Mprwa Special Meeting Agenda Packet 12-10-12

Agenda Monterey Peninsula Regional Water Authority (MPRWA) Special Meeting 6:00 PM, Monday, December 10, 2012
Few Memorial Hall of Records Council Chamber Monterey, California

ROLL CALL PLEDGE OF ALLEGIANCE REPORTS FROM BOARD DIRECTORS AND STAFF PUBLIC COMMENTS PUBLIC COMMENTS allows you, the public, to speak for a maximum of three minutes on any subject which is within the jurisdiction of the MPRWA and which is not on the agenda. Any person or group desiring to bring an item to the attention of the Authority may do so by addressing the Authority during Public Comments or by addressing a letter of explanation to: MPRWA, Attn: Monterey City Clerk, 580 Pacific St, Monterey, CA 93940. The appropriate staff person will contact the sender concerning the details. AGENDA ITEMS
1.
Consideration of a Resolution Approving a Conflict of Interest Waiver for the City Attorney Regarding Providing Legal Services for the Monterey Peninsula Regional Water Authority (MPRWA) Review Recommendations from Technical Advisory Committee for California Public Utilities Commission Cost Model Workshop on December 11 - 13, 2012, Provide Direction and Designated Representative to Communicate Key Topics of Concern Appointment of Vice President and Secretary for the Monterey Peninsula Regional Water Authority Authorize Change to Scope of Work for SPI Consultants and Allocate Additional Funding
ADJOURNMENT
2.
3. 4.
The Monterey Peninsula Regional Water Authority is committed to include the disabled in all of its services, programs and activities. For disabled access, dial 711 to use the California Relay Service (CRS) to speak to staff at the Monterey City Clerks Office, the Principal Office of the Authority. CRS offers free text-to-speech, speech-to-speech, and Spanish-language services 24 hours a day, 7 days a week. If you require a hearing amplification device to attend a meeting, dial 711 to use CRS to talk to staff at the Monterey City Clerks Office at (831) 646-3935 to coordinate use of a device or for information on an agenda. Agenda related writings or documents provided to the MPRWA are available for public inspection during the meeting or may be requested from the Monterey City Clerks Office at 580 Pacific St, Room 6, Monterey, CA 93940. This agenda is posted in compliance with California Government Code Section 54954.2(a) or Section 54956.
Monterey Peninsula Regional Water Authority Agenda Report

FROM: SUBJECT:
Date: December 10, 2012 Item No: 1.
Clerk of the Authority Consideration of a Resolution Approving a Conflict of Interest Waiver for the City Attorney Regarding Providing Legal Services for the Monterey Peninsula Regional Water Authority (MPRWA)
DISCUSSION:
1. Attached are the written materials for this item. A discussion will take place at the meeting.
Attached:
Conflict of Interest Waiver Request Signed Conflict of Interest Waivers MPRWA Draft Resolution
08/12
MPRWA Meeting, 12/10/2012 , Item No. 1., Item Page 1, Packet Page 1
RESOLUTION NO. __- ___ C.S.
A RESOLUTION OF THE MONTEREY PENINSULA REGIONAL WATER AUTHORITY

A RESOLUTION OF THE MONTEREY PENINSULA REGIONAL WATER AUTHORITY ACKNOWLEDGING DONALD G. FREEMAN AS LEGAL COUNSEL FOR THE MONTEREY PENINSULA REGIONAL WATER AUTHORITY AND AUTHORIZING THE PRESIDENT TO EXECUTE A CONSENT AND WAIVER OF CONFLICT OF INTEREST
WHEREAS, Donald G. Freeman has been requested to represent the Monterey Peninsula Regional Water Authority (MPRWA); WHEREAS, Donald G. Freeman is currently the City Attorney for the City of Seaside and the City of Carmel-by-the-Sea; WHEREAS, Donald G. Freeman and MPRWA recognize the potential conflict of interest which may arise as a result of Donald G. Freemans legal representation of MPRWA, City of Seaside, and the City of Carmel-by-the-Sea; WHEREAS, MPRWA wishes to acknowledge Donald G. Freeman as legal counsel for MPRWA; WHEREAS, the President of MPRWA and members of the MPRWA Board of Directors have reviewed a letter from Donald G. Freeman dated November 20, 2012, indicating that Mr. Freeman does not believe that his legal services for the Monterey Peninsula Regional Water Authority will have any impact on his full and effective representation of each party, and does not believe he has knowledge of any confidential information from any party which would be material or relevant to his representation of MPRWA, the City of Seaside, and the City of Carmel-by-the-Sea; WHEREAS, Donald G. Freeman recognizes that by concurrently representing the MPRWA, the City of Seaside, and the City of Carmel-by-the-Sea an issue of divided loyalty, such as in litigation, could possibly arise at some future date, and that at that time it could be necessary for him to make full disclosure to all parties, could be subject to disqualification from representing any party, and at such time it would be necessary for each party to seek independent legal counsel; WHEREAS, the City of Carmel-by-the-Sea and the City of Seaside have passed their respective Resolutions and their respective Mayors have executed the Consent and Waiver of Conflict of Interest; WHEREAS, the President and Board of Directors have reviewed this request with independent legal counsel; WHEREAS, according to Rule 3-310 of the California Rules of Professional Conduct applicable to California lawyers which requires informed written consent of all represented
Ns 06/11
parties because of concurrent representation, MPRWA recognizes that Donald G. Freeman is the City Attorney for the City of Seaside, and for the City of Carmel-by-the-Sea; and WHEREAS Board of Directors wishes to authorize the President to execute a Consent and Waiver of Conflict of Interest, and hereby acknowledges Donald G. Freeman as legal counsel for the Monterey Peninsula Regional Water Authority. NOW, THEREFORE, BE IT RESOLVED, that the President of MPRWA is hereby authorized to execute on behalf of MPRWA a Consent and Waiver of Conflict of Interest thereby acknowledging Donald G. Freeman as legal counsel for the Monterey Peninsula Regional Water Authority. PASSED AND ADOPTED BY THE MONTEREY PENINSULA REGIONAL WATER AUTHORITY this _____ day of , 201_, by the following vote: AYES: NOES: ABSENT: ABSTAIN: DIRECTORS: DIRECTORS: DIRECTORS: DIRECTORS: APPROVED: ATTEST: President
Clerk of the Authority
2 MPRWA Meeting, 12/10/2012 , Item No. 1., Item Page 9, Packet Page 9

