2014 Recovery of Water Stored by the Arizona Water Banking Authority A Joint Plan by AWBA, ADWR and CAP Recovery of Water Stored by the Arizona Water Banking Authority 4/14/2014 1 Table of Contents Table of Contents ................................................................................................................................... 1 Executive Summary ................................................................................................................................ 3 Section 1: Background, Purpose & Scope.............................................................................................. 5 Section 2: Roles & Responsibilities ......................................................................................................... 9 Section 3: Funding, Purpose & Location of Credits ............................................................................. 13 Section 4: Methods & Cost .................................................................................................................. 21 Section 5: Likelihood, Timing & Magnitude of Recovery ..................................................................... 27 Section 6: Credit Request, Distribution & Recovery Opportunities ..................................................... 43 Section 7: Implementation ................................................................................................................... 57 Section 8: Future Activities & Commitments ....................................................................................... 61 Appendix A ........................................................................................................................................... 67 Appendix B............................................................................................................................................ 69 Appendix C – Example Recovery Partner Survey ................................................................................. 75 Recovery of Water Stored by the Arizona Water Banking Authority 1 Executive Summary For nearly two decades, the Arizona Water Banking Authority (AWBA), the Arizona Department of Water Resources (ADWR) and the Central Arizona Water Conservation District (CAWCD, referred to in this plan as CAP) have been engaged in an innovative program to store Colorado River water in the aquifers of Central and Southern Arizona. The AWBA has stored nearly 4 million acre-feet of Central Arizona Project water (CAP water) underground since its inception in 1996. The AWBA's storage credits will be recovered to meet the needs of CAP Municipal and Industrial (M&I) Priority subcontractors and Fourth Priority (P-4) on-River M&I users during declared shortages on the Colorado River; to meet the State's obligations pursuant to Indian water rights settlements; and to meet interstate water banking obligations with Nevada. This Plan is a collaborative effort among the AWBA, ADWR, CAP and stakeholders to provide a roadmap for recovering AWBA credits. It builds on past planning efforts and practical experience to clarify roles, provide updated analysis and identify key decision points and actions. The focus of this Plan is on projected recovery needs and actions through 2045. The analysis in this Plan relies on two models, the Bureau of Reclamation's Colorado River Simulation System (CRSS) and a custom recovery model that was developed to calculate the probability of specific recovery volumes occurring through time, based on a range of supply and demand conditions. The range of possible future recovery needs identified in this Plan frames the general likelihood, timing and magnitude of potential recovery activity. Modeling results suggest that the earliest recovery may be triggered sometime around 2017, though the annual volume and probability is very low. Recovery for on-River users and the state's portion of Indian NonIndian Agricultural (NIA) water are projected to occur first and well before recovery for CAP M&I firming which is not projected until at least 2035. Recovery for Nevada could occur as early as 2018 but is not projected to occur until sometime after 2025. The Pinal Active Management Area (AMA) appears to be the focus of early recovery for a significant portion of the planning horizon. This is because the majority of the credits (credits earned with withdrawal fees, general funds and interstate funds) needed for much of the recovery projected in the near and mid-term planning periods (Indian NIA, On-River P-4 M&I users and requests from Nevada) are located in the Pinal AMA. Recovery in the Phoenix and Tucson AMAs will become more significant in the long-term planning period when recovery for M&I users is needed and credits generated with ad valorem credits are recovered. Successful recovery depends on the effective implementation of various recovery opportunities using methods such as credit exchange, indirect recovery and direct recovery. This plan makes recommendations for pursuing these recovery opportunities in each AMA. While some aspects of implementation may be premature for consideration in this Plan (e.g., terms of yet-to-be developed contracts or agreements), the plan identifies important Recovery of Water Stored by the Arizona Water Banking Authority 3 process steps, including critical points in the operational timeline and issues related to the collection of recovery costs. CAP is committed to entering into long term recovery agreements with recovery partners to meet projected recovery capacities and commissioning the technical studies required to develop the infrastructure for new recovery projects when necessary. ADWR, AWBA, and CAP are committed to ongoing collaboration, monitoring and analysis to ensure that recovery modeling assumptions remain reasonable and up to date. Recovery of Water Stored by the Arizona Water Banking Authority 4 Section 1: Background, Purpose & Scope Background Arizona relies on a multi-faceted approach to mitigating and responding to shortages on the Colorado River including shortage sharing guidelines, tiered priorities of CAP water, the banking and recovery of CAP water, water provider's drought response programs, and drought provisions under the State's Assured Water Supply (AWS) rules. This plan focuses on the recovery of CAP water stored by the Arizona Water Banking Authority (AWBA). For nearly two decades, the AWBA, the Arizona Department of Water Resources (ADWR) and the Central Arizona Water Conservation District (CAWCD, referred to in this plan as CAP) have been engaged in an innovative program to store Colorado River water in the aquifers of Central and Southern Arizona. The AWBA has stored nearly 4 million acre-feet 1 of Central Arizona Project water (CAP water) underground since its inception in 1996. 2 The storage of CAP water by the AWBA has occurred pursuant to regulations administered by ADWR, which issues long-term storage credits (credits) for both direct recharge and for irrigation with CAP water in-lieu of pumping groundwater. The AWBA has storage credits in the Phoenix, Pinal and Tucson Active Management Areas 3 that can be recovered 4 in the future when the need arises. The AWBA's credits will be recovered to meet the needs of CAP Municipal and Industrial (M&I) Priority subcontractors and Fourth Priority (P-4) on-River M&I users during declared shortages on the Colorado River; to meet the State's obligations pursuant to Indian water rights settlements; and to meet interstate water banking obligations with Nevada. 5 The need to recover AWBA credits will unfold over many decades and will be triggered by shortages on the Colorado River, Indian settlement requirements, specific interstate contractual obligations and possible disruptions in operations to the CAP system. Many factors will determine the timing, magnitude, location and method of this recovery, and numerous entities will be involved. Effective planning and coordination among AWBA, ADWR, CAP, P-4 on-River M&I users, CAP customers, recovery partners and Nevada are essential to successful recovery of this water. 1 That storage has resulted in 3.8 million acre-feet of long-term storage credits, after subtracting losses and a 5% "cutto-the-aquifer." One acre-foot equals 325,851 gallons 2 Arizona Water Banking Authority, 2013 Plan of Operation 3 Active Management Areas were established under the 1980 Groundwater Management Act. Strict groundwater management statutes and rules exist in these areas 4 Recovery is the act of turning long-term storage credits into a useable water supply 5 Interstate banking obligations with Nevada are related to a series of agreements, including but not limited to the Third Amended and Restated Agreement for Interstate Water Banking among AWBA, Southern Nevada Water Authority (SNWA), the Colorado River Commission of Nevada (CRCN) dated May 20, 2013 and the Recovery Agreement among AWBA, CAP, SNWA and CRCN dated June 9, 2010 and established the terms for storage and recovery of interstate storage credits accrued for the benefit of SNWA and the State of Nevada Recovery of Water Stored by the Arizona Water Banking Authority 5 Section 1: Background, Purpose & Scope In response to past recovery events for California and in response to requests from CAP customers, there have been a number of efforts by the AWBA, ADWR and CAP to plan for recovery. 6 This latest plan builds on these efforts and solidifies a comprehensive and coordinated approach among the three organizations. This document and the associated planning are products of the Interagency Recovery Planning Group which includes staff from the AWBA, ADWR and CAP. In May of 2012, ADWR established the Ad Hoc Recovery Planning Group to serve as a venue for feedback and guidance by regional representation of customers and stakeholders for the joint agency planning process. The Ad Hoc Group includes representatives from CAP, AWBA, ADWR, Arizona Municipal Water Users Association (AMWUA), Southern Arizona Water Users Association (SAWUA), Salt River Project (SRP) and Pinal County water users. Additional input on the Plan was received from stakeholders through a Joint Public Workshop as well as formal written comment. Purpose and Scope This Plan is a collaborative effort among the AWBA, ADWR, CAP and stakeholders to provide a roadmap for recovering AWBA credits. It builds on past planning efforts and practical experience to clarify roles, provide updated analysis and identify key decision points and actions. The focus of this Plan is on projected recovery needs and actions through 2045. The three entities believe that this time period provides a reasonable balance between the uncertainty of long-range planning and the practical decisions and actions needed to ensure successful implementation of future recovery. Specifically, the Plan is intended to: - Clarify roles and interactions of the primary institutions involved in the recovery of AWBA credits - Establish planning-level certainty around key recovery concepts - Identify both shortage and non-shortage recovery triggers - Analyze and project the potential timing and magnitude of recovery under a range of future supply and demand conditions - Identify potential recovery partners and opportunities to meet recovery needs - Identify key recovery decision points and actions to be taken within the planning horizon - Assist in improving future storage decisions - Provide the framework for continued cooperation between CAP, ADWR, AWBA, CAP customers and stakeholders CAP’s Draft Conceptual Plans to Recover Stored Water, 2007; AWBA's Water Supply and Demand Study, 2011; CAP's Planning for Recovery, 2012 6 Recovery of Water Stored by the Arizona Water Banking Authority 6 Section 1: Background, Purpose & Scope - Allow CAP to manage disruptions in operations on a case-by-case basis outside the scope of this document As discussed in Section 5, the timing and magnitude of recovery depend heavily on factors such as future water supply and demand conditions that are highly uncertain. Given the complex nature of that uncertainty, this Plan employs a scenario-based approach which allows for the evaluation and preparation for a range of potential outcomes. This approach, combined with clarity on key concepts, is designed to provide ADWR, CAP, AWBA, P-4 onRiver M&I users, CAP customers, Nevada and stakeholders with confidence that recovery can be accomplished in an effective and efficient manner. Recovery of Water Stored by the Arizona Water Banking Authority 7 Section 2: Roles & Responsibilities Understanding the roles and responsibilities of the entities involved in the recovery of AWBA credits is an essential first step in the planning process. Arizona Water Banking Authority (AWBA) The AWBA was formed in 1996 to store the unused portion of Arizona's annual entitlement of Colorado River water. At the time, Arizona was not fully utilizing its entitlement of 2.8 million acre-feet. By storing this water, made available as excess CAP water 7, the AWBA not only helped the state use its full entitlement but also created a long-term supply to meet future needs. Through 2012, the AWBA has accrued more than 3.8 million acre-feet of credits within CAP’s three county service area to support various goals and obligations: - To firm 8 water supplies for CAP Municipal and Industrial (M&I) Priority subcontractors and P-4 on-River M&I users during declared shortages - To meet the State's obligation to firm up to 23,724 acre-feet of Non-Indian Agricultural (NIA) priority CAP water pursuant to Indian water rights settlements 9 - To fulfill water management objectives of the Arizona Groundwater Code - To meet interstate water banking obligations with Nevada The AWBA stores water to meet these goals and obligations utilizing several funding sources, each of which has statutory purposes and restrictions that are discussed in Section 3. The AWBA manages its activities through its Annual Plan of Operation and Ten-Year Plan, including the storage of water and the distribution of credits for recovery, consistent with its statutory and contractual responsibilities. In anticipation of a recovery event, the AWBA will review requests for long-term storage credits from CAP before distribution. The AWBA is also responsible for certifying the amount of water recovered in a given year for the purpose of developing intentionally created unused apportionment (ICUA) for Nevada. ICUA is the mechanism that allows Nevada to receive the water that was stored in Arizona on its behalf. Interstate banking between Arizona and Nevada is discussed in more detail in Section 5. Excess CAP water is the water available for delivery on a year-to-year basis after meeting orders pursuant to longterm CAP entitlements 8 Firming is the use of one supply to increase the reliability of another supply. In this case, it is the use of stored water to supplement Colorado River water in times of reduced supply 9 For all practical purposes, this firming obligation will only occur as a result of a declared shortage on the Colorado River; however, it could also result in the extreme case that Arizona on-River demand would reach high enough levels, which could cause a shortage in CAP's 1.415 million acre-feet of long-term entitlements 7 Recovery of Water Stored by the Arizona Water Banking Authority 9 Section 2: Roles & Responsibilities Central Arizona Water Conservation District (CAP) The Central Arizona Water Conservation District (CAP) was created in 1971 to manage and operate the Central Arizona Project (Project) and to repay the Federal government for the State's portion of the construction costs. There are over 80 M&I and Indian long-term contract and subcontract holders, and these long-term CAP entitlements total 1.415 million acre-feet. However, CAP's right to divert Colorado River water entitles CAP to divert the difference between Arizona's 2.8 million acre-feet and the amount used by on-River right holders. For example, in 2012, CAP diverted over 1.6 million acre-feet of water, of which approximately 1 million acre-feet went to long-term CAP entitlements and 600,000 acrefeet 10 was delivered as excess CAP including approximately 136,000 acre-feet delivered to the AWBA. As a designated recovery agent for the AWBA, CAP is responsible for recovering water stored by the AWBA in support of CAP M&I subcontract firming, on-River firming (specifically with Mohave County Water Authority (MCWA) 11) and interstate banking on behalf of the Southern Nevada Water Authority (SNWA). CAP may also have recovery responsibilities to satisfy the State's obligation to Indian tribes under the Arizona Water Settlements Act (Settlements Act) though no specific recovery agreement with the AWBA for this purpose exists at this time. CAP is responsible for scheduling deliveries and, when necessary, determining the specific reductions to each class of user firmed by the AWBA in accordance with its established priorities. CAP will then make a request to the AWBA for credits to meet these shortfalls. Likewise, with regard to the AWBA's on-River and interstate contractual obligations, CAP will coordinate with the AWBA and those parties to determine the volume of credits that will need to be recovered to meet those obligations. CAP will work closely with its voluntary recovery partners to turn the credits into a useable water supply. If necessary, CAP may also construct and operate recovery infrastructure pursuant to recovery well permits issued by ADWR 12. Arizona Department of Water Resources (ADWR) ADWR was created in 1980, as part of the Groundwater Management Act, to ensure longterm reliable supplies for the state. ADWR administers and enforces Arizona's groundwater code and surface water laws. ADWR’s Director also consults, advises, and cooperates with the United States Secretary of the Interior on Colorado River issues. 