Joint Recovery Plan UpdateADWR, AWBA & CAP

AWBA Quarterly MeetingSeptember 4th, 2013

2

“Effective planning and coordination among AWBA, ADWR, CAP, CAP customers, recovery partners and others is essential to successful recovery…”

--Recovery of Water Stored by the Arizona Water Banking Authority: A Joint Plan by AWBA, ADWR and CAP. August 2013 Draft, page 3.

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Progress to Date Drafted Sections 1-4 Shared with the Ad Hoc group Received initial feedback Waiting for written edits/comments Developing Sections 5-7 Broader distribution will occur when the

remaining sections of the draft document are complete

4

Today’s Focus Review first 4 Sections of Plan - set the

stage for the who, what, where, when and why

Emphasis on Section 4 “Likelihood, Timing & Magnitude”

Before the end of the year, we will present the remaining Sections that address how recovery will occur (implementation)

5

Section 1: Background, Scope and Purpose

Section provides broad context Scope includes recovery of the AWBA’s credits

in support of its goals and obligations: To firm CAP M&I priority subcontractors and P-4

on-River M&I users during shortage To meet the State’s obligations to firm up to

23,724 AF of NIA priority CAP pursuant to Indian water rights settlements

To meet interstate water banking obligations with Nevada

6

Section 1: Background, Scope and Purpose (continued)

Clarify roles of the primary institutions Establish planning-level certainty Analyze and project the timing &

magnitude of potential recovery (through 2045)

Identify potential recovery partnerships and opportunities

Identify key recovery decision points and actions within the planning horizon

7

Section 2: Roles and Responsibilities

AWBA CAP ADWR Reclamation CAP’s Recovery Partners Beneficiaries Other Interested Parties

8

Section 3: Funding, Purpose, and Location of Credits

AWBA has accrued 3.8 million AF of credits through 2012 (3.2 MAF for intrastate and 600,000 MAF interstate needs)

Several factors determine where recovery of these credits will occur Funding Sources Statutory Purposes Location of Storage

9

Credits By AMA & Funding Source

Funding Source Phoenix AMA

Pinal AMA

Tucson AMA

4-Cent Tax1 1,329,925 187,465 390,334

Withdrawal Fees 293,632 394,896 98,788

General Fund 42,316 306,968 54,546

Other Intrastate:

Indian Firming Appropriation - - 28,481

Shortage Reparation 20,642 60,507 1,227

GSF Operator Full Cost Share2 - 14,125 -

Intrastate TOTAL 1,686,514 963,961 573,376

Interstate - Nevada 51,009 439,851 109,791

TOTAL 1,737,523 1,403,812 683,167

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Location of Credits

11

Section 4: Likelihood, Timing & Magnitude of Recovery

Factors Affecting Recovery Modeling Approach Synthesizing Results

12

Section 4: Likelihood, Timing & Magnitude of Recovery

Factors affecting Recovery Shortage Non-shortage

13

Shortage Factors Recovery of AWBA credits will be

required when the reduction in Arizona’s supply intersects demand of users (pools) for which the AWBA has firming goals or obligations

14

Shortage: Supply Factors To Arizona

Basin Hydrology Upper Basin Demands Initial Reservoir Condition Reservoir Operations

Within Arizona Colorado River Uses and Priorities CAP Uses and Priorities

15

Shortage: Demand Factors On-River

Agricultural Use Rate of municipal growth

CAP Use of long-term entitlements

Rate of municipal growth Use of Indian contracts

16

Non-Shortage Factors Outage on the CAP system (outside

scope of this Plan)

Interstate ICUA Requests Rate of Nevada’s municipal growth

17

Modeling Analysis of recovery factors requires use

of models The Joint Plan relies on two models

Reclamation’s Colorado River Simulation System (CRSS)

Custom recovery model that calculates the probability of specific recovery volumes through time based on range of supply and demand conditions

18

CRSS Modeling Assumptions

“Arizona Baseline”Modeling Parameters Modeling Assumptions

Basin Hydrology Observed Record (1906-2010)

Upper Basin Demands ADWR Upper Basin Demand Assumption - 4.8 MAF by 2031, then flat

