Feasibility and Implementation Risk Tab A1: Feasibility ... · PDF fileAugust 2017 Feasibility...

August 2017

Feasibility and Implementation Risk Tab

A1: Feasibility Study Summary

Temperance Flat Reservoir Project

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Contents

Feasibility and Implementation Risk A1 August 2017 – i Feasibility Report

Contents

Page

CHAPTER 1 Introduction ..................................................................................... 1-1 1.1 Purpose ........................................................................................................ 1-1 1.2 Feasibility Study Background ....................................................................... 1-1

CHAPTER 2 Feasibility Study Sources ............................................................... 2-1 CHAPTER 3 Determination of Project Feasibility .............................................. 3-1

3.1 Technical Feasibility ..................................................................................... 3-1 3.1.1 Operations ............................................................................................. 3-1 3.1.2 Constructability and Engineering ........................................................... 3-4

3.2 Environmental Feasibility ............................................................................. 3-5 3.3 Economic Feasibility .................................................................................... 3-7 3.4 Financial Feasibility ...................................................................................... 3-9

3.4.1 Allocation and Assignment of Costs ...................................................... 3-9 3.4.2 Availability of Funds ............................................................................ 3-12

CHAPTER 4 References ....................................................................................... 4-1

Tables

Table 3-1. Key Parameters for Project CalSim-II Model Runs ..................................... 3-3

Table 3-2. Average Annual Water Balance for Temperance Flat Reservoir and Millerton Lake under With- and Without-Project Conditions .............................. 3-3

Table 3-3. Benefit/Cost Analysis .................................................................................. 3-8

Table 3-4. Public Benefit Ratio ..................................................................................... 3-8

Table 3-5. Allocation of Capital Costs to Benefit Categories ...................................... 3-10

Table 3-6. Tentative Cost Assignment for the Temperance Flat Reservoir Project .... 3-11

Figure

Figure 3-1. Modeling Processes Used to Support the WSIP Application ..................... 3-4

Contents

ii – August 2017 Feasibility and Implementation Risk A1 Feasibility Report

Abbreviations and Acronyms

AACE Association for the Advancement of Cost Engineering BMCR Benefit Calculation, Monetization, and Resiliency CALFED CALFED Bay-Delta Program CEQA California Environmental Quality Act CWC California Water Commission CVP Central Valley Project DEC Design, Estimating, and Construction Delta Sacramento-San Joaquin River Delta DFR Draft Feasibility Report DWR California Department of Water Resources EGPI Eligibility and General Project Information EIR Environmental Impact Report EIS Environmental Impact Statement FIR Feasibility and Implementation Risk FFR Final Feasibility Report M&I municipal and industrial NEPA National Environmental Policy Act NOI Notice of Intent NOP Notice of Preparation P&G Economic and Environmental Principles and Guidelines for Water

and Related Land Resources Implementation Studies PEIS/R Programmatic Environmental Impact Statement/Report RCC roller-compacted concrete Reclamation U.S. Department of Interior, Bureau of Reclamation RM River Mile ROD Record of Decision SCRB separable costs-remaining benefits SWP State Water Project TFR Temperance Flat Reservoir USJRBSI Upper San Joaquin River Basin Storage Investigation WIIN Water Infrastructure Improvements for the Nation WSIP Water Storage Investment Program

Chapter 1 Introduction

Feasibility and Implementation Risk A1 August 2017 – 1-1 Feasibility Report

CHAPTER 1 INTRODUCTION

This document summarizes and references the feasibility study documentation developed to date for the Temperance Flat Reservoir (TFR) Project in support of an application to the California Water Commission (CWC) under the Water Storage Investment Program (WSIP).

1.1 Purpose The WSIP Technical Reference Section 3.5 provides requirements for a proposed water storage project feasibility study. A completed project feasibility study is required by January 1, 2022 as part of project eligibility requirement of the WSIP (Water Code Section 79757). Feasibility study components must be included in the WSIP Application and contain sufficient information to demonstrate the project’s viability and to help the CWC make its feasibility and implementation risk determination. Feasibility documentation should evaluate the project’s technical, environmental, economic, and financial feasibility.

1.2 Feasibility Study Background Feasibility studies for Temperance Flat Reservoir have been underway for many years as part of the Upper San Joaquin River Basin Storage Investigation (USJRBSI) by the U.S. Department of the Interior, Bureau of Reclamation (Reclamation), in cooperation with the California Department of Water Resources (DWR). Federal feasibility study authorization for the USJRBSI was initially provided in Public Law 108-7, Division D, Title II, Section 215, the omnibus appropriations legislation for Fiscal Year 2003, enacted in February 2003. Subsequent federal feasibility study authorization and funding for the USJRBSI was provided in Public Law 108-361, Title I, Section 103, Subsection (d)(1)(A)(ii), the Water Supply, Reliability, and Environmental Improvement Act, signed October 25, 2004. Section 227 of the California Water Code authorizes DWR to participate in water resources investigations. The USJRBSI is one of five surface water storage feasibility studies recommended in the CALFED Bay-Delta Program (CALFED) Programmatic Environmental Impact Statement/Report (PEIS/R) Record of Decision (ROD) of August 2000. Preliminary studies in support of the CALFED PEIS/R considered more than 50 surface water storage locations throughout California and recommended more detailed study of the five locations identified in the CALFED Programmatic ROD (CALFED 2000a, 2000b, 2000c).

