WATER DEMAND COMMITTEE

ITEM:		ACTION ITEM
1.	CONSIDER RECOMMENDATION TO BOARD ON POTENTIAL MODIFICATIONS TO RULE 162 (STAGE 2 WATER CONSERVATION) AND RULE 163 (STAGE 3 WATER CONSERVATION)
Meeting Date:			September 13, 2004		Budgeted:	N/A
From:			David A. Berger,		Program/	N/A
			General Manager		Line Item No.:
Prepared By:			Stephanie Pintar		Cost Estimate:	N/A
General Counsel Approval:				Staff report provided to Counsel for review.
Committee Recommendation:				N/A
CEQA Compliance:				N/A

SUMMARY: At the August 10, 2004 Water Demand Committee meeting, the committee deferred consideration of a request by Director Edwards to discuss modifications to Rules 162 and 163 (Stages 2 and 3 of the Expanded Water Conservation and Standby Rationing Plan). The Chair had requested discussion regarding modifications to Stage 2 and 3 of the Expanded Water Conservation and Standby Rationing Plan to (1) address the potential for overuse of water during the first month or two of the water year due to the relatively low monthly production limits, and (2) to add further conservation actions to Stage 3 to be taken by the District if necessary due to Carmel River production potentially exceeding the SWRCB Order No. 95-10 limit in the current water year. Currently, Stage 3 only adds to Stage 2 by requiring Cal-Am to provide notice of mandatory conservation in each water bill. A copy of Rule 162 is attached as Exhibit 1. Rule 163 is attached as Exhibit 2.

In addition to the existing requirements of Stages 1-3, in early July 2004, Cal-Am received authorization from the Pubic Utilities Commission (PUC) to increase the water rates for heavy water users. This increase in rates, combined with efforts to educate the community about the need to conserve water, has resulted in a dramatic decrease in Cal-Am production. As of the end of August 2004, Cal-Am was well below the year-to-date-at-months-end target.

Cal-Am has also been directed by the CPUC (California Public Utilities Commission) to file for a moratorium on new connections as part of its effort to curtail use. At its July 19, 2004 regular meeting, the Board adopted a resolution opposing a moratorium under the present conditions. Cal-Am has until mid-October to file its proposal. Chair Edwards has suggested that the District should include a moratorium in Stage 3 in the event that water usage exceeds the monthly targets for a period of several consecutive months.

Cal-Am’s Monterey District Vice President, Steve Leonard, advised our General Manager on September 9, 2004 that the company will announce publicly on Monday, September 13 that it believes a moratorium is not now appropriate, given its successful conservation effort over the summer. Instead, Cal-Am intends to ask the CPUC to authorize the company to reinstitute the temporary rate structure currently in effect in a future water year when demand would cause the Order 95-10 production target to be exceeded. The company also will seek CPUC authorization to work with our District and the jurisdictions on a potential change to the expanded conservation program. The change the company will suggest is to authorize our District Board to temporarily halt new connections should demand in a future water year cause the company to potentially violate the order 95-10 production limit.

The fact that there is essentially no difference between Stages 2 and 3 in the District’s Expanded Water Conservation and Standby Rationing Plan is a concern to staff. Cal-Am permanently implemented the tiered (or block) rate system that was developed for Stage 3 as its full-time rate structure in 2001. By increasing the conservation requirements of Stage 3, the District would provide additional potential for consumption reduction in the event that Cal-Am exceeds its year-to-date-at-month’s-end production targets. A list of possible conservation actions to consider for Stage 3 is included as Exhibit 3.

At the August 16, 2004 Board meeting, Darby Fuerst, Senior Hydrologist, suggested that the Board should consider modifying Rule 162, Table 1, Regulatory Water Production Targets in Acre-Feet, to reflect the current regulatory environment. Attached is an Excel spreadsheet (Exhibit 4) that shows the monthly and water-year-to-date production targets for Cal-Am from their sources in the Carmel River Basin (CRB) and Seaside Coastal Basin (SGB) that were developed in 1998 and are specified in District Rule 162 (Table 1, Regulatory Water Production Targets).  The spreadsheet also includes the revised monthly and water-year-to-date production targets that were developed and used in Water Year 2004.  The WY 2004 values reflect current hydrologic and regulatory conditions, including SWRCB Order 98-04, 2001 Conservation Agreement between Cal-Am and NOAA Fisheries, and San Clemente Reservoir Drawdown Project. 

To implement any changes to Rules 162 or 163, an ordinance will be required. The Water Demand Committee may wish to address the ordinance revision process in its discussion. District Counsel will be available to provide information about the CEQA process and about the potential for adoption of an ordinance on an urgency basis should it be determined necessary and legally appropriate.

RECOMMENDATION: District staff recommends that the Water Demand Committee consider possible modifications to Rules 162 and 163. In addition to considering new water conservation measures, staff recommends that the committee consider changes to Rule 162 to reflect the current regulatory environment. Monthly production values are presently determined each quarter by the Memorandum of Understanding (MOU) group composed of representatives from Cal-Am, CDFG, NOAA Fisheries, and the District. Staff’s recommendation is to consider an adjustable table that isn’t specific to Water Year 2004, but that shows minimal production from Seaside in wintertime with more Seaside production in the summertime. A revised table should be adjustable to reflect changed conditions.

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