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After three years of negotiations, a coalition that includes Palo Alto, Mountain View, Menlo Park, Redwood City and about two dozen other cities is preparing to sign off on a revised deal with its water supplier, the San Francisco Public Utilities Commission.
The agreement between the Bay Area Water Supply and Conservation Association, which represents the 26 municipalities, and the SFPUC seeks to take some of the pressure off cities that have not bought their minimally required allotment thanks to conservation efforts and alternate supplies. This includes Mountain View, which has had to pay millions of dollars in penalties over the past 15 years for not meeting the purchase quotas, and which would see some relief in the amended agreement.
While Palo Alto’s utility staff broadly supports the agreed-upon amendments, characterizing them as a concession from the SFPUC, the proposed contract ran into an unexpected roadblock at a June meeting of the Utilities Advisory Commission. Three of the six commissioners who were present at the meeting declined to support the changes, with two of them citing broader concerns about SFPUC’s drought-planning process. After a heated discussion, the commission failed to agree on any recommendations. Next week, it will be the City Council’s turn to consider the proposed contract changes.
Utilities Department staff argue in a new report that the proposed changes are “minor in cost and operational impact,” with a particular benefit to Mountain View. One key change is the change to the “minimum purchase quantity” provision, which was created in 1984 and which applies to Mountain View, Sunnyvale, Milpitas and the Alameda County Water District, wholesale customers that import water from sources outside the SFPUC. Cities that don’t meet the thresholds are still required to pay for the water they are not using.
Elizabeth Flegel, Mountain View’s water resources manager, said that the city has adopted conservation measures over the past decade thanks to back-to-back droughts. While the city gets the vast majority of its water from the SFPUC, it also gets smaller shares from Valley Water, ground water and treated recycled water. It is also working with Palo Alto now to construct an advanced water purification plant on a San Antonio Road site. But because of these measures, Mountain View has consistently failed to meet its requirements and has had to pay for water it’s not using.
The combination of minimum purchase requirements and drought measures “have really put Mountain View in a pickle,” Flegel said during a presentation at the July meeting of BAWSCA.
“It has resulted in us being charged $15 million for water that our customers simply couldn’t use because of the toggling on and off of drought requirements, conservation mandates and, even next year, we’re being required to purchase certain amounts.”
Under the proposed amendments, an individual city would not be penalized for failing to meet its minimum requirements provided that the four wholesale customers collectively meet their overall minimum allotment. It also creates a transition year after a drought period before the penalties kick in, with the understanding that customers will continue to conserve water even when the urgency is lessened. And it reduces the quantities of water that these cities need to purchase, setting the amount at 80% of the average purchases from the most recent four non-drought years.
Other amendments would revise the drought plan, slightly increasing required water cutbacks for wholesale customers. In Palo Alto, a moderate drought would require customers to reduce water usage by 18% (currently, it’s 16%) while a severe one would require a cutback of 28% (up from 22% in the current contract).
Karla Dailey, assistant director of the Utilities Department, said that the utility already has drought measures in place that would achieve these reductions if needed, including a prohibition on using potable water on driveways and sidewalks.
“From our customer standpoint, they would not see any difference between old formula and new formula,” Dailey said.
The amendments, she said, are a good thing for Palo Alto. They remove a disincentive that some cities may have when it comes to water conservation measures that would benefit the entire region. They also support Palo Alto’s neighbor and close partner on water infrastructure. Staff expects that adjusting the provision for minimum purchase quantities may raise water rates for the customers in the system by between 0.13% and 0.72%.
“It ensures our neighbors aren’t charged for unused water,” Dailey said.
Deep concerns
While the utilities commission had no qualms with the specific provisions of the amended contract, commissioners Utsav Gupta and Chris Tucher both voted to delay the adoption until a future meeting, citing broader concerns about the SFPUC’s drought-management strategies. At prior meetings, the commission has strongly criticized the SFPUC for basing its water supply plans on a “design drought” scenario that commission members argued is unrealistically stringent and prohibitively expensive to implement. These concerns also bubbled to the surface in January, when the commission rejected a staff recommendation to approve the city’s new One Water Plan, a document that details the city’s strategies for dealing with droughts.
Palo Alto has been raising concerns for months about SFPUC’s drought-planning methodology. Former Mayor Peter Drekmeier, who serves as policy director at the Tuolumne River Trust, has been the leading critic of the water supplier, which operates the Hetch Hetchy water system that supplies San Francisco, Palo Alto and other BAWSCA customers with potable water.