FROM: SUBJECT:
Clerk of the Authority Review Recommendations from Technical Advisory Committee for California Public Utilities Commission Cost Model Workshop on December 11 - 13, 2012 and Provide Direction to Designated Representative to Communicate Key Topics of Concern.
DISCUSSION:
1. Attached are the written materials for this item. A discussion will take place at the meeting.
Attached:
TAC Cost Model Memorandum TAC Replenishment Memorandum
08/12
MEMORANDUM
TO: FROM: DATE: SUBJECT: MPRWA Board of Directors Technical Advisory Committee December 3, 2012 TAC Recommendations to Authority Board on CPUC Cost Model
Introduction
At its December 3 rd and November 19th 2012 meetings the Technical Advisory Committee reviewed the November 15, 2012 California-American Water Company compliance filing (attached) on the Monterey Peninsula Water Supply Project Financial Model, in advance of the CPUC cost workshops to be held December 11 th-13th. The following represents the consensus recommendations of the Technical Advisory Committee with respect to the Key Assumptions and other inputs for future scenario analysis.
Recommendation
The Authority Board should review the following recommendations and consider which, if any, to direct its representative(s) to put forth during the workshops, and/or identify additional topics of interest or concern.
Primary Recommendations
i) Examine the effect on operating costs, and the revenue requirement, of the cost of energy both the cost in $/kWh in the base year, as well as escalation rate. For the cost of debt, examine the following: At the authorized debt rate of return At the current corporate borrowing rate As tax-exempt debt based on AWW Capital Corp credit rating, and As tax-exempt debt based on a public backstop credit rating iii) Examine the State Revolving Funds (SRF) either treated as Cal-Am debt or as a public contribution; iv) Examine reducing the amount of Surcharge 2, as well as the size and frequency of the steps; Examine the effect of a public contribution of funds, at various amounts;
ii)
v)
Secondary Recommendations
vi) Provide a scenario that includes the CAW-Only Facilities to show impact on revenue requirement;
vii) Provide a scenario that includes the cost of the test well. (Provide a scenario with both the CAW-Only Facilities and the test well); viii) Reduce the allocation of costs to Instrumentation and control systems; ix) x) Increase the mitigation allowance; Change the cost per acre-foot of GWR to $2500 for with or without SRF (while recognizing the target range of GWR water cost is $2500 to $3000 per AF); Can both SRF moneys and a public agency contribution be modeled simultaneously as offbalance sheet sources?
xi)
xii) Discuss the difference between single test year amounts and total life-cycle costs, especially as it relates to energy cost (see item i above) and the future costs of well replacement; and xiii) What is the cumulative impact of Surcharge 1 and Surcharge 2 in the next 4-5 years?
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Application of California-American Water Company (U210W) for Approval of the Monterey Peninsula Water Supply Project and Authorization to Recover All Present and Future Costs in Rates.
A.12-04-019 (Filed April 23, 2012)
CALIFORNIA-AMERICAN WATER COMPANY COMPLIANCE FILING ON THE MONTEREY PENINSULA WATER SUPPLY PROJECT FINANCIAL MODEL
Sarah E. Leeper Javier E. Naranjo California-American Water Company 333 Hayes Street, Suite 202 San Francisco, CA 94102 Telephone: 415.863.2960 Email: sarah.leeper@amwater.com Email: javier.naranjo@amwater.com Attorneys for Applicant California-American Water Company Dated: November 15, 2012
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Application of California-American Water Company (U210W) for Approval of the Monterey Peninsula Water Supply Project and Authorization to Recover All Present and Future Costs in Rates.
A.12-04-019 (Filed April 23, 2012)
CALIFORNIA-AMERICAN WATER COMPANY COMPLIANCE FILING ON THE MONTEREY PENINSULA WATER SUPPLY PROJECT FINANCIAL MODEL Pursuant to the Administrative Law Judges Directives to Applicant and Ruling on Motions Concerning Scope, Schedule, and Official Notice , dated August 29, 2012, CaliforniaAmerican Water Company (California American Water) respectfully submits this compliance filing to provide a financial model that can be used to compute various revenue requirement scenarios for the Monterey Peninsula Water Supply Project. California American Water worked jointly with representatives from the Division of Ratepayer Advocates (DRA) and Monterey Peninsula Water Management District (MPWMD) to develop the financial model, 1 attached hereto as Attachment 1. The attached financial model reflects the collaborative efforts of DRA, MPWMD, and California American Water and includes the input of these interested parties. Counsel for DRA and MPWMD have authorized the undersigned to state that they support the model, as well as the use of the model as the basis for a common methodology. 2
1 In addition to an in-person meeting that took place amongst these parties at MPWMD's offices on Tuesday, October 30, California American Water, DRA, and MPWMD also met on other occasions to develop the model. 2
By telephone, on November 15, counsel for MPWMD and DRA represented that they support the model and based on the input of their clients believe that the model can be used as the basis for a common methodology to calculate
Dated: November 15, 2012
Respectfully submitted,
By: /s/ Sarah E. Leeper Sarah E. Leeper Attorney for Applicant California-American Water Company
the various revenue requirement scenarios.
Monterey Water Supply Project

