V. The WMP⁴

WMP Figure III-2 summarizes total water supply available for Valencia and the other retail purveyors. It shows a range of supply from 156,900 acre-feet (AF) to 142,800 AF from wet years to dry years, respectively, with the relatively high "dry year" value achieved through inclusion of "firming" supplies.

Protestants contend SWP deliveries, especially during drought years, will not be sufficient to avoid overpumping, thereby causing permanent damage to the groundwater basin. Also, Protestants contend that the reliance on certain groundwater supplies should be reduced, due to a contamination problem, and that water demand for the proposed Newhall Ranch Specific Plan should be included in the WMP.

Valencia disputes these assertions. Among various rebuttal arguments, Valencia endorses CLWA's management practice of securing additional entitlements and "firming supplies" only three to five years before needed, to avoid imposing unneeded costs on its current customers.

We find that the WMP provides a reasonable estimate of the water supplies available, including groundwater from the Alluvial Aquifer and the Saugus Formation, imported water from SWP, supplies to be acquired through CLWA's capital improvement program, and recycled water. Also, we find that CLWA's plan for short-term drought, firming water supplies when availability of SWP water is reduced in times of drought, is reasonable, and that the WMP need not be modified to account for the Newhall Ranch Specific Plan. These findings are discussed and supported below.

A. Water Demand

WMP Figure III-2 shows that the updated demand for both existing and Valley-wide DMS build-out is calculated as 87,010 AF. The WMP relies on Los Angeles County's DMS to forecast future water demands, noting that the County maintains DMS and includes in that data base existing and projected water demands from all development projects for which a tract or subdivision map has been filed. According to Valencia, the County's DMS report provides the most accurate and up-to-date summary of all building activity and corresponding water demands likely to receive water service from Valencia and the other retail purveyors in the foreseeable future.

For Valencia itself, the WMP report estimates total demand of 23,088 AF in 2000 rising to 32,406 in 2010 and 40,978 AF in 2020. This forecast for Valencia reflects an annual usage factor for single-family residential connections of 0.6 AFY and a long-term growth rate of 800 customers per year. Similarly, in accordance with the Commission's preferred methodology, Valencia calculates demand separately for each customer class and aggregates the result.

Donald Howard, a civil engineer with experience performing technical studies and testifying before the Commission on behalf of a range of water utilities, prepared an independent analysis of future water use for Valencia. He concurred with Valencia's analysis of usage by customer class, and performed his own study using a Commission-recommended forecasting program. The results of his study indicated somewhat lower future usage by the bulk of Valencia's customers than projected in the WMP. To be conservative, he recommended using the Valencia's WMP results for long-term purposes, but believed his projections were more accurate for the shorter term. Howard's testimony is uncontroverted.

Protestants asked our consideration of the long-term consequences of planning changes under consideration by the County of Los Angeles in connection with the Newhall Ranch Specific Plan. This is a project of the Newhall Land and Farming Company that may eventually lead to the construction of real estate developments including some 21,000 homes. Robert DiPrimio, Valencia's president and policy witness, stated that the WMP's demand projections do not account for development that may occur pursuant to the Newhall Ranch Specific Plan, because no tract maps have yet been filed with the County for any significant portion of such developments, and so the water demands associated with such developments are not in DMS. He testified that as a water utility manager, he was unwilling to include in his Water Management Program such projects that do not have local approval and are not included in DMS. When asked about the sources of water supply if Valencia were to serve the Newhall Ranch Specific Plan, he refused to speculate, noting that the proponents of that as-yet unapproved project were proposing sources of supply that may be additional to those reflected in the WMP.

DiPrimio explained that the DMS does not have a time frame associated with it, but he estimated that it covers approximately ten years of development activity. He stated that the WMP's projections of demand for Valencia's own operations, however, look 20 years into the future. These longer-term demand projections do not take into account the prospects for serving Newhall Ranch Specific Plan or any other specific development - they are simply based on an extension of Valencia's long-term experience of residential customer growth at an average rate of 800 customers per year.

He argued that this long-term estimate reflects upswings and downswings in the economy, and so is useful regardless of any specific land development plan that might be approved. He viewed the 800 customers per year growth estimate as "conservative" (on the high side). He pointed out, based on his experience, that in the late 1980s there had been a significant level of growth in the Santa Clarita Valley and when the recession occurred, the number of new customers dwindled to practically zero.