Progress and results of the USJRBSI are documented in a series of interim Reclamation reports, prepared consistent with National Environmental Policy Act (NEPA) and California Environmental Quality Act (CEQA) guidelines and the Economic and Environmental Principles and Guidelines for Water and Related Land Resources Implementation Studies (P&G) (WRC

Chapter 1 Introduction

1-2 – August 2017 Feasibility and Implementation Risk A1 Feasibility Report

1983), Reclamation policies, directives and standards; DWR guidance, and applicable environmental laws and policies.

The most recent public documents for the USJRBSI include the Draft Feasibility Report (DFR) (Reclamation 2014a) released in January 2014, and a Draft Environmental Impact Statement (EIS) released in August 2014 (Reclamation 2014b). The DFR and Draft EIS address the results of the feasibility study process and build on the results and findings of previous planning documents, including the Phase 1 Investigation Report (Reclamation and DWR 2003), Initial Alternatives Information Report (Reclamation and DWR 2005a), and Plan Formulation Report (Reclamation and DWR 2008a). The DFR, Draft EIS, and all supporting documents that led to their development are available online at https://www.usbr.gov/mp/sccao/storage/docs.html.

The DFR (available online at https://www.usbr.gov/mp/sccao/storage/docs/draft-feasibility-report-2014/usjrbi-draft-fr-2014-full-report.pdf) is a key component of the feasibility documentation and includes the following findings in Chapter 6 under the “Determination of Feasibility” heading regarding the TFR Project as evaluated in the USJRBSI:

• “…is projected to be technically feasible, constructible, and can be operated and maintained.” (Page 6-6)

• “…would be environmentally feasible.” (Page 6-7)

• “…is projected to be economically feasible, because the estimated benefits exceed the estimated costs, resulting in positive net benefits…” (Page 6-9)

• “…marginal increase would fall within the ability to pay for each of the four representative contractors.” and “Specific analysis for any contractor would be conducted to provide a determination of financial feasibility.” (Page 6-23)

To the extent relevant, information from these USJRBSI documents was used and updated as necessary in the preparation of this feasibility documentation and other documents in support of the WSIP application for the TFR Project.

After the release of the DFR, alternative plans were refined and further analyzed for the Draft EIS, which was completed in August 2014. The evaluation of alternative plans is being further refined for the in-progress Final Feasibility Report (FFR) being developed by Reclamation, including addressing public comments received on the Draft EIS and considering public comments received on the DFR. The FFR will be further revised to incorporate an additional or revised alternative based on the operations of the TFR Project included in the WSIP Application. These documents and their supporting analyses represent the primary detailed feasibility study documentation for the TFR Project, along with the WSIP application. The WSIP application analyses are based on climate change hydrology and reflect an operating plan developed through regional collaboration.

https://www.usbr.gov/mp/sccao/storage/docs.html

https://www.usbr.gov/mp/sccao/storage/docs/draft-feasibility-report-2014/usjrbi-draft-fr-2014-full-report.pdf

https://www.usbr.gov/mp/sccao/storage/docs/draft-feasibility-report-2014/usjrbi-draft-fr-2014-full-report.pdf

Chapter 2 Feasibility Study Sources


CHAPTER 2 FEASIBILITY STUDY SOURCES

The WSIP feasibility study documentation and analyses specific to the TFR Project are comprised of a number of sources, including the Reclamation DFR and in-progress FFR, and several elements of this WSIP Application. Each of the required feasibility study elements in the Technical Reference Section 3.5 are referenced below.

• Summaries of technical feasibility, environmental feasibility, economic feasibility, and financial feasibility are included in Chapter 3 of this document. Constructability is addressed as part of technical feasibility.

• TFR Project objectives are described in the Eligibility and General Project Information (EGPI), Attachment 3 (A3): Project Description, Chapter 1. Further discussion of and background for project objectives can be found in the DFR.

• The TFR Project description is in the EGPI A3: Project Description, Chapter 2 (existing facilities and operations), Chapter 3 (proposed facilities), and Chapter 5 (project governance). The preliminary operating plan for the TFR Project supporting technical feasibility is documented in EGPI A3: Project Description, Chapter 4, and is based on new analyses being performed for this TFR Project WSIP application.

• TFR Project costs are documented in the EGPI A4: Engineering Summary, Chapter 6 and Attachment B. Project costs are based on feasibility-level facility designs that support technical feasibility. The project costs, designs and other engineering support documentation are based on information developed for the USJRBSI DFR (Reclamation 2014a) and FFR (in progress), with updates made to some annual costs, reporting of cost components, and indexing consistent with WSIP application requirements.

• TFR Project benefits are documented in Benefit Calculation, Monetization, and Resiliency (BCMR), A3: Monetized Benefits Analysis. Physical accomplishments and valuation supporting economic feasibility are documented in the BCMR A5: Modeling Approach and BCMR A5: Economic Valuation Approach, respectively. Physical accomplishments and valuation are based on new analyses being performed for this TFR Project WSIP application, and supported by methods and studies developed by Reclamation for the USJRBSI DFR (Reclamation 2014a) and FFR (in progress).

• A TFR Project cost allocation based on the Separable Costs-Remaining Benefits (SCRB) method supporting financial feasibility is documented in BCMR A10: Cost Allocation, and is based on new analyses being performed for this TFR Project WSIP application and supported by methods and studies developed by Reclamation for the USJRBSI DFR (Reclamation 2014a) and FFR (in progress).

