Cadiz Moves Forward on Groundwater Storage Plan

Cadiz Inc. executed letters of intent with a broad collection of Southern California water providers to develop a cost-sharing agreement, finalize terms of pricing, design and capital allocation, and work toward implementing its water conservation and storage project.

These providers together serve more than 3 million water customers across the region.

Four public municipal water agencies and Golden State Water Company, California’s second largest publicly-traded water utility have signed the letters. These providers serve customers in California’s San Bernardino, Riverside, Los Angeles, Orange, and Ventura counties. The company expects to add additional participants for other aspects of the project.

Specifically, Cadiz and the interested water providers have agreed to undertake a mutual project evaluation and seek an agreement identifying and apportioning expected environmental review costs, including the preparation and submittal of a project description for review under the California Environmental Quality Act. The environmental review process is expected to begin shortly following the submittal of the project description.

Under the letters of intent, water purchase options will tentatively be made available to participants on a 50-year term based on the cost of comparable alternative sources of supply. Participants will be subject to fees for administration, management, and maintenance of storage, puts and takes, and power costs. Discounts will be provided to participants meeting agreed-upon environmental stewardship objectives.

In a statement to the participating water providers, Gov. Arnold Schwarzenegger applauded their decisions to join the project:

“I applaud the leadership of these Southern California water agencies who are helping address the state’s water supply challenges by exploring a path-breaking, new, sustainable groundwater conservation and storage project. This innovative project, utilizing sophisticated water conservation practices, will sustainably recover more than 1 million acre feet of water that would otherwise be lost to evaporation and make it available to help provide a reliable source of water for Southern California. All Californians who care about our state’s economic future and job creation should follow the lead of these water suppliers and examine smart and sustainable ways to conserve every last drop of water.”

“Our state is facing a water crisis today and tomorrow unless we expand our water supply for a growing California,” said Congressman Jim Costa (D-Calif.). “We must use all the water tools in our water toolbox. In Southern California especially, all viable water projects that relieve pressure on the Delta and increase supply and storage opportunities are critical to provide water for growing cities, to maintain the viability of our farms, and to address long-term environmental concerns. The Cadiz project falls in this category.”

The $200 million project features the construction of a 44-mile underground conveyance pipeline and will create an estimated 1,200 construction jobs. Cadiz has pledged to hire Inland Empire companies for materials and services, wherever possible, and to reserve up to 10 percent of conserved water and storage for beneficial uses in San Bernardino County.

“By offering new jobs and service opportunities, the Cadiz Project will help get the local economy back on track and put our people to work,” stated Bob Ereth, vice president at Layne Christensen Company. “We look forward to participating in the project as it moves forward.”

Cadiz owns approximately 35,000 acres of land in the Cadiz and Fenner valleys of San Bernardino County, Calif. This landholding is underlain by an extensive aquifer system with storage capacity and natural recharge. By making use of groundwater that currently evaporates from the aquifer system at the nearby dry lakes, the project will yield a sustainable annual water supply for its subscribers. The aquifer system also offers approximately 1 million acre feet of storage capacity that can be used to conserve – or “bank” – imported water, virtually eliminating the high rates of evaporative loss suffered by local surface reservoirs.

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