- Impact on revenue as a result of droughts
- Supply issues
- Alternative supply projects and related costs
- New tech/improvements to existing infrastructure to find alternate sources of water
- Cost of imported water
- Regional solutions to water problems
Jonathan Guz (
Thank you very much. My name is Jonathan Guz. I'm a shareholder at Straddling Yocca Carlson & Rauth, as noted, this is the water challenge, a potential solutions panel. We have a fantastic group of panelists today, and it should be a very productive, discussion. So, with that, I will introduce our panelists. We have Valerie Pryor. She is the General Manager at the Zone 7 Water Agency. We have Katano Kasaine. She is the Assistant General Manager and Chief Financial Officer at the Metropolitan Water District of Southern California. We have Chris Jumper. He is Director at Assured Guaranty... and we have Jenny Poree. She is the Sector Lead of Utility Revenues at S&P Global. So, for the folks in the room today, I think you've seen kind of the current situation with the water supply in California. It's something that is, made national headlines. We've all seen the stories about, the water levels in lake Mead and lake Powell. The stories about the snow pack and the Sierra Nevada, I'm sure folks here today have had, voluntary conservation measures that have been implemented by their various, water agencies. So it's something for, residents of California and the Southwest of the United States. It's something that we're aware of and we live with, every day. So I thought the best way to, kick off this afternoon's discussion would be able to get the insight of individuals who are managing, managing this on a day to day basis for water agencies in California. So, I think for starting it off, I'm gonna ask Katana the thoughts that you have, for metropolitan about the current water situation and just the way it's impacted the district.
Katano Kasaine (
Thank you, are you able to get me my slide? Sure. As we wait for that, how is everybody doing today? thank you. So I wanna keep speaking, but I really just didn't wanna not do metropolitan justice. If I don't show you for those who are in Southern California, who we are and where we are. So we are an agency that serves about 5,200 square feet, miles of service area, 19, nearly 19 million people. I do have 26 member agencies that form metropolitan with 38 board members. So I really thought Oakland was bad with eight, but now 38 is something else. So when people ask me, how do you feel about being metropolitan? I said, great, 38 boat members. So we own and operate the CRA the Colorado river acuduct. We have 16 hydroelectric plants, nine reservoirs, 830 miles of large scale pipes, five water treatments, four of those being, one of largest 10 largest in the country. And so I say all these things, because we did do a lot and perfected how we thought we can, weather every drought. And, the hydrology. So we thought we had it. And I'm gonna say to you today, up until this drought, we have a lot of thinking to do so, that was our map. So this is a service area that we service. This is not all metropolitan supplies. This is our region supplies. And so if you can see the Colorado river, since 1941 is when we started bringing water and we are the, I think the largest state water contractor. And we started getting water in 1970s. So a lot of our member agencies do have their own supplies. So combined, this is the map of our supplies in Southern California. So that tells me and anybody who's looking at that we do influence a lot of what's happening in California. So it is critical that we have a plan for the future. So I was asked a question about what are our current perspective, what what's going on today. So I'm only three years in metropolitan. And when I first came, I said what does that mean to have a less water or demand? And I was told that when it rains, you're not selling water. So revenues go down. I say okay. And I collect revenue polymetric revenues, but I have a wall of debt. Most of you here know that 4 billion worth of debt. So I'm like, okay, how does that work? It is because we balance reserves in water. So we have storage, we have lots of storage. We have lakes, we have reservoirs, how we manage hydrology. This drought did challenge us to know that we are not as reliable as we thought we were six of our member agencies had to do. We did what we called it, emergency drought implementation plan, because we knew that they could not access the state water with a 0%. Now we think at 5%, the dead pool scenarios, I wake up and watch CNN. And I'm like, like meeting, like Powell is where we get our water. And if I keep hearing that word Deadpool, I'm like, okay, that's a challenge. So what do we do? I know that I'm gonna speak more about it, but what we are doing now is conservation a lot. And I think this is a topic that we we'll discuss a little later, but the issue for us is reliability. It's always been the reason why we exist and supposed to be reliable. So if that is challenge, that's a concern for metropolitan affordability goes hand in hand because I can guarantee you water is not cheap. Even though most of you probably today, how many of you had bottled water? How many of you just drank it and walked away? And maybe didn't bother to say, oh, did I finish that water? Right? Because you knew you'll get another bottle. You knew that water exist. So today the challenge that we're thinking is what if that water didn't exist? It is an issue for most people in the rest of the world. You can't always have clean water. I think Mississippi Jackson, Mississippi understood that a couple weeks ago. This is a commodity that I can say, people don't think should be costing even a dollar, but getting water. It is probably going to be a future dilemma because it is not cheap. So I'm gonna stop there cuz I monopolizing the discussion. And thank you, for feeling a few
