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Home My WebLink About0483.091I I I • , " _. __ ~, ___ ~~_~," __ .. td"''''ilK I). ,0; '1.' ,'I - 7 -. October 31, 1991 THE HONORABLE CITY COUNCIL Palo Alto, California Resolution te HD§ter Water Sales Contract Members of the Council: Report in pr; ef This staff report requests Council approval of a resolution suspending a pro\~ision of the Master water Sales contract between the City and County of San Francisco and the Suburban Purchasers. Palo Alto is a party to this contract and one of the )0 suburban purchasers that ma)(e up the Bay Area Water Users Association (Association). Suspension of this section of the contract will resolve a potential conflict between allocation of futUre water supplies and the mandatory ~atar rationing program enacted by the San Francisco Public Utilities Commission (SFPUC). Background In 1974, Palo Alto initially filed a lawsuit, with the remaining aqencies joining later, against the City and county of San Francisco to prevent. an increase in water rates to suburban purchaser-s higher than San Francisco resident customers .... ere to pay. During the period of 1976 through 1984, the parties to this civil action enqaged in extensive settlement negotiations in an effo~t to resolve outstanding differences amicably and p~ovid~ a new framework for futUre relationships. The negotiations resulted in the ·Settlement Agreement and Master Water Sales Contract between the City and county of San Francisco and BAWUA members in San Mateo, Santa clara and Alameda counties· (Aqr-eement). Palo Alto signed the Agreement on June 8 1 1984, based on a resolution adopted by Council on May 21, 1984. Qiscussicn under the 1984 Agreement, San Francisco committed to deliver water to the 30 subur-han purchasers, at the prices determined by the. Agreement I s d:etailed fonnulas. Futur~ 'Water supply is to be allocated among the individual suburban aqencies by ll. method described in Section 7.02 of the Aqreement~ In essence~ Section 7.02 provides that if the &qencies do not agree amonq th~msel ves as to ho,*, the addi tiona! water should be allocated.. it 'Will be allocated based on usage measured at pe~iodic three-year intervals~ based on the average use during this three-year period. The first triennial allocation occurred in 1988, based Ofl. water use during fisca.l years 1984-85 through 1986-87. The allocation .formula in the Agreement tends to discourage conservation, since a purchaser's permanent entitl~ment to additional San Francisco water supplies is based Qn actual water use. Thus 1 there is a conflict between the program a~opted by San Francisco to reduce consumption during this current water shortage and the Agreement's incentive to maintain or increase consumption, in order to increase one's entitlement to additional supply. section 7.02 comes into play only if the suburban purchasers ara unable to decide how future \.iater should be distributed among themselves. Therefo!'"e, it is entirely 'Within the power of the lorr'holesale suburbar.: purchasers to decide to suspend the operation of the "vesting" provisions of Section 7.02 for a particular time period in whiCh watEr consumption patterns are unusual. Doing so, while not requiring any involvement by San Francisco, does require unanimous concurrence by the 26 SUburban purchasers who are involved in the allocation process. (Four purchasers are not affected due to temporary status or individual supply contracts that predate the 1984 Agreement.) Three years aqo, the Association and Palo .... lto faced a similar situation after the SFPUC adopted its water drought/conservation program in ltpril of 1988. Association members recognized the conflict betw~en the Master Sales Agreement and the water conservation 90a15 to reduce consumption. At that time, there was discussion about the F¥s 87/88 and tS/S9 being suspended fr"m the vesting aspect of the Master Sales Agreement. Only F'i 88/8";1 '"jas finally adopted by all 26 aqer:cies to be suspended. Several agencies voted not to suspend FY 87/88~ as their water usage did increase from the previous year. Palo Alto council voted unanimously to exclude F'i 87/ta and 88/89 from the allocation calculation {CMR:462:S, Resolution 67.3)4 The Agreement "protects" agen..:ies· vested \.'ater allocation, from decreasing~ as determinea by Section 7.02. If. during a triennial allocation, an agenc)d s average usage is less t'"'an the previous vesting allocation, that agency's allocation will remain at the CKR:483:tl t , . , i i I I I i higher value. This ensures that smaller and/or slower gro.,th