LR1/GW2/ek4 8/7/2017

FILED
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
8-07-17
02:06 PM

Application of California-American Water

Company (U210W) for Approval of the
Monterey Peninsula Water Supply Project Application 12-04-019
and Authorization to Recover All Present
and Future Costs in Rates.

ASSIGNED COMMISSIONER AND ADMINISTRATIVE LAW JUDGES

RULING SETTING PREHEARING CONFERENCE AND IDENTIFYING
ISSUES FOR FURTHER HEARINGS

Summary
A prehearing conference (PHC) will be held at 1:00 p.m. on
August 18, 2017 in the Commissions Courtroom, 505 Van Ness Avenue,
San Francisco, California. The purpose is to discuss the schedule for the
remainder of this proceeding, and address anything else necessary for the
efficient and equitable completion of this matter. The issues for further hearing
are identified in this Ruling.
As the scheduling of this PHC may impact the August 17 and 18, 2017
evidentiary hearing in Application (A.) 15-07-019, this ruling is being served on
parties to this proceeding and A.15-07-019.
Background
The first set of evidentiary hearings in this proceeding was held on
April 2-5, 8-11, 30, and May 1, 2013. Bifurcation into Phase 1 (Certificate of
Public Convenience and Necessity (CPCN) for the Monterey Peninsula Water
Supply Project-MPWSP) and Phase 2 (groundwater replenishment project
GWR) was ordered in the Scoping Memo and Ruling of September 25, 2013.

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A proposed Settlement Agreement was heard by Administrative Law

Judge (ALJ or Judge) Minkin on December 2, 2013. On November 17, 2015, an
ALJ Ruling set the issues for further evidentiary hearings, mainly to update cost
estimates from those provided in the Application and to provide then-current
supply and demand information, among other things. An Amended
Application, updating the project configuration and description in response to a
Ruling by the assigned Commissioner, was filed on March 14, 2016. Evidentiary
hearings were conducted on April 11-14, and May 26, 2016.
In recognition of the availability of water from GWR (Pure Water
Monterey Project) earlier than the desalination plant, a Proposed Decision (PD)
for Phase 2 was published on August 12, 2016. Decision No. 16-09-021
(September 15, 2016) affirmed the PD and authorized the purchase of GWR
water by California-American Water Company (applicant). A Third Amended
Scoping Memo and Ruling on November 21, 2016 extended the statutory
deadline for completion of the proceeding to June 30, 2018.
On June 9, 2017, an ALJs Ruling requested the parties to identify issues for
further evidentiary hearings. The Ruling (at 1-2) noted that assigned
Commissioner Randolph and assigned ALJ Weatherford:
agree that further evidentiary hearings may be needed
for the purpose of updating cost estimates, financing
details, and assessing the forecast of demand that bears
upon the justification for and sizing of the Monterey
Peninsula Water Supply Project.
believe evidence is necessary on a project alternative
that includes the desalination plant energized by a
combination of purchased electricity and on site solar
panels.
believe evidence is necessary on the feasibility and costs of
the desalination plant being constructed in modular

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increments, with the potential for the Commission to

authorize a smaller plan now (even smaller than 6.4 gallons
per day, if feasible) but with the option for applicant to
later request authority to add increments if and as demand
increases.
On June 30, 2017, twenty-three parties filed a Joint Statement of Issues.
The Joint Statement of Issues separately identifies 82 issues (with 4 sub-issues for
item 56) presented by 13 of the 23 parties. On July 11, 2017, elective comments
on the Joint Statement of Issues were filed by 18 parties.
Discussion
Issues
The record in this proceeding is already quite extensive. More than 10
days of evidentiary hearings were held in 2013, with 5 days of update hearings in
2016 for the purpose of completing the record for Phases 1 and 2. Many exhibits
have been identified and received as evidence, and motions are pending to
approve one or more Settlement Agreements.
Given the passage of time, the June 9, 2017 Ruling asked parties to identify
any remaining disputed issues of material fact, other than those addressed in the
separate but parallel California Environmental Quality Act (CEQA) and National
Environmental Policy Act (NEPA) process, that need to be updated or heard
before the matter is submitted. This was not an invitation to continue to hear
issues upon which there already is adequate evidence, but to address limited
disputed material issues that need updating or which could be shown to need
further evidence.
The 82 separately identified issues nominated for consideration are listed
by party, not by subject. As a result, many of the 82 issues are duplicative. For
other issues, parties failed to convincingly show that their proposed issue was
not simply continued argument of an issue with adequate evidence and that has

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already been heard. Further, a large number of the 82 issues are matters to be
covered in the CEQA/NEPA portion of the proceeding. It would be duplicative
to also address them in the evidentiary hearing, and we will not do so.
The issues that will be heard in the remaining evidentiary hearing are
stated below. The issues are not stated with such specificity as to constrain
additional testimony, but testimony outside the scope of these issues will not be
heard. The issues are:
1. Demand: updated estimates and analysis of demand
including but not limited to:
1.1 use by existing customers;
1.2 status with respect to legal lots of record;
1.3 status with respect to Pebble Beach; and
1.4 status with respect to economic recovery of hospitality industry.

