MWD Implements Ag Water Cuts

On October 22, 2007 the Metropolitan Water District of Southern California (MWD) officially notified its member agencies of its intention to implement a 30% reduction in deliveries of 2008 agricultural water supplies under its Interim Agricultural Water Program (IAWP). The action comes in response to record low rainfall in Southern California, continued drought conditions throughout the southwestern United States, and a recent federal court ruling to protect the endangered delta smelt. The court’s ruling may result in significant reductions of State Water Project (SWP) deliveries to Southern California in 2008 and beyond.

IAWP Program

The IAWP was established in 1994 and provides for the delivery of “surplus water” for agricultural purposes at a discounted rate. In exchange, participating agricultural water users agree to an initial 30 percent reduction in demand during periods of shortage prior to any reductions in deliveries to customers of “firm”, non-interruptible supplies. MWD generally defines agricultural purposes as “growing or raising agricultural, horticultural or floricultural products for the purposes of commerce, trade, or industry.” It applies to both the growing of crops and raising of livestock and fowl for human consumption.

MWD has the right to discontinue surplus water service, in whole or in part, upon one year’s written notice to the purchasers or users of the water.  MWD’s Board of Directors annually initiates the necessary actions to implement cuts should it become necessary.  Following such notification, MWD’s General Manager has the discretion to reduce IAWP deliveries up to 30 percent prior to imposing any mandatory urban water allocation.   Under the terms of the program, IAWP customers are not allowed to offset a reduction in discounted IAWP water with “firm” water purchases.

Baseline for Reduction

Because a reduction in IAWP deliveries is typically called during an extended dry period, a dry year usage pattern is used to determine monthly IAWP usage targets.  After discussion with the member agencies, MWD established fiscal year 2003/04 IAWP water deliveries as the baseline for the planned reduction period. This baseline will remain in place for the period in which the IAWP reduction is in effect.  Member agency monthly IAWP usage targets will be set at 70 percent of the corresponding monthly baseline use.  The expected yield of the 2008 IAWP reduction is approximately 45 thousand acre-feet (TAF) or 30 percent of the roughly 150 TAF that was certified for that fiscal year.  Below are the IAWP allocation targets by member agency amounts based on the fiscal year 2003/04 IAWP deliveries:

Implementing the Program

In June 2007, MWD requested updated IAWP reduction plans from its member agencies to obtain more detailed information on how each agency would meet the 30 percent objective.  These reduction plans provide specific methodologies for implementing, monitoring and verifying IAWP water reductions that reflect agency operations and administrative procedures.  MWD received the preliminary plans in October. 

MWD will monitor reduction performance on a monthly basis, but assess penalties at six-month intervals.  At the end of each six-month period, MWD will assess financial penalties for IAWP water over-use (debits) or issue credits for IAWP water under-use.  Member agencies demonstrating IAWP use below their usage targets during the first six months (under-use) of the reduction period will be able to carry forward that amount as a credit into the second six-month period.  Should the agency incur a debit in the second six-month period, its over-use would be reduced by credits carried forward from the first six months. However, should the IAWP reductions continue into calendar year 2009, credits would revert to zero on January 1, 2009.

At its October 2007 meeting, the MWD Board amended its administrative code to move up the deadline for member agencies to submit IAWP certifications from the current six months to three months during the reduction period. This will allow MWD and the member agencies to improve performance monitoring, as well as establish credits and penalties as applicable.  MWD will also conduct spot checks to verify that proposed actions are actually being implemented.

Penalties for Noncompliance

To encourage performance by IAWP participants, MWD will impose financial penalties and restrict usage for member agencies that do not reduce their use of water below usage targets established for that agency.  Deliveries exceeding IAWP usage targets for the six-month period will be subject to a fee equal to twice the bundled Tier 2 Full Service rate less the applicable IAWP rate. In other words, the unit cost of IAWP deliveries exceeding usage targets will be twice MWD’s applicable Tier 2 water rate.

IAWP Penalty Rates

Furthermore, the maximum annual amount of IAWP water a member agency can purchase will be permanently reduced by the extent to which usage targets are not met. 

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