EXHIBIT 22-C

Quarterly Water Supply Strategy and Budget Report

California American Water

Water Distribution Systems: July – September 2009

1. Management Objectives

The Monterey Peninsula Water Management District (District) desires to maximize the long-term production potential and protect the environmental quality of the Carmel River and Seaside Groundwater Basins. In addition, the District desires to maximize the amount of water that can be diverted from the Carmel River Basin and injected into the Seaside Groundwater Basin while complying with the instream flow requirements recommended by the National Marine Fisheries Service (NMFS) to protect the Carmel River steelhead population. Similarly, during the low-flow season, the District desires to recover some or all of water that was previously injected into the Seaside Groundwater Basin. By meeting customer demand with this recovered water, California American Water (CAW) will be able to reduce its diversion from its Carmel River sources during the low-flow season. To accomplish these goals, a water supply strategy and budget for production within CAW’s Main and Laguna Seca Subarea water distribution systems is reviewed quarterly to determine the optimal strategy for operations, given the current hydrologic and system conditions.

2. Quarterly Water Supply Strategy: July - September 2009

On June 8, 2009, staff from the District, CAW, California Department of Fish and Game (CDFG), and National Marine Fisheries Service (NMFS) met and discussed the proposed water supply strategy and related topics for the remainder of June 2009 and the July-September 2009 period. Currently, flow in the Carmel River is unregulated, with San Clemente Reservoir and Los Padres Reservoir full and spilling. Flow in the Carmel River is continuous from the headwaters to the ocean, with approximately 15 cubic feet per second (cfs) flowing to the ocean on June 8, 2009. Rainfall during Water Year 2009 to date at San Clemente Dam in the upper watershed has totaled 18.1 inches or 86% of the long-term average at this site. Further, unimpaired runoff at San Clemente Dam for WY 2009 to date has totaled approximately 44,400 AF or about 67% of the long-term average for this site.

Carmel River Basin Given these conditions, it was agreed that “ below normal” inflows would be used to assess CAW’s operations during the July through September 2009 period. To meet customer demand, CAW would operate its wells in the Lower Carmel Valley in a downstream-to-upstream sequence, as needed. For the quarterly budget, it was agreed that CAW would produce approximately 31, 31, and 30 AF of groundwater from its wells in the Upper Carmel Valley during July, August, and September 2009, respectively.

In addition, it was agreed that CAW would produce approximately 970, 970, and 830 AF of groundwater from its wells in the Lower Carmel Valley during July, August, and September 2009, respectively. Table 1 shows actual and projected monthly releases and diversions from Los Padres and San Clemente Reservoirs for the January through December 2009 period.

Seaside Groundwater Basin It was also agreed that CAW would produce 500 AF of native groundwater each month from the Coastal Subareas of the Seaside Basin, respectively, during this

period. In addition, the proposed budget includes recovery of 182 AF of non-native groundwater that was injected into the Seaside Groundwater Basin during the December 2008 – May 2009 injection season. Approximately 60 AF per month will be recovered from the Seaside Basin and provided to CAW for customer service during the July through September 2009 period. This will allow CAW to reduce its diversions from the Carmel River during this period.

It was also agreed that CAW would produce 33, 33, and 31 AF of groundwater from its wells in the Laguna Seca Subarea of the Seaside Basin for customers in the Ryan Ranch, Bishop, and Hidden Hills systems during July, August, and September 2009, respectively. It is recognized that, based on recent historical use, CAW’s actual production from the Laguna Seca Subarea during this period will likely exceed the proposed monthly targets, which are based on CAW’s allocation specified in the Seaside Basin Adjudication Decision. For example, in the July through September 2009 period, CAW produced 60, 59, and 57 AF from the Laguna Seca Subarea to meet customer demand in the Ryan Ranch, Bishop, and Hidden Hills systems. In this context, the production targets represent the maximum monthly production that should occur so that CAW remains within its adjudicated allocation for the Laguna Seca Subarea. Under the amended Seaside basin Decision, CAW is allowed to use production savings in the Coastal Subareas to offset over-production in the Laguna Seca Subarea.

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