EXHIBIT 3-B

Governance Committee Comments on Value Engineering Alternatives From 8/25/14 Committee Meeting Refer to pages 7 – 10 of the Final Value Engineering Study Report
Richard Svindland and Ian Crooks reviewed Cal-Am’s response to recommendations BD-6; E1 through E7; M-4; TP-1 through TP-11; and RS-2. Comments from the Governance Committee are listed below.
E-2	If recommendation were to be followed, it would affect plant sizing, and reliability (with more pumps, operation could continue if some pumps were down). Committee noted that any change affecting plant size would be a concern to the community. Many parties to the litigation have agreed that 9.6 MGD is recommended or 6.4 mgd with a groundwater replenishment project.
TP-1	Cal-Am representatives said that this change could cause an increase in brine concentration to the outfall, and operation of outfall to the National Marine Sanctuary, which could increase costs. Through use of slant wells, it is possible that the source water will require less treatment and result in increased plant efficiency. Committee asked if the plant could be designed to use 45% recovery rate and later increase the recovery. CAW responded that yes, if conditions change, modifications could be made to increase recovery.
TP-4	Committee asked that the report include the annual and life-cycle cost savings associated with elimination of sulfuric acid treatment from the process.
TP-7	Committee clarified that if this change were implemented, a one-month delay in project completion would result. However, due to the time extension recently granted by the California Public Utilities Commission (CPUC), this delay would not inhibit timely completion of the project.
TP-9	Cal-Am representatives stated that the review of alternatives will be completed prior to the September 17, 2014 meeting of the Governance Committee.
TP-10	Committee agreed that an expenditure of $225,000 to evaluate the mean size of sand granules so that pump screens can be designed properly, would be a wise expenditure.
TP-11	Cal-Am representatives say they will review this, but have concerns that implementation would result in increased iron and manganese to the outfall.
RS-2	The committee requested that this be carefully analyzed, so that the information is available before State Water Resources Control Board hearings on this issue. There should be a plan to accelerate construction so that operation could begin as soon as possible, especially in the event that drought continues. (Cal-Am’s current plan is that partial operation of the plant could begin after the first six months of construction.) There are permitting and environmental considerations to plan for, if construction were to be accomplished in shifts at night. A final decision on whether to implement shifts could be made after 60% design work is complete. Cal-Am will investigate this, and also ask the test well drillers to provide a quote for operation with 1, 2 and 3 shifts.

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