COMMUNITY ADVISORY COMMITTEE
4.	PRESENTATION ON THE COASTAL WATER PROJECT PROPOSED BY CALIFORNIA AMERICAN WATER
Meeting Date:		May 29, 2007	Budgeted:	N/A
From:		David A. Berger,	Program/	N/A
		General Manager	Line Item No.:
Prepared By:		Andrew Bell, District Engineer	Cost Estimate:	N/A
General Counsel Approval: N/A
Committee Recommendation: N/A
CEQA Compliance: N/A

SUMMARY: Representatives of California American Water (CAW) will give a presentation on the Coastal Water Project. Basic information on the project is included in the MPWMD Comparative Matrix of water supply alternatives dated October 16, 2006. This matrix was distributed to Community Advisory Committee (Committee) members at the February 6, 2006 Committee meeting. The presenters will address questions orally following the presentation.

RECOMMENDATION: This item is a presentation only. The Community Advisory Committee members should express their initial opinions on the merits and drawbacks of this project as part of Item 6, “Committee Comments on the Coastal Water Project Proposed by California American Water.”

BACKGROUND: Summary information regarding the Coastal Water Project is located in column B of Part I-A of the Matrix, pages 171 through 177 of the packet for the October 16, 2006 MPWMD Board meeting. Item 13 from that packet, pages 159 through 205, was distributed at the February 6, 2006 Committee meeting.

Following is the summary description of the project from the October 16, 2006 staff report. CAW representatives will provide updated information during their presentation.

Coastal Water Project (Sponsor: Cal-Am – Exhibit 13-A, Column B)

The major components of the proposed Coastal Water Project (CWP) are a seawater desalination plant in Moss Landing at the “Duke East” site on Dolan Road about one-half mile east of Highway 1; use of the intake and outfall for LS Power Group’s Moss Landing Power Plant (MLPP), formerly owned by Duke Energy.; a desalinated water conveyance system to the Monterey Peninsula, including a transmission pipeline, terminal reservoir and pumping stations; and an ASR project in the Seaside Groundwater Basin. Cal-Am plans to use a site on the MLPP property for a one-year pilot project, but does not yet have a long-term lease agreement for the proposed CWP facilities. The yield goal for the “basic project” is defined as 11,730 AFY to: (a) provide 10,730 AFY to replace Cal-Am’s Carmel River withdrawals to comply with SWRCB Order WR 95-10, and (b) 1,000 AFY to help alleviate over-pumping in the Seaside Groundwater Basin.

New and Changed Information in 2006: On July 14, 2005, Cal-Am announced completion of the 1,700-page Proponent’s Environmental Assessment (PEA), a comprehensive environmental review document required by the California Public Utilities Commission (CPUC) before the CPUC will consider Cal-Am’s application for a Certificate of Public Convenience and Necessity (CPCN) to allow rate increases to fund the CWP. The September 2004 CPCN application was also amended in July 2005 to reflect information provided in the PEA for the 11,730 AFY Proposed Project.

The PEA also analyzed five alternatives in detail, four of which could potentially be approved by the CPUC as a new water project. The five alternatives are listed below. More complete descriptions are provided in the 2005 matrix materials:

Ø Alternative 1 (Regional Alternative) -- would provide 20,272 AFY of water for both Cal-Am and the neighboring communities.

Ø Alternative 2 (Over-sized Pipeline Alternative) – would include the same features as the proposed CWP, except that all pipelines would be larger to facilitate increased production to meet future needs.

Ø Alternative 3 (MLPP HDD Intake Alternative) -- would utilize Horizontal Directional Drilling (HDD) intake wells as feedwater supply.

Ø Alternative 4 (North Marina Site Alternative) – would locate the seawater desalination facility in the City of Marina Sphere of Influence at Armstrong Ranch. The project could be sized to meet either the CWP or Regional Alternative water demands.

Ø Alternative 5 (No Project Alternative) – would entail existing programs to conserve and recycle water.

Cal-Am consultants performed extensive engineering analyses to prepare cost estimates in 2005 for the proposed CWP. The June 2006 report by MPWMD consultants evaluated project facilities and estimated costs for the desalination portion of the CWP only and did not review or evaluate the ASR component.

With the submittal of the PEA, the CPUC staff began its formal environmental review as lead agency under the California Environmental Quality Act (CEQA). In 2006, the CPUC retained the firm of ESA Water to prepare the Draft EIR for the CWP. The ESA Water consulting team and CPUC staff met with MWMD staff on two occasions (June 28 and August 3, 2006) to better understand the water supply setting and to ask questions about potential CPUC-developed alternatives that may be included in the EIR. The current schedule calls for the Draft EIR to be prepared in Spring 2007 and the Final EIR to be completed in Summer 2007. This is roughly one year later than projected in September 2005.

The California Department of Health Services (CDHS) requires a pilot project for a desalination facility to demonstrate reliable water quality and quantity. In early 2005, Cal-Am submitted an application to the California Coastal Commission (CCC) for a waiver of a Coastal Development Permit to construct a 200,000 gallon-per-day (gpd) pilot project at the MLPP. In 2005, Cal-Am anticipated that permits for the pilot project would be issued in September 2005 by the CCC, Regional Water Quality Control Board (RWQCB) and Monterey County. At the time the 2005 matrix was prepared, Cal-Am anticipated pilot project installation in late 2005, with a one-year test period beginning January 2006. The actual timeline appears to be running about one year later. The County of Monterey approved the Cal-Am pilot project in August 2006, and the RWQCB approved the pilot project at its September 7, 2006 meeting. CCC consideration is anticipated later this year. Various components of the pilot project have been delivered and are being assembled, but operation of the pilot project is not anticipated to begin until June 2007 at the earliest.

Other Related Events in 2006:

Ø Cal-Am and MPWMD entered into a Management and Operations Agreement as of April 1, 2006 for Phase 1 of MPWMD’s Aquifer Storage and Recovery Project. In accordance with this agreement, Cal-Am and MPWMD representatives have coordinated planning, permitting, and construction of facilities that will comprise the Phase 1 ASR Project.

Ø The Decision on the Seaside Groundwater Basin Adjudication (California American Water v. City of Seaside, et al.) was issued on March 27, 2006. This decision may affect planning for the CWP.

Ø The Moss Landing Power Plant, previously owned by Duke Energy, was purchased by LS Power Systems in 2006.

Ø In May 2006, Cal-Am and its parent entities filed application with the CPUC for authority to sell up to 100% of the stock of American Water Works Company, Cal-Am’s parent company, through public stock offerings. CPUC Public Participation Hearings are scheduled in September 2006. It is not known if this potential change will affect the CWP.

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