13 ADWR serves two primary roles in the recovery process: regulatory and advisory. In its regulatory role, ADWR administers and enforces the Underground Water Storage and Recovery Program. It is responsible for reviewing and issuing permits, such as underground storage facility permits, water storage permits and recovery well permits. It also handles longterm storage credit accounting, including credit recovery and transfers. In its advisory role, This figure includes 400,000 acre-feet of excess designated as the Agricultural Pool Exchange Agreement between Central Arizona Conservation District and The Mohave County Water Authority 12 A.R.S. § 48-3713.B 13 A.R.S. § 45-107 10 11 Recovery of Water Stored by the Arizona Water Banking Authority 10 Section 2: Roles & Responsibilities ADWR will work closely with CAP and AWBA to ensure planned recovery activities are consistent with ADWR statues, rules and policies. Bureau of Reclamation (Reclamation) The Secretary of the Interior (Secretary), through Reclamation is the contracting authority for water on the Lower Colorado River. Reclamation, through the Lower and Upper Colorado Regions, manages and administers programs related to the Colorado River for the Department of the Interior, including making a determination on the condition of the Colorado River system. For recovery activities that rely directly on CAP facilities and project power, Reclamation has a role that is determined by contracts, agreements and the stipulated judgment with CAP. Reclamation also has a role in ensuring that recovery cost collection policies are consistent with its contractual agreements with CAP. Additionally, Reclamation oversees Colorado River accounting, including aspects of interstate banking and the development of ICUA. The Secretary, like the State, also has an obligation to firm certain NIA priority CAP water supplies for existing and future settlements of Indian water rights claims under the Arizona Water Settlements Act. Although this Plan does not address recovery on behalf of Federal customers, CAP, AWBA and ADWR are committed to coordinating with Reclamation on these efforts. CAP's Recovery Partners CAP's recovery partners are entities that voluntarily enter into an agreement with CAP to facilitate meeting demands during a shortage on the Colorado River, or an interstate request, by “receiving” a portion of their CAP water order in the form of AWBA credits. Recovery partners can agree to receive credits for all or a portion of their order and, by doing so, help CAP offset a shortfall to a particular pool of water. Recovery partners may include CAP M&I subcontractors, irrigation districts or Indian communities that hold and use a CAP long-term entitlement 14. In some circumstances, a third party that owns the necessary infrastructure (regional conveyance system) may perform the physical recovery for a CAP customer that has agreed to be a recovery partner with CAP. For this document, these entities will be referred to as "third party recovery partners." Beneficiaries Beneficiaries of recovery are any Colorado River water users for which the AWBA has a firming responsibility or contractual obligation. Specific beneficiaries are CAP M&I Priority subcontractors and P-4 on-River M&I users, Indian Tribes that receive a portion of the NIA priority CAP supply subject to AWBA firming, and Nevada. It is important to note that being a recovery beneficiary does not require becoming a recovery partner. CAP Ag Pool water is not considered a long-term entitlement but irrigation districts using this supply are ideal recovery partners for interstate recovery during non-shortage conditions 14 Recovery of Water Stored by the Arizona Water Banking Authority 11 Section 2: Roles & Responsibilities Other Interested Parties There are numerous other parties such as AMWUA, SAWUA, SRP, Active Management Area Groundwater User Advisory Councils (AMA GUACs) and Pinal AMA water users that have an interest and stake in how the future recovery of AWBA storage will be managed and implemented. Recovery of Water Stored by the Arizona Water Banking Authority 12 Section 3: Funding, Purpose & Location of Credits The AWBA has accrued over 3.8 million acre-feet of credits through 2012. Of these, approximately 3.2 million acre-feet are for Arizona's needs, and just over 600,000 acre-feet 15 are for interstate purposes, accrued specifically on behalf of the Southern Nevada Water Authority (SNWA) under the state’s interstate banking program. There are several factors that will determine where the recovery of these credits will occur including: the funding sources that are used to accrue the credits; the statutory purpose for distributing the credits; and the location of both the credits and CAP’s recovery partners. Funding Sources The AWBA credits are accrued utilizing four main revenue sources: - an ad valorem property tax of up to four cents per $100 assessed valuation in the three-county CAP service area levied and collected by CAP - $2.50 per acre-foot of the $3.00 per acre-foot groundwater withdrawal fee in the Tucson, Phoenix, and Pinal AMAs collected by ADWR - general fund appropriations - proceeds of interstate banking activities While the AWBA is authorized to use these funding sources, the availability of revenues from each source varies on an annual basis. Furthermore, CAP’s authority to levy the ad valorem property tax is set to expire January 2, 2017. A.R.S. § 45-2425 further describes how revenues are made available to the Arizona Water Banking Fund. In addition to its primary funding sources, the AWBA has received revenue from two other sources—shortage reparations and the water storage capital charge. As part of the Arizona-Nevada Shortage-Sharing Agreement executed on February 9, 2007, SNWA agreed to provide $8 million in "shortage reparations" funding to the AWBA to assist Arizona in offsetting impacts from any shortages during the “Interim Period”. 16 The AWBA also utilizes monies collected from CAP’s water storage capital charge 17 at recharge projects in Pima County that were constructed with State Demonstration Funds. Those revenues are deposited into the ad valorem tax fund for Pima County. AWBA 2012 Annual Report The Interim Period is the period beginning on the date the Secretary issued the Colorado River Interim Guidelines for the Lower Basin Shortages and the Coordinated Operations for Lake Powell and Lake Mead, December 13, 2007, and ending on December 31, 2025 (through preparation of the 2026 Annual Operating Plan) 17 CAP assesses an underground water storage capital charge, currently $9/AF in Pima County, for use of its storage facilities by certain classes of users 15 16 Recovery of Water Stored by the Arizona Water Banking Authority 13 Section 3: Funding, Purpose & Location of Credits Credits accrued by the AWBA are further categorized according to the AMA/County in which the funds were collected. Table 1 identifies the amount of credits accrued by location and the funding source used. Table 1 AWBA Credits Accrued through 2012, by AMA and Funding Source (AF) Funding Source Phoenix AMA Pinal AMA Tucson AMA Total 4-Cent Ad Valorem Tax1 1,329,925 187,465 390,334 1,907,724 293,632 394,896 98,788 787,316 42,316 306,968 54,546 403,830 - - 28,481 28,481 20,642 60,507 1,227 82,376 - 14,125 - 14,125 1,686,514 963,961 573,376 3,223,851 51,009 439,851 109,791 600,651 1,737,523 1,403,812 683,167 3,824,502 Withdrawal Fees General Fund Other Intrastate: Indian Firming Appropriation Shortage Reparation GSF Operator Full Cost Share2 Intrastate TOTAL Interstate - Nevada TOTAL Funds are collected by County, but storage and credits are accounted by AMA. To date, all Maricopa County funds are stored in the Phoenix AMA, Pinal County in the Pinal AMA and Pima County in the Tucson AMA. 1 2 GSF operators paid all of the AWBA's water delivery costs because AWBA funding resources were fully subscribed and the water was needed to avoid crop losses. Statutory Purposes While the AWBA has the authority to distribute, extinguish, or exchange its credits, this authority does not apply equally across all categories of credits held by the AWBA. 18 (see Table 2) Ad Valorem Tax Credits AWBA credits accrued using the ad valorem water storage tax fund can only be distributed by the AWBA for the benefit of the county in which the monies were collected and cannot be extinguished or exchanged. Statute requires that the AWBA distribute these credits to CAP to the extent necessary to meet the demands of its M&I subcontractors during shortages or disruptions in operations to the CAP system. At the determination of the AWBA that the amount of credits accrued using the ad valorem tax 18 The purposes for which each category of credits may be used is further described in A.R.S. § 45-2457 Recovery of Water Stored by the Arizona Water Banking Authority 14 Section 3: Funding, Purpose & Location of Credits exceeds the amount needed for the purposes described above, the AWBA may also distribute the credits to M&I providers within CAP’s service area to firm other surface water supplies 19 (e.g. SRP water). Withdrawal Fee Credits Credits earned using withdrawal fees have a broad range of statutorily authorized uses including firming CAP M&I subcontracts, implementing Indian water rights settlements to the extent credits accrued from legislative appropriations are not available, and furthering the water management objectives in each of the three AMAs. The AWBA may only distribute or extinguish credits accrued using withdrawal fees for the benefit of the AMA in which the monies were collected. At this time, except for 5,621 acre-feet of withdrawal fee credits in the Tucson AMA that have been identified by the AWBA for meeting its Indian settlement obligation to the federal government, these credits have not been dedicated for a specific purpose. Therefore, these credits remain available to the AWBA for meeting any of the purposes identified above. General Fund Credits Credits earned using appropriations from the State's General Fund can be used for firming on-River P4 M&I users, firming CAP M&I subcontractors, settling Indian water rights claims, or extinguished to further water management goals. The AWBA is required (452457(B)(1)) however, to reserve a reasonable number of General Fund credits for firming on-River P4 M&I users and has therefore resolved to give first priority for use of these credits for this purpose. 20 The AWBA has accrued 403,830 acre-feet of credits of the 420,000 acre-feet of credits originally identified as the amount of credits that should be set aside for on-River P-4 M&I firming. To provide additional certainty, the Mohave County Water Authority (MCWA) entered into a contract with the AWBA to firm specific on-River P4 M&I users. To date, 256,174 acre-feet of the 403,830 acre-feet of General Fund credits have been reserved as part of the MCWA contract. 21 CAP and MCWA have also entered into an agreement for the exchange and recovery of these reserved credits when they are transferred to MCWA’s long-term storage credit account during shortages. 22 At this time, MCWA is the only on-River P-4 M&I entity that has contracted with the AWBA for firming. Through resolution, the AWBA established the procedures by which other OnRiver entities can also enter into a contract with the AWBA. 23 The AWBA has further resolved that as these General Fund credits are used and replaced, the new credits will be earmarked for the entity that paid the replacement costs and that they would be ARS§ 45-2457 (B)(8)(a) AWBA Resolution 2002-1 prioritizes use of general fund credits in the following order 1) firming on-River M&I users, 2) implementing the settlement of water right claims by Arizona Indian communities, 3) firming CAP M&I priority subcontracts, and 4) fulfilling water management objectives of the Groundwater Code 21 The AWBA has currently reserved Pinal AMA credits for this purpose, but General Fund credits stored in the Phoenix or Tucson AMA credits are also available for reservation 22 Exchange Agreement between CAP and MCWA dated September 27, 2005, amended November 4, 2010. 23 AWBA Resolution 2010-1 19 20 Recovery of Water Stored by the Arizona Water Banking Authority 15 Section 3: Funding, Purpose & Location of Credits used for the same purpose the original credits were used. 24 The AWBA also received a general fund appropriation authorized specifically for meeting part of the State’s Indian settlement obligations, which resulted in the accrual of 28,481 acre-feet of credits. These credits will be made available to the Federal government as part of the State’s obligation to assist the Federal government in meeting its Indian firming obligations under the Southern Arizona Water Rights Settlement Act. The State does not have an obligation to recover these credits. Credits accrued with General Fund appropriations may also be exchanged for credits held by others if those credits were accrued in a location that better enables the AWBA to meet its goals and obligations. Shortage Reparation Credits The primary purpose for credits accrued with shortage reparation funds is to assist in making water available to those entities that are impacted by shortages during the Interim Period. The AWBA does not have statutory limitations on how or where these credits may be utilized. Any credits not used during the Interim Period would remain available to the AWBA for meeting any of its goals and obligations. Groundwater Withdrawal Fees X General Fund X Shortage Reparations X Fulfilling Water Management Objectives X Firming Indian Settlements (NIA) Ad Valorem Taxes Firming On-River M&I (P-4 ) FUNDING SOURCE Firming M&I CAP Table 2 Summary of Intrastate Funding Sources and Allowable Use X X X X X X X X Interstate Banking Credits Credits accrued pursuant to an interstate banking agreement are recovered within CAP’s service area so that an equal amount of Colorado River water, or intentionally created unused apportionment (ICUA) from Arizona, can be made available to the contracting state for diversion when it requests the stored water. The amount of credits that can be accrued annually or used to develop ICUA are governed by state statute and a number of separate agreements including, the individual storage agreements between the AWBA and the contracting state, storage and interstate release 24 AWBA Resolution 2008-1 Recovery of Water Stored by the Arizona Water Banking Authority 16 Section 3: Funding, Purpose & Location of Credits agreements among the U.S., AWBA, and contracting state parties, agreements for developing ICUA between AWBA and CAP, and agreements for recovering the credits among the AWBA, CAP and the contracting state parties. A complete description of this process is provided in Section 5. Location Since 1997, the AWBA has stored water at two dozen different recharge facilities at various times located in the Phoenix, Pinal, and Tucson AMAs (see Figure 1 and Table 3 for more detail). By statute, recovery must occur within the AMA where the original storage took place, and there are often hydrologic and policy advantages for recovery to take place in the vicinity of the specific storage facility. Location of the credits is therefore a key consideration in recovery planning. The AWBA has accrued over 3.2 million acre-feet of intrastate credits through 2012. Of these, nearly 1.7 million acre-feet of credits are in the Phoenix AMA, over 960,000 acre-feet are in the Pinal AMA, and over 570,000 acre-feet are in the Tucson AMA. The AWBA has also accrued over 600,000 acre-feet of credits on behalf of SNWA. More than two-thirds of these credits, nearly 440,000 acre-feet, have been accrued in the Pinal AMA. There are many factors that will determine where the recovery of AWBA credits will occur, including; the funding source, the statutory purpose, and the location of both the credits and recovery partners. AWBA storage activity is accounted for at the level of individual recharge facility, while the financial accounting is tracked at the AMA (and County) level. As a consequence, credits earned at an individual facility are not specifically differentiated by funding source. It is only when recovery takes place that the storage facility and funding source accounting is reconciled. Recovery of Water Stored by the Arizona Water Banking Authority 17 Section 3: Funding, Purpose & Location of Credits Figure 1 Map showing locations of intrastate and interstate credits (AF) by recharge facility Recovery of Water Stored by the Arizona Water