August 11, 2025 www.cityofpaloalto.org
Recommendation to Approve
Resolutions Amending the
Water Supply Agreement and
Approving the Updated Tier 2
Drought Allocation
Implementation Plan
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Agenda
• Overview of the Water Supply Agreement
between San Francisco and the Wholesale
Customers (WSA)
• Proposed Amendments to the WSA
• Minimum Purchase Requirement Modifications
• Tier 1 Water Shortage Allocation Plan Modification
(How water is allocated between San Francisco and
the Wholesale Customers)
• Proposed Tier 2 Drought Allocation
Implementation Plan (How water is allocated
among the Wholesale Customers)
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Key Elements of the Water Supply
Agreement Between San Francisco and the
Wholesale Customers (WSA)
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Proposed Amendment to the
Water Supply Agreement (WSA)
Modifies Minimum Purchase Requirement
(Section 3.07c)
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Intended to ensure Wholesale Customers with access to other purchased water do not shift purchases away from the
Regional Water System causing rates to increase
Applies to cities of Mountain View, Milpitas, Sunnyvale and Alameda County Water Agency
Minimum purchase quantities (MPQs) assigned in 1984
Settlement Agreement based on actual water purchase
volumes
MPQs last adjusted as part of 2009 WSA
MPQ does not apply during droughts
Minimum Purchase Requirement
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Minimum Purchase Amendment has Three
Simple Elements
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Minimum Purchase Requirement
Amendment Impacts
$0.007 to $0.040 per ccf cost
increase (0.13% to 0.72%
rate increase) shared by All
BAWSCA Agencies and
SFPUC Retail Customers
Considerations
• Removes disincentive for RWQCP
partner Mountain View to expand
recycled water distribution which
helps meet discharge requirements
• May delay regional alternative
water supply projects (partially
paid for by Palo Alto)
• Ensuring our neighbors aren't
charged for unused water exhibits
good regional citizenship
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Proposed Amendment to the
Water Supply Agreement (WSA)
Modifies Tier 1 Water Shortage
Allocation Plan
(Attachment H in the WSA)
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Shortages on the Regional Water System
(RWS) are Governed by Two Plans
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Tier 1 Family Plan
• New element agreed to by SFPUC
• In mandatory cutback conditions, excess use
charges will not be applied if the Wholesale
Customers collectively are below the Tier 1
allocation
• If not collectively below Tier 1 allocation, excess
use charges will be applied proportional to each
agency’s share of over-usage (no change from
current)
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Proposed Updated Tier 2
Drought Allocation
Implementation Plan
12 Applies during water supply shortages
Current formula expired in 2019
Series of 1-year extensions
Tier 2
Negotiated among the agencies
BAWSCA Board is default decision maker
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Tier 2 Policy Principles
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Palo Alto Customer Will Experience Same
Water Use Restrictions with New Tier 2 Plan
Notes: Actual Cutbacks May Vary ≈ +/- 2%;
Water Shortage Stage II: 11% - 20%, Stage III: 21% - 30% Wholesale
Customer Cutback Palo Alto Cutback and Water Shortage Stage 20% Old Formula: 16%
New Formula: 18%
25%
Old Formula: 22%
New Formula: 28%
Stage II – moderate shortage (e.g., application of potable water to driveways and sidewalks prohibited)
Stage III – severe shortage (e.g., restricts watering days of the week) TITLE 40 FONT BOLD
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Staff recommends Council approve two resolutions amending the Amended and Restated Water Supply Agreement Between the City of County of San Francisco and Wholesale Customers in Alameda County, San Mateo County, and Santa Clara County and Approving an updated Tier 2 Drought Response
Implementation Plan
Alternatives re Tier 2:
If Palo Alto (or any BAWSCA member agency) does not approve the proposed plan, BAWSCA Board could approve a new Tier 2 formula
If BAWSCA Board takes no action or cannot agree, SFPUC will determine a Tier 2 formula Recommended Motion