Appendix VOL 3 of 3 (X149368).pdf

8/9/2019 Appendix VOL 3 of 3 (X149368).pdf

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Case No. S

IN THE SUPREME COURT OF THE

STATE OF CALIFORNIA

Monterey Peninsula Water Management District,

Petitioner,

v

California Public Utilities Commission,

Respondent,

California-American Water Company,

Real Party in Interest

The California Public Utilities Commission, Decisions No. 11-03-035 and No.13-01-040 in

Proceeding No. Application 10-01-012

The Honorable Maribeth A. Bushey, Administrative Law Judge Presiding

Commissioner Michael R. Peevey, Assigned Commissioner

PETITIONER S APPENDIX OF EXHIBITS IN SUPPORT

OF PETITION FOR REVIEW

VOLUME3 F3

[PAGES 552 - 595]

Thomas J MacBride, Jr., Bar No. 066662

[email protected]

David C. Laredo,

ar

No. 66532

dave@laredolaw net

Suzy Hong, Bar No. 239489

Megan Somogyi, Bar No. 278659

GOODIN, MACBRIDE, SQUERI,

DAY LAMPREY, LLP

505 Sansome Street, Suite 900

San Francisco, California 94111

Telephone: (415) 392-7900

Facsimile: (415) 398-4321

Attorneys for Petitioner Monterey Peninsula

Water Management District


2/56

INDEX OF EXHIBITS

EXHIBIT DOCUMENT

VOLUME

1

In the Matter

of

the Application

of

California-

American Water Company U 210 W) for an

Order Authorizing the Collection and

Remittance

of

the Monterey Peninsula Water

Management District User Fee, Application

No.I0-01-012

2 Resolution ALJ 176-3247. Preliminary

determinations

of

category and need for

hearing.

3

Response .of Monterey Peninsula Water

Management District to the Application of

California-American Water Company

4. Protest of the Division of Ratepayer

Advocates

5 Motion to Approve Settlement Agreement

Between the Division of Ratepayer

Advocates, the Monterey Peninsula Water

Management District and California

American Water Company

6. Proposed Decision Denying Approval

of

Settlement Agreement and Dismissing

Application

7

Comments of California-American Water

Company on the Proposed Decision

8

Comments

of


Management District to the Proposed

Decision

9

Comments

of

the Division

of

Ratepayer

Advocates on the Proposed Decision

DOCUMENT

D TE

01/01/2010

01/21/2010

02/18/2010

02/18/2010

05/18/2010

12/21/2010

01/10/2011

01/10/2011

01/10/2011

P GE

R NGE

1 25

26 32

33 39

40 46

47 71

72 94

95

- 119

120 142

143

148


3/56

INDEX OF EXHIBITS

EXHIBIT

DOCUMENT

10

D.ll-03-035: Decision Denying Approval

of Settlement Agreement and Authorizing

Amendment to Application

11 Application of the Monterey Peninsula

Water Management District for Rehearing

of

Decision 11-03-035

12

Amended Application

of

California-

American Water Company

13 Protest of the Monterey Peninsula Water

Management District to the Amended

Application

14

Protest of the Division

of

Ratepayer

Advocates

VOLUME2

15

Petition of the Monterey Peninsula Water

Management District for Modification of

Decision 11-03-035

16

Response of the Division of Ratepayer

Advocates to the Monterey Peninsula Water

Management District s Petition to Modify

Decision 11-03-035

17

Administrative Law Judge s Ruling Setting

Prehearing Conference

18 California American Water Company

Response to ALJ s Directive to Provide

Additional Information

19

Proposed Interim Decision Authorizing

Aquifer Storage and Recovery Project Phase

2 and Carmel River Mitigation Agreement

20. Seeping Memo and Ruling

of

Assigned

Commissioner

DOCUMENT

DATE

03/25/2011

04/25/2011

08/26/2011

09/29/2011

09/29/2011

10/14/2011

11/14/2011

01/26/2012

02/24/2012

04/06/2012

04/16/2012

PAGE

RANGE

149

150

151 - 213

214 243

244 248

249 251

252 443

444 446

447 449

450 487

488

500

501 - 507


4/56

INDEX OF EXHIBITS

EXHIBIT DOCUMENT

21.

Opening Comments of the Division of

Ratepayer Advocates on the Proposed

Decision

22.

Comments

of

California-American Water

Company on the Proposed Decision

23.

Comments of the Monterey Peninsula Water

Management District on the Proposed

Interim Decision

VOLUME

24.

Comments of the Monterey Peninsula Water

Management District to the Scoping Memo

and Ruling of the Assigned Commissioner

25.

Opening Comments of the Division of

Ratepayer Advocates on the Scoping Memo

and Ruling of the Assigned Commissioner

26.

Reply Comments of the Division of

Ratepayer Advocates on the Proposed

Decision

27.

Administrative Law Judge s Ruling Setting

Prehearing Conference

28. Response of California-American Water

Company to the Assigned Administrative

Law Judge s Direction to Provide Additional

Information

29.

Interim Decision Authorizing Aquifer

Storage and Recovery Project Phase 2 and

Carmel River Mitigation Agreement

30. California-American Water Company

Compliance Filing

31.

D.13 0l 040: Order Modifying D.11-03-035

and Denying Rehearing, as Modified

DOCUMENT

DATE

04/26/2012

04/26/2012

04/26/2012

04/30/2012

04/30/2012

04/30/2012

05/23/2012

06/11/2012

06/26/2012

12/31/2012

01125/2013

PAGE

RANGE

508 515

516-518

519 551

552

557

558

559

560 56

562

563 570

57

- 583

584 593

594 595


5/56


6/56

BEFORE

THE PUBLIC UTILITIES COMMISSION

OF THE STATE

OF

CALIFORNIA

In the Matter

of

the Application

of


U 210 W) for an Order Authorizing

Collection and Remittance

of

the

Monterey Peninsula Water

Management District User Fee

)

)

)

)

)

)

- - - - - - - - - - - - - - - - - - ~ - - - - - - .

Application No. 10-01-012

Filed January

5

2010)

COMMENTS

OF THE

04-30-12

04:59PM

MONTEREY

PENINSULA

WATER

MANAGEMENT

DISTRICT

TO THE

SCOPING

MEMO

AND

RULING

OF THE ASSIGNED

COMMISSIONER

David C. Laredo, CSBN 66532

Heidi A. Quinn, CSBN 180880

Alex J. Lorca, CSBN 266444

De LAY LAREDO

606 Forest Avenue

Pacific Grove, CA 93950-4221

Telephone: 831) 646-1502

Facsimile: 831) 646-03 77

Email: [email protected]

Frances M. Farina, CSBN 185035

De LAY LAREDO

389 Princeton Avenue

Santa Barbara, CA 93111

Telephone: 805) 681-8822

Facsimile: 805) 681-8823


Attorneys for

MONTEREY

PENINSULA

WATER MANAGEMENT DISTRICT

MPWMD Comments on Scoping Memo and Ruling

A.10-01-012

55


7/56

BEFORE

THE PUBLIC

UTILITIES

COMMISSION

OF THE

STATE

OF

CALIFORNIA

In the Matter

of

the Application of


(U 210 W) for an Order Authorizing


of

the



)

)

)

)

)

)

Application No. 10-01-012

(Filed January

5

2010)

COMMENTS

OF THE

MONTEREY

PENINSULA


TO THE

SCOPING

MEMO

AND

RULING

OF THE

ASSIGNED

COMMISSIONER

Pursuant to Ordering Paragraph No. 2

of

the Scoping Memo and Ruling (Scoping

Memo)

of

Assigned Commissioner Michael R Peevey, the Monterey Peninsula Water

Management District (Water Management District or MPWMD) submits these

Comments and Objections

to

the Scoping Memo.

MPWMD objects to the determination in Ordering Paragraph No. 1 that this

proceeding should be closed.

The

basis for that conclusion, [a]ll issues within the

scope

of

this proceeding have either been submitted or are pending before the Monterey

County Superior Court , is flatly wrong. In particular, it is not correct that issues

related to the District's User Fee are pending before Superior Court.

ll

DISCUSSION

A MPWMD Requests An Evidentiary Hearing.

CAW requested the Amended Application be categorized as ratesetting, with

evidentiary hearings required.

1

In its Protest to the Amended Application, MPWMD also

1

Amended Application, p. 16.


A.10-01-012

Page I

553


8/56

requested evidentiary hearings.

2

DRA also protested, stating evidentiary hearings may

be necessary to resolve the issues raised by the application.

3

The Commission

determined this matter to be ratesetting. This preliminary determination that hearings are

required in this matter

4

has not been rescinded pursuant to Rule 7.5.