Valerie Pryor (
Good afternoon. I will tell you a little bit about the drought from, the zone seven water agency perspective. And our official name is Alameda county flood control and water conservation district zone seven. And we are a smaller suburban, agency in the east bay area. We serve the cities of Dublin Livermore and Pleasanton. We are a state water project contractor and our community is highly dependent on the state water project and imported water. So 70% of the water is provided through imported water. the retail agencies, we're a wholesaler retail agencies, pump some local ground water and do some recycled water and purple pipe for irrigation. But other than that zone, seven's the only the game in town. so this, is a very bad drought. and the way we are managing through that is we're trying to buy some water out on the open market and we are largely living off of storage. So, and we are also doing mandatory conservation. So it's, we're trying to meet about 50,000 acre feet of demand with about 4,000 acre feet of state water project table, a water. So new water last year, which was a second drought year, we were able to buy about 12,000 acre feet of water. This year, we're gonna get slightly less than 4,000 acre feet of water. And then we don't know that there will be any water to buy next year as more and more agencies, go on the drought. So we store state water, project water. We stored in San Louis reservoir. We store it in, recovery programs in Kern county and we also store it in our local groundwater basin. So we are pumping a historic amount of groundwater for our agency. And like I said, living off of storage that worked in, 21 and 22 and should work for 23, but in 24 it gets a little bit more dire for us. So for our agency, we did declare a drought emergency with mandatory conservation of 15%. And we are also accelerating a few capital improvement projects that can help us better produce water. It's interesting about this drought, going to mandatory conservation of 15% last drought, we easily hit over 30%, a lot of demands were hardened. So it is a bit harder this year. So we are spending a lot of money on rebates and a lot of money on messaging. And so that is how we are addressing the drought.
Jonathan Guz (
Thank you. Jenny, I know that S and P has been monitoring the impact of the drought on issuers in the Western United States, based upon what we've heard from Valerie and Catano is this consistent with what you've been observing from other issuers in the region?
Jenny Poree (
Well, I mean we certainly have a best in class, management team here from both agencies. So I would love to say this is representative of every water entity California. And I think some have the foresight and are taking some similar actions to what we heard about today. I would also say that met, for example, it's about what they're doing today, but it's also about what they did many, many years ago over decades to prepare for the current situation that we're in right now. It was alluded to that when we're in drought conditions, we did historical look back. And what we found was that those were actually over the past two decades, the strongest financial performance years for most entities in the state of California. And you tend to have weaker years during wet years, which comes as no surprise to many of you that said, what we believe is that the droughts are becoming more pronounced, more severe, and that will result in an increased need for conservation and alternative supply development. Now in California, the leverage ratios, the cash and the coverage are actually much better than peers throughout the country, which positions California. Well, to be able to take on the associated fixed costs associated with alternative supply or to handle fluctuations that will come from conservation. But we do believe that it will result in some weakened margins. And we think there's some cushion to actually absorb that what it's really brought to the forefront. and Catana alluded to this with the volume charge. Comment is the importance of rate structure. And it's something that in the past, we were a bit more agnostic on. And I think where we find ourselves today is that as you have reliability as an important goal, and you build in more fixed charges associated with drought tolerance supply or you utilize conservation, which will be the lowest cost option having a rate structure, that's going to work in tandem with those strategic initiatives is gonna be really critical to maintaining credit quality and financial capacity.
Jonathan Guz (
Chris, how about, on your side for AGM? what have you observed?