Key Assumptions
Plant Assumptions
Plant Size (MGD) Capital Scenario vs. Most Probable Capital Scenario Include CAW-Only Facilities? Mobilization/Demobilization Engineering/Startup Implementation Elec, Inst & Control Systems Contingency Mitigation Allowance Exclude Test Well? Ground Water Recharge Annual AF Cost per AF ($) 9.0 High End +25.0% No 2.0% 15.0% 20.0% 40.0% 25.0% 1.0% Yes Capital Investment Desal Plant CAW-Only Facilities AFUDC Total Project Cost CAW Rate Base at Year End 2017 Utility Plant * SRF Funded Costs * Surcharge Funded Costs * Pub Agency Funded Costs Deferred Taxes Total CAW Rate Base * Net of depreciation & amortization Total Cost to Customer
$254.7 0.0 12.8 $267.5
$260.9 0.0 (102.5) 0.0 (1.2) $157.2
0 $3,000
Financing Assumptions
Cost of Capital Cost of Equity Cost of Debt Equity % Debt % Cost of Capital Other Debt Rates Short Term Debt Rate Short Term Debt Cap ($MM) SRF Debt Rate SRF Term (yrs) SRF Assets Exempt from Prop Tax? CAW Financing Scenario % of SRF Debt in CAW Cap Structure? (Max = 47.0%) SRF Borrowings ($MM) 9.99% 5.00% 53.00% 47.00% 7.64%
CAW Pre-Tax Equity Cost CAW Pre-Tax Debt Cost Depreciation & Amortization General Taxes Fixed O&M Variable O&M Year 1 CAW Rev Req ($MM) Customer SRF Surcharge Public Agency Costs Total Yr 1 Cost to Customer Fixed Cost per AF Variable Cost per AF Total Cost per AF CAW Captial Structure CAW Equity CAW Debt SRF Debt Total
$14.0 3.7 4.1 1.8 2.8 6.9 $33.3 0.0 0.0 $33.3 $2,619 $689 $3,309
1.00% $20.0 2.50% 20 Yes 3 - CAW Equity & Debt / SRF 0.0% $0.0
53.0% 47.0% 0.0% 100.0%
Surcharge & Contribution Assumptions

