2. Reservoir Water Quality Improvements

AGENDA Special Meeting Governing Board of Sweetwater Authority Tuesday, October 13, 2020 – 4:00 p.m.

Notice: Pursuant to Governor Newsom’s Executive Orders N-29-20 and 33-20, which in part, provide waivers to certain Brown Act provisions, meetings of the Board of Directors will be held by teleconference. There will be no physical location from which members of the public may participate. Instead, the public may listen and/or view the meeting proceedings and provide public comment and comments on agenda items by following these instructions: To join via Zoom Webinar from a computer, tablet, or smartphone, click on the link below: https://zoom.us/j/91458023440

To join this meeting via telephone, please dial: 1-669- 900-6833 or 1-253-215-8782 Meeting ID: 914 5802 3440

If you are unable to access the meeting using this call-in information, please contact the Board Secretary at (619) 409-6703 for assistance.

To provide public comment on non-agenda items or to provide public comment on any item of the agenda: Before the meeting: - Go to www.sweetwater.org; click on the “HOW DO I…” at the top of the page; and then click on the “Public Comment” link in the Contact section. OR - Physically deposit your public comment in the Authority’s payment drop box located in the public parking lot at the Authority’s Administrative Office at 505 Garrett Avenue, Chula Vista. OR - Mail your comments to 505 Garrett Avenue, Chula Vista, CA 91910 [Attention: Public Comment].

All written public comment submissions must be received 1 hour in advance of the meeting and will be read aloud to the Board during the appropriate portion of the meeting with a reading limit of 3 minutes for each comment.

1 SWEETWATER AUTHORITY – GOVERNING BOARD AGENDA – Special Meeting of October 13, 2020 Page 2 of 3

During the meeting: The Chair will inquire prior to Board discussion if there are any comments from the public on each item.

- Via Zoom Webinar go to Participants List, hover over your name and click on “Raise Hand.” This will notify the moderator that you wish to speak during Oral Communication or during a specific item on the agenda.

- Via phone, you can raise your hand by pressing *9 to notify the moderator that you wish to speak during the current item.

Any person with a disability who requires a modification or accommodation in order to participate in a meeting should direct such request to the Board Secretary at (619) 409-6703 at least forty-eight (48) hours before the meeting, if possible. The above public comment procedures supersede any Authority standard public comment policies and procedures to the contrary.

• Call Meeting to Order and Roll Call

• Pledge of Allegiance to the Flag

• Opportunity for Public Comment Opportunity for members of the public to address the Board (Government Code Section 54954.3)

ACTION CALENDAR AGENDA The following items on the Action Agenda call for discussion and action by the Board. All items are placed on the Agenda so that the Board may discuss and take action on the item if the Board is so inclined, including items listed for information.  Fine Screening Project Evaluation from the Feasibility Study for Maximizing Reservoir Assets and Expanding the Local Water Supply

• Directors’ Comments Directors’ comments are comments by Directors concerning Authority business that may be of interest to the Board. Directors’ comments are placed on the Agenda to enable individual Board members to convey information to the Board and the Public. There is no discussion or action taken on comments made by Board members.

CLOSED SESSION

 Public Employee Appointment pursuant to Government Code Section 56957: Title: Special Labor Counsel

• Adjournment

This agenda was posted at least twenty-four (24) hours before the meeting in a location freely accessible to the Public on the exterior bulletin board at the main entrance to the Authority’s office and it is also posted on the Authority’s website at www.sweetwater.org. No action may be taken on any item not appearing on the posted agenda, except as provided by California Government Code Section

2 SWEETWATER AUTHORITY – GOVERNING BOARD AGENDA – Special Meeting of October 13, 2020 Page 3 of 3

54954.2. Any writings or documents provided to a majority of the members of the Sweetwater Authority Governing Board regarding any item on this agenda will be made available for public inspection at the Authority Administration Office, located at 505 Garrett Avenue, Chula Vista, CA 91910, during normal business hours. Upon request, this agenda will be made available in appropriate alternative formats to persons with disabilities, as required by Section 202 of the Americans with Disabilities Act of 1990. Any person with a disability who requires a modification or accommodation in order to participate in a meeting should direct such request to the Board Secretary at (619) 409-6703 as soon as possible prior to the meeting. To e-subscribe to receive meeting agendas and other pertinent information, please visit www.sweetwater.org.

PUBLIC COMMENT PROCEDURES Members of the general public may address the Board regarding items not appearing on the posted agenda, which are within the subject matter jurisdiction of the Governing Board. Speakers are asked to state name, address, and topic, and to observe a time limit of three (3) minutes each. Public comment on a single topic is limited to twenty (20) minutes. Anyone desiring to address the Governing Board regarding an item listed on the agenda is asked to fill out a speaker’s slip and present it to the Board Chair or the Secretary. Request to Speak forms are available at the Speaker’s podium and at www.sweetwater.org/speakerform.

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TO: Governing Board

FROM: Management

DATE: October 9, 2020

SUBJECT: Fine Screening Project Evaluation from the Feasibility Study for Maximizing Reservoir Assets and Expanding the Local Water Supply

SUMMARY At its May 28, 2020 Special meeting, the Board received the results from the coarse screening project evaluation from the Feasibility Study for Maximizing Reservoir Assets and Expanding the Local Water Supply, and accepted the recommendations from the Consultant, Gillingham Water and Planning, Inc. (Gillingham Water).

Per the Scope of Work and the accepted recommendations from the coarse screening project evaluation, Gillingham Water performed a fine screening project evaluation of the feasibility in implementing the following alternatives for maximizing reservoir assets and expanding the local water supply: • Reservoir Water Quality Improvements • Indirect Potable Reuse (Pure Water) • Regional Water Sales Opportunities • Reservoir Storage Practice Revisions

A fifth alternative, Loveland Regional Exchange, is also to be evaluated. Evaluation of this alternative requires staff and Gillingham Water to meet with staff from Padre Dam Municipal Water District (Padre Dam); however, a meeting with staff from Padre Dam could not be accommodated before this Special Board meeting. A meeting with staff from Padre Dam is scheduled for late October 2020 and will aid in finalizing the fine screening evaluation of the Loveland Regional Exchange.

Per the Scope of Work, the goal of this meeting will be to review, refine, and confirm the findings of the Task 2 Fine Screening work, and to present project(s) suitable for advancement to preliminary design and environmental documentation. A fine screening project evaluation briefing document summarizing which project alternatives are recommended for implementation and which ones are recommended for further evaluation is enclosed. This briefing document will be updated after the meeting with Padre Dam, to include recommendations for the Loveland Regional Exchange.

5 Memo to: Governing Board Subject: Fine Screening Project Evaluation from the Feasibility Study on Maximizing Reservoir Assets and Expanding the Local Water Supply October 9, 2020 Page 2 of 3

PAST BOARD ACTION May 28, 2020 The Governing Board received the results from the coarse screening project evaluation from the Feasibility Study and accepted the recommendations from Gillingham Water. December 11, 2019 The Governing Board approved the Scope of Work for the Feasibility Study. October 9, 2019 The Governing Board approved Gillingham Water as the consultant to prepare the Feasibility Study and directed staff to initiate contract negotiations. August 28, 2019 The Governing Board approved the draft Request for Qualifications (RFQ), as modified by the Operations Committee, allowing staff to issue the RFQ to obtain Statement of Qualifications from qualified consultants. August 14, 2019 The Governing Board directed staff to engage the Operations Committee to review the draft RFQ for consultant to perform a Feasibility Study prior to consideration by the Governing Board. June 12, 2019 The Governing Board approved the FY 2019-20 Strategic Plan Detailed Work Plan.

FISCAL IMPACT The FY 2019-20 Budget includes $300,000 for the Feasibility Study.

POLICY Strategic Plan Goal 2: System and Water Supply Reliability – Achieve an uninterrupted, long-term water supply through investment, maintenance, innovation and developing local water resources. • Objective SR11: Explore options for new water sources including but not limited to: conservation, recycled water, potable reuse, stormwater retention, groundwater/desalination, and Urban Runoff Diversion Systems.

o Task 003.00: Conduct a Feasibility Study including cost/benefit analyses and an evaluation of environmental impacts, for developing new water resources such as recycled water and potable reuse.

Strategic Plan Goal 3: Financial Viability – Ensure long-term financial viability of the agency through best practices, operational efficiency, and maximizing assets.

6 Memo to: Governing Board Subject: Fine Screening Project Evaluation from the Feasibility Study on Maximizing Reservoir Assets and Expanding the Local Water Supply October 9, 2020 Page 3 of 3

• Objective FV5: Explore innovative opportunities for leveraging Authority assets (e.g., reservoirs, property) to reduce financial burden on Authority ratepayers.

o Task 001.00: Conduct a Feasibility Study including cost/benefit analyses and an evaluation of environmental impacts, for maximizing the Loveland and Sweetwater Reservoirs including but not limited to consideration of a pipeline between the two reservoirs and reducing the emergency storage requirement at Loveland Reservoir.

ALTERNATIVES 1. Receive the results of the Fine Screening Project Evaluation from the Feasibility Study for Maximizing Reservoir Assets and Expanding the Local Water Supply, and accept the recommendations from Gillingham Water, knowing that a recommendation on the Loveland Regional Exchange alternative will be provided at a later date in 2020.

2. Other direction as determined by the Governing Board.

STAFF RECOMMENDATION Staff recommends that the Governing Board receive the results of the Fine Screening Project Evaluation from the Feasibility Study for Maximizing Reservoir Assets and Expanding the Local Water Supply and accept the recommendations from Gillingham Water and Planning, Inc., knowing that a recommendation on the Loveland Regional Exchange alternative will be provided at a later date in 2020.

ATTACHMENT Draft Water Supply Feasibility Study 2020 - Briefing Document – Fine Screening

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8 SWEETWATER AUTHORITY

Water Supply Feasibility Study 2020 Briefing Document– FINE SCREENING DRAFT October 2020

Maximizing reservoir assets and expanding local supply

Prepared by:

9 SWEETWATER AUTHORITY

Water Supply Feasibility Study 2020 Briefing Document– FINE SCREENING DRAFT October 2020

Prepared by:

In association with:

Hoch Consulting

Michael R. Welch, Ph.D., P.E. Ken Weinberg Water Resources Consulting Consulting Engineer

DRAFT ______12-31-21 Doug Gillingham, P.E., BCEE Project Manager

GILLINGHAM WATER i DRAFT October 7, 2020 10 PROJECT TEAM

CONSULTANT TEAM SWEETWATER AUTHORITY

Gillingham Water BOARD OF DIRECTORS: Doug Gillingham, P.E. BCEE Steve Castaneda, Chair Hector Martinez, Vice Chair HDR Josie Calderon-Scott Jennifer Duffy, P.E. Jerry Cano Leanne Abe, P.E. José F. Cerda Alice Wang Jose Preciado Kirstin Skadberg Consulting Alejandra Sotelo-Solis

Kirstin Skadberg, PhD

DLM Engineering STAFF: Don MacFarlane, P.E. Erick Del Bosque, P.E., Engineering Manager Water Quality Solutions Ron Mosher, P.E., Director of Engineering Imad Hannoun, Ph.D., P.E. (VA) Tish Berge, P.E., General Manager Xing Qi, PhD Jennifer Sabine, Assistant General Manager Kareem Hannoun, Ph.D. Justin Brazil, Director of Water Quality Ira Rackley, P.E. Mark Hatcher, Water Treatment Superintendent Pete Famolaro, Biologist Michael R. Welch Consulting Engineer Israel Marquez, Environmental Project Manager Michael R. Welch, PhD, P.E.

Weinberg Water Resources Consulting Ken Weinberg

Hoch Consulting Adam Hoch, P.E., QSD Joseph Hinden

GILLINGHAM WATER ii DRAFT October 7, 2020 11 PROJECT TEAM

CONSULTANT TEAM SWEETWATER AUTHORITY

Kirstin Skadberg, PhD

Weinberg Water Resources Consulting Ken Weinberg

Hoch Consulting Adam Hoch, P.E., QSD Joseph Hinden

GILLINGHAM WATER ii DRAFT October 7, 2020 12 CONTENTS

SECTIONS: 1. Overview and Introduction ...... 1 2. Reservoir Water Quality Improvements ...... 8 3. Pure Water / Indirect Potable Reuse (IPR) ...... 18 4. Otay Sales Agreement ...... 34 5. Storage Policy Revision ...... 41 6. Loveland Regional Exchange ...... 50

TECHNICAL APPENDICES: 2A: Reservoir Water Quality Cost Estimate Detail...... 2A-1 2B: Reservoir Water Quality Technical Documentation ...... Separate Cover 3A: Pure Water Net Present Value Cost Detail ...... 3A-1 4A: Meeting Minutes: Coordination with Otay Re: Possible Sales Agreement ...... 4A-1

GILLINGHAM WATER iii DRAFT October 7, 2020 13 LIST OF TABLES

TABLE 1-1. Average and Reliable Production of Authority Local Supplies ...... 4 TABLE 1-2. Project Ratings Summary ...... 5

TABLE 2-1: Select Factors Affecting Sweetwater Reservoir Water Quality ...... 9 TABLE 2-2: Consequences of Diminished Water Quality ...... 11 TABLE 2-3: System Options for Maintaining Dissolved Oxygen Levels ...... 12 TABLE 2-4: Net First-Year Unit Costs After Treatment Plant Avoided Costs ...... 13 TABLE 2-5: Anticipated Environmental Documentation and Permitting ...... 14 TABLE 2-6: Key Aspects of the Conceptual Design – ...... 16 TABLE 2-7: Conceptual Project Implementation Items, Schedule, and Budget ...... 17

TABLE 3-1: ECAWP Direct Cost Estimates ...... 23 TABLE 3-2: Key Aspects of the Conceptual Design ...... 26 TABLE 3-3: Conceptual Project Costs ...... 27 TABLE 3-4: Water Authority Rate Escalation Assumptions ...... 28 TABLE 3-5: Metro System Rate Escalation Assumptions ...... 29 TABLE 3-6: Project Finance Rates and Terms (Unaided) ...... 29 TABLE 3-7: Low-Interest Loan Program Summaries ...... 30 TABLE 3-8: Project Finance Rates and Terms Inclusive of Programs ...... 30 TABLE 3-9: Net Present-Value Cost Comparison – Scenario Assumptions ...... 31 TABLE 3-10: 30-Year Net Present-Value Cost Comparison ...... 31

TABLE 4-1: Sales Agreement Potential Benefits ...... 35 TABLE 4-2: Key Aspects of the Conceptual Design ...... 36 TABLE 4-3: Conceptual Total Project Costs, Corral Canyon Road Alignment ...... 38

TABLE 5-1: Existing Emergency Storage Practice ...... 42 TABLE 5-2: Changed Conditions Re: Emergency Storage Policy...... 42 TABLE 5-3: Summary of Potential Shortage Events and Consequences ...... 43 TABLE 5-4: Recommend Revised Emergency Storage Practice ...... 45 TABLE 5-5: Loveland Reservoir Evaporation Losses by Water Level ...... 48

GILLINGHAM WATER iv DRAFT October 7, 2020 14 LIST OF FIGURES

FIGURE 2-1: Reservoir Thermal Stratification ...... 10 FIGURE 2-2: Conceptual Aeration / Destratification Diffuser Layout ...... 15

FIGURE 3-1: Metro System and Spring Valley Interceptor Facilities Overview ...... 20 FIGURE 3-2: San Diego Pure Water Program ...... 21 FIGURE 3-3: ECAWP Pure Water Program Drivers ...... 22 FIGURE 3-4: ECAWP Estimate of Avoided Metro Costs ...... 24 FIGURE 3-5: Conceptual Siting of Major Project Components ...... 25

FIGURE 4-1: Conceptual Pipeline Alignment – SWA to Otay Sales Agreement ...... 37 FIGURE 4-2: Otay Supply Sources ...... 39

FIGURE 5-1: Loveland Reservoir Storage Levels ...... 46

GILLINGHAM WATER v DRAFT October 7, 2020 15 ABBREVIATIONS

AF acre-feet Authority Sweetwater Authority AWT Advanced Water Treatment CDFW California Division of Fish and Wildlife CEQA California Environmental Quality Act County County of San Diego DBP Disinfection By-Products DDW California Division of Drinking Water Desal Facility Richard A. Reynolds Groundwater Desalination Facility DSOD California Division of Safety of Dams DWSRF Drinking Water State Revolving Fund ECAWP East County Advanced Water Purification Program) ESP SDCWA Emergency Storage Project hp horsepower IPR Indirect Potable Reuse JPA Joint Powers Authority Metro System City of San Diego Metropolitan Wastewater System MG Million Gallons mgd million gallons per day MWD Metropolitan Water District of Southern California NPV Net Present Value Otay Otay Water District Padre Dam Padre Dam Municipal Water District RO Reverse Osmosis RWCWRF Water District Ralph W. Chapman WRF RWQCB Regional Water Quality Control Board South District Composite of the Otay Central and Otay Mesa Service Areas SWA Sweetwater Authority (used as shorthand in some tables and figures) SDCWA San Diego County Water Authority SVI Spring Valley Interceptor SWRCB State Water Resources Control Board TDH Total Dynamic Head Treatment Plant Robert A. Perdue surface water treatment plant USACE U.S. Army Corps of Engineers URDS Sweetwater Reservoir Urban Runoff Diversion System WIFIA Water Infrastructure Financing Innovation Act WRF Water Reclamation Facility

GILLINGHAM WATER vi DRAFT October 7, 2020 16 1. Overview and Introduction

Summary: • Authority Leadership: Sweetwater Authority is already a regional leader in the development of local water supplies. The Water Supply Feasibility Study examines opportunities for further innovation and refinement. • Additional Opportunities: The Study’s Fine Screening review has investigated five short-listed projects advanced from the earlier Coarse Screening level of review. Of these, the Study team recommends two projects, Reservoir Water Quality Improvement and Storage Practice Revision, proceed to implementation. • Review and Next Steps: The Fine Screening Workshop will present our findings on each of the five short-listed projects for Board consideration.

1.1. Study Purpose: Explore opportunities to maximize reservoir assets and expand local water supplies. Sweetwater Authority (Authority) is in the enviable position of possessing considerable local water supply assets, a result of farsighted planning and investment decisions by preceding and current generations of leadership. These assets include Loveland and Sweetwater Reservoirs, the Robert A. Perdue surface water treatment plant (Treatment Plant), the National City Wellfield, and the San Diego Formation Wellfield supplying the Richard A. Reynolds Groundwater Desalination Facility (Desal Facility).

With imported supplies subject to continuing challenges and growing increasingly expensive, it becomes prudent to examine additional opportunities to maximize local water supplies and increase their value to Authority ratepayers. The Water Supply Feasibility Study is designed to do just that, examining a few old ideas in light of new Maximizing reservoir assets and expanding local supply. The overarching purpose of the Study is to evaluate opportunities to further circumstances, and adding refine the management of the Authority’s Sweetwater River reservoir some new ideas to the mix assets and other options to expand local supply. as well.

GILLINGHAM WATER 1 DRAFT October 7, 2020 17 1.2. The Fine Screening review has investigated the five projects short-listed by the earlier Coarse Screening review. The five projects investigated in the Fine Screening round are as follows:

Reservoir Water Potable Reuse Quality Improvements (Pure Water)

Reservoir Storage Regional Water Sales Practice Revisions Opportunities

Loveland Regional Exchange

Reservoir Management Recycled and Pure Water Loveland Reservoir Utilization Regional Sales

1.3. The Study team is using a phased screening approach to review the alternatives based on cost and non-cost evaluation criteria. The Study team is utilizing a three-phase planning review summarized in the flow chart below. The Study team briefed and received direction from the Authority Board on Project Identification issues in December 2019, and presented results of the Coarse Screening review in May 2020. The team has now completed the Fine Screening review of project alternatives, as described in this report.

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GILLINGHAM WATER 2 DRAFT October 7, 2020 18 Evaluation criteria build on the Authority’s mission statement:

AUTHORITY MISSION STATEMENT: The mission of Sweetwater Authority is to provide its current and future customers with a safe and reliable water supply through the use of the best available technology, sound management practices, public participation and a balanced approach to human and environmental needs.

Leading to the following cost and non-cost evaluation criteria:

EVALUATION CRITERIA

COST FACTORS NON-COST FACTORS (COSTS) (BENEFITS)

• Economic Analysis • Supply Reliability • Ratepayer Economy • Water Quality • Environmental Sustainability • Customer Service • Best Practices for Efficiency and Effectiveness

1.4. We have rated the short-listed alternatives as to their suitability for implementation. Based on the Study’s evaluations, the Fine Screening review has assigned an 1/2/3 ranking to each of the alternatives, with the rankings defined as shown in the table below. We recommend projects in Category 1 proceed to project implementation.

FINE-SCREENING RATINGS CATEGORIES

Rating / Category Description Action 1. Recommended for Project is feasible and provides clear Proceed to implementation, Implementation opportunity for benefit to Authority including design and environmental review as needed 2. Monitor and Project offers potential benefit to Monitor and review Review Authority, but further action must await future developments and/or actions and decisions by others 3. Dismiss Project is not feasible under current Do not advance; conduct due- conditions and is unlikely to become diligence review in 10+ years so in the future

GILLINGHAM WATER 3 DRAFT October 7, 2020 19 1.5. Conditions have changed: Water demands have gone down, and local supplies have gone up. Demands have gone down. From 2000 up until the Great Recession of 2008, Authority water deliveries (inclusive of non- revenue water) averaged 23,000 acre-feet per year (AF/yr), and projections of future demands followed an upward trend. Fast forward to calendar years 2018 and 2019, the first a bit dryer than normal and the second a bit wetter, and Authority deliveries have declined to a current average of approximately Period Deliveries (AF/yr) 17,000 AF/yr. This decline reflects the effects of the Great 2000-08 23,000 (average) Recession, periods of statewide mandatory water use restrictions, increases in water rates that have further 2018 17,400 incentivized water conservation efforts, and other changes. 2019 16,800 The Authority will be preparing new water demand projections as part of its 2020 Urban Water Management Plan, due July 1, 2021. The Study team would not be surprised if the new forecast indicates future demands flat or even decreasing slightly, notwithstanding projected increases in population and employment within the Authority service area. Even if the new forecast does indicate an increase, we believe the increase is unlikely to return the Authority to the past era of delivering 23,000 AF/yr.

Local supplies have gone up. Over the same period of time, the Authority has implemented a major expansion of its local supply portfolio through the expansion of the Desal Facility, together with the expansion of the San Diego Formation wellfield that supplies the plant. The expansion increases the Authority’s average local water production to almost 16,000 AF/yr, and its highly reliable production to more than 8,000 AF/yr, as summarized in Table 1-1.

TABLE 1-1. Average and Reliable Production of Authority Local Supplies

Average Production RELIABLE Production Year in Source Service Source Cumulative Source Cumulative (AF/yr) (AF/yr) (AF/yr) (AF/yr) 1. Sweetwater River 1883 7,400 7,400 0 0 2. National City Wellfield 1950s 2,100 9,500 2,100 2,100 3. Desal Facility, original 2000 3,600 13,100 3,600 5,700 4. Desal Facility expansion 1 2017 2,600 15,700 2,600 8,300

1. Authority portion of expansion. The total expansion is shared 50-50 with the City of San Diego.

The result is an oversupply of relatively inexpensive local water in wet years. The other San Diego area water agencies would love to have that problem. Water not used by the Authority in wet years may be held over in storage in Loveland and Sweetwater reservoirs, but becomes subject to storage losses. The local yield of the combined supplies could be more fully utilized if the Authority’s demands were higher, or if it accomplished the same end through participation in a Water Sales arrangement with one of its neighbors. Another effect is that the Authority’s economic incentive for investing in new local supplies is less than for an agency fully reliant on relatively expensive imported supplies.