Chris Jumper (
Yeah, so at assured guarantee, we currently ensure about 2.3 billion of, outstanding bonds to California, water districts, irrigation districts, water agencies, wastewater agencies. So what we've found similar to what Jenny said was they went into this drought, pretty well with a, a pretty strong liquidity and, financial coverage balance that, hopefully will weather them through the, remainder of this. But again we are expecting that as things continue that they'll begin weaken we have seen that they've experienced similar types of conditions and experiences, mandatory, use reductions of 15% in some cases we've seen higher, some of the agricultural or rural, water districts have been experiencing higher water reductions based because they're dependent upon ground water. We've also seen a lot of I mean, a hundred percent, outdoor, restrictions on, on outdoor watering we did see a lot, again our, water districts that we guarantee and ensure we have seen them focusing more on things like groundwater recharge, programs surface water storage, energy efficiency so it's a very similar story to what's playing out.
Jonathan Guz (
So, California, there have been droughts in the state before, what makes the current situation different than prior challenges to the region's water supply. Valerie, do you have perspective?
Valerie Pryor (
Yes. Thank you. I, think everyone knows that this drought is really showing that climate change is here, and it's happening quickly and it is changing things. And so I think first and foremost, we're recognizing that this drought is different. The previous droughts it's, I don't wanna say a short term thing. They can last five or six years, but you go to mandatory conservation, you limit lawn watering to one, two or three days a week. and you muddle your way through, through so to speak. And then, it rains and storage is filled back up, and then you just wait for the next drought cannot do that any longer for the zone seven water agency, we are about 80% of the way to build out. So we need a little bit more water for build out. And the state water project is becoming less reliable. So we've known we needed to invest in a different supplies and storage programs. So we're actively participating in the planning phases for the site's reservoir, the Delta commands project and low Vicari reservoir expansion, and more on the conceptual phases, looking at potential brackish dcentralization, or cold we use. So we always knew we needed, one or more of those solutions for long term reliability and growth, but now it's just right, right in our face that we definitely need those for climate change. if nothing else changed for the zone seven water agency, if you just froze us in time and we didn't grow any longer, we would still need these projects. So I think everybody's recognizing that what, this drought is showing it's climate change. There is just going to be less water and California and the west frankly, is going to need to operate differently. We're going to need all of the solutions more conservation, both for urban some changes in agriculture we'll need more storage, groundwater, storage, surface storage, we'll need recycled water D and anything, anything else anybody could come up with? So that's what make this drought different. It's permanent and changes have to happen.
Jonathan Guz (
Katano. Do you see any differences, in the current situation versus those experienced in years past.
Katano Kasaine (
Everything Valerie just said, I could, I literally it's persistent dry years you saw storms in LA. I mean, who, so I woke up I'm like, what is that? It's not rain. It's not storms. So climate change is having us rethink. I know that in metropolitan, everything Paul just said is we thought we had enough and we have invested a lot. So it's very difficult to look at those same, customers and say, pay for more. I will go back and how expensive that water bottle is that people don't really see that. So we have to not just keep, and we cannot keep adding more supplies, very, very costly. And the supplies that you're gonna add, it's the next 10, 15 years before you see it. And this droughts are coming long, becoming longer and longer and longer. So if it's two years, three years, people ask me, we have 3.5 worth of storage. We say, we're very proud of that. And we're like, we have that water, two things. We realized the CRS, the runoff, the snow pack was gone, and it happened the same time with the state water project. Maybe that is the biggest change for us because all of a sudden we realize that we can't reach all our service areas and it's happening globally. This is not just a California or America thing. It's happening drought in Africa, drought in China, drought everywhere. So climate change is here to stay and we have to think differently. We have to act differently. And it's really not about just finding the next reservoir. It's not just finding the next pipeline. It's really thinking differently about water in this source called water. So that's what we're doing, but a lot of these changes will have to happen in behavior too.
Jonathan Guz (
So, In august the new administration, they released a water supply strategy for the state. the strategy called for the development of new water supplies, including increased investment in, recycled waste water and desalination, as well as increased in terms of storage capacity. I just wanted to get the thoughts of the panels that we have today. generally the thoughts on the strategy that was outlined by the administration, as well as the types of projects that you know for Valerie and Katana that your agencies are currently, pursuing.
