March 25, 2011 Update



Carmel River Mitigation Program and Water Project User Fee Ė CPUC Decision, March 24, 2011


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On March 24, 2011, the California Public Utilities Commission (CPUC) approved a Revised Proposed Decision that adversely affects funding for the MPWMD Carmel River Mitigation Program and Water Project 1 (also known as Aquifer Storage and Recovery).  This required Mitigation Program reduces adverse impacts to the Carmel River that result from community water use.  For more than two decades, a MPWMD surcharge on the California American Water Company (Cal-Am) water bill has been the source of funding for the Mitigation Program.  This practice was questioned in 2008 and the MPWMD User Fee was removed in late July 2009.  In January 2010, Cal-Am submitted Application No. 10-01-012 to reinstate the MPWMD User Fee.  In May 2010, Cal-Am, MPWMD and CPUCís watchdog entity called the Division of Ratepayer Advocates (DRA) signed a Settlement Agreement that supported the MPWMD User Fee and Cal-Am application (Motion and Agreement).   In December 2010, the assigned Administrative Law Judge issued an initial decision denying Cal-Amís application for reinstatement of the MPWMD User Fee.  In January and February 2011, many groups and members of the public wrote the CPUC expressing support for the User Fee.

On March 24, 2011, a Revised Proposed Decision was issued by the CPUC, which includes three key components:

(1)   It denies the settlement agreement among MPWMD, Cal-Am and DRA.

(2)   It authorizes Cal-Am to amend Application 10-01-012 within 60 days to either: (a) propose a joint Mitigation Program with MPWMD, including an updated budget; or (b) propose a program where Cal-Am is solely responsible for the Mitigation Program.If an amended application is not received within 60 days, the original application will be denied without prejudice.

(3)   Cal-Am will be able to recover the payments made to MPWMD for Mitigation Program activities from July 2009 through May 23, 2011. Cal-Am can be reimbursed for these payments (roughly $5 million) by placing a surcharge on water bills over a 12-month period.

MPWMD is disappointed that the Revised Proposed Decision was made public only one day before CPUC action.†† The District, Cal-Am and other parties were not allowed to address the Commission on this matter.It was approved as a Consent Calendar item, and no public hearing was held to set the record straight on a variety of inaccurate assertions.

MPWMD supports the recovery of payments to Cal-Am, but continues to disagree with the CPUC regarding the rights and authority of MPWMD as clearly enunciated in State Law.The District plans to request a reconsideration of the CPUCís action, and litigation is possible.The MPWMD Board will address these issues in detail in closed session on March 31, 2011.MPWMD and Cal-Am also plan to meet to discuss this new ruling, and how to coordinate action in the near future.


Other Background Information:The original Proposed Decision contained many errors, was legally flawed, and did not provide the opportunity for a public hearing.The MPWMD sponsored a January 2, 2011 advertisement urging the public to get involved.  A sample letter of support for the Cal-Am application was made available, and detailed Questions & Answers were prepared.  MPWMD prepared formal comments to the CPUC.



List of Documents in Reverse Sequential Order


Revised Proposed Decision by Administrative Law Judge Bushey, Issued on March 23, 2011 and Adopted by CPUC on March 24, 2011


February 2, 2011 Q&A on Proposed CPUC Decision


January 10, 2011 Formal Comments Submitted to the CPUC Regarding the Proposed Decision



Submitted by Monterey Peninsula Water Management District



Submitted by Division of Ratepayer Advocates



Submitted by California American Water


January 5, 2011 Sample Letter of Support prepared by MPWMD


January 2, 2011 Advertisement in Monterey Herald by MPWMD


December 2010 Proposed Decision by Administrative Law Judge Bushey


May 18, 2010 Motion to Approve Settlement Agreement between Cal-Am, MPWMD and DRA


May 18, 2010 Settlement Agreement between Cal-Am, MPWMD and DRA


January 5, 2010 Cal-Am Application No. 10-01-012 to Reinstate User Fee



Other Mitigation Program information is available on the website as follows:


Mitigation Program (environmental protection)


Field Activities Overview


MPWMD Water Allocation Program Final EIR -- April 1990


Mitigation Program Annual Reports