Tacoma Water presents proposed wholesale contracts with Cascade Water Alliance; committee hears infrastructure and revenue details

Tacoma Water staff told the Infrastructure Planning and Sustainability Committee on Feb. 12 that proposed wholesale agreements with the Cascade Water Alliance would supply northern utilities beginning in the early 2040s, would shift the city's future resource mix toward more groundwater use in high-demand years, and would require coordinated infrastructure and capital planning.

Deputy Superintendent Jessica Knickerbocker described the proposals as a long-term regional partnership. She introduced senior staff to explain system impacts; Sean (last name recorded in the briefing materials) and Mark Powell led the technical and revenue discussion.

What was proposed: staff described two complementary agreements under negotiation. One agreement would reserve 12 million gallons per day (mgd) average with a 15 mgd peak allocation; a second would reserve a 12 mgd average with a 17.5 mgd peak. Tacoma's system-wide peak day demand in 2024 was about 73 mgd. Staff said Cascade does not need deliveries until the early 2040s and is responsible for constructing pipeline connections to the north; Cascade will also contribute to the corridor pump-station costs associated with pipeline intertie work.

System and operational implications Sean summarized modeling that projects Tacoma's historical average-day demand has declined in recent years (in part because a large industrial customer, the WestRock pulp mill, closed in late 2023), and that Cascade's phased demand would ramp in through the 2040s and 2050s. The presentation modeled a range of futures and used Tacoma's resource adequacy standard (a planning metric staff described as targeting mandatory curtailments less than 4% of years).

Staff described multiple mitigation options to preserve the standard: additional water storage behind Howard Hansen Dam (a large federal project the Corps is managing), forecast-informed reservoir operations (adjusting Corps operations to optimize yield), and accelerated well-field projects to bring dormant wells back online. Sean said the additional Corps storage project and reservoir operation changes largely offset the projected impacts of Cascade's demands in staff modeling.

Longer-term operations would likely include a greater share of groundwater in some high-demand years; staff estimated that at Cascade's peak modeled demand the system could be roughly two-thirds surface water and one-third groundwater in the downtown supply mix. Knickerbocker and Sean emphasized that Tacoma would retain operational control of its assets and that Cascade would share capital costs proportionate to its reserved capacity.

Revenue and timing Mark Powell summarized expected revenue components: payment streams from a prior agreement (about $47 million remaining on an earlier payment stream), a system-development charge (staff estimated roughly $50 million, with Cascade able to pay a lump sum or finance over time), a capacity reservation fee (modeled near $3 million), monthly fixed charges beginning in the late 2020s, volumetric charges once deliveries begin, and associated gross-earnings tax for the city. Staff noted some amounts are variable and depend on future demand schedules; others are fixed or contractually defined.

Infrastructure and governance Staff presented a proposed north pipeline alignment and said Cascade has purchased easements on a central segment; the most capital-intensive parts of the concept are the pipeline corridor, a pump station near the north end and, eventually, the potential development of Lake Tapps as a regional source (which would require filtration and lake-level management in coordination with local stakeholders). Staff also discussed hazard- and resilience-related benefits from system intertie, including the ability to redirect flows following major events.

Committee members asked detailed operational and financial questions, including the timing and scale of PFAS/PFOS treatment related to expanded well use, the schedule for updated modeling and lidar-informed planning, options for demand management and pricing to address peak irrigation loads, and how cascade membership changes would be handled contractually. Staff said the contracts incorporaate five-year connection planning steps and that both agreements must be executed together to take effect.

Next steps and public engagement Tacoma Water said it will brief the General Purpose Finance Committee, return to the board for approval in late February, then go to the city council for consideration; staff aim to execute the agreements shortly after council approval. Staff also described ongoing customer and stakeholder outreach and said more detailed rate and capital planning will be part of subsequent briefings.