EXHIBIT 10.1
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PRINCIPLES FOR AN AGREEMENT BETWEEN
THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA
AND CADIZ LAND COMPANY, INC. ("PRINCIPLES")
The Metropolitan Water District of Southern California
("Metropolitan") and Cadiz Land Company, Inc. ("Cadiz") have
jointly evaluated the feasibility of a water storage and supply
program, referred to as the Cadiz/Xxxxxx Water Storage and Supply
Program ("Program"), and have determined that the Program is
feasible and beneficial to both Metropolitan and Cadiz (referred
to collectively as the "Parties"). As proposed, Metropolitan
would store a minimum of 500,000 acre-feet ("AF") of its Colorado
River water in the groundwater basin underlying Cadiz land
holdings in the Cadiz and Xxxxxx valleys in San Bernardino
County, California. This water would be conveyed to the
Cadiz/Xxxxxx storage area via a pipeline from the Colorado River
Aqueduct ("CRA"). Upon request of Metropolitan, Cadiz would
extract the stored water and convey it back to the CRA.
Metropolitan would also purchase for transfer to the CRA a
minimum of 1,100,000 AF of indigenous groundwater from the
Cadiz/Xxxxxx groundwater basin during the 50-year term of the
Program. The stored and transferred water would be delivered to
Metropolitan on demand as a supplemental, dry year supply.
In addition to these minimum amounts of storage and supply,
Metropolitan could store additional Colorado River water and
purchase for transfer additional indigenous groundwater as
technically and environmentally feasible. All Program capital
facilities would be dedicated to Metropolitan's use. The Parties
propose to prepare a comprehensive agreement (the "Agreement")
consistent with these Principles, final implementation of which
will become effective only when all appropriate institutional and
environmental requirements are met, and all necessary conditions
precedent have been satisfied.
RECITALS
A. WHEREAS, Cadiz is a publicly-held agricultural company
that owns and manages substantial land and water resources
throughout central and southern California, including more than
27,000 acres (43 square miles) of land located in the Cadiz and
Xxxxxx valleys of San Bernardino County, California (the
"Property");
B. WHEREAS, Cadiz, as one of the largest United States
growers and marketers of table grapes, stone fruit and specialty
row crops, has developed farming operations at the Property using
water-conserving irrigation techniques and has completed an
Environmental Impact Report, certified by the County of San
Bernardino, which approved the development of up to 9,600 acres
of irrigated agriculture and affirmed the withdrawal and use of
indigenous groundwater;
C. WHEREAS, Metropolitan was created in 1928 under the
Metropolitan Water District Act for the purpose of providing
supplemental water supplies to the cities and communities of
southern California within its 5,155 square-mile service area,
which includes portions of Los Angeles, Orange, San Diego,
Riverside, San Bernardino, and Ventura Counties;
D. WHEREAS, Metropolitan has entitlements to Colorado
River water pursuant to the 0000 Xxxxxxx Xxxxxx Xxxxxxx Xxx, xxx
Xxxxxx Xxxxxx Supreme Court 1963 opinion in ARIZONA V. CALIFORNIA
and subsequent decrees and contracts with the United States and
others;
E. WHEREAS, Metropolitan owns and operates the CRA which
imports water from the Colorado River for use in southern
California;
F. WHEREAS, California law and water policy all recognize
the importance of groundwater storage and conjunctive use
programs in meeting the water supply needs of the state;
G. WHEREAS, the proposed Program would provide storage and
dry year supply opportunities which are necessary components of
the California 4.4 Plan;
H. WHEREAS, storage programs for Colorado River water
supplies will provide for more efficient use of this water
resource, which is a critical component of the water supply for
over 16,000,000 people in Southern California and which will ease
demands and impacts on the sensitive Bay/Delta ecosystem
providing a significant benefit to the environment and to all the
people of California;
I. WHEREAS, various studies and reports prepared by public
agencies and accredited consultants confirm that the Property
overlies a large groundwater basin that has significant water
recharge and storage capabilities and which can yield substantial
amounts of high-quality water in excess of the present and
projected agricultural requirements of Cadiz;
J. WHEREAS, various hydrological, environmental, and
engineering studies and reports, together with empirical data
acquired by Cadiz from more than fourteen years of groundwater
pumping for irrigation, confirm that the Property is well suited
technically, environmentally, and economically for a storage and
supply program, involving both storage of Colorado River water
and transfer of indigenous groundwater;
K. WHEREAS, the Parties have jointly reviewed the
feasibility of the Program and have concluded that the Program is
technically feasible; and the Parties therefore desire to
finalize an appropriate water management strategy that achieves
reasonable and beneficial conjunctive use of Colorado River water
and Cadiz indigenous groundwater by the operation of a
conjunctive use program that entails the delivery of high
quality, reliable, supplemental water supplies to Metropolitan on
a long-term basis for use within its service area;
L. WHEREAS, the Parties recognize that environmental
documentation of this Program is required for compliance with the
California Environmental Quality Act ("CEQA") and the National
Environmental Policy Act ("NEPA"), and that this Program is
subject to compliance with CEQA and NEPA; and
M. WHEREAS, the Principles reflect the basic parameters of
the Program and provide a scope for environmental review. In
compliance with CEQA and NEPA, the Principles are not a legally
binding document, information regarding the Program which is
discovered during the environmental review phase will be taken
fully into account in analyzing the Program.
