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HomeMy WebLinkAbout0486.093I ! I , • ~_"'c,. ~ , ~'~~" -";::.,,:-;'=?i / t"~.:, _ 'co,,,·. '-.. ~ o SepteabGr 16, 1993 THE HONORABL£ CITY COUNCIL Palo Alto, California Water Integr.at§d Resource Plan Meabers of the city Council: Jhmort in Brief ;~- ~------- This report transmits to council a "draft" copy of the Water Integrated Resource Plan {IRP). Tbe rlan addresses the long-term planning issues and identities the water resource alternatives available to Palo ~~O~ No action is required at this time. The document is available to the council as additional informaticn in advance of the joint study session with the utilities Advisory ca..i.sion (U~C) on October 4, 1993. BackgrQund Staf~ initiated the integrated water resource planning p~ocess# to deter.ine the hest choice the city could make regarding long­ term contract~l commitments toward the anticipated San Francisco Water Department (SFWO) Hetch Hetchy Treatment Plant~ However, action has been delayed on the proposed treatment plaut and a coaaitaent to the SFWD is no longer imminent. Therefore# the focus of the IRP turned to the determination of the value of rec!aiaea water to the water Utility as part of the City's examination of reclaimed water, as both an alternative water resource and an alternative wastewater disposal method. ClOU486:93 ,,:., . I I ~ Anlilysis The analysis of any single resource necessitates an appraisal of all alternatives, to determine the best available. The analysis process UB~d is a very structured approach, which began by screening all alternatives and influencinq factors to the most viable and the most sensitive factors. The M'Qst viable alternatives were then studied in more dept:t'l~ Repp!!r!!!f'ndatioD Steail'l9 from a calculation of the value of reclaimed vate~· tc the Water utility. the report recommends that the Water Utility pay no .ore th~~ 70 percent of the cost 'Of water from the SFWD for reclaimed water. The value to the water utility of reclaimed water does not, in itself, justify the reclamation project. Justification hinges on the joint benefits of the project to both the water utilities, which would purchase the water, and the partners of the Palo Alto Regional Water Quality Control Plant~ In addition, future water planning efforts need to consider the fo11owinq issues: !. When the value of maintaining Palo Alto's right to qroundwater can be ascertained, that value should be weighed against the costs to the co~unity of using ~~e valls. 2. It, and when, ~ commitment to the SFWD is required, analysis viII need to be redone with updated assumptions and a f~esh look at all the alternatives. 3. A decision on a demand-side management program should a.ait the conclusion of a study currently underway, which will provide more info~tion regarding the potential for and the cost of water efficiency imprmrements. ClOI:4U:t3 utilities Advisory commission Action The final draft of the Water IRP was presented to the UAe on september 1, 1993. In the preceding year, the VAC has examined the Water IRP as it has progressed from the establis~ent of the resource alternatives and evaluation c~iteria to its final form. At the september 1, 1993, the UAe Dade the cot ion -to endorse the september 1993 Water Integrated Resource Plan as the f~amewo~k for water resource aecision .aking". Respectfully submitted, , \ fi"", tl ,JX.~ ; __ _ TOM HABASBI R~~~~nn~n~En9ineerinq I!~ ~~ v-,;z;{ Inter!. Director of Utilities ~I'c\.~~ BERNARD M. STlIOJNY Assistant City Manager Kanaqer Attac}ment: september 1993 Water Integrated Resource Plan s~ptember 16, 199) THE HONORABLE CITY COUNCIL Palo Alto, california Hater Integrated Resoyrce plan Members of the City Council: Report in. Brief -;,' . "-~~--," ,2~ ""1;;,, This report tra~s~its to Council a -draft-copy of the Water Inteqrated Res~rce Plan (IRPl. The plan addresses the lonq­ term planning issues and identifies the water resource alternatives available to Palo Alto. No action is required at this time. The document is available to the council as additional information in advance of the joint study session with the utilities Advisory commission (UAC) on october 4, 1993. Staff initiated the integrated water resource planning process;to-­ determine the best choice the Cjty could make reqardinq lonq_term .'\ contractual commitments toward the anticipated San Francisco Water Department (SFWD) Retch Hetchy heatment ptant~ However, action has beeJ'l delayed on the proposed 'treatment plant and a commitment to the SFWD is no longer imminent. Therefore)the focus of the IRP turned to the determination of the value of reclaimed water to the water Utility as part of the City's ~ .. , .~ ; -= : · -. " examination of reclaimed ~ate:>as both an alternative water resource and an alternative wastewater disposal method. AnalysiCi The analysis of any single alternative necessitates an appraisal or all alternatives/in order to determine it the sinqle alternative is the best available. The ~nalysis process used is a very structured approach)'WhiCh began by screening all alternatives and influencing factors to the most viable alternatives and the ~ost sensitive factors. The most viable alternatives were studied in more depth. Recg .. endation Stemminq from a calculation of the value of reclaimed water to the water utility, the report recommends that the water Utility pay no .ore than 70~e cost of water fro~ the SFWD for reclai~ed water. The value to the Water utility of reclaimed water does not, in itself, justify the reclamation project. ~-­ \ ~ustification hinqes on the joint benefits of the project to both the water utilities which would purchase the watar and the ) j partners ot the P~lo Alto Regional water Quality Cont~ol Plant. In addition, future water pla~~inq efforts need to consider the fQllowing issues: ;';'-... I · ~ J. . <) When the value of maintaining Palo Alto's ~iqht to ground'k?ater can be ascertained, that value should be 'Weighed a9~ir.st the costs to the community of using the veIls. 2~ If, and when, a commitment to the SFWD is required, analysi$ will need to be re~one with updated assumptions ~nd a fresh look at all the alternatives. 3. A decision on a demand-side manage~ent program should await the conclusion of a study currently underway)which ~il! provi~e aore information regarding the potential for and th~ cost of wate~ efficiency improvemen~s. Utilities AdyisQry commission Action The fina~ draft of the Water IRP was presented to the UAC on September 1, 199J. In the precedinq year, the UAC has examined the water rRP as it has progressed from the establishment of the ... resour~e alternatives and evaluation criteri .. tbrciS; to its final form. At the September 1, 1993, the UAC made the motion -to endorse the September 1993 Water Inteqrated Rgsource Plan as the fraaewo~k for water resource decision making-. Respectfully submitted, --" T<lll lI«hash i ~$sourc. Pl~nninq Enqineerin~ Manaqer 2dw~rci J ~ Krizek tnteria Director of Utilities June ~~n9 city IIan .. ger Attachl1ent: september 1991 ~ater Inteqrated Resource Plan • I PALO ALTO WATER INTEGRATED RESOURCE PLAN September 7, 1993 PREPARED BY THE UTILITIES DEPARTMENT RESOURCE PLANNING STAFF Primed on Recyc1t!d Paper Water lnt"l:raled Resource Plan Tabl. or Contents poge I. fuecutive Summary ... .................................. I U. Background and COnlext of the IRP ...............•............ 4 Historical Backgrou nd . ~ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 4 Existing SuWli.. . • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • . . . . .. 4 M('Iti vatioo to do the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .' 6 CUtT'eOl Planning Issues Fa::ing the "'Vater Utility .' . . . .. ....... 6 Objective of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 8 Overview of IRP Document ............ .................... 8 ill. Analysis Metl>odology . . . . . . . . . . . . . . . . • . . . . . . . . . . . . • . . • . . •. 9 Dec:isi0fl Analysis Process ...................•..•........... 9 Problem Fonnulation ..................................... 9 Problem Statement. . . . . . • . . . . • . . . . . . . . . • . . .. . ........ 9 Evaluation Criterion. • . . . . . •. ............ . .......... ]0 Long list of Resource Alternati\les .. ' ..................... 10 List of UnCer1Zinties .....•.......•.....•.....•....... 11 Deterministic Analysis ..................................... l2 Probabilistic AnaJysis ................................ 12 IV. Assessment of Resource Alternatives . . . . . . . . . . . . . .. ............ 14 Characteristics to Appraise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 C<lSl .•.••••.••.....•..•••.....•••...•...•••. 14 A vailabilil)l .. . . . • . . . . . • • . . • • . . . . . . . . • . . . . . • . . . • .. 10\ Water Quality ......................... . .......... 14 Reliability . . . . . . . . . . . . . . . . . . . . . . . ............ 15 EnVltonmel1taI Impact. . . .. ................. . ..... , .. IS Sensitivity to Regulations ..... , + •••••••••••••••••••••• _ IS Acceptability. . ................................... 15 EJ<perience of Others ..•..•... . . . . . .. .•.............. 15 Enhanced Emergoncy Prep<>redness ..•.............•..... 15 Water lolegrated Resource Plan Table of Contents page Resoorce Alternati,es and Uncertainties .......................... 15 Warer from the SM Francisco W2ter Department . . . . . . . . . . . . . . .. 15 Demand-Side Resources ..........,................ 16 Noopotabie Reclaimed Waler ........... + • • • • • • • • • • • • 16 Treated Waler from the Santa Clara Valley Water District ... _ . . . . .. 17 Existing Groundwater WeUs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i8 New Potable WeU De,:!opment ....... . . . . . . . . . . . 18 New Irrigation-Only Well De,elopmen' . . . . . . . . . . . . . ..... 19 l)esalination ........ _ . _ ......... _ . _ ................ 