Hidden away in the bulging hills of the Sunol Valley, construction on the showpiece of San Francisco’s water delivery system overhaul is nearing completion.

At the northernmost tip of the Calaveras Reservoir, a critical component of the vast Hetch Hetchy network that sends water to 2.7 million Bay Area residents, a brand-new, $810 million earthen dam is now 89 percent complete.

While the new Calaveras Dam rests just 1,000 feet downstream from its 91-year-old predecessor, it’s being built to meet far more stringent seismic standards.

That’s particularly important, considering that the new dam will sit just 1,500 feet from the Calaveras Fault, which is capable of producing a 7.25-magnitude earthquake and, with it, the potential to severely disrupt the entire region’s water supply. The new dam is being built to take such a quake in stride.

“When it’s full, Calaveras Reservoir represents 40 percent of all of our local water storage capacity — in that one reservoir,” said San Francisco Public Utilities Commission spokeswoman Betsy Lauppe Rhodes. Should the region be suddenly cut off from its central source of water — the Hetch Hetchy Reservoir in Yosemite — or in times of drought, the local supply at Calaveras becomes even more critical, Lauppe Rhodes said.

The new Calaveras Dam represents by far the largest component of the Water System Improvement Program, an $4.8 billion project the city agency began in 2002 to upgrade huge portions of its water delivery system.

The agency is more than 90 percent of the way through the 83 projects that make up the improvement program, most of which are centered on strengthening the system better against earthquakes. The Hetch Hetchy system crosses three major faults as it moves water westward toward San Francisco and the Peninsula: the Calaveras, Hayward and San Andreas.

Each aspect of the improvement program, Lauppe Rhodes said, was designed to ensure that in the event of a catastrophic earthquake, the PUC would still be able to provide what it calls “minimum-day demand” within 24 hours — roughly the amount of water needed during the winter, when demand is usually lower.

“That’s water for drinking and firefighting and keeping everything going,” Lauppe Rhodes said.

One-third of the program is being paid for through gradual increases in residential and commercial water rates. Those customers use about a third of the reservoir’s supply. The other two-thirds in revenue is coming from the PUC’s wholesale customers, like the Alameda County Water District and cities like Hayward and Milpitas.

At the point where the new dam meets the Calaveras Reservoir, an inscription above a newly built water intake tower reads “Lympha Optima,” a rough Latin equivalent for “pure water.” Beneath the stately intake tower, adorned with Greek columns, a vertical shaft plunges more than 160 feet beneath the ground and is capable of drawing water from the reservoir at three different elevations.

After five years of site preparation and excavation work, a mammoth undertaking in its own right that involved moving 7 million cubic yards of soil and rock — enough to fill two Levi’s Stadiums — PUC crews and contractors finally began building the dam upward in 2016.

The dam grows a foot in height each day as heavy earthmovers roll over its foundation, flattening layer after layer of rock and sediment. The earthen materials are transported to the dam’s basin via a screeching, 3,000-foot conveyor belt that winds around the work site’s perimeter. By the dam’s anticipated completion in the spring of 2019, it will top out at 220 feet high. It’s about half that height now, said Susan Hou, a senior project manager at the PUC.

Last year, workers also completed the dam’s 1,550-foot-long concrete spillway, which is as wide as an eight-lane highway.

For nearly 16 years, state regulators have required the agency to keep water levels in the reservoir well below what it’s capable of holding. In 2001, the state’s Division of Safety of Dams ordered the PUC to reduce the amount of water in the reservoir by 60 percent, citing earthquake safety concerns related to the dam.

Building the new dam will also allow the PUC to restore the Calaveras Reservoir to its full 31 billion-gallon capacity, greatly adding to the amount of local water the PUC can store.

“Sixty percent is about 18 billion gallons,” Hou said. “That’s a lot of water.”

The reservoir had to be lowered because, state regulators found, a 7.25-magnitude quake could cause the sides of the old dam to slump, unleashing a 30-foot-high torrent of water on Fremont.

Hou said the old dam, which was built in the 1920s with mule-drawn carts, used now-outdated methods and poor materials that didn’t compact properly.

“The construction method wasn’t strong enough for the size,” Hou said. “We were testing the limits of the time to build such a high dam with those types of materials.”

Bringing the reservoir back up to pre-2001 levels means being able to store a far greater amount of water, further protecting the region from disruptions.

“You need to have that storage readily available if a drought comes or if we have an event at Hetch Hetchy,” Hou said. “Then you have to go to your local source, and this is the largest one in our regional water system.”

Richard Luthy, a professor of civil and environmental engineering at Stanford, said that in addition to hedging against the effects of a violent national disaster, increasing Calaveras Reservoir’s storage capacity will also be crucial for combating the effects of climate change.

“The snowpack in the Sierra won’t be as big in the future because of climate change and warming,” Luthy said. “The way the snowpack worked is that it was water in storage.” But as temperatures rise and as the snowpack melts earlier in the year, Luthy said, the amount of time available to capture and store the runoff will continue to shrink.

“That time gap is getting shortened. In terms of increased capacity, it gives you more flexibility to deal with climate change,” he said.

Dominic Fracassa is a San Francisco Chronicle staff writer. Email: dfracassa@sfchronicle.com Twitter: @dominicfracassa