GILLINGHAM WATER 4 DRAFT October 7, 2020 20 1.6. Project Ratings Summary: Several of the options merit further evaluation. TABLE 1-2. Project Ratings Summary

Project Project Description / Benefits & Constraints Next Steps

Category 1 Projects: RECOMMENDED FOR IMPLEMENTATION

• Reservoir Install a vertical mixing / destratification system in • Program into CIP Water Quality Sweetwater Reservoir to maintain healthy levels of budget ($1.2M) Improvements dissolved oxygen throughout the water column. • Investigate grant Benefits: funding and low- interest loan • Reduced nutrient recycling, reduced algal productivity, opportunities and reduced manganese levels, leading to: • Initiate design, • Life-cycle cost savings arising from reduced power and environmental chemical usage at the Treatment Plant documentation, and • Pathway for removal of the reservoir from the Regional permitting Water Quality Control Board’s list of impaired water bodies (Clean Water Act Section 303(d) designation) • Improved disinfectant residual stability / reduced nitrification problems in distribution system • Reduced colored water and taste and odor complaints • Improved consumer confidence Constraints: • Project projected to pay for itself in time, but up-front Capital investment required

• Storage Policy Amend current operating practice for the maintenance of • Amend operating Revision emergency storage reserves in Authority reservoirs. practice relative to Continue to target one-month of reserve in Sweetwater maintenance of Reservoir, but reduce the target at Loveland Reservoir Emergency Storage from three months to none. reserve Benefits: • Consider options for addressing • Together with other Authority supply assets, SDCWA effects on fishing Emergency Storage Project, and SDCWA supplies, and recreation uses maintains high levels of supply reliability for Authority at Loveland customers Reservoir • Reduces storage losses; resulting in increased local • Consider obtaining yield. Reduces Authority supply costs by legal advice to approximately $300,000 per year on average confirm adjustment • One-time initial withdrawal benefit (after transfer and to reservoir other losses) of up to $6 million (based on 6,000 AF of operating practice additional withdrawal valued at $1,000/AF) is ministerially Constraints: exempt from CEQA • Reduced Loveland Reservoir storage levels will affect fishing and recreation uses • The Authority’s boat launch at Loveland may need to be improved to maintain boat access, and the log-boom modified to accommodate lower water levels

GILLINGHAM WATER 5 DRAFT October 7, 2020 21 Project Project Description / Benefits & Constraints Next Steps

Category 2 Projects: MONITOR AND REVIEW

• Indirect The Authority hosted a South Bay Pure Water • Following review Potable Reuse Opportunities Workshop with Otay Water District (Otay) of this report, (IPR) and the County of San Diego to explore the merits of a contact Otay and cooperative indirect potable reuse project. The workshop the County to identified potential opportunities for mutually- assess interest in advantageous cooperation, but also many potential further constraints to project feasibility. investigations The workshop participants agreed to review the Fine • If the parties Screening report and to subsequently advise one another express interest, of their interests in proceeding with further investigations. identify a project Benefits: champion who would lead further • An IPR project would provide highly-reliable local investigations supply for the Authority and Otay, reducing reliance on supplies from SDCWA • An IPR project would allow the County to reduce its reliance on the City of San Diego Metropolitan Wastewater System (Metro System) for disposal of wastewater Constraints: • Because the Authority’s existing supplies already allow it to be independent of SDCWA in some years, its average annual economic incentive for additional increments of local supply is diminished • Economic feasibility appears to depend on favorable assumptions about the magnitude and duration of SDCWA and Metro System price escalation • Economic feasibility may also hinge on obtaining credit for Metro System avoided costs at Point Loma

• Regional Sales The Authority hosted a Regional Sales Agreement Review • Coordinate with Agreement Meeting with Otay to review the opportunity for an Otay during Authority to Otay sales agreement. Subsequently, Otay preparation of its has advised that it will need to await the completion of its Water Master Plan next Water Master Plan, scheduled for approximately to assess interest in 2022, before it is in a position to decide on whether to an agreement advance an agreement. Benefits: • Additional water demands via regional sales could improve the operational efficiency of the Authority’s storage and treatment assets, reducing storage losses and improving Treatment Plant operations • Otay could obtain a highly-reliable supply of treated water for its Central service area at advantageous costs Constraints: • Project requires an Otay capital investment of approximately $30M for a connection sized at 10 mgd

GILLINGHAM WATER 6 DRAFT October 7, 2020 22 Our review of the fifth short-listed project, Loveland Regional Exchange, is awaiting a late October scheduled review meeting with Padre Dam Municipal Water District. We will prepare a supplement to this report in November addressing the Fine Screening recommendations for that option.

1.7. Document Outline The remainder of the briefing document is organized into sections presenting the Fine Screening evaluation and ranking of each of the project alternatives.

Section: Page • SECTION 2: Reservoir Water Quality Improvements ...... 8 • SECTION 3: Pure Water / Indirect Potable Reuse (IPR) ...... 18 • SECTION 4: Otay Sales Agreement ...... 34 • SECTION 5: Storage Policy Revision ...... 41 • SECTION 6: Loveland Regional Exchange ...... 50

GILLINGHAM WATER 7 DRAFT October 7, 2020 23 2. Reservoir Water Quality Improvements

Summary: • We recommend the Authority install an aeration / destratification system in Sweetwater Reservoir to maintain healthy levels of dissolved oxygen throughout the water column. • We anticipate the system will pay for itself in reduced power and chemical costs at the Authority’s Treatment Plant. In addition, we anticipate the project will provide significant additional non-monetary water quality benefits as described in this section. • The system will also improve the Authority’s emergency storage reliability by maintaining Sweetwater Reservoir water quality at levels treatable as a sole source of supply to the Treatment Plant.

2.1. Overview and Ratings Summary This section reviews opportunities for improving Sweetwater Reservoir water quality and treatability. On the basis of the Fine Screening review, the Study team recommends the Authority proceed with implementation of an aeration / destratification system for the reservoir. Our overall summary rating is presented below; more detailed information and analysis is presented in the body of this section and its attachment.

Project Project Description / Benefits & Constraints Rating / Next Steps

• Reservoir Install an aeration / destratification system in Category 1: Water Quality Sweetwater Reservoir to maintain healthy levels of RECOMMENDED Improvements dissolved oxygen throughout the water column. FOR Benefits: IMPLEMENTATION • Reduced nutrient recycling, manganese levels, and possibly reduced algal productivity • Long-term cost savings arising from reduced power Next Steps: and chemical usage at Treatment Plant • Program into CIP • Pathway for removal of the reservoir from the budget ($1.2M) Regional Water Quality Control Board’s • Investigate grant (RWQCB’s) list of impaired water bodies (Clean funding and low- Water Act Section 303(d) designation) interest loan • Improved disinfectant residual stability / reduced opportunities nitrification problems in distribution system • Initiate design, • Reduced colored water and taste and odor complaints environmental • Improved consumer confidence documentation, and permitting Constraints:

• Project projected to pay for itself in time, but up- front Capital investment is required

GILLINGHAM WATER 8 DRAFT October 7, 2020 24 2.2. Many factors influence reservoir water quality. Reservoirs are dynamic ecosystems, responding to annual and seasonal variations in water levels and inflows, nutrient loading, temperatures, dissolved oxygen levels, and other factors. Key factors influencing water quality in Sweetwater Reservoir are summarized in Table 2-1.

TABLE 2-1: Select Factors Affecting Sweetwater Reservoir Water Quality

Factor Description Sweetwater Reservoir Dissolved Depletion of dissolved oxygen • Frequent occurrence in eutrophic (nutrient Oxygen (anoxia), as it can occur in the rich, biologically productive) lakes such as deeper waters of a reservoir, allows Sweetwater Reservoir nutrients and other oxidized compounds sequestered in the sediment to reenter the water column, fueling a cycle of algal productivity and other water quality challenges

Runoff Depending on watershed conditions, • Development within the watershed may Quality / runoff entering a reservoir can be contribute increased loading of nutrients, Watershed relatively pristine, or can contain organic matter, and chemical pollutants Protection problematic levels of sediment, • URDS allows for diversion of “first flush” nutrients, organic matter, and runoff that can be quite contaminated chemical pollutants. • High inflows bring sedimentation • Runoff contains naturally occurring bromide

Algal Algal productivity can vary as a • Low to severe levels of algal productivity, Productivity function of nutrient concentrations, with higher levels most likely to occur at water temperatures, and other lower water levels factors.

Cyanobacteria Cyanobacteria can develop under • Increased risk of occurrence due to warmer Occurrence certain conditions of warmer water water temperatures and higher nutrient temperatures and nutrient levels availability. The bacteria can lead to the formation of objectionable taste and odor compounds, and in some cases can produce dangerous cyanotoxins.

Water The Treatment Plant backwashes • Sediment buildup around the outlet tower is Treatment residual treatment solids to up to 30-40 feet thick and has blocked the Plant Filter Sweetwater Reservoir, at a location lowest cups of the intake tower, making Backwash near the outlet tower. Past use of them inoperable. Disposal potassium permanganate (KMnO4) • The proximity of the lowest usable outlet at the plant as an oxidizing agent has valve to the sediment and anoxic conditions contributed to problematically high in the bottom waters can cause manganese levels of manganese in the reservoir. in the sediment and poor water quality to enter the treatment process.

GILLINGHAM WATER 9 DRAFT October 7, 2020 25 Thermal Stratification An interesting and important phenomena of reservoir behavior is thermal stratification. Beginning each year in the Spring, all but the shallowest reservoirs exhibit thermal stratification, in which the upper layers of the reservoir warm in response to increased air temperatures and solar radiation, and float on top of the colder, denser water at the bottom of the reservoir. Thermal stratification is illustrated in Figure 2.1.

FIGURE 2-1: Reservoir Thermal Stratification

Thermal Stratification. Reservoirs stratify thermally. Warmer surface water is less dense than cooler bottom water, and floats on top. The lower layer, called the hypolimnion, can become separated from oxygen inputs from the surface, and become depleted of dissolved oxygen, a condition called anoxia. Anoxic conditions allow nutrients and other oxidized compounds sequestered in the sediment to reenter the water column, fueling a cycle of nutrient loading, algal productivity and water quality challenges.

With stratification in place, the lower layer of the reservoir can become depleted of dissolved oxygen, a condition called anoxia. Anoxic conditions allow nutrients and other oxidized compounds sequestered in the sediment to reenter the water column, fueling a cycle of algal productivity and water quality challenges.

GILLINGHAM WATER 10 DRAFT October 7, 2020 26 2.3. Diminished water quality at Sweetwater Reservoir complicates water treatment and distribution operations, increases taste and odor complaints, and at times may impair the utility of the reservoir as an emergency storage reserve. Diminished water quality in Sweetwater Reservoir contributes to a range of problems and challenges. These are summarized in Table 2-2.

TABLE 2-2: Consequences of Diminished Water Quality Problem Consequence Taste and Odor • The occurrence of cyanobacteria algal blooms can produce Taste and Odor compounds compounds (MIB & geosmin) that are difficult to treat and which may generate customer complaints and lead to reduced levels of consumer confidence in the Authority’s product. Cyanobacteria and • The occurrence of certain cyanobacteria algal blooms can produce Cyanotoxins cyanotoxins. Extreme events elsewhere in the country have led to “Do Not Drink” orders for affected water systems. Regulations pertaining to cyanotoxins are anticipated to come in the near future. Disinfection • Total Organic Carbon / Natural Organic Matter (TOC/NOM) from the By-Products (DBPs) reservoir sediment, runoff, and decaying vegetation, together with high bromide concentrations, increase DBP formation potential. Disinfection Residual • The same factors that increase DBP formation as above also decrease the Stability stability of the chloramine residual in the distribution system by increasing chloramine decay rates. Treatment Costs • The same factors that increase DBP formation as above also require increased power consumption and chemical dosages to treat, increasing treatment costs (e.g., ferrous chloride, ferric chloride, caustic, chlorine, sodium chlorite, ammonia, and polymer doses). Total Dissolved • During multiple dry-year conditions and with reservoir levels low, TDS can Solids (TDS) increase due to evaporative losses. Discoloration • High manganese levels can cause discolored water, resulting in possible staining of porcelain water fixtures and customer complaints. Reservoir • The accumulation of treatment plant backwash sediment around the outlet Operability tower is up to 30-40 feet thick and has blocked the lowest outlets of the intake tower. This inhibits operability of the reservoir at low levels by limiting the selection of lower elevation intake cups. Reservoir Storage • The Authority relies on stored water for use during supply emergencies Reliability such as an interruption of supply from SDCWA. Utilization of storage from Sweetwater Reservoir requires the water be maintained at quality levels sufficient for it to serve as a sole source of supply to the Treatment Plant. 303(d) Impaired • The Regional Water Quality Control Board currently lists Sweetwater Water Body Listing Reservoir as an impaired water body under Section 303(d) of the Clean Water Act. The listed impairment is low dissolved oxygen. The designation obligates the Authority to consider measures to remedy the impairment.

GILLINGHAM WATER 11 DRAFT October 7, 2020 27 2.4. Various means are available to maintain dissolved oxygen levels and thereby improve reservoir water quality and treatability. The Fine Screening review has evaluated three types of systems for maintaining dissolved oxygen levels in Sweetwater Reservoir: 1) Aeration / Destratification, 2) Vigorous Mixing, and 3) Hypolimnetic Oxygenation.

Key attributes of the three options are summarized in Table 2-3. Additional detail on each of the system types and system costs is included in Appendices 2A and 2B.

TABLE 2-3: System Options for Maintaining Dissolved Oxygen Levels

System / OPTION 1: OPTION 2: OPTION 3: Attribute Aeration / Vigorous Mixing Hypolimnetic Destratification Oxygenation Description Uses compressed air Same as Option 1, but Diffuses pure oxygen released at the bottom with the additional air into the deeper waters of the reservoir to volumes and wider areal of the reservoir induce vertical mixing extent needed to inhibit (hypolimnion), while the growth of blue-green maintaining thermal algae (cyanobacteria) stratification

Major Components • Air-Compressors, • Same as Option 1, but • Liquid Oxygen with Housing more of everything Storage Tank and • Diffuser Lines Vaporizer • Buoyancy Lines • Diffuser Lines and Ballast System • Buoyancy Lines and Ballast System Benefits Reduction of total organic carbon, sulfides, and ammonia    Reduced sediment release of iron, manganese, phosphorus, nitrogen    Likely decrease of algae abundance    Potential reduction of blue-green algae (cyanobacteria) ?  Maintains selective elevation withdrawal utility  Costs1 Capital $1.2 M $3.9 M $3.5 M Annual OMRR2 $100k/yr $300k/yr $260k/yr First-Year Unit Cost3 $21/AF $67/AF $59/AF

Notes: 1. Planning-Level cost estimates, in 2020 dollars 2. Operations, Maintenance, Repair, and Replacement. Costs for a system sized for 20,000 AF of storage capacity but operating at historical average volumes 3. Unit costs based on 7,500 acre-feet/year (AF/yr) of average local yield; capital costs amortized over 30 years at i = 3.0%/yr

GILLINGHAM WATER 12 DRAFT October 7, 2020 28 2.5. Avoided Costs: The Study Team estimates the maintenance of healthy dissolved oxygen levels in Sweetwater Reservoir will reduce treatment costs by approximately $27 per acre-foot. Additional non-monetary water quality benefits will also accrue. The Study team, inclusive of the Authority’s water quality staff, estimate the maintenance of healthy dissolved oxygen levels in Sweetwater Reservoir will reduce treatment costs by approximately $27 per acre-foot when treating local water. The cost savings arises primarily from reduced power and chemical consumption at the Treatment Plant. Details of the cost analysis are provided in Appendix 2A.

Applying the avoided cost savings to the gross unit costs presented in Table 2-3 results in the net unit costs presented below in Table 2-4. The analysis indicates the total life-cycle costs for system Option 1, inclusive of costs for operations, maintenance, repair, and replacement, will be fully offset by the anticipated direct cost savings at the Treatment Plant.

TABLE 2-4: Net First-Year Unit Costs After Treatment Plant Avoided Costs

System / OPTION 1: OPTION 2: OPTION 3: Attribute Aeration / Vigorous Mixing Hypolimnetic Destratification Oxygenation Capital Costs1 $1.2 M $3.9 M $3.5 M Annual OMRR2 $120k/yr $320k/yr $280k/yr First-Year Unit Cost3 $24/AF $69/AF $61/AF Avoided Costs4 ($27/AF) ($27/AF) ($27/AF) Net First-Year Unit ($3/AF) $42/AF $34/AF Costs (Benefits)

Notes: 1. Planning-Level cost estimates, in 2020 dollars 2. Operations, Maintenance, Repair, and Replacement. Costs for a system sized for 20,000 AF of storage capacity but operating at historical average volumes 3. Unit costs based on 7,500 AF/yr of average local yield; capital costs amortized over 30 years at i = 3.0%/yr 4. See Appendix 2A for cost detail

Non-Monetary Water Quality Improvements In addition to the direct cost savings at the Treatment Plant, each of the system types would provide valuable non-monetary water quality improvements. These include: • Reduced Nitrification: The improvements should result in better disinfectant residual stability, reducing nitrification problems in distribution system and thereby further protecting distribution system water quality. Reduced nitrification also produces direct cost savings resulting from the reduced need to purge storage tanks, and this is accounted for in the estimate of avoided costs reported above. • Consumer Confidence: The improvements should reduce colored water and taste and odor complaints, leading to improved consumer confidence in the Authority’s product. • 303(d) Impaired Water Body De-Listing: The improvements provide a pathway for removal of the reservoir from the Regional Water Quality Control Board’s list of impaired water bodies (Clean Water Act Section 303(d) designation).

GILLINGHAM WATER 13 DRAFT October 7, 2020 29 • More Reliable Emergency Storage Reserve: Reserved storage in Sweetwater Reservoir is an important component of the Authority’s emergency supply reliability planning, as described in Section 5. For the stored water to serve its intended function, it is essential the quality of the water be maintained at treatable levels at the Treatment Plant as a sole source of supply, without blending with SDCWA water. Under current conditions, the ability to treat a 100 percent supply of reservoir water at the plant cannot be guaranteed. A system to maintain healthy levels of dissolved oxygen in the reservoir would improve the reliability of the stored water as a source of emergency supply. In addition, during extended dry periods, the TDS content of the stored water can increase to levels above secondary drinking water standards. Because the treatment plant is not equipped to remove dissolved solids, the only available means to mitigate for this effect is to blend SDCWA raw water into the reservoir. With a system in place to maintain organic water quality, this blending would be feasible, and the stored water would remain available for its intended use.

2.6. Environmental Review: Each of the three options would require environmental documentation and permitting. Because the project provides environmental and water quality enhancements, we anticipate the process will be successful. Our assessment of likely environmental documentation and permitting requirements is summarized in Table 2-5. Except as otherwise noted, our assessment applies to any of the three system types described previously.

TABLE 2-5: Anticipated Environmental Documentation and Permitting

Issue Discussion CEQA Compliance Each of the project options would require environmental documentation under the California Environmental Quality Act (CEQA). We anticipate this documentation would take the form of a Mitigated Negative Declaration, or MND. Permitting We anticipate the project will require the following permits: • U.S. Army Corps of Engineers (USACE) 404 (may require an Individual Permit – to be determined during agency pre-application meeting) • RWQCB 401 Water Quality Certification • California Division of Fish and Wildlife (CDFW) Streambed Alteration Agreement (SAA) • State Division of Drinking Water (DDW) amendment to the Authority’s Drinking Water Permit Prospects for Because the project enhances the biological habitat of Sweetwater Reservoir, and Success provides a pathway for removing the reservoir from the RWQCB’s list of impaired water bodies under Section 303(d) of the Clean Water Act, we anticipate the environmental documentation and permitting processes will meet with success. Schedule Two years. (Even though the project provides environmental benefit, the permitting process will still take time.) Costs We recommend a budgetary estimate for environmental compliance and permitting of up to $350,000. These costs are included in the Capital Cost totals reported previously, and in the cost tables included in Appendix 2A.

GILLINGHAM WATER 14 DRAFT October 7, 2020 30 2.7. Caveat: Improved water quality will improve conditions for quagga mussels. Increased control efforts may be required. Under current conditions, the development of anoxia in the lower levels of the reservoir kills quagga mussels within the anoxic zone. Conversely, improving water quality by preventing anoxic conditions will have the unfortunate side effect of aiding the proliferation of quagga mussels. To compensate, the Authority may need to implement additional control strategies, possibly including mechanical removal/harvesting of quagga mussels from the intake tower cups and screens using divers as needed. Costs for additional control are included in the project cost estimates, as detailed in Appendix 2A.

The Authority may also need to consult with CDFW regarding potential changes to the Authority’s Quagga Mussel Control Plan resulting from the operation of a lake aeration system. This consultation could be undertaken together with the permitting review described in the previous section.

2.8. Analysis / Recommendation: We recommend the Authority proceed with implementation of an Aeration / Destratification system. The Study team recommends the Authority proceed with implementation of an Aeration / Destratification system as a cost-effective means of improving Sweetwater Reservoir water quality and treatability. Our conceptual project configuration is illustrated in Figure 2-2. The colored lines in the figure represent the Sweetwater Reservoir surface area at various storage levels. Air would be diffused into the reservoir at its deepest levels near the dam (dashed white line).

FIGURE 2-2: Conceptual Aeration / Destratification Diffuser Layout

GILLINGHAM WATER 15 DRAFT October 7, 2020 31 Non-Monetary Water Quality Improvements In comparison to the other system types, Aeration / Destratification provides the least costly means of maintaining healthy levels of dissolved oxygen in the reservoir.

Option 2, Vigorous Mixing, provides the additional benefit of controlling the growth of cyanobacteria, but at considerable additional capital and annual costs. Should cyanobacteria occurrence increase in the future, the same air compressors and diffuser lines installed as part of Option 1 could be expanded and made part of a Vigorous Mixing system, with no stranding of assets.

Option 3, Hypolimnetic Oxygenation, provides the additional benefit relative to Option 1 of maintaining thermal stratification of the reservoir and resultant selective elevation withdrawal utility, but again at considerable additional capital and annual costs. Authority treatment staff do not view the maintenance of selective elevation withdrawal capability as justifying the additional costs.

Key Aspects of Project Design Key aspects of our conceptual project design are summarized in Table 2-6.

TABLE 2-6: Key Aspects of the Conceptual Design – Item Description / Notes Sizing / Capacity 20,000 AF of reservoir capacity Average Sweetwater Reservoir storage volume for the period 1992-2019 was approximately 12,000 AF, and the reservoir was at volumes less than 20,000 AF approximately 88 percent of the time. At volumes greater than 20,000 AF, a system sized for 20,000 AF of volume would still be mostly if not fully effective at mixing the reservoir, and we judge the additional costs of upsizing the system to provide full functionality for these low-probability storage levels to be unwarranted relative to the modest additional benefit. Likewise, sizing the system for volumes smaller than 20,000 AF would provide only small reductions in project costs, while significantly reducing the functionality and benefits of the system Air-Compressors 2 @ 50 hp each, variable-speed Appendix 2B documents the modeling analysis supporting the horsepower required to maintain reservoir destratification at the prescribed volumes. The selection of the number of compressor units and the cost-efficiency of including variable-speed drives should be confirmed during final design. Air-Compressor Existing Powdered Activated Carbon (PAC) building Housing, Electrical, Authority Water Quality staff advise the likelihood that the air compressors and Instrumentation could be housed within the existing PAC building adjacent to the right abutment of the dam. Final design should investigate the adequacy of existing power supply to the building, and the possible need to expand the building to the west. Our planning-level cost estimates (Appendix 2A) include allowances for necessary improvements. Diffuser Line (with ~500 ft. line located near dam buoyancy and anchor Details on the diffuser line and buoyance/anchor system are provided in system) Appendix 2B.

GILLINGHAM WATER 16 DRAFT October 7, 2020 32 2.9. Next Steps: The Authority’s next steps for project implementation would begin with programming the project into its CIP budget. The project milestone schedule of Table 2-7 below presents a plausible plan for project implementation. We recommend project design include investigation of opportunities for grant funding and low-interest loan opportunities to reduce project costs to the Authority.

TABLE 2-7: Conceptual Project Implementation Items, Schedule, and Budget

Fiscal-Year Budget (Approximate) Description / Notes 2021-22 2022-23 2023-24 2024-25 Project design, environmental $250,000 $250,000 documentation, permitting Bid, construction, start-up $500,000 $200,000

GILLINGHAM WATER 17 DRAFT October 7, 2020 33 3. Pure Water / Indirect Potable Reuse (IPR)

Summary: • South Bay IPR opportunities exist; would require multi-agency effort. Opportunities exist for a South Bay IPR project. Such a project would of necessity be a regional endeavor, requiring coordination among local water and sewer agencies. • Project economics appear challenging. A planning-level economic assessment indicates a favorable economic outlook is dependent on favorable assumptions about the magnitude and duration of future rate escalation by SDCWA and the City of San Diego’s Metropolitan Wastewater System JPA. • Authority role as participant. As the owner of the Sweetwater Reservoir and the Treatment Plant, the Authority would be a key participant in a multi-agency effort to evaluate and advance an IPR project. However, because in wet years the Authority can already meet its entire demand from local supplies, it does not have the same cost incentive for new local supplies as does an agency fully reliant on imported water. The Authority’s logical role in a project might therefore be as a participant in an effort led and championed primarily by others.

