WATER STORAGE INVESTMENT PROGRAM: Temperance Flat Reservoir Project Status Update

Project unlikely to meet program deadlines, putting $171.3 million in Prop 1 storage funds back on the table

In 2018, the Temperance Flat Reservoir Project received a Maximum Conditional Eligibility Determination (MCED) of $171,330,000 through the Water Storage Investment Program.  In order to receive the funding, there are several additional requirements which include a January 1, 2022 deadline to have completed feasibility studies, a draft version of the environmental documents released for public review, and commitments for at least 75% of non-program funding. 

Each quarter, applicants submit a report informing the Commission of project status as it relates to the Prop 1 requirements.  In recent quarterly reports, the Temperance Flat Reservoir Authority has indicated that it is evaluating its ability to achieve the prescribed schedule.

At the October meeting of the California Water Commission, Aaron Fakuda representing Temperance Flat Authority and Bill Swanson, Principal Engineer with Stantec discussed the project’s status with the Commission.

The Temperance Flat Reservoir would be situated inside of Millerton Lake on the San Joaquin River.  Millerton Lake is formed by Friant Dam; it was designed by Reclamation and built as one of the initial features of the Central Valley Project.  The dam diverts water from the San Joaquin River north through the Madera Canal about 30+ miles, and south through the Friant Kern Canal for about 150 miles, serving the 30+ irrigation districts and the city of Fresno and small communities who are part of the Friant Division.

On average, Friant Dam averages around 1.2 MAF per year in water deliveries, which is all the more impressive because Millerton Lake is quite small with a storage capacity of about 500,000 MAF which is less than half of the amount of water delivered, said Mr. Swanson.

“Reality is, because of the way the flood rules are set up and the diversions, it’s even less than that,” he said.  “So in order for this project today to function, the water needs to turn over in the reservoir 2, 3, sometimes 4 times the volume of the reservoir that is delivered to the region, and this is accomplished by taking advantage of the snowmelt.”

The project was designed as a large conjunctive use project that serves water through storage and a lot of reregulation of snowmelt when it melts and comes down during the first half of the irrigation season. 

However, there are a number of challenges, one of which is integration with local supplies.  In the Friant Division boundaries, there are multiple rivers that drain from the Sierra and cross the Friant Kern Canal to serve the farmers in the Friant Division, so many users have access to local water supplies through surface water rights, access to groundwater, and access to the Friant Division supplies. 

“The challenge they confront year after year and particularly during wet periods is the water is all available at the same time,” said Mr. Swanson.  “With the lack of ability to store it, it creates real big management problems.  So historically, a lot of that water that could have been delivered has been released to the San Joaquin River as flood flows.  So the purpose behind Temperance Flat is to recapture or to store some of the floodwaters and hold it longer in time on the San Joaquin River so it could be better integrated with the other local watersheds.  That operation would be what the water districts in the Friant Division would take into account.  They would reschedule their deliveries from Millerton Lake, they would store additional water supply, and they would coordinate it with their local suppliers to take better advantage of the surface water supplies.”

“There is also great opportunity to coordinate the operation of Temperance Flat with the greater South of Delta service area through the coordinated operation of storage in San Luis Reservoir and taking advantage of the California Aqueduct and the Cross Valley Canal to move water from the west side of the valley to the Friant Division, and the return of that would be delivered down the San Joaquin River to Mendota Pool, so it’s a very large reregulation facility within the San Joaquin Valley.”

PROJECT HISTORY

The project was initially identified within the CalFed Record of Decision in the year 2000 as one of the five storage projects that would be jointly pursued by the Bureau of Reclamation and the Department of Water Resources.  Reclamation began the feasibility study in 2002. 

On the timeline shown on the slide, the major activities for the project are on the top and the major external factors are on the bottom. 

The first major external factor that impacted the project was the San Joaquin River Restoration Settlement, which fundamentally changed the management of water on the San Joaquin River.  The reservoir project had to be set aside until the restoration settlement was adopted and the operations plan for implementing it was determined.  The San Joaquin River Restoration Program was a priority action that would occur first, and then Temperance Flat would layer on top of that where the opportunities occur.

After that process was complete, the Bureau of Reclamation was able to move forward and develop a draft feasibility report and EIS which was released for public review in 2014.  However, that study only looked at the ability to capture and manage San Joaquin River supplies under existing operating practices and did not consider integration with local supplies or coordination with the south of Delta water use, so it was viewed by the water users in the region to be a narrow look at the opportunity but not really reflective of what they would like to do, said Mr. Swanson.