At the February 8 2012 Prehearing Conference, Administrative Law Judge (ALJ)

Bushey represented a Scoping Memo would issue, and will give the parties a chance to

form a record on what issues they think should be resolved here, and then we will issue a

disposition on those matters.

5

The

Scoping Memo, issued only after the filing .of the

PD, did not provide the Parties an opportunity to form a record on the matters in dispute.

Instead, the Scoping Memo simply concludes all outstanding issues in this proceeding

are apparently being addressed here or in Superior Court.

MPWMD did not waive its right to a hearing

in

this proceeding. The Scoping

Memo concludes no party requested further proceedings, based upon an assertion the

parties agreed that any further procedural steps· would also be requested in CAW's

February

24

filing. However, only CAW was directed to make a filing. There was no

opportunity for MPWMD to comment on CAW's supplemental filing, or to request

further procedural steps. As the Division of Ratepayer Advocates (ORA) indicates, the

ALJ's statements at the Prehearing Conference were confusing and ambiguous.

6

Importantly, there was no written ruling issued after the Prehearing Conference that

clarified the rights and obligations ofthe Parties regarding further procedural steps.

Closing the proceeding without the opportunity to introduce evidence to augment

the record is a denial of due process. There was no fair notice to the Parties regarding

2

MPWMD's Protest, p. 3.

3

ORA Protest,

p.

2.

4

http://docs.cpuc.ca.gov/efile/RESC/112666.pdf.

5

d.

6

ORA s Opening Comments to Proposed Interim Decision of Administrative Law Judge Maribeth Bushey

(ORA's Comments), pp. 2 4 .


A.10-01-012

Page2

554


9/56

any waiver of evidentiary hearings. MPWMD requests the opportunity to present

evidence as to the issues in dispute.

B. Issues Pertaining To Phase 1 of MPWMD s Aquifer

and

Storage

Recovery

Program

Have Not Been Adequately Addressed.

CAW's Amended Application requests authorization to impose a surcharge to

fund the completion ofMPWMD s ASR Program Phase

1.

CAW requested a surcharge

totaling $4,875,488 to fund the remaining improvements of the ASR project, replenish

the $1,522,792 to MPWMD's reserves, and fund management and support staff, capital

asset purchases, and indirect overhead.

7

In its supplemental filing on February 24, 2012,

CAW provided detailed information regarding the cost components to complete Phase 1

ASR project improvements.

8

There

is

no

dispute among the Parties

as

to

the

need for

funding for this program; only a dispute as to the amount

of

funds required.

9

Neither the PD nor the Seeping Memo address CAW's request regarding ASR

Phase 1 funding. The sole reference in the PD is a footnote indicating that in its filing,

Cal-Am repeated its request for surcharge to fund the MPWMD's Aquifer and Storage

Recovery Phase 1 costs. Those costs, some ofwhich are from 2005, are part of the user

fee matter being litigated in Monterey Superior Court.

1

The Seeping Memo simply

determines issues regarding the District's user

fee

are pending in Monterey Superior

Court. These statements completely mischaracterize the proceeding before the Court.

The Monterey Superior Court will not address the merit

of

ASR costs funded

by the District's User Fee. The discrete issue before the Court

is

CAW's contention that

Decision (0).11-03;..035 prohibits CAW from collecting the User Fee and thereby bars

7

Amended Application, pp.

14-

15.

8

CAW s

Response to ALJ's Directive to Provide Additional Information (Response), p. 4.

9

ORA did not oppose the funding, it simply wanted to review and evaluate the budgets and Cal-Am's

ratemaking proposals for the requested projects. ORA Protest, p.

2.

IOPD

P• 6.

11

The PD and the Scoping Memo make no attempt

to

describe the Superior Court action. The action arose

from MPWMD's Board of Directors' adoption of Resolution 2011-09 ordering CAW

to

collect and remit

the User Fee. In response, CAW filed a Petition for Writ

of

Mandate and Complaint for Declaratory and

Injunctive Relief, commanding the District to vacate its approval

of

the Resolution, and a determination

that Resolution is not binding upon CAW.


A.I0-01-012

Page3

555


10/56

CAW from complying with Resolution 2011-09.

2

The funding for Phase I of the ASR

remains a material issue before the Commission within the meaning

of

California Public

Utilities Code§§ 1705 and 1757(a)(3), and must be addressed.

The Scoping Memo provides that the District's Rehearing Application for

0.11-

03-035 (Rehearing Application) was incorporated by reference into MPWMD's Protest,

and notes the District's Petition for Modification

ofD.ll-03-035

(PFM) has been filed.

The Rehearing Application and PFM (the granting of which would moot both Rehearing

Application and the Monterey County Superior Court proceeding) are still pending before

the Commission, and are not addressed by the PO or the Scoping Memo.

MPWMD requests an evidentiary hearing, and the opportunity to introduce

evidence regarding Phase 1 ASR.

C. Issues Pertaining To

MPWMD s

Carmel River Mitigation Program Have

Not Been Adequately Addressed.

In

the Amended Application, CAW proposed a surcharge to recover $6,836,413

for the Mitigation Program tasks

to

be performed from June

2011

through 2014.

3

In

its

February 24 filing, CAW indicated it entered into an interim agreement with the District

to fund the Mitigation Program, and paid the District $5.5 million.

14

After the

Commission ordered CAW to close the memorandum account associated with those

payments,

15

CAW and MPWMD entered into a second interim agreement that provided

an austerity budget of$1.6 million through December 2012.

6

The Scoping Memo acknowledges Cal-Am's funding for

cert in components

of the District's Mitigation Program have been submitted for Commission consideration

and are the subject of a proposed decision. (emphasis added). The PO determined

12

On May 26, 2011, MPWMD's Board

of

Directors adopted Resolution 2011-09 (Resolution) ordering

CAW to collect and remit the User Fee. In response, CAW filed a Petition for Writ of Mandate and

Complaint for Declaratory and Injunctive Relief (Petition), commanding the District to vacate its approval

of

the Resolution, and determine the Resolution is not binding upon CAW.

13

Amended Application, p. 7

14

Response, p 7.

15

D.I 1-03-035.

16/d


A.10-01-012

Page4

556


11/56

CAW justified funding

of

$1.6 million per year, pending further detailed review of the

·direct costs, indirect allocations, management and administrative costs in CAW's next

general rate case.

17

Cmicluding the amount represents a 60% increase in funding, the

PD imposes a cap. However, DRA disputes the $1.6 million represents any increase in

relation to MPWMD's historic expenditures for the mitigation activities at issue.

18

There are significant factual and legal issues

in

dispute regarding the adequacy of funding

for the Mitigation Program.

Although MPWMD endorses continuation of the $1.6 m illion per year through

20

14

MPWMD requests an evidentiary hearing, and the opportunity to introduce

evidence regarding the adequacy of funding for the Mitigation Program.

III. CONCLUSION

Evidentiary hearings are required to clarify and augment the record

in

this

proceeding. Significant issues remain regarding funding for Phase 1 of the District's

Aquifer Storage and Recovery Program, Mitigation Program, and User Fee. Ordering

Paragraph

No.

1 of the Scoping Memo should be stricken.

Dated: April 30, 2012

Respectfully submitted,

Is/

David C. Laredo

DAVID C. LAREDO

De LAY LAREDO

Attorneys for MONTEREY PENINSULA


U:\GENERAL (NEW)\MPWMD- Main\PUC -A.10-01-012 (UserFee)\2012.4.30 MPWMD Final Comments on

SMRAI0-01-

012.docx

17 Id

18

DRA s

Comments to the PD, p. 7.


A.10-01-012

Page

5

557


12/56


13/56

BEFORE THE PUBLIC UTILITIES COMMISSION

OF THE STATE OF CALIFORNIA

FILE

04 30 12

04:59PM

In the Matter

of

the Application

of


(U210W) for an OrderAuthorizing the


of

the

Monterey Peninsula Water Management

District User Fee.

Application 10-01-012

(Filed January 5 2010)

OPENING COMMENTS

OF THE

DIVISION

OF

RATEPAYER ADVOCATES

ON THE SCOPING MEMO AND RULING

OF THE ASSIGNED COMMISSIONER

I INTRODUCTION

Pursuant to Ordering Paragraph

No.2

of

the April16, 2012 Scoping Memo and

Ruling

of

the Assigned Commissioner in this proceeding (Scoping Memo), the Division

of

Ratepayer Advocates (DRA) hereby files its Opening Comments on the Scoping

Memo.