We find that the WMP does not need to separately take into account at this time any additions that may result from the Newhall Ranch Specific Plan. To the extent that any part of the project gets built, in the near term, it is accounted for in the WMP by the 0.6 AFY usage figure and the customer growth rate of 800 customers per year testified to by witnesses Howard and DiPrimio. In any event, Newhall Ranch Specific Plan is not included in ALs 88 and 90. If Valencia proposes to serve Newhall Ranch Specific Plan, we will require the company to file an application requesting authority to expand its service area, provide an updated WMP and advice letter covering any such project. In the meantime, for purposes of approving the WMP in conjunction with ALs 88 and 90, we find the demand forecast set forth in the WMP to be reasonable.

B. The Alluvial Aquifer and the Saugus Formation

Water purveyors in the Santa Clarita Valley pump their groundwater supplies from two aquifers: the Alluvial Aquifer and the deeper Saugus Formation.

For the Alluvial Aquifer, WMP Figure III-2 shows as available 40,000 AFY in a wet year and 32,500 AFY in a dry year. For the Saugus Formation, it shows as available 20,000 AFY in a wet year and 11,000 AFY in a dry year. Sierra Club and Ventura say these groundwater resources would be overpumped, if pumped to the full extent shown.

Sierra Club foresees a shortfall in water supply if the Newhall Ranch Specific Plan is built within the 10-year planning horizon of the WMP and SWP supplies are curtailed to 4,562 AFY as happened in 1991. Sierra Club contends that even if as shown in WMP Figure III-2, the Alluvial Aquifer and Saugus Formation provide 43,500 AFY in a dry year, these aquifers would supply less than half of the 104,000 AFY demand requirement. According to Sierra Club, such accelerated pumping would overdraft the aquifers at a rate never experienced before.

Ventura has similar concerns. Ventura argues that pumping at rates considerably in excess of the combined average historical pumping rate of about 36,000 AFY would greatly stress the groundwater basin, more so with the addition of the Newhall Ranch Specific Plan.

Valencia disputes the assertions. Valencia witness Joseph Scalmanini, a consulting engineer with expertise in groundwater hydrology, found no long-term trends toward overuse of these aquifers. In reviewing groundwater level data, Scalmanini consistently found that groundwater levels over the last 30 years were generally higher than over the preceding two decades (the 1940s and 50s). He also found that groundwater quality variations in the Alluvial Aquifer correlated inversely with precipitation and stream flow, without any sustained trend toward water quality degradation. He endorsed the groundwater management practices of maximizing use of the Alluvial Aquifer in the context of a previously reported perennial yield of 32,500 AFY. He noted that this management practice includes intermittent "stressing" of the aquifer by pumping in excess of the perennial yield value for one or more years, without long-term adverse effects.

Regarding the Saugus Formation, Scalmanini testified that there has been no quantification of its perennial yield, although Richard Slade recently estimated short-term yield of up to 40,000 AFY. He also found support in recent experience for a management approach that contemplates pumping up to 40,000 AFY from the Saugus Formation in drought years, followed by periods of lower pumpage to allow recovery of water levels and storage. He considered the components of the overall groundwater supply shown in WMP Figures III-2 to be "very conservative," and he particularly endorsed the logic of relying on the Saugus Formation for firming water supply in dry years.

The only contrary witness with expertise in hydrology was Ventura's Steven Bachman. He presented an analysis of the adequacy of water supplies for Valencia's future use by comparing a long-term demand curve included in CLWA's draft IWRP with a significantly modified version of the available supplies shown in WMP Figure III-2. His major departures from the WMP were to set a maximum dry-year yield from the Alluvial Aquifer of 25,000 AFY and to look to the Saugus Formation as the only source for dry-year firming supply, discounting to zero the prospects for firming from other sources, both State and private. Based on these and other assumptions, Bachman concluded that the Saugus Formation would be in perpetual overdraft beginning in 2011. Bachman also considered water quality data that suggested to him a general deterioration of water quality in the Saugus Formation, as measured by total dissolved solids (TDS), with increased pumping.

Valencia argues that Bachman's assessment of the WMP's supply scenarios was arbitrary. According to Valencia, a fundamental defect in Bachman's approach was that he contrasted a current snapshot of supply availability to a trend line of demand growth 10, 20, and even 50 years into the future. Valencia witness DiPrimio considers the IWRP's Valley build-out scenario, the source of Bachman's 50-year view, beyond the scope of the WMP and this proceeding. According to DiPrimio, Bachman also disregarded numerous potential future water supplies available to CLWA and the retail water purveyors, and the fact that beyond a relatively modest baseload contribution, the Saugus Formation is intended to be used to meet demands when imported water supplies are reduced during droughts.