Utilize a Surcharge? Period Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 Period 7 Yes % of Mont Revenue Req 30.0% 45.0% 60.0% 60.0% 60.0% 60.0% 60.0% Start Date 07/01/13 01/01/14 07/01/14 01/01/15 07/01/15 01/01/16 07/01/16 End Date 12/31/13 06/30/14 12/31/14 06/30/15 12/31/15 06/30/16 12/31/16
Non CAW Debt via Public Agencies (ie. Public Agency Contribution, SRF Funding off CAW Debt Balance Sheet) Contribution Amount ($MM) $0.0 Contribution Date Jan-14 Financing Rate 2.5% Financing Term 20
MPRWA Meeting, 12/10/2012 ,Item No. 2., Item Page 7, Packet Page 17
Monterey Water Supply Project Inputs
Project Dates / Timing Engineering Start Date Engineering Length (months) Construction Start Date Construction Length (months) Total Project Length (months) O&M Expenses Begin PUC Order Ground Water Recharge Cost as of GWR Begins Depreciation/Amortization Book Depreciation Rate Tax Depreciation Rate Reg Asset Amorization Rate CAW Pipeline Depr Rate CAW Share of O&M in Year 1 Fuel & Power Chemicals Membrane/Media Replacemen Repairs & Maintenance Purchased Water Labor Avoided Costs O&M Items Avoided Costs ($MM) Date of Estimate Portion of R&R Capitalized Property Taxes Property Tax Rate Surch Exempt from Prop Tax?
Jul-13 24 Jul-15 18 42 Jan-17 Jul-13
AFUDC Rates % of Debt as ST in AFUDC Rate AFUDC Rate Grossed Up AFUDC Rate Taxes Federal State Effective Tax Rate Yr 1 Monterey Rev Req Annual Rev Req Inflator
7.64% 11.29%
Capex Desal North Pipeline Engineering Other Ratemaking CWIP in Rate Base Reg Assets in Rate Base Rev Req Inflator Replacement Capital Pumps Chemical Equipment 1 Chemical Equipment 2 O&M Expenses Fuel & Power Chemicals Membrane/Media Replacement Repairs & Maintenance Purchased Water Labor Avoided Costs Capacity Factor
In Service In Rates Dec-16 Dec-16 Dec-16 Dec-16 Dec-16 Dec-16
35.00% 8.84% 40.75% $50.0 3.0% 0.3%
No No 2.0% Year 20 15 30 Date Dec-36 Dec-31 Dec-46
Jan-17 Jan-17
Uncollectible %
2.50% 4.00% 2.50% 1.33%
Inflation Rates Consumer Price Index Water & Sewer Maintenance PUC Labor Escalation 2011 2012 2013 2014 2015 CAGR PUC Non-Labor Escalation 2011 2012 2013 2014 2015 CAGR
1.3% 5.6%
1.60% 3.10% 1.50% 1.70% 2.10% 2.00%
Fixed % Variable % 100.0% 100.0% 100.0% 100.0% 100.0% 0.0% 100.0% 100.0%
$2.0 Dec-12 50.0%
5.50% 0.10% 2.00% 6.60% 2.10% 3.23%
1.05% Yes
MPRWA Meeting, 12/10/2012 ,Item No. 2., Item Page 8, Packet Page 18
MEMORANDUM
TO: FROM: DATE: SUBJECT: MPRWA Board of Directors Technical Advisory Committee December 3, 2012 TAC Discussion of Seaside Basin Replenishment
Introduction
At its December 3 rd 2012 meeting the Technical Advisory Committee reviewed an agenda item (attached) from the November 29, 2012 Seaside Groundwater Basin Watermaster meeting regarding replenishment. The Watermaster meeting was attended by Mayors Bachofner, Della Sala, Edelen, and Pendergrass. At the meeting, the Watermaster board authorized its consultant HydroMetrics to execute modeling of a 25-year 700 acre-foot per year Cal-Am replenishment scenario, as well as an additional scenario to determine how protective water levels could be achieved in a 25 year period. Some parties expressed concern that a 25 year period (commencing with completion of the desalination facility) was too long. It was countered that reducing the schedule increases the cost and 25 years was a compromise. The Watermaster board voted 6-2 in favor of approving examination of a 25-year schedule. The Authority s TAC is generally supportive of the effort and find that it is consistent with the Board s stated goal of securing a sufficient supply to meet replacement and replenishment needs. The TAC will review the HydroMetrics report when it becomes available.
' '
ITEM VIII.A.1. 11/29/2012 SEASIDE GROUNDWATER BASIN WATERMASTER TO: Board of Directors
FROM: Laura Dadiw, Assistant to the CEO APPROVED BY: Dewey D Evans, CEO DATE: November 29, 2012
SUBJECT: Clarification of the schedule of repayment by California American Water (CAW) of artificial or in-lieu replenishment water to the Basin per the terms of the Memorandum of Understand, (MOU) between Watermaster and CAW dated January 21 & 29, 2009.
PURPOSE: Consider revisions to the language of the MOU between the Watermaster and CAW in order to clarify the schedule of repayment by CAW of artificial or in-lieu replenishment water to the Basin. RECOMMENDATION Consider revising the language of Section 2. (a) of the agreement within the attached copy of the MOU to clarify the schedule of repayment by CAW of artificial or in-lieu replenishment water to the Basin to be on a 25-year schedule at 700 acre-feet annually (AFA).
:
BACKGROUND: An MOU was approved with revisions by the Watermaster Board at its December 3, 2008 meeting that contained conditions on the extension of Replenishment Assessment credit to CAW to ensure replenishment of the Basin by water from CAW projects operational in the years ahead. The MOU contains a guaranty from CAW that it would provide replenishment water in the future to avoid the impact of drought or seawater intrusion to the extent that CAW over-pumped through time under the judgment. DISCUSSION: Although the MOU stipulates that CAW will ensure replenishment of the Basin with water from its operational projects, at no cost to Watermaster, in an amount equivalent to the quantity of water that CAW has overproduced during Basin adjudication, there is currently no language as to the schedule of repayment by CAW other than on a schedule that is feasible per Section 2. (a) of the agreement. There is no language within the Decision itself that clarifies the schedule of repayment. The matter was addressed at a meeting of an Ad Hoc Committee consisting of Directors Bruno, Sabolsice, Edelen, and Bachofner on November 13, 2012. Director Sabolsice
presented a Draft For Discussion Purposes Only schedule which outlined various basin replenishment scenarios, with the committee ultimately focusing on three repayment scenarios: 50 years (350 AFA), 25 years (700 AFA), and 10 years (1,750 AFA), keeping in mind that each scenario affects plant design (plant size, number of wells, pre-treatment improvements, etc.) and ultimately the cost to customers. A clause would be included to allow an override of the schedule should conditions in the basin change (i.e. evidence of seawater intrusion) at some point during the replenishment period. A majority of the committee favored the 25-year repayment scenario.CAW developed Attachment A California American Water Replenishment Schedule that details the 25year repayment schedule (attached). FISCAL IMPACT There is minimal, if any, anticipated staff time required to provide information to legal counsel to make revisions to the language of the MOU. Staff time would also be required to document the repayment over the years.
:
ATTACHMENTS Draft Memorandum of Understanding between Seaside Basin Watermaster and California American Water dated January 21 & 29, 2009.
:
Attachment A California American Water Replenishment Schedule
ATTACHMENT A CALIFORNIA AMERICAN WATER REPLENISHMENT SCHEDULE A1. Upon final completion and acceptance by California American Water of a Water Supply Project and beginning October 1 of the subsequent Water Year, California American Water shall commence replenishment of the Seaside Basin in accordance with the schedule contained herein. The schedule is agreed by all parties to be feasible in accordance with Section 2 of the MOU dated December 3, 2008. A2. Watermaster and California American Water agree that the volume of artificial or in-lieu replenishment shall be based on a running five (5) Water Year average. Should the average volume of artificial or in-lieu replenishment calculated by the Watermaster be less than 700 acre feet annually and if the Watermaster declares that water for Artificial Replenishment is available from sources other than the CAW Water Supply Project, Watermaster shall have the option of requiring CAW to pay a part of CAW's Outstanding Replenishment Assessment for the purpose of providing Watermaster with funds to obtain Artificial Replenishment in sufficient quantities to replenish that quantity not provided via in-lieu replenishment. A3. Watermaster and California American Water agree that should conditions change in the basin sufficient to indicate that Seawater intrusion is occurring; this replenishment schedule shall be subject to immediate modification. A4. Replenishment Years subsequent to Replenishment Year 25 shall continue at 700 acrefeet annually based on a running 5-year average until California American Waters total calculated Over-Production volume has been achieved. In accordance with Section 4 of the MOU, at any stage in CAW's replenishment prior to Replenishment Year 25 should the Court determine that the Basin has been replenished in an amount sufficient to prevent seawater intrusion or the Basin has been protected by alternative seawater intrusion preventive measures CAW's obligations under conditions set by this MOU shall be deemed fully satisfied.
