LOS ANGELES — A $44.4 million water banking agreement between a Nevada water authority and Southern California water wholesaler is a credit positive, Moody's Investors Service said.

The Southern Nevada Water Authority approved an agreement Sept. 17 allowing it to bank up to 150,000 acre-feet of water with the Metropolitan Water District of California, according to a Sept. 24 Moody's report.

The transaction is credit positive, Moody's credit analyst William Oh said, because Met Water receives additional supply for resale while addressing severe drought conditions.

SNWA, a wholesale water supplier for the Las Vegas Valley Water District, will receive $44.4 million.

The agreement gives SNWA additional revenue from existing, unused water assets stored in Lake Mead.

Moody's also considered the payment a manageable portion of MWD's $950 million in fiscal 2014 operations expenses.

SNWA has more than 1.5 million acre feet of water stored with various partners along the Colorado River, equal to approximately seven years of consumptive use. It increases the water banked by SNWA to 350,000 acre feet, but Moody's said if SNWA needs the water banked in the agreement, provisions allow it to return the money and recover the supply.

Under standard guidelines, MWD is entitled to 550,000 acre feet of California's 4.4 million acre feet share of Colorado River water. Through Colorado River projects and agreements that allow MWD to augment its take of river water, it expects in 2015 to divert 1.2 million acre feet of Colorado River water, or 68.6% of budgeted supply, including amounts in this agreement with the SNWA, according to Moody's.

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