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District hires Clean Energy Capitol for a cost estimate of imported water pipeline By

By Patricia Farris News Review Publisher–
At the March 11 Indian Wells Valley Water District meeting, District Manager George Croll reported to the Board on ways to calculate the cost of the Imported Water Pipeline Project. The pipeline is the Indian Wells Groundwater Authority’s (IWVGA) proposed solution for the Groundwater Sustainability Plan, which the Water District does not support.

Croll states that the GA is at the point “I believe where they’ve made a request in the Water Development Act 2024, which would give them the authorization over the next ten years to spend $150 million of federal funding. The Board had requested a couple of months ago that I figure out a way to find what this pipeline is going to cost. My recommended way ahead is to employ Clean Energy Capitol to do an initial cost estimate of the pipeline as designed by the GA using the GA’s estimate for the construction cost so they would not have to recreate that.

“The part that seems less well understood is the cost to our ratepayers of operating and maintaining our system, the delivery fee, and the cost to wheel it through Antelope Valley East Kern (AVEK). That would include all these other things and additions to our system.

“So we want to look at that, and I think it’s important now as we approach this potential authorization under this federally awarded program. The board needs this information about what this will cost our customers to move forward. My recommendation is to approve what I believe would be something on the order of $20,000 expenditures to go ahead and firm up these estimates, requesting support from the GA working on these estimates. I’m looking for your support and authorization to do so.”

Board President Ron Kicinski said, “I’m mixed about this particular one when you look at the National Environmental Policy Act (NEPA) and California Environmental Quality Act (CEQA). Part of that is the economic impact on the community and the surrounding property. That is something that should be considered.

“This type of work should be done by the GA so it’s completely transparent with the public.

“I know why we want to do this. We want to get these numbers out so the public can know what this thing is actually costing.

“I understand long-term planning for the budget of the Water District.

“I’m telling you, money is getting tight with these projects. We have to do pipelines and such, and every little bit counts.

“I’m looking at this and saying, ‘What are we doing here?’ If we truly need longer-term planning for the District in terms of the budget and finances, then I think it’s a good idea, but if the reason we want to do it is to perform the transparency that the GA should be doing, then I have an issue with that. That’s just my comments right now. I would like to hear from the Board.” Kicinski said.

Board member David St Amand said, “I’m not confident that the GA’s numbers are going to be as comprehensive or as accurate as we would like them to be.

“I think this information will give us a good idea of how to approach this whole issue in the future.

“For example, if the cost of water is $8,000 to $12,000 an acre-foot (ACF) through their system, then we would be justified in refusing to take the water because we could not afford it. You talk about the growth of the town, which is important. But imagine people having to pay two or three times their current water bill. There is no maternity care system in the town, and whatever else is going on is going to make it hard to recruit people to come and work on the base. Also, it’s going to make the town shrink, so I think it will give us some rational information as to how to approach the whole pipeline issue, which you know I am opposed to.”

Board member Stan Rajtora said, “I find myself agreeing with David and I don’t disagree with Ron.

“The GA should be responsible for giving us valid cost numbers, but quite frankly, we do not have a lot of current evidence of their cost numbers. Regardless of what we do or say, they are pushing ahead full speed on this, and if it does not give us any more of the information we need to get it under control, I think it would be money well spent, and I would be in favor of it (of employing Clean Energy Capitol).”

Board member Mallory Boyd said, “Just a couple of comments. My understanding is that we are not on the same page with the GA, but how do we receive the water you have mentioned about injecting issues? Taking it and trying to put it directly into our system seems to have holes in their rationale.

“So the cost associated with that alone would be a slight increase in what we are talking about here.” Mallory also asked, “Can you speak briefly to how much this is going to cost and how long it is going to take to complete?”

Croll responded, “About two or three months and about $20,000.”

Boyd said, “It does seem based on both positive and negative comments on this that this is a potentially high value, so I guess I would vote in favor of it, but my question on the direct injection fees is, I’m a little puzzled as to how that would be brought into this discussion. Will they look at direct injection alternatives and provide a cost estimate?”

Croll said, “What you see down there is Water District infrastructure requirements. We talked at length about this in the committee meeting, and one of the things I’m going to ask them to figure out is what it would cost to have an injection well. I know there are objections to the Water District paying for an injection well but we are looking at the various things we would want to do to our system to make sure it was compatible. I think I’ve made it clear to the staff, and the staff agrees with me that in this estimate, we would figure out what a typical Aquifer Storage and Recovery (ASR) well would cost. I am trying to figure out where it would go in conceptual fashion and the cost would be included in these.

“Clearly, this has not been considered. If the pipeline were to come in the way they designed it, there would be all of these costs to us that have not been included.

“This also leads to a stepping stone should the District find that the current design does not fill our needs.  The next stepping stone is to say what comparison is to other alternatives. That would potentially be the next step in the next fiscal year when we have more funding. If we were to look at what it would cost if we just put that money toward recycled water or if we would put that money toward some other type of project, how would that affect our ratepayers, given that we have one consultant doing the estimates? You would at least get a fair basis of comparison. You feel like you are getting the same sort of numbers to compare.

