2011 Comprehensive Annual Financial Report (CAFR)

Major InitiativesThe Agency continues its active involvement at the Board and management levels in a wide variety ofwater and energy related issues affecting Placer County. The Agency continues participation in Bay-Delta, Lake Tahoe and Truckee River issues, a county-wide financial assistance program, American andYuba/Bear River watershed interests, and an integrated water resources program including surface water,reclaimed water, conservation and groundwater management issues. The Agency’s involvement includesthe Bay-Delta Process and possible impacts upon Placer County’s water supplies through the DeltaStewardship Council and its related programs; monitoring the Truckee River operating agreement;hearings on water right matters important to the Agency that are under consideration by the State WaterResources Board; legislative and regulatory advocacy at the state and federal levels; adapting theorganization to an ever-changing and expanding role as a resource agency on water and energy issues;greater involvement in watershed, groundwater and planning strategies; and continued support of localCities and the County’s general plans (including Placer Legacy) relevant to water.The Agency’s Middle Fork Project FERC license as well as its original 1963 Power Sales Contract withPG&E expire in 2013. PCWA continues to refine its Power Division business model as it transitions tothe terms of the new PG&E power purchase contract. In 2011, the Agency continued drafting thefinancial plan for the post 2013 management and operation of the Middle Fork Project hydroelectricfacility. The financial plan will include the comprehensive costs associated with the MFP operation,dispatch and the sale of energy. The FERC relicensing process as well as the approval of a new energysale contract with PG&E is a joint effort between the County of Placer and Placer County Water Agencyas part of the Middle Fork Project Finance Authority (MFPFA).The focus of the Agency’s Relicensing work in 2011 was submittal of a Final License Application toFERC in February 2011 and submittal of supplemental information consistent with the agreement with allparticipating stakeholders in the MFP process on new license conditions in November 2011. Staffanticipates that federal and state environmental review will be completed by late summer 2012 and theprocess appears to be on track for license issuance in 2013. Work in 2012 will focus on assisting FERCin preparing the appropriate National Environmental Policy Act (NEPA) document and drafting aCalifornia Environmental Quality Act (CEQA) document with PCWA as lead agency. Staff intends tobegin planning and design of new facilities that are part of the license that are beneficial to PCWA’sinterests. In addition, a new 56 month power sale agreement with PG&E was signed on April 19, 2011.California Public Utilities Commission approval is currently in process, and is expected in December2012.With the MFP Relicensing nearing completion and a new power sale contract under negotiation, PCWA’sfuture MFP obligations and responsibilities have become more defined. To that end, over the next fewyears, fourteen new positions are proposed to be added. The new personnel will be vital to the PowerSystem, Strategic Affairs, and Finance departments as PCWA assumes the responsibilities of anindependent merchant generator in the California marketplace.FINANCIAL INFORMATIONInternal ControlsElected officials and those employed by the Agency are entrusted as stewards of public resources.Whether cash, equipment or water rights, these resources are entrusted to their care and need to beviii