II. DRA INCORPORATES BY REFERENCE ITS OPENING COMMENTS

ON ADMINISTRATIVE LAW JUDGE BUSHEY'S APRIL

6 2012

PROPOSED INTERIM DECISION.

On April26, 2012, DRA filed Opening Comments on the

April6,

2012 Proposed

Decision (PD)

of

Administrative Law Judge Bushey (ALJ). DRA hereby incorporates by

reference its opening comments on the PD in these comments on the Scoping Memo.

III. THIS PROCEEDING SHOULD NOT BE CLOSED UNTIL THE PARTIES

HAVE BEEN PROVIDED WITH AN OPPORTUNITY TO EXERCISE

THEIR RIGHTS TO DUE PROCESS.

As explained in its opening comments on the PD,

DRA s

primary concern with the

PD, as wriUen is that it prevents the Parties from creating an appropriate record in this

proceeding. Ordering Paragraph No. 1

of

the Scoping Memo states that this proceeding

should be closed with the issuance

of

the Commission's final decision on the issues

580664

1

558


14/56

submitted. Closing the proceeding at this juncture would deprive the Parties of an

opportunity to exercise their due process rights by further supplementing the record with

relevant evidence. As further explained in DRA s opening comments on the PO, we have

reached this impasse because ALJ Bushey's comments during the February

8

2012

Prehearing Conference were confusing and ambiguous and left the Parties uncertain as to

whether significant issues in this case will be heard by the Commission at all. Given this

procedtiral muddle, the Parties have not been provided with adequate due process

protection thus far in the case. The Parties are entitled to an opportunity to exercise their

rights to due process,

e.g.

by introducing relevant evidence at hearing, prior to the

conclusion

of

this proceeding.

III.

ON LUSION

As explained, DRA incorporates by reference its opening comments on the PD in

these comments and emphasizes that this proceeding should not be closed until the

Parties have had an opportunity to exercise their due process rights,

e.g.

by introducing

relevant evidence at hearing.

April30, 2012

Scoping Memo, at 6, Ordering Paragraph No. 2.

580664


Is

Jonathan Knapp

Jonathan Knapp

Attorney for the Division

of

Ratepayer

Advocates

California Public Utilities Commission

505 Van Ness Ave.

San Francisco, CA 94102


Phone: (415) 703-5377

Fax: (415) 703-2262

2

559


15/56


16/56



In the Matter

of

the Application

of


(U21

OW

for an Order Authorizing the


of

the


District User Fee.


(Filed January 5, 2010)

REPLY COMMENTS

OF THE DIVISION OF RATEPAYER ADVOCATES

ON THE PROPOSED DECISION

OF ALJ

BUSHEY

I. INTRODUCTION

04-30-12

04:59PM

Pursuant to Rule 14.3

of

the California Public Utilities Commission's Rules

of

Practice and Procedure (Rules), the Division of Ratepayer Advocates (ORA) hereby

files its Reply Comments on the April6, 2012 Proposed Decision

of

Administrative Law

Judge (ALJ) Bushey titled, Interim Decision Authorizing Aquifer and Storage Recovery

Phase 2 and Carmel River Mitigation Agreement.

II. DRA Concurs with MPWMD's Proposed Changes to the PD's

Findings of Fact and Conclusions of Law

DRA concurs with the changes to the PD s findings of facts and conclusions

of

law which were proposed

by

the Monterey Peninsula Water Management District

( MPWMD ) in its Opening Comments.

1

Comments

of

the Monterey Peninsula Water Management District to the Proposed Interim Decision,

A.I0-01-012, April 26,2012, Appendices A and B.

560


17/56

April 30, 2012

58 666


Is

Jonathan Knapp

Jonathan Knapp

Attorney for the Division of .

Ratepayer Advocates

California Public Utilities Commission

505 Van Ness Avenue


Email: [email protected]. gov

Phone: 415) 703-5377

Fax: 415) 703-2262

56


18/56


19/56

MAB/rs6 5/23/2012

05-23-12

12:43 PM

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In

the Matter of the Application of

Californta-American Water Company

U210W) for

an

Order Authorizing the

Collection and Remittance of the Monterey

Peninsula Water Management District User

Fee.


Filed January 5, 2010

ADMINISTRATIVE L W JUDGE S RULING

SETTING PREHEARING CONFERENCE

The Division of Ratepayer Advocates and the Monterey Peninsula Water

Management Districtraised procedural issues in their comments on the

April6

2012, proposed decision and the April16, 2012, scoping memo. To provide the

parties an opportuni ty to identify disputed issues of material fact necessary for

resolution in this proceeding, and evidence that might be presented on those

issues, a prehearing conference is scheduled:

. 5822 3

Tuesday

June

5, 2012 at 2:00 p.m.

Commission

Courtroom, State Office

Building

505 Van Ness Avenue

San Francisco; CA

IT IS SO RULED.

Dated May 23, 2012, at San Francisco, California.

/

s/

MARIBETH

A.

BUSHEY

Maribeth A. Bushey

Administrative Law Judge

562


20/56


21/56



FILE

06-11-12

4:59PM

In the Matter

of

the Application

of

California

American Water Company (U210W) for an


Remittance

of



A l 0-01-012

(Filed January 5, 2010)

RESPONSE OF CALIFORNIA-AMERICAN WATER COMPANY (U210W) TO THE

ASSIGNED ADMINISTRATIVE LAW JUDGE S DIRECTION TO PROVIDE

ADDITIONAL INFORMAITON

Sarah E. Leeper


333 Hayes St., Suite 202


Telephone: (415) 863-2960

Facsimile: (415) 863-0615


Attorney for Applicant

· California-American Water Company

Dated: June

11

2012

Timothy

J.

Miller


1033 B. Avenue, Suite 200

Coronado, CA 92118

Telephone: (619) 435-7411

Facsimile: (619) 435-7434




563


22/56

T BLE OF CONTENTS

I INTRODUCTION .................................................................................................................. I

II. UPDATED PROJECT COSTS AND RA TEMAKINO TREATMENT ................................ 2

A

Description ofMitigation Program Costs and Proposed Ratemaking Treatment. .............. 2

1 Description ofMitigation Program Costs ....................................................................... 2

2 Ratemaking Treatment of lnterim Mitigation Program Costs Recorded in the Cease

and Desist Order Memorandum Account and Payments For Mitigation Program Costs

Through December 31 2014 ................................................................................................. 3

B

Aquifer Storage and Recovery Project ............................................................................... 4

I. Phase 2 Project Budget and Ratemaking Treatment.. .................................................... 4

2 Completing Phase I ASR Project Improvements ........................................................... 5

IV. CONCLUSION ....................................................................................................................... 5

i i

56


23/56


OF THE

STATE OF CALIFORNIA

In the Matter

of

the Application

of

California

American Water Company (U210W) for an


Remittance

ofthe



A.l O-OI-OI2

(Filed January

5, 20

I

0

RESPONSE OF CALIFORNIA-AMERICAN WATER COMPANY (U210W) TO THE

ASSIGNED ADMINISTRATIVE LAW JUDGE'S DIRECTION TO PROVIDE

ADDITIONAL INFORMAITON

I. INTRODUCTION

California American Water Company ( California American Water or Company ) files

this response pursuant to the direction

of

the assigned administrative law judge given during the

Prehearing Conference held in this proceeding on June 5, 2012. California American Water was

instructed to file and serve updated surcharge calculations to reflect a ten percent annual increase

in Mitigation Program costs for calendar years 20I3 and 20I4 compared to funding agreed to in

the Second Interim Funding Agreement between California American Water and the Monterey

Peninsula Water Management District.

I

6


24/56

II. UPDATED PROJE T COSTS

AND

RATEMAKING TREATMENT

A

Description

of

Mitigation Program Costs and Proposed Ratemaking Treatment

As noted in its February 24, 2012 filing, California American Water negotiated a second

interim agreement that provided an austerity budget for the Mitigation Program pending

resolution of the Amended Application. That agreement was included in February 24, 2012

filing as Attachment 2. The agreement calls for California American Water to pay the District

1/12th

Of the budget attached to that agreement as Exhibit B for non-ASR activities through

December 31, 2012.

1

These costs have been recorded in California American Water's Cease and

Desist Order memorandum account because these costs are related to California American

Water's compliance with State Water Resources Control Board Order WR 2009-0060.

1

Description

of

Mitigation Program Costs

As identified in the Ruling Setting a Prehearing Conference dated May 23, 2012, and the

comments of the Division

of

Ratepayer Advocates' and Monterey Peninsula Water Management

District's comments on the Proposed Decision in this proceeding, there was a dispute of the costs

necessary to fund the Mitigation Program for calendar years 2013 and 2014. As discussed

during the Prehearing Conference, the Parties believe that the program requires cost escalations

compared to the Second Interim Agreement, and have agreed that ten percent annual escalations

are acceptable.