3.1. Overview and Ratings Summary This section reviews opportunities for developing a South Bay IPR project as an additional local source of supply for the Authority service area. Our overall summary rating is presented below.

Project Project Description / Benefits & Constraints Rating / Next Steps

• Indirect Participate in regional efforts to develop a South Bay IPR Category 2: Potable Reuse project, in coordination with the County of San Diego, the MONITOR AND (IPR) Otay Water District, and others. REVIEW Benefits: • An IPR project would provide highly-reliable local supply for the Authority and Otay, reducing reliance on supplies from SDCWA Next Steps: • An IPR project would allow the County to reduce its • Following review reliance on the City of San Diego Metropolitan of this report, Wastewater System (Metro System) for disposal of contact Otay and wastewater the County to assess interest in Constraints: further • Because the Authority’s existing supplies already allow investigations it to be independent of SDCWA in some years, its average annual economic incentive for additional • If the parties increments of local supply is diminished express interest, identify a project • Economic feasibility depends on obtaining credit for champion who Metro System avoided costs at Point Loma, and on would lead further favorable assumptions about the magnitude and duration investigations of SDCWA and Metro System price escalation

GILLINGHAM WATER 18 DRAFT October 7, 2020 34 3.2. The Authority hosted a September 2020 South Bay IPR Opportunities Workshop to begin a regional dialog and assess interest among its neighbors. The coarse-screening analysis included consideration of IPR as a possible additional source of local supply for the Authority. That report noted that IPR projects have the advantage in comparison to conventional purple-pipe recycled water projects of not requiring construction of new separate distribution systems, and of being able to utilize available wastewater on a seasonally constant basis. In addition, IPR projects, with their seasonally constant demands, have the potential to offset wastewater infrastructure costs. The coarse screening analysis identified the potential of a South Bay Pure Water Project, expanding on a study prepared by Otay Water District in 2016, and recommended further discussion through a South Bay working group with potential regional partners.

Subsequently, in September 2020 the Authority convened a workshop group comprised of staff from the Authority, Otay, and the County of San Diego. The group discussed the feasibility of a South Bay Pure Water project and interest from the working group agencies in implementing next steps for a regional project. The workshop identified potential opportunities for mutually- advantageous cooperation, but also many potential constraints to project feasibility. The workshop participants agreed to review the Fine Screening report (this report) and to subsequently advise one another of their interests in proceeding with further investigations.

3.3. Background: Multiple agencies are involved in the management of wastewater systems in and adjacent to the Authority service area. The County’s Spring Valley Interceptor Sewer provides a possible source of supply for a local IPR project. The following agencies provide wastewater collection services in and around the Authority service area: • County of San Diego • Chula Vista • Otay Water District • La Mesa • Lemon Grove • City of San Diego

Metropolitan Wastewater System All of the South Bay area wastewater service providers deliver their flows to the City of San Diego Metropolitan Wastewater System (Metro System), which operates the Point Loma Wastewater Treatment Plant and the major trunk likes and pump stations which convey flows to Point Loma. The local agencies are Participating Agencies in the Metro System, where their interests are represented by membership in the Metropolitan Joint Powers Authority (Metro JPA).

The Metro System’s major South County facilities are illustrated in Figure 3-1 on the next page.

GILLINGHAM WATER 19 DRAFT October 7, 2020 35 FIGURE 3-1: Metro System and Spring Valley Interceptor Facilities Overview

IPR Site Concept

System and Spring Valley Interceptor Facilities Overview Facilities Interceptor Valley Spring and System 1. Metro - FIGURE 3 : Spring Valley Sewer Master Plan (Atkins, January 2013) January (Atkins, Plan Master Sewer Valley Spring : Source

GILLINGHAM WATER 20 DRAFT October 7, 2020 36 Spring Valley Interceptor and Collection Area Figure 3-1 also illustrates the location of the Spring Valley Interceptor (SVI) and the Spring Valley collection area. Wastewater from the collection area, which includes portions of the County, Otay, Chula Vista, Lemon Grove, and La Mesa, is conveyed by the Interceptor to the Metro System’s South Metro Interceptor, as shown in the figure. The SVI provides the most plausible source of supply for a possible IPR project in the vicinity of Sweetwater Reservoir. Based on current wastewater flows, the Fine Screening analysis for an IPR project assumes1 up to 8 mgd could be diverted from the SVI near the Spring Valley Swap Meet site. This location is represented by the red star in Figure 3-1.

3.4. IPR projects under development elsewhere in the County provide insight on project planning and feasibility. San Diego Pure Water Program The City’s Pure Water Program will ultimately produce 83 mgd of pure water. Phase 1 will produce 30 mgd and Phase 2 will produce 53 mgd. A third phase of the program that was to be located within the South Bay is no longer part of the City’s plans. The Program’s major facilities and phasing are illustrated in Figure 3-2.

FIGURE 3-2: San Diego Pure Water Program

Source: City of San Diego presentation to METRO JPA Technical Advisory Committee, 8/19/20

1 SVI flows to the Metro System in 2012 were approximately 14 mgd, allocated as follows: La Mesa and Lemon Grove combined: 2 mgd; County: 4.4 mgd; Otay 1.5 mgd; Chula Vista: 6 mgd. The County has noted that flows at the Metro connection have decreased in recent years and now average approximately 10 mgd, a portion of which is downstream of the proposed take-out point and therefore unavailable.

GILLINGHAM WATER 21 DRAFT October 7, 2020 37 The Pure Water program aims to divert flows sent to the Point Loma WWTP in order to offset and delay improvements at the WWTP. Phase 2 planning studies are underway to evaluate diverting 42 mgd from Point Loma WWTP to a Central Area WRP/PWF and pumping to Lake Murray for further treatment at Alvarado WTP. The Padre Dam ECAWP will produce the balance of the City’s planned Phase 2 supply target of 53 mgd.

East County Advanced Water Purification Program The East County Advanced Water Purification Program (ECAWP) is a regional water and wastewater program and collaborative joint powers authority (JPA) partnership between Padre Dam Municipal Water District, the County of San Diego, and the City of El Cajon. An additional agency, Helix Water District, is not a member of the JPA but has signed a 30-year water purchase agreement with the JPA to receive the product water at Lake Jennings and subsequently treat the water at its Levy Water Treatment Facility. Project construction is expected to begin in 2022, with the ECAWP beginning to produce water in 2025.

The JPA participants point to many reasons for investing in the ECAWP. A fact sheet from the JPA identifies the Program drivers listed in Figure 3-3.

FIGURE 3-3: ECAWP Pure Water Program Drivers

Source: ECAWP Program Information Fact Sheet

GILLINGHAM WATER 22 DRAFT October 7, 2020 38 The ECAWP program includes a 16 mgd water reclamation facility and an 11.5 mgd advanced water treatment (AWT) facility to produce a new, local, sustainable, and drought proof drinking water supply. The AWT will use state-of-the-art technology to purify recycled water and diversify East County’s water supply, while reducing dependence on imported water. In addition to the treatment facilities, the program includes a 10 mile pipeline that will deliver the pure water product to Lake Jennings, which feeds into the Helix Water District Levy Water Treatment Facility.

Residuals from the AWT facility will return to the Metro system. The City of San Diego is concerned the residuals discharge may impact the quality of the wastewater that is the source water for the City’s Pure Water Program. The ECAWP JPA and the City of San Diego are currently working to pursue and financially partner in an integrated regional solution for the management of brine and centrate, which may include the construction of a Regional Brine Line to convey RO concentrate, sludge centrate, and possibly other wastewater constituents around Phase 1 and/or Phase 2 of the Pure Water Program facilities.

ECAWP Costs ECAWP project cost estimates are summarized in Table 3-1.

TABLE 3-1: ECAWP Direct Cost Estimates Program Component Cost Development Costs $65 M (Project planning, pilot testing, permitting, contracts, design) Construction Costs - AWT and Conveyance $384 M (16 mgd WRF; 11.5 mgd AWT and Solids Handling Facilities, 10 mile pipeline, dechlorination facility and reservoir inlet) Construction Contingency $76 M TOTAL $525 M Source: ECAWP JPA

Development costs are associated with the project planning elements, including a 1 mgd demonstration plant that was implemented in advance of the full ECAWP program to prove the feasibility of the project. This demonstration facility allowed verification of the proposed AWT treatment train which combines several processes: free chlorine disinfection (FC), ultra-filtration (UF), reverse osmosis (RO), ultraviolet irradiation with advanced oxidation process (UV/AOP) as well as testing potential brine recovery side stream processes to improve the recovery rate. The demonstration plant also served as a key element of the program’s public outreach efforts.

Also of note, ECAWP was able to secure approximately $50 million in grants and the balance is being funded through low interest loans and tax exempt bonds.

GILLINGHAM WATER 23 DRAFT October 7, 2020 39 ECAWP Avoided Costs A critical element in determining the feasibility of the ECAWP project was the potential to offset costs for continuing to send wastewater to the City of San Diego’s Metro System. Projected costs curves were developed to illustrate the benefit of the ECAWP project, as shown in Figure 3-4. These cost curves indicate an avoided annual Metro cost of $6,000/MG/Year in 2026, increasing to 9,000 or 10,000/MG/Year in 2040. This assumes a 3.4 (low) to 3.9% (high) increase in costs, from the current cost of approximately $4,500/MG/Year. The ECAWP cost projections (WW Price) include the sale of product water at a rate comparable to water sold by the San Diego County Water Authority, valued at $1,500 to $2,000/MG.

FIGURE 3-4: ECAWP Estimate of Avoided Metro Costs

ECAWP Estimate of Avoided Metro Costs

Source: Padre Dam MWD

The ECAWP JPA will own and operate the ECAWP, with Padre Dam MWD acting as the JPA Administrator. The JPA agencies aim to achieve independence from the Metro system while also providing water supply reliability as part of their overall portfolio. Similar to the Authority’s potential role in a South Bay Pure Water program, Helix Water District acts as an ex-officio participating agency in the regional project to enhance local water reliability, but is not motivated by cost savings through wastewater flow diversion.

GILLINGHAM WATER 24 DRAFT October 7, 2020 40 3.5. A conceptual IPR project supplied by the SVI would look something like this. A South Bay Pure Water project would include a new WRF to treat wastewater flows diverted from the Spring Valley Interceptor, an Advanced Water Treatment (AWT) Facility at the Otay Water District Ralph W. Chapman WRF (RWCWRF), and other components. Conceptually, the major facilities might be located as illustrated in Figure 3-5.

FIGURE 3-5: Conceptual Siting of Major Project Components

Conveyance Pipeline AWT site (at Chapman plant)

New WRF at SV Swap Meet site

Source: Google Earth

Project Sizing and Economy of Scale In 2016, Otay considered the feasibility of a small IPR project with an average capacity of up to 2.5 mgd, to be located at the RWCWRF. The Otay investigation work developed conceptual-level project cost estimates. With a 30-year amortization period and interest rate of 4.5 percent, the investigation estimated the unit cost of this new water supply would be between $3,500 and $4,800/AF. On this basis, Otay determined the project was not economically feasible and did not advance the project further. As this proposed project did not offload additional wastewater flows from the Metro system, it did not have the added value of offsetting Metro costs. To gain economies of scale, a project with a larger capacity than that considered by the 2016 study is needed. This could be achieved by diverting 8 mgd of wastewater from the SVI in the vicinity of the Spring Valley Swap Meet site to a new WRF. The AWT Facility could be co- located with the new WRF, or the tertiary treated water could be conveyed upstream to a new AWT Facility at the Otay RWCWRF site (see Figure 3-5). AWT effluent would be conveyed to a site at or near the start of the Sweetwater Reservoir Urban Runoff Diversion System, for delivery to the Sweetwater Reservoir.

GILLINGHAM WATER 25 DRAFT October 7, 2020 41 Project Elements Key aspects of the project concept are summarized in Table 3-2.

TABLE 3-2: Key Aspects of the Conceptual Design

Item Description / Notes Wastewater Divert 8.0 mgd of flow from the Spring Valley Interceptor in the vicinity of the Collection Point Spring Valley Swap Meet property, as described previously. Water Build new WRF in vicinity of Spring Valley Swap Meet property. Reclamation Plant Recycled Water Build pump station and pipeline to convey recycled water from the WRF to the Conveyance site of an Advanced Water Treatment (AWT) facility Residuals Disposal RO concentrate and waste solids generated during the treatment processes could potentially be discharged via existing sewer to Metro. However, disposal to Metro may be complicated by negative impacts to the City of San Diego’s Pure Water program downstream. Similar to ECAWP, there may need to be solids handling facilities at the new WRP. These issues will require further review. Advanced Water A new AWT could be sited adjacent to the Chapman WRF upstream of Treatment (AWT) Sweetwater Reservoir. The AWT would consist of membrane filtration, reverse Facility osmosis, and UV disinfection processes, capable of meeting the State of California Department of Drinking Water (DDW) Surface Water Augmentation standards for indirect potable reuse, prior to discharge to Sweetwater Reservoir. Product Water To move water from the AWT to Sweetwater Reservoir, the proposed project Conveyance to would include an advanced water product pipeline, approximately 3,500 feet Receiving long if originating at the Ralph W Chapman WRF, a dechlorination facility, and Reservoir / an inlet facility to the Sweetwater Reservoir. Dechlorination would be required Dechlorination to remove chlorine added at the completion of the AWT process in order to protect the river a nd/or reservoir environment(s). The location of the dechlorination facility located at the pipe outlet, prior to the reservoir inlet, may require the acquisition of right of way, as well as provide electrical and physical access to the site. Alternatively, it might be possible to deliver dechlorinated product water directly to the Sweetwater River in the vicinity of the Chapman plant, for conveyance to Sweetwater Reservoir. Production Rate Starting with 8.0 mgd of diverted wastewater, we estimate the project would produce approximately 5.75 mgd of product water for delivery to Sweetwater Reservoir. Waste Volume Waste flows, the combination of centrate flows from the WRF and RO and Disposal concentrate from the AWT, would total approximately 2.25 mgd and be disposed to the Metro System. Negotiations would be required. Receiving Sweetwater Reservoir would be used as the IPR receiving water body. IPR Reservoir regulations require IPR product water be delivered to a receiving reservoir (or groundwater basin), and specify retention times and blending requirements. Because Sweetwater Reservoir often operates at modest storage levels on the order of 3,000 AF, it would not meet the standard requirements for a receiving water body, but may still be usable under provisions of the regulations that allow for the smaller storage volume to be offset via the provision of additional treatment at the AWT. Water Treatment Water from Sweetwater Reservoir would be treated at the Treatment Plant. Plant Treated Water New conveyance facilities would be required to deliver treated water to partner Distribution agencies.

GILLINGHAM WATER 26 DRAFT October 7, 2020 42 3.6. We estimate project capital costs would be in the range of $250 million, and initial costs for operations and maintenance in the range of $16 million per year.

Capital Costs Project costs for a proposed South Bay Pure Water project can be derived from recent development of costs for the ECAWP project. The proposed South Bay Pure Water project outlined above has a capacity of approximately half of the ECAWP project, however, because of economies of scale and fixed costs associated with program development, we have made the following cost assumptions and adjustments:

• Project Development. The ECAWP program was initiated over 5 years ago. The demonstration plant came on line in 2015. Numerous studies and CEQA documents were required to prove the feasibility of the program, to gain public acceptance and to apply for and secure grant and low interest loans. Project Development costs for ECAWP total $65 million, including the development of the demonstration (pilot) plant to support project permitting. For this project, we are assuming a comparable cost of $50 million, inclusive of a demonstration testing facility.

• Project Construction. Construction costs are also based on recent construction cost estimates for the ECAWP program. Although the capacity of a South Bay Pure Water treatment facility would be about half of the ECAWP, there are cost efficiencies associated with a larger project. Therefore it is assumed that cost to construct the South Bay Pure Water treatment facility would be 60 percent, rather than 50 percent, of the cost of the ECAWP facility.

For an 8 mgd South Bay Pure Water project, we estimate project costs would be approximately as listed in Table 3-3.

TABLE 3-3: Conceptual Project Costs

Cost Category Costs Project Development $50 M (Project planning, pilot testing, permitting, contracts, design) Treatment Facilities $140 M (8 mgd WRF; 5.75 mgd AWT and Solids Handling Facilities) Advanced Treated Water Conveyance Facilities $27 M (6 mile pipeline, dechlorination facility and reservoir inlet) Construction Contingencies (20%) $33 M Total $250 M

Annual Operations and Maintenance Costs The estimated annual operations costs for the ECAWP program include $20 million in non- electrical O&M costs, $10 million in electrical costs, and $1 million in administrative costs. We will assume that the South Bay Pure Water project would require approximately half of the O&M and electrical costs, and similar administrative costs, totaling $16 million per year.

GILLINGHAM WATER 27 DRAFT October 7, 2020 43 3.7. Preliminary Economic Analysis Part 1: The project’s potential for economic feasibility depends on the degree to which future SDCWA and Metro System costs will escalate at rates faster than inflation. A preliminary net present value analysis was prepared to assess the project’s economic feasibility. This analysis is draft, based on conceptual review only. Additional review will be required to confirm and document the actual costs.

The project allows its participants to avoid future costs for purchasing water from SDCWA and disposing of wastewater to Metro. Both SDCWA and Metro currently forecast that rates over the next several years will escalate at a pace faster than inflation. The economic merits of the project are heavily dependent on the extent and duration of these Faster-Than-Inflation rate increases. To capture uncertainty about these increases, the Study has developed a range of forecasts: Low (Pessimistic), Mid-Range, and High (Optimistic). These are detailed below.

SDCWA Raw Water Costs SDCWA’s average “All-In” raw water rate for calendar year 2020 is $1,406 per acre-foot ($/AF), which for planning purposes we will round to an even $1,400/AF. SDCWA only projects future rates through 2023; its most recent forecast for 2023 shows an expected rate of $1,707/AF, with an average increase over the next three years of 6.7 percent per year.

Over the long-term, SDCWA appears to face more upward pressure on water rates than downward pressure. The largest upward pressure is the need to fund fixed costs, including the Water Authority’s $1.5 billion outstanding debt and its purchase commitments, on a base of reduced water sales. This upward pressure lends credence to the possibility SDCWA rates will continue to increase faster than inflation for many years to come.

For the fine screening review, we will utilize the range of escalation assumptions listed in Table 3-4. Note the escalation assumptions apply to the variable components of SDCWA charges, and that increases in variable charge rate components could be reduced over time should SDCWA elect to recover portions of its costs from unavoidable fixed charges.

TABLE 3-4: Water Authority Rate Escalation Assumptions

Scenario Description Low • Rates escalate at 1.5% above water system inflation for next 10 years • Thereafter at rate of inflation Mid-Range • Rates escalate at 2.5% above water system inflation the next 10 years • Thereafter at rate of inflation High • Rates escalate at 2.5% above water system inflation for next 20 years • Thereafter at rate of inflation

GILLINGHAM WATER 28 DRAFT October 7, 2020 44 Metro System Disposal Costs Current Metro costs for wastewater conveyance and treatment are approximately $4,500/MG. These costs are subject to many years of above-inflation escalation to fund the City of San Diego’s Pure Water Program and other system improvements. For the fine screening review, we will utilize the range of escalation assumptions listed in Table 3-5.

TABLE 3-5: Metro System Rate Escalation Assumptions

Scenario Description Low • Rates escalate at 1.5% above water system inflation for next 10 years • Thereafter at rate of inflation Mid-Range • Rates escalate at 2.0% above water system inflation the next 15 years • Thereafter at rate of inflation High • Rates escalate at 2.5% above water system inflation for next 30 years • Thereafter at rate of inflation

3.8. Preliminary Economic Analysis Part 2: Market interest rates are already low. Project interest rates could be further lowered through State or Federal low-interest loan programs. The economic comparison of the project entails a comparison of merits of capital outlays with long-term annual costs and avoided costs. Equating these two, in terms of Net Present Values or Equivalent Annual Costs, is done based on an interest rate that reflects the Authority’s cost of funds. Lower interest rates decrease the annual costs of capital financing and increase the present- worth value of future annual costs; higher interest rates do the opposite.

Market Interest Rates A reasonable range of project finance costs, without inclusion of low-interest loan opportunities, is listed in Table 3-6.

TABLE 3-6: Project Finance Rates and Terms (Unaided) Interest Rate Scenario Description (%/yr) Low (Optimistic) Reflects continuation of low interest rates into the future 3.0 Mid-Range Projected mid-range market conditions 3.5 High (Pessimistic) Less favorable market conditions 4.0

GILLINGHAM WATER 29 DRAFT October 7, 2020 45 Low-Interest Loan Opportunities The project is likely to be eligible for low-interest financing. The most likely sources for low- interest financing for the project are the State Water Resources Control Board’s Drinking Water State Revolving Fund (DWSRF), and the Federal Water Infrastructure Financing Innovation Act (WIFIA) Credit Assistance Program, summarized in Table 3-7.

TABLE 3-7: Low-Interest Loan Program Summaries Interest Rate1 Program Description (%/yr) DWSRF Credit assistance for drinking water infrastructure projects. 1.4 • Up to 100% funding available • Up to 30-year loan repayment term • Fixed interest rate set at 50% of the average interest rate paid by the State on general obligation bonds issued the prior year • No interest payments during construction WIFIA Credit assistance for water and wastewater systems. Specific to • Up to 49% of total eligible project costs project; • Up to 35-year loan repayment term as low as: • Fixed interest rate tied to treasury securities rate for similar 1.2 maturity date 1. Interest rates are as of September 2020, and are subject to change. WIFIA loan rate reflects recent experience of the City of San Diego and the City of Oceanside.

We believe it reasonable to assume the project would be eligible for and would be likely to receive funding from one or both programs. We believe a reasonable mid-range assumption is that the project would be awarded a DWSRF loan covering 50 percent of the project’s capital cost, effectively lowering the project’s average cost of financing by a considerable margin2.

Low-Interest Loan Opportunities Combining Optimistic, Mid-Range, and Pessimistic financial assistance assumptions with the previous market interest rate assumptions results in the range of project finance rates (Weighted Average Cost of Capital) listed in Table 3-8.

TABLE 3-8: Project Finance Rates and Terms Inclusive of Programs Melded Scenario Description Interest Rate (%/yr) Low (Optimistic) Reflects continuation of low interest rates into the future, and 1.8 an optimistic assumption that the project would receive DWSRF funding covering 75% of project capital costs. Mid-Range Reflects projected mid-range market interest rates, and a mid- 2.5 range assumption that the project would receive DWSRF funding covering 50% of project capital costs. High (Pessimistic) Reflects less favorable market interest rate conditions, and a 4.0 pessimistic assumption that the project would not be awarded any low-interest loans.

2 Actual loan awards are subject to funding availability and to year-to-year variation in the level of competition for available funds, and there is no guarantee the project would be awarded financing.

GILLINGHAM WATER 30 DRAFT October 7, 2020 46 For the fine-screening analysis, a mid-range adjusted rate of 2.5 percent was used, with an assumed finance period of 30 years. This results in a capital recovery factor (A/P) of 0.0478, meaning that every $1 million in capital financed would incur an annual repayment of $47,800 fixed over the 30-year repayment term.

3.9. Preliminary Economic Analysis Part 3: Mid-Range assumptions indicate the project would fall short of being cost-effective. More favorable findings require more optimistic assumptions. We have combined the various cost and financial assumptions to identify a plausible range of project economic outlooks. Our range assumptions are summarized in Table 3-9.

TABLE 3-9: Net Present-Value Cost Comparison – Scenario Assumptions Input Factor Pessimistic Mid-Range Optimistic Capital Costs $300M $250M $200M (no grant funding) (no grant funding) ($50M grant funding) Annual Costs (first year) $19M/yr $16M/yr $14M/yr Annual Cost Escalation 4.0%/yr 3.5%/yr 3.0%/yr Melded Cost of Funds 4.0%/yr 2.5%/yr 1.8%/yr Water System Base Inflation 3.0%/yr 3.0%/yr 3.0%/yr Discount Rate 3.0%/yr 3.0%/yr 3.0%/yr Analysis Period 30 yrs 30 yrs 30 yrs SDCWA Rate Escalation Low-Range Mid-Range High-Range Metro Rate Escalation Low-Range Mid-Range High-Range

To compare costs between the different range scenarios, our analysis utilizes a Net Present Value (NPV) comparison between the No Project and Project alternatives. The NPV comparisons are summarized below in Table 3-10.

