ITEM: ACTION ITEMS

1. DISCUSS ACTION TO BE TAKEN ON WATER SUPPLY PROJECT INITIATIVE

A. CONSIDER RECEPTION OF PHASE 1 ENGINEERING REPORT ON LOCAL ALTERNATIVES FOR WATER SUPPLY PROJECT EIR

Meeting Date: March 27, 2003 Budgeted: see Item 1-C

Program/Line Item No.: 1-5-2

Staff Contact: Henrietta Stern Cost Estimate: N/A

General Counsel Approval: Staff note not reviewed

Committee Recommendation: Staff note not reviewed by committee

CEQA Compliance: EIR in progress

SUMMARY: The Board will hear a presentation on the Phase 1 engineering study of local water supply alternatives prepared by Camp Dresser McKee (CDM). This information will be used to assess impacts of various facilities in the Draft Environmental Impact Report (DEIR) for a long-term water supply project for the Monterey Peninsula. Attached as Exhibit 1-A is the cover letter and Executive Summary of the March 2003 Phase 1 report, which was previously transmitted to the Board and is available at the District office for public review. The report addresses the maximum size of projects that could be built and develops combinations of projects to meet three California-American Water Company (Cal-Am) production goals previously identified by the Board. Capital and operating cost estimates are also presented based on engineering analysis of all components of the water project options, including different pipeline alignments and other facilities. The report used information in the Draft and Final “Plan B” Report prepared by the California Public Utilities Commission (CPUC) as a baseline, then refined and amended this information based on more recent data, consultation with affected cities and agencies, and an independent engineering analysis.

In their cover letter, the consultant makes the following conclusions:

Ø Desalination at Sand City is limited to 6,000 AFY [roughly 5-6 MGD] with radial wells. Horizontal directionally drilled (HDD) wells [“slant drilling”] are a promising technology that could boost production to 11,000 AFY (10 MGD).

Ø However, this assessment is based on limited data and field investigations are recommended in Phase 2 to confirm the HDD technology to a seawater environment in the local hydrogeologic setting.

Ø The largest size desalination project has capital costs in the $176 to $216 million range with a unit cost of $2,300-$2,500/AF.

Ø There are many institutional issues associated with local desalination which should be addressed. A fatal-flaw analysis was not part of the Phase 1 scope and should be performed early in Phase 2.

Ø A small ASR project could readily be integrated in to the existing Cal-Am system; a larger ASR project would require extensive facilities and has significant implementation issues.

Ø A smaller ASR project (roughly 700 AFY) is considered to be practicable while a larger ASR project (3,200 AFY) is not.

Ø A smaller ASR project (3 injection wells) has an estimated cost of $21 million and a unit cost of $2,800/AF.

It should be noted that conclusions about the maximum capacity of the small ASR differ between CDM and MPWMD staff, but are roughly in the same general range (1,000 AFY + 300 AFY). Conclusions partly depend on operations scenarios and assumptions encoded in groundwater models and other analytic tools used to predict capacity.

RECOMMENDATION: Staff recommends that the Board receive the report, hear the presentation by CDM, and ask questions of the consultant. No action is needed for this item, as policy questions raised by the report are included in Items 1-B and 1-C.

BACKGROUND AND DISCUSSION: At its March 18, 2002 meeting, the District Board authorized retention of JSA and its primary subcontractor CDM to carry out Phase 1 tasks associated with preparation of a long-term water project EIR for a not-to-exceed amount of $723,775. The primary Phase 1 goal is to define the water supply alternatives and scope of study of the Draft EIR. Please see Item 1-C for a detailed overview.

At its August 29, 2002 meeting, the Board concurred that time was needed to obtain the CPUC Plan B engineering data that had been withheld by California-American Water Company (Cal-Am) and the California Public Utilities Commission (CPUC), which was subsequently provided; review and assess the Plan B Final Report released by the CPUC in August 2002; and complete the Phase 1 engineering report. A detailed engineering update was provided by CDM to the Board at its November 14, 2002 strategic planning session.

In Fall 2002 through January 2003, CDM held several meetings with local jurisdictions about specific water supply facility locations and components.

At its January 30, 2003 meeting, the Board directed that a Phase 2 DEIR scope of work should focus on project-level evaluation of a large desalination project in the Sand City area, producing up to 11,000 acre-feet per year (AFY), combined with a small Seaside Basin aquifer storage and recovery (ASR) project, producing less than 1,000 AFY. Most recently, some Board members have expressed an interest in evaluating only a Sand City area desalination plant that would lawfully meet the existing Cal-Am production.

On February 11, 2003, Cal-Am announced its plans to construct a 9,400 AFY Moss Landing desalination plant combined with a small (1,300 AFY) Seaside Basin ASR project. Cal-Am calls this proposal the Coastal Water Project (CWP), formerly known as “Plan B”.

In December 2002 and February 2003, CDM submitted interim drafts of the Phase 1 engineering report for internal staff detailed review; a formal draft was prepared for presentation on March 27, 2003. With the remaining funds available in the Phase 1 budget, consultants addressed various options for seawater collection and brine disposal for a local desalination plant.

IMPACT ON RESOURCES: The Phase 1 report was budgeted as part of the Phase 1 contract with Jones & Stokes Associates (JSA), for which CDM is a subcontractor. If additional study is needed, the work will need to be part of the Phase 2 scope of work with JSA (see Item 1-C).

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