Operation of Yuma Desalting Plant No

Mexico Shortage Sharing Yes, Minute 319, extended

Reservoir Operations 2007 Interim Guidelines, extended

Initial Reservoir Condition 2014 Lake Mead elevation

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Basin Hydrology

-

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

1906 to 2010

20

Upper Basin DemandsArizona Baseline

Historical Use

Trendline

21

Reservoir Operations

Interim Guidelines (2007) and Minute 319

22

Shortages to Arizona

0%

10%

20%

30%

40%

50%

60%

70%

Probability of Shortages to Arizona

“Arizona Baseline”

23

Recovery Model The recovery model incorporates the

105 different water supply traces from the CRSS model and matches those against a range of projected on-River and CAP demands.

24

On-River Demand

25

On-River P-4 Demand

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,00020

1220

1420

1620

1820

2020

2220

2420

2620

2820

3020

3220

3420

3620

3820

4020

4220

44

P-4 On River Scenario B

Muni

Ag

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

2042

2044

P-4 On River Scenario A

Muni

Ag

Muni

Ag

Ag

Muni

26

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

Full Long-Term Contract Use by 2045

P3 M&I & Indian NIA Ag Pool Other Excess

CAP Demand

Long-Term Contracts

Excess

Historic Projected

1.415 MAF

Full Use

27

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

Full Long-Term Contract Use by 2035

P3 M&I & Indian NIA Ag Pool Other Excess

CAP Demand

Long-Term Contracts

Excess

1.415 MAF

Full Use

Historic Projected

28

Nevada Demand

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000Nevada Consumptive Use (1970-Present)

Entitlement

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Scenarios

Scenarios On-River Demand

CAP Demand

Nevada Request

Scenario A Increase to 1.22 MAF by 2045; Ag steady, Muni growth per 2006 Census, no conversion of P-4 agricultural use

(ADWR's Scenario A for NIA reallocation)

Full long-term contract use by 2045

A1: Start in 2025; steady to 2063 (~15 kAF/yr); no shortage requestA2: Start in 2035; steady to 2063 (~21 kAF/yr); no shortage request

Scenario B Increase to 1.22 MAF by 2045; Ag steady, Muni growth per 2006 Census, full conversion of P-4 agricultural use to M&I by 2035

Full long-term contract use by 2035

B1: Start in 2025; max request; additional shortage requestB2: Start in 2035; max request; additional shortage request

30

5%

25%

50%

75%

100%

13%

13%

14% 13%

14% 13%

14% 13%

14% 13%

14% 13%

14% 13%

14% 13%

14% 13%

14% 13%

14% 13%

12% 11% 11% 14% 28%

15% 15% 12% 12% 11% 11% 30% 28%

16% 16% 14% 14% 15% 15% 12% 32% 30% 29% 30% 45%

17% 15% 17% 17% 18% 16% 16% 14% 14% 30% 29% 31% 32% 30% 29% 46% 45%

16% 15% 16% 15% 17% 15% 17% 17% 38% 35% 30% 33% 33% 30% 29% 31% 45% 48% 48% 46% 45%

17% 17% 15% 16% 15% 16% 37% 40% 37% 40% 39% 38% 35% 30% 33% 47% 46% 45% 44% 45% 48% 48% 46% 45%

16% 12% 17% 17% 15% 35% 36% 36% 37% 40% 37% 40% 39% 47% 48% 47% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45%

6% 13% 16% 12% 17% 35% 32% 35% 36% 36% 52% 51% 52% 52% 51% 47% 48% 47% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45%

1% 6% 13% 32% 36% 36% 35% 55% 53% 51% 55% 52% 51% 52% 52% 51% 47% 48% 47% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45%