TABLE 3-10: 30-Year Net Present-Value Cost Comparison

Option Pessimistic Mid-Range Optimistic NO-PROJECT $750M $820M $950M PROJECT $1,160M $940M $800M

VARIANCE ($410M) ($120M) $150M

Our planning-level economic assessment indicates that under mid-range conditions the project falls modestly short of achieving economic efficiency. However, the economic outlook is highly dependent on assumptions about Metro and SDCWA rate escalation, and the economic outlook becomes favorable if those rates are assumed to escalate faster and for longer durations than assumed in the mid-range scenario. Conversely, the outlook becomes less favorable if the rate escalation assumptions are adjusted in the other direction, or if either SDCWA or the Metro System or both shift a portion of the cost recovery from variable rates to unavoidable fixed fees. Additional detail on the NPV analysis is included in Appendix 3A.

GILLINGHAM WATER 31 DRAFT October 7, 2020 47 3.10. Conclusions and Next Steps: Project feasibility appears possible but is subject to many uncertainties. Coordinate with other parties to assess interest in further joint studies, and identify project champion.

Opportunities / Potential Benefits • Local production and use of a drought-proof, reliable water supply source. • Potential cost savings associated with offsetting purchase of SDCWA imported water and avoiding escalating costs to deliver imported water. However, as noted in Section 1.5, in wet years the Authority is fully supplied by local sources, and in these years additional local supply from an IPR project would not offset SDCWA purchase. In contrast, Otay Water District currently purchases nearly 100% of its potable supply from SDCWA. • Potential cost savings associated with offsetting use of City of San Diego’s Metro System and avoiding escalating costs to operate that system. • There are opportunities for grants and low interest loans available to fund water reclamation projects that could reduce capital investment requirements. • Project may partially offset City of San Diego Pure Water program costs, if the City’s program were downsized to account for a South Bay Pure Water project. The City is committed to having Phase 2 of their Pure Water Program online by 2035; additional flows offloaded from the Metro system would need to be determined by 2024 to account for the City’s design schedule for Phase 2. • High quality source of supply to Sweetwater Reservoir could assist with reservoir water quality improvement efforts.

Constraints / Challenges • Project requires extensive interagency coordination and likely formation of a new entity or joint powers authority to implement. A strong champion will be required to make such a project happen. • Project requires extensive planning period and upfront costs to prove the concept to the regulatory agencies and general public. Planning and permitting efforts could take up to a decade before a project is operational. • Project economic-efficiency appears challenging, with significant up-front costs and uncertain potential for positive return on investment. Economy of scale disadvantages for an 8 mgd Pure Water Program vs. a 16 mgd program are a negative factor. • Metro operational and maintenance costs and capital improvement costs for existing facilities are distributed across agencies based on flows; however, costs for new facilities are based on an agency’s capacity rights in the Metro system and are currently being negotiated in amended regional agreements. These agreements will be based on projected 2050 flows and commit agencies over a 60-year period, which could affect avoided cost estimates when evaluating future projects.

GILLINGHAM WATER 32 DRAFT October 7, 2020 48 Next Steps This screening document has identified opportunities and constraints of this proposed project that may provide sufficient basis for interested parties to dive deeper into the details of project implementation. A Project Feasibility Assessment, on the order of $300,000, would be required to further develop both economic and non-economic factors, develop more detailed discussion on grant opportunities, and more thoroughly project ranges of future cost projections for Metro and SDCWA rates.

Based on the preliminary economic analysis and consensus of the working group members, the Authority may want to consider a South Bay Pure Water project as a future opportunity, and place discussions on developing the concept on hold at this time. An IPR project is an attractive supply project under the right conditions and would provide the Authority an opportunity to reduce imported water within their water supply portfolio. However, such a project requires a lead agency to champion the process.

We recommend the following actions:

1) Follow-up with other parties: Following review of this report, contact Otay and the County to assess interest in further investigations.

2) Identify agency roles and project champion(s): If the parties express interest, identify a project champion who would lead further investigations.

• Otay has requested more information on their level of involvement in a South Bay Pure Water project prior to engaging beyond observations on a regional level and would require adequate time to allocate an appropriate budget into their capital plan. • The County of San Diego has shown interest in exploring a new IPR project, particularly once they have revisited the system operations in the Spring Valley Basin. They may consider pursuing this opportunity as they develop their new Spring Valley Sewer Master Plan in FY 21-22. • Because the Authority’s existing supplies already allow it to be independent of SDCWA in some years, its average annual economic incentive for additional increments of local supply is diminished. This suggests a possible role for the Authority may be as a participant but not necessarily a leader of the project development effort. The Authority could also be an ex-officio partner in a South Bay Pure Water project, similar to Helix Water District in the ECAWP project. This would be accomplished through a water purchasing agreement, without having to participate in the costs of the wastewater components of the project.

GILLINGHAM WATER 33 DRAFT October 7, 2020 49 4. Otay Sales Agreement

Summary: • The Authority’s reservoir and treatment assets could be more fully and efficiently utilized if demands were higher. A higher demand base would benefit the Authority’s reservoirs by allowing storage levels to be drawn down faster, reducing evaporation losses. Higher demands would also improve operations of the Authority’s Treatment Plant by reducing the need to turn the plant off or to operate it at inefficiently low rates of flow. • A water sales agreement with the Otay Water District (Otay) could be mutually beneficial. A water sales agreement with Otay has potential for mutual advantage, improving asset utilization for the Authority, and providing economy and supply reliability benefits to Otay. • Otay has advised it will need time to evaluate its options. Implementation of a sales agreement would require a capital investment by Otay of approximately $30 million to fund the necessary connection facilities. The investment might be cost-effective to Otay if it provides enhanced supply reliability, but Otay has advised that determination will need to await completion of its next Water Master Plan in or about 2022.

4.1. Overview and Ratings Summary This section reviews the feasibility of a Regional Sales Agreement as a means of increasing the base of water demands serviceable by the Authority’s storage and treatment assets. Our project rating is summarized below.

Project Project Description / Benefits & Constraints Rating / Next Steps

• Otay Sales The Authority hosted a Regional Sales Agreement Review Category 2: Agreement Meeting with Otay to review the opportunity for an MONITOR AND Authority-to-Otay sales agreement. Subsequently, Otay has REVIEW advised that it will need to await the completion of its next Water Master Plan, scheduled for approximately 2022, before it is in a position to decide on whether to advance an agreement. Benefits: Next Steps: • Additional water demands via regional sales could • Coordinate with improve the operational efficiency of the Authority’s Otay during storage and treatment assets, reducing storage losses and preparation of its improving Treatment Plant operations Water Master Plan to assess its interest • Otay could obtain a highly-reliable supply of treated in an agreement water for its Central service area at advantageous costs Constraints: • Project requires an Otay capital investment of approximately $30M

GILLINGHAM WATER 34 DRAFT October 7, 2020 50 4.2. The Coarse Screening review established Otay as the most plausible Authority partner for a regional sales agreement. The retail water agencies bordering the Authority are the most likely candidates for such a sales agreement. The Authority is bordered on the north by the City of San Diego, and on the south by the Cal American Water Company, which is supplied by the City of San Diego. We judge these to be poor candidates for a sales agreement because the City of San Diego experiences the same type of wet year abundance of local supply as the Authority, has surplus treatment plant capacity of its own, and as a result has little incentive to participate in an arrangement with the Authority.

The Authority is bordered on the east by Otay. Otay relies on SDCWA for all of its potable supply, and is vulnerable to any water supply interruptions affecting the SDCWA aqueduct system. These conditions provide incentive for Otay to consider a sales arrangement with the Authority. We view Otay as the most plausible partner of the Authority’s three neighbors.

4.3. A sales arrangement might provide multiple benefits to both parties. Potential benefits to each party are summarized in Table 4-1.

TABLE 4-1: Sales Agreement Potential Benefits

Authority Otay

• Increased Local Yield and Revenue: An • Supply Reliability: Otay relies on SDCWA increased demand base would allow for for all of its potable supply. The northern quicker utilization of available wet year portion of its service area, north and east of water supplies, increasing usable yield by Sweetwater Reservoir, has a redundant source reducing reservoir evaporation and other of supply from the Helix Water District’s Levy storage losses. The sale of this increased WTP, but its Central service area, the center yield to Otay would produce revenue for portion of the district in and around the City of the Authority. The amount of yield increase Chula Vista and south of Sweetwater Reservoir, will depend on the transfer capacity to Otay lacks supply redundancy, leaving it vulnerable and other factors, but we anticipate the to any water supply interruptions affecting the increase could easily amount to an average SDCWA aqueduct system. A sales agreement of 100 AF/yr or more. with the Authority could provide Otay with valuable supply reliability benefit for this area. • Higher Treatment Plant Production: Water sold to Otay would be treated at the • SDCWA Purchase Cost Savings: It may be Authority’s Treatment Plant. Operation of possible to structure a sales arrangement in the plant at very low flow rates, as is which both parties gain economically, the sometimes necessary under current supply Authority by selling local water that would and demand conditions, poses treatment otherwise be lost, and Otay by purchasing the challenges. An increased demand base water for less than it would spend for like could improve plant operations. purchases from SDCWA. • Evaporation Cost-Sharing: An • Enhanced Water Quality: Over the past arrangement could potentially be structured decade the southern reach of the SDCWA in which Otay shared in the maintenance of aqueduct system serving Otay’s treated water emergency storage pool levels at the connections has struggled with nitrification Authority’s reservoirs, and in the issues, complicating Otay’s system operations evaporation losses incurred by that storage. and water quality compliance. A supply from the Authority may provide opportunities for improved water quality management.

GILLINGHAM WATER 35 DRAFT October 7, 2020 51 4.4. New conveyance facilities would be required to deliver water from the Authority service area to Otay. The Otay service area is at higher elevation than the Authority service area, and a new pump station and up to 16,000 feet of new dedicated pipeline would be required to convey water from the Authority to Otay. Key aspects of the project concept are summarized in Table 4-2.

TABLE 4-2: Key Aspects of the Conceptual Design

Item Description / Notes Sizing / Capacity The controlling factor for capacity sizing is the extent of Otay’s need and desire for a reliable back-up supply for its Central service area. Based on analysis conducted as part of the Otay 2016 Water Master Plan, the desired capacity is likely in the range of 5 to 15 mgd. Pump Station / Provision of the desired capacity requires the conveyance originate in the SWA Delivery Gradient Gravity (275) zone, and terminate in the Otay 624 zone in the vicinity of suitably-sized 24-inch and larger pipelines. This leads to the need for a significant pump station with TDH = ~400 ft. Installed horsepower would be:  5 mgd: 450 hp  10 mgd: 900 hp  15 mgd: 1,300 hp Authority For the capacities desired, conveyance would need to originate from the Origination Point Authority’s 36-inch transmission line in Bonita Road, or the 42-inch transmission line.

Pipeline Sizing  5 mgd: 18 in.  10 mgd: 24 in.  15 mgd: 30 in. Pipeline See next section Alignments Sales Agreement The parties would need to negotiate the terms of sales agreement. Environmental Construction of capital facilities would require environmental compliance under Compliance the California Environmental Quality Act. Water Rights Legal review would be required to confirm a preferred approach relative to Considerations water rights.

4.5. The most probable pipeline alignment would be in Corral Canyon Road. A possible pipeline alignment could be in Corral Canyon Road, as illustrated in Figure 4-1 on the next page. The alignment would originate at the Authority’s 36-inch pipeline in Bonita Road at Frisbee Street, proceed west on Central to Corral Canyon Road, and hence to the existing 24-inch Otay 624 zone pipeline in East “H” Street. This alignment is the southern half of the North-South Interconnect Pipeline previously studied extensively by Otay. The total length of the alignment is approximately 15,500 feet.

GILLINGHAM WATER 36 DRAFT October 7, 2020 52 FIGURE 4-1: Conceptual Pipeline Alignment – SWA to Otay Sales Agreement

Sweetwater Reservoir 125

East H St.

Bonita Road

LEGEND Conceptual Corral Canyon Rd. Alignment Conceptual Pump Station Location 0 0.5 1 2 miles Source: Google Earth

The alignment as shown would accommodate capacities up to 10 mgd. For larger capacities up to 15 mgd, the alignment would need to proceed north in East “H” Street approximately 1,000 feet to reach the 30-inch section of Otay’s existing transmission main. Other alignments are possible and should be considered in a project alignment study and environmental review, should the parties elect to proceed with the project. Alignment alternatives may exist in Otay Lakes Road, and in “L” Street, the latter alignment originating from the Authority’s Second Avenue transmission main.

4.6. Conceptual Costs: A 10 mgd would require a capital investment of approximately $30 million. Capital Costs. Our c onceptual-level estimates of project capital costs are summarized in Table 4-3 (next page). The costs shown are Total Project, inclusive of contingencies, design and administration, environmental, and other costs, in 2020 dollars. Costs are for the default Corral Canyon Road alignment.

Operating Costs. The static lift from the Authority's Gravity (275) zone to the Otay 624 is approximately 350 ft., and the total lift will be approximately 400 ft. inclusive of dynamic losses. At a pump efficiency of 80 percent, and an average power price of $0.17/kWh, power costs would amount to approximately $85/AF. Additional costs for operations, maintenance, repair, and replacement would increase total operating costs to somewhere in the range of $125/ AF.

GILLINGHAM WATER 37 DRAFT October 7, 2020 53 TABLE 4-3: Conceptual Total Project Costs, Corral Canyon Road Alignment

Quantity Cost Component Unit Cost 5 mgd 10 mgd 15 mgd 5 mgd 10 mgd 15 mgd Pipeline $40/in./ft. 18-in. 24-in. 30-in. $11 M $15 M $22 M 15,500 ft. 15,500 ft 15,500 ft Pump Station $13k/hp 450 hp 900 hp 1,300 hp $6 M $12 M $17 M Connections $500k/ea. 2 2 2 $1 M $1 M $1 M ROW (for PS) $1M/ea. 1 1 1 $1 M $1 M $1 M Other (allowance) $1 M $1 M $1 M Totals $20 M $30 M $42 M Conceptual-level cost estimates, in 2020 dollars

4.7. Project Economics Part 1: The agreement has economic merit if two conditions can be satisfied. The first is that the Authority be able to profitably sell water to Otay at an attractive discount. The Authority anticipates being able to offer price discounts to Otay relative to SDCWA rates, even after accounting for pumping costs to convey water to Otay. The opportunity for discounted water arises from treatment plant efficiencies3, and local water utilization efficiencies.4

The overall unit cost savings to Otay are likely modest, but nevertheless of value. The net unit cost savings (after pumping costs) are likely on the order of $50 to $100/AF. Compounded by volume however, the potential annual cost savings is not insignificant. For example, if Otay purchased 7,500 AF/yr at an average net discount of $75/AF, the savings would amount to more than $0.5 million per year.

3 Treatment Plant Efficiencies: Water sold to Otay would be treated at the Authority’s Treatment Plant. Operation of the plant at very low flow rates, as is sometimes necessary under current supply and demand conditions, poses treatment challenges and cost inefficiencies. An increased demand base could improve plant operations and reduce unit costs of production. Potential treatment plant efficiency savings will require further review and documentation, but at a conceptual level might be able to hold the plant’s average operating costs to less than $100/AF. Relative to the SDCWA treated water rate differential of approximately $300/AF, this represents at least a $200/AF savings. This savings could be shared with Otay through a discount on water sales.

4 Local Water Utilization Efficiencies: An increased demand base would allow for quicker utilization of available wet year water supplies, increasing lusable yie d by reducing reservoir evaporation and other storage losses. The amount of yield increase will depend on the transfer capacity to Otay and other factors, but we anticipate the increase could easily amount to an average of 100 AF/yr or more. If valued relative to SDCWA raw water rates, this additional yield would be worth approximately $140,000 per year. If the benefit were shared equally with Otay and distributed across 7,500 AF/yr of sales, it would amount to approximately $10/AF. This analysis is draft, based on conceptual review only. Additional review would be required to confirm and document the actual savings as part of a Sales Agreement negotiation between the parties. One of the details that would need to be addressed would be a method for addressing the year-to-year variability of the additional yield benefit.

GILLINGHAM WATER 38 DRAFT October 7, 2020 54 4.8. Project Economics Part 2: The second condition for economic feasibility is that Otay be able to justify the $30 million investment in capital facilities required for the connection facilities. The potential justification entails supply reliability for its South District service area. Otay relies on SDCWA for all of its FIGURE 4-2: Otay Supply Sources potable supply. The North District portion of its service area, north and east of Sweetwater Reservoir, has a redundant source of supply from the Helix Water District’s Levy WTP, as depicted in Figure 4-2. In contrast, its South District service area, consisting of the Central Area and Otay Mesa regions depicted in the figure, lacks supply redundancy, leaving it vulnerable to any water supply interruptions affecting the SDCWA aqueduct system. A sales agreement with the Authority could provide Otay with valuable supply reliability benefit for this area.

Otay has access to an emergency supply from the City of San Diego’s Lower Otay Reservoir and Otay Water Treatment Plant, but the supply is on an “as available” basis, leaving Otay uncertain as to the reliability of the supply.

Sales Agreement Opportunity to Boost Reliability A Sales Agreement could be structured to provide a highly-reliable emergency supply for the Otay South District. A sales agreement could specify a storage pool for Otay in Sweetwater Reservoir, for which Otay would pay proportional storage losses and reservoir/dam maintenance costs. A storage pool sized for 10 days of supply at 10 mgd would amount to approximately 300 acre-feet. A larger reserve could be specified if desired by Otay.

Reliability Valuation The economic feasibility of an Authority-to-Otay sales agreement may come down to the value Otay would assign to the reliability benefits achieved. We expect the capital cost of the connection facilities will need to be funded entirely, or almost entirely, on the basis of supply reliability enhancement. If Otay can justify the investment on this basis, then an Authority-to- Otay Sales Agreement would appear quite promising. If Otay cannot justify the investment on this basis, then such an agreement would appear economically infeasible.

GILLINGHAM WATER 39 DRAFT October 7, 2020 55 4.9. Otay has advised a decision on its South District supply reliability alternatives will need to await the completion of its next Water Master Plan, in or around 2022. Although an Authority-Otay Sales Agreement offers potential to enhance supply reliability for Otay’s South District service area, Otay has advised it will need time for further study to weigh the merits of the capital investment that would be required for connecting facilities. Otay advises this decision will need to await the completion of its next Water Master Plan, in or around 2022.

4.10. Next Steps: Maintain coordination with Otay. We recommend the parties continue to compare notes on opportunities and share information during their next round of water master plans.

4.11. Attachments:

• Meeting minutes of August 20, 2020 Re: Coordination with Otay Water District Re: Possible Sales Agreement

GILLINGHAM WATER 40 DRAFT October 7, 2020 56 5. Storage Policy Revision

Summary: • Existing emergency storage practice is outdated; we recommend revision: With the completion of SDCWA’s Emergency Storage Project and the expansion of the Authority’s Desal Facility, the Authority’s current emergency storage practices now merit adjustment. We recommend targeting a one-month reserve in Sweetwater Reservoir, and none at Loveland Reservoir. • Lesser reserve volumes would reduce storage losses, increasing local supply: The revised operating practice would increase average local yield by approximately 300 AF/yr, worth $300,000 per year. • Lower storage levels will affect the Authority’s fishing program at Loveland Reservoir: Various options are available for addressing changes to the Loveland fishing program. Board input is needed to help guide these decisions.

5.1. Overview and Ratings Summary This section reviews the status of the Authority’s existing operating practice for the maintenance of emergency storage reserves in Loveland and Sweetwater reservoirs, and our recommendations for updating the practice to reflect changed conditions.

Project Project Description / Benefits & Constraints Rating / Next Steps

• Storage Amend current operating practice for the maintenance of Category 1: Practice emergency storage reserves in Authority reservoirs. RECOMMENDED Revision Continue to target one-month of reserve in Sweetwater FOR Reservoir, but reduce the target at Loveland Reservoir IMPLEMENTATION from three months to none. Benefits: Next Steps: • Together with other Authority and SDCWA supply assets, maintains high levels of supply reliability for • Amend emergency Authority customers storage operating practice as described • Reduces storage losses; resulting in increased local yield. Reduces Authority supply costs by • Consider options for approximately $300,000 per year on average addressing effects on • One-time initial withdrawal benefit (after transfer and fishing and recreation other losses) of up to $6 million (based on 6,000 AF uses at Loveland of additional withdrawal valued at $1,000/AF) Reservoir Constraints: • Consider obtaining legal advice to • Reduced Loveland Reservoir storage levels will affect confirm adjustment to fishing and recreation uses reservoir operating • The Authority’s boat launch at Loveland will need to practice is be improved to maintain boat access, and the log- ministerially exempt boom modified to accommodate lower water levels from CEQA

GILLINGHAM WATER 41 DRAFT October 7, 2020 57 5.2. Existing emergency storage practice dates from 1982. Conditions have changed. The Authority’s existing operating practice on the maintenance of emergency storage reserves in Loveland and Sweetwater Reservoirs dates from 1982. At Loveland Reservoir the practice calls for the maintenance of a storage reserve equal to three summer months of demand, plus an allowance for transfer losses to Sweetwater Reservoir. At Sweetwater reservoir the practice calls for the maintenance of a reserve equal to an additional one-month of summer demand. Existing policy is summarized in Table 5-1.

TABLE 5-1: Existing Emergency Storage Practice

Emergency Storage Reserve Incremental Evaporation 3 Reservoir Months 1 Volume 2 % Volume Loveland 3 6,375 AF 5% 320 AF Sweetwater 1 1,700 AF 14% 240 AF TOTAL 4 8,075 AF 7% 560 AF

1. Months of average summer demands, at 1,700 AF/month 2. The Loveland reserve volume includes a 25% (1,275 AF) allowance for transit losses to Sweetwater Reservoir. 3. Incremental evaporation is the additional evaporation loss incurred on an additional unit of storage added to the reservoir. The incremental loss values assume relatively low storage levels. ______

Subsequent to the establishment of the current operating practice, conditions have changed in a manner that reduces the Authority’s need to maintain emergency reserves at the current levels. Key changed conditions are listed in Table 5-2.

TABLE 5-2: Changed Conditions Re: Emergency Storage Policy

Changed Description Implication Condition 1. SDCWA The ESP is a multi-component project • The ESP system is available to Emergency designed to maintain SDCWA aqueduct provide at least two months of Storage system deliveries to all portions of its supply to the Authority during Project service area for the duration of a two-month an emergency. (ESP) interruption of supply from the • ESP storage in San Vicente Metropolitan Water District of Southern reservoir incurs very low California (MWD), as could be caused by a evaporation losses. Regional major earthquake on the Elsinore fault. supply efficiency favors storing Major components of the ESP include the emergency supply there rather enlarged San Vicente Reservoir, the San than in Authority reservoirs. Vicente Pump Station and Pipeline, the Olivenhain Dam and Reservoir, and the Lake Hodges Pipeline and Pump Station.

2. Increased The Authority has constructed the Desal • The Authority’s highly reliable Local Facility, and together with the National City local supply from groundwater Supplies wells now produces a highly reliable supply can now provide approximately of 8,300 AF/year for the Authority, as half of its annual demands, described in Section 1.5. partially negating the need for emergency storage.

GILLINGHAM WATER 42 DRAFT October 7, 2020 58 5.3. Even with reduced emergency storage levels, the Authority could still provide excellent supply reliability to its service area. Table 5-3 summarizes the types of water shortage events that could affect the Authority, the assets currently available to it to address the shortage event, and the consequences of each event to the Authority’s customers. Relative to emergency storage, the applicable event category is an ESP Event, an earthquake-induced or other failure of the San Diego Aqueduct pipelines leading to a two-month interruption of imported supplies until repairs could be completed. For this event, the Authority has multiple redundant supplies. Emergency storage may still be a useful component of the full arsenal of response assets, but no longer needs to be the sole asset carrying all the load.