REPLENSIHMENT YEAR * 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
ARTIFICIAL REPLENISHMENT (AFA)
IN-LIEU REPLENISHMENT (AFA) 700 700 700 700 700 700 700 700 700 700 700 700 700 700 700
16 17 18 19 20 21 22 23 24 25 **
700 700 700 700 700 700 700 700 700 700 700
MEMORANDUM OF UNDERSTANDING BETWEEN SEASIDE BASIN WATERMASTER AND CALIFORNIA AMERICAN WATER This Memorandum of Understanding between the Seaside Basin Watermaster (Watermaster) and California American Water (CAW) is entered into pursuant to a motion passed by Watermaster on December 3, 2008 with respect to the following: RECITALS A. The Amended Decision in Case No. M66343 filed February 9, 2007 (Decision) provides that Standard Producers that exceed their allocation of Natural Safe Yield are subject to a Replenishment Assessment for each acre foot of Over-Production for each Water Year. Under Section III.M1.d of the Decision, CAW has the right to claim a credit against its Replenishment Assessment (Replenishment Credit) for costs incurred for water supply augmentation that has or will result in replenishment of the Basin. B. Wastermaster has calculated the Replenishment Assessments for CAW for Fiscal Year 2006 (Water Year 05/06), Fiscal Year 2007 (Water Year 06/07) and Fiscal Year 2008 (Water Year 07/08) in the total amount of $10,166,640. Pursuant to Section III.M.1.d of the Decision, CAW applied for a Replenishment Credit for expenditures totaling $12,305,924.00 that CAW has made through calendar year 2006 for water supply augmentation associated with pre-construction expenses for the Coastal Water Project. The request was made on March 5, 2008 and supplemented with further information on May 2, 2008. C. Watermaster approved CAW's request for a Replenishment Credit in the amount of $12,305,924.00, subject to conditions set forth in the motion which provide that CAW will ensure replenishment of the Basin with water from the Coastal Water Project, or a comparable alternative project, at no cost to Watermaster, in an amount equivalent to the quantity of water that CAW has overproduced, and thus incurred a Replenishment Assessment obligation for Fiscal Years 2006, 2007 and 2008. D. Watermaster and CAW desire to enter into this Memorandum of Understanding regarding future CAW requests pursuant to Section III.M.1.d of the Decision for Replenishment Credits against future Replenishment Assessment obligations.
706125.03/SD C1144-029/101608/jd/sc
ITEM VIII.A.2. 11/29/2012 SEASIDE GROUNDWATER BASIN WATERMASTER TO: Board of Directors
FROM: Robert S. Jaques, Technical Program Manager MODIFIED AND APPROVED BY: Dewey D Evans, CEO DATE: November 29, 2012
SUBJECT: Discussion/Consider Approving a Professional Services Contract with HydroMetrics for $45,290.00 to update protective water levels and perform modeling work to evaluate replenishment scenarios. RECOMMENDATIONS: It is recommended that the Board approve the attached RFS No. 2012-04 for $45,290.00 with HydroMetrics to perform groundwater modeling of Seaside Basin replenishment scenarios. It is also recommended that if the Board decides to approve the contract that the Board approve the funding as outlined in the fiscal impact section of this report. BACKGROUND: At the Boards October 3, 2012 meeting one agenda item pertained to the Memorandum of Understanding between Seaside Basin Watermaster and California American Water (MOU) regarding CAWs Replenishment Assessments and Replenishment Assessment Credits. Specifically, this agenda item pertained to the development of a schedule under which CAW would repay the quantities of water that it has overpumped from the Seaside Basin, upon completion of its Monterey Peninsula Water Supply Project. The Board determined that it would handle this matter without TAC involvement. However, there was discussion on this matter at the October TAC meeting which led to Eric Sabolsice stating that he would approach the Boards Ad Hoc Committee (created for the purpose of working on this topic) to provide them the TACs recommendation that modeling be done in order to assist in the development of a feasible replenishment schedule for use by Cal Am in fulfilling its MOU repayment obligations. At the TACs November meeting there was further discussion about developing a proposed contract to have HydroMetrics perform the modeling work, so it could be presented for the Boards consideration at its November 29 th Special meeting. DISCUSSION The TACs discussion led to the conclusion that if modeling work is to be performed, it should include the following work to provide information on the following issues: 1. Develop revised protective water levels using more detailed hydrogeologic information about the Seaside Basin than was available when the first set of protective water levels was developed during preparation of the February 2009 Basin Management Action Plan .
This will likely result in slightly lower protective water levels that will be easier to achieve. 2. Model two replenishment scenarios: a. Scenario 1: What groundwater levels will be if Cal Am provides 700 acre-feet per year (AFY) for Basin replenishment over a period of 25 years, and how these levels will compare to the water levels needed to protect the Basin against seawater intrusion (protective water levels). This scenario will provide information about how close to achieving protective water levels the Cal Am replenishment proposal will come. b. Scenario 2: How much replenishment water will need to be supplied in order to enable Standard Producer pumping rates to be sufficiently reduced over a 25 year period in order to achieve protective water levels? If completely replacing Standard Producer pumping with replenishment water does not achieve protective water levels, additional replenishment water may be needed to recharge the Basin, either by injection or by spreading. This scenario will provide information on how feasible it would be to achieve protective water levels in a 25 year period. 3. Estimate the rate-of-approach of the offshore seawater intrusion front under both Scenarios to provide a sense of how fast the front is approaching the Basin under each Scenario. The TAC felt that this work would provide a sound and logical basis for determining whether or not the Cal Am replenishment scenario represents a feasible replenishment scenario, as described in the MOU. The TAC also believed that the Judge would want to have the Scenario 1 and 2 data, along with information about the rate-of-approach of the seawater intrusion front, in order to render a decision on the acceptability of Cal Ams replenishment proposal. The attached RFS No. 2012-4 contains the scope of work developed as a result of the TACs discussion on this topic, and the cost proposal from HydroMetrics to perform this work. The cost proposed by HydroMetrics is $45,290. FISCAL IMPACT: At the regular meeting of the Board of Directors on June 6, 2012 three line items in the Monitoring and Management Plan Operations Budget were identified that could be deferred to a later fiscal year to cover the modeling work that was determined to be needed to request the court to suspend the 10% triennial phasing down of pumping from the Basin. Those three line items totaling $55,000 of which only $30,780 was needed to cover the modeling work; leaving $24,220 to be used for other purposes with Board approval. The three budget approved line items that were identified and deferred were: Evaluate Replenishment Scenarios and Develop Answers to Basin Management Questions $25,000 Refine and/or Update the Basin Management Plan $25,000 Evaluate Coastal Wells for Cross-Aquifer Contamination Potential $5,000
The is another $13,519 remaining in the Monitoring and ManagementCapital Fund that is available leaving only an additional amount of $7,551 needed to total the $45,290 required to fund the entire Professional Services Contract with HydroMetrics. It is suggested that the $7,551 be taken from the budgeted contingency account which would leave $32,033 remaining in the account ($39,584 - $7,551 = $32,033). Summary: Remaining amount from deferred task items Balance available in M&M Capital Fund M&MContingency Account $24,220 13,519 7,551 $45,290