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

2045

MedianAverage

Maximum

7,000 -

14,000 -

21,000 -

28,000 -

35,000 -

42,000 -

49,000 -

56,000 -

63,000 -

70,000 -

77,000 - DRAF

T

5%

25%

50%

75%

100%

Prob

abili

ty a

t Sp

ecifi

ed V

olum

e

Model Results

Near-Term Mid-Term Long-Term

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DRAF

T 16%

17% 15% 17% 17% 18% 16%

16% 15% 16% 15% 17% 15% 17% 17% 38% 35%

17% 17% 15% 16% 15% 16% 37% 40% 37% 40% 39% 38% 35%

16% 12% 17% 17% 15% 35% 36% 36% 37% 40% 37% 40% 39% 47% 48%

6% 13% 16% 12% 17% 35% 32% 35% 36% 36% 52% 51% 52% 52% 51% 47% 48%

1% 6% 13% 32% 36% 36% 35% 55% 53% 51% 55% 52% 51% 52% 52% 51% 47% 48%

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

Median

AverageMaximum

0 22

7,000 -

14,000 -

21,000 -

28,000 -

35,000 - In 2023, there is a 35% probability of

needing 7,000 AF of recovery, and a 17%

probability of needing 14,000 AF

Model Results

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DRAF

T5%

25%

50%

75%

100%

13%

13%

14% 13%

14% 13%

14% 13%

14% 13%

14% 13%

14% 13%

14% 13%

14% 13%

14% 13%

14% 13%

12% 11% 11% 14% 28%

15% 15% 12% 12% 11% 11% 30% 28%

16% 16% 14% 14% 15% 15% 12% 32% 30% 29% 30% 45%

17% 15% 17% 17% 18% 16% 16% 14% 14% 30% 29% 31% 32% 30% 29% 46% 45%

16% 15% 16% 15% 17% 15% 17% 17% 38% 35% 30% 33% 33% 30% 29% 31% 45% 48% 48% 46% 45%

17% 17% 15% 16% 15% 16% 37% 40% 37% 40% 39% 38% 35% 30% 33% 47% 46% 45% 44% 45% 48% 48% 46% 45%

16% 12% 17% 17% 15% 35% 36% 36% 37% 40% 37% 40% 39% 47% 48% 47% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45%

6% 13% 16% 12% 17% 35% 32% 35% 36% 36% 52% 51% 52% 52% 51% 47% 48% 47% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45%

1% 6% 13% 32% 36% 36% 35% 55% 53% 51% 55% 52% 51% 52% 52% 51% 47% 48% 47% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45%

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

2045

MedianAverage

Maximum

7,000 -

14,000 -

21,000 -

28,000 -

35,000 -

42,000 -

49,000 -

56,000 -

63,000 -

70,000 -

77,000 -

>25% Probability

There is a 75% probability that

recovery needs will be less than this line.

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5%

25%

50%

75%

100%

15% 12% 12% 11% 11% 14% 13%

15% 16% 15% 17% 15% 17% 17% 18% 16% 30% 33% 33% 30% 29% 31% 32% 30% 29% 30% 28%

16% 12% 17% 17% 15% 35% 36% 36% 37% 40% 37% 40% 39% 47% 48% 47% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45%

1% 6% 13% 32% 36% 36% 35% 55% 53% 51% 55% 52% 51% 52% 52% 51% 47% 48% 47% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45%

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

2045

MedianAverage

Maximum 4,099 6,745 8,417

0 22 0327 1,941 2,638

Recovery for On-River P4CRSS: 9/13 Run, AZ Assumptions; On-River: ADWR NIA "A", No Ag Convert

65,000 -

60,000 -

55,000 -

15,000 -

10,000 -

5,000 -

25,000 -

20,000 -

Prob

abili

ty a

t Sp

ecifi

ed V

olum

e

40,000 -

35,000 -

30,000 -

50,000 -

45,000 -

DRAFT

Scenario A

34

5%

25%

50%

75%

100%

12% 11% 11% 30% 28%

15% 12% 12% 11% 11% 30% 28%

14% 14% 15% 15% 12% 32% 30% 29% 46% 45%

17% 17% 18% 16% 16% 14% 14% 30% 29% 31% 32% 30% 29% 46% 45%

15% 16% 15% 17% 15% 17% 17% 18% 16% 30% 33% 33% 30% 29% 31% 45% 48% 48% 46% 45%

17% 15% 16% 15% 16% 15% 17% 37% 40% 39% 38% 35% 30% 33% 33% 46% 45% 44% 45% 48% 48% 46% 45%

16% 12% 17% 17% 15% 16% 36% 36% 37% 40% 37% 40% 39% 38% 48% 47% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45%