• Identification of environmental issues and potential mitigation supporting environmental feasibility are documented in Feasibility and Implementation Risk (FIR), A5: Project Impacts on Environmental and Cultural Resources and Mitigation, and are based on

Chapter 2 Feasibility Study Sources


information developed by Reclamation for the USJRBSI Draft EIS (Reclamation 2014b) and Final EIS (in progress).

Chapter 3 Determination of Project Feasibility


CHAPTER 3 DETERMINATION OF PROJECT FEASIBILITY

This chapter demonstrates the technical, environmental, economic, and financial feasibility of the proposed TFR Project. Determination of project feasibility for the TFR Project is comprised of the following elements:

• Technical Feasibility, including Constructability: demonstrating that it would be physically and technically possible to operate the project consistent with the operations plan, and construct the project with existing technology and availability of construction materials, work force, and equipment.

• Environmental Feasibility: demonstrating that constructing or operating the project would not result in unacceptable environmental consequences, and identifying key environmental issues and how significant environmental issues will be mitigated.

• Economic Feasibility: demonstrating that the expected benefits of constructing and operating the project equal or exceed the expected costs, considering all benefits and costs to the State and its residents.

• Financial Feasibility: demonstrating that that beneficiaries of non-public benefits are allocated costs that are consistent with and do not exceed the benefits they receive, and that sufficient funds will be available from public (including the funds requested in the application) and nonpublic sources to cover the construction and operation and maintenance of the project over the planning horizon.

3.1 Technical Feasibility Evaluations of technical feasibility consist of operations, constructability and engineering analyses to determine whether it would be physically and technically possible to operate the project consistent with the operations plan, and construct the project with existing technology and availability of construction materials, work force, and equipment. Based on the range of information developed for the WSIP Application and for the USJRBSI DFR and Draft EIS, the TFR Project is technically feasible – it can be operated consistent with the operations plan and is constructible.

3.1.1 Operations Based on Technical Reference Section 3.5, technical feasibility includes demonstrating that the project is technically feasible consistent with the operations plan, including a description of data and analytical methods, the hydrologic period, development conditions, hydrologic time step, and water balance analysis showing, for the with- and without-project condition, all flows and water supplies relevant to the benefits analysis. Each component is discussed or referenced in this section.



Operations of the TFR Project are technically feasible under existing laws and can be implemented consistent with the operating plan described in EGPI A3: Project Description, Chapter 4.

The TFR Project operating plan is based on the allocation of new storage space in TFR through storage accounts for San Joaquin River inflow and water obtained from exchanges with other sources. The operating plan will provide a range of public and non-public benefits and operational flexibility, and includes a set of operating rules for the management delivery of water for non-public purposes that contribute to the provision of public benefits and preserve of the existing delivery capabilities of Friant Dam under current contracts. Implementation of the operating plan will require development of operating agreements with the specific TFR Project investors for the management of their storage accounts for inflow and exchange supplies. The operating plan will be further refined once specific project investors are identified.

In securing water rights for the TFR Project, Reclamation or a TFR Project implementation delivery system would comply with the California Water Code requirements to obtain necessary water rights for implementing the portion of the TFR Project that affects the storage and release of San Joaquin River water. Additional components of the TFR Project, such as transfers, exchanges, hydropower operations and modifications, release for fishery habitat enhancement and downstream diversion, and emergency supply may require subsequent water right actions, which would be taken by the individual storage account owners or a TFR Project implementation delivery system.

A description of data and analytical methods, the hydrologic period, development conditions, hydrologic time step, and water balance analysis supporting the benefits analysis is documented in BCMR A3: Monetized Benefits Analysis and BCMR A5: Modeling Approach. The CalSim-II model products provided by the CWC were used for statewide water operations analysis of all scenarios for the WSIP application, so the analytical methods, hydrologic period, development conditions, and water balance are based on those products, and are summarized in Tables 3-1 and 3-2. The with-project scenarios were analyzed by incorporating representation of the TFR project facilities and operating plan details into the CWC CalSim-II model products and other modeling tools.



Table 3-1. Key Parameters for Project CalSim-II Model Runs

Parameter Project CalSim-II Model

Current Conditions (2017)

2030 Future Conditions

2070 Future Conditions

Model Source 2015 SWP DCR Model Provided by CWC for WSIP application analyses

Provided by CWC for WSIP application analyses

Hydrologic Period 1922-2003 1922-2003 1922-2003 Climate Change Not Included Included Included Time Step Monthly Monthly Monthly Development Conditions Level of Development (land use) 2030 Level1 2030 Level1 2030 Level1 Notes: 1 The Sacramento Valley hydrology used in the existing condition CalSim II model reflects 2020 land-use assumptions associated

with Bulletin 160-98. The San Joaquin Valley hydrology reflects draft 2030 land-use assumptions developed by Reclamation to support Reclamation studies (Source: DWR’s 2015 SWP Delivery Capability Report).