NOW THEREFORE, the Parties desire to document their
demonstrated commitment to pursuing such a Program by agreeing to
these Principles as the basis for preparing the Agreement which
will be brought to the respective Boards of both Parties for
final action.
PRINCIPLES
1. STORAGE PROGRAM COMPONENT
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1.1 Metropolitan shall Put (as defined in Section 4.1)
a minimum of 500,000 AF of its CRA water for storage in the
Cadiz/Xxxxxx groundwater basin within five (5) years from
commencement of Program operations or will pay equivalent fees,
on an annual basis, to Cadiz pursuant to Section 5 of these
Principles. Put water shall be returned to Metropolitan upon
request at the rate of 100,000 AF per year. Metropolitan shall
Take (as defined in Section 4.1) the minimum stored Put water
within 20 years of commencement of Program operations, or will
pay equivalent fees to Cadiz pursuant to Section 5 of these
Principles. In the event Metropolitan pays equivalent Put and/or
Take fees, Metropolitan shall receive a credit to be applied to
future Put and Take of CRA water.
1.2 In order to maximize the benefits of the Agreement
to both Parties, after Metropolitan has Put 500,000 AF of CRA
water to storage pursuant to Section 1.1, Metropolitan may
continue to Put, Store, and Take (as defined in Section 4.1)
water through the Program capital facilities during the term of
the Agreement.
1.3 Transportation and evaporation losses of stored
CRA water shall be set at 10% and may be changed after further
study at the mutual consent of both Parties. Such losses shall
be deducted after payment of the Put Fee but prior to payment of
the Take Fee and the Storage Fee as described in Section 5.1.
All water placed in storage as part of the Agreement, minus the
losses, shall be returned to Metropolitan upon request.
2. DRY YEAR SUPPLY (TRANSFER) PROGRAM COMPONENT
--------------------------------------------
2.1 Metropolitan shall purchase from Cadiz a minimum
of 1,100,000 AF of indigenous groundwater for transfer to
Metropolitan during the 50-year term of the Agreement pursuant to
the agreed upon purchase schedule in Section 5.2. Metropolitan
may purchase available additional indigenous groundwater for
transfer to Metropolitan under the same terms and conditions,
consistent with the safe operation of the groundwater basin and
requirements of the groundwater management plan as described in
Section 2.2.
2.2 To ensure long-term management of the groundwater
resource, the Parties shall implement a comprehensive groundwater
monitoring and management plan. The plan shall include all
specific technical criteria, operating procedures, monitoring,
and reporting procedures necessary to ensure that any potential
adverse impacts to the groundwater resource will be avoided or
mitigated.
3. CONSTRUCTION OF FACILITIES FOR STORAGE AND DRY YEAR
--------------------------------------------------
SUPPLY (TRANSFER) PROGRAM
--------------------------
3.1 The Parties shall jointly fund construction of and
jointly own the facilities needed to operate the Program
("Program Capital Facilities"). The Agreement shall specify the
Parties' respective responsibilities for all Program Capital
Facilities. In this regard, it is contemplated that the Program
would involve the following new Program Capital Facilities:
3.1.1 Spreading and Recovery Facilities -- The
Parties will construct, own, and operate facilities consisting
of: (1) approximately 640 acres of spreading facilities; and (2)
approximately 33 extraction xxxxx.
