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-19- <br />Peninsula watersheds. Water originating in the Hetch Hetchy watershed represents the majority <br />of the water supply available to the Regional Water System. On average, the Hetch Hetchy <br />Reservoir provides approximately 85% of the water delivered and runoff into Bay Area <br />reservoirs provides approximately 15% of the water delivered through the Regional Water <br />System. Water produced is dependent on precipitation and the ability of the SFPUC to regulate <br />watershed runoff. Water collected in the Hetch Hetchy is delivered by gravity to Bay Area <br />reservoirs and users. The remaining water supply is drawn from local surface waters in the <br />Alameda and Peninsula watersheds. The Regional Water System was constructed and is owned <br />by San Francisco and is operated by the SFPUC. The Regional Water System delivers <br />approximately 65% of its water to Wholesale Customers in Alameda County, Santa Clara <br />County and San Mateo County. The Wholesale Customers pay for the Regional Water System in <br />proportion to their purchases of water. <br /> <br />Water Supply Agreements. The City entered into two contractual arrangements with the <br />City and County of San Francisco, on behalf of the SFPUC, on July 1, 2009, both of which expire <br />in 25 years (with provisions for two conditional five-year extensions): (i) a “Water Supply <br />Agreement,” which the City co-signed on July 1, 2009 with 26 other suburban water purchasers, <br />and (ii) a “Water Sales Contract.” Under the Water Supply Agreement, the SFPUC is <br />responsible for maintaining the Regional Water System and delivering water that meets all <br />applicable drinking water standards (including all treatment necessary to meet those <br />standards). The Water Supply Agreement also requires the SFPUC to complete the Regional <br />Water System Water System Improvement Plan (“WSIP”). Under the Water Sales Contract, the <br />City’s Individual Supply Guarantee (“ISG”) is 10.93 million gallons per day (“MGD”) on an <br />annual average basis (or approximately 12,243 acre feet per year (“AFY”). <br /> <br />Water Supply Assurance. The Water Supply Agreement assures a maximum supply of 184 <br />MGD collectively to all of the suburban purchasers. The City’s water supply assurance is 10.93 <br />MGD, or approximately 12,243 AFY. If additional water is available to the wholesale water <br />purchasers within the 184 million gallon per day limit, the City’s average annual water usage <br />may increase, but in case of rationing due to drought, the City’s usage may be limited pursuant <br />to the Water Shortage Allocation Plan (“WSAP”), approved as part of the Water Supply <br />Agreement in July 2009. <br /> <br />In Fiscal Year 2015-16, the Regional Water System delivered an average of 7.29 MGD to <br />the City, or approximately 8,053 acre feet for the Fiscal Year. The six-year average (2010-11 to <br />2015-16) delivery was 8.71 MGD, or 9,693 AFY. <br /> <br />SFPUC Water System Improvement Program. The WSIP is an approximately $4.8 billion <br />dollar, multi-year capital improvement program undertaken by the SFPUC to upgrade the <br />Regional Water System and San Francisco’s in-city water distribution system to meet water <br />quality requirements, improve seismic and delivery reliability, and meet water supply goals. At <br />the end of fiscal year 2015-16, construction of 37 regional projects were completed and an <br />additional 8 regional projects valued at $2.1 billion were in progress. The Regional Program <br />includes 46 projects that benefit both retail customers and wholesale customers, and includes a <br />wide variety of improvements such as upgrades to and the addition of new treatment, <br />transmission (pipelines, tunnels, pump stations), and storage (dams and reservoirs) facilities <br />spread over seven counties. The Wholesale Customers pay a proportionate share of the costs of <br />these projects pursuant to the terms of the Water Supply Agreement. <br /> <br />The most significant WSIP project remaining is the Calaveras Dam Replacement Project <br />(“CDRP”), which includes a main dam project and a sub- project to the CDRP, the Fish Passage <br />Facilities at Alameda Creek Diversion Dam (“ACDD”). Although the overall WSIP has only <br />increased 12% since 2005, the CDRP and the ACDD will be completed significantly later and at <br />significantly higher costs than originally anticipated. Budget increases for the CDRP were <br />8.C. - Page 44