EXHIBIT 5-A

CONSERVATION ACTIVITY AND REIMBUSEMENT AGREEMENT

BETWEEN

MONTEREY PENINSULA WATER MANAGEMENT DISTRICT

AND

CALIFORNIA AMERICAN WATER

FOR REIMBURSEMENT OF EXPENSES FOR WATER CONSERVATION PROGRAMS MPWMD UNDERTAKES UNDER THE MPWMD SPECIAL CONSERVATION SURCHARGE APPROVED IN CALIFORNIA PUBLIC UTILITIES COMMISSION (CPUC) DECISION 06-11-050 (NOVEMBER 30, 2006)

THIS AGREEMENT is entered into this _____ day of ________________2007, by and between California American Water, hereinafter called "CAW," and the Monterey Peninsula Water Management District, hereinafter called "MPWMD" or "District".

SECTION I

PURPOSE

Pursuant to CPUC Decision 06-11-050, CAW was directed to enter into an agreement with the MPWMD for reimbursement of expenses necessarily and reasonably incurred by the District in providing certain Water Conservation tasks as set forth below: 

1. Enforce District and CAW water conservation rules and standards; educate and assist the public in understanding water conservation requirements and Best Management Practices;

2. Develop and implement water conservation programs in coordination with CAW;

3. Conduct interior and exterior water audits, evaluate irrigation efficiency, develop water budgets; document findings and make recommendations;

4. Participate in the distribution and presentation of water conservation materials, videos and software to libraries and educational facilities throughout the county;

5. Meet with CAW and other agencies regarding the need for water conservation;

6. Research water conservation programs and devices, make recommendations on products and programs; collect and analyze water use data; contact manufacturers to obtain specific information on conservation devices; post updates to website(s);

7. In coordination with CAW, prepare press releases and articles on water conservation programs; prepare public service announcements; and

8. Other water conservation tasks as may be mutually agreed to by CAW and MWPMD.

SECTION II

REIMBURSEMENT

A. FEE SCHEDULE

CAW shall reimburse MPWMD for all costs incurred to a maximum of $300,000 per calendar year. Labor and expenses payable to MPWMD for services provided by MPWMD performing water conservation tasks, as described in Section I, shall be reimbursed at the rate of seventy dollars ($70.00) per hour, for direct and indirect costs associated with regular full-time employees, billed in fifteen (15) minute time increments. Expenses payable to any contractor retained by MPWMD for work under this Agreement shall be reimbursed at actual cost incurred in accordance with the fee schedule included in the agreement between the contractor and MPWMD. MPWMD may charge for efforts associated with administering and overseeing said contractor at the above-stated rate.

B. METHOD OF PAYMENT

Payment by CAW of costs payable to MPWMD shall be based upon documented monthly billings submitted by MPWMD to CAW. Payments are due and payable within thirty (30) days of each invoice.

C. CATEGORIZATION OF PAYMENT

Bills submitted for reimbursement by MPWMD must identify the services as related to Special Request #7 with the designated account number of 5800.07.

California American Water shall also provide a specially designated account number (______) for MPWMD invoices for payment associated with Special Request #7.

SECTION III

OWNERSHIP OF WORK PRODUCT

All original documents, explanations of methods, maps, tables, computer programs, reports, and other documents prepared under this Agreement and equipment purchased specifically for the project shall remain the exclusive property of MPWMD. CAW shall have an irrevocable, non-exclusive license to all original documents, explanations of methods, maps, tables, computer programs, reports, and other documents prepared under this Agreement, unless the granting of such license is otherwise prohibited. MPWMD shall in good faith attempt to negotiate the license provided by this section in the future procurement of goods or services acquired for the project.

SECTION IV

RESPONSIBILITIES

The District shall act as an independent contractor and not as an agent or employee of CAW. CAW, for its part, agrees to provide access to information in its possession and cooperation of its staff in order to assist MPWMD and its contractor(s) to carry out its responsibilities herein, in compliance with the Non-Disclosure Agreement dated June 7, 2000. The District shall have exclusive and complete control over its employees and subcontractors, and shall determine the method of performing the services hereunder.

SECTION V

REPORTING

The District and CAW shall develop a reporting format acceptable to the Division of Ratepayer Advocates to document activities undertaken by both entities. The reporting shall identify (1) conservation activities undertaken by CAW, (2) conservation activities undertaken by MPWMD from its own budget, (3) programs MPWMD undertakes under Special Request #6, and (4) conservation programs MPWMD undertakes under Special Request #7.

