1. Municipal Water District of Orange County OC Water Reliability Study INTERIM REPORT Review Interim Phase 1 Results December 8, 2015 Orange County Business Council 1

2. California/OC Economy California: Has a gross domestic product of $2.2 trillion – the 8 th largest in the world Contributes 13% to the output of the U.S. Exports $174 billion; Imports $230 billion Produces more food than any other state – 40% of the annual national agricultural output OC has a similar robust economy! California and OC should plan for a high degree of reliability in future supplies – the OC Water Reliability Study should help to understand what that means

3. Supply GAP Findings Three Scenarios were modeled out to 2040, both with and Without the California WaterFix (Delta Fix). Under the most likely Scenario 2, assuming the Delta Fix does not occur: Modest shortages begin in 2020, 8,500 AF per year on average (about 1.5% of demands) with an occurrence of about 1 in 10 years Large shortages occur by 2040, 74,000 AF (about 13% of demands) with an occurrence of about 5 in 10 years Annual shortages in 2040 could range from 0 to 170,000 AF under different hydrologies 3

4. Supply GAP Findings Scenario 1 shortages would be lower and Scenario 3 shortages would be higher, mainly due to assumptions regarding growth and impacts of climate change The Delta Fix significantly reduce average shortages by 77% for Scenario 2, to 17,000 AF. Decision-making must take into account the large influence of the California Fix. MET and OC are much more reliable with the Fix. Just in time planning can be risky. 4

5. Introduction to GAP Analysis 5 GAPs represent the inability to meet demands under the given Scenario The GAP Analysis being discussed today ASSUMES: NO NEW PROJECTS either at MET, among the MET Member Agencies or in OC Exceptions for OC are that GWRS Expansion to 130,000 AF per year occurs OC Agencies proceed with expansions of existing recycled water systems

6. What Projects are NOT Included in the GAP Analysis? 9 Orange County Poseidon HB or Doheny Ocean desalination OCWD basin storage San Juan Basin yield augmentation Direct Potable Reuse Cadiz MET MET PVID Land Purchase MET Indirect Potable Reuse Project Delta Islands Additional Transfers & Exchanges Additional Local Projects

7. Why Assumptions of “No NEW Projects”in the GAP Analysis 7 This allows portfolios of NEW projects to be “tested” via the modeling to determine the specific reliability improvements to be achieved and they can be compared to other portfolios of projects This evaluation will be conducted in Phase 2 (Feb – Apr 2016)

8. OC Supply GAP Findings in 2040 Average shortages 8 DRAFT - No NEW Projects 3% Scenario 2 13% 30,000 60,000 90,000 0 120,000 Supply GAP Shortage in acre-feet Without Delta Fix With Fix 17,000 74,000

9. OC Supply GAP Findings in 2040 Average shortages 9 DRAFT - No NEW Projects Scenario 1 Scenario 3 3% Scenario 2 23% 1% 6% 13% 12% 30,000 60,000 90,000 0 120,000 Supply GAP Shortage in acre-feet Without Delta Fix With Fix 64,000 126,000 17,000 74,000 4,800 32,000

10. 10 Benefit of the Delta Fix in 2040 – Probability = average values Acre-Feet 17,000 No Delta Fix WITH Delta Fix

11. 11 Growth in GAP 2020 to 2040 Acre-Feet 74,000 (13%) 8,500 (1.5%) 2020

12. OC Projects Ocean desalination OCWD basin storage Water transfers and banking San Juan Basin yield augmentation Additional recycling Water Use Efficiency Emergency power supplies MET Projects California WaterFix MET IPR Project PVID Land Purchase Delta Islands Transfers & Exchanges Potental Projects to Eliminate the GAPS 12

13. Study Phasing 13 Phase 1 Develop data, models, OC water demand projections for 25 years and analyze supply & system GAPS under various scenarios Develop list of projects (portfolios) that can fill the GAPS Phase 1 Extension – started Nov 30 Staff workshops to gather input from member agencies Phase 2 = Feb – Apr 2016 Quantifies the reliability improvement from project portfolios (groups of projects to fill GAPS) Decisions to be made by all water entities – not dictated by MWDOC Provide local officials best information to chart course for decisions affecting their stakeholders Model GAPS Alternatives Evaluations Decisions

14. Major Uncertainties 9 UncertaintyRange of Outcomes California WaterFixNo/Yes MET Demands (growth)Lower/Higher MET IRP Policies & InvestmentsHigher or Lower Reliability OC DemandsRebound from 2015/WUE Regional Local SuppliesLow, High Regional WUELow, High Climate Variability/Change (CRA & SWP)None, Moderate, High Santa Ana River BaseflowsLow, Med Bureau of Reclamation Basin StudyLong Term Sustainability DWR Projections of SWP YieldRange of Outcomes EarthquakesWill happen

15. What is the meaning of being reliable? 15 MET Reliability Definition “…meet all retail-level water demands under all foreseeable hydrologic conditions” “Through the implementation of the IRP, Metropolitan and its member agencies will have the full capability to meet full-service demands at the retail level at all times.” Should reliability involve “water rationing or demand curtailment”? If we have to ask customers to reduce water usage to meet demands at certain times, are we fully reliable? What role? What is the cost of the last unit of shortage?

16. 16 System How well can the infrastructure serve customers if parts of the local or regional system are out of service Supply Having the wet stuff to meet supplies on a sustainable basis Two Types of Water Reliability 4

17. EMERGEN CY GAP Analysis (System Reliability) 17 Local Supplies Groundwater & Recycling Ocean Desalination (future) Where Orange County Gets Its Water 50% Import - 50% Local Conservation (Water Use Efficiency) Colorado River Aqueduct (1941) State Water Project Entitlement (1972) Transfers & Storage Bay Delta Area X X X = Potential Earthquake Locations X X Primary Risks: Earthquakes Power Outages

18. OC Water Demand Forecast 18

19. Supply Gap – Average Shortage (AFY) Possible Proxy for Base-loaded Need* 19 Scenario 1 Scenario 2 Scenario 3 OC TotalA. No FixB. With Fix A. No FixB. With Fix A. No FixB. With Fix 20206,000 8,500 14,000 204032,0004,80074,00017,000126,00064,000 * Examples of base-loaded supplies include additional active conservation, desalination, non-potable reuse, indirect potable reuse, agricultural land fallowing, and take or pay water transfers that are implemented by MET and/or OC. Updated OCWD Basin Run

20. 20 OC Total Supply Gap in 2040 – Phase 2 Example Acre-Feet Scenario 2a – No Fix Water Utilized Remaining Shortage = 22,000 AF Water to Storage = 28,000 AF??

21. Sensitivity of the Modeling The most sensitive model parameters are: Whether or not the California Fix is in place, and by when The extent that climate change impacts our supply reliability, which can take many forms: Loss of the snow pack in the Sierras and Rocky’s affecting imported water Higher reservoir evapotranspiration Reduced groundwater recharge statewide and locally Increased water demands for irrigation and cooling from higher temperatures 21

22. Click to add title Phase 2 Balancing Decisions Without CA WaterFix Level of Investment MET IRP OC Reliability With CA WaterFix Comfort with Risk Phase 2 will help agencies and elected to deal with these judgements