OUR MISSION: To provide our customers with high-quality, efficient and reliable water, power and sewer services in a manner that values environmental and community interests and sustains the resources entrusted to our care.
525 Golden Gate Avenue, 13th Floor
San Francisco, CA 94102
T 415.554.3155
F 415.554.3161
TTY 415.554.3488
June 15, 2023
Elaine Marshall
Deputy Public Works Director
City of Milpitas
455 E. Calaveras Blvd.
Milpitas, CA 95034-5479
Mansour Nasser
Water & Sewer Division Manager
City of Sunnyvale
P.O. Box 3707
Sunnyvale, CA 94088-3707
Lisa Au
Assistant Director of Public Works
City of Mountain View
500 Castro Street
P.O. Box 7540
Mountain View, CA 94039-7540
Leonard Ash
Water Resource Planning Engineer
Alameda County Water District
P.O. Box 5110
Fremont, CA 94537
Re: Minimum Purchase Requirements for Fiscal Year 2023-2024 (Water Supply Agreement Section 3.07)
Dear Elaine, Lisa, Mansour, and Leonard:
Thank you for your various correspondence regarding the 2021 Amended and Restated Water Supply Agreement (WSA) Minimum Purchase Requirements for the Cities of Milpitas, Mountain View, and Sunnyvale, and Alameda County Water District (collectively, “Minimum Purchase Customers”) for Fiscal Year 2023-2024.
As you note, Section 3.07.C of the WSA provides that the Minimum Purchase Requirements set forth in WSA Attachments E and E-1 “may be waived during a state of emergency declared by the Governor of California that impacts water supply use or deliveries from the Regional Water System.” Though we recognize that Governor Newsom’s March 24, 2023 Executive Order N-5-23 (Order) retained the statewide drought emergency, the Order and subsequent State Water Board action rescinded all restrictions placed upon the SFPUC as a wholesale water provider and Water Shortage Contingency Plan implementation requirements for all water agencies, and there are no longer limitations on water supply use or deliveries from our Regional Water System. As a result, the Minimum Purchase Requirements will be in effect for Fiscal Year 2023-2024.
At the same time, we recognize that water consumption patterns in the SFPUC’s service area have changed significantly in the almost 40 years since the signing of the 1984 Settlement Agreement and Master Water Sales Contract (which set
Minimum Annual Purchase Quantities as 80% of the Minimum Purchase Customers’ respective 1981 calendar year purchases) and the subsequent 2009 Water Supply Agreement (which set Minimum Annual Purchase Quantities in specific million gallons per day quantities). In addition to the impacts of at least three severe drought periods experienced by the Regional Water System, water consumption and efficiency standards in California since the 1980’s have resulted in notable and continued reductions in water consumption.
As a result, the fixed Minimum Annual Purchase Quantities expressed in the WSA no longer reflect the reality in which we live. For example, over the last 10 years, the Minimum Annual Purchase Quantities for the Cities of Mountain View and Sunnyvale have ranged from 113% to 133% of their respective average purchases from the SFPUC for the most recent 3-year period, thanks, in large part, to those customers’ reduced water consumption patterns and development of alternative water supply sources.
We recommend amending the WSA to reset the existing Minimum Annual Purchase Quantities to align with water consumption trends, while still protecting investment in the Regional Water System. One way of doing this would be to adjust the Minimum Annual Purchase Quantities to amounts that reflect the average of each Minimum Purchase Customer’s documented purchases of water supply from any source, including the SFPUC, for the prior 3-year period, which would be recalculated on an annual basis. Another option would be to express the Minimum Purchase Requirements as a percentage of total supplies rather than a set volume. This new, maintained Minimum Annual Purchase Quantity could explicitly account for alternative local water supplies (i.e., groundwater, recycled water, or purified water) that the Minimum Purchase Customer has developed or purchased from another Wholesale Customer.
While the details and impacts of these potential changes require discussion, we believe that this amendment would better reflect the spirit of the WSA’s Minimum Purchase Requirement, which aims to reduce purchases of extra supplies from sources other than the Regional Water System, and support the success of Minimum Purchase Customers who have limited their purchases from the Regional Water System by diligently applying their “best efforts to use both surface water and groundwater sources located within their respective service areas and available recycled water to the maximum feasible extent” in accordance with WSA Section 3.06.D.
We look forward to discussing this proposal and ideally developing and approving an amendment to the WSA within the next fiscal year. Please let me know if you have any questions.
Sincerely,
Steven R. Ritchie
Assistant General Manager for Water
cc: SFPUC Commissioners
Dennis J. Herrera, General Manager, SFPUC
Nicole Sandkulla, CEO/General Manager, BAWSCA
Wholesale Customers