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Contract for reservation, diversion, and use of raw water by and between the City of Garland and the North Texas Municipal Water District
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SUBJECT
recommendation
Authorize execution a Contract between the North Texas Municipal Water District (NTMWD) and the City of Garland (Garland) for reservation, diversion, and use of raw water for industrial use from Lavon Lake.
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PURPOSE
Renew long-standing agreement to allow the City of Garland continued access to raw water for industrial use at its electric power generation facility adjacent to Lavon Lake.
RECOMMENDATION
The Executive Director and NTMWD staff recommend the Board of Directors authorize execution of a contract as follows:
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Contracting Parties: |
City of Garland and NTMWD |
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Scope: |
Execution of a Contract for Reservation, Diversion and Use of Raw Water for Industrial Use from Lavon Lake |
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Duration: |
25 years, with a renewal term of an additional 25 years with mutual written agreement |
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Water Quantity: |
Up to 1,500 acre-feet/year |
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Strategic Objective: |
3.3 Durable Strategic Partnerships |
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Committee: |
This will be an item on the March 27, 2024, Water Committee meeting agenda. |
DRIVER(S) FOR THIS PROJECT
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☐ Regulatory Compliance |
☐ Asset Condition |
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☐ Capacity |
☐ Redundancy/Resiliency |
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☒ Relocation or External Requests |
☐ Operational Efficiency |
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☐ Safety |
☐ Administrative |
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☐ Policy |
☐ Other _____________ |
BACKGROUND
• NTMWD is authorized to divert and use water from Lavon Lake for industrial purposes pursuant to Certificate of Adjudication No. 08-2410, as amended.
• NTMWD has ongoing agreements with the United States Army Corps of Engineers to utilize water storage space in Lavon Lake.
• The City of Garland provides electric service to its citizens through Garland Power and Light (GP&L), a municipal non-profit electric power utility.
• GP&L has owned and operated Ray Olinger Power Plant (Plant) and distribution system on the perimeter of Lavon Lake since 1967.
• Raw water from Lavon Lake is necessary to operate the Plant and NTMWD has contractually authorized the use of raw water by the City of Garland for industrial purposes at the Plant since 1964.
• In 1988, NTMWD and the City of Garland entered into an Industrial Raw Water Supply Contract, which was amended in February 2008, and included an initial term that extended through August 1, 2023 (1988 Industrial Raw Water Contract). The 1988 Industrial Raw Water Contract authorized the diversion and use of raw water for industrial operations at the Plant, including power generation and cooling purposes.
• The 1988 Industrial Raw Water Contract allows the City of Garland to divert and use up to 4,000 acre-feet per calendar year of raw water from Lavon Lake for industrial use.
• The City of Garland desires to continue purchasing raw water for industrial purposes from NTMWD for use at the Plant but no longer requires access to the full volume authorized in the 1988 Industrial Raw Water Contract.
• The City of Garland has indicated that a contract quantity of up to 1,500 acre-feet per year is sufficient to meet their long-term operational needs at the Plant. Reducing the contract quantity to 1,500 acre-feet per year will provide NTMWD additional certainty regarding the volume of raw water available in Lavon Lake for municipal drinking water use during periods of extended drought.
• The City of Garland and NTMWD have a long history of cooperation on raw water supply matters. In addition to the 1988 Raw Water Industrial Contract, the NTMWD and City of Garland have a separate agreement through which NTMWD purchases wastewater effluent volumes discharged from the City’s Duck Creek and Rowlett Creek Wastewater Treatment Plants for reuse supply at the East Fork Wetlands (2007 Reuse Contract).
• In 2023, the City of Garland requested to renew the 1988 Raw Water Industrial Contract to allow for continued operation of the Plant. NTMWD and the City of Garland subsequently entered into letter agreements to extend the 1988 Raw Water Industrial Contract through April 30, 2024, to allow time for development of a new contract, a draft copy of which is attached.
KEY CONTRACT TERMS
• The new contract (2024 Industrial Raw Water Contract) will replace and supersede the 1988 Industrial Raw Water Contract and provide the City of Garland with continued access to industrial raw water from Lavon Lake.
• The 2024 Industrial Raw Water Contract will allow the City of Garland to use up to 1,500 acre-feet per year of raw water from Lavon Lake for industrial purposes at the Plant.
• The initial term of the 2024 Industrial Raw Water Contract is a period of twenty-five years, and upon mutual written agreement, the Parties may extend for one additional term of twenty-five years.
• The reservation and diversion fees paid by the City of Garland will be assessed at the same rate and adjust in the same manner as those in the 2007 Reuse Contract. The current rate at which reservation and use fees are assessed in the 2007 Reuse Contract, and included in the 2024 Raw Water Industrial Contract, is $0.0569 per 1,000 gallons. That rate applies individually to both the reservation and use fees in the 2024 Raw Water Industrial Contract and will adjust annually based on the Consumer Price Index, which is consistent with the 2007 Reuse Contract.
• The 2024 Industrial Raw Water Contract will substantially conform to the attached draft.
FUNDING
No funding is requested.