Katano Kasaine (
So thank you again. So our general manager and our chair, gray, they meet with Newsome. If he's been to our area several times talking about California drought, because we like everybody else would really invested in a large area of California. and how do we, come together cooperatively to resolve this issue? So metropolitan has this idea. Our general manager has started talking about one water. And so when he started talking about one water, it's all about one water within our region. We quickly realize this it's really one water across California. So that message of one water is joins us. We, as a contractor of the state water, need to come together to resolve these issues. We all have agreements, but are we going to spend another year or six months agreeing to those agreements? No, we realize we need to give and take to get us on the same page, because one water equals not just California, by the way. Now we're talking about Arizona, we're talking about Nevada, we're talking about the seven states. One water becomes really bigger and bigger. The more you think about it. So yes, we are thinking differently on one of the things that I wanna mention that we're asking the Newsome administration, and we're asking the bright administration to support water infrastructure. I hear about transportation and no offense to all people who do transportation, but you all get money. Other people give money, but nobody's thinking about water as a critical infrastructure needs. So we are pushing that. Metropolitan is really going to DC and Sacramento and saying, we need funding. We need more money to go into this infrastructure because that water bottle is gonna be very costly for our taxpayers and they shouldn't have to be burdened while other, infrastructure's being supported by the government. So I have for the first time a grant line item in my budget, that was not a thing for metropolitan, but now it is because I'm going to, we're gonna fight for every dollar to go into conservation, every dollar to go into some programs where we're not burdening our customers, because we do believe this is something that is for all of us. Water is critical for our being and is critical for California. So we're looking for corporation. We're looking for funding because we do have big projects. And the biggest one we have is our recycling water project that we think will change us from just being an importer of water a produce of water.
Valerie Pryor (
I'd like to ditto that the funding part, I was in some of the same sessions this morning. I heard a lot about transportation funding. I heard a lot about energy funding, but I did not hear a lot about water funding and I think that will be key. And one thing I wanna say about the Newsome administration's water supply strategy, I think it's good that it recognizes that we can't just conserve our way out of this drought. So it talks about conservation water, supply, water storage. So that's good that it recognizes that, but we will need some help with funding, state funding, federal funding, otherwise these large scale water infrastructure projects went won't get done. And, maybe some agencies are better able to fund the participation in these projects than others, but since they're large projects, either statewide or regional, you need all of the partners to be in them. So if one of these large scale projects becomes unaffordable for smaller communities or agricultural communities, then the entire project might go away. So I will put in the same plug as metropolitan that it would be, very beneficial for there to be state or federal funding for parts of these projects.
Jonathan Guz (
Thank so, Jenny, maybe I'll turn it over to you for just a, your insight. So it sounds like these from what Valerie said, and Kaan said, these are regional issues, statewide issues when you're kind of going through credit analysis, how important do you think it is for there to be regional coordination to address the challenges being faced by the Western region?
Jenny Poree (
I think it's one of the most emerging risks in the Western water sector, because what you're looking at right now, when we have this temperature driven drought, which is different than I think we've had in the past, which has been exclusively hydrological volatility management, to some extent is you have this going on, which is extended the growing season. So you have demand increasing there, you have significant population increases in some of our neighboring states and a water source that is shared and a water source that was allocated based on I'm sure you've all heard the expression, convenient science to some extent, but on levels that we may actually not see come to fruition because of some of the effects of climate change. So as we go through and there becomes increasing degrees of water rights, uncertainty, and we have, for example, with the Colorado river, like renegotiations coming up from a credit standpoint, what we're trying to assess is how are the regional partners coming together? And in the past, it's not that when DCP was originally, negotiated that that was a seamless process, but what we saw most recently is the upper and lower base in states for example, having very divergent interests. And so what we're looking at whether it's within California or regionally within the west is how is there gonna how will they find compromise so that all of the different aspects that influence credit are acknowledged, whether it's the underlying economy, agricultural sectors urban use, and that's certainly going to take a regional solution. And I think in addition, because as katana mentioned, the cost is expensive for alternative supply. You wanna be able to have that over a broader base of users, and when more participants come to the table, you certainly have access to greater economies of scale. So credit wise, that's underlying importance of regional cooperation.