Banking Authority 18 Section 3: Funding, Purpose & Location of Credits Table 3 AWBA LTS Credits Accrued through 2012 by Site AWBA - Recharge Sites Intrastate PHOENIX AMA USF GRUSP AGUA FRIA HIEROGLYPHIC MTNS TONOPAH DESERT SUPERSTITION MTNS Interstate CHANDLER HGTS CID Total 399,967 - 399,967 75,325 - 75,325 67,684 - 67,684 403,095 51,009 454,104 4,571 Subtotal GSF LTS Credits Accrued Through 2012 950,642 51,009 4,571 1,001,651 4,518 - 4,518 47,172 - 47,172 NEW MAGMA 353,519 - 353,519 QUEEN CREEK MWD 104,080 - 104,080 SRP 77,327 - 77,327 RWCD 58,575 - 58,575 2,368 - 2,368 TONOPAH ID GRIIDD-PHX Subtotal T otal Storage 88,313 - 88,313 735,872 - 735,872 1,686,514 51,009 1,737,523 PINAL AMA GSF CAIDD 217,673 117,497 335,170 HOHOKAM 369,391 71,407 440,798 MSIDD 359,820 250,946 610,766 GRIIDD-Pinal 17,077 T otal Storage - 17,077 963,961 439,851 1,403,812 AVRA VALLEY 59,588 1,315 60,903 CAVSARP 90,444 4,717 95,161 T UCSON AMA USF PIMA MINE RD LOWER SANTA CRUZ SAVSARP Subtotal GSF CMID KAI FARMS (Red Rock) BKW-FARMS Subtotal 97,190 29,828 127,019 224,544 73,930 298,475 76,758 - 76,758 548,524 658,315 8,642 - 8,642 14,335 - 14,335 1,641 - 1,641 24,618 - 24,618 T otal Storage 573,142 45-841.01 Credits 234 TOTAL 109,791 3,223,851 109,791 682,933 234 600,651 Recovery of Water Stored by the Arizona Water Banking Authority 3,824,502 19 Section 4: Methods & Cost Recovery to make up for shortfalls to a firmed user pool or to fill an interstate request can be accomplished using a number of different recovery methods, each with its own attributes and associated costs. Methods There are three basic methods of recovery that CAP will use to recover AWBA credits: direct recovery, indirect recovery and credit exchange. The methods are differentiated by their reliance on the CAP system and whether or not additional pumping and energy are required over normal operations. (see Table 4). Table 4 Differences among the three types of Recovery Direct Recovery Indirect Recovery Credit Exchange Water into CAP system Yes No No Additional Pumping & Energy required over normal operations Yes Yes No Indirect recovery and credit exchange also require that some CAP customers voluntarily become recovery partners by agreeing to a reduced delivery of their CAP water order and in turn receive AWBA credits to make up for the reduced delivery. It is important to note, that recovery performed by a CAP recovery partner is for the benefit of the pool being firmed not recovery for the individual recovery partner. The recovery partner will receive compensation for the agreed upon arrangement with CAP. Factors such as where credits are located, the cost of recovery and the needs and availability of recovery partners will all determine which methods are utilized. Direct Recovery Direct recovery is when stored water is pumped from permitted recovery wells and then returned directly to the CAP system for delivery to CAP customers. (see Figure 2) Recovery of Water Stored by the Arizona Water Banking Authority 21 Section 4: Methods & Cost CAP Canal Figure 2 Normal Conditions vs. Direct Recovery In most cases, CAP would be the entity performing direct recovery. Although existing wells could be used for direct recovery, it is likely that new recovery wells will be needed. An example of direct recovery would be the development of a new recovery well field and related pipeline relatively close to the CAP canal. AWBA credits would then be pumped from the recovery wells and directly returned to the CAP canal for delivery to CAP customers to offset the shortfall to CAP supplies due to a shortage or interstate request. Indirect Recovery Indirect recovery is when stored water is pumped and delivered by a CAP recovery partner from permitted recovery wells to fulfill a portion of a CAP water order that would have otherwise been directly delivered by the partner. (see Figure 3) CAP Canal Figure 3 Normal Conditions vs. Indirect Recovery, Municipal In this method of recovery, recovered water is not returned directly to the CAP system. Indirect recovery requires a CAP recovery partner or third party to have additional recovery well capacity available to use when CAP deliveries are reduced. Existing wells will most likely be used to perform indirect recovery. Recovered credits could be directly applied to the water use, as in the case of irrigated lands, or could be placed into a conveyance system other than the CAP system and delivered to the customer. Recovery of Water Stored by the Arizona Water Banking Authority 22 Section 4: Methods & Cost The following is an example of indirect recovery with an irrigation district that receives Ag Pool water (see both Table 5 and Figure 4). This method was used successfully under normal supply conditions between 2007 and 2010 for interstate recovery for the Metropolitan Water District of Southern California (MWD). This specific arrangement only works when Ag Pool water is available say for interstate recovery during a non-shortage year or for on-River P4 M&I recovery during a shortage when a portion of Ag Pool water is still available. Table 5 INDIRECT Irrigation District using 75 kAF of CAP Ag Pool on their crops Normal mode 25 kAF recovery mode 75 kAF CAP water delivered directly to crops As a recovery partner, the irrigation district voluntarily agrees to a reduced delivery of 50 kAF of CAP water ; the remaining 25 kAF of water is produced from district wells that recover (pump) AWBA LTSCs CAP Canal Figure 4 Normal Conditions vs. Indirect Recovery, Ag Pool Credit Exchange Credit exchange is when a CAP recovery partner has scheduled CAP water for delivery to an Underground Storage Facility (USF) and instead agrees to receive a portion of that water order as previously accrued storage credits. (see Figure 5) Recovery of Water Stored by the Arizona Water Banking Authority 23 Section 4: Methods & Cost CAP Canal Figure 5 Normal Conditions vs. Credit Exchange CAP customers performing annual storage and recovery (ASR) or replenishment are ideal recovery partners for using the credit exchange method, especially if those customers are storing at or near a USF where the AWBA has previously accrued credits. This method has also been identified as an option for developing ICUA for meeting interstate requests and has previously been used to make water available for MWD. Table 6 is an example of the credit exchange method with a CAP M&I subcontractor as a recovery partner. CREDIT EXCHANGE Table 6 M&I Subcontractor performing 75 kAF of Annual Storage & Recovery Normal mode 75 kAF of CAP water is delivered to USF; 75 kAF recovered into M&I subcontractor's service area and reported to ADWR as Annual Recovery 25kAF As a recovery partner, the M&I subcontractor recovery mode voluntarily agrees to a reduced delivery of 50 kAF of CAP water to the USF; the 50 kAF is recovered and reported to ADWR as Annual Recovery, and 25 kAF of previously stored AWBA LTSCs are transferred, recovered, and reported to ADWR by the recovery partner as recovered CAP water. Method Flexibility One of the additional considerations for the selection of a recovery method is how quickly the capacity can be developed, and how that relates to the likelihood it will be needed. If the probability of needing recovery during a specific time period is relatively Recovery of Water Stored by the Arizona Water Banking Authority 24 Section 4: Methods & Cost low, choosing a recovery method such as credit exchange or indirect recovery may make more sense over direct recovery which can require the installation of costly infrastructure that may or may not be used for years. Methods such as credit exchange and indirect recovery allow for flexibility and lower cost options when demand for recovery is highly uncertain. However, as the probability of recovery increases, SNWA's recovery schedule becomes more certain and/or recovery partner agreements do not appear sufficient to meet projected recovery demands, direct recovery options may be needed. Because the construction of direct recovery facilities will likely take considerable time to design, approve and construct, adequate lead time should be built into the planning schedule. Costs General cost comparison by method The overall cost of recovery will depend on the method, or combination of the methods used. Depending on the purpose for which the recovery is taking place, recovery costs may also be apportioned to an overall class of users (e.g., all M&I subcontractors), in those cases the per-unit costs may be quite modest. The collection of recovery costs by user class is discussed further in Section 7. Cost components for direct recovery include energy used for pumping recovery wells and operations and maintenance (O&M) costs of the wells and the conveyance system. Capital costs must also be factored into the overall cost of recovery if new wells and conveyance systems need to be constructed. Capital costs would include costs for planning, permitting, design and construction, etc. Costs needed to purchase land and/or easement rights must also be considered, if applicable. Indirect recovery cost components generally include the same cost components as direct recovery, though likely lower. The cost components would include well pumping energy costs and well O&M costs above and beyond normal operational costs. If the wells permitted for recovery are existing, but in poor condition, additional costs to rehabilitate the well may be incurred. To the extent new infrastructure is needed, capital costs must also be factored into the total cost. Recovery partners will be compensated for these additional costs through recovery partnership agreements with CAP. CAP performed indirect recovery for California using existing irrigation district wells in the Pinal AMA between 2007 and 2010. The average costs for recovery was just under $60/acre-foot. Of this total, approximately $20/acre-feet was attributed to well O&M costs and repairs. The remaining costs were associated with energy, which varied between wells and electrical providers. As irrigation districts pump more groundwater in the future, recovery costs could increase because some districts face tiered energy rates that could result in the additional pumping charged at higher rates. In addition to potentially higher energy rates, the total energy required to pump water may increase because of dropping water levels due to increased groundwater pumping caused by shortages to CAP supplies available to the districts. Recovery of Water Stored by the Arizona Water Banking Authority 25 Section 4: Methods & Cost Costs associated with credit exchanges are likely to be even lower than indirect recovery. In an example of a credit exchange arrangement between CAP and a subcontractor conducting ASR, the operational costs should be no greater than normal operating costs. This is because the recovery partner's day-to-day operations would not change. In another example of credit exchange, the CAGRD, could forego planned delivery to a USF fulfilling replenishment obligations in exchange for previously stored AWBA credits. No pumping occurs and no direct costs would be incurred. Avoided storage facility fees would, however, still need to be paid to the recharge facility owner because the facility owner was otherwise going to receive a wet water supply and the associated storage fees. Storage fees currently run between $8-16/acre-foot. Recovery of Water Stored by the Arizona Water Banking Authority 26 Section 5: Likelihood, Timing & Magnitude of Recovery Estimating the likelihood, timing and magnitude of future recovery is useful in planning for recovery. Projecting future recovery requires an understanding of the factors affecting recovery, a method for modeling those factors, and an approach to synthesize the results. Factors Affecting Recovery The need for recovery can result from shortages on the Colorado River, a CAP outage 25 or a request by Nevada for the creation of ICUA. Requests for ICUA by Nevada may also be tied to shortage, but are primarily expected to be triggered by requests to supplement Nevada's apportionment during non-shortage years. Shortage Related Whether or not recovery is triggered by a shortage is dependent on the magnitude of the shortage and the demands by Arizona Colorado River water users at the time of shortage. Recovery of AWBA credits during shortage will be required when the reduction in Arizona's Colorado River supply intersects deliveries to CAP users (pools) and On-river P4 M&I users for which the AWBA has firming responsibilities. Supply Factors Each year, the Secretary of the Interior makes a determination on the Colorado River water supply availability conditions for the Lower Division states 26 in terms of Normal, Surplus or Shortage 27. The factors influencing the water supply determination include the amount of water in reservoir storage, runoff from snowmelt and precipitation, consumptive uses in the Upper Basin, and the policies governing reservoir operations. The 2007 Colorado River Interim Guidelines for the Lower Basin Shortages and the Coordinated Operations for Lake Powell and Lake Mead (Interim Guidelines), which are in effect through 2026, outline how and when the Secretary makes the annual water supply determination. Three tiers of shortage are designated and the trigger for each tier is tied to a specific elevation in Lake Mead (see Table 7). Arizona water contracts dated after1968, including the entitlement held by CAP, have lower priority than California’s apportionment, causing Arizona to bear the majority of the Lower Basin shortage. Nevada also bears a portion of a shortage. In accordance with Minute 319 to the 1944 US-Mexico Treaty, which is in place through 2017, Mexico also takes a defined reduction in water deliveries during shortage. As noted earlier, emergency CAP outages are not included in the scope of this planning document Arizona, Nevada and California make up the Lower Division States 27 A shortage condition exists when "…insufficient mainstream water is available to satisfy 7.5 million acre-feet of annual consumptive use in the Lower Division states." Record of Decision - 2007 Colorado River Interim Guidelines for the Lower Basin Shortages and the Coordinated Operations for Lake Powell and Lake Mead 25 26 Recovery of Water Stored by the Arizona Water Banking Authority 27 Section 5: Likelihood, Timing & Magnitude of Recovery Table 7 Reduction in deliveries to Lower Division States and Mexico during a declared shortage Shortage Tier Tier 1 Tier 2 Tier 3 Tier 3+ January 1 Elevation of Lake Mead Delivery Reductions During Shortage (AF) Nevada Mexico Arizona 320,000 13,000 50,000 400,000 17,000 70,000 480,000 20,000 125,000 Basin States must consult (consultation triggered once Lake Mead drops below 1025') Source: Interim Guidelines (2007) and Minute 319 (2012) 1075' to 1050' <1050' to 1025' <1025' to 1000' below 1000' Arizona's reduction as specified in the Interim Guidelines is further shared among the state's P-4 water users. After an extensive public process in 2006, the Director of ADWR proposed a method for sharing Arizona's reduction between on-River P-4 users and CAP, which was sent as a recommendation to the Secretary of the Interior. 28 The recommendation proposes a proportional shortage reduction to P-4 on-River water supplies based on entitlement. Using this method, when on-River P-4 diversions reach full entitlement (164,652 AF), on-River P-4 diversions will be reduced by approximately 10% of the shortage volume. The remainder of the reduction will be borne by CAP. However, until on-River P-4 entitlements are fully utilized; CAP will bear most if not all of the delivery reductions to Arizona. Demand Factors On-River Demand More than 90% or approximately 1 MAF of Arizona's on-River water use is pursuant to high-priority (P1-3) water entitlements and not affected by shortages on the River, but the P-4 entitlements provide a critically important supply to a variety of water users, including a number of the River communities. 29 In total, these P-4 entitlements are currently underutilized (~111,000 AF in 2012 out of a total of 164,652 AF of entitlement), however overall demand is expected to increase over time, particularly as population grows. Since the AWBA only firms P4 M&I water, the amount of recovery also depends on the proportion of entitlements being used for M&I purposes. CAP Demand The total volume of supply available for CAP is based on the Colorado River supply available to Arizona, less the use on-River. That available supply is first used to meet CAP long-term contract demands, and then any remainder is Excess Water, which is first used to satisfy the Agricultural Settlement Pool, and then other Excess users, including the AWBA (Figure 6). 