July 29, 2004

CALL TO ORDER /ROLL CALL

The meeting was called to order at 7:00 PM in the Monterey City Council Chambers.

Directors present:

Alvin Edwards, Chair – Division 1

Larry Foy, Vice Chair – Division 5

Judi Lehman – Division 2

Kristi Markey – Division 3, arrived at 7:10 PM

Michelle Knight – Division 4

David Pendergrass – Mayoral Representative

David Potter – Monterey County Board of Supervisors, arrived at 7:07 PM

Directors absent: None

General Manager present: David A. Berger

District Counsel present: David C. Laredo

ORAL COMMUNICATIONS

No comments were directed to the Board.

Director Edwards announced that production from the Carmel River in the California American Water (Cal-Am) system was 6 acre-feet under the year-to-date at month-end target. He thanked Cal-Am and its customers, and golf course operators who delayed greens flushing operations for their conservation efforts.

CONSENT CALENDAR

1. Consider Adoption of Resolution 2004-13 Approving a New Memorandum of Understanding between the Monterey Peninsula Water Management District and the Confidential Staff Bargaining Unit

On a motion by Director Pendergrass and second by Director Foy, the Memorandum of Understanding was approved unanimously on a vote of 5 – 0. Directors Edwards, Foy, Lehman, Knight and Pendergrass voted in favor of the motion. Directors Markey and Potter were absent.

PRESENTATIONS

2. California American Water/Monterey County Coastal Water Project

On file at the District office is a presentation prepared by the project proponents. Fred Feizollahi, Senior Operations Engineer, California American Water was the first presenter. He spoke to slides 1 through 8. He emphasized the importance of community outreach and receipt of public input during the project development process. He noted that Cal-Am is interested in any sound idea and alternative that it determines to be better, cheaper, faster and more acceptable to the community than any other project.

Curtis Weeks, General Manager of the Monterey County Water Resources Agency, presented slides 9 through 12. He stated that design, cost and ratepayer information has not yet been developed, but could be brought before the Board when available. He explained that the goal of the public/private partnership is that the public would ultimately own the project. He noted that the Public Utilities Commission (PUC) has acknowledged that this will be a public asset that should be “captured in the public’s hands.” Mr. Weeks proposed that after the project has been designed, built and operated for a “relatively small number of years,” the facilities could be transferred to the Monterey County Water Resources Agency. The public would then be responsible for the cost of operation and maintenance. Mr. Weeks said that he had conducted one meeting with David Berger of the Monterey Peninsula Water Management District (MPWMD) about bringing the MPWMD in as a third partner with the addition of an aquifer storage and recovery (ASR) component. He stated that a phased approach or modular design could be taken in development of the project, and that the initial phase would entail sizing of the pipeline.

Larry Gallery, Project Engineer for RBF Consulting, presented slides 12 through 33 related to the project description, environmental process, time line and permit coordination. He proposed preparation of a Proponents Environmental Assessment (PEA) as required by the PUC that would ultimately serve as a draft Environmental Impact Report (EIR). The plan is to utilize the existing Duke Energy (Duke) power plant seawater intake and outfall pipelines which have a current NPDES permit. Construction of a pilot plant could begin in January 2005 at the Duke site and would be operated for one year during the PEA preparation process. The coastal development permit could be obtained by the fall of 2006. Design and construction would follow. The goal of pipeline design is to align the majority of the pipelines within the railroad right-of-way to minimize environmental impacts. Operation of the desalination facility and Duke’s power generation function would be fully integrated, so that Duke’s normal operating hours would be unchanged.

3. Pajaro/Sunny Mesa Community Services District Desalination Project

Marc Del Piero, an attorney for the Pajaro/Sunny Mesa Community Services District (P/SM) was the first presenter who spoke on the North Monterey County Desalination Project. A copy of the presentation is on file at the District office. Mr. Del Piero reviewed slides 1 and 2. He explained that P/SM serves approximately 5,000 connections in Moss Landing and North Monterey County, including the former Alco Water Company service area. Presently only one well serves Moss Landing, and since seawater intrusion is a problem in the coastal area, P/SM began investigations a year ago into development of a seawater desalination project. P/SM has obtained a lease on the former National Refractories property and plans to utilize its intake and outfall facilities. Mr. Del Piero stated that the P/SM Board of Directors has indicated its willingness to work with the MPWMD or any agency interested in providing the best quality water for the lowest cost to constituencies in Monterey County.

Fred Neal, Senior Project Manager for P/SMs engineering consultant Kennedy/Jenks Consultants, presented slides 3 through 5. Pipeline alignment is currently in design phase, they propose both public and private right-of-way access. The private easements could be beneficial in overcoming some permitting issues. Utilizing Monterey County’s railroad right-of-way could make the pipeline cost effective. The pipeline would end at the Seaside Basin because this project could be part of an overall plan to meet the water needs of Monterey County. One alternative is to utilize cooling water from the Duke plant in P/SM’s desalination facility at the National Refractories site.

Val Frenkel, Principal Process Engineer for Kennedy/Jenks Consultants, presented slides 6 through 15, and reviewed the components of a desalination plant and process. The proposed pilot project will be open to the public and will simulate operation of a full-scale project. The quality of treated water will be tested, and brine discharge will be modeled and evaluated. The pilot project will utilize both conventional and integrated membrane reverse osmosis technology for pre-treatment, in order to determine which method will produce the best results. Mr. Frankel explained that using membrane technology, 5 gallons of desalinated water can be produced in one minute. The energy recovery process is an important factor in plant operation. Energy recovery occurs when the desalinated water is separated from the discharge water and brine. About 45 percent of the entire plant operation is recovered as energy that is used to operate the equipment. It allows the return of more than 90 percent of the discharge energy of the half-capacity of that water.

