EXHIBIT 21-C

Quarterly Water Supply Strategy and Budget Report

California American Water

Main Water Distribution System: July - September 2011

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 the water that was previously injected into the Seaside Groundwater Basin, as well as a seasonally balanced amount of California American Water’s (Cal-Am) full allocation of Seaside native groundwater. By meeting customer demand with as much as feasible of these two groundwater sources, Cal-Am will be able to maximally 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 Cal-Am’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 2011

On June 9, 2011, staff from the District, Cal-Am, and National Marine Fisheries Service (NMFS) met and discussed the proposed water supply strategy and related topics for the remainder of June 2011 and the July through September 2011 period. Staff from the California Department of Fish and Game (CDFG) was not available to attend the meeting, but were briefed on June 13, 2011 and concurred with the recommendations made at the June 9, 2011 meeting. Flow in the Carmel River is currently 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 99 cubic feet per second (cfs) flowing to the ocean on June 13, 2011, in comparison to 60 cfs on the same date last year. Rainfall during Water Year (WY) 2011 to date through the end of May at San Clemente Dam in the upper watershed has totaled 23.44 inches or 111% of the long-term average at this site. Further, unimpaired runoff at San Clemente Dam for WY 2011 to date through the end of May has totaled approximately 92,610 acre-feet (AF) or about 139% of the long-term average for this site.

Carmel River Basin Given these conditions, it was agreed that representative “wet year” inflows would be used to assess Cal-Am’s operations during the July through September 2011 period, by using a similar period from the WY 2010 flow recession curve to predict outflow patterns for the last quarter of WY 2011, and then we would shift to being more conservative and use “normal year” inflows for the next quarter (i.e., first quarter of WY 2012). To meet customer demand, Cal-Am 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 Cal-Am would produce approximately 0 AF of groundwater from its wells in the Upper Carmel Valley during July, August, and September 2011, respectively. These amounts are consistent with the interagency Low Flow Season MOA and Cal-Am management’s intent to minimize production in the Upper Carmel Valley at all times.

In addition, it was agreed that Cal-Am would produce approximately 960, 885, and 753 AF of groundwater from its wells in the Lower Carmel Valley during July, August, and September 2011, respectively. Table 1 shows actual and projected monthly releases and diversions from Los Padres and San Clemente Reservoirs for the October 2010 through December 2011 period.

Lastly, it was assumed that no water would be diverted from the Carmel River Basin and injected into the Seaside Groundwater Basin during this period, since the diversion season for ASR ended May 31, and does not resume until December 1, during the following Water Year, 2012.

Seaside Groundwater Basin It was also agreed that Cal-Am would produce 525, 595, and 595 AF of water each month from the Coastal Subareas of the Seaside Basin, respectively, during this period. Each month’s production from the Coastal Subareas of the Seaside Groundwater Basin would be comprised of either 500 or 570 AF of native groundwater, combined with 25 AF of treated brackish groundwater production from the Sand City Desalination Plant. The Sand City Desalination Plant has just completed its first year of full production testing in April 2011, and its monthly yield may still vary somewhat for the near term. If it cannot make its monthly production targets the needed water will be produced from a combination of Water Project #1 wells in Seaside and Cal-Am wells in the Lower Subunits of the Carmel Valley Aquifer. There are no plans to recover any of the 1,117 AF stored by Water Project #1 (ASR Phase 1) in WY 2012, until the following quarter, which is the first quarter of WY 2012. This is being done to ensure Cal-Am utilizes all of its Seaside native groundwater allocation in WY 2011 to comply with SWRCB Water Rights Order (WRO) No. 95-10.

It was also agreed that Cal-Am should produce only 30, 30, and 28 AF per month 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 2011, respectively. It is recognized that, based on recent historical use, Cal-Am’s actual production from the Laguna Seca Subarea during this period will likely exceed the proposed monthly targets, which are based on Cal-Am’s allocation specified in the Seaside Basin Adjudication Decision. For example, in the July to September 2010 period, Cal-Am produced 52, 50, and 50 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 Cal-Am remains within its adjudicated allocation for the Laguna Seca Subarea. Under the amended Seaside Basin Decision, Cal-Am is allowed to use production savings in the Coastal Subareas to offset over-production in the Laguna Seca Subarea, if any remains after maximizing production in order to minimize pumping of the Carmel Valley Aquifer, in compliance with SWRCB WRO No. 95-10.

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