19 Initial Soeening of Aiternatives . . . . . . .. . ............• 20 V. Deterministic Analysis ... _ . _ .............................. 22 PuIposIl . . . . . . • . . • . . . . .. ............•......•......... 22 Detcnninistic Analysis Overview ............... . . . . . . . . . . 22 First Round Sensitivi:y Analysis ......... " ................... ~3 Recommendations from First Round Sensitivity Analysis . . . . . . . . . . . .. 24 Secood Round Sensitivity Analysis .....................•..•.... 25 .Recommendations from Second Round Scnsitivjty Analysis .......... ~ .. 25 VI. Probabilistic Analysis .....•.............. . ............. 27 PuIposIl . . _ . . . . . . . . . . . • • . . . . . . . . • • . . . • . . . . . . . . . • . . . . . _ 27 Expert Intervlews lOT Key VIDab~e5 ............ .. + •••••••••••• 27 Hetch Hetch)l Wat~ Treatment Plant C~pital Cost ............... 27 Drought Likelihood ................. . 28 SFWD Commodity Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 VII. ResulIS. _ . . . . . . . . . .. . ............................... 30 Analysis .....•....... . ....................... 30 Risk Analysis .......... . . . . . . . . . . . . . .. . ............... 31 R.ecommendation ................. _ . . . . . . . . . . . . ........ 32 ShOlHerm Action Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Loog-Iemt Direction .•......•........•...•..•....•... 32 I i ~ I \ ...... -. ;,.. ":.' Water Integrated Resource Plan Table or Contents page Vill. Additional Analysis 10 be Completed ... " ...•................ 33 Reclamation Decision .............................. ~ . . . .. 33 Issues 10 Take Up in Subs.:quenl IRPs ..........................• 33 Ust of Figures Figure I: Figure 2: Figure 3: Figur" 4: Figure 5: Figure 6: Figure 7: Fig"", 8: List of Tabl .. Tabl. I: Table 2: Table 3: Table 4: List Df Appendices Historic V/ater Consumption Since 1910 . . . . . . . . . . . . .. . .. S Waler Consumption Since 1965 and Forecasts for Future Demand . . 5 Initial Deci siol'l Tree . . . . . . . . . . . ~ ................ 12 Initial In n uence Diagram ........................ 13 Deterministic Phase Decision Tree .................... :2 I Deterministic Phase Influence Diagrar.'l .. + •• ~ • • • • • • • • • • • • 21 Dep<ildenl Relationship Between Forecast and DSM Impact . . 22 FinaJ Decision Tree . ~ . . ~ . . . + • + • • • • • • • • • • • • • • • • ~ • 30 AJternatives Under Consideration for Deterministic Analysis .... 20 Values for Probabilistic Phase .......•............... 29 Value of Reclaimed Water 10 Utility . . . .. . ............ 31 Value of Reclaimed Water (90% confidence range) . . . . . . . . . . 32 A: Preliminary Assessmenl of Water Resource Alternatives B: List and Description of Uncertain Variables C; Detailed Results from Dererministic Seositi"'ily Analysis D: Derailed Results from ProbabLlistic Analysis .. i I AF Acre-iOOf: AFY Acre-feet/year ! I , DSM Dema."\d-Side Management PERC Fo:Ieral Energy Regulatory o,mmission FY Fiscal Year HHWTP Herch Hetcby Watei Treatment Plant lRP Integrated Resource Plan O&M Operations and Maintenance PVTRC Preient Value of Total :lesource Cost SCYWD Santa Clara Valley Water District SFWD San Francisco Water Department TRC Total R=urce Cost UAC Utilities AdviSOlY Commission iv .- 1. Executive Summary lntegratod resource planning is a research activity that resiJitS in a business action pi.a"!. Information is gathered and 'analyzed through a struclured p.toce~s to determine: the re\ati'Ye = of many possible future plans. The goal of an IRP is to select t~e b>!st plan or resource portfolio to meet future water demand. Finally the plan makes 3 recommendation regarding an impending decision. The integrated ~'aler resou.rce planning process was initiated 10 determine the be:;t choice the City could make regarding long term conttactua1 commitments to the San Frandsco Water Department (SFWD). These )ong term c{Jmmltmeuts were belle"ed ne-.cessary to finaflce an eJtpensi\fe filtration pW\t for !.he Hetch Retchy sys.tem. Also the SUiff needed to ce:.ennine ",that actioo the Water Utility should take rega.rdin~ participation in the ~'3ler reclamation project. ill fact, the decision regarding the reclamation project became the main question addressed in thb lRP as a commitment to the SFWD is no longer imminent. Th.is report documents the City of Palo Ailo integrated ~'3.ter resource pla"'U,ing activity whicb was done to address t~ese two isslleS. Included in the report are: 1. Important infonnation and assumptions about plausible wa.ter resourc.es (Chapter IV) 2~ A description of the analysis used to evaluate the many resource plans that are possible (Ch.pter Ill) 3. The identification and analysis of most im!JQrtznt factors which impact th! plan altemanv .. (Chapters V >nd VI) 4. Short-and long-term r""ommendations (Chapters VII and VIll} Decision ilWysis IcchniqlJes were used in the planning process becau.se these methods provide a systematic way to examine comple" situations. The process involves five major blocks ofacuvity: fonnui<Hion of the problem, development of a mooel, risk analysis, aaoption of a pian~ and action. 1be problem formlJlation stage includes de .... eloping a formaJ problem statement, assessing all .alternatives, and selecting a criterion for comparing the ahematives. To address the problem of determining the appropriate commitment to the SFWD and (0 redaimed water, staff evaluated .all of the water resources alternat.i",es available to the City. " o Jmportant characteristics of and :SS!.ICS related !o these resources were investigated. The a!b'lDuteS deemed most important in deflning a water resource were; cost, availabili ty, water quality, reliability. environmental impacts, vulnerability 10 regulatory limitation, public acceptability. and e.'1hallcement of emergency prepa.redness. The potential water reso:.JTCeS included: wate} from 'the SFWD. water from the Santa CiaI3 Vaney Water District (SCVWD) !reate<! water pipeline, pGtabIe glOundwater from .kisting wells, pGtable gtQU!1dv.'ateT from new wells. groundwater from new weUs for irrigation uses, desalination, and demand-side management (DSM). While appraising the alternati\/es staff took into account that each water source differs in quality. Lower quality waters .can cause additional costs, beyond 'Utility rates, (0 Palo Alto residents and businesses. The most evident of thele additional costs are for water softening and bottled water. To capture the tr\1e oost of water to Palo Altans. Total Resource Cost W-d..S selected as the criterion to evaluate tile alternative plans, The ana!ysi:: process beg~ with U1e development of a model which can calculate the Total Resource Cost for each possible plan. The mode! analyzes all the .... '().t~r resource options available under the many uncertainties that exist about Ole fl.lIure, Th~ uncertainties are handled by developing a r=nable range of values fo, each variable which may be critical, A major objc!Ctive of the flIst aria] ysis. phase is to reduce the number of poiSible plans and uncert:;liq V':I~.3bles to only the most 'liable phns and sensitive variables. The detenninistic phase analysis resulted in the removal of desaJination, groundWOiater a.1d water from the SCV'ND treated water pipeline from further consideration as these aJtema.ti ves were too costly compared to the other available optior.s. The.re.mainiJlg viable alrematives were water from the SFWD, DSM, and ,eclaimed water. Th"'" variables were identified as the key uncertainties: the capital co"-of the Hetch Het<:hy water treatment plan~ the SFWD commodity COS! escalation rate, .and the likelihood of water supply reduction, in the furure. These three variables were analyzed further in we ne.x;t analY,'iis phase. The analysis iI1c1udc.s identifying an expert for each sensitive variable and assessing Ole expe:rt?s judgmental uncerta.tnry about the vanables. For each of these uncertain variables, a fonnaJ structured interview of an expen was conducted. The result of the systematic procedure 1$ a probability distribution which expresses. tho:. expen's judgemer.t of the relatil{e Lilelihood of possible values for the variable, FinaIiy. the model is updared with the information from Qle expert interViews. Given the above understanding of the future as we can best assess it, we return to the originaJ question: what should be the Cit{s commitment ro Sr"'WD and reclaimed water. Based on the analysis, staff recommends: 1. If the full reclamation project is constructed, the W<arer utility should: a. pay 00 more than 70% of the cost of water from the SFVv'D for the 2 '~' I i , reclaimed 'oWater; h. commit to about i8,OOO AFY of water from tile SFWD; and c, pursue 2. DSM program of permanent efficiency improvements which would result in water savings of 1440 AFY or about 8% of the 19B7 use. 2. If, however, the redamation project is nOl built, the water utility should: k. commit to .bout 19,750 AFY of SFWD waler; and b, pursue a DSM program of permanent effLciency improvements which would result in water savings of 1440 AFY or about 8 % of the 1987 use. This IRP primarily addresses decisions regarding commitments to reclamation and to the SFWD, however, neither dedsion must be made immediately. The water utility should continue to participate in discussions and protect its stake in the development of thes::: resources. When decisions must be made about tllese or other 'aII.'ater resources, the analysis sbauld be reviewed in light of the latest: information. Some of the issues which may arise as tle\\' inf~"7Oation develops inc] ude: 1. The value to the water utility of reclaimed water coes not, in itself. justify the reclamation project. Tha: j Llstl flcation hi.1ges on Ole joint benefits of the project to botb tile water utmties and t.~e partners of the Regional Water Quality Control Plant. 