1

During the Prehearing Conference, the duration of this agreement was discussed, and it was suggested that

payments under this agreement terminated in May 2012 The operative language

of

the agreement requires the

District

to

invoice California American Water monthly for l/12th

of

he budget without reference to a particular time

period. California American Water understands that its obligation

is to

pay that when invoiced until the agreement

is terminated by one of the termination methods listed in the agreement.

2

566


25/56

2. Ratemaking Treatment of Interim Mitigation Program Costs Recorded in the

Cease and Desist Order Memorandum Account and Payments For Mitigation

Program Costs Through December 31,2014.

At the February

8

20I2

Prehearing Conference, the assigned administrative law judge

directed the Company to propose a a multi-year plan for accounting for and recovering costs

paid to the Monterey Peninsula Water Management District for its Mitigation Program that have

been recorded

in

the Cease and Desist Order memorandum account. The Company included

that proposal as Table 2 in its February 24,

20I2

filing .

. California American Water is in the process

of

instituting a surcharge to recover

approximately $5.5 million recorded

in

the Mitigation Program memorandum account authorized

in D.09-07-02I and deauthorized

in

D.II-03-035. The surcharge for those costs is recovering

that balance over I2 months beginning April I , 20I2. In addition to those costs, shown as First

Interim Agreement

in

Table I, California American Water proposes that the Commission

authorize the Company to: (1) transfer the payments made for mitigation activities occurring

between May 23, 20I1 through June 30, 2012 from the Cease and Desist Order memorandum

account to the Mitigation Program balancing account

in

which the current $5.5 million

in

Mitigation Program costs are recorded and then adjust the surcharge so that the transferred costs

are also amortized over 12 months; and (2) to further adjust the surcharge at six month intervals

to recover the payments made to the Monterey Peninsula Water Management District for

Mitigation Program costs, with such payments not to exceed: (a) $1.6 million for activities

performed during the calendar year 2012; (b) $1.76 million for activities performed during the

calendar year 2013; and, (c) $1.936 million for activities performed during the calendar year

20I4. For all payments made under item (2), California American Water would be authorized to

record those costs incurred and surcharge collections in the Mitigation Program one-way

567


26/56

balancing account. The surcharge amounts to implement this proposal are reflected in Table I

below.

Table One:

M i t h ~ a t i o n

Prol ram

u r c h a n ~ e

Amounts and Implementation

Schedule

Surcharge Apr-Sep

Oct-Mar

Apr-Sep Oct-Mar Apr-Dec TOTAL

Effective Period 2012 2012 2013

2 13

2014

Surcharge

6 Months 6 Months 6 Months 6 Months 9 Months

Component

First Interim 2,750,000 2,750,000

0 0

5.5M

Agreement

Second Interim

86I,756 86I,756 840,000 2.564M

Agreement

2013/2014 Costs

880,000

924,000

1,452,000

3.256M

Total Surcharge 2,750,000 3,611,756 1,741,756 1,764,000 1,452,000 11.320M

for Period

Surcharge Related

to First Interim

11.70%

11.70%

Agreement

Surcharge Related

to Second Interim

Agreement

0.0%

3.67% 7.41% 7.51 4.12%

6.03%

6.03% 6.03%

TOTAL

2,750,000 3,611,756

1,416,502

1,416,502 2,124,753 11.320M

SURCHARGE

11.70% 15.37%

6.03% 6.03%

6.03%

TOBE

COLLECTED

/%

B. Aquifer Storage

and Recovery Project

1 Phase 2

Project

Budget

and

Ratemaking

Treatment

In its February 24, 20I2 filing, California American Water proposed a budget and

ratemaking treatment to construct the Phase 2 aquifer storage and recovery facilities. California

American Water maintains that request here. The effect of that request would be to increase

rates I.3% beginning January I, 2013, as shown in Table 3

of

California American Water's

February 24, 20I2 filing.

568


27/56

2. Completing Phase 1 ASR Project Improvements

As discussed on the record at the June

5

2012 Prehearing Conference, California

American Water and the Monterey Peninsula Water Management District are to meet and confer

on a different proposal to fund Phase 1 ASR Project capital improvements and operation and

maintenance costs. California American Water is to file that new proposal no later than August

1

2012. California American Water will provide a analysis

ofthe

cumulative effects

ofthe

Mitigation Program, ASR Phase 2 costs, and the costs of the ASR Phase 1 proposal in its August

1

2012 filing.

III. CONCLUSION

As set forth in its February 24, 2012 filing, as amended above, California American

Water respectfully requests the assigned administrative law judge to authorize California

American Water to:

• Open a memorandum account earning the 90-day commercial paper rate for costs

related to constructing ASR Well 4, file a Tier 2 advice letter to transfer those costs to rate base

upon the facilities being placed in service, with a cap of $4.7 million, and recover the revenue

requirement for those costs in base rates, and to i l ~ a Tier 3 advice letter to recover any costs

that exceed $4.7 million or seek such additional costs in its next general rate case;

• Collect a surcharge from October 2012 to December 31, 2014 to generate up to

$11.32 million

in

revenue, at the rates shown in Table One, with revenues to be recorded in a

one-way balancing account with expenses invoiced by the District for non-ASR mitigation

activities.

- 5

569


28/56

• Such other and further

relief

as the Commission deems appropriate

Dated: June 11 2012

By: Is Tim iller

Tim Miller

Corporate Counsel

57


29/56


30/56

ALJ MAB earn acr ms6

Date

of

Issuance

6 26 2012

Decision 12-06-020 June 21,2012

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

In the Matter of the Application of


U210W) for an

Order

Authorizing the

Collection

and

Remittance of the Monterey

Peninsula Water Management District User

Fee.


Filed January 5, 2010

INTERIM DECISION AUTHORIZING AQUIFER STORAGE AND

RECOVERY PROJECT PHASE AND CARMEL

RIVER MITIGATION AGREEMENT

ummary

This decision authorizes California-American Water Company Cal-Am) to

create the Aquifer Storage

and

Recovery Project Phase 2

memorandum

account

in

which to record the reasonable costs for

adding Well4

to the Project

on

an

expedi ted basis and,

when

completed, to move the costs so recorded to rate base

with

a Tier 2 advice letter. Cal-Am is also authorized to enter into an agreement

with the Monterey Peninsula Water Management District District) to fund

Carmel River mitigation measures required by the State Water Resources Control

Board

Order

95-10, where Cal-Am is responsible for the measures, should the

District cease to perform them. A surcharge is authorized to recover these costs

on an

on

going basis.

584 8

571


31/56

A.10-01-012

ALJ MAB

eamjms

ackground

n August 22,2011, California-American Water Company (Cal-Am) filed

and served its

amended

application seeking Commission authorization to:

1 Collect a surcharge on Cal-Am s Monterey district

customers to

fund

the Carmel River Mitigation

Program performed

by

the Monterey Peninsula

Water Management District (District);

2

Collect a surcharge

on

Cal-Am s Monterey district

customers to fund the District s Phase 1 Aquifer

Storage

and

Recovery Facilities; and

3

Establish a memorandum account to track Cal-Am s

Phase 2 Aquifer Storage

and

Recovery Facilities.

Cal-Am requested that the

amended

application be categorized as

ratesetting, with evidentiary hearings required.

The Division of Ratepayer Advocates (DRA) protested the amended

application, preliminarily identifying issues with the District s proposed budgets

and Cal-Am s proposed ratemaking. DRA did not rule out the possibility that

evidentiary hearings would be necessary.

The District also protested the

amended

application. In its protest, the

District agreed

that

it

would

implement the Carmel River Mitigation Program as

proposed

by

Cal-Am, if

approved by

the Commission. The District, however,

challenged the Commission s jurisdiction to review the costs and scope of the

Mitigation Program, and contended that the District s own statutory authority

gave the District the right to require Cal-Am to collect a user fee from Monterey

District customers and remit the collections to the District. The District

incorporated

by

reference the jurisdictional

and

legal arguments it

had

set forth

in

its rehearing application for Commission Decision (D.) 11-03-035, which

focuses on the District s statutory authority to impose the user fee.

572


32/56

A.10-01-012

ALJ/MAB/

eam/ms6

On October 14 2011 the District filed its Petition for Modification of

Decision 11-03-035. The petition contended that the settlement agreement

rejected

by

the Commission in D.11-03-035 should instead be approved. The

petition stated

that

the District has statutory authority to lawfully impose a user

fee and that the Commission should modify D.11-03-035 to allow Cal-Am to

resume collecting the fee for the District.