Valencia witness Richard Slade addressed Bachman's claim about deteriorating water quality in the Saugus Formation. He studied the same data and concluded that although TDS had increased slightly over time in all five wells studied, the TDS increase was not related to groundwater production from any of the wells. He found "no evidence to suggest that more intensive pumping of the Saugus Formation will increase TDS concentrations in the water supply."

Sierra Club witnesses Plambeck and Kotch challenged Valencia's planned reliance on groundwater resources. Plambeck asserted that the Santa Clara River "has been over-drafted beyond its safe, perennial yield for the past six years and in 1999 it was over-drafted by more than 10,000 AF." She also claimed that there was no hydrological study that supports extraction from the Saugus Formation of more than 20,000 AFY. Likewise, Kotch pointed to a "trend of overextraction" from the Alluvial Aquifer.

Valencia witness Scalmanini contends that Plambeck's and Kotch's assertions about "overdrafting" from the Alluvial Aquifer fail to recognize that the perennial yield of an aquifer system is a long-term value, and that "overdraft" cannot be concluded simply because recent pumping has exceeded a long-term average number, even if for several years. Further, Scalmanini dismissed the assertion that the system has been pumped in excess of perennial yield over the past six years as not "even close to correct" - especially in view of the "absolute[ly] constant water-level condition throughout the time period that you're asking me about." In short, Valencia believes that its estimate of available groundwater resources and its reliance on those resources to meet both normal and dry year needs, is reasonable.

We find the WMP's reliance on groundwater from the Saugus Formation is within reasonable limits, and we reject Ventura's contention that the Saugus Formation will be in overdraft by the year 2011. Ventura witness Bachman reached this conclusion by using a demand figure of 105,500 AFY for the year 2010 obtained from CLWA's draft IWRP report. He compared this demand figure to the supplies shown as available in the WMP after making downward adjustments to firming supplies. The point that Bachman overlooks is that the supplies shown as available in the WMP are the supplies shown as available for a demand of 87,000 AFY rather than the 105,500 AFY IWRP demand figure he used. Obviously, such a mismatch would provide the shortage (overdraft) that Ventura forecasts. In short, Ventura has made an "apples and oranges" comparison. We need not address the other adjustments made by Bachman to WMP firming supplies, because Bachman's use of the 105,500 AFY IWRP demand figure overshadows everything else.

C. The Perchlorate Problem

Ammonium perchlorate contamination has been recently detected in four Saugus Formation wells located in or near the Porta Bella property. The parties disagree on how the WMP must account for that fact. Protestants argue that the extent of contamination has not been identified, increased groundwater pumping could spread the contamination, and clean-up might take several decades.

Valencia believes the problem has been fully identified and is well on the way to remediation. Valencia points out that a treatment facility has been licensed for operation in La Puente by DHS, which has found that the technology employed by the facility can reduce perchlorate to a no-detect level.

Protestants cite data from monitoring wells that they believe shows the perchlorate is migrating toward production facilities now relied on for drinking water. Protestants conclude that to stop the migration, Valencia must reduce its pumping from this acquifer, and that the WMP should be revised to show correspondingly lower availability of water supply. Valencia, however, says these data show that groundwater is flowing westward but not that contamination is spreading; in fact, perchlorate has shown up only at the four wells where it was initially reported. Thus, Valencia believes its supply assumptions reasonably consider the perchlorate contamination problem and should not be adjusted.

We conclude that the record supports the WMP's analysis of the perchlorate problem. Specifically, remediation is substantially under way, and production facilities sufficiently remote from the contamination site can be relied upon for the quantities of water that the WMP assumes will be available from the Saugus Formation. Furthermore, the close monitoring of the situation by water purveyors and DHS, and more recently the U.S. Army Corps of Engineers, reasonably ensures a prompt response to any change in the situation. Consequently, for purposes of the WMP, Valencia is appropriately accounting for the impact of perchlorate contamination on its water supplies.

D. Supply From State Water Project and Firming Resouces

WMP Figure III-2 reflects 95,200 AFY of SWP water being available for use in a wet year, and 47,600 AFY available for use in a dry year. WMP Figure III-2 also shows 50,000 AFY of firming supplies available to make up the difference in SWP deliveries in a dry year.

CLWA is the SWP contractor or wholesaler of imported water for the Santa Clarita Valley. While CLWA's current SWP entitlement is 95,200 AFY, actual availability and delivery can be affected by a number of factors, including hydrologic and weather conditions and conflicting needs of the Sacramento-San Joaquin Delta.

