EXHIBIT 18-C

Quarterly Water Supply Strategy and Budget Report

California American Water

Main Water Distribution System: July – September 2014

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. To accomplish these goals, a water supply strategy and budget for production within California American Water’s (Cal-Am) 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, and legal constraints on the sources and amounts of water to be produced.

2. Quarterly Water Supply Strategy: July - September 2014

On June 10, 2014, staff from the District and Cal-Am, met and discussed the proposed water supply strategy and related topics for the July - September 2014 period. The California Department of Fish and Wildlife (CDFW), United States Fish and Wildlife Service (USFWS), and NMFS were unable to attend, and staff from the State Water Resources Control Board’s, Division of Water Rights were invited to participate by conference call. Currently, flow in the Carmel River is regulated by Los Padres Reservoir (LPR) storage releases, and LPR is no longer spilling. LPR is currently at ~97% of maximum effective storage capacity, i.e., 1,731 AF that occurs with the Los Padres Dam (LPD) spillway’s notch flashboard removed, or 95% of the 1,775 AF of storage capacity achieved when the notch’s flashboard is in place. The LPD notch is closed, since this is such an extremely dry water year, and it was placed into the notch earlier than normal during March. This was done in order to maximize any potential storage that could be gained this year, so that it can be allocated to sustaining minimum flows in the river over the summer and fall. Flow in the Carmel River is continuous only to the lower end of DeDampierre Park in Carmel Valley Village at ~RM 13.60. Flow re-emerges below the Trail and Saddle Club and flows to just above Cal-Am’s Berwick Well #8 at ~RM 8.3. There is still approximately 1.2 miles of dewatering habitat in four sections below RM 8.3. Flows never reached Carmel River Lagoon, the lagoon mouth has remained closed for the year, and it will remain so until next winter. Rainfall during Water Year (WY) 2014 to date at San Clemente Dam in the upper watershed has totaled 10.42 inches or 50% of the long-term average to date of 20.96 inches at this site, and 49% of the long-term annual average of 21.29 inches. Further, unimpaired runoff at San Clemente Dam for WY 2014 through May has totaled approximately 6,899 AF or about 10% of the long-term average to date for this site of 65,899 AF, and 10% of the long-term annual average of 68,386 AF, making this a “Critically Dry” Water Year Type, to date.

Carmel River Basin Given these conditions, and runoff to date, it was agreed that “Critically Dry” year inflows would be initially assumed to assess Cal-Am’s operations during the July through September 2014 period. 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 attempt to produce no groundwater from its wells in the Upper Carmel Valley during July through September 2014. If sufficient flow in the Carmel River at the District’s Don Juan Bridge gage in Garland Park, i.e., any day of 20 or more cubic feet per second (cfs), continues to occur to justify operations allowed under the less restrictive high-flow period, Cal-Am could operate these wells if needed. In addition, it is projected that Cal-Am would produce approximately 1,243, 1,100, and 1,513 AF of groundwater from its wells in the Lower Carmel Valley during July, August and September 2014, respectively, for customer service. Table 1 included in this month’s Staff Note is shows the initial minimum flows agreed to under the 204 Low Flow Memorandum of Agreement (MOA), but due to the unpredictability of ongoing hydrology in this relatively unprecedented water year, the regulatory agencies are already discussing reducing the targets to 2.8 CFS or less for the rest of the year. This table will be revised and updated monthly with new flow and storage data, by September 9 for the September, 15, 2014 Board meeting as a formal part of the Annual Low Flow MOA process.

Seaside Groundwater Basin It was also agreed that, subject to rainfall and runoff conditions in the Carmel River, Cal-Am would continue production at 250, 400, and 0 AF per month from their wells in the Coastal Subareas, for July, August and September 2014, in addition to the planned 25 AF per month of production from the Sand City Desalination Plant, so as to achieve maximum utilization of the native water available in the basin under the Seaside Basin Adjudication Decision and in compliance with SWRCB Orders 95-10 and 2002-0060. It was also agreed that only 18, 17, and 16 AF of groundwater would be budgeted from Cal-Am’s 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 2014, 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 through September 2013 period, Cal-Am produced 43, 40, and 38 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 Adjudication Decision, Cal-Am is allowed to use production savings in the Coastal Subareas to offset over-production in the Laguna Seca Subarea.

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