In the petition the District also revealed that on May 26 2011 it had

adopted

a resolution ordering Cal-Am to collect and remit the user fee.

In

response Cal-Am filed

on

July 21 2011 a Petition for Writ of Mandate

and

Complaint for Declaratory

and

Injunctive Relief against the District captioned

California American Water Company

v.

Monterey

Peninsula

Water

Management

District Monterey County Superior Court Case No. M113336.

The petition also included a copy of the Interim Implementation

Agreement for 2011-2012 Carmel River Mitigation Program between Cal-Am and

the District which provided for Cal-Am to fund the mitigation program for 2012.

Cal-Am is recording these costs

in

a

memorandum

account for recovery from its

ratepayers.

On February 8 2012 the assigned Administrative Law Judge ALJ)

convened a prehearing conference

and

the parties gave status updates on the

pending litigation the Carmel River mitigation program and the Aquifer

Storage

and

Recovery Project. Cal-Am

and

the District reported that a case

management conference before the Monterey Superior

Court was

scheduled for

March in the user fee lawsuit referenced above. Cal-Am and the District also

Petition to Modify at 25.

3

573


33/56

A.10-01-012 ALJ MAB eamjms

reported that they had entered into

an

interim agreement to fund the portions of

the District's Carmel River mitigation program

that

are Cal-Am's contingent

responsibility,

with annual

costs for Cal-Am of 1.6 million. Cal-Am also

reported that Phase 2 of the Aquifer Storage and Recovery Project, which consists

of constructing a second well at the Seaside Middle School site, which is

Well4 for the overall project, was scheduled for completion in 2013. In response

to questioning from the assigned ALJ, Cal-Am indicated that moving up the

projected in-service

date

to 2012

was

likely feasible but

would

incur additional

costs.

At

the prehearing conference, the parties agreed that

due

to the

urgent

need for additional water supply in Cal-Am's Monterey district, Cal-Am should

investigate the potential for moving

up

the projected in-service date for Phase 2

and file and serve a statement

showing

the forecasted cost for the accelerated

construction. Cal-Am agreed to meet and confer with DRA regarding the

revised costs. Also

in

that statement, Cal-Am agreed to provide an accounting

and proposed recovery mechanism for the interim mitigation

program

costs.

The parties agreed

that

any further procedural steps

would

also be requested

in

that filing.

On February 24, 2012, Cal-Am filed and served its revised costs for an

expedited Phase 2, showing a 20 increase in labor costs, which brought the total

estimated costs to 4.7 million from 4.2 million. This amount also includes a

20 project contingency, as well as 12 overheads for the project. Cal-Am will

be contracting

with

the District to construct the well. Cal-Am proposed that the

costs be recorded in a memorandum account as incurred, and when the project is

574


34/56

A.10-01-012 ALJ/MAB/eamfms

completed, moved to base rates with a Tier 2 advice letter

up

to the cap of

4.7 million.

2

DRA reviewed the projected costs and

supported

the proposed ratemaking

for Phase

2.

Cal-Am also included its surcharge proposal to recover from its Monterey

district customers the 1.6 million annual costs for its share of the Carmel River

mitigation program. Cal-Am noted that

on

April1 2012, it will initiate a

surcharge to recover from customers 5.5 million

paid

to the District

during

2009-2011, and

that

surcharge of

11.7

will end in April2013. Cal-Am

proposed

to move the additional 1.6 million

per

year

in

costs to the same

balancing account,

and

to begin collecting the new costs after June 30,2012, with

an additional5.42% surcharge. After adjusting to amortize transferred costs over

12 months, the projected surcharge increases to 15.37 for October 2012 to

March 2013, and

then

drops to 5.42%.

Cal-Am's filing did not include DRA's position on the mitigation program

costs or the proposed surcharge.

No

party requested further procedural steps, so

the issues of the Aquifer Storage Phase 2 and the mitigation

program

funding

required from Cal-Am were submitted for resolution by the Commission on

March 28,

2012.

Cal-Am also reported that on February 23, 2012, the District's

2 Cal-Am would be required to obtain Commission authorization for any costs above

the

cap

either

with

a Tier 3 advice letter or

in

a general rate case.

-5-

575


35/56

A.10-01-012 ALJ/MAB/eam/ms6

Board of Directors authorized a rate

study that

is a precursor to placing a

new

tax

on

parcels within the District to generate additional revenue for the District.3

iscussion

As required by Pub. Util. Code§ 454, Cal-Am bears the burden of

justifying the proposed ratemaking treatment for the Aquifer Storage

and

Recovery Project Phase 2 Seaside Well ASR-4,

and

the fisheries, riparian

vegetation

and

wildlife, and lagoon vegetation

and

wildlife components of

the

Carmel River mitigation program, and of demonstrating that the proposed rates

will be just and reasonable as required by§ 451. As set forth below, Cal-Am has

met

its

burden

of justifying its proposals,

and we

approve the Seaside

Well

ASR-4

and the Carmel River mitigation agreement.

The urgent need to increase water

supply in

Cal-Am s Monterey district is

well-documented.4 In its testimony supporting its application, Cal-Am stated

that this additional well is necessary to allow Cal-Am to capture the full

2,900 acre-feet

per

year it is allowed to divert from the Carmel River

pursuant to Permit 208008C. This permit allows Cal-Am during the winter

period - December 1 to May

31

of the succeeding year - to divert from the

Carmel River for injection into the Seaside Basin up to 2,900 acre-feet. Cal-Am

stated that it requires a second well at the Seaside Middle School site to

accomplish this diversion reliably.

3

In its filing, Cal-Am repeated its request for surcharge to fund the District s Aquifer

Storage

and

Recovery Project Phase 1 costs. Those costs,

some

of

which

are from 2005,

are

part

of the

user

fee matter being litigated

in

Monterey Superior Court.

4 See

e.g., 0.09-07-021.

6

576


36/56

A.10-01-012

ALJ MAB

eam ms6

No

party disputed Cal-Am assertions justifying Well ASR-4, and DRA

supports the project.

Cal-Am presented cost forecasts of 4.2 million for Well ASR-4,

with

a

projected completion date of 2013. To expedite the project for a projected

completion date in 2012, Cal-Am forecasted total costs of 4.7 million. DRA has

examined these cost forecasts and supports the estimates and proposed

ratemaking.

Cal-Am has presented detailed cost forecasts for the record, which have

been reviewed and are

supported

by DRA. Therefore, we conclude that Cal-Am

has

met

its

burden

of justifying

the

costs of Well

ASR 4.

Cal-Am requested a memorandum account, with costs properly recorded

therein to be transferred to rate base via a Tier 2 advice letter to be filed upon

placing Well ASR-4 into service. The amount authorized to be recorded in the

memorandum account must be reasonable and shall not exceed 4.7 million.

Should Cal-Am's reasonable and actual costs exceed 4.7 million, Cal-Am may

request Commission authorization to include such costs in revenue requirement

by

a Tier 3 advice letter or the next general rate case. The

memorandum

account

will accrue interest at the 90-day commercial

paper

rate.

We conclude that Cal-Am has

met

its burden of showing that the proposed

ratemaking for Well ASR-4 is just and reasonable.

Turning now to the portions of the District's mitigation program for which

Cal-Am is responsible,s Cal-Am

and

the District have entered into a written

agreement

pursuant to

which

the District will continue these activities and

s ee D.ll-03-035 at 15 - 16.

577


37/56

A.l0-01-012

ALJ/MAB/eam/ms6

Cal-Am will reimburse the District for its costs

up

to 1.6 million per year. We

therefore, find that Cal-Am has justified these costs

but

will also cap this amount

pending

further detailed review of the direct costs, indirect allocations,

management and administrative costs, and overhead allocations in Cal-Am's

next general rate case. We will also approve Cal-Am's

proposed

recovery of

these costs by continuing its existing District surcharge mechanism

with

the

amounts

adjusted to reflect the change in costs being recorded.

Therefore, Cal-Am is authorized to collect a surcharge in its Monterey

district for Carmel River mitigation program costs included in the agreement

with

the District. Cal-Am reports that it has been recording

in

its Cease

and

Desist

Order

Compliance memorandum account payments to the District since

May 24,2011, the effective date of its agreement with the District. Cal-Am

proposed to transfer all such amounts recorded in the Cease and Desist

Order

memorandum account to the existing District fee surcharge balancing account, as

of June 30, 2012.6 The amounts so transferred will be amortized and collected

from ratepayers over 12 months. Thus, for October

2012 to March 2013 both the

existing District fee surcharge and the Carmel River mitigation

program

costs

will

be

simultaneously collected, with a resulting cumulative surcharge of

15.37%. Thereafter, all mitigation

program

payments will be recorded directly

in

the District surcharge balancing account, amortized and collected from

ratepayers,

with

a surcharge of 5.42%,

through

December 2014. In this way,

6

Pursuant

to Advice Letter 935, Cal-Am

s

collecting a

surcharge of 12.5 in

its General

Metered

Service Tariff

as

Special Condition

24.