aqencies' allocation of ~ater would not be jeopardized by larger and/or qr~"t11 agencies of tt.le Association. Recompendotton staff recOlDIenda thlllt council approve the attached resolution suspendin!;, use of water consumpti~n in FY year 91/92 from the vest.inq prooEJcilu'es of the San Francisco Water Department Master Agreement, conditional upon si~ilar action by all remaining suburban P\lrchaae. affected by the allocation process. , RespectTllY submitted, '~~ ... L _ \. BLAKE HEIT~ Senior Power Engineer ,£... '0' --/ ,( ... y ...... -7- RICHARJ) L. YOUNG Director of Utilities -'_' .'1 -". o_futl_ -./< (u,t/''J <- JUNE PLElUNG Assistant City Manager Attachment.s: Resolution References: CHR:H2:8 CXRI481:'1 ..... -rm ..... :1 ~~r ~::''l:'-.~~': • T 1 i __ l-___ ~_ RESOWTION' NO. ___ _ RESO)ArrION OF THE COUNCIL OF THE CITY OF PALO ALTO SUSPENDING OPERATION OF SEcTION 7.02(p) OF SETTLE !fi:NT AGREEMENT MID MASTER WATER SALES CONTRACT WITH THE CITY AND COUNTY OF SAN FRANCISCO FOR FISCAL YEAR 1991-92 The C(1uncil of the City of Palo Alto does RESOLVE as folloW's: WHEREAS, the ~ity of Palo Alto obtains water fro~ the San Francisco water Department ,"SFWn") pursuant to the tenr..s of a Settlem~nt Agreement and Master Water SalaD Contract with the ~ity and county of San Fran.:::isco ("Cont:-act-j and a water Purchilse Contract ~itt~ the San Francisco Public Utilities Co~mission, each of which was entered into in 1984~ and WHEREAS, the San Francisco Public Utilities Commission, on May 8 f ~99C r declared a -wat.er shortage emergency and adopted a mandatory water Conservatio~ Program, inCluding water rationi~g and excess U$e charges. The goal of the mandatory water Conservation Program is to reduce significantly the consumption of water supplied by the SYWD within its service area; and WHEREAS, on February 26, 1991, and Ap~il 23, 1991, the S~n Francisco Public Utilities commission concluded that a water shortage emergency condition continued, as a result of a fifth consecutive year of be~ow-normal precipitation; and WHEREAS, the :mandatory Water cOTiservation Proqram is expected to remain in effect until at least May, 1992; thUS, water rationing viII be impo~ed by the SrwD on its ~holesale customers for the majority of FY 1991-92; and WHEREAS, the Contract, provides a methodology by which individual wholesale customer's entitlements to the overall Supply Assurance made toy San Francisco a:re Gietermined~ Unless the 'Wholesale customers otherwise agree, this determination is based on water usage by individual wholes~le customers; and WHEREAS, the provisions of the contract that determine permarlent entitlements to a portion of the overall Supply Assurance based on ill'ater used are not compatible with efforts by all the wholesale customers to reduce consum.ption of SFWD .... ater ~ They should, therefore, be suspended in response to the enactment of the mandatory Water Conservation Progra~ by the San Francisco Public Utilities Commission and the actions by this agency and the othe= wholesale customers to encourage .... at.:.r conservation~ NOW, THEREFORE, the City of Palo Alto does hereby RESOLVE as follows: SECTION 1. Subject to the provisions of Section 3 of this Resolution, the provisions of section 7.02 (b) of the contract 1 91103 I kp 0050443 ~ I .. o dealing with the a.llocation of that pcrtion of the Supply Assura.nce designated as ·suburban allocable water" shall be suspended as to wat~r used by wholesale customers during FY 1991-92 (i.e., July 1, 1991 -June 30~ 1992). ~ate~ usage durinq this fiscal year will not be used for any purpose in oetermininq permanent entitlemer.ts of the wholesale customers tc suburban allocable water. SECTION 2. In all ether respects, section 7.02(b) cf the con'::ract shall roemain in full force and effect and shall operate 'Without moclification as to wa'ter USEd during all years other than FY 1991-92, commencing with F¥ 1992-93. SECTION 3. This resolution shall not become effective until ad.option of similar resolutions by each of the 25 other wholesale customers affected by Section 7.02 (:b) on or before December 31., 1991. If each and all of the other 25 wholesale customers ha~"e not adopted similar resolutions by Deceml:;:er 31, 1991., then this resolution shall be ot no further force or effect and the provisions of section 7.0~(bJ of the contract shall apply to wate~ used during FY 1991-92 in accordance with their terms. INTRODUCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: APPROVED: City Clerk Mayor APPROVED AS TO FORM: APPROVED: City Attornr;,y City Md!'laqer Director of utilities 9lLmll.:p~l