Jonathan Guz (
Excellent. The water supply strategy for the state also emphasized, reducing demand, through conservation efforts and you know why we have, Valerie katana here. I just want to get your perspective in terms of, the types of conservation measures you're seeing in your region. And then, maybe what some of the effective strategies have been to have water users adopt voluntary conservation measures, katana help out.
Katano Kasaine (
So, we do put a lot of money into conservation and understand that in our way of billing, the more we put money in conservation is costing us costs for conservation, just to get the programs. And we do have a lot of programs. We have commercial outdoor irrigation, residential, indoor, commercial, tough replacement, water, saving incentives, indoor I can read on and on and on. So metropolitian has a lot of different incentives to incentivize people to conserve. So what that means for our budget, I, I go back to being a finance, so sorry, guys, it means less money. So less revenue demand goes down. We're driving demand down at the same time, I'm sitting here going, we need revenue, but we recognize that this is a long term fix. Conservation is something that we look at for long term budget of short term. Yes, we lose some dollars and yes, we are pushing demand down. And, but we recognize that long term, this is very beneficial. It's not something that we can afford not to do or fund, but we are also looking at it and saying that we save 207,000 mega feet of water last time. So that's huge. So we look at that and said, okay, revenue down, but there's conservation less demand. And in a time like this, you realize that you cannot deliver water for all the various reasons that we talked about to everybody. So you are better off having conservation, being a true issue and adapted by your customers rather than just having that extra dollars for the next budget. So that's really what we're pushing through. And it's something that we think the federal government or the state can fund, cuz this is something that we believe it's really supporting underserved community and metropolitan has a large underserved community across our service area. So even though we're doing this conservation programs, you realize that you have to have money to conserve because sometime we tell you, we are rebating, I might not have money to do that. So what does that mean? So we're now rethinking conservation in those terms, because it might not be effective if the people you're targeting are not gonna able to afford it. So we need grants to be able to do this. So we are also pushing that really hard. Thank you.
Valerie Pryor (
Yeah. I might talk about our conservation efforts. We have really been focused on outdoor watering. that's where most of our residential use is, for our community. We're largely an urban community, but actually about 10 to 15% of our water sales are to agriculture, the Livermore valley wine growing region, largely which is an economic generator for the community. So we are not having mandatory conservation there because that means tearing out vineyards. So that's if the drought continues and gets worse. So we've really been focusing on limiting outdoor irrigation and focus messaging and the rebate programs and kind of tagging onto what kasana said is that's where we are now. Those are the programs to do. We have a drought. We ask people to get rid of their lawns and put in native plants, but, on a going forward base if we're really going to have, significant changes and this is a finance panel, not a conservation panel. So that could be somewhere else. But there probably are not enough landscape firms and gardening firms that take out everybody's lawn and there's not enough people that know how to do it. People want to take out their lawn and they call the water agency saying, what do I put in instead? And we're like, we don't know, so there there's a real vacuum and I've heard some talk with some water agencies about the state should have like the conservation core for turf conversions. And again, this isn't a panel on conservation. I'm just trying to mention that we will need some significant and permanent changes transform California water. On the revenue side for all your rating agencies out there looking at zone seven, we're doing just fine. We do have a, a significant fixed, rate component. and then we're close enough to build out we're about 80% of the way to build out that I think our demand forecasts have been, fine tuned. So even when we do have conservation, it's only 15% off of a small increment. So, that has worked well for us.
Jonathan Guz (
Thank you. So I think if you look at the agenda for this year's conference, it's clear that, ESG is one of, kind of the overarching topics and, for many of us in the public finance industry, we've you observed that in the past couple years, there's been an increased focus and certainly this topic, touches upon general ESG considerations. So Chris, Is ESG coming into play at all for purposes of AGM when it's, doing analysis.