Key: CWC = California Water Commission DCR = Delivery Capability Report

DWR = California Department of Water Resources SWP = State Water Project WSIP = Water Storage Investment Program

Table 3-2. Average Annual Water Balance for Temperance Flat Reservoir and Millerton Lake under With- and Without-Project Conditions

Temperance Flat Reservoir and Millerton Lake Inputs/Outputs

2030 Future Conditions 2070 Future Conditions Without-Project

With-Project

Without-Project

With-Project

Average Annual Inputs Inflow from Upper San Joaquin River

Watershed (TAF) 1,733 1,733 1,714 1,714

Total Inputs 1,733 1,733 1,714 1,714 Average Annual Outputs Reservoir Evaporation (TAF) 22 36 21 36 Releases to Friant-Kern and Madera Canals (TAF) 1,032 1,124 912 1,041

Releases to San Joaquin River – Water Supply Deliveries for Westside and Refuges (TAF)

--- 79 --- 99

Releases to San Joaquin River – SJRRP Restoration Flows (TAF)1 432 432 430 432

Releases to San Joaquin River – Flood Releases (TAF) 248 64 351 108

Total Outputs2 1,734 1,735 1,714 1,716 Change in Storage3 -1 -2 0 -2

Mass Balance 0 0 0 0 Notes: 1 SJRRP Restoration Flow Releases include 117 TAF riparian water right releases and 2070 without-project condition simulated releases reflect shortages in 1929 and 1959 hydrologic conditions. 2 Numbers are rounded for display purposes and may not sum to totals. 3 Change in storage represents the annual average difference in beginning and ending period storage over the long-term simulation. Key: TAF = thousand acre-feet

A multi-objective modeling process was implemented for comprehensive analysis of the TFR Project and without-project conditions for current conditions, 2030, and 2070. Several models



were used to simulate Central Valley Project (CVP) and State Water Project (SWP) system operations. The CalSim-II model and a post-processing routing model were used to develop the overall operational parameters for the entire CVP and SWP system, including Millerton Lake and TFR. A gaming tool was used to support iterative development and testing of the preliminary TFR operating plan and simulate the operations of the TFR Project on a monthly time step, compatible with CalSim-II. Daily operations models of Millerton Lake and TFR were used to define a set of daily operations for the two reservoirs for use in temperature analysis. Following the system-wide water operations analyses, modeling efforts were carried through: reservoir temperature models for TFR and Millerton Lake (CE-QUAL-W2), river temperature modeling for the San Joaquin River (SJR-5Q), fish habitat modeling for the San Joaquin River (Ecosystem Diagnosis and Treatment) and floodplain analysis, local and system-wide hydropower operations, and TFR and Millerton Lake recreational effects analyses. A simplified schematic of the modeling process used to support the WSIP application is illustrated in Figure 3-1. See BCMR A5: Modeling Approach for additional details.

Figure 3-1. Modeling Processes Used to Support the WSIP Application

Operations considerations have been rigorously considered and the modeling performed has been thorough and based on CWC products, so technical feasibility risk for operations is low.

3.1.2 Constructability and Engineering Constructability and engineering considerations are also important in assessing technical feasibility. Constructability evaluations include determining whether the project can be constructed with existing technology and availability of construction materials, work force, and equipment. The primary TFR Project features include a 665-foot high roller-compacted concrete (RCC) arch gravity dam, a 30-foot diameter concrete-lined outlet works tunnel, a low-level intake structure, a powerhouse and valve house, other construction features, and modifications or relocations for affected facilities. The TFR Project would be constructed using conventional heavy civil construction means and methods.



Section 6.2 of the Technical Reference indicates that cost estimates for the WSIP should conform to Reclamation’s feasibility-level estimates or Association for the Advancement of Cost Engineering (AACE) Class 4 estimates, or better. Designs and cost estimates of facilities for the TFR Project have been developed to a feasibility level, consistent with a Class 3 level-of-effort estimate, as defined by the AACE, so they exceed the minimum level of detail for cost estimates for WSIP applications. Designs and cost estimates were refined to address risk based on multiple rounds of formal Reclamation review, including recommendations from the 2007 Design, Estimating, and Construction (DEC) Review (Reclamation 2007b), 2011 Value Planning Report (Reclamation 2011c), 2013 DEC Special Assessment (Reclamation 2013d), 2014 Constructability Review (Reclamation 2014e), and 2014 DEC Review (Reclamation 2015).

In November 2014, Reclamation conducted a constructability review of key project components (Reclamation 2014e). The report concluded that the project’s construction approach and schedule is feasible, and forms a good basis for appropriate cost estimation, work package development, and project duration expectations. In December 2014, Reclamation conducted a DEC review for the feasibility-level designs and estimates (Reclamation 2015a). The DEC review addressed risk concerns and was the culmination of a rigorous quality assurance/quality control process for all project feature designs and cost estimates and addressed. In March 2015, Reclamation conducted a back check review of DEC recommendations and determined that DEC recommendations were addressed and the field exploration data provided is consistent with and adequate for the feasibility-level designs and cost estimates (Reclamation 2015b). Constructability and engineering risks have been considered and addressed in detail through the development of the feasibility level designs and costs, resulting in a low technical feasibility risk for constructability and engineering. See EGPI A4: Engineering Summary for additional information on cost estimates, engineering, and constructability.

3.2 Environmental Feasibility Evaluations of environmental feasibility consist of analyses to determine whether constructing or operating the project would not result in unacceptable environmental consequences, and identifying key environmental issues and how significant environmental issues will be mitigated. Based on the range of information developed for the WSIP Application and for the USJRBSI DFR, Draft EIS, and in-progress Final EIS, the TFR Project is expected to be environmentally feasible. The TFR Project would have beneficial effects on many resource areas, while some resource areas may be impacted through temporary, construction-related effects or effects related to inundation from the reservoir.