2. When tile value of maintaining Palo Alto·, riEhtlo groundwater can be ascertained, that value sflould be weighed against Ihe costs to the community of using groundwater. 3. AnaJysis wiH need to be redone with updated assumptions before making .a final commitment to SF-""Wn if it is required due to tile construc:tin.'1 of a large filtn.tOn plant or any other signit~cant capital project or proje\:ls which may require such a commitrnetlt. 4. A decision on a DS.""I program should await the conclusion of the mulli-commodity DSM report when a more detliiled analys.is of the potential for and the COSl of water efficiency improvements is evaluated. 3 ll. Background and Context of the IRP Historical Background The water utility gO! its start on May 9, 1896 --Iwo years and one monlh afler lIle City of Palo Allo incorporated. Local water companies were bought out al that time with a $40,000 bond issue by the voters of the 750 person -community. These private ".,:aler companies opc:ra1td one or more shallow wells lc .serve Lie r..:.acby residents. The city grew and the well system e~panded until 9 wells were in operation in 1932. In December 1937. Palo Alto signed a 2O-year-conlr3.ct ~'ith the SFWD for water deliveries from l:he newly constructed pipeline bringing Helch Hetchy ' .... ater to the area. Hetch Het~hy water deliveries commenC<d in 1938 and well production declined to less tI1an half of the IotlI citywide water demand. A 1950 engineering repart noted, "Ille capricious alternation of well wate" and the SFWD water ••. hM made satisfactory .service to the average consumer practicaHy impossible.· However, groundwater production increased in the 1950's leading 10 lowered groundwater tables and water qualily COOCf"ms. In 1962, a survey of water softening costs to Palo Aha custcmen deterrrUned that the City should purchase 100% of its "Water supply needs from the SFWD. A 20--year contract was signed \\~th San Francisco and Palo Alto's wells were placed in a standby condition. Existing Water Supplies Since 19f12 (except for some very short periods) all our water has come from SFVlD. In 1988, the ten existing wells were evaluated. Four were sealed in 1988 and 1989. Two remain inoperative, but are not sealed. FOtJr wells are on standby status, b'Jt must be rehabilitated to produce porable water on a continuolis basis. These four wells were operared from July to December J988 and in early ]99J to provide supplemental wa.ter during a period of mandatory rationing of SFWD water. Figure 1 shows che city's \o\:ater consumption since 1910. 4 • I ! I , City of Palo Alto Wafer Consumption ..... - -r--'----------------- ",. -,---.,.-----------'----------~------------­ MI ~----_r_____~--------""'-.-------------~-.-.1 __ ' __ 17 , ---------------. -~------....,......------ • -----------,._-----._-------< --'-' -------------l5' -L.. : __ ' ___ L ___________ _ ~ ~-_-=---=::!--------~~-/7:---~::::~~:==------ tr '----l-----, ---+-------~-----------r-------------------,----- • I ",I -------------------,----------------- 10 --------------.--.j.--------..,----7-, ----.----~---------- t i-t------------~----------------r--------------- ~ t:i=~-=' ,~2-:===~/==~-==~~--:~~-;=-~~ :Lm i --~--;--------=----l -_~(--:-' ----~=_=___=_~_==_=_~-~ • t--+-~-~----------------, ~ r--1:::==~ :--=~--=-', _= _______ : =~==_~-~---, -, .... ....... ' 1070 - City of Palo Alto Water Consumption ~I __ INS -..-_..-..-.30:2 21 I J .. H , , r -'-.. --.. -"~ __ ,--t-I ---,,-, -----• /!J~+::---r--(.,t----m-~-;t~:e.aa '6;, ..... ~'-~ • ''--m_; , . I, .. --' --h--------~ 'I ,,1,1 , .,. ---------r--------- -~---------~----------- ~~~---- , , 'IS L-.........-_________ ._, _ _!__: • , ___________ m----: ______ ~ __ M :-___ ~L __ .--______________ -----.:........~+_~_:~ ____________________ _ ",-' -.:.-- n -~-c--~--,----lII6S I .. n J8M ---~--------~--------wro _ - 5 . ' ,. -,J'" o Motivation to do the Plan In the Spring of i992. me Surface Water Treatment Rules broughl about the prosper.:t of a ~ expensive fJJtratior. plant fOT the Hetch Heteby system. At about the same time, the City was undertakiJlg a comprehensive ~fUdy of reclaimed waler as both a water supply alternative and a means of divenir.g effluent from disposal into southern San Francisco Bay_ In order to detennine the appropriate resource decisions regarding each of these issues, Resour<:e PWming S!aff decided to prepare a study (lRP) of all of Palo Alto's water supply allematiVel. Planning Issues Facing the Water Utility Future Demand Due 10 the recent water shortage, the City's demand for water IS about 35% less than the consumption in 1987, the last year considered "normal". Since tlle last six. years have been drought influenced, it is difficult to predict what "normal" demand ""ill be or when it will return. It is unciear 10 what extent water customers have adopted pmtice.s and installed bardware to permanently redu('.e [heir consumption. 1987 water use was abo1Jt J8,{X)() acre­ em (AF) while FY 92-93 wruer use was only 11,000 AF. Figure 2 shows the City's water consumption since 1965 ;in.d &.e range of forecasts de\,·eloped. Waur Quality Perceptions Even though any woller delivered would meet drinking water standards, people are likely to respond to a change in the quality of the water they receive. rn surrounding communities which utilize water of poorer quality than that of SFWD's, there is a higher demand for borne treatment devices, water softeners, alldJor bottle4.1 water+ These costs should be considered when deciding whether to commit to a new resource. Retch Hetehy Water Treatment Plant (lnrnTP) Studies are currently underway regarditlg wheL~er SFWD can avoid filtration of its Hetch Hetchy water supplies. If a. fihration plant must be built. its high cost ($300-700 million) will approximately double our water costs from SFWD. In this case, it is likeJy that Pa.lo Alto wculd be required 10 make a tale-or-pay commitment tied to a specific amount of water. Ho","'ever? this commitment may be mitigated by the .;:rea.tion of some pooling aJ'J'aJ1gement or the ability to "JdY-(lff" unneeded capadly in the future. An additiooal fealure of the HHWfP i, that it may be located such that it can taXe water from sources other man traditional ones (e.g. water from the Sacramento-San Joaquin Delta). This feature adds flexibility in the face of regulations which may limit currenrJy heid water 6 . ' .. / /. , . / rigbts and enhances the system's ability Ie fInd alternate water in time'l of water shortages, However. obtaining t.l:Jis additional Delta water requires the construction of a pipeline or canal to the Delta or to a conveyance facility sucr. as the Delta-Mendota canal. The cost for this facility could be substantial. Don Pedro Reservoir and Dam FERC Relicensing These proceedings are undef\0V3y atld requests are being made to r,kase addiuonaJ water i.nto the-river. The Modesto and Tl.lrlock lrrigacon Districts daim that slnce the ownership of the facility is 52% SFWDI4S." Districts, that the SFWD shuuld comnbu\<: 52." of the total requirement to in-stream use. The manager of the Het;;h Hetchy system estimates that this requirement would reduce the sys:em's safe yield by about 9%. Bay-Delta Proceedings Since SfWD is an upstream diverter from a river which feeds lhe DeTta, it is likely that they will Jose some of their rights to water from the Tuolumne Rlver in these: proceedings. However, e%pe!tS believe that if SF\VD ccntnoote.s water to in-stream use due fo the FERC relicensing, they wil1 not be required to contrihute additional flow. Establishment of Righb to Ground,,'ater In order 10 establish oU" rights to groundwater. we rna)' kavt to U'Se it. The establishment of this right i5 advised to: 1) provide a basis for suit of parties whic~ may ,",mage the groundwater by pollution in the futur~; 2) maintain the groundwater resource as a potential .option for anytime in the future; and J) provide grounds for getting a "fair share" of the groundwater when adjacent agencies begin pu mpil1g the aquifers. PoliticallRegulatory Pressure Various government policies and reguJations have been brmJJht to bear on water users througboot the state with the focus of six consecutive yean of below average avaHahHity of water. The envirol1ment, in particular. is. seen as ha .... ing a need for water. However. since most of the water in the state is. already spoken for. any water allocated to the environment means that water will be taken from a current right holder or contractor. The upshot ofth~ pressures is that water will rise In price. fall in availability. and be pursued from nontraditional sources. Wasle and unreasonabie woe will be reduce.d and Step5 wiU be taken to re-evaluate whether all available sources are being used in the most effective way. A$ an example, the 'Erldangered Species Act is a powerfut too} which is. being used. by environmentallsts to resmct water diverstons. It has the potenti::J to limit the amou.nt of 7 • water SFWD would have available by forcing additional ;valer to be made available for in· stream uses for fish and wildlife babitat restoration. In addition, the Pubii<: Trust Doc!rine is being used successfully in CO:Jrts by envtronmentalisl$ to provide additional water for in­ stream uses. Objectives of the Plan AI the time the IRP was originated, 3. decision was imminent regarding the appropriate commitment level to the SF\VD given the plan to construct an ex.pensive treatment plant for Het.ch Retchy water. Howe ..... er, this decision is delayed for at !ed_~t a year. This IRP, then. focusses on the decision which we will face first -the decision regarding reclaimed water. The problem is tc determine the value to the ",,:aler utility of reclaimed \I,:ater. Put d.ifferently~ what is the most that the water Ulitity shouid pay for reclaimed water from the PalQ Alto Regional Water Quality ConlIol Plant? This IRP artempts to answer that question. The question, if and when it arises. of the SFWD commitment level will require additional analysis if not another IRP. Also, the que-suon of the. appmpriate level of demand-side management prograJ .. ;:; 10 pursue needs additional analysis. It is eXpe\:ted that more .information 10 make this decision wjll be made available after the completion of the Mult­ Commodity DSM report now undeT\lr,-a)'. Overview of the IRP Document This document is organized es5enr.ially cnronologrcany according '0 l1'le analysis method used 10 arri .... e aJ the recommended res1Jlt Chapter HI describes decislon analysis, the technique used in the preparation of this IRP. An appralsal of aIi resource alternatives considered is found in Chapter IV. Chapter V de..scnbes the resLilts from the deterministic analysis used to identity t.ie sensitive uncertain variables. Chapter VI discLisses the probabilistic analysis results. ReccJmmendations and conclusions induding the short-term action plan and the longer term direction are 'Contained in Chapter VJI. Chapter VIIf discu:-.ses l1'le nexl steps in water resource planning. 