2. Supply: updated estimates and analysis of supply

including but not limited to:
2.1. Plans for expansion of the Pure Water Monterey
(PWM) project, if any; and
2.2. Can expansion of the PWM project provide water to
applicant in excess of 3,500 acre-feet per year, the
amount provided in the Water Purchase Agreement
approved in the Phase 1 D.16-09-021.
3. Costs: updated estimates and analysis of costs for the
Monterey Peninsula Water Supply Project (MPWSP),
including the cost of the ground water replenishment
water covered by PWM.
4. Project Financing: updated information and analysis of
project financing.
5. Downsizing: feasibility and costs of MPWSP being
downsized including but not limited to:
5.1. Postponement of one or more wells;

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5.2. Operation of plant at lower rate until demand

materializes; and
5.3. Construction in modular increments including but
not limited to whether the MPWSP can be authorized
at a level smaller than 6.4 gallons per day with the
option for applicant to later request authority to add
increments if and as demand increases.
6. Solar and Renewables: Feasibility and desirability of a
project configuration that includes the plant being
energized by a combination of purchased electricity
(including some or all renewables) and on site solar panels.
7. CEMEX Site: status of applicants access to land at the
CEMEX site if CEMEX ends operation and the land is
transferred to another entity.
8. Settlement Agreements: Are modifications needed, if any,
to any pending Settlement Agreement? Will any new
Settlement Agreements be forthcoming?
Schedule for Final Environmental Impact Report (FEIR)
Due to the complexity and extensive number of comments received on the
Draft EIR/EIS, the Energy Division and the Monterey Bay National Marine
Sanctuary have extended the anticipated release date of the Final EIR/EIS to
March 16, 2018. Under the requirements of CEQA and NEPA, the Final EIR/EIS
will include detailed responses to comments as well as pertinent changes to the
Draft EIR/EIS text.
Prehearing Conference (PHC)
A Prehearing Conference will be held at 1:00 p.m. on August 18, 20171 in
the Commission Courtroom, 505 Van Ness Avenue, San Francisco, California.

1 Since an evidentiary hearing has been scheduled for August 17 and 18, 2017 in A.15-07-019,
that evidentiary hearing will be temporarily suspended, if necessary, in order to hold the PHC
in this proceeding.

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The purpose of the PHC will be to hear proposals from parties on the remaining
schedule for the CPCN portion of this proceeding. The purpose is also to hear
from parties regarding anything else they recommend so that the Commission
will efficiently and equitably complete the proceeding by June 30, 2018.
Parties may file PHC statements, and shall do so by 5:00 p.m. on
August 16, 2017. Parties shall make all reasonable efforts to file one Joint PHC
Statement. If unable to do so, parties should seek to agree with as much as
possible of the Joint PHC Statement and concurrently file their own PHC
Statement which states their differing or opposing views.
In particular, the Commission is interested in hearing from parties about
the feasibility and reasonableness of holding evidentiary hearings in
September, completing the evidentiary record by October 2017, and receiving
briefs in early 2018. The statutory deadline for this proceeding is June 30, 2018.
Parties should propose a schedule and ways to address all necessary matters so
that the Commission completes all required parts of this proceeding and reaches
a final decision by June 30, 2018.

IT IS RULED that:
1. A Prehearing Conference shall be held at 1:00 p.m. on August 18, 2017 in
the Commission Courtroom, 505 Van Ness Avenue, San Francisco, California for
the purpose of hearing proposals from parties on the remaining schedule for the
Certificate of Public Convenience and Necessity portion of this proceeding, and
anything else parties recommend for the Commission to efficiently and equitably
complete this proceeding by June 30, 2018.
2. Parties may file and serve Prehearing Conference Statements and shall do
so by 12 noon on August 17, 2017. Parties shall make all reasonable efforts to file
one Joint PHC Statement. If unable to do so, parties should seek to agree with as

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much as possible of the Joint PHC Statement and concurrently file their own
PHC Statement which states their differing or opposing views.
3. As the scheduling of this PHC may impact the August 17 and 18, 2017
evidentiary hearing in Application (A.) 15-07-019, this ruling is being served on
parties to this proceeding and A.15-07-019.

Dated August 7, 2017, at San Francisco, California.

/s/ LIANE M. RANDOLPH /s/ JEANNE MCKINNEY for

Liane M. Randolph Gary Weatherford
Commissioner Administrative Law Judge

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