Identification of environmental issues and potential mitigation supporting environmental feasibility are documented in the Draft EIS (Reclamation 2014b), and FIR A5: Project Impacts on Environmental and Cultural Resources and Mitigation, and are based on information developed by Reclamation for the USJRBSI Draft EIS (Reclamation 2014b) and Final EIS (in progress). Further environmental compliance analyses will be documented in the TFR Project Environmental Impact Report (EIR).

The Draft EIS was prepared in consideration of CEQA and CEQA Guidelines (California Code of Regulations, Title 14, Sections 15000, et seq.) to support the CEQA Lead Agency and Responsible and Trustee agencies that would be involved in approving a proposed CEQA



action. From initiation of the USJRBSI, DWR was identified as the CEQA Lead Agency. At the time of the release of the Draft EIS, DWR had insufficient funding to complete preparation of a Draft CEQA document. Therefore, the publicly released environmental compliance document was issued as a Draft EIS and not a joint draft EIS/EIR. However, it was organized and formatted consistent with the reporting requirements of CEQA to allow the streamlined completion of a draft CEQA document in the future by the CEQA Lead Agency.

The impact assessment findings and mitigation measures described in FIR A5: Project Impacts on Environmental and Cultural Resources and Mitigation are expected to be consistent with those that would be presented in a CEQA document for the proposed project in this application for the following reasons:

• Environmental compliance for the USJRBSI was initiated as a joint NEPA/CEQA activity with the issuance of a Notice of Intent (NOI) and Notice of Preparation (NOP) in 2004, with Reclamation as the NEPA Lead Agency and DWR as the CEQA Lead Agency

• The preparation of the Draft EIS involved extensive public involvement, consultation, and coordination as described in Chapter 29 of the Draft EIS

• Several potential CEQA Responsible and Trustee agencies were engaged and consulted during development of the Draft EIS

• The Draft EIS evaluated five action alternatives that each included Temperance Flat River Mile (RM) 274 Dam and Reservoir, water operations that would provide water supplies to CVP Friant Division contractors, south of Sacramento-San Joaquin River Delta (Delta) CVP and SWP agricultural and municipal and industrial (M&I) water contractors, and produce a wide range of public benefits including ecosystem improvements in the San Joaquin River

• Action Alternative 5 evaluated in the Draft EIS includes the same facilities and most closely reflects the proposed project operations presented in this application

• More than 350 letters and 3,000 comments were received on the Draft EIS during the public comment period, which closed on October 27, 2014

• Subsequent to public review of the Draft EIS, refinements to support responses to public comments are underway through preparation of the Final EIS, including refinements to reflect incorporation of the project proposed in this application

• Impacts and mitigation measures presented in this document reflect the most recent evaluation of Alternative 5 from the in-progress Final EIS

• The TFR Project implementation delivery system to be formed following submission of this application will serve as the CEQA Lead Agency

Based on FIR A5: Project Impacts on Environmental and Cultural Resources and Mitigation, the Draft EIS, and in-progress analyses for the Final EIS, beneficial effects of the TFR Project correspond to the following resource areas:



• Fisheries and aquatic ecosystems – San Joaquin River, Friant Dam to Merced River confluence.

• Flood management – San Joaquin River, Friant Dam to Merced River confluence.

• Groundwater – CVP/SWP facilities and water service areas.

• Surface water supplies and facilities operations – CVP/SWP facilities and water service areas receiving increased water deliveries and emergency water supplies.

• Surface water quality – San Joaquin River, Friant Dam to Merced River confluence, and CVP/SWP facilities and water service areas receiving increased water deliveries and emergency water supplies.

• Recreation – Temperance Flat RM 274 Reservoir and vicinity.

• Socioeconomics, population, and housing – CVP/SWP facilities and water service areas receiving increased water deliveries and emergency water supplies.

Some of the adverse effects anticipated for constructing the TFR Project would be temporary, construction-related effects that would be less than significant or would be reduced to less-than-significant levels through mitigation. Impacts to reservoir and riverine fisheries would be less-than-significant or would also be reduced to less-than-significant levels through mitigation. Other adverse effects would be long-term, such as effects on botanical, wildlife, and cultural resources within the inundation area of Temperance Flat Reservoir. Some adverse effects (e.g., temporary, construction-generated emissions and noise that could exceed local thresholds) would remain significant and unavoidable despite mitigation measures.

Environmental commitments, BMPs, and mitigation measures will be incorporated into the TFR Project to avoid or minimize potential effects. The planning, engineering, design and construction, and operations phases of the TFR Project will be coordinated with applicable resource agencies. BCMR A4: Mitigation and Compliance summarizes environmental effects and proposed mitigation for the TFR Project. The Environmental Commitments section of EGPI A3: Project Description describes environmental commitments for the TFR Project. The extensive environmental review performed to date consistent with NEPA and CEQA and the remaining environmental compliance activities anticipated to complete CEQA for the TFR Project suggest a low risk regarding environmental feasibility.

3.3 Economic Feasibility Evaluations of economic feasibility include analyses to determine whether the expected benefits of constructing and operating the project equal or exceed the expected costs, considering all benefits and costs to the State and its residents.