3.1.2 Conveyance Pipeline -- The Parties will
construct, own, and operate a bi-directional pipeline from the
Property to the CRA, as well as the related pumping facilities
and appurtenances capable of base loaded operation of
approximately 100,000 AF per year (approximately 135 cfs) to and
from the CRA.
3.2 Responsibility for funding design, construction,
and program implementation costs of the Program Capital
Facilities shall be shared equally by the Parties. The Parties
estimate that design, construction, and program implementation
costs of the Program Capital Facilities described above in
sections 3.1.1 and 3.1.2 shall be approximately $125 million to
$150 million. Cadiz shall fund its 50% portion through its
corporate resources. Metropolitan, with the joint cooperation of
Cadiz, shall arrange for its 50% portion of the funding.
3.3 Design, construction, and Program implementation
costs are estimated to be within the range of $125 million - $150
million. The costs within that range are to be shared equally by
the Parties. If such costs should be below $125 million for any
reason, the savings shall be shared equally by the Parties. If
such costs should be above $150 million due to a request from one
Party for a change in design, construction, implementation, or
base load operation, the Party requesting the change shall bear
the responsibility for funding that cost overage. If such costs
should be above $150 million due to reasons not known at this
time, the Parties shall renegotiate the Agreement. The Parties
shall remain free to mutually share the cost of changes in
design, construction, and implementation.
4. PROGRAM OPERATIONAL REQUIREMENTS
-------------------------------
4.1 The Program Capital Facilities shall have the
capacity to convey water from the CRA to the Cadiz/Xxxxxx area
and recharge the water into the groundwater basin underlying the
Cadiz/Xxxxxx area ("Put"); to store water in the Cadiz/Xxxxxx
basin ("Store"); and to extract stored water and convey it back
to the CRA ("Take"). In addition, the Program shall be capable
of extraction and conveyance of indigenous groundwater from the
Cadiz/Xxxxxx basin to the CRA ("Transfer").
4.2 Upon commencement of operations, the Program shall
have the capacity to Put 100,000 AF (approximately 135 cfs) into
storage per year. The Program shall have the capacity to Take
100,000 AF of water per year from storage and convey it back to
the CRA, or to Transfer 100,000 AF of indigenous groundwater to
the CRA in the course of one year. During the environmental
review phase, the parties will analyze the operational
requirements of the program to optimize the layout and sizing of
the facilities, subject to the provisions of Section 3.3 above.
4.3 Throughout the term of the Agreement, the Program
shall have the capacity to Store a minimum of 500,000 AF of CRA
water in the Cadiz/Xxxxxx groundwater basin.
4.4 The Parties shall be jointly responsible for
taking all steps needed to implement Put, Store, Take, and
Transfer operations and convey the stored and transferred water
to Metropolitan. Metropolitan shall have responsibility for the
physical operation of the Program, and the Agreement shall
specify the respective responsibilities of the Parties for all
other Program operations.
5. PROGRAM COMPONENT FEES
----------------------
5.1 STORAGE COMPONENT FEES
----------------------
5.1.1 Metropolitan shall pay Cadiz $90 per AF
of CRA water Metropolitan cycles through the Program Capital
Facilities. The $90 per AF rate shall be based on a rate of $50
to Put such water ("Put Fee") and $40 to Take such water ("Take
Fee").
5.1.2 Metropolitan shall pay a "Storage Fee"
of $5 per AF every year that Metropolitan's CRA water is stored
in the Cadiz/Xxxxxx groundwater basin.
5.1.3 Commencing concurrently with the initial
operation of the Program, the Put Fee, Take Fee, and Storage Fee
shall be adjusted annually to account for inflation.
5.1.4 After the minimum 500,000 AF are Put
into storage, as referenced in Section 1.1, additional CRA water
may be cycled through the Program in accordance with the fees
described in Section 5.1.
5.2 DRY YEAR SUPPLY (TRANSFER) COMPONENT FEES
-----------------------------------------
5.2.1 Metropolitan shall pay Cadiz a "Transfer
Fee" for the purchase of transferred indigenous groundwater. The
Transfer Fee shall be based on an initial rate of $230 per AF
("Base Rate"). The payments shall be structured as follows for
the first 500,000 AF:
1st 500,000 AF
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a) $110 per AF to be paid upon
completion of permits and approvals necessary
for program implementation including, but not
limited to, certification of the EIR/EIS for
the Program;
b) $120 per AF to be paid upon
completion of the conveyance and spreading
facilities. This payment is to be adjusted
for the Water Price Index described in
Section 5.3 below.