Also in 2014, SGMA was enacted and the region was in a very severe drought, so the attention of water users in the valley was elsewhere than the Temperance Flat project.  In 2017, the San Joaquin Valley Water Infrastructure Authority formed and presented an application to the Water Commission for Temperance Flat; however, the authority did not have the membership that would allow it to implement the project, so it presented it as an example of what the opportunity could be to begin soliciting some of this regional support.

Following the establishment of the MCED from the Water Storage Investment Program in 2018, a series of operational studies were done by the districts that would have a meaningful role in investing in the project, which ultimately led to the formation of the Temperance Flat Reservoir Authority.  However, these entities are so strongly focusing on their long-term implementation for SGMA that they have not yet figured out how Temperance Flat fits into their ultimate portfolio.

THE PROJECT

The Temperance Flat Reservoir would be a new dam within the upper limits of Millerton Lake.  On the map, the existing storage of Millerton Lake is shown in light blue, and the darker blue areas show the inundation that would from the construction of Temperance Flat Dam and the filling of Temperance Flat Reservoir. 

The basic facility would be a new dam in Millerton Lake and a new powerhouse that would generate hydropower as water is released from Temperance Flat into Millerton Lake, essentially impounding water upstream to the downstream face of Kerckhoff Dam, a PG&E power facility. 

The Temperance Flat Reservoir would have about 1.3 MAF in storage capacity that when combined with the storage capability of Millerton Lake would be about 1.8 MAF.  The capital costs are significant at about $3.2 billion; a big part of that cost is since it would be building a dam inside of a lake, coffer dams have to be built to isolate the upstream and downstream ends of the work area. 

“We actually have to build 3 dams in total: 2 coffer dams and a main dam,” said Mr. Swanson.  “The diversion tunnel and the powerhouse all add to the cost of this project.”

WATER STORAGE INVESTMENT PROGRAM APPLICATION

With the Water Storage Investment Program application, the Water Commission determined that the project produces three benefits:

• Ecosystem improvement through the provision of a water supply that would be delivered as Level 4 water supply for wildlife refuges in the San Joaquin Valley.
• Flood control benefits to areas downstream of Friant Dam.
• Water storage held year to year to year in Temperance Flat which would not be possible in Millerton Lake because of its size would provide a long-term water volume that could be applied to emergency response.

The benefits analysis for those three exceeded the MCED but the MCED was capped at $171,330,000 dollars because it was equal to twice the ecosystem improvement, consistent with statute requirements. 

“That amount is about 5% of the total capital cost of the project, and so that raised a lot of concerns obviously among the potential investors of where is the rest of the money going to come from and how would that be allocated among the participants,” said Mr. Swanson.

ASSESSING THE OPTIONS

Following the WSIP application, a technical workgroup was formed in late 2017 comprised of public water agencies that have a potential interest in the project.  It essentially included every CVP contractor south of the Delta, the entire Friant Division and all the CVP contractors on the west side, and the exchange contractors who all had a strong interest in looking at what could the project could do.  A lot of technical study was done to evaluate how the reservoir could be sliced up into individual storage accounts with each investor having the ability to manage their own portion of the reservoir to figure out what kind of benefits they could produce for themselves. 

“This is where the integration with their local resources or the coordination with the local supplies was able to be evaluated,” said Mr. Swanson.  “That analysis found the project can produce water at a reasonable cost in the context of the overall portfolios that these entities were looking at; however, before it could move forward, greater work was needed to get a final operating reservoir plan.  A lot of the uncertainty in the final plan comes down to what is the integration with local supplies in the context of responses to SGMA.”

Afterwards, the Temperance Flat Reservoir Authority was formed comprised of a smaller group of potential investors who wanted to further evaluate the project.  They focused on forming a set of principles for participation and those principles addressed how the benefits of the project would be allocated among the investors and how the existing beneficiaries of the Friant project who do not want to participate would be protected.  The Temperance Flat Reservoir Authority then coordinated with the Water Commission to formally transfer the application from the San Joaquin Valley Water Infrastructure Authority to the Temperance Flat Reservoir Authority and it became the formal coordinating entity.  The Temperance Flat Reservoir Authority has been submitting quarterly reports to the Commission and coordinating with Reclamation on the ongoing feasibility study.