The TFR project is economically feasible since the monetized benefits exceed the estimated costs. The TFR Project has a benefit-cost ratio of 1.42, as summarized in Table 3-3. The benefit-cost ratio would also increase if IDC is adjusted in recognition of up-front WSIP capital cost funding.



Table 3-3. Benefit/Cost Analysis

Category Value

Present value of net Project benefits ($ millions)1, 2 $5,503.4 Present value of total Project costs ($ millions)1, 3 $3,887.7

Ratio of present value of total monetized net benefits to the present value of total Project costs 1.42 Notes: 1 Based on 2015 price levels in accordance with the Water Storage Investment Program Technical Reference. 2 Benefits discounted to the start of project operations, based on 3.5 percent discount rate, in accordance with the Water Storage

Investment Program Technical Reference. 3 Costs compounded or discounted, as appropriate, to the start of project operations (based on 3.5 percent discount rate) in

accordance with the Water Storage Investment Program Technical Reference.

For monetized public benefits, Table 3-4 presents the expected public benefit ratio for the TFR Project—consistent with regulations Section 6004(a)(6)—as the ratio of the present value of the economic net public benefits to the total requested TFR Project cost share. The public benefit ratio is 2.86, and therefore it is a cost-effective project to achieve the intended public benefits. The present value of the public benefits of the TFR Project is $3,057.7 million. The total capital cost for the TFR Project is $2,660.7 million, and the TFR Project is seeking 40.2 percent of the capital costs equal to $1,068.6 million from the WSIP.

Table 3-4. Public Benefit Ratio

Category Value

Capital cost ($ millions)1 $2,660.7 Total Program funding request ($ millions)1 $1,068.6

Present value of total net public benefits ($ millions)1, 2 $3,057.7

Public benefit ratio 2.86 Notes: 1 Based on 2015 price levels in accordance with the Water Storage Investment Program

Technical Reference. 2 Benefits discounted to the start of project operations, based on 3.5 percent discount rate,

in accordance with the Water Storage Investment Program Technical Reference.

These metrics indicate a low economic risk and are conservative. BCMR A3: Monetized Benefits Analysis, Chapter 5 documents further details of the benefit-cost analysis for the TFR Project.

The monetized benefits for the TFR Project have a present value of $5.50 billion ($3.06 billion for public benefits and $2.45 billion for non-public benefits). Benefits were evaluated and monetized for a total of four public benefit categories (ecosystem improvement for fish habitat enhancement and refuge water supply, emergency response, flood control, and recreation), and two non-public benefit categories (agricultural and M&I water supply and hydropower generation). The monetized benefits of the TFR Project are documented in the BCMR A3 Monetized Benefits Analysis, Chapter 4 and are based on new analyses being performed for this TFR Project WSIP application, supported by methods and studies developed by Reclamation for the USJRBSI DFR (Reclamation 2014a) and FFR (in progress). For some categories such as agricultural water supply, the monetized benefits have been conservatively



estimated to reflect the lower bound of potential value, indicating a low risk of the benefits component of economic feasibility. The ecosystem analyses also incorporate a low smolt-to-adult return rate, further illustrating a conservative approach to estimating project benefits and reflecting a low risk.

Capital costs for the TFR project are $2.66 billion, with a present value of $3.19 billion. Total project cost for the TFR Project is $3.67 billion, with a present value of $3.89 billion. The cost estimates for the TFR Project facilities have been developed to a feasibility level, consistent with a Class 3 level-of-effort estimate, as defined by the AACE. Cost estimates were refined based on multiple rounds of formal Reclamation review, including recommendations from the 2007 DEC Review (Reclamation 2007b), 2011 Value Planning Report (Reclamation 2011c), 2013 DEC Special Assessment (Reclamation 2013d), 2014 Constructability Review (Reclamation 2014e), and 2014 DEC Review (Reclamation 2015). The costs of the TFR Project are documented in the EGPI A4 Engineering Attachment, Chapter 6 and are based on information developed by Reclamation for the USJRBSI DFR (Reclamation 2014a) and FFR (in progress), with some updates for consistency with WSIP application requirements and operations-based system-wide power costs. The level of review and refinement of the costs indicate a low risk regarding the cost component of economic feasibility.

3.4 Financial Feasibility Evaluations of financial feasibility include analyses to determine whether beneficiaries of non-public benefits are allocated costs that are consistent with and do not exceed the benefits they receive, and that sufficient funds will be available from public (including the funds requested in the application) and nonpublic sources to cover the construction and operation and maintenance of the project over the planning horizon. The TFR Project is expected to be financially feasible.

3.4.1 Allocation and Assignment of Costs The primary purpose of cost allocation is to determine the assignment of costs to beneficiaries for payment (either repayment or up-front payment). Cost allocation is a financial exercise rather than an economic evaluation. Consequently, project costs may be presented differently in a cost allocation than in an economic analysis. Costs to be allocated include capital costs, interest during construction, annual operations, maintenance and repair costs, replacement costs, and future adaptive management costs. Based on WSIP application requirements, costs allocated to the WSIP funding sources are to:

• Only include capital costs and do not exceed 50 percent of total capital costs, pursuant to regulations Sections 6004(a)(7)(A)(1).

• Are not associated with environmental mitigation or compliance obligations pursuant regulations Sections 6004(a)(7)(A)(4), as described in more detail in Benefit Calculation, Monetization, and Resiliency Attachment A4: Mitigation and Compliance.