The Carmel River mitigation program

costs approved n today s decision will be

added

to his balancing account

and

recovered through this surcharge.

-8-

578


38/56

A.10-01-012 ALJ/MAB/

eamjms6

Cal-Am will record and recover

annual

costs for the Carmel River mitigation

program

through December 2014.

Comments

o

Proposed Decision

On April6, 2012, the proposed decision was mailed to parties in

accordance with Section 311 of the Public Utilities Code, and the comments were

allowed under Rule 14.3 of the Commission s Rules of Practice and Procedure.

On April16, 2012, the assigned Commissioner issued his Scoping Memo

finding that all outstanding issues had been addressed

in

this proceeding or were

pending in Superior Court,

and

proposing to close the docket. Parties were

authorized to comment

on

this proposal.

The Division of Ratepayer Advocates

and


Management District raised procedural issues in their comments

on

the April6,

2012, proposed decision

and

the April16, 2012, ScopingMemo. To provide the

parties

an

opportunity to identify

disputed

issues of material fact necessary for

resolution in this proceeding, and evidence that might be presented on those

issues, a prehearing conference

was

held on Tuesday, June 5, 2012.

At the prehearing conference the parties agreed

that

the

amount

to be

authorized in this proceeding for the interim mitigation agreement should be

escalated to by 10 for 2013 and 2014. Cal-Am

and

the District also agreed to

meet and confer regarding the District s costs for Phase I of the Aquifer Storage

project,

with

a new proposal

to be

filed in this docket no later than August

2,

2012.

ssignment o Proceeding

Michael

R.

Peevey is the assigned Commissioner and Maribeth A. Bushey

is the assigned ALJ in this proceeding.

9

579


39/56

A.10-01-012

ALJ/MAB/eam/ms6

Findings

o

Fact

1.

Cal-Am s Monterey District is

and

has been experiencing a water

supply

shortage.

2.

Well ASR-4 is necessary to ensure

that

Cal-Am will be able to divert its full

allocation

under

Permit 208008C from the Carmel River for storage in the

Seaside Basin.

3.

The costs of Well ASR-4 are reasonable,

and

it is reasonable to expend the

additional increment necessary to potentially expedite the in-service date of the

well.

4. The Agreement

with

the District reasonably meets Cal-Am s Carmel River

mitigation obligations.

5.

DRA supports Well ASR-4

and no party

opposed the Agreement

with

the

District.

6. No

evidentiary hearing

was

necessary for this phase of this proceeding.

onclusions o Law

1.

Cal-Am has

met

its burden of justifying the construction of Well ASR-4,

including the costs of

an

expedited schedule.

2.

The projected expedited costs of Well

ASR 4

are reasonable,

and

the

ratemaking steps

proposed

by

Cal-Am should be approved.

3.

The Agreement

with

the District is reasonable,

and

recovery of costs

through

the ratemaking surcharge proposed

by

Cal-Am should be approved.

4. Issues related to the District s user fee are not addressed

by

today s

decision.

5. This decision should

be

effective today.

6.

This proceeding

should

remain open.

10

580


40/56

A.10-01-012 ALJ/MAB/eam/ms6

O R E R

IT

IS

OR ERE

that:

1.

California-American Water Company s (Cal-Am) request for authorization

to construct Well ASR-4 is granted, and, if feasible, Cal-Am shall accomplish

such construction on an expedited schedule

with

a target in-service date for the

well in 2012.

2. California-American Water

Company

(Cal-Am) is authorized to file a

Tier 1 Advice Letter to create the Aquifer Storage and Recovery Project Phase 2

memorandum

account, and to record in this account the reasonable costs,

not

to

exceed 4.7 million plus interest calculated

at

the 90-day commercial

paper

rate,

for Well ASR-4 to be constructed at the Seaside Middle School site. Upon

completion of construction and placing Well ASR-4 into service, Cal-Am is

authorized to file a Tier 2 advice letter to move the costs properly recorded into

rate base. Any costs for Well ASR-4 that exceed the cap of 4.7 million may be

presented for Commission reasonableness review and ratemaking consideration

in a Tier 3 advice letter or in the next general rate case.

3. California-American Water Company (Cal-Am) is authorized to enter into

the Inter im Implementation Agreement for 2011-2012 Carmel River Mitigation

Program, with a term

through

December 2014, with the Monterey Peninsula

Water Management District (District). Annual billings from the District to

Cal-Am pursuant to this Agreement and to be recovered from ratepayers shall

not

exceed 1.6 million for 2012, 1.76 million for 2013,

and

1.94 million for

2014. Future payments for all such billings from the District

pursuant

to this

agreement may be recorded

in

the balancing account and surcharge authorized

in Advice Letter

935.

Cal-Am is also authorized to file a Tier 1 advice letter to

-11-

581


41/56

A.10-01-012

ALJ/MAB/

eam/ms6

transfer payments pursuant to the Agreement since its initiation date of May 24,

2011, and recorded in the Cease and Desist Order Compliance memorandum

account, from that account to the Advice Letter 935 balancing account and

surcharge.

4. California-American Water Company is authorized to collect a concurrent

surcharge under Advice Letter 935 for amortization of the previously recorded

and transferred costs, w ~ t a resulting total surcharge of 15.37 from

October 2012 to March 2013. Thereafter the surcharge authorized

in

Advice

Letter

935

shall expire and the only surcharge shall be to recover the payments to

the Monterey Peninsula Water Management District authorized

by

today' s

decision, at a rate of 6.03 .

5. California-American Water Company must present in its next general rate

tase a detailed ratemaking analysis of any costs from the Monterey Peninsula

Water Management District (District) sought to be included in revenue

requirement. Such analysis must include justification for and reasonableness

demonstration of all direct costs, indirect allocations, management and

administrative costs,

and

overhead allocations. A detailed showing that the costs

proposed to be included

in

revenue requirement are not also recovered

by

the

District through its other funding sources will also be required.

6.

No later

than

August 1,2012, California-American Water Company

may

file and serve a revised proposal for Aquifer Storage Phase 1 costs. The assigned

Administrative Law Judge may reschedule this filing date for good cause shown.

12

582


42/56

A.10-01-012

ALJ/MAB/eam/ms6

7

This proceeding should remain

open

to address the remaining issues.

This order is effective today.

Dated June 21 2012

at

San Francisco California.

MICHAEL

R

PEEVEY

President

TIMOTHY ALAN SIMON

MICHEL PETER FLORIO

CATHERINE J.K. SANDOVAL

MARKJ.FERRON

Commissioners

13

583


43/56

3


44/56


OF THE STATE

O

CALIFORNIA

12 31 12

04:59PM

In the Matter

ofthe

Application ofCalifornia

American Water Company U210W) for an


Remittance

ofthe



A.10-01-012

Filed January 5, 2010)

CALIFORNIA-AMERICAN WATER COMPANY COMPLIANCE FILING

Dated: December 31, 2012

Sarah E. Leeper

Javier E. Naranjo


333 Hayes Street, Suite 202

San Francisco, CA 94 02

Telephone: 415.863.2960



Attorneys for Applicant


58


45/56


OF THE STATE

OF

CALIFORNIA

In the Matter

of

the Application

of

California

American Water Company (U2IOW) for an


Remittance ofthe Monterey Peninsula Water


A.I0-0 1-0

12

(Filed January 5, 20IO)

CALIFORNIA-AMERICAN WATER COMPANY COMPLIANCE FILING

I. INTRODUCTION

Pursuant to California Public Utilities Commission ( Commission ) decision ( D. ) 12-

06-020, California-American Water Company ( California American Water ) files this

compliance filing regarding the funding of the remaining capital improvements for the Phase I

aquifer storage and recovery ( ASR ) facilities.

1

As described below in more detail, the

Monterey Peninsula Water Management District ( MPWMD ) has secured a funding source

independent

of

California American Water for the Phase 1 ASR facilities.

II. DISCUSSION

In D.l2-06-020, the Commission resolved all but one of the pending issues relating to the

collection and remittance of the MPWMD User fee.· Specifically, the Commission ordered

California American Water to file and serve a revised proposal for the Phase 1 ASR facilities

costs by December 31, 2012.

