provision shall be fully severable. However, in lieu thereof, there shall be added a provision as similar in te1ms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

(h) Successors and Assigns. This Agreement shall be binding on and inure to the benefit of the successors and assigns ofthe respective Parties to this Agreement. No Party may assign its interests in or obligations under this Agreement without the written consent of the other Parties, which consent shall not be unreasonably withheld or delayed.

(i) Waivers. Waiver of any breach or default hereunder shall not constitute a continuing waiver or a waiver of any subsequent breach either of the same or of another

01376.00079\8340801.1 3 15/21

provision of this Agreement and forbearance to enforce one or more of the rights or remedies provided in this Agreement shall not be deemed to be a waiver of that right or remedy.

G) Attorneys' Fees and Costs. The prevailing Party in any litigation or other action to enforce or interpret this Agreement shall be entitled to reasonable attorneys' fees, expert witnesses' fees, costs of suit, and other and necessary disbursements in addition to any other relief deemed appropriate by a court of competent jurisdiction.

(k) Necessary Actions. Each Party agrees to execute and deliver additional documents and instruments and to take any additional actions as may be reasonably required to carry out the purposes of this Agreement.

(1) Compliance with Law. In perfmming their respective obligations under this Agreement, the Parties shall comply with and conform to all applicable laws, rules, regulations and ordinances.

(m) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all ofwhich together shall constitute but one and the same instrument.

(n) Notices. All notices, requests, demands or other communications required or permitted under this Agreement shall be in writing unless provided otherwise in this Agreement and shall be deemed to have been duly given and received on: (i) the date of service if served personally or served by facsimile transmission on the Party to whom notice is to be given at the address(es) provided below, (ii) on the first day after mailing, if mailed by Federal Express, U.S. Express Mail, or other similar overnight courier service, postage prepaid, and addressed as provided below, or (iii) on the third day after mailing if mailed to the Party to whom notice is to be given by first class mail, registered or certified, postage prepaid, addressed as follows:

To Valley District:

General Manager San Bernardino Valley Municipal Water District 380 East Vanderbilt Way San Bernardino, CA 92408

To Western:

General Manager Western Municipal Water District of Riverside County 14205 Meridian Parkway Riverside, CA 92518

Either party may change its address for notice purposes, or designate additional addresses for notice purposes, by giving the other Party notice of the new address in the manner set forth above.

01376.00079\8340801.1 4 16/21

Date: ________ , 2013

APPROVED AS TO FORM:

By:

By:

Jill N. Willis Best Best & Krieger

David R. E. Aladjem Downey Brand LLP

01376.00079\8340801.1 5

SAN BERNARDINO VALLEY MUNICIPAL WATER DISTRICT

By: President

By: Secretary

WESTERN MUNICIPAL WATER DISTRICT OF RIVERSIDE COUNTY

By: President

By: Secretary

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alle BERNARDINO

MUNICIPALY WAT ER DISTRICT

DATE: December 3, 2013

TO: Board of Directors

FROM: Douglas Headrick, General Manager

SUBJECT: Consulting Services for Analysis of Mandatory Electric Reliability Standards

Background

In August 2005, Valley District along with its partner the San Gorgonio Pass Water Agency

(Pass) executed a Joint Powers Agreement with the California Department of Water Resources

(DWR) related to the operation and maintenance of the East Branch Extension (EBX) of the

State Water Project. This JPA establishes the allocation of duties for operations and

maintenance functions of the EBX facilities. In brief, Valley District and Pass are responsible for

operating the facilities while the maintenance duties are split between DWR and Valley District

and Pass.

The JPA is set to expire on December 31, 2014. In anticipation of the need to re-negotiate the

JPA to include the EBX Phase II facilities currently under construction, Staff from Valley District

and Pass have been meeting with DWR over the last 18 months to determine what, if any,

changes need to be made to the current JPA. In the context of those discussions, DWR recently

informed Valley District that they believe there are major electricity grid reliability standards that

will apply to the EBX facilities. Further, DWR stated that it was their belief that Valley District

would have difficulty meeting these standards. These electrical grid reliability standards were

implemented to ensure that large generating and power load points attached to the regional

electrical grid do not cause or exacerbate outages.

The EBX facilities do not include any electrical generating stations and the EBX pump stations,

although large, do not represent a significant load compared to the combined load of other

facilities in the region. Therefore, Staff does not believe that the standards will apply and if they

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do, any compliance issues will be easily satisfied. In an effort to better understand the potential

application and requirements of these reliability standards to the EBX, Staff is recommending

that the Valley District Board approve a consulting services agreement with a firm, that

specializes in electrical grid compliance and applicability issues, to analyze if these standards

apply to the EBX.

