EXHIBIT 12-A

MONTEREY PENINSULA WATER MANAGEMENT DISTRICT

STRATEGIC PLAN (FINAL)

April 19, 2007 through September 30, 2007

Adopted May 21, 2007

MISSION STATEMENT

The mission of the Monterey Peninsula Water Management District (MPWMD) is to manage,

augment and protect water resources for the benefit of the community and the environment.

VISION STATEMENT

The MPWMD:

1) will strive to serve as a catalyst in collaboration with public and private entities for environmentally responsible solutions that result in a reliable and legal water supply; and

2) shall be a fiscally responsible, professionally and publicly respected leader in

managing water resources.

CORE VALUES

(Not in priority order)

MPWMD values…

Collaboration and teamwork

Ethical behavior

Environmental responsibility

Fiscal responsibility

Quality service internally and externally

Professionalism

Technical accuracy

A positive attitude

THREE-YEAR GOALS

(2006-2009 * Not in priority order)

Establish respectful and effective relationships among the District, public, CAW, jurisdictions and the Watermaster

Determine and participate in long-term water supply solution(s)

Complete ASR Phase 1 and expanded ASR Project(s)

Enhance revenue from external resources

Enhance and protect the water resources of the Carmel River and the Seaside Ground Water Basin for the benefit of the environment and the community

FINAL

MONTEREY PENINSULA WATER MANAGEMENT DISTRICT

SIX-MONTH STRATEGIC OBJECTIVES

April 19, 2007 – September 30, 2007

October 15, 2007 Update

B THREE-YEAR GOAL: Establish respectful and effective relationships among the District, CAW, public, jurisdictions and the Water Master

WHEN	WHO	WHAT	STATUS			COMMENTS
			DONE	ON TARGET	REVISED
1. On Aug. 30, 2007	Board	Hold a special meeting with the CAW General Manager to learn about the operation and regulation of CAW Monterey Division (see suggestion #1 from attached document approved by the Board on 2/22/07).	ü			Meeting conducted August 30, 2007 at 7 PM in the District Conference Room. Meeting was cablecast beginning 9/8/07 on Channels 25 and 28.
2. By Aug. 31, 2007 By Sept. 30, 2007 By Oct. 31, 2007 By Nov. 30, 2007	General Manager (lead) and the Public Information Coordinator	Develop and implement a procedure to implement suggestions #3 and #4 from the document approved on 2/22/07 for improving understanding and cooperation between CAW and MPWMD (see attachment at the end of this record).			ü	To be discussed at October Public Outreach Committee meeting. Target completion date adjusted, accordingly.
3. By Sept. 30, 2007 By Oct. 31, 2007 By Nov. 19, 2007	Public Outreach Committee (Board Member Michelle Knight-lead), the General Manager and the Water Demand Manager	Develop a Public Outreach Plan to educate the public on District activities and regulation changes.			ü	Public Outreach Committee met on October to develop a plan. Will meet again to finalize plan for presentation to the Board in November. Target date adjusted, accordingly.

WHEN	WHO	WHAT	STATUS			COMMENTS
			DONE	ON TARGET	REVISED
4. By Sept. 30, 2007	General Manager (lead) and Board Members	Make a presentation to each jurisdiction regarding water issues affecting the jurisdictions.	ü			Final presentation completed on 9/11/07.
5. By Sept. 30, 2007	Water Demand Manager (lead) and TAC	Document and implement a process for educating the jurisdictions and the public on changes to District permit regulations.	ü			Process was developed and communicated to the Technical Advisory Committee on May 1, 2007. Minor amendments were made at the 11/3/07 Public Outreach Committee meeting.
6. By Sept. 30, 2007 By Nov. 30, 2007	Senior Hydrogeologist	Initiate work under the initial contract with the Seaside Basin Watermaster and determine, in conjunction with the Watermaster, the amount and type of District technical services required to complete and implement the Monitoring and Management Program (MMP).		ü		Contract work under Phase 1 implementation of the MMP began with May 1 kick-off meeting; monthly progress updates are being prepared for the Watermaster. District staff aiding Watermaster Technical Program Manager and TAC in developing MMP action plan. Target date previously adjusted for Board consideration of revised MPWMD service contract. Prepared preliminary budgets for Phase 2 MMP Tasks.

B THREE-YEAR GOAL: Determine and participate in long-term water supply solution(s)