ATTACHMENT: 1. HydroMetrics RFS No. 2012-04
47
MPRWA M eeti ng , 12/1 0/2012 , Item N o . 2 . , Item Page 26 , Packet Page 36
ITEM. IX.
NEW BUSINESS
ITEM IX. A.
COMMITTEE REPORTS
ITEM NO. IX.A.1.
TECHNICAL ADVISORY COMMITTEE (TAC)
ITEM IX.A.1.a 11/29/12 SEASIDE GROUNDWATER BASIN WATERMASTER TO: Board of Directors FROM: Robert S. Jaques, Technical Program Manager MODIFIED AND APPROVED BY Dewey D Evans, CEO DATE: November 29, 2012 SUBJECT: Discussion/Consider Approving the Seawater Intrusion Analysis Report (SIAR) for FY 2012 RECOMMENDATIONS : It is recommended that the Board approve the Seawater Intrusion Analysis Report for WY 2012. BACKGROUND: HydroMetrics has prepared the Draft Seawater Intrusion Analysis Report (SIAR) for Water Year 2011-2012. The Executive Summary from the SIAR is attached. The SIAR examines the health of the Basin with regard to whether or not there are any indications that seawater intrusion is either occurring or is imminent. At its November 14, 2012 meeting the TAC reviewed the Draft 2012 SIAR and recommended it for approval by the Board DISCUSSION The key Conclusion contained in the SIAR is that depressed groundwater levels, continued pumping in excess of recharge and fresh water inflows, and ongoing seawater intrusion in the nearby Salinas Valley all suggest that seawater intrusion could occur in the Seaside Groundwater Basin. However, in spite of these factors, no seawater intrusion is currently observed in existing monitoring wells. A trend toward increasing chloride concentration was observed in WY 2012 in three of the nearcoast monitoring wells, as well as a decreasing sodium/chloride molar ratios in some of those wells. While it is too early to determine whether these are early indications of approaching seawater intrusion, this warrants increasing the monitoring frequency in those wells. The additional monitoring will be performed for the Watermaster by MPWMD under its existing contract with the Watermaster. Since this additional work was not known when their contract was initially prepared, an addendum to that contract will need to be issued to MPWMD during the first quarter of 2013 to compensate them for performing that additional work. FISCAL IMPACT: Unknown at this time, additional cost is expected to be modest. ATTACHMENTS: Executive Summary of the WY 2012 Seawater Intrusion Analysis Report. The complete SIAR is posted on the Watermasters website at http://www.seasidebasinwatermaster.org/, for review by those Board members who wish to examine the entire document, including all of its attachments.
Executive Summary
This annual report addresses the potential for, and extent of, seawater intrusion in the Seaside Groundwater Basin. Continued pumping in excess of recharge and fresh water inflows, pumping depressions near the coast, and ongoing seawater intrusion in the nearby Salinas Valley all suggest that seawater intrusion could occur in the Seaside Groundwater Basin. No seawater intrusion is currently observed in existing monitoring and production wells, as demonstrated by the different tools and analyses that are used to investigate for evidence of seawater intrusion. However, there are two monitoring wells (PCA-West Deep and sentinel well SBWM-4) that need to be watched carefully over the next water year. Piper diagrams for groundwater samples collected from depth-discreet monitoring wells during Water Year 2012 show no changes in water chemistry towards seawater. No groundwater samples analyzed with Stiff diagrams are indicative of incipient seawater intrusion. Wells with increasing chloride concentrations over the past year are: PCA-West Deep, sentinel well SBWM-4 shallow, and SBWM-4 deep. The September 2012 chloride concentration in the PCA-West Deep well is only 4 mg/L below the chloride threshold value of 186 mg/L established in the Seawater Intrusion Response Plan (SIRP) for this well (HydroMetrics WRI, 2009c). The sentinel wells do not have chloride threshold values, however, the deep sample from well SBWM-4 is above the secondary MCL of 250 mg/L. The increasing trend seen in the shallow and deep samples from well SBWM-4 start at the same time as the PCA-West Deep wells increasing trend. Well SBWM-4 should be sampled quarterly at the same time as the PCA-West Deep well so that results can be correlated. No other increases from the current monitoring frequency are warranted. Quarterly data from PAC-West Deep and SBWM-4 need to be evaluated each quarter after results are received from the laboratory. The PCA-West Deep well and sentinel well SBWM-4 are the only wells with decreasing sodium/chloride ratios. If these trends continue and drop below 0.86, it could indicate seawater intrusion. Maps of chloride concentrations for the shallow aquifer do not show chlorides increasing towards the coast. The deep aquifer maps show that higher chloride concentrations are limited to coastal monitoring wells PCA-West Deep and sentinel well SBWM-4. Although production wells have a different water quality than the monitoring wells, this is probably as a result of them being screened across both shallow and deep zones. The production well water qualities are not indicative of seawater intrusion. Groundwater levels continue to be below preliminary protective elevations in all deep coastal target monitoring wells (MSC deep, PCA-W, and Sentinel Well 3). Two of the three shallow wells groundwater levels are above protective elevations: PCA-W shallow and CDM-MW4. MSC shallow remains below preliminary protective elevations.
Based on the findings of this report, the following recommendations should be implemented to continue to monitor and track potential seawater intrusion. MPRWA Meeting, 12/10/2012 , Item No. 2., Item Page 31, Packet Page 41
1. Analyze Data from PCA-West Deep Quarterly Increasing chloride concentrations, decreasing sodium/chloride molar ratio, and chloride concentrations approaching the chloride threshold justify increasing how often data from well PCAWest Deep is evaluated. In the past, access issues due windblown sands from the nearby dunes have prevented sampling in the first quarter of the water year. However, every effort must be made to collect a sample in the first quarter of WY 2013 to confirm the observed trends. Additionally, due to a change in sampling method from airlifting to micropurging in 2009, it would be prudent to collect samples using both methods to verify whether the change in water quality is an artifact of the sampling method. After each quarterly sampling event at this well, the data must be analyzed and documented. 2. Initiate Quarterly Water Quality Sampling and Analysis for Sentinel Well SBWM-4 Because nearby monitoring well PCA-West Deep has an increasing chloride trend with decreasing sodium/chloride molar ratio which matches the trends observed in SBWM-4, sampling at SBWM-4 needs to increase its sampling frequency from semi-annual to quarterly so that a direct comparison can be made with the quarterly samples collected at PCA-West Deep. 3. Evaluate Water Quality at Sand City Public Works Corp Yard Well Due to the evolving water type being observed in the Piper diagram, the source of the irregular water quality at this well needs to be evaluated. The Piper and Stiff diagrams, and sodium/chloride molar ratio suggest that the source of high chloride is not seawater, however, this needs to be confirmed with further investigation into historical water quality of the area around the well. 4. Watermaster to Request Complete Sample Analysis for Production Wells When Watermaster makes its annual request to producers for water quality data, the request will state that full results from one sample are to be reported. This ensures that the anions and cations balance and that anion/cation analyses can be carried out for this report. 5. Continue to Analyze and Report on Water Quality Annually Seawater intrusion is a threat, and data must be analyzed regularly to identify incipient intrusion. Maps, graphs, and analyses similar to what are found in this report should continue to be developed every year. 6. Refine Preliminary Protective Groundwater Elevations Once the water supply parameters of the Coastal Water Project are better defined, we recommend that the preliminary protective groundwater elevations be refined using final calibrated aquifer properties from the Seaside Basin groundwater flow model. It is expected that the protective elevations will decrease by a few feet, which will make them more practical to meet.