5.2.2 Metropolitan shall purchase from Cadiz
an additional 600,000 AF of indigenous groundwater (beyond that
described in Section 5.2.1) for Transfer to Metropolitan during
the 50-year term of the Agreement pursuant to the following
schedule:
1st 200,000 AF
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a) Base Rate adjusted for the Water Price Index
to be paid upon delivery to the CRA or 10
years after commencement of operations,
whichever is earlier;
b) After adjustment of the Base Rate for the
Water Price Index, Metropolitan to receive
approximately a 5% discount.
2nd 200,000 AF
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a) Base Rate adjusted for the Water Price Index
to be paid upon delivery to the CRA or 20
years after commencement of operations,
whichever is earlier;
b) After adjustment of the Base Rate for the
Water Price Index, Metropolitan to receive
approximately a 5% discount.
3rd 200,000 AF
------------------
a) Base Rate adjusted for the Water Price Index
to be paid upon delivery to the CRA or 30
years after commencement of operations,
whichever is earlier;
b) After adjustment of the Base Rate for the
Water Price Index, Metropolitan to receive
approximately a 5% discount.
5.3. WATER PRICE INDEX
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Fees under the transfer program described in
Section 5.2 will be adjusted periodically based upon an index
(the "Water Price Index") which will be derived from the concepts
contained in Exhibit "A".
5.4 WATER QUALITY FEE
-----------------
The Parties recognize that the delivery of low TDS
indigenous groundwater from the Cadiz/Xxxxxx groundwater basin
into the CRA provides a water quality benefit to Metropolitan.
The Parties further recognize that this benefit will vary
depending on numerous factors, such as the flow in the CRA at the
time of Transfer, the actual quality of the water delivered under
the Program, the availability of blending water supplies, and/or
the eventual addition of treatment facilities. Accordingly,
Metropolitan will pay a fee for the water quality benefit of the
water delivered from the Program to the CRA at the end of the
year of actual delivery. This fee will be additive to both the
Take Fee and the Transfer Fee. The Water Quality Fee shall be
calculated annually based on the concepts contained in the "Water
Quality Fee Formula", attached as Exhibit "B".
6. ADDITIONAL PROGRAM USAGE COMMITMENTS
-------------------------------------
Metropolitan agrees to Put a minimum of 500,000 AF of
CRA water into groundwater storage under this Program and
purchase a minimum of 1,100,000 AF of indigenous groundwater
under this Program as previously discussed in these Principles.
In accordance with the fees described in Section 5 and subject to
the availability for Transfer of 400,000 AF of indigenous
groundwater, or a pro rata portion thereof, Metropolitan agrees
to (a) Put an additional 400,000 AF of CRA water through the
Program in addition to the initial Put of 500,000 AF; or (b)
purchase an additional 400,000 AF of indigenous groundwater
beyond the initial 1,100,000 AF; or (c) any combination of "(a)"
and "(b)" totaling the additional amount of indigenous
groundwater available for transfer up to 400,000 AF. Nothing
contained in these Principles shall be construed to mean the
Parties would limit the Program's beneficial use of CRA water
supplies or Cadiz indigenous groundwater supplies, consistent
with the safe operation of the groundwater basin.
7. SECURITY ASSURANCES
-------------------
7.1 Metropolitan's interests in the storage portion of
the Program will be secured by placing stored water in a trust
along with easements for use of the spreading basins, extraction
xxxxx, and conveyance pipeline.
7.2 Metropolitan's interests in the transfer portion
of the Program will be secured by the trust provisions described
in Section 7.1 and an appropriate security interest in the
Property and/or appropriate financial securities.
7.3 Cadiz agrees that it will not deed ownership of
the Property without the written permission of Metropolitan
during the term of the Agreement. Metropolitan agrees that such
permission will not be unreasonably withheld or delayed. Any
transfer of property must ensure that the Program is secured
against non-performance.
7.4 To the extent there is a partial non-performance
of the Program, Metropolitan's interests shall be secured by an
appropriate security interest in the Property and/or appropriate
financial securities.
8. CONDITIONS PRECEDENT
--------------------
8.1 The Parties recognize that environmental
documentation is required for compliance with CEQA and NEPA and
that this Program is subject to compliance with CEQA and NEPA.
