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50 <br />and Tuolumne Rivers) and the Bay-Delta. The Bay-Delta Plan Amendment requires the release <br />of 40% of the “unimpaired flow” (unimpaired flow represents the natural water production of a river <br />basin, unaltered by upstream diversions, storage, or by export or import of water to or from other <br />watersheds.) on the three tributaries from February through June in every year type, whether wet, <br />normal, dry, or critically dry. <br />If the Bay-Delta Plan Amendment is implemented, the SFPUC expects to be able to meet <br />the projected water demands presented in its Urban Water Management Plan in normal years but <br />would experience supply shortages in single dry years or multiple dry years. Implementation of <br />the Bay-Delta Plan Amendment will require rationing in all single dry years and multiple dry years. <br />The SFPUC has initiated an Alternative Water Supply Planning Program to ensure that SFPUC <br />can meet its Retail and Wholesale Customer (including the City) water needs, address projected <br />dry years shortages, and limit rationing to a maximum 20% system-wide in accordance with <br />adopted SFPUC policies. This program is in early planning stages and is intended to meet future <br />water supply challenges and vulnerabilities, such as environmental flow needs, other regulatory <br />changes, earthquakes, disasters, and emergencies, increases in population and employment, <br />and climate change. <br />Wholesale Water Costs <br />The City of San Francisco is expected to substantially raise wholesale water rates for the <br />Wholesale Customers, including the Enterprise, due to the costs of the City of San Francisco’s <br />capital improvement program, which is described above under “THE ENTERPRISE – Water <br />Supply and Demand – SFPUC Water System Improvement Program” above. The City projects <br />that these rates may increase by up to 29% through Fiscal Year 2028-29, from $5.21 per CCF in <br />Fiscal Year 2023-24 to $6.74 per CCF in Fiscal Year 2028-29 (exclusive of the BAWSCA <br />Surcharge). Including the BAWSCA Surcharge, rates may increase up to 27% through Fiscal <br />Year 2028-29, from $5.59 per CCF in Fiscal Year 2023-24 to $7.12 per CCF in Fiscal Year Fiscal <br />Year 2028-29. <br />The City has covenanted in the 2024 Installment Purchase Contract to prescribe and <br />collect rates, fees and charges in connection with the Enterprise in an amount sufficient to allow <br />the Enterprise to pay Operation and Maintenance Costs and amounts due under the 2024 <br />Installment Purchase Contract and any Parity Obligations. Further, the Enterprise has agreed, in <br />the 2024 Installment Purchase Contract, to prescribe and collect rates, fees and charges in <br />connection with the Enterprise during each Fiscal Year which are sufficient to yield estimated Net <br />Revenues which are at least equal to one hundred twenty percent (120%) of the aggregate <br />amount of the 2024 Installment Payments, and principal of and interest on any Parity Obligations <br />(including the 2015 Installment Purchase Contract and the 2017 Installment Purchase Contract) <br />payable from Net Revenues coming due and payable during such Fiscal Year. <br />No Reserve Account <br />No debt service reserve account has been established with respect to the Bonds. <br />Parity Obligations <br />Upon the issuance of the Bonds and the refunding of the Refunded Bonds and <br />corresponding portion of the related installment payment obligation of the City, the only other <br />outstanding obligations payable from Net Revenues on a parity with the Bonds will be the 2017 <br />Installment Payments and the 2015 Installment Payments. In addition, the City is permitted under <br />8.A. - Page 64 of 255 <br />692