8 "' I i o Ill. Analysis Methodology Decision Analysis Process Resource planning decisions must be made even though the outcome of many future events cannot be ImO'WIl or predlcted. Making the decisions is complex. since there are competing aupply-and demaP.(Hide resources aiong witb these uncerta.inties. Decision analysis lechniques provjde a systematic way to break down compleJl: decisions into understandable components. Each step in the process gives analysts and decision-m.a};ers v3.luable insight into tbe problem and helps to focus on the most cri tical elemen rs surrou nding h'le decision which must be made. The steps in the decision analysis process are shown in the following diagram: Assess Develop Evaluate :[)e(:ide Esublish Situation Al!cmati vesI Rj'\h Among A PiaJ1 Of Inf·xmation Alternatives Action Problem Deterministic Probabilistic Evaluatkm Action Fonnulation Analysis Analysis Communication Problem Formulation The purpose of the problem fomulation stage is to deflne the pmtlem and set tile scope of the analysis. The steps include: I) slaLing the problem; 2) generating lists of alternatives? and uncef"t!lin variables; 2nd 3) designating the criterion or critelia upon ",,·hich candidate piaJ1s will be compared. Problem Statement %ich group of resource alternatives i!i. the optimum for the 20-year planning horizon? The question was prompted by a short-term need to determine commitment level 10 tile San Francisco Water Department (Sr-vtD) .as the pricc of that resource will increase draq]aticaIly dlle to the possible construction of the Helch Herchy Water Treatment Plant (HHWrP). In addition, the water utility must determine an appropriale price it is willing 10 pay fOT reclaimed water if developed for dislnoutLon iII the City. 9 I o A. stated before the UAC at the August 1992 meeting, the formal statement of the problem is: -What commitment should be made to SFWD and reclaimed water". Evaluation Criterion At the Au~us.t 1992 UAC !"!"leeting, the criterion to t: .. 'aluate aJtemaLives ...... as se)ei;ted. Since water sources are not fungible, lite decision was made to use ToW Reso~rce Cost (TRC') as the sing,le value criterion. TRC is the total cost that the communi~ incurs. These costs include the costs of all resources, the costs of all defl"Wld-side devices, costs to meet the water quality cri1l!ria of the utihiY'S customers if water of poorer quality is planned, J.Ild the loss of value to the customers when their end use fleedS ar~ not met. They de not include any transfers from one party within the community to another such as-the costs of any rebates offered to encourage participation in demand-side programs. We have not attempted to define externalities. This task has not bt:en done elsewhere to OUT knowledge; thus, we have no tlasis for assigning vaJues 10 er.vironmenta.l externalities. Long List Or Resou ree Alternatj,'e5 Palo AJto has many potential resource aitematives iJo.cluding those listed below. I. ~~ of SFWD commitment. Due to the construction of the HHWTP ~ Palo Alto and !be other custome", of !he SFWD may be asked to make a com mitment to !he SFWD for water supply_ This commitment wiH be the basis for a take-or-pay demand charge a.s.sessment. so what is me appropriate revel of commitment? 2. Dernan6 side mznagemem (DSM}. Various levels of DSM progr.lm oommltmem will be investigated" Which level should be selected? 3. Nonpolable reclamation. Which, ifa.,y, of the three alternatives or pha.~.; of the program 2.5 outlined in the Redama60n M:uter Plan should be pursued") 4, Treated water from the Santa Clara Valle), Water DisL';e, (SCVWD)" Should SCVWO's treated water pipeline be extended to serve Palo Alto? Shouid Palo Alto pursue solo ownership of the extension or share the costs and water deliveries with other agencies such. as Slaniord University and/or Purissima Hills? 5. Existing potable wells" Should Palo .. Ito refurbish any of 'he four potable warer weDs? Should their use be for full-time or for supplemental use? 6. New potabie wells. Should Palo Alto develop additional groundwater suppties? 7. New irrigation-only wells. Should PaJo Alto site and drlll new wells to serve irrigation needs of City parks? 10 -----" o '" 8. Dctr.inctalizallon. Should Palo Alto consL-ucl a demineralization plant for potabLe water use. using either seawater Of reclair.u!G wastev.:at:r? List or Uncertainties AppeIldU: 8 contains descriptions of the l.Jncertain va.."iables associated with each indi-.idual alternative and expanded descriptions of the uncerta3nties associated with t~e general areas listed below, 1. Fcrecast. The long-term demand for VI'3ler foUowing the recent drought is h.ighJy uncertain due 10 unkIlOW!1 levels of permanent versus temp:lrary conservation efforts. A range of forecasts were developed which differed by {he estimated amount of perm.anent conservation wh ich has taken pI ace in ~e years since 1987. the last "oormaI" year. 2. Drought EsLimates for the likelihood of dmught were developed using both hislorical data L,d possible future scenarl_os which could impact suppfy availability. 3. Fina.nclaI pa..P'3fi"leters. The City discount r.de is estimaled to be 3% above the inflation raJ •• 4. Water quality mitigation fI1t2Sures. Water utility customers may incur additional costs if water of lesser quality than pure mountii.in w.:uer (HelCh Hetchy) from the SF\VD is ddivered, It is expe;:1ed that ... ter softeners arnl bottled water would be purchased if delivered water hardn~ increased or if customers' perception of the Willer is poor. It is interesting to note that the COst to the cUSlomers of water softener was ciled as one or IIIe main rearons to shut of( the weUs in J 962, 5. Wa.stewaleT Treatment Expenses. Variable wastewater treatment electricity and chemical expensel mUSt be con.~idereci since the)' would be saved if demand is reduced by ccnservation. 6. Value of Quantity. During the 1977·78.and the recent water shortages, water utility customers were (orced :c do "~Iithout some '1uilI1lily of water that they normally would have demanded. "The customers incurred some cost for doing without this water. These costs are difficuJl to caJcutate. but should be considered in evaJuating the total resource cost or water supply aJk:m.aLi\'e~. The problem fonnulation .sLage J'e4'..AJlts car. be illustrated with the use of a decision tree (Fjgure 3) and an infl'Jel'lce diagl'3m (Flgure 4j. The decisions which must be made can be characterized as a yes or no ror some r~UTC( Oli"lematives and a levet of commitment for othCts. A plan is made up of a series or decisioos about each a1temative. This is shown schematically ir1 the decision trcc'. The innuert<:e diagram shows the factors which affect the components or the \o'alue criterioo. I J , • ,- I&yelof DSM CQIlC~liQD &il.d.A Existioi ~ SEMl Irrigation IOSCVwn ~<:ro Q)lW.tl: C£J!!Imjt-Pro= ~ tr=5l lIIiz.aIsm fQlaIlk fllIahl~ mmu L=I Willi:[ i2i~ plantZ ~ ~ none Done IIOW irrlg wells le .... ell rv.'o _ wells fulltime No No --mcd ---rw-phase 1 __ level 2 _---------__ _ Yes _ Yes IUgh ""-phase 2 no~ wells ~.-r level 3 rw-phase 3 Figure 3 --Initiai Decision Tree Deterministic Analysis In the deterministic pbase of the decision anilysis process an outcome: model is created to caIc\!laIe the value (p=1 value ofTRe, in this case) for each setting of the inputs, The inpua are the states of the alternati \Ie! and the states of the uncertain variables. The outcome model developed includes aU CDSts associated with each alternative, costs of customer water quality mitigation, and the C()Sfs of unmet demand. High and low values were developed for each uncertain variable which was likely to be important to the decision. These values are shown in Appendix E_ Results from the deterministic a..,arysis are identification of the sensitive variilbles --those for which the. optimal pJan changes depending upon tile setting of the value. Probabilistic Analysis The pwpose of the probabtlistic phase is to model and assess the key uncertain variables identified .in the detenninistic phase. The steps include identifying and inrerviewing an expert for each variabJe and assessing the expert's judgment about the uncertainty. The uncertainty is then represented ~ a probability .:IistTibution for the variabJe. 12 ---------~. .... ".." .~. '--- ilmp~ ftICf_: L __ ' ..... -,-~ FlaM! L-___ _ I~I :~~i 1 ____________ _ /~~~, ,fI""'lir]'.,­ '------' ........... ,«1" -. lIOfI~r .lIm~ -",. ';;~ ~';i" _~~ .... ~ tOS' __ " ........ ~ ... ter ,qt.,:, .ubJ:llhlln tTeIIltd .rrt COlI .