Sierra Club argues that because the SWP must curtail deliveries in some years to as little as 20 to 30% of entitlements, the SWP cannot reliably make up the difference between the WMP's projected demand of 87,000 to 104,000 AFY (including Newhall Ranch Specific Plan), on the one hand, and the total sustained yield capacity of the Alluvial Aquifer and the Saugus Formation. Regarding Valencia's proposals for securing firming supplies to make up this difference, Sierra Club argues that no documentation of contracts to secure such additional supplies has been provided.

Ventura's assessment, based on a probability analysis, is that the amount of SWP water likely to be received by CLWA is 34,272 AF or less in one year out of 20. Ventura notes that in 1991, the SWP delivered approximately 30% of the entitlement statewide and CLWA received 4,000 to 5,000 AF, or less than 10% of its then 54,200 AFY entitlement. Ventura discounts the availability of the firming supplies described in the WMP to make up any shortfall caused by reduced SWP supplies in a dry year.

Undoubtedly, SWP deliveries will be curtailed, perhaps substantially, in some years. Thus, the WMP's provisions for firming supplies are vital and should be considered together with SWP supply. We examine these provisions below.

The WMP defines "firming water supplies" as alternate short-term supplies (1 to 3 years) made available to local purveyors when imported water is reduced during drought conditions. The WMP refers specifically to three firming supply options: (1) acquiring additional SWP entitlement, (2) the Drought Water Bank, operated by the State of California through DWR, and (3) local supply augmentation. The WMP also refers to several other state programs CLWA can use to firm up SWP supplies when they are reduced, including the Supplemental Water Purchase Program, the Interruptible Water Purchase Program, and the SWP Turn-back Pool. A survey of additional future water resources also is provided.

CLWA witnesses Sagehorn and Takaichi explained that development of these resources is on an "as-needed" basis. CLWA seeks to anticipate and implement the capital improvements needed to satisfy future water demands without overly burdening its wholesale customers (and their current ratepayers) with the costs of these capital improvements. Because CLWA has taken past steps to increase its SWP entitlement well beyond current and near-term projected demand, and has sufficient capacity available on the California Aqueduct to ensure delivery of the supplies it needs, existing capital assets are sufficient to meet near-term demand. Nevertheless, CLWA is seeking additional SWP entitlements totaling approximately 19,000 AFY from two water districts in Kern County to meet incremental future demand and to enhance service reliability to existing users in the event of future statewide drought.

Sagehorn testified that CLWA has about 4,700 AF of storage in Pyramid and Castaic Lakes for surplus SWP water. He estimates that about 100,000 AFY could be produced for three years in an extended drought by storing unneeded SWP entitlements in underground basins. Sagehorn noted that since 1994, CLWA returned a total of 130,000 AF of water to the SWP, which could otherwise have been stored for use in drought years.

Also, Valencia witness Dendy testified that in a statewide dry year, up to 20,000 AF could be made available to CLWA through the State Water Bank. According to Dendy, the record supports that reliance and even greater amounts, if needed.

For planning purposes, the WMP assumes that Valencia's customers could voluntarily conserve 10% from their normal usage. Valencia believes this is a reasonable and, in fact, conservative assumption given that Valencia's customers voluntarily conserved over 20% during the severe drought year of 1991. However, the WMP does not expressly factor conservation or "demand management" into either the demand or the supply side of its balance of resources. Thus, this factor does not appear in WMP Figure III-2 either as an adjustment to the various demand levels or as an element of firming supply. Where conservation does come into play is in the definition of Valencia's water reliability goal. That goal, as part of its effort to balance the provision of reliable service with economical operations, is to meet water demands (unadjusted for conservation) 95% of the time, or in 19 out of 20 years. In the remaining 5% of the time, the maximum contemplated supply shortage is 10% - the presumed level of conservation. As DiPrimio testified, planning instead to serve normal demand in a critically dry year would require Valencia and CLWA to invest prematurely in alternative water supplies that might never be needed, producing a significant cost burden to local water companies and their customers.

The Santa Clarita Valley's water purveyors have reserved the Saugus Formation as a firming resource and have decided to maximize production from the shallower Alluvial Aquifer, from which water can be pumped at lower cost. Valencia estimates that, if needed, the Saugus Formation could provide 40,000 AF of firming supplies.

WMP Figure III-2 shows 1,700 AFY of recycled water as available in both wet and dry years. DiPrimio estimated the potential production of recycled water to be at least 10,000 AFY, with the costs declining as a function of increasing production. Such increased production of recycled water for golf courses and landscaping uses makes more supplies of potable water available for residential use.

In summary, Valencia believes that the availability of the range of firming resources described above, now and in the future, substantially obviates any grounds for serious concern about the uncertainty of obtaining full deliveries of SWP entitlement in any particular year.