Staff contacted representatives from Navigant Consulting, Inc. based on recommendations from

the State Water Contractors Association (SWC). Navigant has been providing services to the

SWC related to ongoing issues associated with the electrical grid and how it affects the State

Water Project. In this capacity, they have proven to be a reliable source for these types of

analysis and have gained substantial experience in the operations of the State Water Project as

a whole.

Staff requested and received a proposal for the consultant services and a copy is attached.

Staff believes that the scope and cost are appropriate for the needs of Valley District and

recommend approval for a not to exceed amount of $20,000.

In December, Pass Agency Staff will be recommending to their Board to split the costs of these

services with Valley District.

Staff Recommendation

Authorize the General Manager to sign a consulting contract with Navigant Consulting, Inc. for

services to analyze mandatory electric reliability standards in relation to the East Branch

Extension for a not to exceed amount of $20,000.

Attachment

Proposal Letter from Navigant Consulting, Inc.

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3100 Zlnlandel Drive Suite 600

N)\VIGANT Rancho Cordova, CA 95670 916.631.3200 phone 916.852.1073 fax

November 15, 2013

Navigant Consulting, Inc. (Navigant) is pleased to provide you with this letter proposal to analyze the potential implications of mandatory elech·ic reliability standards for the San Bernardino Valley Municipal Water District (SBVMWD). Navigant has considerable experience in assisting entities in their efforts to understand and comply with the mandatory reliability standards promulgated by the North American Electric Reliability Corporation (NERC) and the Western Electricity Coordinating Council (WECC).

OUR UNDERSTANDING

It is our understanding that SBVMWD is seeking information regarding whether and how the NERC and WECC electric reliability standards pertain to its role as an operations and maintenance agent under conh·act to the California Department of Water Resources (DWR). Since 2003, SBVMWD has operated and maintained Phase I of the East Branch Extension (EBX I) of California's State Water Project (SWP), pursuant to a contract with DWR. Per the existing contract, SBVMWD has been the sole operator and has shared maintenance responsibilities with DWR for EBX l. The current conh·act is nearing Hs expiration date and the two parties have begun negotiating a possible renewal.

DWR h as recently indicated that compliance obligations associated with the NERC and WECC electric reliability standards should be considered in the contract renewal negotiations. According to SBVMWD, its responsibilities as a contractor to DWR pertain solely to the operations and maintenance of water facilities and have no direct bearing on the Bulk Electric System (BES). The operations and maintenance of the portion of theBES affecting EBX I are believed to be the responsibility of Southern California Edison (SCE) and/or DWR.

SBVMWD is interested in hiring a qualified firm to evaluate DWR's claims regarding the potential relevance of the NERC and WECC electric reliability standards to the ongoing conh·act renewal discussions. Navigant proposes to evaluate the potential relevance of,such standards to SBVMWD in the manner described below.

SCOPE OF WORK

Navigant proposes to perform the following three distinct tasks in support of SBVMWD.

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Task 1- Information Collection and Analysis In this task, Navigant will gather information from public sources, SBVMWD, and potentially DWR, pertaining to DWR' s current position regarding the nexus between the electric reliability standards and the services currently, or potentially, provided by SBVMWD on SWP facilities pursuant to a contract with DWR. Navigant will coordinate with SBVMWD to identify specific information for collection and analysis. Such information may include, but not be limited to, the following:

» Current and proposed contracts involving DWR, SBVMWD, and/or SCE; » System design drawings and diagrams of relevant water and electric facilities; » Operations and maintenance plans and procedures for relevant water and electric

facilities; » Current and proposed electric reliability standards promulgated by NERC and/or

WECC;and » The NERC compliance registry.

Following an initial review of the information collected, Navigant may follow up with SBVMWD and/or DWR to further clarify our understandings. Navigant will then analyze all available information to develop an informed position regarding the merits of DWR' s claims about the relevance of the NERC and WECC electric reliability standards.

Task 2- Position Paper Based on findings from Task 1, Navigant will develop a position paper for SBVMWD's consideration as it continues contract renewal negotiations with DWR. The position paper will provide SBVMWD with a clear understanding of DWR' s claims regarding the implications of electric reliability standards and the validity therein of such claims. N avigant will provide SBVMWD with a review draft to ensure that our findings are based on the best available information and facts. Navigant will consider any feedback provided by SBVMWD before preparing and delivering a final version of the position paper.

Task 3 - Meeting Participation Navigant will be available to participate in at least one meeting between SBVMWD and DWR to discuss our findings as represented in the aforementioned position paper. Such participation would be to address any concerns and clarify any findings, if necessary, that either party may have regarding our position on this matter.

SCHEDULE AND BUDGET

Navigant is prepared to begin work immediately upon execution of an agreement with SBVMWD. We anticipate the activities proposed in Task 1 and Task 2 would be performed sequentially, with each one taking approximately three to four weeks to complete. We will coordinate with SBVMWD to establish timelines for the completion of specific activities.

Navigant's costs will be billed on a time and materials basis at a cost not to exceed $20,000.

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