Updated Water Supply Amounts for State and Federal Projects

On Friday, April 18, 2014, the California Department of Water Resources ("DWR") and the United States Bureau of Reclamation ("USBR") announced updated water supply allocations for certain contractors.  DWR increased its allocation to long-term contractors and expects to meet 5% of contractor requests.  USBR will honor Sacramento River settlement contracts by reducing contract amounts by 25% instead of the original forecasted reduction of 60%.  These water supply amounts are up from forecasts earlier this year and are the result of modestly improved hydrologic conditions affecting the State Water Project ("SWP") and Central Valley Project ("CVP"). 

Before Friday's announcement, DWR had issued its first ever zero-percent allocation for all SWP contractors and USBR had taken the unprecedented measure of forecasting that it would only make 40% of contract amounts available to Sacramento River settlement contractors.  USBR had also informed other CVP contractors, such as agricultural water users north and south of the Delta, to expect zero percent allocations and municipal users were reduced to 50% of historic use.  San Joaquin River exchange contractors were also notified in February that only 40% of contracted supply would be available for diversion.

Although increased runoff from storms in February and March are not enough to take California out of the current drought, reservoir storage has improved and updated hydrologic conditions support the increased allocations. In particular, USBR determined that the natural inflow into Lake Shasta remains below the 3.2 million acre-foot level specified in the Sacramento River settlement contracts, requiring contract amounts to be reduced by 25%.  In addition to increasing the SWP long-term contract allocation, DWR notified the Feather River Settlement Agreement Contractors last week that unimpaired runoff to Lake Oroville on April 1 exceeded the threshold level specified in the contract and that therefore no reduction was triggered.

The updated water supply amounts for long-term SWP contractors and Sacramento River settlement contractors come with certain conditions on the timing of diversions.  SWP contractors can expect to take delivery of water only after September 1, 2014.   Sacramento River Settlement contractors, for their part, will coordinate with USBR to delay diversions typically made in April and May to later summer months.  In exchange, USBR has agreed to waive certain charges and contract requirements for this year only. 

USBR has not issued updated allocation amounts for other CVP contractors or the San Joaquin River exchange contractors, but is continuing its hydrologic analysis over the next 7 to 10 days to determine allocation and supply amounts.  As final allocation and water supply amounts are announced, water transfers will become possible between willing sellers and buyers.  DWR and USBR are working to prioritize processing to facilitate efficient handling of such transfer requests.