28Arizona 29 Such Director’s Shortage Sharing Workgroup Recommendation from October 2006 as Mohave Water Conservation District, Lake Havasu City, and Bullhead City Recovery of Water Stored by the Arizona Water Banking Authority 28 Section 5: Likelihood, Timing & Magnitude of Recovery The CAP long-term entitlements total 1.415 MAF, and are grouped into four priority types; P-3, Indian, M&I, and NIA. The delivery volumes, from highest to lowest priority are: - 68,400 acre-feet of higher priority P-3 water: 47,500 acre-feet for the Ak-Chin Community and 20,900 acre-feet of Salt River Pima-Maricopa Water Rights Settlement exchange water for seven Valley cities 30 - 981,902 acre-feet 31 of M&I priority subcontracts and Indian priority contracts 32 - 364,698 acre-feet 33 of NIA priority water for both Indian and non-Indian parties Long-term entitlement demand is expected to increase over time, primarily driven by population growth and increased industrial use. Full utilization of the NIA priority entitlements depends on the reallocation of163,595 AF; 96,295 AF for M&I uses, and 67,300 AF reserved for Indian water right settlements. 34 1.2 MAF 1.6 MAF Figure 6 Arizona Colorado River Priorities and CAP Pool (based on 2012 Use) 30 This water was originally 72,000 AF of on-River P-3 water. Delivery through the CAP system incurs 5% losses resulting in 68,400 AF available 31 1,029,205 acre-feet after 2044 once 47,303 acre-feet of NIA (HIDD) water is converted to M&I priority 32 Shortage is shared between these two higher priority categories based on the formula developed in the Gila River Indian Community Water Rights Settlement 33 317,395 after 2044 34 23,782 Af of the 67,300 AF reserved for Indian water right settlements are pending for the White Mtn Apache Recovery of Water Stored by the Arizona Water Banking Authority 29 Section 5: Likelihood, Timing & Magnitude of Recovery Interstate Requests Recovery of interstate credits and the development of ICUA will be triggered by requests from Nevada for the release of ICUA. The timing and magnitude of these requests can be independent of shortage conditions, and are expected to be driven primarily by Nevada's future demand and the desire to supplement its apportionment of Colorado River water (300,000 acre-feet). Nevada is currently using less than their full entitlement (237,161 AF in 2012 35, see Figure 7), but population growth is expected to result in increased future demand. Figure 7 Nevada's Historic Consumptive Use 350,000 300,000 Nevada Consumptive Use (1970-Present) Entitlement 250,000 200,000 150,000 100,000 50,000 - The interstate banking program is governed by state statute, and four inter-related agreements. 36 The agreements allow Arizona to store CAP water on behalf of Nevada, 37 as well as develop the mechanisms necessary to enable its recovery and exchange. Upon request of the release of ICUA by Nevada, a portion of Arizona's entitlement will be made available for diversion by Nevada from Lake Mead, and CAP will recover an equal volume of interstate credits and deliver the recovered water to its customers to make up for CAP's reduced diversion. USBR Degree Accounting Report Storage and Interstate Release Agreement (SIRA); Agreement for Interstate Water Banking, as amended; Agreement for the Development of Intentionally Created Unused Apportionment (ICUA); and Recovery Agreement, with subsequent amendments 37 More specifically, the Colorado River Commission of Nevada holds Nevada's Colorado River apportionment. The Southern Nevada Water Authority has several diversion contracts, the largest being 308,000 acre-feet 35 36 Recovery of Water Stored by the Arizona Water Banking Authority 30 Section 5: Likelihood, Timing & Magnitude of Recovery Starting in 2015, Nevada is required to annually provide the AWBA and CAP with a schedule of potential ICUA requests for the following ten year period. A minimum lead time of three years is required for any year in which there is an amendment to the schedule. Nevada is also limited in the magnitude of ICUA that can be requested in any single year: 20,000 acre-feet in the initial year, 30,000 acre-feet in the second year and 40,000 acre-feet any year thereafter. During a declared shortage, up to an additional 13,000-20,000 acre-feet per year may be requested (depending on shortage tier), and additional ICUA will be developed to the extent recovery capabilities exist. On an annual basis, the parties may also agree to additional interstate storage, but the 600,651 acre-feet of existing credits must be recovered by 2063. Modeling Approach Quantification of the factors described above, and evaluation of potential future recovery, requires the use of models. The analysis in this Plan relies on two models: the Bureau of Reclamation's Colorado River Simulation System (CRSS) and a custom recovery model that was used to calculate the probability of specific recovery volumes occurring through time, based on a range of supply and demand conditions. CRSS was used to generate a range of future Colorado River supplies available to Arizona. The CRSS model incorporates parameters such as basin hydrology, upper basin demands and current operating rules. Table 8 lists some of the key CRSS assumptions used for this Plan. These assumptions are generally conservative in nature, and are part of a regularly updated consensus "Arizona Baseline" developed jointly by ADWR, CAP and the AWBA. Using these assumptions, CRSS generated over one hundred future water supply scenarios, commonly referred to as traces. Table 8 Key Modeling Parameters & Assumptions that affect Arizona's Colorado River Supply 38 Modeling Parameters Modeling Assumptions Basin Hydrology Observed Record (1906-2010) Upper Basin Demands ADWR Upper Basin Demand Assumption - 4.8 MAF by 2031, then flat Operation of Yuma Desalting Plant No Mexico Shortage Sharing Yes, Minute 319, extended Reservoir Operations 2007 Interim Guidelines, extended Initial Reservoir Condition 2014 Lake Mead elevation (Projected from August 2013 24-month study) 38 Model does not simulate shortages greater than a Tier 3 (480,000 AF for AZ) Recovery of Water Stored by the Arizona Water Banking Authority 31 Section 5: Likelihood, Timing & Magnitude of Recovery The water supply traces from the CRSS model were incorporated into the recovery model, where the traces were matched against a range of projected on-River and CAP demands. The model determines the instances in which available supplies do not meet the projected demands, and calculates the probability, timing and magnitude of potential recovery of water stored by the AWBA. The recovery model also allows ICUA requests to be analyzed and combined with shortage-based recovery. To capture the uncertainty of future demand, two different variations were developed for both on-River and CAP utilization. On-River demand is projected to increase to approximately 1.22 million acre-feet by 2045 39, of which 92,000acre-feet 40 is P-4 on-River. Two variations of the amount of on-River P-4 remaining for agricultural use were developed. In one, the P-4 agricultural demand was held constant through the planning horizon (at 42,000 acre-feet of consumptive use) and in the second, the P-4 agricultural demand is converted entirely to M&I use by 2035 (See Figure 8). This later assumption increases the amount of P-4 supply that would potentially require recovery during a shortage. Figure 8 Projected On-River P-4 Consumptive Use (Scenarios A & B) 41 39 This is the same assumption that ADWR called "Scenario A" in its recent NIA reallocation process modeling 92,000 AF of consumptive use correlates to approximately 146,000 AF of diversion. On-River P-4 entitlements are capped at 164,652 AF of diversion 41 2012 actuals 40 Recovery of Water Stored by the Arizona Water Banking Authority 32 Section 5: Likelihood, Timing & Magnitude of Recovery The two variations in CAP utilizations differ in how quickly full utilization of long-term entitlements is achieved; one achieves full-use by 2045(See Figure 9), the other achieves full use ten years sooner (Figure 10) (See Appendix A for detailed assumptions). Figure 9 CAP Demand Schedule for Scenario A Figure 10 CAP Demand Schedule for Scenario B Full Long-Term Contract Use by 2035 1,800,000 Historic Projected Full Use 1,600,000 1,400,000 1,200,000 1,000,000 800,000 1.415 MAF 600,000 400,000 200,000 - P3 M&I & Indian NIA Ag Pool Other Excess For interstate recovery, a larger number of potential outcomes were modeled. The variations included the timing of the first request for ICUA (2025 or 2035), the magnitude of request Recovery of Water Stored by the Arizona Water Banking Authority 33 Section 5: Likelihood, Timing & Magnitude of Recovery (maximum or evenly distributed to 2063), and whether an additional request for ICUA during shortage was made. Modeling Results Synthesizing Results Even with a relatively small number of factors and variations, a large number of model results can be generated. To make these results manageable, two approaches were taken. First, composite scenarios were developed based on specific sets of assumptions. Four combinations of assumptions where chosen to represent a plausible range of future intrastate and interstate demands: Scenario A with Early Steady Interstate, Scenario A with Later Steady Interstate, Scenario B with Early Max Interstate, and Scenario B with Later Max Interstate (see Table 9). In comparison to Scenario B, Scenario A assumes less on-River P-4 M&I use by 2045, slower utilization rates of CAP entitlements as well as smaller volumes of future interstate requests. Table 9 Scenario Assumptions Intrastate Assumptions Scenarios Scenario A On-River Demand Increase to 1.22 MAF by 2045; no conversion of P-4 agricultural use CAP Demand Full long-term contract use by 2045 Scenario B Nevada Request Early Steady: Start in 2025; steady to 2063 (~15 kAF/yr); no shortage request Later Steady: Start in 2035; steady to 2063 (~21 kAF/yr); no shortage request (ADWR's Scenario A for NIA reallocation) Increase to 1.22 MAF by 2045; full conversion of P-4 agricultural use to M&I by 2035 Interstate Assumptions Full long-term contract use by 2035 Early Max: Start in 2025; max request; additional shortage request Later Max: Start in 2035; max request; additional shortage request Second, the recovery model was developed to display probabilistic results of the underlying shortage traces. The recovery modeling tool generates graphs which depict the probabilities that a specific annual recovery volume will be needed, for each year in the planning horizon (see Figures 11 and 12). The shade of the cell indicates the probability that the specific volume of recovery will be needed at a particular time. The darker the cell, the higher the Recovery of Water Stored by the Arizona Water Banking Authority 34 Section 5: Likelihood, Timing & Magnitude of Recovery probability is that recovery at that volume will be needed. For instance, for a given year the very pale blue at the top may indicate a 15% probability that 20,000 AF of recovery may be necessary, but the darker blue below indicates there is a 30% probability of 5,000 AF of recovery for that same year. To further aid in the discussion of the results as well as future planning efforts, the planning horizon was divided into three different periods: Near-term (2013-2023), Mid-term (2024-2034) and Long-term (2035-2045). These planning periods are depicted as gold, blue and red on the chart's timeline. Probability at Specified Volume Figure 11 Example of graph generated by the Recovery Modeling Tool 77,000 70,000 63,000 56,000 49,000 - 5% 25% 50% 13% 13% 75% 100% Mid-Term Near-Term 42,000 - Long-Term 35,000 12% 28,000 - 15% 21,000 14,000 - 17% 16% 7,000 - 12% 17% 17% 11% 11% 30% 28% 15% 12% 32% 30% 29% 30% 45% 14% 30% 29% 31% 32% 30% 29% 46% 45% 17% 15% 17% 17% 38% 35% 30% 33% 33% 29% 31% 45% 48% 48% 46% 45% 35% 30% 33% 47% 46% 45% 44% 45% 48% 48% 46% 45% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45% 37% 40% 37% 40% 39% 47% 48% 15% 35% 36% 35% 36% 53% 35% 12% 14% 14% 38% 17% 35% 32% 55% 36% 13% 11% 14% 28% 14% 39% 36% 13% 14% 16% 37% 40% 12% 13% 14% 16% 37% 40% 36% 13% 14% 16% 15% 16% 16% 13% 14% 16% 15% 16% 13% 32% 13% 14% 17% 18% 15% 13% 13% 14% 17% 15% 16% 6% 13% 14% 15% 16% 6% 13% 14% 47% 30% 36% 52% 51% 52% 52% 51% 47% 48% 47% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45% 51% 55% 52% 51% 52% 52% 51% 47% 48% 47% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 1% 17% 13% 14% 17% 15% 15% 12% 11% 14% 35,000 28,000 21,000 - In 2023, there is a 35% probability of needing 7,000 AF of recovery, and a 17% probability of needing 14,000 AF 14,000 7,000 - 15% 16 17% 15% 16% 15% 16 17% 15% 35% 36% 16% 12% 17% 6% 13% 16% 12% 17% 35% 32% 35% 36% 6% 13% 32% 36% 36% 53% 35% 55% 36% 36% 51% 55 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 1% 16% 17% Figure 12 Recovery of Water Stored by the Arizona Water Banking Authority 35 Section 5: Likelihood, Timing & Magnitude of Recovery Modeling Results Intrastate Recovery Component Modeling results suggest that the earliest intrastate recovery may be triggered sometime around 2017, though the annual volume and probability is very low. Recovery for on-River users and the state's portion of Indian NIA water are projected to occur first and well before recovery for M&I firming which is not projected until at least 2035. It is important to note that CRSS modeling done in September, 2013 shows a high probability (>50%) that a level 1 shortage could occur in 2016, but the recovery modeling indicates that the potential shortage would not intersect with projected on-river or NIA priority pool demands. Figure 13 shows projected CAP water orders for 2016 and the approximate impact a level 1 shortage would likely have on the projected delivery schedule. Excess CAP including Ag Pool water would be significantly impacted; however no intrastate recovery would be triggered. Other Excess Shortage (75,000) Ag Pool Shortage Ag Pool 155,000 1.0 MAF 0.5 MAF NIA Priority 215,000 Indian Priority 317,000 465,000 Priority 3 68,400 High 0 MAF M&I Priority CAP Delivery Priority (245,000) Low 1.5 MAF 320,000 Figure 13 2016 Level 1 Shortage The intrastate recovery component results of both Scenario A & B are shown in Figure 14 before interstate recovery is added. The magnitude and likelihood of annual recovery, in both Scenario A & B, gradually increases through the planning horizon as the use of on-River P-4 and CAP long-term entitlements increases. Shading of the graph indicates the underlying shortage tiers and probability that the annual recovery volume will be necessary. Potential recovery during the Near Term (2013-2023) and Mid Term planning period (2024-2034) consists of a combination of on-River and Indian NIA recovery (see Appendix B for more details). Recovery in the Long Term planning period consists of on-River, Indian NIA and M&I firming. The spike in 2044 is due to the conversion of 47,303 acre-feet of water from the NIA priority pool to the M&I user pool in 2044. This increases the volume of firmed water for the M&I pool. Scenario B shows higher recovery volumes due to the faster utilization rate of longterm entitlements. Recovery of Water Stored by the Arizona Water Banking Authority 36 Section 5: Likelihood, Timing & Magnitude of Recovery Figure 14 Scenario A & B before Interstate Recovery Component is Added 140,000 126,000 - Intrastate Recovery Component of Scenario A On-River: No P4 Ag conversion; CAP: Full contract use by 2045 112,000 - Acre Feet 98,000 84,000 70,000 56,000 42,000 - 5% 25% 50% 75% Maximum 75th percentile 100% 28,000 - 0- 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 14,000 - 140,000 126,000 - In-state Recovery Component of Scenario B On-River: P4 Ag convert by 2035; CAP: Full contract use by 2035 112,000 - Acre Feet 98,000 84,000 70,000 56,000 42,000 - 5% 25% 50% 75% Maximum 75th percentile 100% 28,000 - 0- 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 14,000 - Recovery of Water Stored by the Arizona Water Banking Authority 37 Section 5: Likelihood, Timing & Magnitude of Recovery Interstate Component Interstate recovery could occur as early as 2018 but is not expected to occur until the MidTerm (2024-2034) or Long-Term planning period (2025 or later) and the maximum volume could be up as much as 40,000 acre-feet plus up to 20,000 acre-feet during shortages. Four different interstate assumptions were created to represent a plausible range of future interstate recovery: early (2025) and steady (15KAF/Y), later (2035) and steady (21KAF/Y), early (2025) and max (40KAF/Y plus shortage if applicable) and later (2035) and max (40kAF/Y plus shortage if applicable). Combined Results When the intrastate recovery results (graphs previously shown) were combined with the interstate recovery assumptions mentioned above, four scenarios were generated: Scenario A with Early Steady Interstate, Scenario A with Later Steady Interstate, Scenario B with Early Max Interstate, and Scenario B with Later Max Interstate (See Figures 15-16). Recovery of Water Stored by the Arizona Water Banking Authority 38 Section 5: Likelihood, Timing & Magnitude of Recovery Figure 15 140,000 126,000 112,000 - Scenario A (Early Steady Interstate) On-River: No P4 Ag conversion; CAP: Full contract use by 2045 Acre Feet 98,000 84,000 70,000 56,000 42,000 - 5% 25% 50% 75% Maximum 75th percentile 100% 28,000 - 0- 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 14,000 - 140,000 126,000 112,000 - Scenario A (Late Steady Interstate) On-River: No P4 Ag conversion; CAP: Full contract use by 2045 Acre Feet 98,000 84,000 70,000 56,000 42,000 - 5% 25% 