“Laws are like spider webs through which the big flies pass and the little ones get caught” — French novelist Hornore de Balzac, author of “Bureaucracy”.
Small, wealthy cities and large corporate agriculture have been blamed as the main culprits of California’s four-year long drought. But focusing on the size of cities, not gallons of water used per person per day, tells a different story. Continue reading
“Climate change is likely to increase the frequency of warmer winters and low snowpack”. – Ben Chou, Natural Resources Defense Council, “California Needs Proactive Ways to Deal with Drought”, EnergyNewsData.com, April 3, 2015.
But such a climate change prognostication is a classic case of a self-fulfilling prophecy because California already has warmer winters and lower snowpack during normal dry years! You can’t predict the present.
Two recent transactions in western water (San Diego County Water Authority’s Carlsbad Desalination Plant and San Antonio Water System’s Vista Ridge Project) provide an opportunity to discuss the economics of the structure of debt and equity payments to project developers. For long-lived projects, a finance plan that matches the term of debt structure to the project’s life, makes both debt and equity payments subject to inflationary adjustments and deferred payments at the end of the payment period provides the best economic incentives for:
Plans that don’t incorporate these features will shift the economic burden of project costs to future current customers relative to current future customers, erode the economic incentives for customers to conserve water long-term and dilute the economic cost of project operators defaulting on contractual obligations. Continue reading
Call me skeptical. After reading the California Debt and Investment Advisory Commission’s The Bay Delta Conveyance Facility: Affordability and Financing Considerations, my skepticism metastasized.
In contrast, the discussion of risk and financing considerations must be studied by anyone who has invested or intends to invest a nickel in the BDCP. (Part 2)WARNING: you may regret your actions.