Until completion of compliance with CEQA and NEPA, the Parties
are unable to determine the full range and scope of potential
impacts associated with the Program. Accordingly, both Parties
retain the right to reevaluate the Program and, if necessary, not
proceed with the Program if the environmental review determines
that the benefits of the Program do not outweigh any unavoidable
adverse environmental impacts associated with the Program.
8.2 Based on Metropolitan's minimum commitments to the
Program, the melded cost of the storage and transfer components
is currently $205 per AF (1998 dollars), not accounting for
adjustments for the price index, water quality benefit, O&M and
power. By the end of the environmental review phase, should such
melded cost be exceeded, the Parties agree that the Program may
not proceed as specified under these Principles, and the Parties
will reevaluate whether or not to proceed with the Program or
renegotiate the Agreement. In addition, should such melded cost
be exceeded or as otherwise mutually acceptable, the Parties may
separate the Program components and proceed with just the
separate transfer or storage component of the Program.
8.3 The Parties have concluded this Program is
technically feasible. The Parties shall reevaluate the Program
or renegotiate the Agreement if detailed environmental review
reveals clear and objective technical or legal reasons why the
Program cannot be completed as planned in the Principles and the
Agreement.
8.4 Metropolitan will contract with a nationally
recognized financial consultant to review the scope and structure
of the final agreement to advise Metropolitan that the Program is
financially sound and fair to the Parties in the context of a dry
year water supply program.
9. MISCELLANEOUS PROVISIONS
------------------------
9.1 Cadiz has no existing water storage or supply
programs with other parties regarding the Property. Metropolitan
shall have exclusive use of the Program Capital Facilities
described in Section 3 above for the term of the Agreement, and
Cadiz shall not enter into any water storage or supply programs
with other parties regarding the Property during the term of the
Agreement without the written permission of Metropolitan.
9.2 If Cadiz does not convey water to Metropolitan
when required under the terms of the Agreement, Metropolitan may
require specific performance from Cadiz and/or exercise its right
under a security interest in the Property. Metropolitan agrees
that Cadiz may propose to meet its conveyance commitments by
providing water to Metropolitan via alternate sources, and
Metropolitan agrees that it will consider such a proposal.
9.3 Metropolitan or another appropriate public agency
shall be the lead agency on the environmental documentation. The
Parties shall share responsibility on obtaining any institutional
approvals required under the Program, and shall be responsible
for preparing such documentation and obtaining any necessary
permits. Metropolitan and Cadiz shall share equally the costs
for such documentation and approvals.
10. TERM OF THE AGREEMENT
---------------------
The basic term of the Agreement shall be for 50 years,
and may be extended under terms and conditions mutually agreed
upon by the Parties. At the end of the term of the Agreement,
the Parties shall each own half of the Program Capital Facilities
constructed for operation of the Program. If the Parties fail to
reach agreement on an extension or renegotiation, Cadiz may
negotiate with third parties. Metropolitan shall have a right of
first refusal on any agreement with a third party. Any new
agreement with a third party must provide reasonable compensation
for use of the Metropolitan funded portion of Program Capital
Facilities.
11. EARLY TERMINATION OF AGREEMENT
------------------------------
11.1 Should the conditions precedent described in
Section 8.1 or 8.3 not be met before completion of the
environmental review phase, either Party may initiate
renegotiation of the Agreement at that time. At such point, all
work shall cease and the Parties shall each be responsible for
one half of the costs incurred on the studies and environmental
documentation process from the date of execution of these
Principles to that point.
11.2 Should the water management and supply benefits of
the Program be materially reduced prior to the completion of the
environmental review phase due to materially changed conditions,
Metropolitan shall immediately notify Cadiz. As used herein,
"materially changed conditions" shall be defined as (a)
significant reductions in Metropolitan's projected water demands,
or (b) significant changes in Colorado River water availability
as determined by the Secretary of the Interior or by the United
States Bureau of Reclamation that would result in a critical lack
of water available for storage or a critical lack of capacity in
the CRA for Program water due to long-term surplus conditions on
the Colorado River. The Parties agree that under no
circumstances shall the meaning of materially changed conditions
be interpreted to include changed conditions that are the result
of actions undertaken by Metropolitan or Cadiz. In circumstances
of materially changed conditions, the Parties shall enter into
renegotiations to address the materially changed conditions. If
renegotiations cannot resolve the issues caused by the materially
changed conditions, either Party may terminate the Agreement. In
the case of Agreement termination, the Parties shall continue to
share the cost of and shall take the actions necessary to
complete the environmental review phase. Metropolitan shall be
reimbursed for its costs in preparation of the environmental
documentation if a third party should enter into an agreement
with Cadiz for a water storage and/or supply program on the
Property.
