ITEM: PUBLIC HEARING

13. REVIEW PROVISIONS OF ORDINANCE NO. 92, EXPANDED CONSERVATION AND STANDBY RATIONING PLAN

Meeting Date: January 29, 2004 Budgeted: N/A

Program/Line Item No.: N/A

Staff Contact: Stephanie Pintar

General Counsel Approval: N/A

Committee Recommendation: The Water Demand Committee recommends no changes to the ordinance at this time (January 20, 2004).

CEQA Compliance: N/A

SUMMARY: Ordinance No. 92 (Exhibit 13-A) was unanimously adopted by the Board on January 28, 1999, and was implemented on March 1, 1999. The ordinance requires Board review every five years, with the first review in January 2004. The January 2004 review will include a public hearing to consider whether or not a state of water supply emergency continues, and whether or not the provisions of this ordinance shall be continued, modified, or rescinded.

The Peninsula’s Water Supply Emergency is chronic. Using its powers under Section 332 of the MPWMD Law, it was originally declared in 1990 with implementation of Supply Option V of the Water Allocation Program Environmental Impact Report and was substantiated in April 1991 upon adoption of Ordinance No. 54. State Water Resources Control Board (SWRCB) Order No. 95-10 in 1995 added another layer to the existing Water Supply Emergency by enforcing water production restrictions with substantial fines. Ordinance No. 92 helps the community stay within the limits set by the SWRCB through mandatory conservation measures and helps the community respond to physical drought or unexpected emergencies through mandatory rationing.

RECOMMENDATION: The Board should determine that a Water Supply Emergency persists

and continue Ordinance No. 92 unchanged. Unless the Board directs a more frequent review, the next review of the ordinance will take place in January 2009 or upon modification of SWRCB Order No. 95-10. At its January 20, 2004 meeting, the Water Demand Committee unanimously (3-0) supported the recommendation to continue the ordinance unchanged.

BACKGROUND: The District’s plan encompasses lessons learned from past rationing on the Peninsula, plans from other areas, and comments from the public. A fundamental consideration in the design of the program was to keep it simple. The District’s expanded water conservation and rationing plan was designed to achieve three goals:

1. Ensure that California-American Water Company (Cal-Am) meets the Carmel River water diversion goals set by the SWRCB. This is accomplished by focusing the first three stages of the program on users of water from the Monterey Peninsula Water Resources System.

2. Prolong water supplies during times of drought. The program responds with a “per-capita” rationing response plan in the event of drought. Residential users will be rationed with an equal amount of water for each person (per capita) based on a reduction in the system-wide percentage of residential use. Non-residential users will be required to ration to an equivalent extent.

3. Provide a method to reduce water use immediately in an unexpected emergency situation. The drought response rationing plan can be implemented to provide relief during an unexpected emergency situation.

After months of working closely with Cal-Am and local community leaders through the District’s Technical Advisory Committee (TAC), Policy Advisory Committee (PAC), and with a community group comprised of representatives from multiple interests, including residential and commercial users, Ordinance No. 92 was presented to the Board in the Fall of 1998 and adopted in January 1999.

The following is a summary of the seven stages of the Plan:

Stage 1 Stage 1 Water Conservation unified the District’s conservation program with Cal-Am’s. It applies only to water users of Cal-Am that receive water from the Monterey Peninsula Water Resources System (MPWRS). Hidden Hills and Ryan Ranch are exempt from the first three stages of the Plan as they receive water from sources outside the MPWRS. During Stage 1 Water Conservation, action is taken to prepare for more intensive conservation or rationing by undertaking a census of Cal-Am customers and preparing landscape water budgets for specific outdoor water uses.

Stage 2 Stage 2 Water Conservation requires large landscape irrigators and irrigators with separate landscape water meters to comply with the water budgets established in Stage 1 Water Conservation.

Stage 3 Stage 3 Water Conservation uses Cal-Am’s conservation tariff rate design. Excess use rates and/or water waste fees for use above the base rate is used to control water use.