__ _ __ ,,~_~/ "'-~"~~' • ___ AI" '!01I1CO!II , ponttlu ,------/ - Figure 4 -. Initiai Influence Diagram 13 ,----.., , d~OIIJllr ...... ario , '-----~ IV. Assessment of Resource Alternatives 'The Water Utility undenook a taroad assessment of all potential suppJy--side and demand-side resource alternatives. These options include water from Ole San Francisco Water Dep-.utment (SFWD), rehabiliration of the srandby ground",,'er wells for potable distnllution, drilling and deveJopment of new groundwater wells for potable distribution, deveiopment of new shallow aquifer groundwater wells for nonpotable uses such as irrigation of parks and alher large landscaped areas, reclaimed water, desalination, connection to the treated water pipeti:le from the Santa Clara Vailey Water District, and demand-side management resources. Factors examined for each aJternative include cost (capital, commodity, and O&M), availability, water quality. reliability, environmental impacts, sensitivity to regulations, and comm1Jn:ity acceptability. (See Appendix A for expanded deSCriptions of each altemative.) Characteristics to Appraise A first step in the evaluation of ""rater resource altematl'l.'es is to determine the appropriate attribuleS to eumine for each alternative. Th~ can then be reviewed and weighed as to their relative importa.'1Ce. F.acll aiternative has specific strengths and weaknesses so decisions to select one over another necessi tate trddeoffs among the competing at!ributes. The criteria Jisted here are not in order of importance. Cost Capital costs, if appropriate, and operation and maintenance costs. This assessment should include any factors which affect the cost (i.e. eApected system upgr.Jdes, project lifetime, energy costs, cbemicals, technical innovation, etc.) and the ma. ..... !ler in which the costs are iJ1l'urred (e.g. by amcllnt of commodity used, deb~ repayment obligation, ~mbination, or other). Availability The quantity. timing. peak flow or capacity, and any ellpecleti changes over time. When would the source be available al the earfiest'? Viha! faclors may affect the availability in the short-or long-term'? \Vho would have control over the operation and how would this affect availability? Water Quality All water resource options will have to meet an .applicahle water qualilY regulations but 14 I 1 1 I ! o options may differ in their relative water qualities. The quality rna} limit the use of the water and determine which end uses would be appropriate Mid which. end uses would have to be excluded. Are there any known health Of safelj issues that are s:pecifLC to this source? Reliability TIle reliability of the source under an arr2)' of conditions. What events would affect delivcrability7 Does the source add diversity and reliauih!y to the system: Vlhat is lhe behavior of this sourr.e in times of emergency and to what types of emergencies is this Sl.)tJrce VlIlnerable? Environmental Impacts Any environmental complicattoi1s or hazards thai are known or probable inclUding those re1ated to:) project siting. construction a.'ldlor operation. Sensitivity to Regulations Is the .resource vlOlnerable QC does it have strength in view of existing or impending fed~ra1. stale, or local regulations? Acceptability How will the community and the region find the option? Does pohticaJ opposition or suppon affect the likelihood of implementation? Are there publi,~ per..:epLion problems? Experience of Others What .is the experiei1Ce of other entities in the use of chis resource"? Enhanced Emergency Preparedness Would there be a.T1Y value in emereency situations to connecting [0 a new or refurbished resource? Resource Alternatives and Uncertainties Water from the San Francisco 'Vater Department High quality water from tne SFWD has been Palo Alto+s primary source of water since 1962. Approximately 85% of SFWD's water is imported from the Sierra Nevada mountains 15 '~; j '. ,;~~)~~~:~~ ,. and its availi.bility is dependent upon the hydrologjcal conditioI15 there as weU as the physical system coostraints s.uch as reservoir and pipeline capacity. The pos5lDle ronstruction of the HH\VfP greatly impacts lhe future cost of the rEsource. rn addition, future availability depends to some el<.tem, upon tile outcome of key legislative and regulato')' decisions. Unce~ties for this a!ternative include: 1. Commodity CQst escalation rate e,.c1uslve of HHWTP costs. 2. Hetch Hetchy Water Treatment Plant Information: a. Capital cost. Estimates range from $300 10 $625 mHlion. however it is also possible that there win be some regulatory relief and that a less extensive faciiity wiU b!: constructed to address some ''''<iter quality concerns which could cost as littJe as $50 mitlion. b. Financing terms. The financing period for this plant will be 30 years at an estimated bond rate of6%. Low and high vaJues are 5% and 8% per year. c. Operation and maintenance costs. Annual operatior. and maintenance rests are estimated to be about $501 AF. Since there is some unccrtain!)' aboot this number, high a.,d low values were tested for sensitivlty. DS!>f Resources To better analyze !he DSM resources thrre levels of DSM were developed: 4%,8%, and 12% of !he 1987 total usage for program level, 1,2, and 3 respectively, Program Level I is assumed to cost $2501AF; Level 2, S300IAF; and Level 3, $3501AE The administr.live costs for t.l)e impier!1entation of the DSM programs is estimated at about 510,000, S15,OOO, and .$20,000 per year for five years for Levels 1, 2. and 3 respectiveLy. DSM programs.are defined by the iollGwing parame~ers: 1) instnlled cost of the measure; 2) impact of the measure in water savings; and 3) administrative cooe;.ts 10 implement the program. The major uncertainly for this resource alternative is the fraction of the targeted reduction level which CJl1l actually be achieved. Nonpotable Reclaimed Water Three stages of a reclamation project were identified in the Reclamation Master Plan. Since the third smge extended pipelines to Mountain View 'Uses, the lhree M~ter Plan stages corresponded 10 ooJy IWO level, or redaime<! water use in Palo AlIo: 134 and 1279 AFY. Reclaimed water availability is nOL affected by drought-time water supply shortages, bowever 16 .",' >.' the end uses to wnich it can be applied are limited. Uncertainties for this alternative include: I. Share of project costs paid by water utilities. It is uncLear exactly how the total cost of the project will be shan:d by the project beneficiaries: waslewater ciischargers and water l!tIlities. 2. Project production relaLive to Master Plan projections. 3. Operation and mai ntenance costs. Treated Water Crom the Santa Clara Valley Water District Extensit'n of the SCVWD treated waler pipeline to serve Palo Alto is po.>.sibie. The quality of this v..'3ter is poorer that! that from SFWD~ bOi higher than that of tile groundwater. The SCVWD has access to multiple supplies, both local and im)XJrted, a.l1d ma."lages a fle;.;:ible syslern of surface 2nd subsurface slora~e. The allocation 0" water Palo Alto could receive is depc::ndent upon the capital cost to extend l.he pipeline as well as: whether other entities participated in sharing the cost and water receipts. This resource, as SFWD's, V-'35 subject 10 reductions in the recent drol!ght and its susceptibility to future water supply shorl2ges is partly depel1dent upon legislative and regu1al.ory decisions.. Uncenainties for this alternative include: I. Actual fraction of contract amount used. The contract amounl is a take-or-pay amounf~ .so if the actual amount used is less thi:lI1 the controict amount, the unit costs would increase. 2. Pipeline capital cost. The capital cost determines to the lake--or-pay objjgation. 3. Commodity cost escata!ion rate: EstimaTes of the "Basic User Charge" and the treated water surcharge were obtained from SCVWD staff. The Basic User Charge is the groundwater extraction charge. The rare at which this commodity escalates over the planning period is uncertain. 4. Water qualily mitigation: Trealed water from Lr,e SCVWD',s piperine has os hardness of about 167 mgl1, a levd which would cause some residents to convert to water softeners. Additionally, the water has poorer taste when compared to Hetch Hetchy water prompting some residents to purchase boUled water. 17 ' ... . . - Existing Groundwater Wells Palo Alto's four welts on emergency standby status must be refurbished if tl'ley are to be used on a continuous basis. Treatment of this water would aho be necessary SO as to ensure compliance witb all drinking water standards. In addition, the connection to the City distribution system needs to be modified to effect better mixing of groundwater 51JppIles with other" system waters. Since quality of th.e groundwater IS poorer than tha.t \o\:hich Palo Alto customers have become accustomed, it is anticipated that community costs for water softeners and bottled 'Water would increase. Santa Cla..-a county groundwater is managed by l1'1e SCVVID which charges a ·pump tax" for groundwater extractions in exchange for recharging the caunly aquifers, During drought periods, this suppl,!' is s~bject to reduced availability as are all supplies ma.'1aged by lhe SCVWD. Uncertainties for this allernative include: 1. Production. Pro(fuction is estimated from the four wells (Seale. Park. Hale, and Rinconada) used most recently in 1988. However, future production may not compare !O past usage. 2. Capital C<b1:. The estimate is influenced by unknowns such as the extent of refurbishment needed or appropriate and the requirement for treatment at the wells. 3. Operation and maintenance costs Annual operation and maintenance costs include tlIe costs of electricity and chemicals. The SCVWD charges a "pump tax· for use of groundwater in Santa Clara county. 4. Water qll4'lity mitigation. Groundwater quality is lower than waler from the SF\VD and treated water from the SCVV/D. It is expected that residential customers who would receive the water would become new cusf[Jrners of water scftening and bonlee water. New Potable Well Development New wells could be sited, drilled, and developed fOT porabte supplies. This alternative wouJd have higher first c(}Sts than refUrbishing the existing ~e]js. but other aspects of this .resource arc si m liar . Uncertainties for this altemative include: 1. Production. 