California Business Minute™

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Hi, I am Tim Johnson and welcome to the California Business Minute.

The state’s Department of Water Resources has announced that its initial
allocation to its state customers will be a mere 5 percent of total
contracted water deliveries for 2010.

Five percent is the lowest initial allocation percentage since the State
Water Project; SWP began delivering water in 1967. The previous low for
an initial allocation as a percentage of SWP contractors’ requests was
10 percent in 1993, but that number was increased to 100 percent during
the year as supply conditions improved. The initial figure for 2009 of
15 percent was increased to a final allocation of 40 percent in May. The
historical average of final SWP allocations as a percentage of initial
requests over the past 10 years has been 68 percent.

The initial allocation is a very conservative estimate of what DWR expects
it can deliver as a percentage of SWP contractors’ initial requests for
contracted water deliveries for a calendar year, the state agency explains.
This year, the contractors have requested 100 percent of the maximum
contractual amount allowed -- 4,171,996 acre-feet. While the initial 2010
allocation is only 5 percent of that amount, actual deliveries are expected
to increase during the year once actual hydrologic and water supply conditions
are known. SWP contractors provide water to more than 25 million California
residents and more than 750,000 acres of farmland.

The initial allocation figure reflects the low carryover storage levels in
the state’s major reservoirs, ongoing drought conditions and federally
mandated environmental restrictions on water deliveries from the Sacramento-
San Joaquin Delta to protect endangered fish.

I am Tim Johnson and this has been the California Business Minute.