Title
Agreement with the United States Bureau of Reclamation and the Central Arizona Water Conservation District to Implement the Lower Colorado Conservation and Efficiency Program (Ordinance S-49774)
Description
Request to authorize the City Manager, or his designee, to enter into an agreement with the United States Bureau of Reclamation and the Central Arizona Water Conservation District to forgo delivery of a volume of Phoenix's Colorado River entitlement in 2023, as system conservation, in return for compensation. Further request to authorize the City Treasurer to accept all funds related to this item into the Water Services Department Water Fund. The compensation will not exceed $60,000,000.
Report
Summary
Conditions on the Colorado River system remain difficult, with the major reservoir of Lake Mead and Lake Powell at historically low water levels. Based on recent modeling on the Colorado River, the Bureau of Reclamation (BOR) has determined there is an unacceptable risk of further water declines in Lake Mead that threaten operations and deliveries of Colorado River water to the Lower Basin states of Arizona, California, and Nevada even with delivery reductions agreed to in the Lower Basin Drought Contingency Plan. The BOR received $4 billion in Inflation Reduction Act of 2022 funding to create Lower Colorado Conservation and Efficient Program to specifically address Colorado River issues. Phase 1 funding established a system conservation program to incentivize water users to voluntary contribute volumes to protect Lake Mead from catastrophic risks.
Under the agreement, Phoenix will make available up to 50,000 acre-feet (af) of Phoenix's Colorado River entitlement in 2023, 2024 and 2025 in exchange for monetary compensation of $400 per af. These reduced deliveries are in addition to the reductions in deliveries Arizona agreed to in the Drought Contingency Plan.
In 2023, Phoenix is scheduled to receive 177,237 af of its total Colorado River allocation of 186,557 af. That includes 27,960 af of "mitigation water" under the Arizona Drought Contingency Plan implementation agreement. This "mitigation water" is Non-Indian Agricultural (NIA) Priority water that would have otherwise been unavailable to Phoenix without the mitigation measures taken by Arizona to deliver water from reserves in Lake Mead. By forgoing delivery of the NIA mitigation water, that volume of water will remain in Lake Mead. The remainder of the 50,000 af of system conservation is water that would have been stored in Tucson for future shortage conditions. The creation of system conservation has no impact on water available for customer deliveries.
Contract Term
This agreement will terminate on Dec. 31, 2025.
Financial Impact
Phoenix will receive compensation in 2023 up to $20,000,000 for contribution of 50,000 af ($400/af). In the event Phoenix creates additional system conservation in 2024 or 2025, it will be compensated at the same rate of $400 per af. The funds will be deposited in Water Services Department's Water Fund for use through the Colorado River Resiliency Fund for water resource portfolio augmentation and water conservation programs.
Location
Out of City
Department
Responsible Department
This item is submitted by Deputy City Manager Ginger Spencer and the Water Services Department.