Title
Authorization to Enter into a Supplemental Agreement with the United States, Central Arizona Water Conservation District and Others for Further Participation in the Colorado River 500+ Plan; Amend Ordinance S-48254 (Ordinance S-48859)
Description
Request to authorize the City Manager, or his designee, to enter into a supplemental agreement with the United States, Central Arizona Water Conservation District and Others, to forgo delivery of a volume of Phoenix’s Colorado River entitlement in 2022, as system conservation, in return for compensation. Further request to amend Ordinance S-48254 so that total compensated system conservation for 2022, when combined with the supplemental agreement, will be up to 30,000 acre-feet. Additionally request to authorize the City Treasurer to accept all funds related to this item. The compensation for all system conservation will not exceed $7,848,000.
Report
Summary
Due to worsening conditions on the Colorado River, the Lower Basin states of Arizona, California and Nevada have determined there is an unacceptable risk of the water volumes in Lake Mead dropping below elevation 1,030 feet in the near term. Due to the risks to deliveries throughout the Lower Basin, the Lower Basin states and the U.S. Bureau of Reclamation have determined it will require a 500,000 acre-feet (AF) reduction in deliveries from Lake Mead each year through 2026 to feasibly protect Lake Mead from catastrophic risk. This reduction is referred to as the 500+ Plan.
In January of 2022, the Council adopted Ordinance S-48254, which authorized execution of Agreement 156216 to forbear delivery of 15,977 AF of Phoenix’s Colorado River entitlement to support the 500+ Plan. At the time, it was anticipated that the Lower Basin States had received sufficient volumes of water from other water users to achieve its goal of 500,000 AF. Since that time, several large water users, including entities in California, have determined they will be unable to provide water for the 500+ Plan in 2022.
The Gila River Indian Community has been working with stakeholders to attempt to find additional volumes to increase the amount of system conservation being created in 2022. Phoenix can forbear additional water in 2022, up to a total of 30,000 AF in order to create system conservation under the 500+ plan.
Due to technical errors in Ordinance S-48254, Ordinance S-48254 will be amended for the City to forbear 15,997 AF of Colorado River water at $261.60/AF and receive a total of $4,184,815.20 with a termination date of Dec. 31, 2022, and to provide that the funds will be placed in the Water Revenue Fund and used to purchase replacement water, including credits, and to support water conservation programs.
Under the supplemental agreement, the City will forbear up to an additional 14,003 AF of Colorado River water at $261.60/AF and receive a total of up to $3,663,184.80. The agreement is with United States, Central Arizona Water Conservation District and/or others as necessary to forbear the additional water.
Contract Term
Both agreements will terminate on Dec. 31, 2022. Agreement 156216 includes the option for renewal to create system conservation through 2026. City Council approval will be required for each year Phoenix agrees to forbear water in the 500+ Plan.
Financial Impact
Phoenix will receive compensation in the amount of $4,184,815.20 from Agreement 156216 and up to $3,663,184.80 from the supplemental agreement for a total of up to $7,848,000. The funds will be placed in the Water Revenue Fund and used to purchase replacement water, including credits, and to support water conservation programs.
Concurrence/Previous Council Action
The City Council approved Agreement 156216 (Ordinance S-48254) on Jan. 5, 2022.
Location
Council District: Out of City
Department
Responsible Department
This item is submitted by Deputy City Manager Karen Peters and the Water Services Department.