A representative cost allocation for the TFR Project is included in BCMR A10: Cost Allocation. The cost allocation was prepared based on the SCRB method, which allocates costs among beneficiaries proportional to the benefits remaining after separable costs are removed. This



method is also consistent with typical federal cost allocation procedures, and ensures that all beneficiaries are allocated costs that are consistent with and do not exceed the benefits they receive. The SCRB method is included as an acceptable method for allocating costs to beneficiaries in Technical Reference Section 8.2.

Table 3-5 summarizes the allocation of capital and present value total costs to each benefit category or project purpose based on using the SCRB method. Cost shares for all benefit categories are less than benefits for each category. A comparison of Table 3-5 below with Table 4-1 in BCMR A3, Monetized Benefits Analysis, Chapter 4 indicates that the allocated present value total project costs for water supply ($2,403.5 million) are less than the water supply benefits present value ($2,413 million).

Table 3-5. Allocation of Capital Costs to Benefit Categories

Benefit Category/Purpose Capital Cost Allocation ($ Millions)

Present Value Total Project Cost Allocation

($ Millions) Water Supply Reliability1 $1,645.9 $2403.5 Ecosystem/Fish Habitat Enhancement $751.2 $1095.9 Emergency Water Supply $141.5 $206.5 Recreation $47.0 $72.2 Flood Damage Reduction $75.1 $109.5

Total $2,660.7 $3,887.7 Notes:

1 Refuge water supply and hydropower is included in water supply reliability category. The cost allocation process is designed so that costs associated with project purposes are assigned for cost sharing and/or repayment. Once costs are allocated to the appropriate purpose, costs can be assigned to Federal and/or State taxpayers and project beneficiaries based on specific project authorization, existing Federal law, existing cost sharing requirements, and laws and objectives of non-Federal entities.

Table 3-6 shows capital and present value total project costs assigned to TFR Project purposes consistent with existing Federal and State law. The assignment of costs includes costs to accomplish the benefits and purposes being considered for potential federal authorization, which are also consistent with the planning objectives. These capital costs amount to $2,660.7 million per year. Also shown in Table 3-6 of the capital costs allocated for the TFR Project, 40.2 percent are allocated to WSIP public benefits and are the estimated WSIP cost share, and 59.8 percent are allocated to agricultural and M&I water supply beneficiaries. Of the $1,068.6 million in State public benefits, over 50 percent ($751.2 million for fish habitat enhancement) are related to ecosystem improvements.

Chapter 3

Determ

ination of Project Feasibility

Feasibility and Implem

entation Risk A

1 August 2017 – 3-11

Feasibility Report

Table 3-6. Tentative Cost Assignment for the Temperance Flat Reservoir Project

Purpose/ Action

Cost Assignment Summary1, 2, 3 Agricultural and

M&I Water Supply Participants

Federal Other Local or State

WSIP Public Benefits4

Total

Capital Cost

Present Value Total Project Cost

Capital Cost


Capital Cost


Capital Cost


Capital Cost


Water Supply Reliability5

$1,592.1 $2,324.9 $0.0 $14.1 $0.0 $0.0 $53.9 $64.5 $1,645.9 $2,403.5

Ecosystem/Fish Habitat Enhancement

$0.0 $37.4 $0.0 $158.5 $0.0 $0.0 $751.2 $900.0 $751.2 $1,095.9

Emergency Water Supply

$0.0 $36.9 $0.0 $0.0 $0.0 $0.0 $141.5 $169.6 $141.5 $206.5

Recreation $0.0 $0.0 $0.0 $7.6 $0.0 $7.6 $47.0 $57.1 $47.0 $72.2

Flood Damage Reduction

$0.0 $0.0 $0.0 $19.6 $0.0 $0.0 $75.1 $89.9 $75.1 $109.5

Total $1,592.1 $2,399.2 $0.0 $199.7 $0.0 $7.6 $1,068.6 $1,281.2 $2,660.7 $3,887.7

% of Total 59.8% 61.7% 0% 5.1% 0% 0.2% 40.2% 33.0%

Notes. 1 Total project costs include capital costs, OM&R costs, and environmental mitigation or compliance obligations after

completion of construction, and IDC costs. Assigned percentages are a composite of all assigned costs based on existing Federal authorities and the State of California Water Quality, Supply, and Infrastructure Improvement Act of 2014.

2 Costs are at a July 2015 price level. All numbers are rounded for display purposes, and therefore line items may not sum to totals.

3 IDC calculations assume full financing of project capital costs. Up-front WSIP funding for capital costs would reduce IDC. 4 Costs assigned to the State under WSIP are capital costs only, and do not include OM&R and IDC costs. 5 Assigned costs to Water Supply include interest; however, interest would not be included in actual agricultural repayment

contracts per Reclamation Manual Directive and Standard PEC 05-01, Water Rates and Pricing (2013). 6 While additional incidental hydropower benefits would be realized by the local power authorities, for the purposes of this

tentative cost allocation these benefits and allocated costs are included in the agricultural and M&I water supply allocation.

Key: % = percent $ millions = million dollars



3.4.2 Availability of Funds In simple terms, if beneficiaries have the collective financial resources to pay the costs allocated to them, the project is considered financially feasible. Project beneficiaries need to have the financial capacity to absorb additional costs associated with benefits that they would receive under the proposed Project.