50% 75% Maximum 75th percentile 100% 28,000 - 0- 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 14,000 - Recovery of Water Stored by the Arizona Water Banking Authority 39 Section 5: Likelihood, Timing & Magnitude of Recovery Figure 16 140,000 126,000 - Scenario B (Early Max Interstate) On-River: P4 Ag convert by 2035; CAP: Full contract use 112,000 - Acre Feet 98,000 84,000 70,000 56,000 42,000 - 5% 25% 50% 75% 100% 28,000 - 0- 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 14,000 - 140,000 126,000 112,000 - Scenario B (Later Max Interstate) On-River: P4 Ag convert by 2035; CAP: Full contract use Acre Feet 98,000 84,000 70,000 56,000 42,000 - 5% 25% 50% 75% 100% 28,000 - 0- 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 14,000 - Recovery of Water Stored by the Arizona Water Banking Authority 40 Section 5: Likelihood, Timing & Magnitude of Recovery Modeling Highlights  Earliest projected intrastate recovery is 2017 (at 1% probability; Indian NIA and On-River)  Total intrastate recovery during Near-Term Period is projected to be no greater than 17,000 acre-feet per year, during Mid-Term no greater than 38,200 acrefeet per year and in the Long-Term no greater than 84,500 per year.  36% or less probability of needing to recover in any given year during the NearTerm planning period (2013-2023)  55% or less probability of needing to recover in any given year during the MidTerm planning period (2024-2034)  No M&I recovery projected until the Long-Term planning period (2035-2045) and even then less than 17% probability of needing to recover in any given year It is evident from the modeling results that the timing and magnitude of Nevada's request plays a significant role in projecting future recovery volumes. The AWBA, CAP and ADWR should have a better idea of future requests from Nevada when SNWA submits its first 10 year plan to the AWBA in 2015. Figure 17 takes the maximum total projected recovery in each planning period from all scenarios and disaggregates it by recovery type. Note that M&I recovery is not projected until the Long Term planning period. Of the intrastate recovery needs, only On-River and Indian NIA are projected in the first two planning periods. Requests for interstate recovery are not expected to occur until at least the Mid Term period. Maximum Projected Recovery by Type 160,000 140,000 120,000 100,000 19,900 On-River M&I Interstate AF 23,700 Indian NIA 15,500 42,100 80,000 22,700 60,000 40,000 20,000 0 60,000 60,000 Mid-Term (2024-2034) Long-Term (2035-2045) 6,800 10,200 Near-Term (2013-2023) Figure 17 Recovery of Water Stored by the Arizona Water Banking Authority 41 Section 5: Likelihood, Timing & Magnitude of Recovery Recovery of Water Stored by the Arizona Water Banking Authority 42 Section 6: Credit Request, Distribution & Recovery Opportunities The range of possible future recovery identified in the previous section frames the general likelihood, timing and magnitude of potential recovery activity. This section builds on that information to determine the general volume and location of future recovery. There are three factors that will govern these specific decisions: credit requests, credit distribution, and recovery opportunities. Credit Request & Distribution During shortage on the Colorado River, the volume of AWBA credits needed for recovery will be based on requests for firming by on-River P4 contractors pursuant to recovery and exchange agreements (currently only with MCWA); the difference between supply and demand for the M&I priority class of CAP water and up to 23,724 AF for NIA Indian priority CAP water firmed by the AWBA; and up to 40,000 acre-feet per year of request for ICUA by Nevada (up to 60,000 acre-feet during shortage). Prior to a year in which recovery is required, CAP, in consultation with the AWBA, will use the projected recovery volumes to develop a recovery schedule that identifies the volume of credits that will be utilized, the storage facility at which they were accrued, and the purpose for which they are needed (See Section 7 for a detailed operational timeline). By statute, recovery must occur within the AMA where the original storage took place. Current statutes allow water stored at any USF or GSF in an AMA to be recovered anywhere in the same AMA under a valid recovery well permit, but there are often hydrologic and policy advantages for recovery to take place in the vicinity of the specific storage facility, which is a view many potential recovery partners and water managers have expressed. CAP's credit requests to the AWBA will need to consider credit funding sources. As discussed in Section 3, a credit's funding source dictates the allowable use(s) of that credit. Table 10 shows total credits accrued through 2012 by funding source and the percentage stored in each AMA. Table 10 Credits (AF) accrued by funding source and percentage by AMA 42 Acre-feet 1,907,724 PHOENIX PINAL TUCSON Ad Valorem 70% 10% 20% 787,316 Withdrawal Fee 37% 50% 13% 403,830 General Fund 10% 76% 14% Shortage Reparations 25% 73% 1% Interstate 73% 18% 82,376 600,651 42 8% Not all funding source percentages add up to 100% due to rounding Recovery of Water Stored by the Arizona Water Banking Authority 43 Section 6: Credit Request, Distribution & Recovery Opportunities CAP will also consider AWBA resolutions, statues and contractual obligations when developing its request to the AWBA. Based on current AWBA direction, this Plan assumes that recovery for meeting an Indian NIA firming obligation will be met using withdrawal fee credits (pending further legislative appropriations) and on-River P-4 M&I recovery will be met with General Fund credits. Due to the anticipated shortfall in achieving the M&I firming goal in the Tucson AMA however, this Plan assumes that CAP will not request Tucson AMA credits accrued with withdrawal fees during the planning horizon, in order to preserve the option of using them for M&I firming in the future. The AWBA will need to make a policy decision on this issue at the appropriate time. This Plan also affirms the statutory provisions that ad valorem credits will be used for CAP M&I recovery, and interstate credits will be used for interstate ICUA requests based on contractual obligations. The AWBA has not yet developed a policy for the distribution of credits accrued with shortage reparation funds, so this Plan does not include an assumption about the request and distribution of those credits. By statute and policy, ad valorem credits are to be distributed for the benefit of the county from which monies were collected. To date, Maricopa County funds have been expended exclusively in the Phoenix AMA; Pinal County funds in the Pinal AMA; and Pima County funds have generated Tucson AMA credits. This Plan assumes that the proportion of total M&I subcontract entitlements by county (see Figure 18) 43 will form the basis of CAP's request for credits from each of the associated AMAs. 44 M&I Subcontract Entitlements by County Pima 32% Maricopa 62% Pinal 6% Figure 18 These proportions will change slightly in 2044 when 47,303 of NIA priority water allocated in Maricopa County converts to M&I priority 44 There has been periodic interest in the concept of inter-AMA firming in which 4-cent funds collected in Maricopa County, for instance, are used to accrue credits in the Tucson AMA. In this Plan, it is assumed that any inter-AMA credits would be used to benefit the County that funded the credits (i.e., the inter-AMA credits in the Tucson AMA would be used to satisfy Maricopa County firming needs) 43 Recovery of Water Stored by the Arizona Water Banking Authority 44 Section 6: Credit Request, Distribution & Recovery Opportunities To help illustrate what a CAP credit request (i.e. recovery schedule) might look like distributed by AMA, the general credit use assumptions made above (and summarized in Table 11) were applied to the maximum annual projected recovery volumes for each user type (see Table 12 below) through the planning horizon. Maximum annual recovery volumes by AMA were then calculated and graphed (see Figure 19). Table 11 General Credit Request Assumptions TYPE DISTRIBUTION FUNDING BASIS OF DISTRIBUTION PHX PIN TUC Indian NIA Withdrawal Fee 43% 57% 0% Based on Phoenix and Pinal storage only On-River General Fund 10% 76% 14% Based on AMA storage (see Table 10) M&I Ad Valorem 62% 6% 32% Based on entitlement by county (see Figure 18) Interstate Interstate Funding 9% 73% 18% Based on AMA storage (see Table 10) Table 12 Maximum Annual Volume (AF) Recovery Type Near-Term (2013-2023) Mid-Term (2024-2034) Long-Term (2035-2045) Indian NIA 10,200 22,700 23,700 On-River M&I Total Intrastate 6,800 0 17,000 15,500 0 38,200 19,900 42,100 84,200 45 Interstate TOTAL 0 17,000 60,000 98,200 60,000 144,200 Based on this credit request strategy, the Pinal AMA appears to be the focus of recovery for a significant portion of the planning horizon. This is because the majority of the credits (withdrawal fee credits, general fund credits and interstate credits) needed for much of the recovery projected in the Near and Mid-Term planning periods (Indian NIA, On-River P-4 M&I 45 Total generated by the Recovery Model is slightly less than sum of its individual parts Recovery of Water Stored by the Arizona Water Banking Authority 45 Section 6: Credit Request, Distribution & Recovery Opportunities users and interstate requests), are located in the Pinal AMA. Recovery in the Phoenix and Tucson AMAs will become more significant in the Long-Term planning period when recovery for M&I users is needed and credits generated with ad valorem credits are recovered. Figure 19 Example Credit Request by AMA - Projected Intrastate & Interstate Recovery Example Annual Credit Request by AMA Based on Maximum Annual Projected Recovery 160,000 140,000 26,216 120,000 100,000 AF 12,970 80,000 60,000 10,800 0 68,519 31,159 10,800 2,170 40,000 20,000 74,959 15,416 952 952 24,719 10,982 5,066 10,982 5,066 11,311 Near-Term 43,800 43,800 39,125 5,400 16,711 Mid-Term 44,525 5,400 Long-Term The AWBA and ADWR will review CAP's proposed recovery schedule for consistency with State laws as well as conformance with the AWBA's goals and obligations. With the exception of the statutory provisions regarding the distribution of credits earned with Ad Valorem taxes, and as provided in any agreements entered into by the AWBA, the decision to distribute (or extinguish) any AWBA credits is at the complete discretion of the AWBA (A.R.S. § 45-2457(D)). Consequently, it is imperative that CAP and the AWBA work in close cooperation on the request of recovery credits. The distribution of ad valorem credits has been a source of some uncertainty in previous recovery planning efforts. In order to provide clarity on this issue, CAP, AWBA and ADWR have developed the following proposal: For shortages to the M&I priority pool, the AWBA will distribute credits earned with ad valorem funds to CAP, provided the following conditions exist; Recovery of Water Stored by the Arizona Water Banking Authority 46 Section 6: Credit Request, Distribution & Recovery Opportunities • AWBA has credits available to firm the supply • CAP's recovery schedule is consistent with statutes, rules and policies • Credits will be used to benefit the county for which they were accrued • The shortage to the M&I priority pool is less than 20% Modeling suggests that shortages to M&I priority pool rarely exceeds 20%. However, in the event real-time projections indicate that shortages are anticipated to exceed 20%, the AWBA, CAP, and ADWR will initiate a consultation process, with input from stakeholders, to determine the most appropriate way to address the portion of the shortage that exceeds 20%. It is expected that the drought exemption provisions in the State's Assured Water Supply program, which have a similar 20% threshold, will be included in that discussion. 46 Recovery Opportunities by AMA In addition to the factors described above, CAP's recovery opportunities will also play a large role in where recovery will occur. CAP has, and will continue to, focus its efforts on developing recovery partnerships that will meet recovery where and when it is needed. This Plan identifies the primary recovery opportunities in each AMA that CAP is actively pursuing. Many of these opportunities have been mentioned in past planning efforts and CAP has commissioned a number of technical studies related to these options to further guide its planning efforts. Most of these opportunities are suitable for both shortage and non-shortage related recovery needs. Phoenix AMA The primary recovery opportunities in the Phoenix AMA are: • Credit Exchange with the CAGRD The CAGRD currently holds a 7,996 acre-foot M&I subcontract that is prioritized for replenishment in the Phoenix AMA. 47 The CAGRD's use of that subcontract makes it a good candidate for credit exchange. The CAGRD could agree to forego planned deliveries to a USF and, instead, have credits previously stored by the AWBA assigned to the CAGRD’s Conservation District Account (CDA), where the credits would satisfy replenishment obligations and are then considered extinguished. The CAGRD would receive the credits it needs to fulfill its replenishment obligations and CAP deliveries would have been reduced. 48 The credit exchange method with the CAGRD was successfully used by CAP to develop a portion of ICUA for Metropolitan Water District of Southern California (MWD). In December of 2014, ADWR recommended to the Secretary of the Interior that 18,185 acre-feet of NIA Priority CAP water be reallocated to the CAGRD. The CAGRD is also [AWS Rule citation] The CAGRD's subcontract was established as a result of several voluntary transfer/relinquishment actions, some of which included provisions governing where portions of the subcontract are to be used 48 In the case of replenishment, CAGRD Member pumping has occurred prior to the credit exchange, so the use of permitted recovery wells is not required 46 47 Recovery of Water Stored by the Arizona Water Banking Authority 47 Section 6: Credit Request, Distribution & Recovery Opportunities awaiting finalization of a 2,500 AFY lease of NIA priority CAP water from the White Mountain Apache Tribe. Depending on the level of shortage and demand for higher priority CAP supplies, the CAGRD may be able to perform credit exchange with its NIA priority water as well (i.e. if some NIA supply is still available during shortage). This Plan recommends that the credit exchange method be used with the CAGRD when possible. • Credit Exchange with Subcontractors performing ASR at USFs Subcontractors conducting ASR at a USF in the Phoenix AMA would also make good recovery partners using the exchange method. The physical operation of their recovery wells would be identical. The only difference would be that instead of receiving and storing water at a USF facility, the recovery partner would recover water previously stored by the AWBA. To date, 22 of the 36 M&I subcontractors in the Phoenix AMA store CAP water in the same recharge facilities where the AWBA has stored water. Additionally, 24 of the 36 M&I subcontractors have a combined total of 485 recovery wells. 49 In 2012, approximately 30,000 AF of annual storage and recovery took place in the Phoenix AMA. Note that under limited circumstances, such as for the development of ICUA during a non-shortage year, there may also be opportunities to do credit exchange with a CAP subcontractor that was storing to accrue long-term storage credits. This Plan recommends that CAP pursue recovery partnerships with subcontractors in the Phoenix AMA that are currently conducting Annual Storage and Recovery (ASR). • Indirect Recovery using Third Party Recovery Partners and Regional Water Delivery Systems Many of the M&I subcontractors in the Phoenix AMA, and some of the Indian contractors, are served by regional water delivery systems other than CAP. These include canals and related infrastructure operated by SRP, MWCD and RWCD. There are existing arrangements in which CAP water is wheeled or exchanged, and in each case, the regional systems include permitted recovery wells. These factors provide an opportunity to enter into agreements with the long-term CAP contractors and the third party partners to recover AWBA credits. As discussed in Section 4, indirect recovery requires a CAP recovery partner or in this case a third party recovery partner to have additional recovery well capacity available to use when CAP deliveries are reduced. 