WHEN	WHO	WHAT	STATUS			COMMENTS
			DONE	ON TARGET	REVISED
1. Ongoing	General Manager and District Counsel (co-leads)	Continue active participation in PUC Coastal Water Project (CWP) process, including environmental review and Department of Ratepayer Advocates processes.		ü		Chair and staff are regular participants on monthly REPOG meetings, and staff attended technical sub-groups.
2. Ongoing	Senior Hydrogeologist	Provide technical support or guidance to the MRWPCA for its Groundwater Replenishment Project in the Seaside Basin.		ü		Staff is participating in project coordination meetings, and providing follow-up review of technical and planning documents.
3. By June 30, 2007	General Manager	Present to the Board for consideration an MOU for participation in the Monterey Bay Regional Water Solutions Task Force to evaluate regional water solutions.	ü			Board adopted draft MOU at its June 18, 2007 meeting. Representatives of jurisdictions/ agencies involved in formation of the Monterey Bay Regional Water Authority adopted final draft MOU on 7/23/07. Distributed to jurisdictions/agencies for final approval.
4. By Sept. 30, 2007	General Manager	Present to the Board the Community Advisory Committee Report on projects listed in the matrix of water supply alternatives.	ü			Community Advisory Committee conducted final meeting and approved report to the Board on 9/11/07. Board received the report on 9/17/07.
FUTURE: By November 2007 Board meeting By Dec. 10, 2007	District Engineer (lead) and Project Manager	Refine the matrix of water supply alternatives (using the quantified supply target) to incorporate results of the revised Bookman-Edmonston/GEI report evaluating desalination projects.		ü		BE/GEI draft report received by Board on 7/18/07. Three comments received by 8/17/07 deadline.

C THREE-YEAR GOAL: Complete ASR Phase 1 and expanded ASR Project(s)

ASR PHASE 1 OBJECTIVES:

WHEN	WHO	WHAT	STATUS			COMMENTS
			DONE	ON TARGET	REVISED
1. By May 31, 2007 By Oct. 31, 2007 By Dec. 2007	District Engineer	Secure SWRCB water rights permit for Phase 1 ASR project (if not, ASR team will prepare for water rights hearing).			ü	Protests by CDFG and NMFS withdrawn and hearing cancelled. SWRCB Water Rights Division staff preparing amended permits for Phase 1 ASR Project with December 2007 goal for permit issuance. Target date adjusted accordingly.
2. By Sept. 30, 2007 By Dec. 31, 2007	Senior Hydrogeologist	Complete Well #2 for Phase 1 ASR, including final facilities design and contractor selection.		ü		Staff and consultant work on facilities design underway, but completion delayed by expanded ASR evaluation. Prepared designs plans for initial facilities construction
3. By Sept. 30, 2007 By Oct. 31, 2007 By Nov. 30, 2007	Senior Hydrogeologist	Determine the feasibility of a dual-well injection test and report the results to the General Manager.			ü	Coordination meeting with MCWD and MCWRA held on 6/5/07. ASR coordination agreement drafted. MCWRA action pending and MCWD Board consideration delayed. Target completion date adjusted, accordingly.
4. By Sept. 30, 2007 By Dec. 31, 2007	Senior Hydrogeologist, in cooperation with CAW	Facilitate determination and schedule for completion of necessary infrastructure improvements to the CAW system to ensure they are in place to support Phase 1 ASR.			ü	ASR coordination meeting held with CAW 4/18/07 and 10/2/07. Follow-up work in process. Target completion date adjusted, accordingly.
5. By Sept. 30, 2007 By Oct. 31, 2007 By Nov. 30, 2007	District Counsel	Confirm water storage rights with the Watermaster.			ü	Opinion by District Counsel has been prepared. District staff will notify and make presentation to Watermaster. Target date adjusted accordingly.

EXPANDED ASR PROJECT(S) OBJECTIVES:

WHEN	WHO	WHAT	STATUS			COMMENTS
			DONE	ON TARGET	REVISED
1. By June 30, 2007 By Nov. 30, 2007	Team Water Rights (General Manager-lead, General Counsel, District Engineer, Water Resources Manager, Senior Hydrogeologist and Senior Fisheries Biologist)	Complete negotiations with CAW for joint ownership of water rights, to obtain future ASR and other water rights permit(s).		ü		No progress since December 2006. Focus has been securing water rights for Phase 1 ASR Project.
2. By Aug. 31, 2007 By Sept. 30, 2007 By Nov. 30, 2007	Water Resources Manager, in cooperation with CAW	Develop a project description and yield estimate for expanded ASR and present to the Board.		ü		Staff provided comments on a draft Technical Memorandum describing a Conceptual Development Plan for an Expanded ASR Project. Coordination and assistance to CAW consultants continues.

DTHREE-YEAR GOAL: Enhance revenue from external resources

WHEN	WHO	WHAT	STATUS			COMMENTS
			DONE	ON TARGET	REVISED
1. By May 31, 2007 By June 30, 2007 By July 30, 2007 By Aug. 31, 2007 By Sept. 30, 2007	General Manager (lead) and Water Demand Manager	Complete reimbursement agreement for the Conservation Program with CAW.	ü			Draft agreement sent to CAW 4/22/07; CAW comments received; CAW reviewing revised, final draft. Board adopted agreement on 9/17/07.
2. By June 30, 2007 By Aug. 30, 2007 By Nov. 30, 2007	District Engineer	Complete and submit to the Board for action the IRWMP (Integrated Regional Water Management Plan) to compete for State grant funds.		ü		Board reviewed Draft IRWMP and received initial public comment on 7/18/07. Approved MOU to form water management group to implement IRWMP. Board to consider final IRWMP 11/19/07.
3. By July 31, 2007 By Aug. 31, 2007 By Sept. 30, 2007 By Oct. 15, 2007	Water Resources Manager	Apply for 100% NMFS/CAW settlement agreement funding of the Water Intake Retrofit Project at the Sleepy Hollow Fish Rearing Facility.			ü	$684,000 included in FY 2007-08 budget. NMFS funding request is being prepared and is planned for submission by 10/15/07. Target completion date adjusted.
4. By Aug. 31, 2007 By October 2007 By Dec. 31, 2007	Chief Financial Officer (lead), Administrative Committee and the Board	Secure funding through a debt issuance for ASR Phase 1.		ü		Staff is reanalyzing “stand-alone” debt issuance. Board to consider agreement with financial advisor on 9/17/07.
5. By Sept. 30, 2007 By Nov. 30, 2007	Chief Financial Officer (lead), General Counsel and the Administrative Committee	Monitor the future CPUC rate increase requests and project potential impact on MPWMD.			ü	CAW briefing staff on next General Rate Case key assumptions continuing. Target completion date adjusted.