Marc Del Piero presented slides 16 and 17. He stated that P/SM would be lead agency for the desalination project. National Refractories has a permit to discharge 70 acre-feet of water per year from its outfall; however, a new NPDES permit will be required for brine discharge. One alternative is to utilize cooling water from the Duke power plant in order to reduce the environmental impacts of brine discharge. During the hours when Duke is not operating, the National Refractories intake and outfall could be utilized. Mr. Del Piero explained that P/SM must develop a desalination project to meet the needs of its constituents. He invited the MPWMD to partner with P/SM.

4. Overview of MPWMD Desalination Concept in Sand City Area

Henrietta Stern, Project Manager for the MPWMD, gave a presentation that is on file at the District office. She described the offshore and onshore horizontal directionally drilled (HDD) well technologies that were studied in Phase 1 of the District’s studies of a Sand City desalination project. The proposed project would provide 8,409 acre-feet per year of water, and assumes a reduction in pumping from the Seaside basin of 500 acre-feet. Program level studies showed that the offshore HDD technology was determined to not be feasible in the Sand City area. It was also determined that offshore HDD disposal wells in the Fort Ord area would not be feasible and that an outfall pipeline might need to be constructed for brine disposal. Studies also concluded that radial wells and onshore HDD wells are feasible intake options. Other alternatives studied in the EIR are no project, a large aquifer storage and recovery project along with desalination, Carmel River Dam and Reservoir, and a desalination plant at Moss Landing as proposed by the Public Utilities Commission in the Plan B report. Ms. Stern noted that construction of the HDD and radial wells would change the flow of water through the shallow dunes in the Sand City area, which would adversely affect the operation of any small desalination plant that the City of Sand City may propose. The MPWMDs EIR is 95 percent complete, but the Board of Directors has not yet authorized the report to be finalized and distributed for comment. Ms. Stern reviewed the feasible desalination project options utilizing a combination of radial wells, onshore HDD wells and an ASR component.

5. Update on MPWMD Seaside Basin Aquifer Storage and Recovery (ASR) Project

Joseph Oliver, Water Resources Manager for the District, gave the presentation. A copy is on file at the District office. Mr. Oliver described the boundaries of the hydrologic subareas of the Seaside groundwater basin. He recounted the history of development of the ASR project and described the current status of the project. Since 1998, approximately 1,100 acre-feet of excess water from the Carmel River Basin has been injected into the Coastal area of the Seaside basin. Staff is developing plans and cost estimates for a second injection well. The District has also applied for permanent water rights for a long-term ASR project.

Question and Answer Period

The project proponents responded to questions from the Board, District staff and members of the public. Responses to the questions are recorded on Attachment A.

PUBLIC COMMENT PERIOD

The following comments were received from the public. (1) Lou Haddad asked that all project proponents present cost estimates. He suggested that in order to ensure that the cost estimates are realistic, each applicant should agree to post a bond to ensure they are within ten percent of the final cost of delivering water to the Cal-Am facilities. (2) Jim Willoughby, a resident of Pacific Grove, spoke in support of the North Monterey County Desalination Project, because he believes that Nadar Agha could develop the project within 18 months for half the cost of the Coastal Water Project. (3) Al Spalino, a resident of Monterey County, urged the Board to support the P/SM project because it could produce good quality water at a significant savings in cost to the consumer. (4) John Fischer, a resident of Pacific Grove, stated that a decision must be made soon on which project will be pursued to avoid a duplication in planning costs. Project operating costs must also be discussed. He urged all parties to get together and decide what should be done about the water supply problem. (5) Heather Allen, a resident of Monterey representing the Friends of the Sea Otter, stated that it would be inefficient to utilize antiquated cooling systems at the Duke plant as source water. Instead, she advocated the use of modern and efficient desalination technologies that would minimize project operating costs and harm to the environment. (6) David Dilworth, representing Helping Our Peninsula’s Environment, advised the Board that before a decision is made, it should consider the distinct differences between the competing projects related to cost, time line, growth component, public ownership, and the opportunity for a public vote. (7) Brad Damitz, representing the Monterey Bay National Marine Sanctuary (MBNMS), recommended that any decisions made by the District regarding desalination undergo a comprehensive analysis of the environmental impacts including site specific and cumulative impacts. He noted that the MBNMS has determined that a regional approach to desalination is preferred, but no decision has been made yet as to whether that means one desalination plant for the region, or several small, well designed plants. (8) Nadar Agha stated that initially he contacted Cal Am about development of a desalination plant at the National Refractories site, but company representatives told him they were only interested in a project that would provide 10,700 acre-feet of water. He then contacted Marc Del Piero and soon after entered into an agreement with P/SM for a publicly owned and operated project. He expressed confidence in the ability of P/SM to develop a cost effective project. (9) Conner Everets, Co-Chair of the Statewide Desal Environmental Working Group, urged the Board to take enough time to analyze the projects completely. (10) Robert Greenwood, representing the Carmel Valley Association, asked if the North Monterey County Desalination Project would give the MPWMD first priority for the water produced from the project. (11) Ray Worrell, a resident of Monterey and former Cal-Am employee, noted that groundwater runoff at his property in New Monterey has filled a 1,500 gallon tank. He suggested that capturing runoff in that area could be a potential source of water for the community.

ADJOURNMENT

The meeting was adjourned at 11:20 PM.

David A. Berger,

Secretary to the Board

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