49 Draft Planning for Recovery, CAWCD, February, 2012 Recovery of Water Stored by the Arizona Water Banking Authority 48 Section 6: Credit Request, Distribution & Recovery Opportunities Figure 20 Phoenix AMA With appropriate agreements among all parties, AWBA credits could be recovered by third party recovery partners and delivered to their customers to make up for a reduction in CAP deliveries. Preliminary discussions have occurred between CAP and the primary water districts, and there appears to be initial interest in developing these partnerships. This Plan recommends that CAP pursue recovery partnerships with subcontractors and the districts operating regional infrastructure to make up for reduced CAP deliveries by recovering AWBA credits. • Other Opportunities in the Phoenix AMA The AWBA has stored more than 450,000 acre feet at the Tonopah Desert Recharge Project (TDRP), in the far western portion of the Phoenix AMA, where there is little current groundwater pumping. This physical isolation helps protect the stored water, but will likely require new wells to be constructed when recovery is required. In 2009, CAP commissioned an initial investigation of a potential large-scale direct recovery well field at TDRP. That Phase 1 Study reached a preliminary conclusion that large-scale recovery at TDRP is hydrologically feasible, but would require a potentially large capital expenditure. Before that expenditure could be justified, an analysis of the timing, economics and purpose of proposed recovery will be required, and it is likely that such a project would need to have multiple recovery purposes (e.g., Interstate in non-shortage, Recovery of Water Stored by the Arizona Water Banking Authority 49 Section 6: Credit Request, Distribution & Recovery Opportunities and Indian NIA during shortage). It is also possible that a smaller scale project could be developed at lower costs. Pinal AMA The primary recovery opportunities in the Pinal AMA are: Indirect Recovery using Irrigation District wells and the Ag Pool • The Agricultural Settlement Pool (Ag Pool), which is a category of excess CAP water allocated to specific irrigation districts and users, provides a good opportunity for indirect recovery for interstate recovery in non-shortage years. In this arrangement, irrigation district wells are permitted for recovery, and the districts agree to additional pumping (i.e., recovery of AWBA credits) in exchange for a reduced delivery of their Ag Pool water. Since most of the Ag Pool water is used in the Pinal AMA (~80%), the opportunity in this AMA is significant. Indirect recovery with the Ag Pool in the Pinal AMA was successfully employed by CAP, in partnership with MSIDD, CAIDD and HIDD, to recover 74,026 acre feet of water on behalf of California (MWD) between 2007 and 2010. 50 To help maintain that partnership, CAP has had a recovery incentive program in place with the three Pinal AMA irrigation districts since 2007. The participants have been compensated annually in order to maintain specific recovery wells. Program expenditures to date have been approximately $1.7 million and are associated with approximately 30,000-40,000 AFY of potential recovery capacity. CAP and the irrigation districts have also started to explore options for expanding the existing recovery capacity and developing the associated agreements. The timing is favorable because the districts are already working to increase their well capacity in preparation for potential shortages that will affect excess CAP water supplies, and in anticipation of the first step-down in the size of Ag Pool, from 400,000 AFY to 300,000 AFY in 2017. 51 However, precisely because the Ag Pool is scheduled for reduction over time, and its susceptibility to reduction or elimination in shortage, the opportunity to use this water supply for indirect recovery is time sensitive. Though the irrigation districts may still receive CAP water from GSF partners during shortage and after 2030, the lack of a CAP supply of their own would preclude indirect recovery with the districts. 50 An additional 6,883 acre feet of ICUA was developed via the credit exchange method with the CAGRD 2024 the Ag Pool will be reduced to 225,000 AFY, and in 2030 it reduces to zero 51 In Recovery of Water Stored by the Arizona Water Banking Authority 50 Section 6: Credit Request, Distribution & Recovery Opportunities Figure 21 Pinal AMA This Plan recommends that CAP increase and formalize its recovery capacity with the three Pinal AMA irrigation districts that participate in the current Recovery Incentive Program. • Indirect recovery using Third Party Recovery Partners and Regional Water Conveyance Systems There is an extensive network of canals and other water conveyance infrastructure in the Pinal AMA that may be useful for recovery of stored water. For instance, previous planning efforts have identified the potential opportunity for MSIDD to act as a third party recovery partner for delivering recovered water to the Ak-Chin Indian Community. The Community holds a large entitlement of high priority CAP water 52 that is delivered through the Santa Rosa canal, which first passes through MSIDD. The Santa Rosa canal is currently used to make agricultural deliveries that include both CAP water and groundwater pumped by MSIDD. 53 It might be useful to begin dialogue with both the AkChin Indian Community and MSIDD to evaluate the potential for some type of arrangement whereby a portion of the Ak-Chin Community's full order would be satisfied with the combination of the recovered water and Colorado River water. Collaboration with all relevant parties would be critical to fully inform any such agreement. 52 In Normal supply conditions, 47,500 acre-feet of former Yuma-Mesa Priority 3 water and 27,500 acre-feet of Indian Priority supply 53 In 2012, 311,464 AF of CAP water was delivered to the Santa Rosa turnout Recovery of Water Stored by the Arizona Water Banking Authority 51 Section 6: Credit Request, Distribution & Recovery Opportunities Further analysis suggests there may be opportunities to explore similar concepts utilizing CAIDD wells, and there may be options to satisfy a portion of the deliveries of Indian priority CAP water to the Gila River Indian Irrigation and Drainage District (GRIIDD) that originate in the Pinal AMA. 54 This Plan recommends that CAP pursue cooperative agreements with subcontractors and contractors in the Pinal AMA for indirect recovery using the districts wells and regional conveyance systems, especially the Santa Rosa Canal. • Development of a Direct Recovery Well field In 2009, CAP commissioned a Phase 1 study to evaluate four potential sites in Pinal County located reasonably near to the CAP canal where a large capacity groundwater production well field could be developed. It also identified underutilized wells adjacent to the CAP canal that could be used to recover AWBA credits for delivery to CAP customers. Three of the four sites were located in Pinal AMA. Two of these sites were found to have potential for practical and sustainable groundwater development for recovery operations. One ranged from 12,000-17,000 AFY, the other from 12,000-18,000 AFY. This Plan recommends that the Phase 1 study and its recommendations be pursued in a Phase II study. Siting and building direct recovery sites would require significant lead time and should be considered well in advance of the need. • Partnering with Potential USF Developers to Create Future Credit Exchange Opportunities Currently there are no USFs in the Pinal AMA and, therefore, credit exchange would not be a viable option until one was operational. In 2009, CAP commissioned a study to investigate the feasibility of developing a USF at a previously identified site in the Pinal AMA. Preliminary results indicated that the site was not ideal for recharge and CAP has not pursued the project. However, there are other potentially suitable recharge sites in the Pinal AMA, and there are CAP M&I subcontracts (totaling 15,103 AFY) that may be interested in utilizing such a facility. This Plan encourages the development of USFs in the Pinal AMA for CAP storage by M&I subcontractors. To the extent that subcontractors wish to pursue the USF option, CAP has expressed interest in developing recovery partnerships with these storers. Tucson AMA The primary recovery opportunities in the Tucson AMA are: The GRIIDD itself spans both the Pinal and Phoenix AMAs, but the district's primary deliveries (74,303 AF in 2012) came through the Pima Lateral turnout, which is in the Pinal AMA 54 Recovery of Water Stored by the Arizona Water Banking Authority 52 Section 6: Credit Request, Distribution & Recovery Opportunities • Credit Exchange with Tucson Water performing ASR at Clearwater In 2012, approximately 110,000 AF of annual storage and recovery (ASR) took place in the Tucson AMA. The majority of this ASR was done by Tucson Water, the largest CAP M&I subcontractor, at their Clearwater Renewable Resource Facility (CAVSRP, SAVSRP and associated recovery infrastructure). Tucson Water has also been entering into agreements for the storage and wheeling of other subcontract water, notably with the Town of Oro Valley, Vail Water Company, Pascua Yaqui Tribe, and possibly Metro Water. The AWBA has stored approximately 25% of all its Tucson credits in these recharge facilities, setting up the ideal situation for credit exchange. This Plan recommends that CAP pursue a recovery partnership with Tucson Water. • Credit Exchange with Metro Water performing ASR at Avra Valley USF The Metropolitan Domestic Water Improvement District ("Metro Water") also relies on ASR for a majority of its annual deliveries. Metro stores approximately half of their 13,460 AFY CAP subcontract water at the Avra Valley Recharge Project in Marana, which it purchased from CAP. Currently, Metro's recovery is taking place outside of the Area of Impact of storage; however, Metro Water has plans to develop on-site recovery and conveyance infrastructure. In either case, the AWBA has accrued over half of its TAMA credits at Avra Valley and the near-by Lower Santa Cruz Recharge Project, setting up another ideal situation for credit exchange when Metro's recovery and conveyance infrastructure is built and operational (end of Near-Term period). This Plan recommends that CAP pursue a recovery partnership with Metro Water. • Credit Exchange with Town of Marana performing ASR at Lower Santa Cruz USF The Town of Marana has a 1,528 AF M&I CAP subcontract, which it currently recharges at the Lower Santa Cruz USF. With more than half of the AWBA's credits residing in the Marana area (including 45% in Lower Santa Cruz), the Town is an obvious candidate for credit exchange recovery. Marana has also applied for an allocation of NIA priority CAP water, and there may be shortage and non-shortage circumstances in which the Town can perform credit exchange with NIA water, if they are successful in receiving an allocation. This Plan recommends that CAP pursue a recovery partnership with Marana. • Other Opportunities in the Tucson AMA There have been several other recovery concepts considered in the Tucson AMA over the years, including potential direct recovery facilities in the vicinity of the Kai Red Rock GSF and the Lower Santa Cruz USF. These remain under consideration, but both may require infrastructure investments that would need to be carefully evaluated against other alternatives in the Tucson AMA. Recovery of Water Stored by the Arizona Water Banking Authority 53 Section 6: Credit Request, Distribution & Recovery Opportunities Figure 22 Tucson AMA Recovery of Water Stored by the Arizona Water Banking Authority 54 Section 6: Credit Request, Distribution & Recovery Opportunities Table 13 Summary of Potential Recovery Opportunities by AMA Method Phoenix Pinal Tucson Direct Possible future well field at TDRP (potentially large capacity) Possible future well fields, more analysis necessary (12,00018,000 AFY) Possible future well field, Red Rock or Lower Santa Cruz USF, more analysis necessary Indirect Irrigation Districts – when Ag Pool water is available Irrigation Districts – (30-40kAF current potential capacity) when Ag Pool is available M&I M&I subcontractors, contractors, and/or third party (i.e. water districts like SRP, MCMWCD, and RWCD)with additional well capacity (quantity unknown but could be large) Subcontractors and Contractors and third party with additional well capacity Credit Exchange CAGRD subcontract (8,000 AF) and NIA (18,000 AF) at USFs Subcontractors performing ASR at USFs (approximately 30kAF) Subcontractors performing ASR at USFs (approximately 110 kAF) During non-shortage years with subcontractors earning LTSCs During non-shortage years with subcontractors earning LTSCs Each of these potential opportunities will require additional steps before the recovery capacity can be relied on. Most of these opportunities (summarized in Table 13) will require further analysis, technical studies, and the development of specific agreements. Those steps are discussed in the final section of this Plan, "Future Activities & Commitments." However, successful recovery planning also requires consideration of the issues associated with implementation, the focus of the next section of this Plan. Recovery of Water Stored by the Arizona Water Banking Authority 55 Section 7: Implementation Successful recovery depends on the effective implementation of the kinds of recovery opportunities identified in the previous section. While some aspects of implementation may be premature for consideration in this Plan (e.g., terms of yet-to-be developed contracts or agreements), there are important process steps that can be identified, including critical points in the operational timeline and issues related to the collection of recovery costs. Operational Timeline The need to recover AWBA credits will be evident prior to the year in which it is required. For the creation of ICUA on behalf of Nevada for instance, there is a requirement for annual submission of a 10-year recovery request schedule, and notification from Nevada three years in advance of recovery. The timing of shortage-related recovery is less predictable, but is triggered by reservoir conditions—specifically Lake Mead elevations—that develop over a number of years. As the forecasted probabilities of shortage increase, the level of preparation should increase. In the year immediately preceding shortage-related recovery, there are specific provisions of existing agreements that are triggered (e.g., MCWA must notify CAP of its intent to exchange LTSCs), and CAP expects to include similar triggers in the agreements it develops with recovery partners. Before Recovery Year In the latter part of a year immediately before the expected recovery, there will be a number of process steps that will involve CAP, AWBA and ADWR (see Table 14). In particular, CAP will request credits from the AWBA by submitting a recovery schedule. The recovery schedule will identify the projected number of credits needed, including those credits MCWA plans to exchange with CAP, the purpose of recovery and the preferred locations of that recovery. The AWBA and ADWR will review CAP's recovery schedule for consistency with State laws, adopted policies and water management objectives If any changes to the schedule are proposed, the AWBA, ADWR and CAP will work in cooperation to modify the schedule. The AWBA will incorporate the final recovery schedule into its Annual Plan of Operation (APO)as part of its requirement to identify the projected amount, location , purpose, and recipient of credits that will be distributed in that year. During Recovery Year The primary activities during a recovery year will be dictated by the terms of the agreements between CAP and its recovery partners; however there are also credit transfer actions that will need to occur. By statute, 55 long-term storage credits can be recovered provided they were transferred into the account of the entity doing the recovery (i.e., CAP or CAP's recovery partner) by the end of the calendar year. That 55 ARS § 45-852.01(E)(1) and (F) Recovery of Water Stored by the Arizona Water Banking Authority 57 Section 7: Implementation offers some flexibility of when credits are transferred, which can help ensure that credits are used judiciously to accomplish the goals and obligations of the AWBA. After Recovery Year Final accounting of credits recovered in the previous year can only occur after the recovery year has ended and after all Annual Water Use Reports have been submitted to ADWR for review and reconciliation, if neccessary. The final accounting of credits will be determined by ADWR and identified in the AWBA's Annual Report. Collection of Recovery Costs Beneficiaries of recovery are expected to pay the associated costs. Interstate recovery costs are borne by SNWA, while intrastate recovery costs are borne by the class of users whose supplies are made firm by virtue of the recovery. Interstate Recovery costs for interstate banking with Nevada are assigned to SNWA. These costs include energy, O&M, and any capital for recovery facilities. The existing Interstate Recovery Agreement, executed on June 9, 2010, sets forth the development of recovery facilities and payment responsibilities. The recovery costs for the first 50,000 acre-feet of credits were prepaid to CAP, who shall be responsible for the cost of recovery of that water; SNWA will pay for the recovery of the remaining credits. If new facilities are constructed solely to recover water for SNWA, SNWA is required to pay all of the associated costs. If new facilities are constructed for multiple purposes, including recovery for SNWA, then SNWA will pay the proportional share of costs associated with interstate recovery. SNWA will pay its share of operating costs associated with recovery for its benefit. The development