Item - Agenda w-Hillsborough 03-22-2004

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when the County was in mandatory water use restriction while the Town was in voluntary restrictions, the County and Town reached a temporary agreement to address the conflicts. The County agreed to forgo enforcing its mandatory restrictions against the Hillsborough water customers under County jurisdiction while the Town agreed to provide additional (above Capacity Use requirements) water releases from the West Fork Reservoir to supplement releases from Lake Orange. In essence, the arrangement preserved and actually enhanced the integrity of the Lake Orange water supply for the short period (water levels in Lake Orange dropped from the Stage III to the Stage IV level in just 30 days [6/17/02 — 7/17/02] due to the unseasonably hot and dry conditions) in which the ordinance restrictions were disparate. The Town has been approached by some of its water customers who have asked that water restrictions be relaxed (given the availability of additional water supplies from a source - the West Fork Reservoir - the cost of which is already included in the water rates) or that utility rates be reduced and /or equalized between in- and out -of -town customers. The Town's response has been to seek input on these issues from its Water and Sewer Advisory Committee. As indicated earlier, the advisory committee has recommended a strategy that includes restoring the water demand /sale lost with the closing of Flint Fabrics. One method of increasing water sales — relaxing water use restrictions during the normal summer dry period — has the potential to address both complaints raised by Town water customers. For example, the Town has calculated that water restrictions imposed in 2002 cost it loss water sales more than $500,000 or 11 % of its total annual water revenues. In all probability, had the Town's proposed water use restriction imposing mandatory restrictions only when its total water supply (Lake Orange and West Fork Reservoirs) falls below 135 days of supply had been in effect in 2002, Hillsborough water customers would not have faced any water restrictions during the drought (storage in the West Fork Reservoir never fell below 150 days of supply). Consequently, the Town would not have lost the $500,000 in utility revenues. Although the Town would have incurred the incremental treatment costs, its rates could theoretically have been reduced by an amount approaching 10% overall (or by 20% to out -of -town customers with no off - setting rate increase to in -town customers). Water Conservation of Eno River Water Supplies Water conservation, including conservation of the very scarce Eno River water supply, has long been a stated value of the BOCC. Insofar as the Eno is concerned, it has been the Eno River Capacity Use Agreement that has actually accomplished this goal since its inception. Customer demand on the Hillsborough and Orange - Alamance water utilities has historically exceeded the Capacity Use specified water supply allocation of each (although Hillsborough's water demand subsequent to the close Flint Fabrics has generally been less than its Stage IV allocation). Historically, demand /Eno availability shortfalls have been addressed by acquiring water from other sources — ground water wells and purchases of treated water from Mebane, Graham and Burlington through Haw River in the case of Orange - Alamance and treated water purchases from OWASA and Durham in Hillsborough's case. It now appears that both Hillsborough (which has little draft 9