TABLE 5-3: Summary of Potential Shortage Events and Consequences (for Authority Service Area)

Event Frequency Duration Existing Response Assets Consequence

1) Drought Low 1 year a) State, Metropolitan, and Minor / Moderate (or other (dependent on (and longer) SDCWA response capabilities (Effect of prolonged State, MWD, b) National City Wells and SDCWA cutbacks reduction in and SDCWA Reynolds groundwater supplies to SWA muted by imported water actions) c) Surplus (non-emergency) SWA local supply supplies) storage in Loveland and resources) Sweetwater, if any (Excepting d) SWA Water Shortage possible SWRCB Contingency Plan dictates)

2) ESP Event Low 2 months a) National City Wells and Minor / Moderate (Earthquake- (on the order of (per ESP Reynolds groundwater supplies (No SDCWA induced or one event per design b) Emergency storage in deliveries for 5-7 other failure of 100 years) criteria, Authority reservoirs and days; thereafter the San Diego based on treatable at Perdue WTP deliveries at Aqueduct aqueduct c) SDCWA ESP facilities minimum 75% pipelines) repair time d) Interconnections from Otay level of service) estimates) North District and City of San Diego and Cal-American e) SWA Water Shortage Contingency Plan

3) Treated Water Biannually 10 days a) National City Wells and Inconsequential Shutdown of (approximately) (Dec. – Mar. Reynolds groundwater supplies (SWA not Second window) b) Surplus (non-emergency) dependent on Aqueduct storage in Loveland and SDCWA treated (planned event) Sweetwater, treatable at the supply) Perdue WTP c) SWA raw water connection to SDCWA, treatable at the Perdue WTP

4) Raw Water Biannually 10 days a) National City Wells and Inconsequential Shutdown of (approximately) (Dec. – Mar. Reynolds groundwater supplies (Easy adjustment Second window) b) Surplus (non-emergency) to other sources) Aqueduct storage in Loveland and (planned event) Sweetwater, treatable at the Perdue WTP c) SWA treated water connections to SDCWA

GILLINGHAM WATER 43 DRAFT October 7, 2020 59 5.4. We recommend the current operating practice be revised to target one month of emergency reserve at Sweetwater Reservoir, and none at Loveland Reservoir.

ESP Shortage Conditions Govern Referencing Table 5-3, the only shortage condition with the potential to require implementation of the Authority’s water shortage contingency plans, and potentially mitigable by the maintenance of emergency storage reserves, is an ESP event. SDCWA’s ESP operations plans specify that immediately after the earthquake or other triggering emergency event, the entire aqueduct system will be subject to shutdown for up to 10 days while SDCWA assesses damage and crafts response plans. Subsequently, SDCWA would activate ESP operations, and in the case of the Authority could resume delivering treated water in Pipeline 4, raw water in Pipeline 3, or both to the Authority. Both of these pipelines south of the San Vicente Pipeline are welded steel pipelines with excellent seismic resiliency and repairability.

Sweetwater Reservoir Emergency Reserve The ESP operations plan suggest the Authority should maintain at least a 10-day emergency supply in Sweetwater Reservoir. Recognizing the opportunity to provide conservatively high levels of supply reliability, we recommend the Authority target the reserve in Sweetwater Reservoir at one month of demand. We recommend the target be calculated on a forward-looking demand basis, meaning the target for summertime months will be higher than the target for wintertime months, and meaning the target levels will also adjust to track any long-term changes in Authority demands. Finally, we recommend staff retain the flexibility to adjust the target downward to account for the Authority’s reliable local supplies from the Desal Facility and the National City wells, depending on staff’s assessment of the risk of those supplies being damaged or otherwise off-line during the emergency event. This adjustment would in effect set the target based on the anticipated demands on the Treatment Plant, rather than the District as a whole. Summary: We recommend the Authority target a one-month emergency storage reserve at Sweetwater Reservoir, calculated on a forward-looking demand basis and with flexibility to account for reliable local supplies from the Desal Facility and the National City wells.

Loveland Reservoir Emergency Reserve Emergency storage reserves in Loveland Reservoir are complicated by the need to move water from Loveland to Sweetwater Reservoir in an emergency, and the subsequent need to provide an additional volume of reserve to make up for potentially significant transit losses that would occur if the transfer occurred during the summer or other prolonged dry conditions. Emergency releases from Loveland could also be complicated by endangered species permitting issues, as reviewed in the Course Screening report. With no more than one month of emergency reserve required overall, as reviewed above, the most efficient location for that reserve is at Sweetwater Reservoir. Considering these issues, we recommend the Authority no longer designate an emergency storage reserve at Loveland Reservoir.

GILLINGHAM WATER 44 DRAFT October 7, 2020 60 Recommended Emergency Storage Reserves / Increased Local Yield Our emergency storage operating practice recommendations are summarized in Table 5-4.

TABLE 5-4: Recommend Revised Emergency Storage Practice Emergency Storage Reserve Incremental Evaporation 2 Reservoir Months 1 Volume % Volume Loveland none 0 AF 5% 0 AF Sweetwater 1 1,700 AF 14% 240 AF TOTAL 1 1,700 AF 14% 240 AF

1. Months of average summer demands, at 1,700 AF/month 2. Incremental evaporation is the additional evaporation loss incurred on an additional unit of storage added to the reservoir. The incremental loss values assume relatively low storage levels. ______

In comparison to the earlier data presented in Table 5-1, the recommended practice would reduce incremental evaporation losses by approximately 300 AF/yr. After accounting for transfer losses, this increased yield would have a unit value of approximately $1,000/AF, and a total value of approximately $300,000 per year. Reduced storage levels would also increase the ability to retain runoff in wet years, reducing spill frequencies. We have not undertaken the detailed analysis needed to quantify this benefit, but judge it might be comparable to the evaporation benefit above.

One-Time Surplus Withdrawal Benefit With a revision to the operating practice, the existing 6,375 AF emergency reserve in Loveland becomes surplus storage, available for one-time withdrawal as additional local yield. If valued as above at approximately $1,000, the surplus storage would provide a one-time benefit to the Authority in excess of $6 million.

CEQA Applicability Considerations The California Environmental Quality Act (CEQA) requires decision-making bodies consider the environmental consequences of their actions. Reservoir operations that are consistent with the already permitted purpose of the reservoir, in this case water supply, have historically been treated as ministerially exempt from CEQA. Accordingly, our review has assumed the Authority can proceed with adjustments to its reservoir operations without the need for environmental documentation under CEQA. We recommend the Authority consider obtaining legal advice to confirm that adjustments to reservoir operating practices are ministerially exempt from CEQA.

5.5. Lower storage levels will affect the Authority’s fishing program at Loveland Reservoir. Lower storage levels will affect Authority’s fishing program at Loveland Reservoir. The effects of lower storage levels on the accessible surface area of the lake are illustrated in Figure 5-1 on the next page. The green contour line at elevation 1297 feet depicts the current emergency storage reserve of approximately 7,500 AF (total inclusive of minimum pool storage). Lower storage levels are depicted by the subsequent contours, proceeding from right to left in the figure and ending at the minimum pool elevation of 1248 feet depicted by the white contour line.

GILLINGHAM WATER 45 DRAFT October 7, 2020 61 FIGURE 5-1: Loveland Reservoir Storage Levels 10/02/20

2018 ,

GoogleEarth source: source: Image Evap. = 710 AF/yr 710 = Evap. El. 1297; 7,500 AF 7,500 1297; El. Current E.Current Reserve LEGEND El. 1280 El. 550 AF/yr ~4,500 AF ~4,500 El. 1270 El. 440 AF/yr ~3,000 AF ~3,000 Access Trail Access Parking Lot and FishingProgram Downstream Boundary Downstream El. 1260 El. AF ~2,000 300 AF/yr Feasibility Study Feasibility Water Supply Water El. 1248 El. 200 AF/yr ~1,150 AF ~1,150 LOVELAND RESERVOIRLOVELAND STORAGELEVELS miles GoogleEarth : 1 . Evaporation losses are are losses Evaporation . - 2008

Figure 5 Figure : Elevation contours and volumes per Aerial Image Source Image Aerial 0 1 2 4 2 1 0 Notes SWA bathymetric survey ofLoveland dated Reservoir after net losses annual average on based precipitation.

GILLINGHAM WATER 46 DRAFT October 7, 2020 62 Figure 5-1 also depicts the parking lot and access trail utilized by the fishing program, and the downstream boundary for public access. In comparison to the current reserve pool elevation of 1294, access to the reservoir surface is diminished at elevation 1280, and eliminated at approximately elevation 1270.

Fishing Program History In 1997 the Authority entered into an agreement with the US Forest Service to provide pubic fishing and birdwatching access along the eastern portion of the Loveland Reservoir shoreline. In exchange for a parcel of land near the reservoir, previously owned by the U.S. Government, the Authority provided the Forest Service with a surplus parcel of land of value to the Forest Service. Under the terms of the agreement, the Authority constructed the parking lot and access trail depicted in Figure 5-1, an information kiosk, and restroom facilities. The Authority also patrols the publicly accessible area.

Comparison to Historical Operations Prior to 1969, Loveland Reservoir was operated by the California American Water Company and was routinely drawn down to minimum pool. After the wet year of 1969, the reservoir filled partially, and with operations transferred to the Authority, drawdowns were subsequently moderated. The storage level history of the reservoir is depicted in Figure 5-2.

FIGURE 5-2: Historical Loveland Reservoir Storage Volumes

Source: Authority data files

Projected Drawdown Frequencies under Revised Operating Practices Examining Figure 5-2 for the most recent 30-year period from 1980 through 2019 inclusive, the Authority has drawn the reservoir down to its target minimum storage pools in approximately 10 of those years, or one-third of the time. In the other years, storage levels have remained above minimum targets due to an abundance of supply.

Applying this historical operating experience to the potential revised operating practice, a reasonable assumption is that the reservoir would be below the lowest level accessible by the current recreation program in approximately one-third of all years.

GILLINGHAM WATER 47 DRAFT October 7, 2020 63 Water Level Effect on Evaporation Losses Lower water levels reduce evaporative losses. Average annual net evaporation losses at Loveland are summarized in Table 5-5.

TABLE 5-5: Loveland Reservoir Evaporation Losses by Water Level

Avg. Net Evaporation @ 3.5 ft/yr USGS Volume Area Depth Volume Volume Incremental Comments (ft.) (AF) (acres) (ft.) (AF/yr) (%) (%) 1248 1,130 57.7 19.6 202 18% Minimum Pool 1260 1,988 86 23.1 301 15% 12% 1270 3,039 126 24.1 441 15% 13% 1280 4,456 156 28.6 546 12% 7% 1290 6,168 185 33.3 648 10% 6% 1298 7,730 206 37.5 721 9% 5% ~Current E. Storage 1300 8,147 211 38.6 739 9% 4% 1310 10,402 240 43.3 840 8% 5% 1320 12,954 272 47.6 952 7% 4% 1330 15,872 313 50.7 1,096 7% 5% 1340 19,266 366 52.6 1,281 7% 5% 1356 25,844 461 56.1 1,614 6% 5% ~Full Reservoir

5.6. Various options are available for addressing changes to the Loveland fishing program. Board input is needed to help guide these decisions. Options are available for addressing changes to the Loveland fishing program include the following:

• Water Supply Primacy: A water-supply primacy policy would prioritize operation of the reservoir for water supply operations, and accommodate fishing access only in those years when water levels allowed access. The reservoir would at times be drawn down to minimum pool elevation 1248 (1,150 AF) consistent with the recommended revisions to the Authority’s reservoir operating practices. • Multi-Purpose: A multi-purpose policy would give some weight to maintenance of access for fishing, establishing minimum recreation pool levels in place of or in addition to minimum emergency storage levels. For example, with reference to Figure 5-1, a target minimum pool elevation of 1280 (4,500 AF) would preserve water surface access for fishing in all years. In comparison to drawdowns to minimum pool, this operation would incur additional evaporation losses of approximately5 300 AF/yr, valued at approximately $300,000 per year, and additional spill losses of possibly comparable value. The operation would also forego a one-time surplus storage withdrawal of approximately 3,350 AF, valued at approximately $3 million.

5 The estimate for additional storage losses has been adjusted downward to account for years when water levels would remain high due to abundant supply conditions.

GILLINGHAM WATER 48 DRAFT October 7, 2020 64 • Revise Recreation Program Boundaries and Access: The Authority could revise the operating practice as recommended, and investigate options for extending fishing and recreational access to lower water levels. This would entail costs for relocating facilities. Also, any revisions to the recreation program involving expanded boundaries or trails would likely require new environmental documentation and permitting.

5.7. Lower water levels will also require modifications to the Authority’s boat ramp and log-boom. Authority staff have identified the need to modify the reservoir keeper’s boat ramp and the log- boom to accommodate lower water levels. A functional boat ramp is needed to provide access for inspection of the South Saddle Dam, with inspections required twice per year at a minimum by Authority staff, and once per year by DSOD.

Staff will return to the Board with updates on these issues.

GILLINGHAM WATER 49 DRAFT October 7, 2020 65 6. Loveland Regional Exchange

[TO BE ADDED FOLLOWING REVIEW WORKSHOP WITH PADRE DAM MWD.]

GILLINGHAM WATER 50 DRAFT October 7, 2020 66

APPENDICES:

• APPENDIX 2A: Reservoir Water Quality Cost Estimate Detail

• APPENDIX 2B: Reservoir Water Quality Technical Documentation (under separate cover)

• APPENDIX 3A: Pure Water Net Present Value Cost Detail

• APPENDIX 4A: Meeting Minutes: Coordination with Otay Re: Possible Otay Sales Agreement

GILLINGHAM WATER DRAFT October 7, 2020 67

APPENDIX 2A: Reservoir Water Quality Cost Estimate Detail

GILLINGHAM WATER DRAFT October 7, 2020 68 DRAFT 10/06/20

Summary Cost Comparison of Alternatives 20,000 AF Capacity Vigorous Hypolimnetic Description Destratification Mixing Oxygenation

CAPITAL COSTS1 Capital Cost $1,200,000 $3,900,000 $3,500,000 Increment vs. Destratification -- $2,700,000 $2,300,000

ANNUAL COSTS1 Annual Cost $120,000 $320,000 $280,000 Increment vs. Destratification -- $200,000 $160,000

TOTAL EQUIVALENT ANNUAL COSTS2 Total Equivalent Annual Costs $180,000 $520,000 $460,000 Increment vs. Destratification -- $340,000 $280,000

FIRST-YEAR UNIT COSTS3 Unit Cost $24/AF $69/AF $61/AF Increment vs. Destratification -- $45/AF $37/AF Avoided Costs @ Perdue WTP (offsets) $27/AF $27/AF $27/AF Net Cost (Benefit) After Offsets ($3/AF) $42/AF $34/AF

Notes: 1. Costs in April 2020 U.S. dollars, ENR LA CCI = 12,054 2. Amortization based on i = 3.0% N = 30 yrs

3. Unit costs calculated on the basis of 7,500 AF/yr of average local yield

SWA Reservoir WQ Cost Estimates_100620.xlsx Page 1 of 7 Summary 69 DRAFT 10/06/20

Aeration / Destratification System 20,000 AF Capacity

1 Description Units Quantity Unit Cost Cost

CAPITAL COSTS Project Components Variable-Speed Oil-Free Air Compressors (50 hp) ea. 2 $80,000 $160,000 2 PAC Building Improvements LS 1 $150,000 $150,000 Air Supply Lines ft. 300 $75 $22,500 Air-Diffuser Line LS 1 $220,000 $220,000 Undefined Design Elements Subtotal $552,500 Undefined Elements 20% $111,000 Construction Contingency Subtotal $663,500 Construction Contingency 10% $66,000 Subtotal Construction Cost (rounded) $730,000 Other Costs Design / Administration / Start-up 30% $219,000 Environmental / Permitting LS 1 $250,000 $250,000 Escalation to Mid-Point of Construction 3% $36,000 TOTAL PROJECT COST (rounded) $1,200,000 ANNUAL COSTS 3,4 Power kWh 284,000 $0.14 $40,000 O&M (as % of Construction Costs) 5% $37,000 Enhanced Quagga Mussel Control Measures LS 1 $20,000 $20,000 Replacement Costs (sinking fund) (ditto) 3% $22,000 TOTAL ANNUAL COSTS (rounded) $120,000

FIRST-YEAR UNIT COSTS Amortized Capital 30 yrs 3.0% $61,000 Annual Costs $120,000 Total Equivalent Annual Cost $181,000 Unit Cost of Treated Water (rounded) $/AF 7,500 AF/yr $24/AF

Notes: 1. Costs in April 2020 U.S. dollars, ENR LA CCI = 12,054 2. Allowance for electrical, IC, and possible building expansion 3. Power consumption based on 100 hp (75 kW) discounted 42% for avg. reservoir level (see "Storage Levels" tab) and 25% for seasonality (system off in winter months) 4. Power unit cost per SWA average for 2019-2020

SWA Reservoir WQ Cost Estimates_100620.xlsx Page 2 of 7 Destratification 20k 70 DRAFT 10/06/20

Aeration / Destratification System 10,000 AF Capacity

1 Description Units Quantity Unit Cost Cost

CAPITAL COSTS Project Components Variable-Speed Oil-Free Air Compressors (25 hp) ea. 2 $40,000 $80,000 2 PAC Building Improvements LS 1 $100,000 $100,000 Air Supply Lines ft. 300 $75 $22,500 Air-Diffuser Line LS 1 $220,000 $220,000 Undefined Design Elements Subtotal $422,500 Undefined Elements 20% $85,000 Construction Contingency Subtotal $507,500 Construction Contingency 10% $51,000 Subtotal Construction Cost (rounded) $560,000 Other Costs Design / Administration / Start-up 30% $168,000 Environmental / Permitting LS 1 $250,000 $250,000 Escalation to Mid-Point of Construction 3% $29,000 TOTAL PROJECT COST (rounded) $1,000,000 ANNUAL COSTS 3,4 Power kWh 172,000 $0.14 $24,000 O&M (as % of Construction Costs) 5% $28,000 Enhanced Quagga Mussel Control Measures LS 1 $20,000 $20,000 Replacement Costs (sinking fund) (ditto) 3% $17,000 TOTAL ANNUAL COSTS (rounded) $90,000

FIRST-YEAR UNIT COSTS Amortized Capital 30 yrs 3.0% $51,000 Annual Costs $90,000 Total Equivalent Annual Cost $141,000 Unit Cost of Treated Water (rounded) $/AF 7,500 AF/yr $19/AF

Notes: 1. Costs in April 2020 U.S. dollars, ENR LA CCI = 12,054 2. Allowance for electrical, IC, and possible building expansion 3. Power consumption based on 50 hp (37 kW) discounted 30% for avg. reservoir level (see "Storage Levels" tab) and 25% for seasonality (system off in winter months) 4. Power unit cost per SWA average for 2019-2020

SWA Reservoir WQ Cost Estimates_100620.xlsx Page 3 of 7 Destratification 10k 71 DRAFT 10/06/20

Vigorous Mixing System 20,000 AF Capacity

1 Description Units Quantity Unit Cost Cost

CAPITAL COSTS Project Components Variable-Speed Oil-Free Air Compressors (100 hp) ea. 2 $150,000 $300,000 2 PAC Building Improvements LS 1 $250,000 $250,000 Air Supply Lines ft. 5,000 $75 $375,000 Air-Diffuser Lines ft. 12,000 $100 $1,200,000 Undefined Design Elements Subtotal $2,125,000 Undefined Elements 20% $425,000 Construction Contingency Subtotal $2,550,000 Construction Contingency 10% $255,000 Subtotal Construction Cost (rounded) $2,810,000 Other Costs Design / Administration / Start-up 25% $703,000 Environmental / Permitting LS 1 $300,000 $300,000 Escalation to Mid-Point of Construction 3% $114,000 TOTAL PROJECT COST (rounded) $3,900,000 ANNUAL COSTS 3,4 Power kWh 759,000 $0.14 $106,000 O&M (as % of Construction Costs) 4% $112,000 Enhanced Quagga Mussel Control Measures LS 1 $20,000 $20,000 Replacement Costs (sinking fund) (ditto) 3% $84,000 TOTAL ANNUAL COSTS (rounded) $320,000

FIRST-YEAR UNIT COSTS Amortized Capital 30 yrs 3.0% $199,000 Annual Costs $320,000 Total Equivalent Annual Cost $519,000 Unit Cost of Treated Water (rounded) $/AF 7,500 AF/yr $69/AF

Notes: 1. Costs in April 2020 U.S. dollars, ENR LA CCI = 12,054 2. Allowance for electrical, IC, and possible building expansion 3. Power consumption based on 200 hp (149 kW) discounted 42% for avg. reservoir level (see "Storage Levels" tab) and 0% for seasonality (system off in winter months) 4. Power unit cost per SWA average for 2019-2020

SWA Reservoir WQ Cost Estimates_100620.xlsx Page 4 of 7 Vigorous Mixing 72 DRAFT 10/06/20

Hypolimnetic Oxygenation System 20,000 AF Capacity

1 Description Units Quantity Unit Cost Cost

CAPITAL COSTS Project Components O2 Storage Tank, Vaporizors, Controls (9,000 gal) LS 1 $500,000 $500,000 2 Civil Site Improvements LS 1 $150,000 $150,000 O2 Supply Lines ft. 7,500 $75 $563,000 O2-Diffuser Lines ft. 2,500 $250 $625,000 Undefined Design Elements Subtotal $1,838,000 Undefined Elements 20% $368,000 Construction Contingency Subtotal $2,206,000 Construction Contingency 10% $221,000 Subtotal Construction Cost (rounded) $2,430,000 Other Costs Design / Administration / Start-up 25% $608,000 Environmental / Permitting LS 1 $350,000 $350,000 Escalation to Mid-Point of Construction 3% $102,000 TOTAL PROJECT COST (rounded) $3,500,000 ANNUAL COSTS 3 LOX Deliveries tons 810 $140 $113,400 O&M (as % of Construction Costs) 3% $73,000 Enhanced Quagga Mussel Control Measures LS 1 $20,000 $20,000 Replacement Costs (sinking fund) (ditto) 3% $73,000 TOTAL ANNUAL COSTS (rounded) $280,000

FIRST-YEAR UNIT COSTS Amortized Capital 30 yrs 3.0% $179,000 Annual Costs $280,000 Total Equivalent Annual Cost $459,000 Unit Cost of Treated Water (rounded) $/AF 7,500 AF/yr $61/AF

Notes: 1. Costs in April 2020 U.S. dollars, ENR LA CCI = 12,054 2. Includes pad, power, I&C, fencing 3. O2 purchases based on 5.1 tons/day, discounted 42% for avg. reservoir level (see "Storage Levels" tab) and 25% for seasonality (system off in winter months)

SWA Reservoir WQ Cost Estimates_100620.xlsx Page 5 of 7 HOX 73 DRAFT 10/06/20

Avoided Costs (Direct) 20,000 AF Capacity

Perdue Water Treatment Plant1,2 Power Chemical Total Reporting Period Month ($/AF) ($/AF) ($/AF) Three Highest Treatment Months Mar-19 $66 $149 $215 Dec-19 $61 $137 $198 Jul-20 $52 $123 $175 Average $60 $136 $196

Three Lowest Treatment Months Jun-19 $36 $94 $130 Jul-19 $44 $94 $138 Sep-19 $46 $93 $139 Average $42 $94 $136 Difference $60

Distribution System Tank Draining Cost (Water Only)1,2 Loss Cost3 Perdue Prod. Unit Cost Reporting Period Month (AF) @ $1,100/AF (AF) ($/AF) Three Highest Loss Months Mar-19 9.04 $9,900 282 Nov-19 11.33 $12,500 762 Jul-20 6.16 $6,800 929 Average 26.53 $29,200 1,973 $15

Three Lowest Loss Months Feb-19 1.09 $1,200 93 Aug-19 0.61 $700 802 Oct-19 0.72 $800 698 Average 2.42 $2,700 1,594 $2 Difference $13

Frequency-Weighted Avoided Cost1 Maximum Benefit Weighted Occurance Distribution Benefit Frequency Level Benefit ($/AF) (%) (%) ($/AF) 4 Percent of months at benefit level indicated $73 25% 100% $18 4 Percent of months at benefit level indicated $73 25% 50% $9

TOTAL $27

Notes: 1. Costs in April 2020 U.S. dollars, ENR LA CCI = 12,054 2. Treatment and Tank Draining cost data provided by SWA on 9/10/20 3. SDCWA "all-in" raw water cost for CY2020 is ~$1,400/AF. That value is discounted to account for years with no SDCWA purchases. 4. Estimates of Occurance Distribution by SWA based on historical operations