FROM: SUBJECT:
Clerk of the Authority Appointment of Vice President and Secretary for the Monterey Peninsula Regional Water Authority
DISCUSSION:
1. There are no written materials for this item. A report will be presented at the meeting.
08/12

FROM: SUBJECT:
Clerk of the Authority Authorize Change to Scope of Work for SPI Consultants and Allocate Additional Funding
DISCUSSION:
1. Written materials for this item are attached and a discussion will take place at the meeting. 2. Attachments: TAC Consultant Amendment Memorandum
08/12
MEMORANDUM
TO: FROM: DATE: SUBJECT: MPRWA Board of Directors Technical Advisory Committee December 3, 2012 TAC Discussion of Addendum to SPI Report
Introduction At its December 3 rd 2012 meeting the Technical Advisory Committee discussed the continually changing landscape regarding the three desalination project proposals. Recognizing that the draft report was based on project specifications through October 15, 2012 the TAC discussed what, if any, addenda to the SPI report might be of value to the Authority, and if so at what cost. It was agreed that the consultants, SPI and Kris Helm, should be contacted and asked if in their communications with the project proponents since the release of the draft report, they have identified any significant changes to any of the project specifications that would have a significant effect on project costs or schedule, and if so, what additional scope and budget would be required. Recommendation It is planned that the consultants final report will be issued December 15 th. The Authority board should review the proposed scope and budget of $12,700 and determine whether it would like to approve an addendum for delivery in January that addresses changes identified by the project proponents. Proposed Additional Scope Significant changes identified since October 15, 2012: 1. Delay in the test slant well program for Cal-Am (primarily schedule impacts). 2. DWD site relocation from the Capurro Ranch property to the Dynegy site. This is by far the biggest change among the projects. It impacts both the pipeline costs in the report along with estimates of buildings and other site structures which were based on existing structures present at Capurro Ranch. The consultant would need to obtain a new site layout from DWD to assess where on the Dynegy site the facility would be located, and then update costs accordingly. 3. Through the comment period since the draft report, the consultants have requests for additional cost sensitivity analyses. Many commenters would like an assessment of increased slant well replacement frequency on Cal-Ams costs. DWD has stated they may be able to secure a power agreement for $0.04/kW-hr; hence SPI could evaluate their costs on that basis as well. It may be beneficial to treat these, along with any others that interested parties may want to have looked at, in a separate analysis altogether as part of the January update.
4. DWD indicated they would be targeting a lower maximum temperature of 26 C, which would impact their system energy requirements. We could re-assess their overall RO system energy requirements at the new temperature. For items 2 4, SPI requested an increase in our not-to-exceed budget of $11,100. For items 1 2, Kris Helm suggested a budget of $1,600. The total additional budget is $12,700.