“I don’t think the GA is going to go out there and create estimates of their alternative ways of achieving sustainability if the District should ever want to do that in the future at some point.”

Kicinski said, “We are trying to limit cost by just saying, let’s look at it as designed and the Board would direct us later at some point in time to say please study, give me a list of five alternatives, then we can go out and negotiate a cost for those at that point in time  provide the Board with other alternatives.” He asked, “Where will the numbers come from of things that are not included that are provided so far by the GA, such as the report came from the Water Resources Board, of all the filtration and operation that would have to happen on this end before we get it into our system as well as changing the way that the district operates, where do you get these numbers?”

Croll stated, “That’s why we are looking at Clean Energy Capitol; that’s what they do for a living. They do it for large-scale projects and typically for multi-district projects.

“They use a wide number of sources. We have a fine consultant, Kreiger, and Stewart. If they are asked, they go get a price and design something. Their specialty is more: ‘Let’s look at different options.’ If we want to design something, we would fall back on Kreiger and Stewart once we have made our final plan. This seems to be their niche.”

Kicinski said, “There are two elements as I see it; one is the capital cost of building the thing. Obviously, some of it is going to be grants, supposedly. The rest of the plan is to attach it to the property taxes. In my opinion, there is one key: the operational cost. I don’t think anyone has a good handle on the operational cost yet. The things that aren’t paid for with grants and are not on your property tax, they have to be paid for by the users of the water, that’s the one where I’m wondering where you’re going to get these numbers.  I suppose you’re going to rely on Clean Energy Capitol.”

Croll responded, “A combination of things like if you dig deep enough into the design for the imported water. They have tables telling by month and year what the water rates would be for a month and a year, but that’s a very detailed, pretty time-consuming analysis.

“One of the things we’re talking to Clean Energy Capitol about is there was a time when we thought they were going to send us 6000 Acre Feet a year; they said, ‘No, no, it’s going to be a little at first, then more and more.’ One of these things you find with projects when you cost them out accurately is that the smaller the amount of water you get at the beginning, the higher the cost of that water is per acre-foot. That’s the way they analyze it. So if you are getting 1500 acre-foot of water through that 20 million-dollar pipeline, what’s the cost per year per acre-foot versus 6000 acre-feet in 2070? So I’ve looked at some of the estimates that were done, and they seem to be somewhat generalized, adding everything up over 70 years and then dividing it by 70. That’s not the way they do it; they’re looking at how interest rates are done, how much water delivery is given in a specific year, and how that would relate to the cost, the operation, and the maintenance. They call that a performer model. I believe it’s sort of an industry standard for a really large project like that. And it just has not been done.”

Kicinski asked, “Is there going to be a lot of unknowns on the operating end? Every year, anything coming out of the State Water Project, the rates you are paying for the maintenance and the transfer of everything through the pipeline project, which all of us are going to be charged for, varies year to year. I don’t know how often the State water project adjusts their rate but they do. They also take into account how much water is available and how much you are really buying, so I realize there are a lot of things that go through that we will have to formulate to answer those questions. In order to get this done, I still feel that we need to have an answer: What is the capital cost? Bottom line which means what is going to happen to our property taxes and the second bottom line is, what are the operating costs including getting water here and yearly purchase requirements? What is that number? To me, it is a very important one because that is what really affects our rates. It all affects the ratepayers, including property taxes as well. The ratepayers are especially in for that particular cost because if you are looking at, I’m guessing, from 9 to 11 billion dollars a year, that’s probably a wild guess but maybe pretty close. But if that’s the operating cost, it would have to be distributed to anybody who is using that water. I assume it’s going to be us even if we don’t need it.”

Croll responded, “That’s the GA’s desire, but there’s no obligation to accept that water.”

Kicinski said, “I think it gets us more information and gives us something to guide us into the future if this thing were to happen. I tend to agree with you George, one we have this dollar figure that people can see that might lead us into looking at other alternatives.”

Mallory said, “None of these estimates are out there right now. We will have the pedigree that this fiduciary will be able to provide. They are under the law’s obligation not to fudge things. So it will be the more complete and trusted look, which may give us initial leverage in our future discussions.”

Legal counsel Jim Worth spoke to the comprehensive adjudication. “I have a couple of things to report on,” he said. The first is there is a case management conference/request for things to be tried, which will be heard by the judge on March 22. The District has requested that the phase 1 trial include the amount of underground water in storage and that the Federal Reserve right be teed up at that time.

“Opposition papers were due today. I haven’t seen anything yet, but I will say that with respect to the District’s motion at the request for the phase one trial, as part of the District’s filing, we have attached the white paper on the amount of groundwater in storage.

“You recall that about three months ago, there was a lot of discussion with the District regarding the amount of groundwater in storage.  People were clamoring for the reports. We indicated that we could not produce. If you go to the District’s website under the Adjudication button, you can find the request for these things on trial, as well as the groundwater storage.”