SWA Reservoir WQ Cost Estimates_100620.xlsx Page 6 of 7 Avoided Costs 74 DRAFT 10/06/20 SWEETWATER RESERVOIR STORAGE LEVELS 1992-2019 # Days in Rain (in) Over SW EOM EOM WQ System WQ System WQ System Year Month Month Month Evap Dam Storage Gauge Utilization Utilization Utilization LTAZnnn LTAZnnn LTAZnnn LTAZnnn LTAZnnn 20,000 AF 15,000 AF 10,000 AF

2018 JUL 31 0.00 183 0 4,578 51.46 23% 31% 46% 2018 AUG 31 0.00 226 0 4,370 50.82 22% 29% 44% 2018 SEP 30 0.00 168 0 3,935 49.38 20% 26% 39% 2018 OCT 31 0.26 157 0 3,690 48.55 18% 25% 37% 2018 NOV 30 1.34 76 0 3,693 48.56 18% 25% 37% 2018 DEC 31 3.89 57 0 3,851 49.10 19% 26% 39% 2019 JAN 31 2.28 53 0 4,019 49.68 20% 27% 40% 2019 FEB 28 5.96 70 0 12,175 68.89 61% 81% 100% 2019 MAR 31 1.78 168 0 16,181 76.34 81% 100% 100% 2019 APR 30 0.12 233 0 15,023 73.64 75% 100% 100% 2019 MAY 31 0.92 183 0 14,112 72.20 71% 94% 100% 2019 JUN 30 0.01 207 0 13,043 70.43 65% 87% 100% 2019 JUL 31 0.00 313 0 11,744 68.10 59% 78% 100% 2019 AUG 31 0.00 275 0 10,676 66.08 53% 71% 100% 2019 SEP 30 0.14 240 0 9,715 64.15 49% 65% 97% 2019 OCT 31 0.00 194 0 8,867 62.35 44% 59% 89% 2019 NOV 30 4.06 139 0 8,356 61.22 42% 56% 84% 2019 DEC 31 4.15 77 0 8,727 62.04 44% 58% 87%

AVG 12,039 58% 70% 83% MIN 2,796 14% 19% 28% 10% 3,693 18% 25% 37% 25% 6,682 33% 45% 67% 50% 11,713 59% 78% 100% 75% 16,105 81% 100% 100% 90% 21,023 100% 100% 100% MAX 28,305 100% 100% 100%

SWA Reservoir WQ Cost Estimates_100620.xlsx Page 7 of 7 Storage Levels 75

APPENDIX 3A: Pure Water Net Present Value Cost Detail

GILLINGHAM WATER DRAFT October 7, 2020 76 Net Present Value Cost and Benefit Summary -- in 2020 dollars DRAFT 10/06/2020

AVOIDED COSTS PROJECT COSTS Net Year SDCWA Metro System Total Total IPR Capital IPR Annual Concentrate Benefit (Deficit) Avoided Avoided Avoided Incurred 1 ($9,000,000) ($13,100,000) ($22,100,000) $11,700,000 $16,100,000 $4,900,000 $32,700,000 ($10,600,000) 2 ($9,200,000) ($13,400,000) ($22,600,000) $11,300,000 $16,100,000 $5,000,000 $32,400,000 ($9,800,000) 3 ($9,500,000) ($13,700,000) ($23,200,000) $11,000,000 $16,200,000 $5,100,000 $32,300,000 ($9,100,000) 4 ($9,700,000) ($13,900,000) ($23,600,000) $10,700,000 $16,300,000 $5,200,000 $32,200,000 ($8,600,000) 5 ($9,900,000) ($14,200,000) ($24,100,000) $10,400,000 $16,400,000 $5,300,000 $32,100,000 ($8,000,000) 6 ($10,200,000) ($14,500,000) ($24,700,000) $10,100,000 $16,500,000 $5,400,000 $32,000,000 ($7,300,000) 7 ($10,400,000) ($14,800,000) ($25,200,000) $9,800,000 $16,500,000 $5,500,000 $31,800,000 ($6,600,000) 8 ($10,700,000) ($15,000,000) ($25,700,000) $9,500,000 $16,600,000 $5,600,000 $31,700,000 ($6,000,000) 9 ($10,900,000) ($15,300,000) ($26,200,000) $9,200,000 $16,700,000 $5,800,000 $31,700,000 ($5,500,000) 10 ($11,200,000) ($15,600,000) ($26,800,000) $8,900,000 $16,800,000 $5,900,000 $31,600,000 ($4,800,000) 11 ($11,500,000) ($15,900,000) ($27,400,000) $8,700,000 $16,900,000 $6,000,000 $31,600,000 ($4,200,000) 12 ($11,500,000) ($16,200,000) ($27,700,000) $8,400,000 $16,900,000 $6,100,000 $31,400,000 ($3,700,000) 13 ($11,500,000) ($16,600,000) ($28,100,000) $8,200,000 $17,000,000 $6,200,000 $31,400,000 ($3,300,000) 14 ($11,500,000) ($16,900,000) ($28,400,000) $7,900,000 $17,100,000 $6,300,000 $31,300,000 ($2,900,000) 15 ($11,500,000) ($17,200,000) ($28,700,000) $7,700,000 $17,200,000 $6,500,000 $31,400,000 ($2,700,000) 16 ($11,500,000) ($17,500,000) ($29,000,000) $7,500,000 $17,300,000 $6,600,000 $31,400,000 ($2,400,000) 17 ($11,500,000) ($17,500,000) ($29,000,000) $7,300,000 $17,400,000 $6,600,000 $31,300,000 ($2,300,000) 18 ($11,500,000) ($17,500,000) ($29,000,000) $7,100,000 $17,400,000 $6,600,000 $31,100,000 ($2,100,000) 19 ($11,500,000) ($17,500,000) ($29,000,000) $6,800,000 $17,500,000 $6,600,000 $30,900,000 ($1,900,000) 20 ($11,500,000) ($17,500,000) ($29,000,000) $6,600,000 $17,600,000 $6,600,000 $30,800,000 ($1,800,000) 21 ($11,500,000) ($17,500,000) ($29,000,000) $6,500,000 $17,700,000 $6,600,000 $30,800,000 ($1,800,000) 22 ($11,500,000) ($17,500,000) ($29,000,000) $6,300,000 $17,800,000 $6,600,000 $30,700,000 ($1,700,000) 23 ($11,500,000) ($17,500,000) ($29,000,000) $6,100,000 $17,900,000 $6,600,000 $30,600,000 ($1,600,000) 24 ($11,500,000) ($17,500,000) ($29,000,000) $5,900,000 $18,000,000 $6,600,000 $30,500,000 ($1,500,000) 25 ($11,500,000) ($17,500,000) ($29,000,000) $5,700,000 $18,100,000 $6,600,000 $30,400,000 ($1,400,000) 26 ($11,500,000) ($17,500,000) ($29,000,000) $5,600,000 $18,100,000 $6,600,000 $30,300,000 ($1,300,000) 27 ($11,500,000) ($17,500,000) ($29,000,000) $5,400,000 $18,200,000 $6,600,000 $30,200,000 ($1,200,000) 28 ($11,500,000) ($17,500,000) ($29,000,000) $5,200,000 $18,300,000 $6,600,000 $30,100,000 ($1,100,000) 29 ($11,500,000) ($17,500,000) ($29,000,000) $5,100,000 $18,400,000 $6,600,000 $30,100,000 ($1,100,000) 30 ($11,500,000) ($17,500,000) ($29,000,000) $4,900,000 $18,500,000 $6,600,000 $30,000,000 ($1,000,000) Total 30 ($330,000,000) ($490,000,000) ($820,000,000) $240,000,000 $520,000,000 $180,000,000 $940,000,000 ($120,000,000) 31 ($11,500,000) ($17,500,000) ($29,000,000) $0 $18,600,000 $6,600,000 $25,200,000 $3,800,000 32 ($11,500,000) ($17,500,000) ($29,000,000) $0 $18,600,000 $6,600,000 $25,200,000 $3,800,000 33 ($11,500,000) ($17,500,000) ($29,000,000) $0 $18,600,000 $6,600,000 $25,200,000 $3,800,000 34 ($11,500,000) ($17,500,000) ($29,000,000) $0 $18,600,000 $6,600,000 $25,200,000 $3,800,000 35 ($11,500,000) ($17,500,000) ($29,000,000) $0 $18,600,000 $6,600,000 $25,200,000 $3,800,000 36 ($11,500,000) ($17,500,000) ($29,000,000) $0 $18,600,000 $6,600,000 $25,200,000 $3,800,000 37 ($11,500,000) ($17,500,000) ($29,000,000) $0 $18,600,000 $6,600,000 $25,200,000 $3,800,000 38 ($11,500,000) ($17,500,000) ($29,000,000) $0 $18,600,000 $6,600,000 $25,200,000 $3,800,000 39 ($11,500,000) ($17,500,000) ($29,000,000) $0 $18,600,000 $6,600,000 $25,200,000 $3,800,000 40 ($11,500,000) ($17,500,000) ($29,000,000) $0 $18,600,000 $6,600,000 $25,200,000 $3,800,000 Total 40 ($450,000,000) ($660,000,000) ($1,110,000,000) $240,000,000 $700,000,000 $250,000,000 $1,190,000,000 ($80,000,000)

SWA IPR NPV Cost Calcs_draft 100620.xlsx Summary 77 DRAFT 10/06/2020

Water System Inflation Discount 3.0% 3.0% Rate: Rate:

SDCWA Escalation $1,400 2.5% Duration 10 Yrs Beginning Rate ($/AF): Premium:

Base Escalation Total Year Inflation Premium Escalation Rate PV PV Cost 6,440 AF/yr 1 3.0% 2.5% 5.5% $1,400 $1,400 $9,000,000 2 3.0% 2.5% 5.5% $1,477 $1,434 $9,200,000 3 3.0% 2.5% 5.5% $1,558 $1,469 $9,500,000 4 3.0% 2.5% 5.5% $1,644 $1,504 $9,700,000 5 3.0% 2.5% 5.5% $1,734 $1,541 $9,900,000 6 3.0% 2.5% 5.5% $1,830 $1,578 $10,200,000 7 3.0% 2.5% 5.5% $1,930 $1,617 $10,400,000 8 3.0% 2.5% 5.5% $2,037 $1,656 $10,700,000 9 3.0% 2.5% 5.5% $2,149 $1,696 $10,900,000 10 3.0% 2.5% 5.5% $2,267 $1,737 $11,200,000 11 3.0% 0.0% 3.0% $2,391 $1,779 $11,500,000 12 3.0% 0.0% 3.0% $2,463 $1,779 $11,500,000 13 3.0% 0.0% 3.0% $2,537 $1,779 $11,500,000 14 3.0% 0.0% 3.0% $2,613 $1,779 $11,500,000 15 3.0% 0.0% 3.0% $2,692 $1,779 $11,500,000 16 3.0% 0.0% 3.0% $2,772 $1,779 $11,500,000 17 3.0% 0.0% 3.0% $2,855 $1,779 $11,500,000 18 3.0% 0.0% 3.0% $2,941 $1,779 $11,500,000 19 3.0% 0.0% 3.0% $3,029 $1,779 $11,500,000 20 3.0% 0.0% 3.0% $3,120 $1,779 $11,500,000 21 3.0% 0.0% 3.0% $3,214 $1,779 $11,500,000 22 3.0% 0.0% 3.0% $3,310 $1,779 $11,500,000 23 3.0% 0.0% 3.0% $3,410 $1,779 $11,500,000 24 3.0% 0.0% 3.0% $3,512 $1,779 $11,500,000 25 3.0% 0.0% 3.0% $3,617 $1,779 $11,500,000 26 3.0% 0.0% 3.0% $3,726 $1,779 $11,500,000 27 3.0% 0.0% 3.0% $3,837 $1,779 $11,500,000 28 3.0% 0.0% 3.0% $3,953 $1,779 $11,500,000 29 3.0% 0.0% 3.0% $4,071 $1,779 $11,500,000 30 3.0% 0.0% 3.0% $4,193 $1,779 $11,500,000 31 3.0% 0.0% 3.0% $4,319 $1,779 $11,500,000 32 3.0% 0.0% 3.0% $4,449 $1,779 $11,500,000 33 3.0% 0.0% 3.0% $4,582 $1,779 $11,500,000 34 3.0% 0.0% 3.0% $4,720 $1,779 $11,500,000 35 3.0% 0.0% 3.0% $4,861 $1,779 $11,500,000 36 3.0% 0.0% 3.0% $5,007 $1,779 $11,500,000 37 3.0% 0.0% 3.0% $5,157 $1,779 $11,500,000 38 3.0% 0.0% 3.0% $5,312 $1,779 $11,500,000 39 3.0% 0.0% 3.0% $5,471 $1,779 $11,500,000 40 3.0% 0.0% 3.0% $5,635 $1,779 $11,500,000 Avg./Sum $1,725 $446,000,000

SWA IPR NPV Cost Calcs_draft 100620.xlsx SDCWA 78 30-Year Present-Worth Avoided Costs of Wastewater Disposal to Metro System DRAFT 10/06/2020

Water System Inflation Discount 3.0% 3.0% Rate: Rate:

Metro System Escalation $4,500 2.0% Duration 15 Yrs Beginning Rate ($/MG): Premium:

Base Escalation Total Year Inflation Premium Escalation Rate PV PV Cost 8.0 mgd 1 3.0% 2.0% 5.0% $4,500 $4,500 $13,100,000 2 3.0% 2.0% 5.0% $4,725 $4,587 $13,400,000 3 3.0% 2.0% 5.0% $4,961 $4,676 $13,700,000 4 3.0% 2.0% 5.0% $5,209 $4,767 $13,900,000 5 3.0% 2.0% 5.0% $5,470 $4,860 $14,200,000 6 3.0% 2.0% 5.0% $5,743 $4,954 $14,500,000 7 3.0% 2.0% 5.0% $6,030 $5,050 $14,800,000 8 3.0% 2.0% 5.0% $6,332 $5,148 $15,000,000 9 3.0% 2.0% 5.0% $6,649 $5,248 $15,300,000 10 3.0% 2.0% 5.0% $6,981 $5,350 $15,600,000 11 3.0% 2.0% 5.0% $7,330 $5,454 $15,900,000 12 3.0% 2.0% 5.0% $7,697 $5,560 $16,200,000 13 3.0% 2.0% 5.0% $8,081 $5,668 $16,600,000 14 3.0% 2.0% 5.0% $8,485 $5,778 $16,900,000 15 3.0% 2.0% 5.0% $8,910 $5,890 $17,200,000 16 3.0% 0.0% 3.0% $9,355 $6,005 $17,500,000 17 3.0% 0.0% 3.0% $9,636 $6,005 $17,500,000 18 3.0% 0.0% 3.0% $9,925 $6,005 $17,500,000 19 3.0% 0.0% 3.0% $10,223 $6,005 $17,500,000 20 3.0% 0.0% 3.0% $10,529 $6,005 $17,500,000 21 3.0% 0.0% 3.0% $10,845 $6,005 $17,500,000 22 3.0% 0.0% 3.0% $11,171 $6,005 $17,500,000 23 3.0% 0.0% 3.0% $11,506 $6,005 $17,500,000 24 3.0% 0.0% 3.0% $11,851 $6,005 $17,500,000 25 3.0% 0.0% 3.0% $12,206 $6,005 $17,500,000 26 3.0% 0.0% 3.0% $12,573 $6,005 $17,500,000 27 3.0% 0.0% 3.0% $12,950 $6,005 $17,500,000 28 3.0% 0.0% 3.0% $13,338 $6,005 $17,500,000 29 3.0% 0.0% 3.0% $13,738 $6,005 $17,500,000 30 3.0% 0.0% 3.0% $14,151 $6,005 $17,500,000 31 3.0% 0.0% 3.0% $14,575 $6,005 $17,500,000 32 3.0% 0.0% 3.0% $15,012 $6,005 $17,500,000 33 3.0% 0.0% 3.0% $15,463 $6,005 $17,500,000 34 3.0% 0.0% 3.0% $15,927 $6,005 $17,500,000 35 3.0% 0.0% 3.0% $16,404 $6,005 $17,500,000 36 3.0% 0.0% 3.0% $16,896 $6,005 $17,500,000 37 3.0% 0.0% 3.0% $17,403 $6,005 $17,500,000 38 3.0% 0.0% 3.0% $17,925 $6,005 $17,500,000 39 3.0% 0.0% 3.0% $18,463 $6,005 $17,500,000 40 3.0% 0.0% 3.0% $19,017 $6,005 $17,500,000 Avg./Sum $5,690 $664,000,000

SWA IPR NPV Cost Calcs_draft 100620.xlsx Metro WW 79 Concentrate and Solids disposal to Metro System DRAFT 10/06/2020

Water System Inflation Discount 3.0% 3.0% Rate: Rate:

Metro System Escalation $6,000 2.0% Duration 15 Yrs Beginning Rate ($/MG): Premium:

Base Escalation Total Year Inflation Premium Escalation Rate PV PV Cost 2.25 mgd 1 3.0% 2.0% 5.0% $6,000 $6,000 $4,900,000 2 3.0% 2.0% 5.0% $6,300 $6,117 $5,000,000 3 3.0% 2.0% 5.0% $6,615 $6,235 $5,100,000 4 3.0% 2.0% 5.0% $6,946 $6,356 $5,200,000 5 3.0% 2.0% 5.0% $7,293 $6,480 $5,300,000 6 3.0% 2.0% 5.0% $7,658 $6,606 $5,400,000 7 3.0% 2.0% 5.0% $8,041 $6,734 $5,500,000 8 3.0% 2.0% 5.0% $8,443 $6,865 $5,600,000 9 3.0% 2.0% 5.0% $8,865 $6,998 $5,800,000 10 3.0% 2.0% 5.0% $9,308 $7,134 $5,900,000 11 3.0% 2.0% 5.0% $9,773 $7,272 $6,000,000 12 3.0% 2.0% 5.0% $10,262 $7,414 $6,100,000 13 3.0% 2.0% 5.0% $10,775 $7,557 $6,200,000 14 3.0% 2.0% 5.0% $11,314 $7,704 $6,300,000 15 3.0% 2.0% 5.0% $11,880 $7,854 $6,500,000 16 3.0% 0.0% 3.0% $12,474 $8,006 $6,600,000 17 3.0% 0.0% 3.0% $12,848 $8,006 $6,600,000 18 3.0% 0.0% 3.0% $13,233 $8,006 $6,600,000 19 3.0% 0.0% 3.0% $13,630 $8,006 $6,600,000 20 3.0% 0.0% 3.0% $14,039 $8,006 $6,600,000 21 3.0% 0.0% 3.0% $14,460 $8,006 $6,600,000 22 3.0% 0.0% 3.0% $14,894 $8,006 $6,600,000 23 3.0% 0.0% 3.0% $15,341 $8,006 $6,600,000 24 3.0% 0.0% 3.0% $15,801 $8,006 $6,600,000 25 3.0% 0.0% 3.0% $16,275 $8,006 $6,600,000 26 3.0% 0.0% 3.0% $16,763 $8,006 $6,600,000 27 3.0% 0.0% 3.0% $17,266 $8,006 $6,600,000 28 3.0% 0.0% 3.0% $17,784 $8,006 $6,600,000 29 3.0% 0.0% 3.0% $18,318 $8,006 $6,600,000 30 3.0% 0.0% 3.0% $18,867 $8,006 $6,600,000 31 3.0% 0.0% 3.0% $19,433 $8,006 $6,600,000 32 3.0% 0.0% 3.0% $20,016 $8,006 $6,600,000 33 3.0% 0.0% 3.0% $20,617 $8,006 $6,600,000 34 3.0% 0.0% 3.0% $21,235 $8,006 $6,600,000 35 3.0% 0.0% 3.0% $21,872 $8,006 $6,600,000 36 3.0% 0.0% 3.0% $22,529 $8,006 $6,600,000 37 3.0% 0.0% 3.0% $23,205 $8,006 $6,600,000 38 3.0% 0.0% 3.0% $23,901 $8,006 $6,600,000 39 3.0% 0.0% 3.0% $24,618 $8,006 $6,600,000 40 3.0% 0.0% 3.0% $25,356 $8,006 $6,600,000 Avg./Sum $7,447 $184,000,000

SWA IPR NPV Cost Calcs_draft 100620.xlsx Concentrate 80 30-Year Present-Worth for IPR Capital Costs DRAFT 10/06/2020

Interest Discount Rate: 3.0% 2.5% Rate:

Capital Cost ($M): $250 Period: 30 Yrs

Year Payment PV 1 $11,653,083 $11,700,000 2 $11,653,083 $11,300,000 3 $11,653,083 $11,000,000 4 $11,653,083 $10,700,000 5 $11,653,083 $10,400,000 6 $11,653,083 $10,100,000 7 $11,653,083 $9,800,000 8 $11,653,083 $9,500,000 9 $11,653,083 $9,200,000 10 $11,653,083 $8,900,000 11 $11,653,083 $8,700,000 12 $11,653,083 $8,400,000 13 $11,653,083 $8,200,000 14 $11,653,083 $7,900,000 15 $11,653,083 $7,700,000 16 $11,653,083 $7,500,000 17 $11,653,083 $7,300,000 18 $11,653,083 $7,100,000 19 $11,653,083 $6,800,000 20 $11,653,083 $6,600,000 21 $11,653,083 $6,500,000 22 $11,653,083 $6,300,000 23 $11,653,083 $6,100,000 24 $11,653,083 $5,900,000 25 $11,653,083 $5,700,000 26 $11,653,083 $5,600,000 27 $11,653,083 $5,400,000 28 $11,653,083 $5,200,000 29 $11,653,083 $5,100,000 30 $11,653,083 $4,900,000 31 $0 $0 32 $0 $0 33 $0 $0 34 $0 $0 35 $0 $0 36 $0 $0 37 $0 $0 38 $0 $0 39 $0 $0 40 $0 $0 Total $350,000,000 $236,000,000

SWA IPR NPV Cost Calcs_draft 100620.xlsx IPR Capital 81 IPR Annual Costs DRAFT 10/06/2020

Water System Inflation Discount 3.0% 3.0% Rate: Rate:

IPR System Escalation $5,500 0.5% Duration 30 Yrs Beginning Rate ($/MG): Premium:

Base Escalation Total Year Inflation Premium Escalation Rate PV PV Cost 8.0 mgd 1 3.0% 0.5% 3.5% $5,500 $5,500 $16,100,000 2 3.0% 0.5% 3.5% $5,693 $5,527 $16,100,000 3 3.0% 0.5% 3.5% $5,892 $5,554 $16,200,000 4 3.0% 0.5% 3.5% $6,098 $5,580 $16,300,000 5 3.0% 0.5% 3.5% $6,311 $5,608 $16,400,000 6 3.0% 0.5% 3.5% $6,532 $5,635 $16,500,000 7 3.0% 0.5% 3.5% $6,761 $5,662 $16,500,000 8 3.0% 0.5% 3.5% $6,998 $5,690 $16,600,000 9 3.0% 0.5% 3.5% $7,242 $5,717 $16,700,000 10 3.0% 0.5% 3.5% $7,496 $5,745 $16,800,000 11 3.0% 0.5% 3.5% $7,758 $5,773 $16,900,000 12 3.0% 0.5% 3.5% $8,030 $5,801 $16,900,000 13 3.0% 0.5% 3.5% $8,311 $5,829 $17,000,000 14 3.0% 0.5% 3.5% $8,602 $5,857 $17,100,000 15 3.0% 0.5% 3.5% $8,903 $5,886 $17,200,000 16 3.0% 0.5% 3.5% $9,214 $5,914 $17,300,000 17 3.0% 0.5% 3.5% $9,537 $5,943 $17,400,000 18 3.0% 0.5% 3.5% $9,871 $5,972 $17,400,000 19 3.0% 0.5% 3.5% $10,216 $6,001 $17,500,000 20 3.0% 0.5% 3.5% $10,574 $6,030 $17,600,000 21 3.0% 0.5% 3.5% $10,944 $6,059 $17,700,000 22 3.0% 0.5% 3.5% $11,327 $6,089 $17,800,000 23 3.0% 0.5% 3.5% $11,723 $6,118 $17,900,000 24 3.0% 0.5% 3.5% $12,134 $6,148 $18,000,000 25 3.0% 0.5% 3.5% $12,558 $6,178 $18,100,000 26 3.0% 0.5% 3.5% $12,998 $6,208 $18,100,000 27 3.0% 0.5% 3.5% $13,453 $6,238 $18,200,000 28 3.0% 0.5% 3.5% $13,924 $6,268 $18,300,000 29 3.0% 0.5% 3.5% $14,411 $6,299 $18,400,000 30 3.0% 0.5% 3.5% $14,915 $6,329 $18,500,000 31 3.0% 0.0% 3.0% $15,437 $6,360 $18,600,000 32 3.0% 0.0% 3.0% $15,900 $6,360 $18,600,000 33 3.0% 0.0% 3.0% $16,378 $6,360 $18,600,000 34 3.0% 0.0% 3.0% $16,869 $6,360 $18,600,000 35 3.0% 0.0% 3.0% $17,375 $6,360 $18,600,000 36 3.0% 0.0% 3.0% $17,896 $6,360 $18,600,000 37 3.0% 0.0% 3.0% $18,433 $6,360 $18,600,000 38 3.0% 0.0% 3.0% $18,986 $6,360 $18,600,000 39 3.0% 0.0% 3.0% $19,556 $6,360 $18,600,000 40 3.0% 0.0% 3.0% $20,142 $6,360 $18,600,000 Avg./Sum $5,905 $518,000,000

SWA IPR NPV Cost Calcs_draft 100620.xlsx Annual Costs 82

APPENDIX 4A: Meeting Minutes: Coordination with Otay Re: Possible Sales Agreement

GILLINGHAM WATER DRAFT October 7, 2020 83 MEETING MINUTES Sweetwater Authority Water Supply Feasibility Study Coordination with Otay Water District Re: Possible Sales Agreement

Date/Time: Thursday August 20, 2:30 p.m. Place: Videoconference Attendees: Jose Martinez – Otay Water District Rod Posada – Otay Water District Bob Kennedy – Otay Water District Tish Berge – SWA Jennifer Sabine – SWA Ron Mosher – SWA Erick Del Bosque – SWA Doug Gillingham – Gillingham Water

Distribution: Attendees and file

PURPOSE The purpose of the meeting was to 1) review and refine the basis for a possible mutually-beneficial SWA to Otay sales agreement; 2) assess level of interest in concept advancement and identify next steps for project planning. A copy of the agenda is attached for reference, along with the Concept Briefing Notes distributed in advance of the meeting.

