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W A T E R I E N E R G Y I L I F E RIVERSIDE PUBLIC UTILITIES W& Board Memorandum P U B L I C U T I L I T I E S BOARD OF PUBLIC UTILITIES DATE: OCTOBER 16, 2015 ITEM NO: 10 File ID — 15 -3274— D SUBJECT: UTILITY 2.0: FIRST AMENDMENT TO 2009 WATER PRODUCTION AND CONVEYANCE AGREEMENT WITH WESTERN MUNICIPAL WATER DISTRICT- MONETIZATION OF EXCESS WATER RESOURCES FOR CALENDAR YEAR 2015 FOR ESTIMATED REVENUE OF $1,660,000 ISSUE: Consideration of the First Amendment to the 2009 Water Production and Conveyance Agreement with Western Municipal Water District of Riverside County to lease and monetize anticipated unused water export rights in the Bunker Hill Basin for the balance of calendar year 2015. RECOMMENDATIONS: That the Board of Public Utilities recommend that the City Council: Approve the First Amendment to the 2009 Water Production and Conveyance Agreement with Western Municipal Water District of Riverside County; and 2. Authorize the City Manager or designee to execute the agreement. BACKGROUND: In late 2008, the Board of Public Utilities approved the Water Production and Conveyance Agreement (Wheeling Agreement) with Western Municipal Water District (Western) wherein the City of Riverside Public Utilities (RPU) operates its excess production, transmission, and distribution facilities to deliver potable and non - potable water that Western owns, leases, or controls in the Bunker Hill, Rialto /Colton, Riverside North, and /or Riverside South ground water basins to Western's service area. The agreement was subsequently approved by the City Council and the Agreement executed on March 30, 2009. To date for calendar year 2015, RPU has produced and conveyed (wheeled) approximately 5,000 acre feet (one acre foot (AF) equals 325,800 gallons) of Western controlled groundwater from the Bunker Hill Basin. For each acre foot of water wheeled, RPU charges Western based on three cost components: 1) energy used at the well, based on actual cost; 2) energy used at distribution pump stations, based on actual cost; and, 3) system operation and maintenance cost of $350 /AF. RPU Water Riqhts and 2015 Extractions RPU's rights to extract and export groundwater from the Bunker Hill Basin in San Bernardino County are controlled by the terms of a 1969 court decision and judgement in Western Municipal Water District v. East San Bernardino County Water District (Riverside County Superior Court No. 78426). Under the terms of that judgment, Riverside has the annual right to extract and export from its wells approximately 55,000 AF annually. Any volume of water not produced and exported is forfeited at the end of the calendar year, and the export right begins new for the following calendar year. As such RPU does not have the ability to store or bank under - produced water for future years.