We find that Valencia has reasonably demonstrated the availability of firming supplies of the magnitude indicated in the WMP. These supplies, in turn, support our finding that the WMP's reliance on SWP water is reasonable.

E. Conclusion

Contrary to the assumptions of witnesses for Sierra Club and Ventura, the amounts of water supply from the various sources listed in WMP Figure III-2 are not presented as an operational plan for how supplies would be used in a particular wet or dry year. The amounts simply show the range of water supplies available to the Valley under a range of weather conditions. The optimal mix of supplies used in a particular year is necessarily a function of prudent management choices by Valencia and the other purveyors based on the conditions in that year. These choices are available because Valencia and the other water purveyors have, as Scalmanini testified, about twice as much supply as there is projected demand.

DiPrimio made a similar point, applicable to the range of water resources available to Valencia, when he testified that:

"The WMP estimates the availability of groundwater from the Alluvial and Saugus aquifers in a wet year and a dry year scenario, but extraction of water at the levels of these estimates would not be required, in most years, to meet the level of demand presented by the addition of the AL 88 and 90 extensions to Valencia's service area. In any single year and in any series of years, Valencia and other water purveyors in the Santa Clarita Valley will look to a variety of sources to meet the current year's demand. These include water transfers and exchanges, groundwater banking programs, participation in DWR's dry-year supplemental program, voluntary conservation and additional withdrawals from the groundwater basin. . . . The WMP estimates supplies that are and will be available - it does not mandate their use." (Exhibit 53 (DiPrimio), at 3.)

In short, the WMP does no more than create a baseline of expectations, at a particular point in time, of the water purveyor's supply and demand. The WMP does not dictate management choices among presently available sources of supply or timely investment in new resources. When performed intelligently, these management choices can augment the available resources while both limiting the incurrence of costs that must be passed on to customers and also avoiding the potential environmental harms that rightly concern the Protestants, and indeed this Commission.

The evidence developed in this proceeding strongly supports the finding that for the relevant forecast period, Valencia has water resources available to meet projected customer demand for its services, including the demand presented by all new development accounted for by Los Angeles County's DMS. The WMP and the related evidentiary record developed in this proceeding is clearly adequate for the Commission to act on Valencia's proposal to extend water service to the four developments covered by ALs 88 and 90. Extending service to large-scale future developments, such as those that may result from the Newhall Ranch Specific Plan, will call for review of more current information, such as the 2000 UWMP or a future update to this WMP. If Valencia proposes to serve this development, it must file an application, an updated WMP and advice letter for such a project.

As is evident from WMP Figure III-2, the increment of demand represented by ALs 88 and 90 comes nowhere near taxing the water resources available to Valencia in a wet or dry year. As discussed in the first half of today's decision, the environmental impacts associated with approval of the WMP in conjunction with those advice letters, including cumulative impacts, were fully addressed by the EIRs completed and certified in connection with the underlying land development projects. Accordingly, we approve Valencia's WMP.

Valencia has facilities in place that can be extended efficiently into the development areas proposed to be served by ALs 88 and 90. The demand the proposed service extensions would add to Valencia's overall service requirements is modest and well within Valencia's demonstrated water

production capacity in both normal and dry years. The extension of Valencia's service area will incorporate development areas that already are enclosed on three sides by Valencia's territory. If Valencia is not authorized to extend its service, one of the other retail water purveyors, drawing from the same shared water resources, will likely take Valencia's place. If that development ultimately is served by another water purveyor rather than Valencia, the cost to extend service will be substantially higher, and the reliability of service less, than what it would be for Valencia. Therefore, the public interest - and particularly the interests of water users in the Santa Clarita Valley - will be served by today's decision approving ALs 88 and 90.

⁴ The Urban Water Management Planning Act, Water Code § 10610 et seq., originally enacted in 1983, requires every urban water supplier - of which Valencia is one - to prepare and adopt an urban water management plan (UWMP) and to update its plan at lease once every five years. (§§ 10620, 10621.) The adopted and amended plans must be filed with DWR, which must, in the succeeding year, submit a report to the Legislature summarizing the status of such plans. (§ 10644.) Water purveyors, such as Valencia, are required to include in their UWMPs descriptions of their service areas, identification of existing and planned sources of water, description of the reliability of their water supplies, quantification of past, present and projected water use, and description of water demand management measures being implemented or planned. (§ 10631.) Similarly, the Commission, following its investigation into the effects of drought on the regulated utilities, requires Class A water utilities to file a WMP with each general rate case application (D.90-08-055). Typically, a WMP filed with the Commission is an updated version of the water utility's last UWMP, as is Valencia's WMP filed in this proceeding.