During a study session last November, which included officials from the SFPUC, Drekmeier argued that the agency has been consistently inflating water demand projections and proposing unrealistic and expensive alternative water supplies to justify these predictions. He also argued that these projections are political in so much as they attempt to justify the SFPUC’s opposition to the Bay Delta Plan, a state document that aims to protect the watershed in the delta created by the Sacramento and San Joaquin rivers.
“Their alternative water supply plan we think is a huge mistake and we think it’s political,” Drekmeier said.
Steve Ritchie, assistant general manager of the SFPUC, disputed this characterization and asserted that the agency’s primary goal is to ensure all customers have a reliable water supply.
“I’d be a grease spot on the pavement, with people running over me if I came out and said, ‘Sorry, no water this year,’ That’s just not an acceptable state of affairs,” Ritchie said.
Palo Alto officials have tried to obtain additional information in recent months from the SFPUC about drought projections. Council member Greer Stone, the city’s representative on BAWSCA, sent to the SFPUC a letter earlier this year trying to get more details about the agency’s drought plans. He also raised the issue at the most recent BAWSCA meeting, arguing that all the cities in BAWSCA need more information to understand what their water-supply risks are.
“I don’t want to see other agencies have a similar issue that Palo Alto recently had where we spent about $500,000 on an alternative supply study that really turned out to be unnecessary,” Stone said, referring to the One Water Plan. “That’s an ongoing risk that we all face.”
Gupta said at the June 4 meeting of the utilities commission that he could not vote for the contract amendments until he has more information about the SFPUC’s design drought and its implications for Palo Alto. Tucher also suggested that this is a good opportunity for the city to get answers from the regional agency. While Palo Alto cannot by itself impose any changes, it has the power to effectively veto negotiated amendments, which need approvals from all 26 agencies.
Tucher noted at the June meeting that the cities have until the end of the year to approve the water supply agreement.
“There’s not a reason that Palo Alto has to be the first in the parade,” said Tucher, who serves on the Embarcadero Media Foundation board of directors.
Some of his colleagues strongly pushed back. A failure by the cities to approve the negotiated contract would leave the decision over future allocations to the BAWSCA board, according to Utilities Department staff. And if BAWSCA doesn’t reach an agreement, the SFPUC will get to set the terms.
Vice Chair Meagan Mauder argued that delaying approval in an attempt to extract information from the SFPUC could undermine the city’s broader water-supply efforts.
“Holding our fellow members hostage over this agreement seems like it would in fact do the opposite,” Commission Vice Chair Meagan Mauder said. “It may actually engender frustration of our commission and ultimately of our city if we do not support an agreement that was negotiated over a three-year period.”
She noted that failing to support this amendment would also leave the SFPUC as the ultimate arbiter.
“And so effectively we would be handing them a victory if we were not to pass this agreement that our members have independently negotiated,” Mauder said.
Commission Chair Greg Scharff also supported approving the agreement. The commission’s function is to advise the City Council, he said, not to exercise leverage over regional agencies.
“The role of the UAC is not to play politics,” Scharff said. “It’s not to decide to try to hold up some agreement on leverage.”
Commissioner Phil Metz joined Gupta and Tucher in dissenting to Chair Greg Scharff’s motion to recommend approving the amendments. But unlike Gupta and Tucher, he did not support moving the discussion to a future meeting. Metz said he was concerned about the impact of the new amendment on Palo Alto.
The upshot from the June meeting is that the council will now consider the amendment without any formal recommendations from its utilities advisors. If the council approves the deal, it will join the roughly half of the member agencies that have already voted to support it.
The SFPUC had approved the amendments at its May meeting. And by mid-July, at least 11 members of BAWSCA had voted to approve it, according to Tom Smegal, who recently took over as CEO of BAWSCA. During the June discussion, he urged the city’s utilities commission not to delay approving the amendments.
“By no means should we be anticipating that the end of the year is the target for BAWSCA,” Smegal said.
“Mountain View has consistently failed to meet its requirements and has had to pay for water it’s not using.” This makes no sense. We all know that in most years there isn’t enough water. We all try to conserve it. What kind of contract requires buyers to pay for something they don’t get, especially when that item is in short supply.
“The agreement between the Bay Area Water Supply and Conservation Association, which represents the 26 municipalities, and the SFPUC seeks to take some of the pressure off cities that have not bought their minimally required allotment thanks to conservation efforts and alternate supplies. This includes Mountain View, which has had to pay millions of dollars in penalties over the past 15 years for not meeting the purchase quotas, and which would see some relief in the amended agreement.”
So we actually get penalized (millions of dollars) for NOT using water during a drought?
What is wrong with this picture?
Why on earth should we take drastic measures to conserve water during a drought? Which my family has done for many years.