Chris Jumper (
Thanks, John. Yeah, the short answer is yes, assured guarantee is a bond insurer. It's we provide an irrevocable guarantee for timely payment or principle and interest on our bonds. So we're basically like a buy and hold investor. We're out there for the entire length of the bonds. So long as they're outstanding if there's a problem, if there's an event at default failure to pay, we step in and we make that payment as a result, in addition to the financial legal economic risks we've always been focused on, what else could happen including environmental risks. it used to be, primarily focused on, earthquake risk in, on the west. Let's say, hurricane risk in the Gulf of Mexico and, along the east coast, however, as, as the environmental risks have been that's the E and ESG appear to becoming greater frequency and longer deeper severity, it's become a primary risk and it's become a major focus of our underwriting criteria criteria, and, a major focus of our credit committee. We've response to that, we've been working closely with urban footprint, urban footprint. You might have heard, on the ESG panel, they're a, a leading urban development provider. They develop scenario modeling for us and risk assessment provide us some, possible scenarios, and the impact of a on a municipalities population or property value. So using that, then we can, the next step is to look at what are the mitigation efforts of being put in? How are they dealing with that problem? How are they looking to continue their operationn pay off their bonds, ultimately. So it's always been a, an important issue. It has just heightened the past several years.
Jonathan Guz (
Excellent. And Jenny how is ESG factoring in on the, the credit agency side?
Jenny Poree (
So, ESG has become so newsworthy, but I feel like in the water sewer sector, it's not even remotely new and it's really either directly or indirectly touches every single aspect of our criteria. So if you think about like the S risk rate affordability, that's just a huge, like element of what we look at, from a credit standpoint, E, we're talking about water scarcity, contaminants, storm, infrastructure hardening, and then G to us. I mean, that's all of the management attributes that really, I mean to me are the most impactful and influential when you talk about timely payment of P and I, and if you looked at over the past year or two, all of the downgrades in the water sewer sector, about 50% of them were related to G and significantly more than that are related to one of these ESG risks. Even if we're not calling them specifically, this is an ESG related, action. In many cases, we have ESG paragraphs in all of our rating reports, so that we're touching on the importance of that, but it also really informs all aspects of our criteria, and is critically important.
Jonathan Guz (
Thank you. So just looking at the time in order to allow for, some questions from the audience, I'm just gonna, pose one last question to the panel looking forward, what's one issue that could be addressed today that would best position California's water supply for the next, 10, 20, 30 years. Maybe Valerie will just work down the panel.
Valerie Pryor (
I was supposed to be last on this one yeah, one issue that that's tough, cause like I can think of several issues, but, I would like to see some significant state funding for water storage and water supply projects. we could have that, that could make some of these projects happen,
Katano Kasaine (
Just quickly. This is not just a California issue. I, really think climate change is here to stay. And so I, am looking for California funding and federal funding, but more importantly, somebody's told me that agriculture production accounts for 80% of water in usage in California, if this is true, which I believe it is, I was told that this is one area we have to reassess. We, we really do need to look at how we farm in California or the rest for others. But since we only talk about California, to me the biggest takeaway is we gotta look at that and reassess, how do we farm this technology? There's a lot of ways we can do rethink everything, because of, it's really about behavior. So thank you.
Chris Jumper (
Okay, Chris? Yeah, So unfortunately I don't think there's any one single solution. I think it has to be multifaceted approach. I think the water strategy, addressing, better management of storm, water runoff, water recycling, recharging, groundwater, expanding the use of desalination are all important, better coordination between, intra California agencies, but also, better coordination between the states that make up the Colorado river basin is critical. We've seen bureau water reclamation declare stage two start cutting back on water flow to, Arizona and Nevada due to the failure to reach an agreement. So I think that that's key I'd say the, probably the most, one of the most important things is, and again, what we saw a couple of weeks ago was that Californians when faced with a, a power outage and rolling blackouts, cut usage they responded and, that's from the continued focus of the media and the public awareness and it's so important because you know it with this area this time of all news all the time everyone's, attention's being challenged you quickly move on to the next new news story. and there has to be this sustained and continued, focus on this, cuz this is a bigger problem than just California. It's a bigger problem than just the west. It's gonna become a nationwide issue, especially with food security and whatnot.
