WATER SUPPLY PLANNING COMMITTEE
ITEM:		DISCUSSION ITEM
4.	PURE WATER MONTEREY – COST OF WATER DISCUSSION
Meeting Date:			August 21, 2018	Budgeted:	N/A
From:			David J. Stoldt	Program/
			General Manager	Line Item No.:	N/A
Prepared By:			David J. Stoldt	Cost Estimate:
General Counsel Approval: N/A
Committee Recommendation: N/A
CEQA Compliance: This action does not constitute a project as defined by the California Environmental Quality Act Guidelines Section 15378.

DISCUSSION: The District signed a Water Purchase Agreement (WPA) with California American Water Company (Cal-Am) and Monterey One Water (M1W) to sell water derived by the Pure Water Monterey Project. The WPA included an initial estimated cost on the sale of water of $1,720 per acre foot (the “Soft Cap”), which was approved by the California Public Utilities Commission (CPUC) in the Phase 2 decision of application a.12-04-019 (see Exhibit 4-A, attached.) The costs for the project were initially estimated at $103 million, with funding provided by a $88 million State Revolving Fund (SRF) Loan and a $15 million grant. In addition, assumptions were made as to the contributions from MCWD and the Monterey County Water Resources Agency (MCWRA) based upon the agreements entered into by M1W with those entities. M1W has now received updated costs on most project components as prepared by the project managers, along with amended information on partner agency grants and capital contributions. M1W staff has also revised the operational and maintenance costs to reflect new estimates prepared by engineering staff. This new information affects anticipated cost of water and may require Commission review and approval. Pursuant to the WPA, prior to the Performance Start Date, if the first year Company Water Rate as calculated is expected to exceed the Soft Cap, the Company shall apply to the CPUC through a Tier 2 advice letter for approval of such rate before the Company shall be required under the WPA to pay an amount greater than the Soft Cap as the Company Water Rate.

The changes and impacts will be presented and discussed at the Water Supply Planning Committee meeting.

EXHIBITS

4-A Selected pages of CPUC A.1204019 Phase 2 Decision

4-B Cost of Water Presentation

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