Agdapkt 2010-12-06 clsd and regular

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� 6.3B '� Memo To: Water Management Representatives Page 5 ' November 5, 2010 Page 2 of 4 Back�round In July 2009, in connection with adoption of the WSA, the Wholesale Customers and San Francisco adopted a Water Shortage Allocation Plan to allocate water from the RWS ta retail and Wholesale Customers during system-wide shortages of 20% or less (the Tier 1 Plan). The Tier 1 Plan replaced the prior Tier 1 Interim Water Shortage Allocation Plan, adopted in 2000 and expired in June 2009, which allocated water for shortages up to 20%. The provisions of the Tier 1 Plan allow wholesale customers to "bank" drought allocations and to voluntarily transfer them to each other and San Francisco. The Tier 1 plan also presents an updated scheduie for actions preceding and during a drought. Section 3.11.0 of the WSA authorizes the Wholesale Customers to adopt a methodology for allocating the water which is collectively available to the 26 Wholesale Customers among each individual Wholesale Customer (the "Tier 2 Plan"). The Tier 2 Plan adopted in 2000 expired in June 2009. The WSA also commits the SFPUC to honor allocations of water unanimously , agreed to by all Wholesale Customers or, if unanimous agreement cannot be achieved, water ' allocations that have been adopted by the Board of Directors of the Bay Area Water Supply and Conservation Agency ("BAWSCA"). The WSA also provides that the SFPUC can allocate water supplies as necessary during a water shortage emergency if no agreed upon plan for water allocation has been adopted by the 26 Wholesale Customers or the BAWSCA Board of Directors. , Commencing in October 2009, Appointed Water Management Representatives of each of the Wholesale Customers have been meeting to develop a set of principles to serve as guidelines for an equitable allocation methodology, as well as formulas and procedures, to implement those principles. These principles include: • Providing certainty of drought allocations with consistent and pre-determined rules for calculation; • Providing sufficient amounts of water for basic needs of customers; • Creating an incentive for water conservation at all times and the development and management of alternative water supplies; • Avoiding preventable, adverse economic impacts; � Avoiding reallocation of water supply assets and investments among agencies without mutual consent and compensation; and • Recognizing inherent differences in land use and climate. The discussions, and supporting technical analyses, were conducted with the assistance of BAWSCA staff.