Metropolitan Board to Vote on Revisions to the IAWP

On October 13, 2008 (1:30pm), The Metropolitan Water District's Water Planning and Stewardship Committee will consider will consider significant revisions to Metropolitan's Interim Agricultural Water Program (IAWP).  The following day (12 noon), the full Metropolitan Board of Directors will consider the matter. Both meetings will take place at Metropolitan Headquarters at 700 N. Alameda St. in Los Angeles, and will be open to the public.  Metropolitan's latest information letter hprovides an update on the discussions to date and the proposed revisions to the IAWP.

The IAWP was established in 1994 to provide delivery of "surplus water" for agricultural purposes at a discounted rate.  In exchange, participating agricultural water users agree to an initial 30% reduction in deliveries during shortage periods prior to delivery reductions to customers of "firm," non-interruptible supplies, and to larger reductions at greater shortage levels.

In November 2007, Metropolitan for the first time called on IAWP participants to reduce their water use in the coming year.  This reduction was precipitated by the ongoing drought and restrictions on pumping from the Sacramento-San Joaquin River Delta, restrictions that fundamentally changed the availability of surplus water supplies for Metropolitan.  These mandated reductions took place at the same time Metropolitan's member agencies were reviewing the IAWP as part of Metropolitan's update to its Long Range Finance Plan (LRFP). 

With surplus supplies reduced for the foreseeable future, and concerns raised by some member agencies during the LRFP process, the Metropolitan Board directed its staff to initiate a review of the IAWP and bring recommendations on proposed program changes for review before the end of 2008.

In response to the Board's direction, Metropolitan staff initiated discussions with SCAWT and others to determine the best course of action.  Staff held a series of meetings with member agency managers (both IAWP participants and non-participants), retail agency managers, and growers within the region, and developed the proposed revisions.

In September, Metropolitan's Water Planning and Stewardship Committee reviewed staff's recommended revisions and directed them to bring the proposal back in October for full Board consideration and action.  Included in the staff's September proposal were the following four provisions that directly affect growers:

Five-Year Phase-Out of the IAWP – under this provision, the IAWP would be completely phased out over a five-year period from 2008 to 2013. As of January 1, 2013 the IAWP would no longer exist. The IAWP discount would be gradually reduced during the phase-out period as shown in the table below:

In addition to a diminishing reduction of the IAWP discount, the reduction requirements for IAWP participants during water shortages will be adjusted each year of the phase-out period according to the schedule on the next page. The shaded region represents the changes from the current reduction schedule identified in Metropolitan's Water Supply Allocation Plan. By the end of the phase-out period, the reduction requirements for agricultural and urban customers will be the same. 

Immediate Opt-Out Opportunity – this provision would allow current IAWP participants to exit the IAWP as of January 1, 2009. IAWP participants that opt out would still be held accountable for performance against their reduction plans for calendar year 2008. The maximum annual IAWP delivery for each agency would be reduced by the total volume of opt-outs within their service area. Growers would be able to opt out each year of the phase-out period. Opt-out notifications received in a given calendar year would be effective beginning January 1st of the following calendar year.

Agricultural Conservation Incentives – IAWP participants who decide to opt out and begin paying Metropolitan's full service rates will be eligible for incentives through a new conservation program focused on agricultural use. Metropolitan staff will work with its member agencies and the agricultural community to develop a program to fund devices, on-grove practices, training, and research to enable growers to manage their supply costs through greater water use efficiency. Staff will work to have an initial phase of the new agricultural conservation incentives in place by June of 2009.

Agricultural Water Use Reduction Contracts – another provision slated to be discussed by the Metropolitan Board is agricultural water use reduction contracts. Under this provision, Metropolitan staff will work with the member agencies and agricultural land owners to assess the feasibility of dry-year water use reduction contracts for agricultural water users. A template for these contracts will be developed by the end of 2009. As an example, Metropolitan could develop contracts with certain landowners or lessees modeled after the contracts that it has entered into with farmers in the Palo Verde Irrigation District. Under such a contract, Metropolitan could provide structured payments based on the amount of land and water used to irrigate in exchange for a grower agreeing to not irrigate contract lands for a period of time. During shortages, Metropolitan would call on those participating landowners or lessees to reduce water usage.

The two other provisions to be considered are adjustments to member agencies' 1) "take or pay" supply contracts, and 2) baselines under Metropolitan's Water Supply Allocation Plan (WSAP). A member agency's supply contract with Metropolitan entitles them to a fixed amount of water priced at the less expensive Tier 1 rate. Under this provision, a member agency's contract amount would be increased as their maximum annual IAWP delivery is reduced through the opt-out provision or the phase-out of the IAWP. Prices in Tier 1 reflect the costs of imported supplies, system access, water stewardship to fund conservation, local resource programs such as recycling, water treatment, and power cost. 

The other adjustment would increase a member agency's baseline under Metropolitan's WSAP. The WSAP uses calendar year 2004 through 2006 to establish the period baseline for each member agency's imported water needs. Deliveries under the IAWP are treated separately from this baseline. WSAP baselines for each member agency participating in the IAWP would be adjusted as their maximum annual IAWP delivery is reduced through the opt-out provision or the phase-out of the IAWP. 

• MWD Implements Ag Water Cuts – 10/2007

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