OTHER REGIONAL PRIORITIES IN THE FOREFRONT

Since the Water Storage Investment Program application was submitted, the growers and agencies that would be the potential public agency investors are juggling a lot of priorities:

Implementation of SGMA:  This region will be significantly impacted with the full implementation of SGMA.  The amount of groundwater pumping to be reduced in the region is quite significant in comparison to total water use and so there is a great amount of adjustment and restructuring of water sources, development of local supplies, and so they are considering what they will do first with their local capabilities before they start looking at regional solutions.

Drought-related impacts:  The drought was very severe in 2014 and 2015, and the water allocations to the Friant Division were zero for the very first time in the history of the projects since 1951, and they are still dealing with the consequences of that.

Groundwater quality issues associated with groundwater depletion:  Groundwater quality is an element to defining sustainability within the requirements of SGMA, and so many of the water agencies are also looking at how to address water quality needs within disadvantaged communities in those areas.

“As a consequence, these potential investors are really focusing on these priorities and at this time, it is not possible for them to say exactly how they would participate in Temperance Flat with enough certainty to develop an operating plan,” said Mr. Swanson.  “The consequence of that is we don’t have the funding commitments that would allow us to advance foreseeably, to demonstrate a 75% funding commitment by January 1^st, 2022.”

POTENTIAL ACTIONS MOVING FORWARD

The Bureau of Reclamation still has their authority and they are going to authorize to complete the feasibility and the EIS, so as the cost share partner with Reclamation, the Temperance Flat Reservoir Authority has requested that Reclamation update the analysis based on what was in the WSIP application.  They have done that; however, due to the lack of a final operating plan, Reclamation cannot proceed with a final feasibility report, so the Temperance Flat Reservoir Authority has requested that Reclamation place the feasibility study in deferral status until such time that an operating plan is defined; then they would resume the feasibility study and wrap it up.

“We don’t see that happening in the next 12 months because of all the other priorities that are occurring with the water users,” said Mr. Swanson.  “The Authority does not perceive the ability to meet the three or four principal requirements for January 2022: the completed feasibility and the Commission’s finding of feasibility, the draft CEQA document and the commitments for 75%, keeping in mind of 75% of non WSIP is funding is almost 75% of the total project because there WSIP funding constitutes about 5%.”

“What we’re doing here today is informing you of a potential future action,” he continued.  “The Temperance Flat Reservoir Authority may notify the Water Commission of intent to decline the funds, however, that action has not been taken at this time.  Today is not a formal notification of that, but it’s important that you’re made aware of this at the earliest possible convenience because this is a significant amount of funding and you need to be aware of its potential availability.”

“In determining how we move forward, we would like to make the request that the Water Commission to work with us to try and return some of those funds back to the Central Valley to help meet some of those priorities that we’ve been dealing here with locally,” said Aaron Fakuda.  “We’re hoping the Water Commission via their staff can work with us to maybe come up with a plan or proposal to honor the intent of that money to help the Central Valley with its needs. We recognize what we just laid out is that over the time between WSIP being put in place and us receiving the funds that the priorities within the Central Valley have shifted and timing is not on our side.  So we’re hoping that is a potential for us.”

DISCUSSION HIGHLIGHTS

Commissioner Teresa Alvarado asked if there were other projects that could potentially meet the deadlines that are set.  Aaron Fakuda said that yes, there are other projects.  “We recognize that those projects would also have to come with the WSIP benefits that were guaranteed under Temperance Flat, but maybe in a different format, but it’s not that we’re walking away form WSIP commitments.  The answer is yes, but I don’t have a specific project.  The goal would be to solicit those projects.”

Commissioner Alexandre Makler asked if there a procedural vehicle for amending it or introducing additional projects or is this the end of this particular effort at this time?  “From the Temperance Flat Reservoir Authority’s standpoint, we would like to work with your staff to establish those vehicles,” said Aaron Fakuda.  “It’s key that your staff help us get there.”

Executive Officer Joe Yun said that until there’s an official action, it would be premature to talk about options.  “Once an official action is taken, staff can bring forward some options for the Commission on how we might consider moving forward, and then the Commission can have a discussion and a decision about what they would like to do.  There’s no prescribed alternative or resubmittal of applications in the regulations, so given the regulations we have, we would bring forward some options for you to consider.”

Aaron Fakuda said that from a timing perspective, there is a Temperance Flat Reservoir Authority board meeting coming up and their intent was to gauge the discussion today to evaluate the need to prepare a resolutions letter returning the MCED and then getting to work with the Commission staff on establishing the process.  “If we sensed that was a realistic opportunity, then we would move quickly to make this all happen within the next 30 days.”

