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Mayor Tarver did not understand how we can allow the State Water Project make us pay for something we don't get. Mr. Dixon replied that it goes back to the bonded indebtedness. When the project was built, we agreed to pay for it. Thirty-five years ago no one worried about the environment and now environmental needs have to be met. We have to release water to the Delta and protect the fish, etc. There is no objection to doing that, but it was not foreseen 35 years ago. Ms. Dennis commented that you pay for the entitlement but you only get 75 % of the water, but you have to have the entitlement because of the legality of the commitment to the State Water Project. Mr. Dixon indicated the entitlement is what the system is built to deliver and 75 % is the average of the water that goes into it. We can still use the facility so that if more water is purchased those state facilities can be used to transport that water. Now the water can be pumped and pay the same power rates that will cost for the State water. The Monterey Agreement allows the purchased water the same priority for delivery to us. Mayor Tarvet asked if this in any way could be considered not in the public interest because of the mount of additional money that is being transferred (potentially $130 million .- added to the cost of the water because of transfer and entitlement fees). Mr. Dixon commented he would be willing at the State level to open the debate that this ought to be done differently. His opinion is that there is a system in the state that says that water is in public trust and therefore if the state determines that it needs it for whatever reason, it can ta~ it. At the same time, we say the water belongs to the people. There is an inherent conflict in that. Given the history of water development in this state, what Mr. Tarver is suggesting is a long way down the road. At some point in time, there needs to be a serious look at how water is used, developed and allocated. He did not think this system currently meets the needs. Transferring water is an in-between step. Mayor Tarvet did not feel first-come/first-served is the correct way to allocate water. Ms. Dennis questioned the process and commented that how we use water, how its allocated, and how we pay for it will always go on because we are always changing. She found it disturbing that Council did not know that the discussion was happening and asked if there was a way to participate in the future. Mr. Dixon indicated that if something like this came up in the future, he could be more diligent in keeping Council apprised of the fact. He felt the agencies involved look at the state system as something they built and paid for. In reality, this is a minor adjustment that only __ affects those paying for the system. In essence, there isn't a big impact on the rest of the public. Zone 7 has been looking out for the interests of its customers. 11/14/95 -9-