Jenny Poree (
I think from a credit standpoint the commitment to credible long term strategic planning is the one that I would probably hang my hat on in terms of having best or the most broad ability to effectuate long term success. When, you think about the intake pipe, for example, with respect to the Colorado, that can't be built overnight, and you can't have generators in place for wildfire related blackouts in a day. So all of these potential risks I wish these were the only risks to the sector, but you also have cyber and emerging contaminants and a bunch of other issues that utilities are facing. So understanding financial capacity and balancing that with rate affordability to get these capital projects done is gonna take a real, like acknowledgement of the new, normal and credible assumptions. When we're talking about water supply and population demand and development throughout not only California, but the Western region generally. So we're really looking credit wise to credible long term strategic planning.
Jonathan Guz (
Excellent. Well, I think that leads a little bit of time for any questions from audience members.
Audience Member 1 (
Think what percentage of the water of the water sources actually come from desalinization, is that scalable and then somewhat related to that, is it feasible for to mandate for new construction, whether it's residential or commercial buildings to kind of have two plumbing sources, one with fresh portable water and one with less treated or light or lighter, more lightly treated water, recycled water for things like toilet flushing
Katano Kasaine (
Was that to me, I think valerie can go ahead.
Valerie Pryor (
I can't say how much total capacity there is for D cell. There is a future for it. I think the governor's water strategy, or at least his press conference, he did mention, the possibility of doing several projects. it's interesting about dual plumbing. I think some communities have invested in that. Some have not. I think not speak for other agencies. I believe like San Francisco mandates on larger buildings to have dual plumbing, in our community. the retailers have been very successful, purple pipe for irrigation, and we're actually out of recycled water during the summertime, all the wastewaters recycled. So there's actually a moratorium on new connections, but I think that could be a viable option for commercial buildings. Alot of new residential development. You, there would be not as much sense in having a gray water system, if these are the new residential developments with very little irrigable landscaping. So yeah, just kind of speaking off the top of my head there,
Chris Jumper (
Just to fill in, I don't have an exact percentage, but I know there are 14 operating, sea water desalination plants along the coast the challenge there is, has been historically citing them and the state water board, the coastal commission and department of water resources are, are, and as well as an array of other state agencies are working together to come up with specific criteria for the sighting of desalination plants. That's supposed to be released and mid 2023. So, it's part of the water strategies, identifies that. And then also there's 23, brackish water desalination plants, which are a little better in that they, require less energy. one of the problems with seawater desalination is it's a, it uses an extraordinary amount of energy. So that that is a challenge in and of itself. Were there any other questions in the audience?
Audience Member 2 (
Hi, thank you. So as wholesale water agencies, it seems like you, have the attention of the governor and policy makers. How do you bridge your position as policy makers and leaders in California and the region on the topic of water? How do you bridge that with the actual end user? Like what tools do you have to get that individual human being? Who's looking at a bottle of water katana and understands the value of that.
Katano Kasaine (
So it is a challenge because we do not typically. We have to what we do conservation, especially in all these other projects. We do. We actually think about the retail, even though we don't really reach the retailers. So we think about that because at the end of the day, our member agencies for metropolitan is buying for retailers. So the less water they consume that relationship is it's how we then know that we can reduce demand. And again, I go back to climate changes here to stay. Water has to be looked at really differently. And especially here in America and west, even the Western California, we we take it for granted clean water. Cause there is water there's dcell water, and you just hot. It's very, very expensive water. Metropolitan does not have dcell. One of our member agencies have it. And so now, but others are thinking about it because it's one way of either in Southern California, you have the CRA water or you have the state water. And if they go to zero, then what, we don't have a lot of rain. We get scattered storms and no rain, no water. So dcell becomes a real reality. But at the end of the day, we are thinking about that retailer and how costly that bottle of water can be because eventually we have to balance affordability and reliability. So yes we are thinking about it. And that's why we're saying to the governor in the states, infrastructure is critical and you need to fund it because it cannot be, if you all walked out into the cafe and they say, this is $10, you'll have a, you like, I would have a fit, but it is actually that costly, but we don't see it. So we need to now start thinking it differently and say that to the governor and everybody, if we don't want this to be $10 to the retailer, we need to have funding and you need to start looking at infrastructure differently than we've done what infrastructure that is than we've done years before, because it's no longer given. I hope that helps.