2

California American Water is informed that MPWMD will pursue

a funding source independent ofCalifornia American Water for the Phase I ASR Project. In

1

0.12-06-020, Ordering Paragraph 2(e), provides: No later than August I, 20I2, [California American Water] may

file and serve a revised proposal for aquifer storage Phase I costs. ALJ may reschedule filing date for good cause

shown. On August 2, 20I2, the administrative law juage granted an extension until December

3I,

20I2 in order for

California American Water and the Monterey Peninsula Water Management District to file and serve the revised

Phase I ASR Project costs proposal.

2

See

D.I2-06-020,

p

II;

see also Email Ruling

o

Administrative Law Judge Maribeth

A

Bushey

dated Aug. 2,

20I2.

585


46/56

particular,

MPWMD s

Board ofDirectors authorized Resolution 2012-15 which approved

MPWMD to obtain a 4 million loan from Rabobank.

3

The December 10, 2012 Regular

Meeting Agenda and Resolution 2012-15 are attached hereto as Attachment

1.

Accordingly,

California American Water believes that it is no longer necessary for the above-captioned

proceeding to remain open as it appears that all of the issues have been resolved.

Dated: December

31,2012


By:

Is Sarah E Leeper

Sarah E. Leeper



3

On December 5 2012, MPWMD informed California American Water that it would not require California

American Water funding in order to complete Phase 1 ASR Project. MPWMD approved Resolution 2012-15 during

its December 10, 2012 Board of Directors Regular Meeting.

586


47/56

FILE

12 31 12

04:59PM

ttachment

1

87


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O

Th5 ~ e t i n g has been noticed

according

to

the

Brown

Act rules.

The Board ofDirectors

t s

regularly on the

third

Monday

of

each

mmth. The ~ e t i n g s

begin

at 7:00PM.

AGENDA

Regular Meeting

Board

of

Directors

Monterey Peninsula

Water

Management District

******************

7 : 0 0 P M ~ : ~ ~ ~ ~ ~ ~ ~

Conference Room, Monterey Pe nt District

5

Harris Court, Bldg G, Monterey,

CA

Staff notes or the 7 PM agenda items will be available on the District web site at

http://www.mewmd.dst.ca.us/asd/board/boardpacket/2012/2012.htm

by 5 PM on Friday, Oecember

7

2012.

The 7 PM Meeting will be televised on Comcast Channels 25 28. Refer to broadcast schedule

on

page

3.

6: PM Closed

Session

As permitted by

O o v e ~ n t

Code Section 54956 et seq.,

the

Board

may

adjown

to

closed

or executive session to consider specific matters dealing

with pending

or threatened litigation,

certain personnel matters, or certain property acquisition

matters.

1. Public

Comment-

Members

of

he public may address the Board on the item or items listed on

the

Closed Session agenda.

2. Adjourn to Closed Session

3.

Conference

with

Legal

Counsel-

Existing Litigation (Gov. Code

54956.9

(a))

A.

Application of California American Water to the CPUC Application No. 12-04-019 -

Monterey Peninsula Water Supply Project

B.

Application

of

California American Water Company to CPUC Application

No.10-01-012- User Fee Collection

C.


v.


District. Superior Court Case No:

M113336-

Reverse Validation Action

4. Public Employee Performance Evaluation (Gov. Code 54957 - General Manager

5.

Adjourn to

7

pm Session

Board of Directors

David

Potter,

Chair-

Monterey County

Board ofSupernors

David

Pendergrass, Vtce ·chair- Mayoral

Representative

Brenda

Lew5 - Division I

Judi

Lehman- Division 2

Kristi Markey-

Division

3

Jeanne Byrne- Division

4

RobertS. Brower,

Sr.-

Div5ion5

General Manager

Davil J. Stoldt

Th5 agenda

was

posted at the D5trict office at Harm Court, Bldg. G

Monterey on

Wednesday,

December 5 20

I

2. Staff reports regarding

these ageoda

items

will be

available fur public review on Thursday,

December 6,

through

Monday, December I0 at

the

D5trict

office

and

at

the

a r m e ~ Carmel

Valley,

Monterey, Pacific Grove

and

Seaside

libraries. After staff reports

have

been d5tnbuted, i additional

d o c ~ n t s are produced

by

the D5trict aod provided to a majority of

the Board

regarding

any item on the agenda, they will be available at the

District office during normal business hours, aod posted

on the

District

website

at

httpi/www.mpwrnd.nelfasdfboard boardpacket

/2012/20I 2.htrn. Documents d5tributed at the =ting will be made

available in

the s a ~ manner.

The

next regular Tllleting of he Board of

Directors 5 scheduk:d for Wednesday, January 30, 2013.

588

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D BOARD MEETING--DECEMBER 10, 2012--AGENDA

http://www.mpwnxl.net/asdlboardlboardpacket/20 12/20121210/121O

PM

••

Regular oard Meeting

CALL TO ORDER/ROLL CALL

PLEDGE OF ALLEGIANCE

ORAL COMMUNICATIONS: Anyone

wishing

to address tl1e Board on

Consent

Calendar, Infonmtion

Items

or matters not

listed on

tl e

agenda

may

do

so only

dwing Oral Colllll1llllications. Please

limit your cormnent to three

3)

minutes. The public may cor:nrrent

on an otller items at

tl e

time tlley are presented to

the

Board.

CONSENT CALENDAR:

The

Consent Calendar consists of routine

items for

which staff has prepared a recor:nrrendation.

Approval of he Consent Calendar

ratifies

tl1e staffrecormnendation. Consent Calendar items

may

be

pulled

for separate consideration at

tl e

request

of

a

member

of

he public,

or a

member

of

he Board. FoHowing

adoptiOn

oftlle

remaining

Consent Calendar

items,

staff

wi

give

a

brief presentation

on tl e puHed

item Members of

he public

are requested

to limit individual cormnent

on

puHed

Consent

Items to

three

3)

minutes.

1. Consider Adoption of Minutes ofNovember

19,

2012 Regular Board Meeting

2. Adopt Board Meeting Schedule for 2013

3. Authorize Expenditure of Reimbursable Funds

for

Design and Installation of Appurtenant

Pipelines

to

ASR-4 Well at Water Project 2 Site

GENERAL MANAGER S

REPORT

4. Status Report on California American Water Compliance with State Water Resources Control

Board Order 2009-0060 and Seaside GrOtmdwater Basin Adjudication Decision

5. Update on Development of Water Supply Projects

6.

Update on Laguna Seca Subarea Water Use

ATTORNEY S REPORT

7.

Report on

6:00PM

Closed Session ofthe Board

DIRECTORS REPORTS (INCLUDING AB 1234 REPORTS ON TRIPS, CONFERENCE

ATTENDANCE AND MEETINGS)

8. Oral Reports on Activities

of

County, Cities, Other Agencies/Committees/Associations

PUBLIC HEARINGS -

Public

comment w ll be received on each oftllese items. Please

limit

your cormnent to three 3) minutes per

item

9. Consider Adoption of January through March 2013 Quarterly Water Supply Strategy and

Budget

Action:

he

Board will consider approval

o

a proposed production strategy

or

the California

American

Water

Distribution Systems

or

the three month period

o

January through March

2012.

he

strategy sets monthly goals

or

surface and groundwater production from various

sources within the California American

Water

systems.

0

MPWMD Presentation

ACTION ITEMS--

Public cor:nrrent will be

received on each oftllese items. Please

limit your

cormnent

to three

3)

minutes

per item

10. Consider Adoption

of

Resolution No. 2012-14 for Reimbursement

of

Expenditures for

Groundwater Replenishment

Project

Action: he Board will consider adoption o a resolution that would authorize the repayment

o

expenditures or Groundwater Replenishment from future revenues.

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D BOARD MEETING--DECEMBER 10, 2012--AGENDA http:/ www.mpwm:l.net/asdlboardlboardpacket/20 12/20121210/121O

11. Consider Adoption

of

Resolution No. 2012-14 to Approve Obtaining a Loan for Costs

Related to Aquifer Storage and Recovery

Action: The Board will consider adoption of a resolution that would authorize the District to

obtain a 4 million loan to fund ASR related costs.

12 Consider Action Plan for Investigation into Desalination Contingency

Project

and Approve

Expenditure Not-to-Exceed 500

1

000 Per Fiscal Year to Fund Environmental Review

Action:

The

Board

witt

consider authorizing

st ff

to circulate a request for qualifications for

preparation of a project description, and authorize funding for CEQA work related

to

a

contingency project.

13. Appoint Citizens Overs ight Panel Members and Adopt Mission Statement and By-Laws

Action: The Board will consider ratification of appointees to the Ordinance No. 152 Citizens

Oversight Panel for the annual Water Supply

Charge

and consider adoption of the Oversight

Panels mission statement and By-Laws.