DISCUSSION SUMMARY Project potential appears positive: Perhaps the most significant result of the meeting was the observation by Otay staff that the capital cost of the conveyance facilities necessary to affect a sales agreement might be justified on the basis of emergency supply reliability benefits, and the possible avoidance of equal or greater costs of treated water storage projects included in the District’s CIP. Otay staff noted this observation was tentative and would require further review. Nevertheless the observation indicates the potential for the project to achieve win-win benefits between the parties, and on this basis the parties agreed to continue investigations and discussions leading to a possible Principles of Understanding or similar mutual declaration of intent.

DISCUSSION TOPICS 1) Introductions: SWA GM Tish Berge and Otay GM Jose Martinez introduced the group and welcomed everyone to the meeting.

2) Opportunity Overview / Potential Benefits: Doug Gillingham provided an overview of the sales agreement concept, reviewing the potential for mutual benefit. Potential benefits to Otay include 1) a reliable emergency source of supply for the Otay South District, and 2) water purchase cost savings in

GILLINGHAM WATER Page 1 of 3 09/15/20 84 comparison to SDCWA purchases. Potential benefits for SWA include 1) Local Yield Utilization Efficiency, and 2) Treatment Plant Utilization Efficiency.

3) Conveyance Considerations Overview: Doug Gillingham provided an overview of the conveyance facilities necessary for the sales agreement to operate, referencing the August 18 Briefing Document. a. Sizing / Capacity: The Briefing Document reviews sizing options ranging from 5 to 15 mgd, noting facility costs will increase as capacity increases. Otay indicated a desire for an emergency supply capacity of approximately 10 mgd. b. Pumping: The conveyance would deliver water from the SWA Gravity zone (275) to the Otay 624 zone, requiring a total pump lift including dynamic losses of approximately 400 feet. Pumping operations would incur operations and maintenance costs on the order of $100 or $125/AF. At 10 mgd of capacity the pump station would require approximately 900 hp. c. Pipeline: Doug reviewed various conceptual alignments, as presented in the Briefing Document. Based on discussion with the group, the most promising appears to be the Corral Canyon Road alignment, which follows the southern half of Otay’s previously proposed North-South Interconnect alignment. This alignment is approximately 15,500 feet in length and for a 10 mgd connection would be sized at 24-inches. d. Conceptual Costs: Conceptual total project costs are presented in the briefing document. Capital costs for a 10 mgd connection following the Corral Canyon Road alignment are on the order of $30 million.

4) Otay Potential Benefits: Doug reviewed the potential benefits described in the Briefing document. a. Water Purchase Cost Savings: The potential cost savings accruing to SWA appear, subject to confirmation, sufficient to allow SWA to provide treated water to Otay at a discount sufficient to offset pumping costs and still provide a net cost savings to Otay relative to SDCWA treated water rates. Doug emphasized the potential net (after pumping) unit cost savings to Otay is modest, perhaps on the order of $50 or $75 per acre-foot, but when multiplied by annual volume sales could amount to several hundreds of thousands of dollars per year. b. Emergency Storage / Avoided Costs: Otay might benefit from having access to a highly- reliable source of potable treated water supply for the Otay South District service areas. Otay could lease storage capacity in Sweetwater Reservoir, and access this supply during planned or emergency outages of SDCWA Pipeline 4. Otay staff indicated, subject to further review and confirmation, it was possible a sales agreement could avoid the need for a planned treated water storage facility included in the District’s CIP, thereby offsetting or partially offsetting the capital costs of the connecting facilities.

5) SWA Potential Benefits: Doug reviewed the potential benefits described in the Briefing document. a. Local Yield Utilization Efficiency: Increased demands would allow SWA to use its local surface water supplies faster, reducing storage levels and thereby reducing storage losses. This benefit could be shared with Otay in the form of discounted water sales. b. Treatment Plant Utilization Efficiency: SWA’s Perdue WTP usually operates at flows well below design capacity, and has had to shut off for parts of some low-demand winter days. Increased demands on the plant would improve plant operational efficiency, reducing unit treatment costs.

GILLINGHAM WATER Page 2 of 3 09/15/20 85 6) Next Steps: The parties agreed the project prospects appears sufficiently positive as to warrant continued investigation, with the general process outlined as follows: a. SWA Fine-Screening Report: The SWA consultant team will gather additional information from the parties and incorporate this into the Fine Screening report due at the beginning of October. The report will expand on the Briefing Document to provide a basis for the parties to brief their respective boards and consider entering into negotiations for a Principles of Understanding or similar preliminary statement of intent. b. Principles of Understanding: If authorized by their respective boards, the parties could develop a Principles of Understanding or similar agreement to define and guide the additional investigations necessary to define the terms of a sales agreement. c. Sales Agreement: The final steps would be the development and approval of a sales agreement and the design, permitting, and construction of the connection facilities.

ACTION ITEMS OVERVIEW: In the course of discussion, the parties identified many issues that will require research, documentation, and mutual review as conditions of a possible agreement. Initial action items to advance the project concept are outlined below: 1) Consultant Team: Coordinate with the parties to develop additional information in support of the Fine Screening report due early October. In coordination with the parties, refine project costs and economics, and outline process for the development of a sales agreement and for project implementation. 2) Otay: a. Supply Reliability Benefits: Evaluate and confirm the potential for supply reliability / emergency storage benefits to accrue to Otay, and consider the magnitude of these benefits in relation to project capital costs. b. Confirm 10 mgd target capacity: Confirm 10 mgd target capacity for emergency supply, and evaluate conveyance pipeline capacity required. 3) SWA: a. Treatment Plant Capacity Availability: Confirm. b. Local Supply and Treatment Efficiency Refinement: Provide support to Gillingham Water to review and refine these estimates. 4) Next Meeting: Parties to meet after October 13 presentation of Fine Screening report to SWA board

Attachments 1) Meeting Agenda 2) Concept Briefing Notes dated 8/18/20

GILLINGHAM WATER Page 3 of 3 09/15/20 86

Due to the size of Appendix 2B, it was not included in the agenda packet.

To obtain a copy of Appendix 2B, please contact the Board Secretary.

87 PRESENTATION SWEETWATER AUTHORITY

Water Supply Feasibility Study 2020 Fine Screening Review

Maximizing reservoir assets and expanding local supply

October 13, 2020

Michael R. Welch, Ph.D., P.E. Ken Weinberg Hoch Consulting Engineer Water Resources Consulting Consulting88 AGENDA / FORMAT

1) INTRODUCTION / OVERVIEW 2) PROJECT ALTERNATIVES 3) DISCUSSION 4) NEXT STEPS

89 GILLINGHAM WATER 2 10/13/20 Purpose: Explore opportunities to maximize reservoir assets and expand local water supplies

Parking Lot and Access Trail

Fishing Program Downstream Boundary

Current E. Reserve El. 1297; 7,500 AF Evap. = 710 AF/yr

El. 1280 ~4,500 AF 550 AF/yr

El. 1270 ~3,000 AF LEGEND El. 1260 440 AF/yr ~2,000 AF El. 1248 300 AF/yr ~1,150 AF 200 AF/yr

0 1 2 4 Aerial Image Source: Google Earth miles Image source: Google Earth, 2018 10/02/20

90 GILLINGHAM WATER 3 10/13/20 Coarse-Screening Alternatives: a mix of old ideas and new

91 GILLINGHAM WATER 4 10/13/20 Fine-Screening Alternatives: Prioritized these five for more detailed review

92 GILLINGHAM WATER 5 10/13/20 Approach: Three Phases

PLANNING PHASES

PHASE 1: PHASE 2: PHASE 3: PROJECT COARSE FINE SCREENING / IDENTIFICATION SCREENING PROJECT REFINEMENT

YOU ARE HERE PROJECT IMPLEMENTATION

93 GILLINGHAM WATER 6 10/13/20 Evaluation Criteria:

94 GILLINGHAM WATER 7 10/13/20 Ratings Categories: 1 / 2 / 3

95 GILLINGHAM WATER 8 10/13/20 Ratings Summary: We recommend two of the alternatives proceed to implementation

Category 1 Projects: RECOMMENDED FOR IMPLEMENTATION

96 GILLINGHAM WATER 9 10/13/20 Ratings Summary: We recommend two other alternatives be monitored for future developments

Category 2 Projects: MONITOR AND REVIEW

97 GILLINGHAM WATER 10 10/13/20 Ratings Summary: The fifth alternative is still in review. We’ll report back next month

Category ??? Projects: TBD

98 GILLINGHAM WATER 11 10/13/20 PROJECT REVIEW

SECTION 2: Reservoir Water Quality Improvements SECTION 3: Recycled and Pure Water SECTION 4: Otay Sales Agreement SECTION 5: Storage Policy Revision SECTION 6: Loveland Regional Exchange (next month)

99 GILLINGHAM WATER 12 10/13/20 2. Reservoir Water Quality Improvements: GOALS: Reduce taste and odor formation, reduce DBP formation, improve disinfectant residual stability, and maintain reliability of reservoirs as source of emergency supply to the Perdue plant

 x

100 GILLINGHAM WATER 13 10/13/20 2. Reservoir Water Quality Improvements: Thermal Stratification . . .

101 GILLINGHAM WATER 14 10/13/20 2. Reservoir Water Quality Improvements: . . . leading to depletion of dissolved oxygen at depth . . . leading to:

July 2019 July 2019 0 0 Treatment Challenges • Increased treatment costs 5 5 (approx. $27/AF) 10 10 • Reduced disinfection residual stability / Increased 15 15 nitrification problems

20 20 • RWQCB designation of h (ft) h (ft) Sweetwater Reservoir as Dept Dept 25 25 303(d) Impaired Water Body

30 30 • Colored water, taste and odor complaints / Reduced 35 35 consumer confidence • Jeopardizes reliability of 40 40 10 15 20 25 30 0 2 4 6 8 10 emergency storage reserve Temperat ure(oC) DO( mg/L)

102 GILLINGHAM WATER 15 10/13/20 2. Reservoir Water Quality Improvements:

SOLUTION: Vertical mixing via Aeration / Destratification System

103 GILLINGHAM WATER 16 10/13/20 2. Reservoir Water Quality Improvements:

SOLUTION: Vertical mixing via Aeration / Destratification System

2,000 ac-ft

3,000 ac-ft

5,000 ac-ft

10,000 ac-ft

20,000 ac-ft Air Diffuser 30,000 ac-ft (Max. Capacity)

104 GILLINGHAM WATER 17 10/13/20 2. Reservoir Water Quality Improvements:

SOLUTION: Vertical mixing via Aeration / Destratification System

Air

105 GILLINGHAM WATER 18 10/13/20 2. Reservoir Water Quality Improvements:

SOLUTION: Vertical mixing via Aeration / Destratification System

106 GILLINGHAM WATER 19 10/13/20 2. Reservoir Water Quality Improvements:

CEQA document and environmental permitting will be required.

107 GILLINGHAM WATER 20 10/13/20 2. Reservoir Water Quality Improvements:

SOLUTION: Vertical mixing via Aeration / Destratification System

108 GILLINGHAM WATER 21 10/13/20 2. Reservoir Water Quality Improvements:

SOLUTION: Vertical mixing via Aeration / Destratification System

109 GILLINGHAM WATER 22 10/13/20 2. Reservoir Water Quality Improvements: FINDINGS: We recommend the Authority proceed with project implementation

110 GILLINGHAM WATER 23 10/13/20 3. Pure Water / Indirect Potable Reuse (IPR):

Coarse-Screening Action Item: Host South Bay IPR Opportunities Workshop

111 GILLINGHAM WATER 24 10/13/20 3. Pure Water / Indirect Potable Reuse (IPR): GOAL: Assess feasibility for the South Bay area, inclusive of the Authority service area

Otay Chapman Plant 2016 Study: • Add AWT capacity up to 2.5 mgd, for delivery to Sweetwater Reservoir • Project would be uneconomical (~$4,000/AF) • Otay elected not to pursue

CHANGED CONDITIONS? • Cost credit for avoided costs to Metro system? ? • City SD Pure Water challenges • South Bay regional interest

112 GILLINGHAM WATER 25 10/13/20 3. Pure Water / Indirect Potable Reuse (IPR): Other IPR projects under development provide insight

Pure Water San Diego

DRIVERS: • Offsetting improvements to PLWWTP • Local, Reliable Water Supply CAPACITY • Phase 1 - 30 MGD • Phase 2 - 42 MGD

113 GILLINGHAM WATER 26 10/13/20 3. Pure Water / Indirect Potable Reuse (IPR): Other IPR projects under development provide insight

Pure Water San Diego

DRIVERS: • Avoidance of Metro System Costs • Local, Reliable Water Supply

CAPACITY • Phase 1 – 11.5 MGD

114 GILLINGHAM WATER 27 10/13/20 3. Pure Water / Indirect Potable Reuse (IPR):

South Bay / Sweetwater Project Concept

115 GILLINGHAM WATER 28 10/13/20 3. Pure Water / Indirect Potable Reuse (IPR):

South Bay / Sweetwater Project Concept

116 GILLINGHAM WATER 29 10/13/20 3. Pure Water / Indirect Potable Reuse (IPR):

South Bay / Sweetwater Project Concept

117 GILLINGHAM WATER 30 10/13/20 3. Pure Water / Indirect Potable Reuse (IPR):

South Bay / Sweetwater Project Concept

118 GILLINGHAM WATER 31 10/13/20 3. Pure Water / Indirect Potable Reuse (IPR): FINDINGS: Monitor and review. Project will require a champion, likely other than the Authority.

119 GILLINGHAM WATER 32 10/13/20 4. Otay Sales Agreement: SETTING: Conditions have changed

• Demands have gone down (now ≈ 17,000 AF/yr) Period (CY)

• Local supplies have gone up

120 GILLINGHAM WATER 33 10/13/20 4. Otay Sales Agreement: OPPORTUNITY: Improve utilization efficiency of the Authority’s reservoir and treatment assets

121 GILLINGHAM WATER 34 10/13/20 4. Otay Sales Agreement: Otay Water District would like to have better supply reliability for its Central and Otay Mesa service areas

122 GILLINGHAM WATER 35 10/13/20 4. Otay Sales Agreement: Connection Facilities: ~$30M for 10 mgd

123 GILLINGHAM WATER 36 10/13/20 4. Otay Sales Agreement:

Coarse-Screening Action Item: Host Review Workshop with Otay to explore potential

124 GILLINGHAM WATER 37 10/13/20 4. Otay Sales Agreement: FINDINGS: Monitor and review. Coordinate with Otay during preparation of their next Water Master Plan.

125 GILLINGHAM WATER 38 10/13/20 5. Storage Practice Revision: OPPORTUNITY: Authority emergency storage operating practice pre-dates the SDCWA Emergency Storage Project, the Authority’s Desal Facility, and other changed conditions. Updates to the operating practice would be beneficial.

126 GILLINGHAM WATER 39 10/13/20 5. Storage Policy Revision: The Authority can continue to provide excellent levels of emergency supply reliability even with lower reservoir levels.

127 GILLINGHAM WATER 40 10/13/20 5. Storage Policy Revision: RECOMMENDATION: We recommend the current operating practice be revised to target one month of emergency reserve at Sweetwater Reservoir, and none at Loveland Reservoir.

128 GILLINGHAM WATER 41 10/13/20 5. Storage Policy Revision: Loveland Reservoir Operating History

129 GILLINGHAM WATER 42 10/13/20 5. Storage Policy Revision:

Parking Lot and Access Trail

Fishing Program Downstream Boundary

Current E. Reserve El. 1297; 7,500 AF Evap. = 710 AF/yr

El. 1280 ~4,500 AF 550 AF/yr

El. 1270 ~3,000 AF LEGEND El. 1260 440 AF/yr ~2,000 AF El. 1248 300 AF/yr ~1,150 AF 200 AF/yr

0 1 2 4 Aerial Image Source: Google Earth miles Image source: Google Earth, 2018 10/02/20

Water Supply Feasibility Study Figure 5-1 LOVELAND RESERVOIR STORAGE LEVELS

130 GILLINGHAM WATER 43 10/13/20 5. Storage Policy Revision: Loveland Reservoir Management Options

Option Description Costs and Benefits 1) Water Supply • Prioritize operations for Relative to current ops: Primacy water supply • Increases average local yield • Reservoir at times would by ~$500k/yr be at minimum pool • One-time withdrawal benefit elevation 1248 (1,150 AF) of up to $6M • Revisions needed to boat ramp and log boom

2) Multi-Purpose • Maintain minimum Relative to Option 1: recreation pool (e.g., el. • Reduces average local yield 1280, 4,500 AF) by ~$300k/yr • Foregoes portion of one-time withdrawal benefit

3) Revise Recreation In combination with either • Undetermined costs for Program Options 1 or 2, seek to project planning, permitting, Boundaries and modify the boundaries and and construction Access access accommodations for • Environmental documentation the current fishing program would be required 131 GILLINGHAM WATER 44 10/13/20 5. Storage Policy Revision: RECOMMENDATION: Modify emergency storage operating practice; seek board input on Loveland Fishing Program issues

132 GILLINGHAM WATER 45 10/13/20 DISCUSSION / CONFIRMATION / NEXT STEPS

133 GILLINGHAM WATER 46 10/13/20 Ratings Summary: We recommend two of the alternatives proceed to implementation

Category 1 Projects: RECOMMENDED FOR IMPLEMENTATION

134 GILLINGHAM WATER 47 10/13/20 NEXT STEPS / SCHEDULE

PLANNING PHASES

PHASE 1: PHASE 2: PHASE 3: PROJECT COARSE FINE SCREENING / IDENTIFICATION SCREENING PROJECT REFINEMENT • Goals & Objectives • Evaluation Criteria • Long-List Alt.s YOU ARE HERE PROJECT IMPLEMENTATION

Will update Board next month of findings re: Loveland Regional Exchange option

135 GILLINGHAM WATER 48 10/13/20

Sweetwater Reservoir Water Quality Improvement Analysis

Performed for Sweetwater Authority Chula Vista, California (on behalf of Gillingham Water Planning and Engineering, Inc.)

Water Quality Solutions, Inc. 1726 Three Springs Rd. McGaheysville, VA 22840

Prepared by: Reviewed by Imad A. Hannoun, Ph.D., P.E. (VA) Ira S. Rackley, C.E.

September 29, 2020 WQS Job #201001

CONTENTS

SECTION A: Vertical Mixing ...... 1

SECTION B: Hypolimnetic Oxygenation Systems (HOS) ...... 7

SECTION C: Water Quality Data Analysis ...... 12

i September 2020

SECTION A: Vertical Mixing A.1 Destratification and Vigorous Mixing A destratification system destratifies a reservoir through entraining water with an upward stream of bubbles. This brings deep, anoxic water to the surface that is replaced by downwelling of oxygenated surface water (Figure A.1). This leads to oxygenated water with uniform water quality throughout the reservoir, which decreases hydrogen sulfide (H2S) and manganese levels and decreases internal nutrient cycling. However, by providing uniform water quality, vertical mixing reduces benefits of selective withdrawal. Reservoir water quality may be adversely affected during the start-up period. Quagga mussel growth may also increase. Destratification could be achieved in Sweetwater Reservoir through use of a line diffuser near the deepest part of the reservoir (Figures A.2 and A.3)

Figure A.1: Diagram showing effects of vertical mixing (left); example of air diffuser (right).

In addition to destratification, a more extensive line diffuser could also be used for vigorous mixing. Vigorous mixing is a subset of vertical mixing that retains the benefits of destratification while adding suppression of blue-green algae. Blue-green algae live in the upper photic zone of reservoirs and contain gas vesicles to remain buoyant. While blue-green algae can overcome weak mixing to remain buoyant, vigorous mixing will move them out of the photic zone, decreasing their energy source and therefore their population. To achieve vigorous mixing, mixing velocity and turbulent diffusion must be greater than buoyancy of blue-green algae throughout the reservoir, requiring a powerful compressor and horizontal distribution of mixing devices throughout the reservoir.

1 September 2020

Figure A.2: Schematic of air bubble curtain for vertical mixing.

Figure A.3: Potential diffuser layout in Sweetwater Reservoir.

A.2 Modeling of Vertical/Vigorous Mixing To determine the amount of mixing needed to destratify Sweetwater Reservoir, one- dimensional hydrodynamic modeling was conducted with the Dynamic Reservoir Simulation Model program (DYRESM) under several simulated conditions. DYRESM is a one-dimensional hydrodynamics model developed at the former Centre for Water Resources at the University of Western Australia that treats a lake as a horizontally homogeneous water body and computes the vertical variations in temperature, salinity, and other variables. The model for Sweetwater

2 September 2020

Reservoir was calibrated using data from the period January 1, 2016 to January 1, 2020. This calibration involved changing some model parameters to obtain the best agreement with water surface elevation and temperature field data. In the first simulation, the period 2016-2019 was simulated with the existing 25 horsepower (hp) compressor (Figure A.4). We found that a 25 hp compressor is sufficient to destratify the reservoir under the actual flow and storage conditions during this period. In the second simulation, the reservoir was simulated at 25,000 acre-feet with a 25 hp compressor (Figure A.5). Bubbler operation was started on July 1, after thermal stratification had begun. The 25 hp compressor was sufficient to destratify the reservoir over the course of approximately two months. In the third simulation, the reservoir was simulated at 5,000 acre-feet with various compressor powers (Figure A.6). We found that a compressor with more than 10 hp would be needed to destroy the thermal stratification under this condition. These simulations assume the reservoir remains horizontally mixed at all times and do not include allowances for frictional pressure losses in the air tubing. Furthermore, these simulations assume constant full power operation. We estimate that 100 hp of compressor power would be necessary to provide destratification and oxygenation under all conditions.

Figure A.4: Comparison of simulation for period 2016-2020 with no bubbler (top) and 25 hp bubbler (bottom)

3 September 2020

Figure A.5: (top) At a low volume of 5,000 acre-feet (a-f), a 10 hp compressor with a flow rate of 40 cfm at 100 pounds per square inch (psi) can achieve destratification throughout a four-year simulation. (bottom) At a higher volume of 25,000 acre-feet, a more powerful 25 hp compressor with a flow rate of 100 cfm at 100 psi is sufficient to destratify the reservoir over two months based on a one-year simulation.

Figure A.6: Comparison of various compressor powers at 5,000 acre-feet volume.

4 September 2020

Preliminary estimates of vigorous mixing needed to suppress blue-green algae are based on literature reports (Visser 2016). Decreases in blue-green algae populations were observed in many cases with greater than 1.3 cubic feet per minute (cfm) bubbler per acre of reservoir surface area. While a 100 hp compressor and single diffuser line can achieve destratification at all volumes (see above), a more powerful 200 hp compressor and extensive diffuser system would be required to provide vigorous mixing for reservoir volumes of 10,000 acre-feet.

