California American Water - Water Distribution System                            
  Quarterly Water Supply Strategy and Budget: July - September 2004                              
                                   
  Proposed Production Values by Source in Acre-Feet                              
  Assuming Below Normal Inflow Conditions                              
                                     
  SOURCE MONTH   YEAR TO DATE                              
    Jul-04 Aug-04 Sep-04   Oct-03 - May-04 Percent                              
                                             
  San Clemente Reservoir 0 0 0   0 0.0%                              
                                       
  Carmel Valley Aquifer                                    
     Upper 31 31 30   438 4.7%                              
     Lower 1,009 1,029 880   6,980 75.5%                              
                                       
  Seaside Ground Water Basin                                    
  Coastal Subareas 540 540 540   1,828 19.8%                              
                                       
      Subtotals:                                    
         -- Production 1,580 1,600 1,450   9,086                                
         -- Seaside Injection 0 0 0   160                                
  Total 1,580 1,600 1,450   9,246 100.0%                              
                                             
                                 
Notes:
1.  The budget reflects "below normal" inflow conditions and assumes that the monthly inflows at the San Clemente Dam site during the July-September 2004 period will equal 68%of the median inflow, based on the 1902-1996 simulated period of record.
2.  The annual budget period corresponds to the Water Year, which begins on October 1 and ends on September 30 of the following year.
3.  Anticipated annual production is based on Cal-Am producing a maximum of 15,285 acre-feet (AF) from its sources in the Carmel Valley and Seaside areas.  Specifically, this maximum includes no more than 11,285 AF from the Carmel River Basin and no more than 4,000 AF from the coastal subareas of the Seaside Ground Water Basin.  Monthly production estimates were calculated by multiplying the maximum annual production by the average percentage of annual production that is expected to occur each month, based on monthly production data from Water Years 1988-1997.  These estimates were adjusted to include an average of approximately 3% less production to comply with SWRCB Order WR 95-10.
4. Anticipated production for "Seaside Injection" is based on an average diversion rate of approximately 1,000 gallons per minute (gpm) or 4.4 AF per day from Cal-Am's sources in the Carmel River Basin. "Total" monthly Cal-Am includes water for customer needs and water for injection into the Seaside Ground Water Basin.
5.  No surface water diversions from San Clemente Reservoir are assumed for this period based on concerns regarding water quality (elevated turbidity) and water levels in the reservoir due to the San Clemente Reservoir Drawdown Project.