IN WITNESS WHEREOF, The Parties hereto have executed these
Principles on this 14th day of August, 1998.
The Metropolitan Water District
of Southern California
By: /s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx
General Manager
Approved as to form:
By: /s/ Xxxxxxx Xxxxxx
---------------------
N. Xxxxxxx Xxxxxx
General Counsel
Cadiz Land Company, Inc.
By: /s/ Xxxxx Xxxxxxxxx
-------------------------
Xxxxx Xxxxxxxxx
Chief Executive Officer
Attachments (Exhs. A&B)
EXHIBIT A
WATER PRICE INDEX
The Cadiz Land Company, Inc. ("Cadiz") and The Metropolitan Water
District of Southern California ("Metropolitan") are developing an
agreement that will provide for the implementation of the Cadiz/Xxxxxx
Water Storage and Supply Program. One feature of this program is the
transfer of indigenous groundwater to Metropolitan over the fifty-year
term of the agreement. To ensure that future payments made for this
new dry-year supply represent the future value of water, a price index
together with a price discount, are proposed.
Parties commonly use indexing in long-term agreements to adjust
prices (upward or downward) to reflect changes in value over time.
Several indices to adjust the price of these new supplies have been
evaluated and one index, an "Incremental Supply Cost Index" appears
most appropriate to this program.
In general terms, this index would measure on an annual basis
Metropolitan's change in cost of water supplied by new or expanded
water storage and water supply programs. On a periodic basis (for
example once every three years) the price of the new water supply
being provided by Cadiz would be adjusted to reflect the change (if
any) in Metropolitan's cost of comparable water storage and supply
programs as measured by the index. More specifically, the index would
measure the change in the weighted-average costs of new water supplies
available to Metropolitan and possibly other Southern California water
providers.
A pricing discount provision is proposed to be a part of this index
formula and program agreement to ensure Metropolitan would at all
times pay a lesser cost for Cadiz indigenous water than the cost of
comparable water supplies. In summary, the features and benefits of
the proposed price index are summarized as follows:
- Fair - index would be the most relevant and objective measure of
change in value of the water to be supplied by the Program.
- Affordable - index would ensure the cost of water supplied under
the program would not exceed the average cost supplied by the
region's other incremental water storage and/or supply programs.
- Responsible - index would ensure future rate-payers are not put
at risk as the result of speculation, or obligated to pay fixed
rates for water that may in the future overstate Metropolitan's
cost to purchase comparable water supplies.
- Manageable - index would preclude erratic pricing fluctuations
(spikes) due to temporary hydrological conditions or other
anomalies.
- Flexible - index could be modified at a future date if it were
determined the index was no longer the most appropriate method
to assess the change in the value of indigenous Cadiz
groundwater.
EXHIBIT B
WATER QUALITY BENEFIT INDEX
One important water quality objective of Metropolitan is to reduce the
total dissolved solids (TDS") of its supplies to approximately 500
mg/l. Historically, Metropolitan has achieved this objective by
blending high TDS Colorado River water with other available sources of
supplies with lower TDS levels. The introduction of alternative
supply sources with lower TDS levels than the Colorado River TDS
levels therefore has the potential to provide water quality benefits
to Metropolitan.
A significant part of the Cadiz Program is the introduction of water
containing lower TDS, organic carbon and bromides than other sources
currently available. In accomplishing this, Metropolitan could
realize water quality benefits (avoided costs), when the program
delivers water to the CRA, either through direct transfer or exchange
of CRA water for Cadiz' indigenous groundwater.
To measure the possible water quality benefits (based on
Metropolitan's actual cost savings), a Water Quality Index is
proposed. This Water Quality Index would adjust the price
Metropolitan pays for alternative water supplies. The index would be
based on the many factors that impact the cost of Metropolitan's
overall system water quality. These factors include, but are not
limited to, the following:
- TDS of Cadiz's supplies
- TDS of CRA supplies
- TDS of SWP supplies
- Metropolitan water demands
- Potential Desalination facilities
- Ozone Treatment facilities
Because these factors vary from year to year, the Index will be
performance-based and will measure only Metropolitan's actual cost
savings resulting from the use of the program. If and when
Metropolitan realizes actual cost savings, the price to be paid for
water supplied by the Program would be adjusted accordingly.