2. Capital cost. Drilling and devefopmem ('osls vary depending upon siting and siung 18 .... conditions. In addition, as for tile existing wells, there is eXpe<::ted to be costs for water treatment at the well site. 3. Operation and maintenance costs. These are similar to t.'1e existins wells. New Irrlgation-Only Well De.'elopment Wells could be sited in City parks to produce waler for irrigation. No treatmen t would be required for this application, but costs are fairly high when divided by the relatively few hours per year wh:n irrigation water would be needed. This water is also subject 10 the SCVWD pcmp tax and drought-time restrictions. Uncertainties for this alternative include: L Production, 2. Capital CQst, Drilling ar.d developmetlt costs may vary depending "pon siting and sizing conditions. There is not expected to be any expense for water treatm~nt for iJrigalion use, 3. ()pe:rntioo and maintenance costs. Annual operation and maintenance costs consist toSl of labor and electricity for pumping. In addition, \his water is also subject to the SCVWD pump tall. DesaI; nation Palo Alto could build a desalination plant to remove s.a1ts and other constituents from San Francisco Bay water or from 'IoVaStewaler ef!Juent. Capital and operating costs for either of tbesealtemali\.'es are very high and environmental impacts wuld be sig'1ificant. However, this resource would be available in years when impo~ supplies were curtailed as. in i1 drought, Unc:ertainties for this alternative include: 1. Production. The load factor thai the plant would operate under is uncertain. 2. Capital cost. 8timates for Ll]e c.apitaJ costs vary and depend upon technology used. 3. Operation and maintenance costs. 19 " ," Initial Screening of Alternatives .Bec:ause of the length of the lis.t of alterna.tives and un=.ertaintiu, it was dec~ded to cOt'duct a screening. analysis in an attempt to ehmlnate very costly or otnerwis.: infeasible altemati\l~ from further consideratioo before proceeding to the deterministic pbas.e. The screening analysis resulted in the removal of two very high cost alternatives from further review. These were tJ;e <XJnstruction of a demincra1ization plant for desaJting either seawater or reclaimed wastewater and the drilling (If new nonJX)table wells far img:ation of dty parks. The remaining alternatives ale summarized in U;e decision tree (Figure 5) and influence If "'IlIllJD (Figure 6) and in the chart below; Alternatives Under Consideration (or Deterministic Analysis Commitlal!llt ~ "low-(14,000 AFY) ....... (16,000 AFy) ._" (18,000 My) '''''''Ib" ('9,m AFY) "mob' (lll,OOO AFY) N"", lArvd 1 (72C A,fY--4" of 1981 use) Levd 2 (1440 AF'Y-8'1 of )9ir7 w.e) ~ 1 (2160 AFY-127£ of 1987~) oclaimod _ Project Ncoe F..,. pwe (134 AFY) FIlU project (l219 MY) sc Trcah~ \l.·'at~r No. do DOt eonneo:l Yes, 50"" partidp:u'o ill pipdil1o:' (tJOO AFY) Yes. full participatioo in plpt:holi:! (4600 AF~') Paubk Wells No, do DOt u# Use 2latgtst nt', wt;Us (1500 MY) Use .... ex.~:l2' WCi[l! (3500 A,}' '() t. Dro\Igilf SUUrlC 2. R.3~ incra.-.e dUMg watoer .shGrUge:5 3. Cost of uaD'd demand 4. City diSC(lullI rate 5, ~mar:uJ (orccas1. I. Corna.oJit,)' «JSI escaIJIhoo taU: ~){ClU5l .... e of Hl-lVw'TP (:(IRS 2. HHWTP' caplW oosI 3. IUtWfP fLDaDcinC terms 4. HHWTP O&M eo:woS S. SIUll of HHVr7P colDULitmeolS I. Sha.."'e 0 costs paid by the wal.llr utiiily t. ProJu..:-tioo :t:13live :0 Ma..<o:cr Plan cs1imatt:S ). o&M ~osu. mclwllJ1g customer costs i. Fraction I;f contract &mOW1.L u.s«! 1. Pipduw capdal cost J. Com.-nr..x.lity ro,,"1. csca1a1inn rate: 4. Wak;r quatity ro.ilig.tiOd coW I. ProJuc:tlon rdativ;: 10 eSl i mate;. 2. Capi tar cosl 3. O&M cn:;ts 4. Water qU-i-firy mitigation wsb Table I 20 WATER Integrated Resource Plan Deterministic Phase Levc] of SEVin DSM CmnmjtnlN!t ~ low ;-----non< / mlow " ReclaIDgliQD ~:.m no , r--,I level I ,J:., me<! ~Lr---_i, first phase ! ,~--' 'Ievel2 ~:--------- ~~ mhig \\. full project \ '--'1e".1 3 , high L ______ _ CgODo;tjpn...lO: SJ:YlW I!J71IrM Water Eill<liil< Do not <;:unnect Par: ownef1ihip Full oYl,nersf1!p Figure 5 -Decision Tree ------1 I DSM ' ;~I '---' """""""' . , :;cvvm IT~.-c:r --~-....... -".o • ....,;--. ... ,'dl - 21 N,.'O wells fulhimc: / four ';lrot!ls su:plmntl < __ .., no wells """"""""""-< ~U-,'_ ...... --__ ,'.1 ... or ... """­ ---= "/~""',F-T--"- V. Deterministic Analysis Purpose A major objective of the deterministic phase of analysts is to pare down the number of both aIc.ematives and uncertain variables. A total of 900 plans or possible CGrnbinations of alternatives were analyzed. Twenty-two variables were considered uncertain and c'I;treme ("lew· and "high") values were develapeD in addiLion to the "nominal" value for each. These uncertain variables were l.:sted to dc:ennine whether they had an impact on the selecUoo of the optimal plan. The results from these sensitivity studies are the major outcome from this analysis and were used to draw oonclu:;ions before proceeding [0 t11e next phase of analysis, the probabilistic phase. Deterministic Analysis Oveniew TIle deterministic phase decision tree (Figure 5) schcmatica1l)i shows the a]rernatlYe plans evaluated. The influence di38ram (Figure 6) shows the u:1certainties which impact tbe value crHericn (TRC). Since there is substantial uncenainty in the forecut rega .... ding the level of permanent conservation in place after the recent drought, the. amounl of DSM achievable is difficult 10 assess. It is likely that the lower the level of permanent conservation. the grea.ler the DSM potential. Treating <he forecast and DSM impact variables asymmetrically .00 probabilistically as shown in Figure 7 takes this dependency into account. DtpHdmt Ret..tioaf.Jalp benrffJI Load FOfeUSI .. If DSM hnparl 10"",' ~H!"·.beJoo,.·19!I7J '-i5~';""---... -..... -.... - DSM [MpAcr "1Oi:.-.... -.... -~ ""7S~;; <~ _ .. --:H':;-<: bi<> 'M';"-~ .. I~ ... ,-.--:­ ._ 't7ast Jote.cafI t~. b.:loo.-1917) _ nomi.JW . -.......--5D'1-'.--···-··-···----'4Q;;-"'- fl~ ... __ / tush fule~ -im-.. _. __ . __ ._ .. _ .. - Figure 7 22 2~·. " -25%······ -"'-, >1(lminaJ -30'100 .,." 2~"- -<: o Two rounds of sensitivity atlal)'sis were required to reduce the SCI of alternative plans and uncertain variables to a manageable le:JeI for further ana1ysis in the prObabilistic phase. In the f1m round, the number of alternatives was reduced a."ld six .:;ensitive variables were identified. These were then analyzed in more detailed in the second round which resulted in the identification of L'1ree uncertain variables which were sufficienLly sensitive to undergo probabilistic treatment before making a final recom mendation. First Round Sensitivity Analysis When aH uncertain variables (eJl.cept for forecast and DSM progrdm impact) are set at Ll:!eir !'lomina! values, the optimaL policy (i.e. the plan witl:! the lowest TRC; is seiecttd and called the -nominal pIan-+ L'l this analysis, the nominal plan is: SFWD: DSM: Reclaimed Water Projec~ SCVWD Treated Water: Potable Wells; "high" or 20,000 AFY Level 1 (4 % of 1987 loarl) No project No, do not connect No, do not refurbish for continuous use Reclaimed water is not selected when the commodity cost is set eq uaJ to its original nomina! vaJue~ lOOt; of the cost of water from the SFWD, However. this value is not an uncesta.inty. but a decision the water utility faces. The maximum value to the water utility of reclaimed water can be thooght of as. t.'1e highest price the water utility would be willin.g to pay for tne reclaimed water when the reclamation project is selected from among the alternatives. In order to determine this val ue, the cost of reclaimed water was varied over a range. The first phase reclamation project is selected wbet1 the cost is less than abol!t 74% of the cost of SFWD waler. The fu)) reclamation project is selected when the cost is le:is than 65 % of the SFWD cost. When the c.ost of reclaimed water is less than 65% of the SF\VD cost and all other \t'anablp.s at their nominal value, the optimal policy is: SFWD; DSM: Reclaimed Water Project: SCVWD Treated Water: Potable Wells; "med" or 18,000 AFY Level 1 (4!: of 1987 load) Fun project No, do not connect No, do not refurbish for continuous 'Use Since the focus of this JRP j'§ on reclaimed water, the tentative value for reclaimed water was .set to 60% so that the sensitive variables. cDutd be identIfied given .an opumal policy which inel ude:s reclamation. The sensitivity of each uncertain variable was tested by holding the v3lues of aH other 23 • :~~'-~ ~': :-::>-.. o YUiables to their nominal values while the target variable was tested sequentially at its high and \ow values. If the optimal policy changed from the nominal plan, then the variable is deemed sensitive. Recommendations From First Round Sensitivity Analysis The results of the first round deterministic ana1ys[s lead !(\ further refinement of the aJternatives and uncertain variables. The remaining 'Uf"K.':ertUntle5 wiH be considered in the more detail especially as to how they relate to the main short-term d.ecision regarding the reclamation project. Jt is very important to winnow down the list of variables for pn:tOObilistic treatment. 'The (ollowing are the recommendations at the conclusion of the fIrst round of the detenninistic analysis phase: 1. Remove existif!£ potable we!!s from further analysjs. It appear.s. that there are plenty of other alternatives which 3fe of higher value to the communtty. Wells are not selected even if the pump tax is zero Q! when SCVWD \lV3.ter is \lcry inexpensive. In additi.on~ the cosrs to the i;:ommuni!:y for wate; softeners and bottled water if the wells are operated are s.lgnificant. Wells are only selected if these costs are actually less than 16% of the costs estim31ed. Note that the wells remain as a starJdby source and that. they can always be refurbished and activated when appropriate:. 