of a recovery schedule for SNWA should not unreasonably allocate the higher recovery costs to SNWA. Likewise, SNWA may also benefit from cost saving measures, such as transfer of credits in-lieu of deliveries of water, so long as these opportunities do not burden Arizona water users. On-River P4 Users - Mohave County Water Authority (MCWA) Agreement The on-River P4 users are obligated by existing agreements and statutes to pay the recovery costs borne by CAP and to either pay the AWBA the replacement costs for the LTSCs or by mutual approval, assign credits to the AWBA in lieu of paying the replacement costs. The cost components for recovery will reflect the mix of recovery methods used to firm P4 onRiver uses. The agreement with MCWA adds additional cost provisions for the contracts included in that agreement; including a provision that MCWA shall not be required to pay more than the cost of recovering credits for delivery to CAP customers It is then up to the MCWA and the signatories to the MCWA Agreement to determine how the costs for firming their supplies will then be borne by their users. M&I The cost of recovery for M&I firming will be collected from all M&I subcontractors. CAP anticipates including those costs in the calculation of fixed OM&R that is applied to municipal & industrial subcontractors (i.e., non-Federal deliveries). This approach is Recovery of Water Stored by the Arizona Water Banking Authority 58 Section 7: Implementation consistent with Section 4(a) of the Revised Stipulation, which provides CAP with the authority to use an alternate method for calculating Fixed OM&R charged to M&I priority water. The M&I priority pool is quite large, and the percentage reductions to the pool are expected to be small (maximum of 6% in 2045 in Scenario B), the recovery costs are likely to have a very modest impact on the overall costs. For example, 20,000 acre-feet of recovery at $90/AF, collected over 600,000 AF of M&I priority deliveries, would translate to about $3/AF. However, that 20,000 AF reduction to the M&I pool would only occur if the overall CAP supply had been reduced by at least 25%, which would have much larger cost implications as fixed costs are spread over a smaller delivery volume. The actual impact of these costs would be determined by the CAP Board as part of its rate setting process. Indian NIA The cost collection method associated with the State's obligation to firm up to 23,724 AF of NIA priority water pursuant to the Arizona Water Settlement Act has not been determined. It is generally expected that these costs will be collected from the non-Federal CAP customers in a manner similar to the M&I priority described above. Recovery of Water Stored by the Arizona Water Banking Authority 59 Section 7: Implementation Table 14 Recovery Operational Timeline After (Reporting) During (Recovery) Before (Preparation) Year Month Task April -24 Month Study from USBR provides likely water availability (i.e., Normal, Surplus or Shortage) for the upcoming year June -SNWA provides preliminary request for ICUA for the upcoming year and an estimate for the two succeeding years -Initial discussions with on-River P-4 M&I users on potential water use August -USBR indicates water availability for the upcoming year (i.e., Normal, Surplus or Shortage) based on 24 Month Study -CAP advises customers of expected CAP water availability for upcoming year September -CAP sends AWBA a preliminary Recovery Schedule -AWBA and ADWR review the preliminary Recovery Schedule -SNWA makes final request to the Secretary for the release of the ICUA -On-River water orders due to USBR -Preliminary Annual Plan of Operation (APO), which includes preliminary Recovery Schedule, is presented to the AWBA Commission October -Deadline for customers to submit CAP water orders for the upcoming year and estimates for the two succeeding years -Deadline for MCWA to notify CAP its intent to exchange LTSCs -CAP sends AWBA a draft Recovery Schedule November -AWBA presents its preliminary APO to the GUACs -CAP holds annual customer workshop -CAP and AWBA work cooperatively on any adjustments to draft Recovery Schedule December -Final Draft APO is presented to the AWBA Commission for adoption -Deadline for MCWA to transfer credits to CAP prior to Exchange Year -USBR makes official determination of water availability for next year in their Annual Operating Plan (AOP) signed in December During Year -CAP works with recovery partners to monitor and ensure compliance with contractual responsibilities Quarterly -CAP sends AWBA any substantive changes to the Recovery Schedule -AWBA incorporates the changes in their quarterly reports December -CAP sends AWBA a recovery report with accounting of credit utilization By End of Year -AWBA credits must be transferred to recovery partner (or 3rd party partner) March -Deadline for CAP and recovery partners to submit annual reports to ADWR June -Reconciliation of annual reporting, if necessary June -Final accounting of credits recovered in previous year in AWBA's Annual Report Recovery of Water Stored by the Arizona Water Banking Authority 60 Section 8: Future Activities & Commitments In order to prepare for the potential recovery identified in this Plan, CAP is committed to entering into short and long term recovery agreements with recovery partners to meet projected recovery capacities. CAP is also committed to commissioning the technical studies required to develop the infrastructure for new recovery projects if necessary. And finally, ADWR, AWBA, and CAP are committed to ongoing collaboration, monitoring and analysis to ensure that recovery modeling assumptions remain reasonable and up to date. Recovery Agreements CAP is working to find interested CAP contractors and subcontractors to enter into long-term recovery agreements to meet potential projected recovery demands. To identify interested parties, CAP will periodically send out recovery partner surveys (see example Survey in Appendix C). Because the planning horizon spans over thirty years, there may be varying levels of interest and commitment between recovery partners and CAP through the planning periods (Figure 23). Agreements must have the flexibility required to accommodate customer's changing operations through time, yet provide enough certainty that recovery can be met when needed. Figure 23 Varying Levels of Commitment between CAP and Recovery Partners Initial Expression of Interest Indicate general Agreement in Principle Specific interest in Preliminary Agreement becoming a Agreement or Recovery Partner Intent to become Enter into a Recovery with CAP a Recovery Agreement with through annual Partner with CAP CAP survey CAP will annually assess and compare its existing and planned recovery capacity (by method and location) with projected needs within the short-term, mid-term and long-term planning horizon. Possible actions by CAP to increase recovery capacity if needed include: -entering into new recovery partner agreements, increasing specificity of agreements through time (Figure above) -increasing capacity (both committed and potential) on existing agreements, -developing new direct recovery facilities if necessary (sufficient lead time necessary) Recovery of Water Stored by the Arizona Water Banking Authority 61 Section 8 – Future Activities & Commitments Technical Studies and Future Project Feasibility New direct recovery projects may also be necessary, depending on the number and volume of recovery agreements secured versus the potential projected recovery capacity needed. There have been a number of technical studies already conducted (see Section 6) and the findings of these studies will be used to guide next steps. In the short-term, CAP will focus its technical efforts in the Pinal AMA to evaluate increasing recovery capacity with the irrigation districts during non-shortage and shortage years, with special attention to water quality issues. CAP will also continue to evaluate potential recovery well field locations in the Pinal, Tucson, and Phoenix AMA and obtain input from stakeholders. Monitoring & Updating CAP, ADWR and AWBA will regularly monitor factors influencing Colorado River supplies available to Arizona, as well as Arizona demands and requests from Nevada, in order to ensure that the modeling assumptions used in any future recovery projections remain reasonable. If anything substantial has changed or is expected to change that could significantly alter the recovery projections, the three entities will update the model and analyze the new results. These results will then be shared with stakeholders with opportunity for input. Colorado River Status CAP, ADWR and the AWBA will regularly monitor shortage probability and available supplies to Arizona using the USBR's 24 month water forecast and CRSS modeling. The organizations will use the latest versions of the official CRSS model when available. This includes the version due out soon by the Bureau of Reclamation that incorporates alternative hydrologies (paleo resampled and downscaled climate) in order to conduct a sensitivity analysis with the hydrology (observed record resampled) used in this Plan. CRSS runs will be periodically updated and input into the model in order to stay as current as possible. CAP & On-River Utilization and how potential shortages might impact firmed supplies CAP and ADWR will regularly monitor on-River and CAP system demand and update future demand projections in the Recovery Modeling Tool when appropriate. Each October, CAP receives customers' water orders for the following year as well as estimates of water orders for the next two years. Using this data, as well as analyzing historical trends, CAP will update modeling demand assumption inputs when necessary. Discussions with Nevada As part of a cooperative planning effort, SNWA, AWBA, CAP and the Colorado River Commission of Nevada (CRCN) have agreed to meet annually beginning in 2015, or sooner, if elevations in Lake Mead are expected to be at or below the1075 ft. elevation, to discuss Nevada’s plans for requesting ICUA and the associated recovery costs. Because the timing and magnitude of Nevada’s request for ICUA will play a significant Recovery of Water Stored by the Arizona Water Banking Authority 62 Section 8 – Future Activities & Commitments role in Mid-Term and Long-Term planning period volumes, AWBA and CAP will encourage these discussions to occur earlier and include efforts to better understand SNWA’s longterm plans beyond the 10 year planning horizon currently required and work collaboratively with them on ways to best meet both intrastate and interstate recovery needs. AWBA Activities Because recovery and water storage are not mutually exclusive, continued planning for both is essential for meeting AWBA responsibilities moving forward. This recovery plan can assist the AWBA in its future planning efforts by providing both a projection of credits remaining available after the current planning period and insight for making operational decisions. Credit Balances Although this Plan's primary focus is the recovery of AWBA credits through 2045, the need to recover will continue well beyond the current planning period. For this reason, it is important to have an understanding of the credits that will be used during the planning period, and the volume and types of credits that are anticipated to remain available for future use. This Plan shows that even with the maximum projected recovery for the planning period, three-fourths of the AWBA's currently accrued intrastate credits will still be available after 2045 (Figure 24). However, based on the credit distribution assumptions listed in Table 11 of Section 6 of the Plan, the balances vary considerably by fund type. These credit balances are particularly useful for the AWBA as it re-evaluates its the 100-year firming targets. Remaining Credit Balances, by Funding Source Based on Table 11 Credit Request Assumptions, and CRSS: 9/13 Run, AZ Assumptions; On-River: ADWR NIA "A", Full Ag Convert by 2035; Long-Term Contracts: Full by 2035 3,250,000 3,000,000 - 34% 47% 59% <--AVERAGE (30 71% 2,750,000 - 84% 2,500,000 - 100% 90% <--MAX (796,90 2,250,000 - 100% 2,000,000 - 100% 100% 84% 1,750,000 - 100% 100% 100% 100% 1,500,000 - 100% 100% 100% 100% 1,250,000 - 100% 100% 100% 100% 1,000,000 - 100% 100% 100% 100% 750,000 - 100% 100% 100% 100% 500,000 - 100% 100% 73% 100% 100% 94% 250,000 - 100% 100% 100% 100% 100% 100% 92% 100% 100% 100% 100% Total 4-Cent Withdrawal Fee General Fund 100% 26% 54% 26% 67% 100% Shortage Reparations Figure 24 The remaining intrastate credits after 2045 based on maximum instate recovery scenario and the credit distribution assumptions in Section 6 of the Plan Recovery of Water Stored by the Arizona Water Banking Authority 63 Section 8 – Future Activities & Commitments On-River P-4 M&I Firming As indicated earlier in Section 6, the majority of the AWBA’s general fund credits available for firming on-River P-4 M&I supplies are located in the Pinal AMA (76%). Additionally, the general fund credits currently reserved for use by MCWA are also in the Pinal AMA. While shortage reparation credits can also be used for this purpose, the majority of these credits (73%) are also in the Pinal AMA. Although limited in volume, it may be beneficial to utilize credits accrued in the Phoenix and Tucson AMAs to provide broader recovery options and to balance costs for On-River P-4 M&I users, particularly in the near and mid-term timeframes. For these reasons, the AWBA may also want to identify entities interested in exchanging Tucson or Phoenix AMA credits for General Fund or shortage reparation credits accrued by the AWBA in the Pinal AMA. Future Storage Activities Each year, the AWBA develops a plan of operation that documents how progress will be made on its goals and obligations for the following year. There are several factors that must be considered when developing the plan of operation. These include the availability of Excess CAP water, storage capacity, and funding sources. These factors have historically limited the amount and type of credits accrued by AMA, and the specific locations where credits were accrued within the AMA. CAP’s recently adopted policy on storage priorities at its facilities 56 eases the AWBA’s limitations on storage capacity, but challenges still exist at other USFs and GSFs. As CAP begins to enter into agreements with recovery partners, those agreements will also assist the AWBA in making future storage decisions. By defining where recovery opportunities exist, the AWBA can seek storage opportunities in those areas. This is consistent with longstanding views that storage and recovery should be more closely connected, including many of the concepts that are currently under consideration as part of ADWR's Enhanced Aquifer Management stakeholder process. 57 In addition, diminished Excess CAP supplies are highlighting the need to stretch available resources while making further progress on firming goals. The AWBA has already made efforts to emphasize recovery as part of storage decisions. Recognizing that CAP M&I subcontractors in the Tucson AMA receive their entitlement primarily through annual storage and recovery, the AWBA, working with Tucson AMA stakeholders, developed a priority system that focuses AWBA storage first at facilities with existing or planned recovery wells (eg. Clearwater, AVRP, and Pima Mine Road), leaving storage at GSFs and Lower Santa Cruz Recharge Project for last. Because of the potential for recovery partnerships at these AS&R facilities, the AWBA may want to pursue opportunities to increase storage at these facilities. "CAWCD Underground Storage Facility Capacity Priority Policy", 5/2/2013. http://www.capaz.com/index.php/board/policies?view=download&fileId=2 57Proposals for differing cuts-to-the-aquifer being considered in ADWR's EAM process would not affect AWBA's current credits, but could affect future storage. http://www.azwater.gov/azdwr/WaterManagement/AMAs/EnhancedAquiferManagementStakeholderGroup.htm 56 Recovery of Water Stored by the Arizona Water Banking Authority 64 Section 8 – Future Activities & Commitments Although not available at this time, the AWBA may also want to consider storage opportunities at possible USFs in the Pinal AMA in the future, particularly those where AS&R will be possible. Doing so, would not only expand recovery opportunities, but offer reductions in recovery costs. Recovery of Water Stored by the Arizona Water Banking Authority 65 Appendix A Assumptions for 'Full CAP Build-Out by 2045' Scenario 1. Ag Settlement Pool: Assumes full usage of the tiered Ag Settlement Pool allocation (400,000 AFY through 2016, 300,000 AFY from 2017 through 2023, and 225,000 AFY from 2024 through 2030). 2. P3 Priority: Assumes continued full utilization of P3 contracts by Indian and M&I users across the entire period (68,400 AFY). 3. Indian Priority, used by M&I: Any existing (as of 2013) long-term leases or exchanges of Indian water will be fully utilized by 2045. Assumes an additional 55,000 AF of Indian Priority water is leased and fully utilized by 2045. The White Mountain Apache Tribe's Indian priority allocation (1,218 AF) is assumed to be leased and fully utilized by 2045. 