The TFR Project could be implemented through a range of potential funding and cost-sharing or repayment options, and could be implemented as a Federal project under Reclamation law, a non-Federal project, or a combination of Federal and non-Federal. If the TFR project were implemented under Reclamation law, the U.S. Congress could fund a portion of project construction costs and the costs allocated to nonpublic benefits such as water supply reliability could be repaid by the water users over a specified period of time. For agricultural water supply, Reclamation Law allows for 40-year repayment with no interest. It is also recognized that current Federal budget conditions could constrain Reclamation’s ability to fund new construction activities of the scale of the TFR Project, so alternative financing options such as private bonds are also being considered.

For public sources of funding, $1,068.6 million has been requested from the CWC in this application, but any portion of the public benefits eligible under Proposition 1 not funded by the CWC could be eligible for federal funding through the Water Infrastructure Improvements for the Nation (WIIN) Act. Reclamation has authority for financial participation/funding for public benefit categories such as ecosystem/fish habitat enhancement, flood control, and recreation.

For non-public benefits and sources of funding, $2,399.2 million in present value project costs has been allocated to the water users for water supply reliability. Regardless of financial arrangement (up-front cost sharing, repayment, or other means) financial feasibility can be demonstrated through the collective financial resources from the potential TFR Project Investors. Potential investors are being assembled for the TFR Project by the Applicant and partners and communications to investors are clear regarding the expected capital and O&M obligations, including requirements for acquiring storage accounts such as minimum funding requirements. A significant amount of interest has been expressed across the San Joaquin Valley. The Applicant and partners including the SJVWIA, the Friant Water Authority acting in association with the Friant North Authority, the San Joaquin River Exchange Contractors Water Authority, and the San Luis & Delta-Mendota Water Authority represent water users from throughout the San Joaquin Valley and have a long history in funding, developing, managing water supplies and have the collective financial resources to pay the costs allocated to them.

The estimated water supply cost per acre-foot based on 2030 deliveries for the TFR project is approximately $430 per acre-foot, and would decrease to $330 per acre-foot based on 2070 deliveries (assuming 3.5 percent interest rate over the project life). These costs are within the demonstrated ability to pay of the Applicant and partners and the potential investors. They have been involved in the water transfer market for over two decades, and their transactions represent a significant portion of the historical water transfers in California.

In addition, the agricultural water supply benefits and cost allocation are based on the value of water from the Technical Reference derived from the Statewide Agricultural Production model, which represents the most conservative water valuation and likely minimum determination of value to water users. There is a higher demonstrated demand on the west side of the San



Joaquin Valley, as evidenced by numerous spot market water transfers and it is anticipated that the implementation of SGMA and other water supply conditions will result in a similar willingness-to-pay in the future on the east side of the San Joaquin Valley in the Friant Division and surrounding areas.

Chapter 4 References


CHAPTER 4 REFERENCES

CALFED. See CALFED Bay-Delta Program.

CALFED Bay-Delta Program (CALFED). 2000a. CALFED Bay-Delta Program Record of Decision. August.

______. 2000b. CALFED Initial Surface Water Storage Screening. August.

______. 2000c. CALFED Bay-Delta Program Final Programmatic Environmental Impact Statement/Environmental Impact Report. July.

Reclamation. See U.S. Department of the Interior, Bureau of Reclamation.

U.S. Department of the Interior, Bureau of Reclamation (Reclamation). 2007b. Upper San Joaquin River Basin Storage Investigation, Design, Estimating, and Construction Review on Administrative Draft Plan Formulation Report. Technical Service Center. Denver, Colorado. October.

______. 2011c. Upper San Joaquin River Basin Storage Investigation, Final Value Planning Report, TM No. K8T-1510-MP11-018-00-0-1. Technical Service Center. Denver, Colorado. November.

. 2013d. Upper San Joaquin River Basin Storage Investigation, Assessment of Actions to Address 2008 DEC Review Recommendations. Mid-Pacific Region, California. December.

. 2014a. Upper San Joaquin River Basin Storage Investigation, Draft Feasibility Report. Mid-Pacific Region, California. January.

. 2014b. Upper San Joaquin River Basin Storage Investigation, Draft Environmental Impact Statement. Mid-Pacific Region, California. August.

———. 2014e. Key Component Constructability Review, Upper San Joaquin River Basin Storage Investigation. Mid-Pacific Region. Sacramento, California. November.

———. 2015. Upper San Joaquin River Basin Storage Investigation Design, Estimating, and Construction Review Report. February.

Reclamation and DWR. See U.S. Department of the Interior, Bureau of Reclamation and California Department of Water Resources.

U.S. Department of the Interior, Bureau of Reclamation and California Department of Water Resources (Reclamation and DWR). 2003. Upper San Joaquin River Basin Storage Investigation, Phase 1 Investigation Report. Mid-Pacific Region. Sacramento, California. October.

Chapter 4 References


______. 2005. Upper San Joaquin River Basin Storage Investigation, Initial Alternatives Information Report. June.

______. 2008. Upper San Joaquin River Basin Storage Investigation, Plan Formulation Report. October.

U.S. Water Resources Council (WRC). 1983. Economic and Environmental Principles and Guidelines for Water and Related Land Resources Implementation Studies.

WRC. See U.S. Water Resources Council.

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