A preliminary diffuser layout is shown in Figure A.7, incorporating six lines from one or two shore locations for a total of 12,000 ft of diffuser. This diffuser arrangement would provide good horizontal reach with vigorous mixing at storage volumes up to 10,000 acre-feet, providing reservoir turnover on the order of once per day. Due to the highly variable water surface elevation (WSEL) and surface area of Sweetwater Reservoir, a vigorous mixing diffuser layout design for storage volumes greater than 10,000 acre-feet would require diffuser lines that are frequently exposed above the reservoir surface. This would lead to damage by ultraviolet light and other weather, and is not considered a viable option. Above 10,000 acre-feet, the system would provide effective destratification and some blue-green algae suppression but the vigorous mixing decreases as the reservoir volume increases, resulting in the effectiveness decreasing. Vigorous mixing provides effective suppression of blue-green algal blooms, but other algal growth may still be significant.

Figure A.7: Potential diffuser layout for vigorous mixing.

5 September 2020

A.3 Vertical Mixing Cost Estimates Cost estimates for three vertical mixing scenarios are provided in Table A.1. For destratification, cost would depend on the condition of current equipment and whether a backup compressor is desired. A vigorous mixing installation would require a more powerful 200 hp compressor and a larger, more horizontally extensive diffuser system. For estimation purposes, total costs include an allowance for building improvements, 20% allowance for undefined design elements, 10% for construction contingency, 25% design allowance, 3% markup for escalation, and an allowance for environmental permitting. Annual costs include 4% of construction cost for maintenance, 3% of construction cost for a sinking fund for replacement, an allowance for additional Quagga Mussel control, and electricity costs. Electricity costs are calculated at $0.14/kWh, and assume a destratification system will run at 52% power on average while a vigorous mixing will run at 83% power on average. These estimates account for the variable WSEL of Sweetwater Reservoir as well as the lower power demand to maintain destratification during the winter months.

Table A.1: Cost Estimates for destratification and vigorous mixing. Scenario Compressor Other Electricity/year Total*** Component Initial Annual Costs Destratification $160,000 $392,500* $48,000 $1,200,000 $100,000 Vigorous $300,000 $1,825,000* $52,500 $3,900,000 $300,000 Mixing *Includes air lines, installation labor, and diffusers. **Initial cost includes allowances for building improvements, undefined design elements, contingency, design, environmental permitting, and escalation. Annual cost includes maintenance, replacement costs, and quagga mussel control.

A.4 References

Visser, P. M.; Ibelings, B.W.; Bormans, M.; Huisman, J. (2016). “Artificial Mixing to Control Cyanobacteria Blooms: A Review,” Aquatic Ecology, 50, 423-441.

6 September 2020

SECTION B: Hypolimnetic Oxygenation Systems (HOS) There are several hypolimnetic oxygenation systems that have been historically used. They typically consist of 1) hardware to spread the oxygen in the hypolimnion and 2) an on-land oxygen source. Systems for spreading oxygen into the hypolimnion include the Speece Cone, SDOX® system, and diffused oxygenation system (DOS). Oxygen sources consist of either on- site oxygen generation or liquid oxygen (LOX) delivery and storage at the site. Due to the variable water surface elevation (WSEL) of Sweetwater Reservoir, a DOS system would be most suitable to efficiently oxygenate multiple strata. B.1 Diffused Oxygen System (DOS) A DOS consists of “soaker-hose” lines that are placed in the hypolimnion and deliver small oxygen bubbles to the water. Typically, several hundred feet (ft) or more of soaker hose are used in an installation. A schematic of a DOS is shown in Figure B.1. A DOS does not require any water pumping. As shown, there is an oxygen delivery line that is connected to the soaker hose at various junctures. A “buoyancy” pipe is also connected in parallel to the oxygen supply line. The buoyancy pipe serves to float or sink the diffusers. If the buoyancy pipe is full of water, the diffusers are designed to sink. To retrieve the system to the surface, air is pumped into the buoyancy line to displace the water. The pipelines are typically secured to the bottom using stainless steel cable and anchors. Figure B.2 presents a typical installation of the diffused oxygen pipelines (Lake Casitas). Typically, the diffusers are laid on the water surface and then lowered to the bottom by operating the buoyancy pipeline. To oxygenate Sweetwater up to 20,000 acre- feet of storage, a diffuser system of approximately 2,500 feet would be necessary (Figure B.3).

Figure B.1: DOS schematic with inset showing details of diffuser hose.

7 September 2020

Figure B.2: Installation of diffused oxygen pipelines at Lake Casitas.

Figure B.3: Potential layout of HOS diffusers (red) and oxygen supply lines (blue) in Sweetwater Reservoir.

8 September 2020

B.2 Oxygen Supply An oxygen source is required to supply a hypolimnetic oxygenation system. Typically, gaseous oxygen can be generated on-site or LOX can be trucked in and stored on-site. LOX delivery provides more reliable operation and is the preferred option for Sweetwater Reservoir. LOX delivery requires road access for a delivery truck, an oxygen storage tank, and vaporizers. A typical LOX storage tank configuration and associated appurtenances are shown in Figure B.4. Tanks can be provided with a remote level sensor and a low-pressure alarm. A tank can either be horizontal or vertical, depending on space and visual requirements, and is typically supported on a thick double-reinforced concrete pad. Approximate dimensions of a pad for a 9,000 gallon vertical tank and vaporizers is 25’ x 25’ x 3’ thick. A LOX installation should meet all safety, engineering, and seismic requirements and is typically enclosed in a fenced area. A LOX storage tank is typically sized to hold a full truck delivery (approx. 6,000 gallons) plus a few days of extra supply. Two ambient vaporizers are desirable: one in operation and one in defrost mode. It is noted that an ambient vaporizer does not require electricity.

Figure B.4: LOX storage tank configuration (left) and associated appurtenances (right).

B.3 DOS Cost Estimates B.3.1 Sizing of DOS The sizing of a hypolimnetic oxygenation system depends on two main factors: the peak hypolimnetic oxygen demand (HOD) and the hypolimnetic volume. In particular:

• Total Oxygen Demand (Tons/day) = Peak HOD (mg/L/day) * Hypolimnetic Volume (Eq. B.1)

• Peak HOD has units of mg/L/day (milligrams per liter per day). Peak HOD is computed as:

• Peak HOD (mg/L/day) = Observed HOD (mg/L/day) * Stir Factor * Safety Factor (Eq. B.2)

9 September 2020

The observed HOD is calculated from historical field data. A “stir factor” is needed because it has been observed that induced water movement by a hypolimnetic oxygenation system may lead to increased oxygen demand by the sediments. Typically, stir factors range from about 2.5 to 3.4. In this investigation, we use a stir factor of 3.0. Additionally, a safety factor is used to account for possible equipment down time and other factors that may lead to higher oxygenation requirements for short periods of time (on the order of a week or so). In this investigation, we use a safety factor of 1.2. Below, hypolimnetic volume and HOD for Sweetwater Reservoir are evaluated.

Table B.1: Expected HOD. Observed HOD (mg/L/day) Expected HOD (mg/L/day) Peak HOD (mg/L/day) 0.148 0.287 0.148 * 3.0 * 1.2 = 0.534 Used to estimate operational Average 2002-2019 Used to size the system cost

Table B.2: Hypolimnion volume and total oxygen demand. Total Oxygen Reservoir Hypolimnion Hypolimnion Demand Storage (acre- Volume (acre- Extent (tons/day) feet) feet) Expected Peak 10 ft below 3,000 955 0.37 0.70 surface 10 ft below 5,000 2,229 0.87 1.6 surface 10 ft below 10,000 5,706 2.2 4.1 surface 10 ft below 20,000 13,054 5.1 9.5 surface

B.3.2 Cost Estimate of DOS Due to the variable WSEL at Sweetwater Reservoir, a DOS system would be most suitable to efficiently oxygenate multiple strata. Based on input from Mobley Engineering, diffuser lines would ideally be staggered at different elevations as shown in Figure B.3. The potential design shown employs a total diffuser length of 2,500 ft (shown in red) in addition to 7,500 ft of oxygen supply lines (shown in blue).

Table B.3: Diffuser and O2 Cost for HOS. Elevation Length Initial Diffuser Yearly O2 Cost Number of Total Length (ft) (ft) and O2 Supply Diffusers (ft) Line Cost 175 500 3 180 1,000 2,500 $1,200,000 $151,200* 185 1,000 * Oxygen cost is calculated at average historical storage level from 1992-2019 of 12,000 acre-feet.

10 September 2020

B.3.3 Cost Estimate of LOX In the following, initial and annual operating costs for oxygen supply systems are provided. For LOX systems, an option to lease the tanks is discussed in addition to a purchase option. A LOX leased system’s initial costs are significantly reduced as the lessor typically would cover most of the installation costs (lessor typically does not cover tank pad installation, fencing, and permitting). The lessor also typically expects the lessee to enter into a long-term oxygen purchase agreement in return for installing the tank storage facilities. This may not be desirable for Sweetwater Reservoir due to fluctuating oxygen demand from varying WSEL, and a purchased LOX system may be more economical. Cost estimates are provided here for purchased LOX storage; leased LOX storage can be evaluated in final design.

Table B.4 presents the calculation of approximate LOX tank necessary for Sweetwater Reservoir, as well as oxygen supply at expected and peak usage.

Table B.5 present the initial and annual costs for the HOS system using a purchased LOX system. The LOX purchase option provides the higher initial cost. Here, the cost of the tank itself is about 40% of the initial total installation cost, with the remainder covering delivery and installation, vaporizers, appurtenances, and tank pad etc. Initial costs for a leased LOX system are lower since the lessee typically only covers the costs of tank pad installation, fencing, and permitting. Annual costs are lower for the purchased LOX system. For estimation purposes, total costs include an allowance for building improvements, 20% allowance for undefined design elements, 10% for construction contingency, 25% design allowance, 3% markup for escalation, and an allowance for environmental permitting. Annual costs include 4% of construction cost for maintenance, 3% of construction cost for a sinking fund for replacement, an allowance for additional Quagga Mussel control, and oxygen costs.

Table B.4: Recommended size for LOX storage. Peak Oxygen Supply (days) LOX Storage Demand* (gallons) Expected Peak (tons/day) 5 9,000 14 7 *Peak oxygen demand is calculated at average historical storage level from 1992-2019 of 12,000 acre- feet and augmented by 11% to reflect an oxygen dissolution rate of 90%

Table B.5: Purchased LOX cost estimates. Initial Diffuser and Purchased LOX System Cost Total Cost** O2 Supply Line Cost Initial Annual O Cost* Initial Annual 2 $1,200,000 $650,000 $151,200 $3,500,000 $260,000 *Oxygen cost is calculated at average historical storage level from 1992-2019 of 12,000 acre-feet and augmented by 11% to reflect an oxygen dissolution rate of 90%. **Initial cost includes allowances for building improvements, undefined design elements, contingency, design, environmental permitting, and escalation. Annual cost includes maintenance, replacement costs, and Quagga mussel control.

11 September 2020

SECTION C: Water Quality Data Analysis

C.1 Storage and Flows Sweetwater Reservoir has a maximum storage capacity of 28,079 a-f and maximum WSEL of 239 ft (Figure C.1). At maximum capacity, the reservoir has an area of 936 acres (Figure C.2).

260

Center Spillway (EL 241 ft, Gauge 91.72 ft) 100

240 North & South Spillway (EL 239 ft, Gauge 89.72 ft)

80 ) t ) f Valve 8 (EL 220 ft, Gauge 70.72 ft) t ( 220 f ( n o e i t 60 g a Valve 7 (EL 205 ft, Gauge 55.72 ft) u v a e l 200 G

E Valve 6 (EL 195 ft, Gauge 45.72 ft)

Valve 5 (EL 185 ft, Gauge 35.72 ft) 40 180 Valve 4 (EL 175 ft, Gauge 25.72 ft)

160 0 5000 10000 15000 20000 25000 30000 35000 Volume (ac-ft) Figure C.1: Capacity and outflow ports of Sweetwater.

260

100

240

80 ) t ) f t ( 220 f ( n o e i t 60 g a u v a e l 200 G E

180

160 0 200 400 600 800 1000 1200 Area (ac) Figure C.2: Surface Area of Sweetwater Reservoir.

12 September 2020

Sweetwater Reservoir receives inflows from three sources: runoff, imported water from the San Diego Aqueduct, and water released from Loveland Reservoir (Figure C.3). Releases from Loveland Reservoir account for much of the inflow, and generally occur during winter. The quantity of releases depends on storage available in Loveland Reservoir.

16000 Runoff Imported Water Loveland Reservoir Release

12000 ) t h n o m - f t /

c 8000 ( a s w o f l n I 4000

0 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Year

Figure C.3: Inflows into Sweetwater Reservoir.

1500 30000 Elevation Storage 1450 25000

1400 20000 ) t f - ) t c f a ( ( L 1350 15000 e E g S a r W o t

1300 10000 S

1250 5000

1200 0 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Year

Figure C.4: Storage of Loveland Reservoir.

13 September 2020

Releases from Loveland Reservoir have varied from non-existent to 14,000 a-f per month, depending on winter precipitation and the water level in Loveland Reservoir (Figure C.4). Loveland Reservoir contains low salt and nutrient levels relative to Sweetwater Reservoir (see below). The watershed of Sweetwater Reservoir is highly developed, and runoff may be high in nutrients and salts. There are a number of runoff monitoring stations near the reservoir that monitor inflow conductivity (Figure C.5), however recent data is not available. From 2002 to 2015, the runoff conductivity has remained near 3000 µS/cm (Figure C.6), significantly higher than water released from Loveland Reservoir. The watershed also has an urban runoff diversion system (URDS), which allows for diversion of “first flush” runoff that can be highly contaminated.

Figure C.5: Map of Sweetwater Reservoir watershed runoff monitoring stations.

14 September 2020

10000 Alacena Pond Div #1 Alacena Pond Div #2 Gum Tree Cove Div. 8000 Hansen's Creek Runoff Old Orchard Cove ) SW River Sand Pit Crossing

m * c / S

µ 6000 ( y t i No Data v i t

c * u 4000 d n

o * C ** * *** ** * * * * * * * ** 2000 * * * * * * * * * * *** ** ** * * * * * 0 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Year

Figure C.6: Conductivity of runoff monitored in the Sweetwater Reservoir watershed.

In addition to releases from Loveland Reservoir and local runoff, Sweetwater receives imported water from the San Diego Aqueduct. This water contains moderately high nutrient levels, with NO3-N levels varying seasonally from approximately 0.05 mg/L to 0.4 mg/L (Figure C.7).

1 Source: MWD Data – Lake Skinner Outlet

0.8 ) L / 0.6 g ( m - N 3

O 0.4 N

0.2

0 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19

Figure C.7: NO3-N levels of imported water.

15 September 2020

C.2 Water Quality

C.2.1 Data Inventory From 2002 to 2019, various water quality measurements have been made in Sweetwater Reservoir. These include temperature, dissolved oxygen (DO), Secchi depth, pH, conductivity, nitrate/nitrite levels, total Kjehldahl nitrogen, total nitrogen, total phosphorus, ortho phosphorus, chlorophyll a, bromide, and sulfate concentrations (Table C.1).

Variable Sampling Frequency Depth Location

Weekly, bi-weekly, or From surface to various Intake Tower; Log Temperature monthly depth (10 ft to 40 ft) Boom Dissolved Weekly, bi-weekly, or From surface to various Intake Tower; Log Oxygen monthly depth (10 ft to 40 ft) Boom Weekly, bi-weekly, or Intake Tower; Log Secchi monthly Boom pH Monthly Surface only Conductivity Monthly Surface only Nitrate/Nitrite Monthly or quarterly Surface only Lake center TKN/TN/TP Quarterly Surface only Lake center Ortho Monthly or quarterly Surface only Lake center Phosphorus Chlorophyll a Quarterly Surface Lake center Bromide/Sulfate Monthly or quarterly Surface Lake center

Table C.1: Data Availability for Sweetwater Reservoir.

Lakes such as Sweetwater Reservoir generally exhibit thermal stratification that is controlled by meteorological variables such as air temperature, solar radiation, and wind. As air temperature and solar radiation increase in the spring and summer, a thermocline develops as illustrated in Figure C.8. In the fall and winter, decreasing air temperature and solar radiation cool the surface water and deepen the thermocline until turnover, the time when a reservoir becomes un-stratified and vertical mixing is uninhibited by stratification (Figure C.9). The timing of turnover in a reservoir is affected by meteorological variables as well as reservoir depth. A by-product of thermal stratification is the inhibition of oxygen transfer from the atmosphere to the hypolimnion. Historically, this generally resulted in anoxic conditions in the hypolimnion of Sweetwater Reservoir. Sweetwater Reservoir experiences anoxia (low DO) at depth during the summer months, a result of oxygen demand by sediments and weak vertical mixing. In general, DO levels are directly dependent on the development of the thermocline, phytoplankton activity, and sediment oxygen demand. Anoxia has increased in recent years, with a significant portion of the reservoir experiencing low DO in 2018 and 2019 (Figure C.10). Anoxia can have significant implications for water quality, including high manganese and iron levels (see below).

16 September 2020

Figure C.8: Illustration of Sweetwater Reservoir thermal structure.

5 Temp (oC) 10 27 26 25 15 24 ) t

f 23 ( 22 h 21 t 20 p 20 e 19

D 18 25 17 16 15 30 14 13

40 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Year

Figure C.9: Temperature profiles for Sweetwater Reservoir.

17 September 2020

10 DO (mg/L) 10 9 15 8 ) t

f 7 ( 6 h t 20 5 p

e 4

D 3 25 2 1 0 30

40 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Year

Figure C.10: DO profiles for Sweetwater Reservoir.

Conductivity is generally used as an indirect measure of salinity. From 2002 to 2013, the surface conductivity remained relatively constant near 1000 µS/cm (Figure C.11). Between 2013 and 2017, the surface conductivity increased significantly, a result of high-salt runoff and a decrease in Loveland Reservoir release and imported water. Following a significant release from Loveland Reservoir in early 2017, the surface conductivity returned to near 1000 µS/cm.

3000

2500 ) m c

/ 2000 S µ ( y t i 1500 v i t c u d

n 1000 o C

500

0 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Year

Figure C.11: Sweetwater Reservoir Conductivity.

18 September 2020

Loveland Reservoir has a less developed watershed than Sweetwater Reservoir, and is expected to have lower conductivity and nutrient levels. From 2002 to 2019, the conductivity of Loveland Reservoir varied from approximately 400 to 700 µS/cm (Figure C.12), and NO3-N remained below 1.2 mg/L (Figure C.13).

1000

800 ) m c / S

µ 600 ( y t i v i t c

u 400 d n o C

200

0 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Year

Figure C.12: Conductivity of Loveland Reservoir.

1.5 ) L / g m (

N 1 - e t a r t i N

0.5

0 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Year

Figure C.14: NO3-N levels in Loveland Reservoir.

19 September 2020

C.3 Nutrients and Algae The presence of nutrients in the water column, coupled with relatively warm water and an abundance of light in the spring and summer, provides conditions that are ideal for the growth of algae. The two primary nutrients required for algal growth are phosphorus and nitrogen. In general, algal growth is hampered by the shortage of any of the nutrients. Total phosphorus (TP) is a measure of all phosphorus in the water. From 2002 to 2015, TP levels remained relatively low (<0.4 mg/L, Figure C.15), but increased to 1.5 mg/L in 2016. This increase in TP may be related to internal nutrient recycling caused by anoxic conditions at depth. No TP measurements are available for 2018-2019.

2 ) L

/ 1.5 g m (

N N s u

o o r

D D o h 1 a a p

t t

a a s o h P l a t

o 0.5 T

0 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Year *Detection limit was 0.02 mg/L

Figure C.15: Total phosphorus levels in Sweetwater Reservoir.

The surface nitrate levels in Sweetwater Reservoir are illustrated in Figure C.16. Surface nitrate levels show significant seasonal variation, increasing in winter and decreasing in summer, reaching zero most years. This may be due to nutrient depletion in the epilimnion, nutrient sampling at multiple elevations would give more insight.

20 September 2020

1.5 ) L / g m ( 1 e t a r t i N

0.5

0 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Year *Detection limit was 0.1 mg/L

Figure C.16: Surface nitrate levels in Sweetwater Reservoir.

Chlorophyll a is an indirect measure of algal growth, and generally increases throughout the summer and decreases in winter months. Surface chlorophyll a has varied significantly between years, with very high levels in 2015 and 2016 (Figure C.17). This is consistent with high TP levels recorded in 2015 and 2016. No measurements are available for 2018-2019.

400

350

300 ) L / g µ

250 N N (

o o a l

D D l y 200 a a h

t t

a a p o r

o 150 l h C 100

0 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Year *Detection limit was 1.0 µg/L Figure C.17: Chlorophyll a levels in Sweetwater Reservoir.

21 September 2020

Secchi depth is a measure of water clarity and an overall indicator of water quality. Secchi depth decreases as water clarity decreases. Generally, Secchi depth will decrease in the summer with algal growth and increase in the winter. Secchi depth in Sweetwater Reservoir has varied from <1 ft to 30 ft, with most measurements since 2013 <5 ft (Figure C.18). Secchi depth was lowest in the period 2015-2016, when algal growth was most favorable by other metrics (see above).

10 ) t f ( 15 h t p e

D 20 i h c

c 25 e S

30 Intake Tower Log Boom 35

40 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Year

Figure C.18: Secchi depth in Sweetwater Reservoir.

22 September 2020

C.4 Water Quality Issues Manganese and iron are elements, which when present in high concentrations, can complicate water treatment operations and discolor water, potentially leading to customer complaints. These elements reenter the water column when anoxic water comes into contact with sediment. Surface manganese levels in Sweetwater Reservoir have varied from non-detectable to >800 µg/L (Figure C.19). This is directly related to low DO at depth (see above; Figure C.10). Manganese levels are generally highest at depth, and surface measurements may greatly underestimate concentrations during the stratified summer months. We recommend sampling vertical profiles for manganese concentration.

0.8

) 0.6 L / g m ( n

M 0.4

0.2

0 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Year

Figure C.19: Manganese concentrations in Sweetwater Reservoir.

Sweetwater Reservoir has experienced significant algal blooms at the reservoir surface, which has resulted in low water clarity (see above; Figure C.18). This has resulted in numerous water quality issues, including detection of the odorous compounds methylisoborneol (MIB) and geosmin (Figures C.20 and C.21). MIB and geosmin are produced by some algae, and can complicate water treatment.

23 September 2020

40 ) L / g

n No ( 30 Data B I M 20

0 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Year *Detection limit was 3 ng/L

Figure C.20: MIB concentrations in Sweetwater Reservoir.

500

400 ) L /

g 300 n (

n No i Data m s

o 200 e G

100

0 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Year *Detection limit was 3 ng/L

Figure C.21: Geosmin concentrations in Sweetwater Reservoir.

24 September 2020

C.5 Summary and Recommendations Sweetwater Reservoir is a highly eutrophic reservoir with high nutrient input. The water quality data for the period 2002-2019 is highly variable due to large volume fluctuations and wet/dry weather sequences. The low hypolimnetic volume limits the ability to selectively withdraw higher quality water from a single layer. When the reservoir level is low, frequent stratification and destratification may occur. There is insufficient data to establish an accurate nutrient mass balance for Sweetwater Reservoir, or to characterize sediment characteristics such as oxygen demand or manganese concentration. There is insufficient data to characterize the nutrient levels in inflows to Sweetwater Reservoir. There is also insufficient data to accurately characterize the water quality in Loveland Reservoir. The following are recommendations for possible enhancement of the water sampling program: 1. Perform more frequent, consistent, and spatial (vertical profiles all the way to bottom) in-reservoir sampling of Sweetwater Reservoir; 2. Perform nutrient mass balance to determine internal vs external loading of Sweetwater Reservoir; 3. Add fluorometer to profiler to measure chlorophyll a levels; 4. Measure inflow nutrient levels to establish an accurate nutrient mass calculation for Sweetwater Reservoir, including the effect of the retention ponds; 5. Measure vertical water quality and nutrient profiles in Loveland Reservoir; 6. Measure chlorophyll a levels in Loveland Reservoir; 7. Sample releases from Loveland Reservoir.

25 September 2020