Water Planning in the Western U.S.

Impacts and Opportunities for Investor-Owned Water Utilities

Jeffrey Stuck, Environmental Management DirectorAmerican Water Western Region

July 17, 2007

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A Critical Junction in the West:Water Scarcity & Increased Demand

Despite winter rains, we are in a long-term drought in the Southwest

Rivers, reservoirs, and snow pack that supply water at record lows

Strong population growth in Southwest (e.g. Colorado River States)

Creativity in water supply must be applied

– New technology

– Water transfers

– Revised water agreements

Creativity in water conservation must be applied

Regulators need to support this creativity, not discourage it or make it burdensome

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Reduced Water Levels - Lakes Mead and Powell

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Colorado River – Upper and Lower Basin States

Colorado River Water Users Association Website

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The Water Supply Planning Process

Water supply planning is very complex but at an elemental level consists of three primary steps:

– Determining what we need and where we need it

– Determining what we have and where we have it

– Determining how to address the delta

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Water Supply Planning – What We Needand Where We Need It

Accurately projecting growth in both water consumption and points of delivery are critical to the water planning process

– Per Capita water use

– Growth patterns; residential versus commercial/industrial

– Physical land condition

– Production assumptions

– Storage capacity and placement

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Water Supply Planning – What We Haveand Where We Have It

Accurately accounting for current production capabilities is the next step

– Production capacity of each source; service pressure limitations

– Source availability limitation; e.g contamination

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Water Supply Planning – Addressing the Delta

Here is where the planning process gets interesting

– The simplest way to address needed capacity is to add more supply…Unfortunately its often not that easy

– Items to consider are:

• Physical and legal availability of supply

• Demand location and associated delivery costs

• Current and future infrastructure needs and capabilities

• Customer expectations

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Water Supply Planning – Addressing the Delta

Increasingly water utilities are addressing the “Delta” through creative and innovative approaches

These approaches are met with differing levels of acceptance among consumers and regulators

What will be imperative is that no solution is eliminated from the tool box unless absolutely necessary

– The next slides illustrate some of the more progressive approaches to addressing the “Delta”

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One New Supply Option: Desalination

RO membrane and energy recovery technologies have improved economics

Water production costs becoming competitive with other sources of “new” water

American Water desalination project involvement

– Florida: Tampa Bay Water

– Hawaii: Kaupelehu Brackish Plant

– California: Coastal Water Project

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Tampa Bay Sea Water Reverse Osmosis Plant

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Kaupalehu Brackish Water Reverse Osmosis Plant

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Other New Water Supply Options

Water transfers between agricultural and municipal uses

Water transfers between geographic regions

Water exchanges – surface water for ground water

Intentionally Created Surpluses (ICS)

Aquifer Storage and Recovery (ASR)

Reuse

Water rights leases from Indian nations

Conservation

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Imperial Irrigation District / San Diego County Water Authority – Water Transfer

Involves wheeling water from Imperial County to San Diego County

Combines aquifer lining, improved farming and other conservation with transfer of water to urban area

Augments San Diego supply while offering some independence

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Water Exchanges – Using Surface Water on Golf Courses in Lieu of Groundwater

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Intentionally Created Surplus – Creative Water Conversation On The Colorado River - Increasing Your Share

Intentionally Created Surplus (ICS)

– This will be facilitated by agreements that allow parties to assist one another with conservation and efficiencies through capital expenditures and other means to increase size of allotment

– This process is still under development but some of the elements are exercised currently

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Aquifer Storage and Recovery – Water Banking

An innovative approach to water supply management

Only the amount of water stored in the aquifer is removed

No groundwater mining occurs and thus the issues associated with groundwater over drafting are avoided.

There are some issues however:

– Source of recharge – reclaimed versus fresh

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Water Reuse – Offsetting The Need For Fresh Water Supplies

American Water Anthem Water Campus – Arizona

– Membrane bioreactor technology

– A+ quality treated effluent

– Master planned community where reuse was considered at inception

– Golf courses, green belts, man made lakes, and parks receive reclaimed water thereby offsetting the demand on scarce fresh water supplies

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Settlement of Indian Water Rights Claims

Resolution of outstanding Indian water rights claims is critical before water rights claims of non-Indian interests’ can be resolved

Gila River Indian Community Water Rights Settlement Act:

– Various Indian nations claim over 650,000 AF of water per year of Colorado River is resolved (47% of CAP canal annual flow)

– Approved by Congress in late 2004

Navajo Nation Water Rights Settlement Agreement:

– Navajo Nation settlement includes rights to over 600,000 AF of water from the San Juan River Basin

– Pending before Congress

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Federal, State & Local Regulation

Regulated water companies, like municipal providers, must focus on conservation. Regulation can and will help:

Federal – U.S. Bureau of Reclamation requires water use efficiency programs for use of federal reclamation project water

State – Arizona Groundwater Management Act & California Urban Water Management Plans set targets and guidelines for water use

Local – Certain local water management districts have specific conservation programs or water use limitations

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New State Legislation in Response to Water Shortages

Arizona –Water bills introduced to extend into rural Arizona, requiring100-year assured water supply for new subdivision

California – SB 610 and SB 221 (2001) require a minimum 20-year supply of water for developments of 500+

New Mexico – the State Engineer has proposed decreasing allowable pumping for private domestic wells from 3 AF to 1 AF/year

Colorado – HB 1177 would create a legal framework for regulating inter-basin water transfers within the state

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Summary

Regulated water companies and regulatory commissions must undertake innovative approaches in light of increased competition for limited water supplies

Water rights transfers, desalination, water exchanges, and water use efficiencies must all be utilized

New regulatory constructs will be necessary in order to compete with public suppliers for water and to encourage conservation

A long range view and cooperative approaches are both necessary to successfully address complicated and emotional issues surrounding water in the arid West

Investor owned utilities are ready to partner with regulators to meet these challenges