6% 13% 16% 12% 17% 35% 32% 35% 36% 36% 37% 51% 52% 52% 51% 47% 48% 47% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45%

1% 6% 13% 32% 36% 36% 35% 32% 35% 51% 55% 52% 51% 52% 52% 51% 47% 48% 47% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45%

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

2045

MedianAverage

Maximum568 3,731 6,718

7,889 14,267 22,269

0 0 0

5,000 -

10,000 -

15,000 -

25,000 -

30,000 -

Prob

abili

ty a

t Sp

ecifi

ed V

olum

e

Recovery for Indian NIACRSS: 9/13 Run, AZ Assumptions; On-River: ADWR NIA "A"; Long-Term

Contracts: Full by 2045

20,000 -

35,000 -

40,000 -

45,000 -

50,000 -

55,000 -

60,000 -

65,000 -

DRAFT

Scenario A

35

5%

25%

50%

75%

100% 13%

13%

14% 13%

14% 13%

14% 13%

14% 13%

14% 13%

14% 13%

14% 13%

14% 13%

14% 13%

14% 13%

14% 13%

14% 13%

14% 13%

14% 13%

14% 13%

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

2045

MedianAverage

Maximum 0 0 42,086

0 0 00 0 977

Recovery for M&ICRSS: 9/13 Run, AZ Assumptions; On-River: ADWR NIA "A"; Long-Term

Contracts: Full by 2045

65,000 -

60,000 -

55,000 -

15,000 -

10,000 -

5,000 -

25,000 -

20,000 -

Prob

abili

ty a

t Sp

ecifi

ed V

olum

e

40,000 -

35,000 -

30,000 -

50,000 -

45,000 -

DRAFT

Scenario A

36

DRAFT

Scenario A

37

DRAFT

Scenario A1

38

DRAFT

Scenario A2

39

DRAFT

Scenario B

40

DRAFT

Scenario B1

41

DRAFT

Scenario B2

42

Summary Table

Water User

Earliest Maximum Probabilit

y

Maximum Near-

Term (AF)

Maximum

Mid-Term (AF)

Maximum

Long-Term (AF)

Indian NIA

2017 55% 10,300 22,700 23,700

On-River 2017 55% 6,800 15,500 19,900M&I 2035 16% 0 0 42,000Total Intrastate

2017 55% 17,000 38,200 84,200

Interstate

2025 100% 0 60,000 60,000

Total with Interstate

    17,000 98,200 144,200

DRAF

T

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100% 34%

100% 47%

100% 59% <--AVERAGE (300,123)<--MEDIAN (239,664)

100% 71%

100% 84%

100% 90%

100% 100% <--MAX (796,906)

100% 100%

100% 100%

100% 100%

100% 100%

100% 100%

100% 100%

100% 100%

100% 100%

100% 100%

100% 100%

100% 100%

100% 100%

100% 100%

100% 100%

100% 100%

100% 100%

100% 100%

100% 100%

- 100% 100%

2,500,000 -

250,000 -

Total Intrastate Credit BalanceCRSS: 9/13 Run, AZ Assumptions; On-River: ADWR NIA "A", Full

Ag Convert by 2035; Long-Term Contracts: Full by 2035

3,250,000 -

3,000,000 -

2,750,000 -

750,000 -

500,000 -

2,250,000 -

2,000,000 -

1,750,000 -

1,500,000 -

1,250,000 -

1,000,000 -

Remaining CreditsScenario B2

3,223,851 Ending Balance

Min 3,223,851 (100%)Max 2,426,945 (75%)Average 2,923,728 (91%)Median 2,984,187 (93%)

Initial Balance =

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Summary of Results

Earliest projected intrastate recovery is 2017 (1% probability; Indian NIA and On-River)

Less than 35% probability of needing any recovery before the Mid-Term planning period (2024-2034)

No M&I recovery projected until Long-Term planning period (2035-2045)

Bulk of intrastate credits remain past 2045 Timing and magnitude of Nevada’s request

plays significant role in Mid-Term and Long-Term planning periods

45

Next Steps Develop Sections 5-7 which deal with

how the recovery will occur Recovery Methods Opportunities by AMA General Costs Implementation Future Activities & Commitments