4. Indian Priority, used by Indians: Assumes full usage of all remaining Indian Priority water by Indian users, after leases and exchanges have been subtracted, by 2045. 5. M&I Priority, used by M&I: By 2045, assumes full utilization of M&I subcontracts (620,678 AF) as well as full utilization by Scottsdale of their 12,500 AF San Carlos Apache lease (which is M&I priority water allocated to the San Carlos Apache Tribe). It also assumes full utilization of former Hohokam assignment water in 2044 and 2045 after it converts from NIA priority. a. M&I Priority, used by Indians: Assumes full utilization of the remaining M&I priority water allocated to the San Carlos Apache Tribe that is not used by Scottsdale (18,145 – 12,500 = 5,645 AF) by 2045. This volume is included in the "M&I" pool, not differentiated by User. 6. NIA Priority, used by M&I: Assumes White Mountain Apache Tribe has been allocated 23,782 AF of NIA water, and that it is leased by 2016 and fully utilized by M&I lessees by 2045. Also assumes continued full use of former Hohokam assignment water through 2043 until it converts to M&I Priority (47,303 AF), and continued full use of former RWCD water (5,000 AF) through 2045. The first round (55,255 AF) of currently unallocated NIA water (totaling 96,295 AF) is assumed to be allocated to M&I users by 2015 and fully utilized by 2020. The second round up for reallocation (41,040 AF) is assumed to be allocated to M&I users by 2023 and fully utilized by 2028. 7. NIA Priority, used by Indians: Assumes full usage of all remaining NIA pool water by Indian users (including GRIC and Tohono O'odham), after leases and exchanges have been subtracted, by 2045. Also assumes the remaining pool volume (43,518 AF) reserved for future Indian Settlements is allocated by 2036 and fully utilized by 2045. Recovery of Water Stored by the Arizona Water Banking Authority 67 Appendix A Assumptions for 'Full CAP Build-Out by 2035' Scenario 1. Ag Settlement Pool: Assumes full usage of the tiered Ag Settlement Pool allocation (400,000 AFY through 2016, 300,000 AFY from 2017 through 2023, and 225,000 AFY from 2024 through 2030). 2. P3 Priority: Assumes continued full utilization of P3 contracts by Indian and M&I users across the entire period (68,400 AFY). 3. Indian Priority, used by M&I: Any existing (as of 2013) long-term leases or exchanges of Indian water will be fully utilized by 2035. Assumes an additional 55,000 AF of Indian Priority water is leased and fully utilized by 2035. The White Mountain Apache Tribe's Indian priority allocation (1,218 AF) is assumed to be leased and fully utilized by 2035. 4. Indian Priority, used by Indians: Assumes full usage of all remaining Indian Priority water by Indian users, after leases and exchanges have been subtracted, by 2035. 5. M&I Priority, used by M&I: By 2035, assumes full utilization of M&I subcontracts (620,678 AF) as well as full utilization by Scottsdale of their 12,500 AF San Carlos Apache lease (which is M&I priority water allocated to the San Carlos Apache Tribe). It also assumes full utilization of former Hohokam assignment water in 2044 and 2045 after it converts from NIA priority. a. M&I Priority, used by Indians: Assumes full utilization of the remaining M&I priority water allocated to the San Carlos Apache Tribe that is not used by Scottsdale (18,145 – 12,500 = 5,645 AF) by 2035. This volume is included in the "M&I" pool, not differentiated by User. 6. NIA Priority, used by M&I: Assumes White Mountain Apache Tribe has been allocated 23,782 AF of NIA water, and that it is leased by 2016 and fully utilized by M&I lessees by 2035. Also assumes continued full use of former Hohokam assignment water through 2043 until it converts to M&I Priority (47,303 AF), and continued full use of former RWCD water (5,000 AF). The first round (55,255 AF) of currently unallocated NIA water (totaling 96,295 AF) is assumed to be allocated to M&I users within the CAP service area by 2015 and fully utilized by 2020. The second NIA reallocation round (41,040 AF) is assumed to be allocated to M&I users within the CAP service area by 2023 and fully utilized by 2028. 7. NIA Priority, used by Indians: Assumes full usage of all remaining NIA pool water by Indian users (including GRIC and Tohono O'odham), after leases and exchanges have been subtracted, by 2035. Also assumes the remaining pool volume (43,518 AF) reserved for future Indian Settlements is allocated by 2026 and fully utilized by 2035. Recovery of Water Stored by the Arizona Water Banking Authority 68 Appendix B On-River P-4 M&I Modeling Results Modeling results for on-River P-4 users (see Appendix B-1) show that the magnitude and likelihood of recovery gradually increases through the planning horizon as the use of P4 contracts increases. The rate of increase is more pronounced in Scenario B, which assumes that P4 contracts currently used for agriculture are converted to M&I use, thus qualifying for AWBA firming. In both Scenario A & B, the earliest recovery occurs in 2017, though the volume and probability is low. The CRSS modeling (done September, 2013) does show shortages occurring before 2017, but based on the projected on-River P-4 M&I use, and the formula developed by the Director's Storage Sharing Recommendation, no shortage would be taken by the on-River P-4 M&I users. During the entire Near-term planning period, the probability of recovery in a given year is <36% and the maximum volume is approximately 6,800 acre-feet per year (12-17% probability). During the Mid-term period the maximum annual probability of recovery is 55% for both A & B and the maximum volume per year is approximately 6,800 acre-feet per year in Scenario A and just over 15,500 acre-feet per year in Scenario B. The probability of needing to recover these maximum volumes in any given year is 15-18%. In the Long-term period, the maximum annual probability that recovery will be necessary is 47% for both A & B and the maximum volume per year is approximately 8,400 acre-feet in Scenario A and 19,900 acre-feet in Scenario B. The probability of needing to recovery these maximum volumes is between 11-15%. Scenario B shows higher recovery volumes due to the conversion of P-4 agricultural uses to M&I users which have a firming obligation. Indian NIA Modeling Results Modeling results for Indian NIA users (see Appendix B-2) show that the magnitude and likelihood of recovery gradually increases through the planning horizon as the use of CAP long-term entitlements increases. The rate of increase is more pronounced in Scenario B. Modeling results for Indian NIA users show that recovery is not likely before 2017. The probability of needing any recovery in a given year is <36% through the Near-term planning period. The maximum annual volume is approximately 7,900 acre-feet per year in Scenario A and 10,200 acre-feet in Scenario B. The CRSS modeling does show that there is a high probability of shortages occurring before 2017, but up until 2017 the potential shortages do not intersect with the NIA priority pool. The maximum annual probability that any recovery will be necessary during the Mid-term period is 55% for both A & B and the maximum volume per year is approximately 14,300 acre-feet in Scenario A and 22,700 acre-feet in Scenario B. The probability of needing to recover these maximum volumes in any given year is 15-18%. Recovery of Water Stored by the Arizona Water Banking Authority 69 Appendix B In the Long-term period, the maximum annual probability of any Indian NIA recovery is 47% (in both A & B) and a maximum volume per year of 22,300 acre-feet in Scenario A and 23,700 acre-feet in Scenario B, which is close to the maximum firming obligation under the Settlements Act. Scenario B shows higher recovery volumes due to the faster utilization rate of Long-term entitlements. CAP M&I Recovery Results Modeling results for CAP M&I users (see Appendix B-3) show that recovery is not likely before the Long-term planning period in both Scenario A & B. The maximum probability of needing any recovery in a year is <16% for the entire period in both Scenarios. In Scenario A, recovery for M&I is first possible in 2044. In Scenario B, it is possible sooner (in 2035) due to a more rapid utilization rate than in Scenario A. In Scenario B, the maximum recovery volume is less than 5,000 acre-feet per year until 2044. In 2044, the maximum recovery volume jumps to approximately 42,100 acre-feet per year at 13-14% probability for both Scenario A & B due to the conversion of 47,303 acre-feet of NIA water to the M&I priority pool in that same year. Recovery of Water Stored by the Arizona Water Banking Authority 70 Appendix B Appendix B-1 Modeling Results – On-River P-4 M&I Recovery On-River P-4 M&I Component of Scenario A CRSS: 9/13 Run, AZ Assumptions; On-River: ADWR NIA "A", No Ag Convert 65,000 60,000 - 50,000 Acre Feet 45,000 40,000 - Probability at Specified Volume 55,000 5% 25% 50% 75% 100% 35,000 30,000 25,000 20,000 15,000 10,000 - 15% 12% 15% 16% 5,000 6% 16% 12% 17% 17% 15% 35% 36% 13% 32% 36% 36% 35% 55% 53% 36% 51% 55% 17% 37% 40% 52% 15% 17% 37% 40% 51% 52% 52% 17% 18% 39% 16% 30% 33% 33% 30% 29% 12% 11% 11% 14% 13% 31% 32% 30% 29% 30% 28% 47% 48% 47% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45% 51% 47% 48% 47% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 1% 15% Median Average Maximum 0 327 4,099 0 2,638 8,417 22 1,941 6,745 On-River P-4 M&I Component of Scenario B CRSS: 9/13 Run, AZ Assumptions; On-River: ADWR NIA "A", Full Ag Convert by 2035 65,000 60,000 - 50,000 Acre Feet 45,000 40,000 - Probability at Specified Volume 55,000 5% 25% 50% 75% 100% 35,000 30,000 25,000 20,000 15,000 10,000 - 15% 16% 12% 5,000 - 16% 6% 13% 32% 17% 15% 16% 36% 17% 17% 37% 40% 16% 15% 15% 12% 12% 11% 11% 14% 13% 15% 12% 12% 11% 11% 14% 13% 16% 14% 14% 15% 29% 31% 32% 30% 29% 30% 28% 17% 18% 35% 30% 33% 33% 30% 29% 31% 32% 30% 29% 30% 28% 39% 38% 35% 30% 33% 33% 30% 29% 44% 45% 48% 48% 46% 45% 39% 38% 48% 47% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45% 36% 37% 51% 52% 52% 51% 47% 48% 47% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45% 51% 55% 52% 51% 52% 52% 51% 47% 48% 47% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45% 35% 36% 36% 35% 53% 37% 40% 17% 18% 14% 37% 40% 35% 32% 55% 17% 15% 17% 15% 14% 36% 12% 36% 36% 15% 15% 16% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 1% 17% 15% 16% 16% Median Average Maximum 0 503 6,755 33 3,791 15,504 Recovery of Water Stored by the Arizona Water Banking Authority 0 5,824 19,865 71 Appendix B Appendix B-2 Modeling Results – Indian NIA Recovery Indian NIA Component of Scenario A CRSS: 9/13 Run, AZ Assumptions; On-River: ADWR NIA "A"; Long-Term Contracts: Full by 2045 65,000 60,000 - 50,000 Acre Feet 45,000 40,000 - Probability at Specified Volume 55,000 5% 25% 50% 75% 100% 35,000 30,000 25,000 11% 30% 28% 12% 11% 11% 30% 28% 15% 12% 32% 12% 30% 29% 46% 45% 14% 30% 29% 31% 32% 30% 29% 46% 45% 20,000 - 15% 12% 15,000 - 17% 15% 16% 10,000 5,000 - 12% 17% 17% 15% 16% 17% 15% 16% 36% 15% 16% 17% 15% 17% 37% 40% 15% 37% 40% 36% 37% 51% 52% 51% 55% 52% 51% 52% 6% 13% 16% 12% 17% 35% 32% 35% 36% 6% 13% 32% 36% 36% 35% 35% 32% 15% 36% 17% 16% 14% 15% 11% 16% 30% 33% 33% 30% 29% 31% 45% 48% 48% 46% 45% 39% 38% 35% 30% 33% 33% 46% 45% 44% 45% 48% 48% 46% 45% 39% 38% 48% 47% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45% 52% 51% 47% 48% 47% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45% 52% 51% 47% 48% 47% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45% 37% 40% 17% 18% 16% 14% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 1% 16% 17% 18% 14% Median Average Maximum 0 568 7,889 0 3,731 14,267 0 6,718 22,269 Indian NIA Component of Scenario B CRSS: 9/13 Run, AZ Assumptions; On-River: ADWR NIA "A"; Long-Term Contracts: Full by 2035 65,000 60,000 - 50,000 Acre Feet 45,000 40,000 - Probability at Specified Volume 55,000 5% 25% 50% 75% 100% 35,000 30,000 25,000 20,000 15,000 10,000 - 15% 16% 37% 40% 11% 28% 30% 28% 38% 35% 30% 33% 33% 30% 29% 31% 32% 30% 29% 46% 45% 38% 48% 47% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45% 55% 52% 51% 52% 52% 51% 47% 48% 47% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45% 35% 51% 55% 52% 51% 52% 52% 51% 47% 48% 47% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45% 53% 51% 55% 52% 51% 52% 52% 51% 47% 48% 47% 47% 47% 46% 45% 44% 45% 48% 48% 46% 45% 16% 36% 36% 35% 32% 36% 35% 55% 11% 30% 29% 47% 35% 36% 36% 11% 47% 17% 35% 32% 25% 32% 11% 30% 51% 47% 48% 12% 6% 12% 31% 32% 51% 47% 48% 16% 1% 15% 12% 29% 52% 13% 13% 15% 51% 52% 17% 6% 15% 30% 37% 12% 37% 40% 14% 36% 16% 1% 14% 33% 39% 14% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 5,000 - 17% 37% 40% 15% 16% 36% 12% 14% 33% 17% 39% 17% 15% 15% 16% 15% 12% 16% 15% 15% 17% 16% 16% 35% 30% 17% 15% 16% 17% 16% 17% 18% 17% 18% 15% Median Average Maximum 0 868 10,249 1,108 6,265 22,691 Recovery of Water Stored by the Arizona Water Banking Authority 0 8,729 23,667 72 Appendix B Appendix B-3 Modeling Results – CAP M&I Recovery CAP M&I Component of Scenario A CRSS: 9/13 Run, AZ Assumptions; On-River: ADWR NIA "A"; Long-Term Contracts: Full by 2045 65,000 60,000 - 50,000 - 40,000 - 5% 25% 50% 75% 100% 13% 13% 35,000 - 14% 13% 14% 13% 30,000 - 14% 13% 14% 13% 25,000 - 14% 13% 14% 13% 20,000 - 14% 13% 14% 13% 15,000 - 14% 13% 14% 13% 10,000 - 14% 13% 14% 13% 5,000 - 14% 13% 14% 13% 14% 13% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 Acre Feet 45,000 - Probability at Specified Volume 55,000 - 0 0 0 Median Average Maximum 0 0 0 0 977 42,086 CAP M&I Component of Scenario B CRSS: 9/13 Run, AZ Assumptions; On-River: ADWR NIA "A"; Long-Term Contracts: Full by 2035 65,000 60,000 - 50,000 Acre Feet 45,000 - Probability at Specified Volume 55,000 5% 25% 50% 75% 14% 13% 14% 13% 35,000 - 14% 13% 14% 13% 30,000 - 14% 13% 14% 13% 25,000 - 14% 13% 14% 13% 20,000 - 14% 13% 14% 13% 15,000 - 14% 13% 14% 13% 10,000 - 14% 13% 14% 13% 5,000 - 14% 13% 40,000 - 100% 14% 14% 15% 15% 12% 11% 11% 14% 13% 12% 11% 11% 14% 13% 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 16% 12% Median Average Maximum 0 0 0 0 0 0 Recovery of Water Stored by the Arizona Water Banking Authority 0 1,303 42,086 73 Appendix C – Example Recovery Partner Survey Please take a few minutes to complete this annual survey and help CAP in its recovery planning efforts: 1. Do you currently recharge some or all of your CAP entitlement at an Underground Storage Facility (USF)? a) Yes b) No 2. Are you anticipating recharging some or all of your CAP entitlement at a USF in the next 10 to 20 years? a) Yes b) No c) Maybe 3. If you answered "Yes" or "Maybe" to questions 1 or 2, under what circumstances would you consider accepting previously earned credits in exchange for a reduced delivery to the USF? A. During SHORTAGE conditions on the Colorado River: a) Under no circumstances b) For compensation, and credits stored at the same facility c) For compensation, and credits stored in the same sub-basin d) For compensation, and credits stored in the same AMA e) Unsure f) Other_________________ B. During NORMAL conditions on the Colorado River: a) Under no circumstances b) For compensation, and credits stored at the same facility c) For compensation, and credits stored in the same sub-basin d) For compensation, and credits stored in the same AMA e) Unsure f) Other_________________ 4. Are you currently treating and directly delivering CAP water? a) Yes b) No Recovery of Water Stored by the Arizona Water Banking Authority 75 Appendix C 5. Are you anticipating treating and directly delivering CAP water in the next 10 to 20 years? c) Yes a) No b) Maybe 6. Do you have potentially underutilized well capacity? a) Yes b) No 7. If you answered "Yes" or "Maybe" to questions 4, 5 & 6, under what circumstances would you consider accepting previously earned credits in exchange for a reduced delivery to your treatment plant? A. During SHORTAGE conditions on the Colorado River: a) Under no circumstances b) For compensation, and credits stored at specific recharge facilities c) For compensation, and credits stored in the same sub-basin d) For compensation, and credits stored in the same AMA e) Unsure f) Other_________________ B. During NORMAL conditions on the Colorado River: a) Under no circumstances b) For compensation, and credits stored at specific recharge facilities c) For compensation, and credits stored in the same sub-basin d) For compensation, and credits stored in the same AMA e) Unsure f) Other_________________ 8. Do you currently receive some or all of your CAP water through a regional provider other than CAP (e.g., through an exchange with SRP)? a) Yes b) No 9. If you answered "Yes" to question 8, and the regional provider was considering becoming a recovery partner with CAP, what level of involvement would you expect? c) None; as long as my full order is received and the quality is acceptable d) Some; to ensure my operations are unaffected e) Substantial; to help decide how specific aspects were implemented f) Unsure; would depend on the particular proposal g) Other_________________ Recovery of Water Stored by the Arizona Water Banking Authority 76