2. Remove tlIe connection to the treated water pipeline from the SCYV .. 'D from further consideration. Neither the fu!! o .... 'Tlerstiip nor the partial ownership option are selected at the extreme value of any variable. The only time tllese options are selected is when the future cost of SCVWD is \Ie!)' inexpensive (Le. me rea) escaI.ation rate is negative 4!t!yearn. 3. Reduce the number (If SF\VD commitment levels to four. The four levels (17500, 18500, 19311, and 20000 AFY) rover a smaller range than the original five alternative level.lj:. 4. Set the following variables at their nominaJ value for further analysis since they are no; sensitive to .he selection of plans: I) HHWrP O&M costs; 2) HHWTP bond rate; 3) total HH\VTP commitments; 4) reclaime.d W21er O&M costs; 5) reclaimed production relative ;0 nominal estimate; and 6) drought rate increase. 5. CondlJct additional research including contacting other major water retailers and wholesalers to find an appropriate value to use in the analysis for the cose of Ullmet demand. These revisions reduced the resource alternatives to three: v,rater from the SF'ND, DSM programs~ .and reclaimed water. In addition, six uncerta.ill variables remained after the roncJusion of Ole first round sensitivity analysis. This is still too many variables tv analyze 24 " .~ .:.. .. ···-.. r o probabilisticaHy since attaining probabilistic .usessments is very complex and time­ consuming. Second Round Sensitivity Analysis Each of the six variables identified as sensitive in the first round analysis (HH'N'TP cap:tai <OSI, demand forecast, DSM impact, drought likelihood, inOation rate, and SFWD commodity cost escalation rate) were stJhjecLed to a more delailed analysis to more poecisely dettnnine when the policy changes occur and which variables affect the shorHtrrn reclamarion decision. When each ~.nable is set EO iu nominal value for this reduced set of re.'murce alternatives, the optinuJ pohcy is "low" (17,~ AFY) SFWD, level 2 DSM, and full reclamation project development if the reclaimed wa~er cost is less than 67% of the cost of SFV/D water. If o,e reclaimed ;.:..ater wsts more tha..r") 67% (If tile SF\VD cost, then the optimaJ plan is -mhigh­ (19311 AFY) SF'''''""D, IC"ifcl 2 DSM and no reclamation. Therefore, in this ~. the maximum that the warer utility should pay for reclaimed wate. is 67% of the cost of SF\VD water. This can be called the "reclaime<! water brea.lqloint cost". To detenn:ine which variables had the greatest impact on the value of reclaimed "''3.ter 10 the water utility, an the variabies are set to their nominal values, and the reclaimed water meal-point cost is detennined wben each variable in turn is changed from its low to its higb value. The results show that the Demand Forecast and inflation variables do not significantly affect the value of :reclaimed water. Not surprisingly, the DSM Impact "mable primarily affects the <Io;ision ofhow much DSM should be selected (i.e., If DSM Impact = "low" value of 50% of .. pected impact, then no DSM i., selected and if DSM Impact = "high" value of 125% of expected impact, then the maximum DSM program is selected.) Therefore, removing these t'1ree \'ariables from probabilistic treatment will not affect the .reclamation ciecislon faced. Recommendations From Second Round Sensitivity Analysis The .second round sensitivity analysis identified additiona! variabJes [0 be set lo thelr n()m.inaJ value (or the probabilistic phase and indicated the three variahles which are the most sensitive to tlle reclamation decision. Obtaining probability a.. .. ses.iments for these three variables is the work of the next phase of analysis. 2.'5 .Recommendations from the .second round sensitivity a. .... aI)'sis are: L Set the foiloWL'g variables to \heir nominal values for the ne" phase of analysis: 1) demand £0=; 2) inflation rate; and 3) impaC! from DSM programs. 2. Obtain probabilistic assessments for the fOllowing variables; 1) HHWTP capital cost; 2) SFWD oommodi.y cost escalation rate; and 3) drought likelihood. 26 . :-;' o VI. Probabilistic Analysis Purpose The purpose. of the probabilistic phase of the decis.ion anaJysis process is ro mode! and assess key uncettain factona in L'I:le decisions faced. The analysis includes identi~Yll1g an expert for eacll sensitive variable and assessing the expert's judgment ax.ut the variables. Expert Interviews for Key Variables 'The deterministic analysis pha...o:e identified t,"Ie three key sensitiw variables in the decisions faced by tile water utiHty. For each of these uncertain variables, a formal stru(.tt:lred interview of an expert was conducted beginning with a discussion of the variable itself and the factors which could influence tlte value of the variable. Probability etlcoding is a formal process for Quantifying expert uncertainty. Since the variables in question are uncenaln , the eJ:pen is not asked for a Single or "besI" e.itimate of what the value will Ix:, but au the values that the variable could be. The expert's knowledge is captured through a structured interview designed to ensure the consideration of all relevant information, circumvent the limits of empirical data, mimmize ambiguity. and control for biases. !be result of the systematic procedure is a probability cfismbution which expresses the ~pert:'s judgement of the relative JikelibOtXl of all possiole values. This distribution is Iben """"'Ded. Hetch Hetchy Water Treatment Plant Capita! Cost steve Le.>nard, SFWD's manager Df the Hetch Hetchy Filtratioll Plant project """ the expert selected for assessing the HHWTP capital cost vanabie. Discussions with him revealed thai: the alternatives for SFWO range from doing nothing to buildir.t: a fun scale water treatment plant. There are .several relationships between requirements to meet water quality regulations and other system upgrddes for reliability improvement which could cost up to $1 bilJjon in the rteJ.t twenty years, dwarfing th: COSls associated with a HH\VTP. Therefore, ;: decision was made to limit the discussion to th().5e expellditu:-es related to meeting water qUality regulations for the whole SFWD system and ensure that tlle cosls associated with other sys{em upgrades ..... ere inciuded in the estimate for the future cost of SF\VD water. Thus, the variable was defined as -the capital cost in 199.3 dollars of the SFWD program to meet Vw'ater quality reguratory requirements over the next twenty years-. 27 • A '..;.I _ . .-' Mr. l..61nard sees t..'lree main issues affecting tlle SFW'D water quality program: I) outcome of rq:uJalOly decisions on 'he Enhanced Surface Wa'er Trea'ment Rule; 2) <he looming rule.; regarding disinfection by-products; and 3) ~ie outcome of new standards for 2002, He also believes that it i'; possible thai California could dange its regulations to allow for \mfiltered treatmenl. Factors which would drive the cost upward includr: Lhe possibility of regulatory change due to the cryptosporidium outbreak in Milwaukee, failure of Hetch Httchy water teo meet standards, and .'~taff recommendation to proceed with a ftltr:a!ion plant. Factors which would result in lowering the cost include having SfVID maintajn Uleir filtration avoidance .status, a cost con.sclOUS environment, staff recommendations, and other changes in rq:uJations, The cumulative probability distnouLion for this variable can be approximated -.irh the low, medlum, and high values of $75 million, $190 million, 3TId $430 million with associated probilbilities of 25%,50%, and 25%. respectiyely. Drought Li keli hood John Famkopf is the technical and fina!lciaJ consultant to BAWUA and, as such, maintains data on historic hydrological conditions of the SFWD system, historic and fuhJre projections for financia1 parameters for the SFWD, and is the main: consultant prepar.J1g the positions of BA'WUA on various legislative and regulatory issues which may affect the future availahility and cost of SFWD StJpplies, He was selected as the expert for assessing the uncertain variables of !he likelihood of drocgh' ard the future commodity cost of water from the SFWD. For the purposes of the analysis, -droughf" is defined as the circumstance of SFWD requiring its retailers to reduce their consumption of its water by 2~%. The likelihood of drought can be eltpt""""~ as the number of years of reduction over a twenty year period. 1be variable was defined as "the number of years in the next twenty years in which SFWD calls fO< a 25% mandatory reduction", The important factors for this variable include regiOnal demand growth, extent of water cor-..servation, hydrology and weather characteristics, and regulations allocating water to fish and other environmental uses. Mr. Famkopf sees decreased willingness. w accept significant demand reductions from urban users and .an increased ease an"" avaiiability of water tr-clIlsfers between agricultural and urban users in the future. The cumulative probability distribution for the number of years of 25 % reduction requests can be approximated with low, merliuffi, and high values of 2.3 yars (I LS% likely in any one year), 3.35 years (J7'11likely in an)' ye.u), and 5,75 years (28,8% l;kely in any year) with associated probabilities of 25%,50%, and 25%, respectiyely. 