Valerie Pryor (
And I, can add for zone seven, we're the wholesaler and we serve four retailers. and we've just it's communication and coordination on, those are buzz words, but I can't say that enough. the last drought retailers kind of did things a little differently. And so people in the community get confused because, your neighbor would be watering two days a week, but you're watering three days a week. So we just really worked with the retailers and we brand ourselves as a tri valley water agencies. And we've just had all the same messaging. So whether it's the wholesaler or one of the four retailers, we've just really tried to have consistent messaging. And so that that's worked well in our community,
Katano Kasaine (
Be wise, is all local be wise.
Audience Member 3 (
So most of us represent densely populated urban areas, but California is still one of the largest agricultural states in the nation. And we ship a lot of our agricultural products overseas. I know over the past 40 years, the farmers in the state have gone from flood irrigation to micro sprinklers and are producing much, much more with much, much just water. What does a one California water system look like for the central valley and the farmers?
Katano Kasaine (
I'm assuming that's for me. So the idea of one water is that we're all dependent on the same water. If it's the state water project, if it's the, CRA's a lot of farmers along those lines that before that water gets even to Southern California. So we are dependent on this one water. So we collectively have to be able to talk to each other, have agreements with each other. What is it that each one of us want, but at the end of the day, recognizing that we're dependent on each other. So the idea for water and water is really that dependency. So you don't have your own water. I don't have my own water and watch what I just said, if somebody else is, has different rules for how they use the water. And so I think that's the idea behind the one water. Go ahead.
Audience Member 4 (
So here in the west, we live and breathe water rights in all the Western states. And over the years, there are a whole series OFS that all that away.
Katano Kasaine (
Absolutely not. I'm not even close to that. I'm talking about an idea and a policy position. Absolutely. Don't take this to say metropolitan is saying any of that because it is an agreement. Oh, no, because no, we value I'm. I came out of farming and I know how painful that is. And I can tell you right now, the reason I keep saying that water is expenses, that there are people who don't have water, but yes you are reliant on that and rely on rain. So we all have water rights. We all have this different, negotiations that we all have to do, but we need to step back and say, we give fight over this water rights all day long, but what is water doesn't exist then? Where are we? That's the point. It's not that. I think one thing that California has done is recognizing even the marginalized communities that we even as metropolitan. Now, we're stepping back and having relationships, as she said, communication, to understand that we are in it together. So the one water idea is really talking about how do we all, and we are not equal. What are, what are, when we talk about equality is, is more equity. We are not always equal when I don't have, if I don't need to take water today, maybe I don't because they needed more, that idea of understanding that we share in this one water. It's the idea not to say no, it's gonna rewrite all the rights. Everybody can be with their rights, but if there is not water, then that's the idea. Let's talk together and hear each other, and how we communicate about the water we all depend on.
Jenny Poree (
And if you think about it from a credit standpoint, some of the biggest population migration, like the (49:23), for example, I mean, it's all, some of the largest population migration issues have been driven by drought. And like, it goes beyond like water utility credit at that point, because if you have areas that are completely agricultural based or have processing plants or indirectly agriculturally supported, that's a local government consideration as well in an inflationary environment where food prices are already quite high, like it can contribute to less discretionary income, which can further pressure rate affordability. So, I mean, everyone has to, I think different people with different seats at the table and divergent interest, but like all with equally important considerations.
Valerie Pryor (
Yeah. A few more comments I might add as you wanted to talk about water rights. You need a panel with water rights attorneys and the state, board up here. But I think when you talk about the agricultural uses of water in California, that's a much, much more diverse group than your, your typical urban agencies. So whether it's, small towns drying up in the central valley, or like, huge almond farms or Sacramento valley rice growers. So it's a pretty diverse group and not talking about water rights or drought, but it's the implementation of Sigma over the next few decades that will have major implications for agriculture in this state.
Jonathan Guz (
Excellent. Well, I think we've actually gone over allotted time. I'd like to thank everybody on the panel. It was, I thought a very useful, discussion this afternoon and did a great job.