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Agenda Monterey Peninsula Regional Water Authority (MPRWA) Special Meeting 6:00 PM, Monday, December 10, 2012

Few Memorial Hall of Records Council Chamber Monterey, California

Monterey Peninsula Regional Water Authority Agenda Report

Date: December 10, 2012 Item No: 1.

RESOLUTION NO. __- ___ C.S.

Date: December 10, 2012 Item No: 1.

A RESOLUTION OF THE MONTEREY PENINSULA REGIONAL WATER AUTHORITY

Clerk of the Authority

Monterey Peninsula Regional Water Authority Agenda Report

Date: December 10, 2012 Item No: 2.

TAC Cost Model Memorandum TAC Replenishment Memorandum

A.12-04-019 (Filed April 23, 2012)

A.12-04-019 (Filed April 23, 2012)

Dated: November 15, 2012

the various revenue requirement scenarios.

Monterey Water Supply Project

$254.7 0.0 12.8 $267.5

$260.9 0.0 (102.5) 0.0 (1.2) $157.2

53.0% 47.0% 0.0% 100.0%

Surcharge & Contribution Assumptions

Monterey Water Supply Project Inputs

Jul-13 24 Jul-15 18 42 Jan-17 Jul-13

In Service In Rates Dec-16 Dec-16 Dec-16 Dec-16 Dec-16 Dec-16

35.00% 8.84% 40.75% $50.0 3.0% 0.3%

No No 2.0% Year 20 15 30 Date Dec-36 Dec-31 Dec-46

2.50% 4.00% 2.50% 1.33%

1.60% 3.10% 1.50% 1.70% 2.10% 2.00%

$2.0 Dec-12 50.0%

5.50% 0.10% 2.00% 6.60% 2.10% 3.23%

Attachment A California American Water Replenishment Schedule

ARTIFICIAL REPLENISHMENT (AFA)

ATTACHMENT: 1. HydroMetrics RFS No. 2012-04

MPRWA M eeti ng , 12/1 0/2012 , Item N o . 2 . , Item Page 26 , Packet Page 36

ITEM NO. IX.A.1.

TECHNICAL ADVISORY COMMITTEE (TAC)

Monterey Peninsula Regional Water Authority Agenda Report

Date: December 10, 2012 Item No: 3.

Monterey Peninsula Regional Water Authority Agenda Report

Date: December 10, 2012 Item No: 4.

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RESOLUTION NO. - _ C.S.