28 --._------ '- o SFWD Commodity Cost John Farnkopf was also the eJ(pert interviewee for the furu re C(Jst of water from the SFWD, formally defmed '" "'he SFWD wholesale commodity cost rate in 2012 (in 1993 dollars per acre-foot) exclusive of waler quality program costs and drought impacts", Mr, Farnkopf said that the key fOf this variable is really SFWD's capital improvement plan. Many tunnels and pipelines are approaching the end of their service lives and their repair or replacement wiU cost iL gm.t deal. In addition, SFWD rn.ay need to add to the redundancy of the system to address potential eartl1qual<o. impact" Factors which would tend ~ mak~ the tost low include SFVln's decisior;s to continue on current capital program and not make repairs or upgrades to the infraHrucwre, delayed c:apita1 projects, voter rejection of eApensjve projects, and difficulty in oblaining financing. Costs would be rugh if an aggreSSive capital program to replace aging system components were begun. project CO!ilS exceed estimale5, and SFWD sales are relativety 10 .... · due to ccnservation or development of alternative resources. The cumulative probability dislribution for the wholesale cost of SFWD ~"3ler in 2012 is approximated wing Jow, medium, and high va]l;es of $360/AF {average of 1.81year above infuuion over 20 years), S5451AF (3.9'1Uyear aoo"e intla"on), and S8551 .... F /.6,3,.lyear above inflation) with associ.too pwbabilities of 25%,50,., and 25,., respectively. Values for Probabilistic Phase Variab e w Vi\lue 25% prObability 75 million I 1.5 Il ely ation Rate J.8%iyear Table 2 29 Medium ue 50,. probability 190 mIllion 17 likely 3.9%ly= .. Ig alLre 25 % probability VII. Results Analysis Aller completing the probabilistic assessments of the unccrt:lin variables, a new decision tree was developed with slight rcconfiguration in bow the reclamation decision was represented and a mitior change ~ the .selection of SfVlD commitment levels to analyre. Figure 8, the firuU decision tree for the Water IRP, shows the 48 poleI1tia1 plans (decisions are depicted by squares in the diagram) and the three uncr,rtainties (circles in the dLagram) representing 27 scenarios of the future. Leyel qfSF'j'P ~ Em; iamgtjnn r:u FigUre I -Fma3 DecisWc Tree l.!lfflP Capillll C 0..,1 low SfWncomm Cost Egalglpp Ra!t row ,~------ med _ ~-~' ---~ high In order to deItrnUne the value of reclaimed waler, the maximum pti<:e the water utility should pay for it was calculated. This price turned out to be 70% of the to!al Unil cost (mcluding HHWfP related costs) of water from the SFWD or ahoul 85 % of the SFv.D commodity CO>I (not including fi"ed eosts related to the HHWrP). Additional analysis was performed to calculate the value of reclaimed waler to the: water utility. This analysis was performed by setting the eost of the reclaimed waler to "'"" and detennining the difference in present value of Total Resource Cost (PVTRC) if the best plan was selected with and without reclaimed water. Th is analysis showed that the best plan with reclamation at zero oost is an SFWD commitment of l8050 AFY and a "level 2" DSM Program. The expected value for the PVfRC fer this plan is Sl15,408,ooo. When no reclamation is developed, the best plan is a -level 2& DSM pro~rarn and an SFWD comrr.itrnenl level of 19750 AFY. For this plan, the expected value for the PVTRC is $l2I,004,ooo. The difference in the expected values is $5,596,000 or S257fAF for the 1279 AFY over 17 yean; of the 20 year analysis pefl.xJ. 30 ".'aIt", If only lbe fltSt phase of 'he recia.'l1alion project i. developed, the be;;, plan is an SFWD commitment level of 19600 AFY and a "levd 2" DSM program with an expected value for U1C P""TRC of $120,380,000. for this case, the differenC1: in PVTRC is $624,000 or S2591AF for 134 AFY over 18 years. These results are summarized in the table below: Value of Reclaimed Water to Utility £kst Plu. ChOl~ Pw;.eat ",J\lf, of TItC (Ex.,..,..., SFWD DM Value) level proP"" 'IalUt 0 ncWmrd watr:r to Uldi!y P.rcsecl P~t \'ailolle VaJue per acre-fooe ND recWm.tioo. p,,,ject 19i5O level 2 $111,OO4,OC(l: mot pbbe roc1am5tlOl1 project 19600 (evet 2 120,3BO,!JI.X) 24,000 2S9fAf proje..-t J8050 lev~12 115,408.000 $5,596,000 $257.' Tabl.3 This analysis shows that the leveHzed value to the water utility of reclaimed water is S257IAF. In other words, the water utility should pay no mOle than $2571AF for the reclaimed water. However. this is the expected value for this. figure and does not inoorporaIe any assessment of the rilk that the value will a.:tuaJl y be greater than or less than !be expected value. Risk Amllysis In order 10 evaluate the risk !be utility faces, high and low values of PVTRC were cala 1lated • Cumulative probability dlscributions of the: PVTRC were developed for the full project, Ibe first phase project, 2nd no project. The values representing the 5%, SO'il.. and the 95'9& cumulative probabilities are shown in the following ub-l,:. No project project VaJue of Reclailned Water to Utility {90% confiderKe range) 5" OImu.latiy~ probabilily $98.2 5.200 $97.799,100 94,445.100 Prc.'>l!Dt Villu.=: of Total RCioOUru Co:;;t Preseal Va1ue of recL.imed walot!r to Utility ($1 AF) so~ 95'1 S~ 50~ 95~ CUa::Ulilli."..,: prohabiJJly $118,240, $1 !7 .631.000 $112,926,000 C1IttlUlilti ~'e cwnl.ll. cumuL probabifity probah. probab. $148,958,000 $[48.104,000 SJ 891 .$252iAf Table 4 31 cumuJ. probab. 34/AF $>641 • ,.- .~.;:.;~' ,. '>; <:', . ',' 1{~;:: :~,'~::-~A~~·~,,:_:/"--: (,-~ . ,--""-'---/" ,',..., :>:>:'·~t!..~ .;< ~-·/t~,: " ', .. , ""," This table shows that: 1) t.'lere is only a 5 % chance thai t11e .... ~ue of reclaimed water to the utility will be less than $174IAF; 2) it is equally likely Ill., the "alue of reclaim": water will be greaICf !ban S244IAF a< it will be less Illan $244IAF; and 3) there is only a 5% cllance ilia! the value of reclaim": water will be greater than $3641 AF. These results show that if the utility chose to pay a set amount, say the expected value of S2S7/AF, it could be at risk of overpaying if the value feU to something lower or closer to the 5% probability case of $174/AF. However. to mitigate that risk, the utility could tie their payment for redai med water to an index such as tile COst of SF'ND water. So rather than commit to a set amount, say $257iAF. the water utility shouid offer to pay for up to 70% of the cost of SFWD water, Recommendation Recommendations from this fRP are presented for both a short-tenn actiol"'_ pian and for long- 1ernl direction. Aclditional analysis or a subsequent IRP w!il be required prior to making OJ. decision to commit to the reclamation project, a DSM program. and the SFWD. if required. Short-term Action Plan 'The sbort-term decision facing the water utility is to determine the value of developing the reclamation projects jdentified in the Reclamation Master Plan. This can be presented in terms or the maximum that the: water utility should pay for the reclaimed water as a commodity. The results of Illis lRP show that Ille water utility shoold pay no more than about 70,;; of the total cost of water from Ill. SFWD, Long-term Direction Although not jmminent. two other decisions besides ~e appropriate level of participatior. in reclamation have been addressed in this lRP --to determine the appropriate Jevei of commitment to the SI-"'WD and 10 a DSM pro~T3m. The recommendations for these resource altema.ti ves are: 1. If the full nx:Jamation project .is constructed, the water utility should commit to about 18,000 AFY of water from the SFWD. if. however, the recla.'11ation project is not built, the water utility should commit to about 19,750 AFY of SFWD Vo'i.ter. 2. The utility should pursue a DSM program of permanent efficiency improvemenrs which would result in waler savings of !440 AFY or about 8% of the 1987 use. 32 '.--- -' _._'---_. o , .. - VIII. Additional Analysis to be Completed Reclamation Decision Although this IRP primarily addressed the decision about reciainalion, mere is additional analysis 10 be done before the r=mmendation should be fU1alized. This IRP does not attempt to determine the value of redamatio-tl to the other main beneficiary. the wastewater treatment plant partners. Since-reclamation is an aitemative Vo"J,Stewater disposal option for tbe RWQCP, the value the RWQCP places on reclamation is a major factor in the. decision about the reclamation project. If the reclamation project is built, the sum of the benefits to water supply and wastewater disposal shc-uld outweigb the total project costs. This IRP has derermined only one part of Ihat equation, the -water supply benefit l,~'hen the bcneflt 10 Lie RWQCP is detennined, the decision as to pursue or not to pursue reclalll..3ljon can be made. Issues to Take Up in Subsequent IRPs In oroer to complete. this. lRP. many 'aSsumptions and estimates bad \0 be made, about the future outcome of uncertain even.ts. When future deciskm 5 must be made about water """"roes, additional .. al yses will undoubtedl y be required. This section of the report points out some of the issues which may arise as new information develops. L As discussed above the conclusion about lhe value to the water utility of reclaimed water does not. in itself. justify the reclamation project. That justificatioo hinges on It.., joint benefits of the projec, 10 both the water utilities and Ill. RWQCP. 2. Vv'ben, and if, tile value of mAintaining Pale Alto's right to groundwater can be ascertained, that value should be weighed against the costs to tile community of using groundwater. nl~ COS!!; include tile actual capital and O&M costs, the presence or absence of the SCVWD pump tax, the costs to mitigale the poorer qualit), water, and the potential erosion in the allocation of water from the SFWD. 3. Analysis will noed to be redone with updated assumptions before maldng • final commitment to SFWD if it is required due to the construction of a large fl1Lration plant or any other 5-ignificant capital project or projects which may require such a commiunenL 33 • '\tj' .... 4. A decision on a DSM program should await the ccnclu,ion of the multi-commodity OSM report "hen a m"" detailed analysis of !he potential for and !he <os\ of watu efficienCY improvements is evalllllt<:d. By then, meTe will be. better indication of me e<le<lt of pennanen. conservation which persists after !he =nt, 7·year drought.