Commissioner Curtin reminded that Prop 1 was a broad but also a constrictive type of proposition, and all of the projects had to meet very specific needs.  “The statute itself was a masterpiece of political work but at the same time, very typically of political work, it was a mish mash of a lot of conflicting interests; it was almost destined for Temperance Flat to run into a brick wall here.  But it does not deny the need for some large-scale regional decision making.”

There are profound groundwater issues in the Valley, some of which have been going on since the 1920s.  “The pressure on groundwater, especially during a massive drought is irresistible.  If you grow crops, you have to get water, you can’t get it from the programs that are out there, so you tap the groundwater.  It’s not sustainable.  And whether Temperance Flat is the kind of thing that will make it sustainable – you have global warming, it’s not a narrow issue.  Mother Nature doesn’t care about all the investor issues and the silos in government … “

“Somebody has to take a hard look,” Commissioner Curtin continued.  “The Valley could work as a single system, more or less.  With Temperance and San Luis Reservoir, you could move the water around almost in a circular fashion to maximize the benefit of it, but there was no governance capability to deal with that issue.  There were no investors that were capable of dealing with that issue.  The only investor at this scale is government – federal, state, and local governments coming together.  … Temperance Flat may have a future, but it obviously doesn’t have one right now.  I don’t think things are going to get better environmentally, global warming wise, etc.  The original understanding was we may have as much precipitation but it’s going to come in the form of rain and not snow, and that changes everything we do and how we do it.  I was support in the past for this project, I still am, but the time wasn’t there for it.  Maybe as things evolve and we decide that groundwater cannot be managed without another large dam project, we’ll see it in the future.”

Commissioner Alvarado agrees.  Mr. Fakuda also agrees, but he emphasized he wants to see the money go to the Central Valley.  “If even $150 million of the MCED that was awarded to Temperance Flat went into the Central Valley, you would rival all of the money currently invested in all of the SGMA programs in the Valley.  You would double our effectiveness.  If we’re able to find a way to make that happen.  What we’re asking the Commission to do is help us find that way, and then on our side, we have to make that happen.  It’s meeting in the middle to make it all work.  … The Water Commission has the ability to rival SGMA’s investment in the Central Valley to date, and put projects in place.  We only have 20 years to make that happen, so we really only have about 10 to 15 years to make that happen, so we have to start making those investments today.”

THE PUBLIC WEIGHS IN …

Ron Stork with Friends of the River gave comments regarding the degree of controversy associated with the Temperance Flat project.  He reminded that the San Joaquin River is already considered fully appropriated from the standpoint of the State Water Resources Control Board.  So no new water rights are available unless and until that declaration of full appropriation is changed.  The expected yield of the project that could go towards recharging overdrafted groundwater basins is only about 70,000 to 200,000 acre-feet per year, and yet groundwater overdraft in the Valley averages 2 MAF per year.  He noted that there are projects in the Central Valley Flood Protection Plan that are not funded, but they are not storage projects.    

“There are other people who think the San Joaquin River Gorge is a good place to live and experience, and the Bureau of Land Management has actually completed a Record of Decision and a final EIS, recommending that the San Joaquin River Gorge be included in the National Wild and Scenic River System, so that gives you some sense of the controversies associated with this project.”

Mark Smith, a consultant and advocate in Sacramento working on wildlife refuge benefits pointed out that the ecosystem benefits for wildlife refuges in the storage projects approved by the Commission are critically important, but it’s also important to make sure the water promised to the refuges; it’s not enough simply to provide water in a reservoir and say that there’s an ecosystem benefit to a refuge if you cannot physically deliver that water to a refuge, he said.

“I think it will be an interesting opportunity to engage with all of you and the other stakeholders in this process to identify what may be new available money and help meet the goals of multiple benefits in the Valley and ensuring that these ecosystem benefits that you have identified for wildlife refuges are fully materialized as you go forward,” he said.

Lastly, Kathryn Fowler commented that no state or federal funds should be given to this project because it doesn’t do anything for anyone in California.  It’s been 18 years this project has been in consideration, and still no operating plan, she points out, and she objects to the project inundating a section of the San Joaquin River which could have Wild & Scenic status.

“In Millerton Lake today, there is 31%.  There is 47.4% in Mammoth Pool.  How are we going to build a big dam and fill it?  I don’t get it.  What we need to do is work on water conservation, that’s where our money needs to go.”