Stage 4 Stage 4 Water Rationing is the first stage that responds to a water shortage resulting from drought conditions. This stage uses excess use rates and notices to all water distribution systems and private wells affected by the supply limitation to achieve a 15 percent system-wide reduction goal. During this stage, a census of all non-Cal-Am water users within the MPWRS or within other impacted resource system(s) is conducted.

Stage 5 Stage 5 Water Rationing begins the per-capita rationing program and is implemented during “medium risk” water supply conditions. Stage 5 requires a 20 percent system-wide reduction. All customers are rationed equally by category, with every residential water user getting an equal portion of the water available to residential users. Also, during Stage 5, there is a moratorium on water permits that intensify water use capacity, and “water banks” are available for every customer.

Stage 6 Stage 6 Water Rationing is the response to “high risk” water supply conditions and requires a 35 percent system-wide reduction. Stage 6 Water Rationing also enacts a moratorium on water permits that propose to use public or private water use credits. Restrictions on non-essential outdoor water use may occur during this stage.

Stage 7 Stage 7 Water Rationing is the response to “extreme” water supply conditions and requires a 50 percent system-wide reduction. Restrictions on non-essential outdoor water use may also occur during this stage.

Since its inception, Cal-Am customers have moved from Stage 1 to Stages 2 and 3 one time, in Water Year 1999-2000. During that year, the monthly target was exceeded in December 1999, moving Cal-Am into Stage 2 on January 2000. Stage 3 followed in February 2000, and Cal-Am water use remained above the monthly goal until July 2000, where it has remained within the monthly target until October 2003.Cal-Am exceeded the monthly target in October 2003 by 46.2 acre-feet and was notified to take actions to reduce water use and to provide the District with an accounting of its system losses for the previous year. The District contacted Cal-Am on October 23, 2003.

Cal-Am Vice President and Division Manager Steve Leonard responded to the District on November 21, 2003 (Exhibit 13-B). Cal-Am has successfully maintained its water use within the monthly targets since the end of October 2003. The community entered January 2004 with a cushion of 131.5 acre-feet of water. System unaccounted for losses were reported by Mr. Leonard to be 9.3 percent (1,371.4 acre-feet) for the twelve-month period ending September 30, 2003. This is above the desired loss of 7 percent that is indicated in Ordinance No. 92. Cal-Am indicates that they will be conducting additional leak detection surveys within their system and calibrating production and large meters to reduce the unaccounted for water use.

Cal-Am’s “conservation tariff” rate structure was put into place for the first time during Stage 3 in March 2000. As the public requested a “per capita” rationing plan repeatedly during development of the plan, District Ordinance No. 92 employs both a census-based tariff rate design and a per-capita ration. The census-based conservation tariff rate design assigns a base rate to each customer that reflects the number of persons in a home and the size of the property. From the base rate, water costs increase as use increases. Although the rates were not implemented until April-May 2000, the change in the rate structure was effective during the remainder of the water year and for the first two months of the next water year. Although the community was able to maintain water use within the monthly targets during Water Year 2000-2001, Cal-Am petitioned the Public Utilities Commission to allow the conservation tariff rate structure to remain in place year-round beginning in January 2002. The PUC approved Cal-Am’s request and the conservation tariff rate structure is permanently in place in Cal-Am’s Monterey Division.

During Stage 5 and higher levels of water rationing, each residential user will be assigned an equal portion of the water available to residential users. The strength of a per-capita rationing system is that all residents are treated equally. Similar to the residential per-capita rations, non-residential

users must also reduce according to the amount of the overall water supply used.

Cal-Am tracks monthly water use for the following non-residential water use categories: Commercial, Industrial, Public Authority, Golf Course, Other, and Non-Revenue Metered Use. From October 1, 2002 through September 30, 2003, residential users consumed 78 percent of the total Cal-Am water sales and commercial uses consumed 21 percent of the total water produced by Cal-Am (or 24 percent of the total Cal-Am water sales). Other users reported by Cal-Am include industrial users, public authority users, other users, and non-revenue metered users. In addition, water used for well irrigation, non-revenue un-metered uses and unaccounted for water use is reported. The proposed plan reduces water use in each user category by the reduction amount selected by the Board.

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