ETHREE-YEAR GOAL: Enhance and protect the water resources of the Carmel River and the Seaside Ground Water Basin for the benefit of the environment and the community

WHEN	WHO	WHAT	STATUS			COMMENTS
			DONE	ON TARGET	REVISED
1. Beginning immediately and ongoing	Board Member David Potter (lead) and the District Engineer	Provide support data and participate in the Big Sur Land Trust (BSLT) Carmel River Parkway Project.		ü		Staff participating in project development. BSLT staff gave presentation to the Board on 8/20/07.
2. At the August 2007 Board meeting By Sept. 17, 2007 By Oct. 15, 2007	Water Demand Manager	Present to the Board for direction the amendment of Rule 23 to reflect new metering technology.	ü			In-line metering technology is available through CAW, making it unnecessary to change Rule 23 to reflect this technology.
3. At the August 2007 Board meeting By Sept. 30, 2007 By Oct. 31, 2007 By. Nov. 19, 2007	Water Resources Manager (lead) and the Water Demand Manager	Present to the Board for their discussion a possible environmental trigger related to stream flow that would require existing conservation measures during low-flow years.			ü	Technical report on establishment of environmental trigger related to streamflow to be presented to Board on 11/19/07. Target completion date adjusted.
4. At the August 2007 Board meeting By Sept. 17, 2007 By Oct. 31, 2007	General Counsel	Present to the Board for direction an ordinance to amend the process by which the District enforces its rules and regulations.		ü		Rules & Regulations Review Committee will review concept ordinance for second time in October. Board direction set for 10/15/07.
5. By Sept. 30, 2007 By Nov. 30, 2007	Water Demand Manager (lead) and Water Resources Manager	Present to the Board for its consideration an ordinance that will include all areas of the Seaside Basin so they are subject to the Expanded Conservation and Standby Rationing Plan.		ü		Water Demand Committee will review draft ordinance in November in preparation for Board first reading on 11/19/07.

WHEN	WHO	WHAT	STATUS			COMMENTS
			DONE	ON TARGET	REVISED
6. By Sept. 30, 2007	Water Demand Manager (lead) and Water Resources Manager, working with CAW and the Seaside Municipal Water System, and in consultation with the Watermaster	Present to the Water Demand Committee a draft contingency plan to implement Stages 5-7 of the Expanded Conservation and Standby Rationing Plan in case of drought.	ü			Preliminary meetings with CAW are underway. Water Demand Committee reviewed item on 9/11 and 10/4/07.

List of Suggestions for Improving Understanding and Cooperation between California American Water and the MPWMD

Adopted February 22, 2007

1. Conduct a televised workshop on August 30, 2007 that would provide Steven Leonard, General Manager of the Monterey Division, California American Water (CAW), the opportunity to educate the Board and public about how a regulated utility is operated and funded. He could describe: (a) the physical system including the number of tanks, pumps and customers CAW serves locally; (b) the regulatory process; (c) operating costs and the interaction between capital and operations; (d) how capital budgets are developed and the associated priorities; and (e) how the Public Utility Commission regulates profits through a public process. Mr. Leonard would like to explain why customers pay higher rates for less water, and that rates pay for maintenance and operation of the entire water system, even if only 60 percent of the available water is utilized. Mr. Leonard suggested that another subsequent workshop could be focused on describing the tiered rate system. Mr. Leonard shall submit an outline of the presentation to the Public Outreach Committee for review prior to the August 30, 2007 workshop.

2. Mr. Leonard invited the District Board members to tour CAW facilities to increase their understanding of the complicated system they are regulating. The Board should make a visit to San Clemente Dam and view the siltation that has occurred. Directors should also see the Seaside Basin wells. These tours could be arranged without the participation of the press.

3. CAW could inform the District before it begins infrastructure improvements, such as replacement of a water main in a sensitive area. The District would then be prepared to make statements in support of the work when warranted. This would alleviate confusion among members of the public as to whether or not the District was in someway responsible for the project.

4. CAW and the District should jointly develop press releases on projects they are developing cooperatively.

5. For issues that have potential as publicly reported disagreements, CAW and the District commit to discussion in order to reach a common understanding of the facts, and mutual recognition of divergent perspectives.

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