14. Provide Direction to Staff on Response to National Marine Fisheries Service 2012 Public

Review Draft South-Central California Coast Steelb ead Recoverv Plan

Action: The Board will provide direction

to

st ff on development

of

a response to the NMFS.

Comments are due by December

18

2012.

0

MPWMD

Presentation

15. Conduct Election of Board Officers for 2013

Action:

The

Board will conduct

an

election for the positions of Board

Chair Vice Chair

Secretary, and Treasurer according to the procedure outlined

in

Meeting Rule 2.5 that

prescribes annual rotation of he Chair and Vice Chair.

INFORMATIONAL ITEMS/STAFF REPORTS The public may address

the

Board on Information Items

and Staff Reports during the Oral Communications portion of he meeting. Please limit your comments

to

three minutes.

16.

Letters Received Letter Packet

17.

Committee Reports

18. Water Conservation Program Report

19.

Monthly Allocation Report

20. Monthly Water Supply and California American Water Production Report

21. Semi-Annual Groundwater Quality Monitoring Report

ADJOURNMENT

Board Meeting Broadcast

Schedule

- Comcast

Channels

25

28

Live webcast on

12/10/12 at www ampmedia org

on

the

Monterey Channel

Rebroadcast schedule shown below. Check

your

local listings

for

the

12110112

rebroadcast dates

Ch.

25, Mondays, 7 PM Del Rey Oaks, Monterey, Sand City Seaside

Ch. 28, Mondays, 7 PM Carmel, Carmel Villley Del Rey Oaks, Monterey, Pacific Grove,

Ch. 25, Thursday, Noon

Ch. 25, Fridays, Noon

Ch.

28, Fridays,

7

PM

Ch. 28, Saturdays, 1 PM

January 30, 2013

February 27,2013

Pebble Beach, Sand City Seaside

Del Rey Oaks, Monterey, Sand City Seaside

Del Rey Oaks, Monterey, Sand

City

Seaside

Carmel, Carmel

Villley

Del Rey Oaks, Monterey, Pacific Grove,


Carmel, Carmel Valley Del Rey Oaks, Monterey, Pacific Grove,


Upcoming Board

Meetings

Regular Board Meeting 7: pm

Regular Board Meeting

7: pm

District Conference

room

District Conference

room

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BOARD MEETING--DECEMBER I 0, 20I2--AGENDA http://www.mpwmd.net/asdlboardlboardpacket/20I2/20I2I210/I2IOa

Upon request, MPWMD will make a reasonable effort to provide written agenda materials in

appropriate alternative formats, or disability-related modification or accommodation, including

auxiliary aids or services, to enable individuals with disabilities to participate in public

meetings. . MPWMD will also make a reasonable effort to provide translation services upon

request. Please submit a written request, including your name, mailing address, phone number

and brief description

of

the requested materials and preferred alternative format or auxiliary aid

or service by

5:00PM

on Thursday, December

6

2012. Requests should be sent to the Board

Secretary, MPWMD, P.O. Box 85, Monterey, CA, 93942. You may also fax your request to

the Administrative Services Division at 831-644-9560, or call

831-658-5600.

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D BOARD MEETING--DECEMBER 10, 20 12--ITEM 11--CON... http://www.mpwml.dst.ea.us/asd/board/boardpacket/20 12/20 121210/

ITEM:

ACTION

ITEM

11.

CONSIDER

ADOPTION

OF

RESOLUTION

NO. 2012-15 TO APPROVE OBTAINING

A LOAN FOR

COSTS RELATED TO AQUIFER

STORAGE AND

RECOVERY

Meeting

Date:

From:

Prepared

By:

December 10, 2012

David

J.

Stoldt,

General Manager

Suresh

Prasad

General Counsel

Review:

Pending

Budgeted:

Program/

Line Item

No.:

Cost Estimate:

N/A

N/A

N/A

Committee

Recommendation: The

Administrative Committee

reviewed this

item

on December

3,

2012 and recommended approval 3-0. The Water Supply Planning Committee reviewed this item

on

December 4, 2012

and

recommended

approval3-0.

CEQA Comeliance: N/A

SUMMARY:

District's Aquifer Storage Recovery (ASR) related costs were previously reimbursed from a

portion

of

the User Fee collected

on

the California-American Water Company bill. Since

May

2011, the

District has not

been

able to collect the User Fee.

Exhibit

11-A is the Annual Status Report on the 1.2%

Water User Fee used to reimburse the ASR costs. As the report indicates, expenditures for the stated purpose

through Fiscal Year (FY) 2011-12 totaled 4,364,445 and revenue collected are 2,176,021, leaving a balance

of approximately 2,188,625. to

be

collected. The remaining balance has been used from District reserve

funds

and the

Bank of

America credit line. Staff is proposing that the District borrow funds from Rabobank,

N.A. (Rabobank) to replenish the reserves including paying off the credit line, deposit to the Water Supply

Capital Account to fund a portion of the current

year

ASR costs or

be

reserved for

other

water supply related

costs, and fund newly created debt reserve fund and rate stabilization fund.

A breakdown of the proposed borrowing is as follows:

Reimburse Reserves

Pay

Credit Line

Deposit to Water Supply Account

Rate Stabilization Fund

Debt Reserve Fund

Loan Origination Fees

Total Loan Amount

1,463,562

725,063

1,496,101

55,055

220,219

40,000

4,000,000

RECOMMENDATION:

Staff recommends adopting Resolution No. 2012-15 Exhibit 11-B) to obtain a

loan with Rabobank, N.A. in an amount not-to-exceed 4 million for ASR and other water supply related

costs as per the terms outlined in

Exhibit

11-C and this staff note.

BACKGROUND: On December 8, 2008, the Board of Directors adopted Ordinance No. 138, An Ordinance

of

the Board

of

Directors

of

the Monterey Peninsula Water Management District to Re-authorize a Water

User Fee

to

Fund Aquifer Storage and Recovery and Related Water Supply Projects. In addition to

re-authorizing and extending the 1.2% portion of the

water

user fee for the stated purpose, the Resolution

required

that

the Board of Directors hold a public hearing each

year in

conjunction with review of the annual

District budget to review the amounts collected

and

expended in relation to the purposes for which the fee

was imposed. Since May 2011, the District has been unable to collect the 1.2%

user

fee from the Cal-Am

customers.

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BOARD MEETING--DECEMBER 10, 20 12--ITEM 11--CON... http://www.mpwm:l.dst.ea.us/asd/board/boardpacket/2012/20 1212101

The District has used its reserves and credit line to fund the ASR project in anticipation of getting reimbursed

from the User Fee. Since the User Fee

is

not available, these funds remain outstanding. Staff proposes that

District borrow funds from Rabobank to replenish the reserves and pay

off the credit line. The semi-annual

payment for the loan will be paid from the newly established Water Supply Charge.

Staff contacted Bank ofAmerica, N.A. (BofA),

US

Bank, and Rabobank to solicit proposals for a commercial

term loan. BofA and

US

Bank declined to submit a proposal until after at least a 6 month history

of

collections. Attached as

Exhibit 11 C is

Rabobank's proposal.

The Rabobank proposal stipulates creating and maintaining a reserve fund

in

the amount of 1 year of debt

service.

t

also requires a rate covenant

of

1.25x maximum annual debt service, meaning that Water Supply

Charge revenues minus operating expenses related to the water supply activities will, in every year, be at least

1.25% of debt service due

in

that year.. The interest rate

is

to be fixed at 3.6% per year, with 30 year

amortization and a

10

year maturity. The District will have a balloon payment of the outstanding principal at

the end of 10 years. However, there

is

no pre-payment penalty if the District chose to repay the loan before

the maturity date. District's Water Supply Charge will be pledged as security for the loan.

The schedule

of

repayment

is

included

in Exhibit 11 D.

The payoff balance in year 10

is

3.1 million and

would have to be refmanced or repaid from reserves at that time.

EXHIBITS

11 A

Annual Status Report on 1.2% Water User Fee

11 B

Resolution 2012-15

11 C

Rabobank Terms and Conditions

11 D Calculation ofDebt Service

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L/cdl

Decision 13-01-040 January 24, 2013

Date of Issuance

January 25, 2013

BEFORE

THE PUBLIC

UTILITIES COMMISSION OF

THE

STATE OF CALIFORNIA

In the Matter

of

the Application

of


(U21 OW for an Order Authorizing the


of

the Monterey

Appendix VOL 3 of 3 (X149368).pdf

Documents

Transcript of Appendix VOL 3 of 3 (X149368).pdf