AWBA 2011 Annual Report & Ten-Year Plan

AWBA 2011 Annual Report & Ten-Year Plan AWBA Quarterly Meeting June 20, 2012

Annual Report Requirements • Accounting of AWBA transactions and proceedings for previous year • All monies expended from Banking Fund • All monies remaining in Banking Fund • Amount of water stored • Number of long-term storage credits distributed or extinguished • Ten-Year Plan

2011 Plan of Operation • Initial Plan – 136,441 AF • 135,441 AF storage - 1,000 AF Southside Replenishment Bank • No Interstate storage • Amended Plan - August • 5,000 AF redirected from TDRP to NMIDD (Actual use 2,626) • 15,000 AF redirected from Tucson AMA to Pinal AMA • Pinal AMA GSF operator’s pay full cost • Final Deliveries - 136,576 AF, includes 1,000 to SSRB

Agreements and Permits • Groundwater Savings Facility Agreements • Effective through December 2021 • Master Water Storage Agreement • Amended Agreement to Firm Future Supplies • Exhibit C – reserves additional 25,894 AF credits (256,174 AF) • Water Storage Permits • Superstition Mtns., QCID, CAIDD, MSIDD

Indian Firming Program • White Mountain Apache Tribe Water Rights Quantification - signed December 2010 • Firming obligation 3,750 AF/yr during shortages • Enforceability anticipated in 2014 • Navajo Nation/ Hopi Tribe settlement discussions • Bill introduced February 14, 2012 • Southside Replenishment Bank • AWBA required to deliver 15,000 AF • 3,000 AF delivered since 2009

Water Supply and Demand Study • Determine potential for use of existing and future AWBA credits for meeting firming requirements • Colorado River System Simulation – AZ assumptions • Period 2008 – 2138 (based on NAIWRS) • Three Scenarios: • 1997 Base – Conditions existing when goals established • AWBA Base – Current River operations, 60th percentile • Maximum Firming – Worst case scenario using AWBA Base

Water Supply and Demand Study • Study Identified: • Number of shortages for each firming obligation • Firming and shortage volumes • Amount of credits remaining after firming period • Initial Analysis • AWBA Base – probability of shortage before 2022 is 6% • Maximum Firming - 15.4 % chance of shortage in 2035 • Insufficient credits for Pima County after 2057 • Maximum Firming – deficit of 128KAF of credits for Indian firming by 2091

Credit Distribution • What is AWBA’s Role in Recovery Planning Process • 4-Cent Tax Credits • Distributed to CAWCD “to the extent necessary” to meet demands of CAP M&I subcontractors during shortages or disruptions in operations of the Project • Withdrawal Fee Credits • Used at discretion of AWBA Commission • Indian firming • M&I firming • Other water management objectives

Credit Distribution • Workshop with Interested Parties • Solicit input on distribution of credits during shortages • Issues Raised by Participants • What is meant by “to the extent necessary” • Are recovered CAP credits considered Project water • Is equity a consideration? • Perception of other states, particularly Lower Basin • Focus discussion first on 4-cent tax credits • Identify which organization is responsible for various issues and developing potential policies • Organized Inter-agency Workgroup

Conceptual IGA • AWBA Potential Policies/Rules/Statutes • Considering credit preservation when distributing AWBA credits • Limiting the amount of credits to up to 20% of the shortage • Use of AWBA credits for the purpose of accruing long-term storage credits • Distribution of the credits within the AMA or County that is being benefited • When to use 4¢ ad valorem tax credits vs. withdrawal fee credits

Conceptual IGA • CAWCD Potential Policies/Rules/Statutes • Meeting its CAP M&I subcontractors’ full orders during a shortage event using a combination of Project Water and AWBA credits • Delivery of recovered credits as Project Water • Creation of a credit recovery schedule • Recovery agreements CAWCD may have with entities that will be recovering credits on behalf of CAWCD • Managing the shortage and distribution of supplies

Conceptual IGA • ADWR Potential Policies/Rules/Statutes • Develop credit transfer form and fees • Recovery for M&I firming • Use of AWBA long-term storage credits • Annual recovery reports long-term storage accounting • Continuing Inter-agency Workgroup Discussions

2012 Plan of Operation • Projected Deliveries • 119,002 AF deliveries for storage • 1,000 AF Southside Replenishment Bank • No Interstate storage

Monies Collected and Expended (see page 16, Tables 1 and 2, of 2011 Annual Report)

Number and Location of Storage Credits (see page 17 and 18, Tables 3 and 4, of 2011 Annual Report)

Use of AWBA Credits through 2011 (see page 20, Tables 5, of 2011 Annual Report – Part 1 M&I Firming)

Use of AWBA Credits through 2011 (see page 20, Tables 5, of 2011 Annual Report – Part 2 Indian Firming)

Use of AWBA Credits through 2011 (see page 20, Tables 5, of 2011 Annual Report – Part 3 Interstate Obligation)

Ten-Year Plan (2013-2022) • Evaluate Ability to Meet Goals and Obligations • Evaluate Ability to Engage in Other Banking Activities • Updated Annually Based on Current Priorities • Tool for Developing Plan of Operation and guidelines for Future AWBA Activities

AWBA – Ten-Year Plan (2013 to 2022) (see page 25, Tables 7, of 2011 Annual Report – Part 1 of 3)

AWBA % of Goals Achieved through 2022 (see page 26, Tables 8, of 2011 Annual Report – Part 1 M&I Firming)

AWBA % of Goals Achieved through 2022 (see page 26, Tables 8, of 2011 Annual Report – Part 2 Indian Firming)

AWBA % of Goals Achieved through 2022 (see page 26, Tables 8, of 2011 Annual Report – Part 3 Interstate Obligation)

Conclusions • There may not be sufficient excess CAP water to meet the state’s obligation to Nevada. • Funding becomes a limiting factor in both Pinal and Pima Counties. • The magnitude of carryover funds in Maricopa County could become an issue in future years. • Absent future appropriations, withdrawal fees will become the principle source of funding for Indian firming.

AWBA 2011 Annual Report & Ten-Year Plan