SECTION VI

CHANGES AND CHANGED CONDITIONS

If, during the course of the work herein contemplated, the need to change the purpose of this Agreement should arise, for whatever reasons, whichever party first identifies such need to change shall notify the other party in writing. The authorized representatives of the parties shall meet within seven (7) working days of the date of such notice, to discuss the need for change so identified and to determine if this Agreement should be amended. Any changes agreed to shall be documented by duly approved and executed amendments to this Agreement or other means acceptable to both parties.

SECTION VII

TERMINATION

This Agreement shall remain in effect until the date of approval of a subsequent General Rate Case or an action of the CPUC that amends the terms and conditions of the MPWMD Special Surcharge contained in CPUC Decision 06-11-050 (November 30, 2006).

SECTION VIII

CONTRACTING

The District may contract any portion of the work outlined in the purpose of this Agreement after consultation with CAW. The District shall ensure that in any agreement between the District and a contractor that CAW is an additional insured and indemnified to the same extent as the District.

SECTION IX

DISPUTES

In the event a dispute arises out of the performance of this Agreement, either party shall, as soon as a conflict is identified, submit a written statement of the conflict to the other party. Within five (5) working days of receipt of such a statement of conflict, the second party will respond and a meeting will be arranged not more than five (5) working days thereafter to arrive at a negotiated settlement or procedure for settlement. If, within twenty (20) working days from the initial filing of a statement of conflict an agreement cannot be reached, it is agreed that the dispute may be resolved in a court of law competent to hear this matter. This Agreement shall be construed in accord with California law and it is agreed that venue shall be in the County of Monterey; however, nothing in this paragraph shall be construed as a waiver of CAW’s rights under the California Code of Civil Procedure, Section 394. The prevailing party shall be awarded costs of suit, and attorneys' fees.

SECTION X

NOTICES

All communications to either party by the other shall be deemed given when made in writing and delivered or mailed to such party at its respective address, as follows:

MPWMD: Monterey Peninsula Water Management District

ATTN: General Manager

5 Harris Court, Bldg. G

Post Office Box 85

Monterey, California 93942

California American Water:

California American Water

ATTN: General Manager

50 Ragsdale Drive, Suite 100

Post Office Box 951

Monterey, California 93942

Each party shall notify the other in writing of any address change.

SECTION XI

RIGHT TO AUDIT AND COOPERATION WITH DATA REQUESTS

CAW shall have the right to examine books, records, documents, any financial data, and any and all other evidence and accounting procedures and practices that CAW determines is necessary to discover and verify all direct and indirect costs, of whatever nature, which are claimed to have been incurred, anticipated to be incurred, or for which a claim for compensation has been submitted under this Agreement.

MPWMD shall maintain complete and accurate records in accordance with generally accepted accounting practices for governmental agencies.

MPWMD shall include CAW’s right to audit in any and all contracts that are or may be used in performance of this agreement, and shall ensure that this right to audit is binding on all subcontractors.

MPWMD shall fully assist and cooperate with CAW in responding to data requests issued by the CPUC regarding the performance of the District and any contractor.

SECTION XII

MUTUAL INDEMNIFICATION

Each party shall indemnify, defend, protect, hold harmless, and release the other, its officers, agents, and employees, from and against any and all claims losses, proceedings, damages, causes of action, liability, costs, or expense (including attorney’s fees and witness costs) arising from or in connection with, or caused by any negligent act or omission or willful misconduct of such indemnifying party. This indemnification obligation shall not be limited in any way by any limitation on the amount or type of damages or compensation payable to or for the indemnifying party under workers’ compensation acts, disability benefit acts, or other employee benefit acts.

SECTION XIII

AMENDMENTS

This Agreement sets forth the entire understanding of the parties with respect to the subject matter herein. There are no other agreements expressed or implied, oral or written, except as set forth herein. This Agreement may not be amended except upon written amendment, executed by both parties hereto.

IN WITNESS WHEREOF, the parties hereto have entered into this Agreement effective as of the day and year first above written.

MONTEREY PENINSULA WATER MANAGEMENT DISTRICT

_________________________________________________

BY: David A. Berger, General Manager

CALIFORNIA AMERICAN WATER

__________________________________________________

BY: Kent Turner, President

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