EXHIBIT 13-B
ITEM:		PUBLIC HEARING
10.	Consider First Reading of Ordinance No. 137 -- Amend Regulation XV, The Expanded Water Conservation and Standby Rationing Plan
Meeting Date:			November 17, 2008	Budgeted:	N/A
From:			Darby Fuerst,	Program/	N/A
			General Manager	Line Item No.:
Prepared By:			Stephanie Pintar	Cost Estimate:	N/A
General Counsel Approval: Approved
Committee Recommendation: Recommendations of approval from Water Demand Committee, Policy Advisory Committee and Technical Advisory Committee
CEQA Compliance: Statutory Exemption under Section 15282(w) of the CEQA Guidelines (14 CCR §15282w)

SUMMARY: As part of a Settlement Agreement between MPWMD and California American Water (CAW), MPWMD agreed to amend Regulation XV, the Expanded Water Conservation and Standby Rationing Plan. The agreement called upon MPWMD to address both regulatory rationing in the event of a significant legally-compelled reduction in supply, and suspension of the water banking portion of the rationing program until either MPWMD or CAW has a database capable of tracking water banks. Consistency in noticing requirements and compliance triggers between CAW and MPWMD were also addressed. The District agreed to amend its definition of the Monterey Peninsula Water Resource System to include the Laguna Seca Subarea, in which the Ryan Ranch, Bishop and Hidden Hills subsystems of CAW operate. This latter action was taken at the September 22, 2008 Board meeting with the adoption of Ordinance No. 135. All remaining actions have been included in Ordinance No. 137 (Exhibit 10-A).

The Board reviewed draft Ordinance No. 137 at the October 20, 2008 Board meeting and referred the ordinance back to committee for review prior to first reading on November 17, 2008. The Water Demand Committee reviewed the draft ordinance and recommended approval on October 27, 2008. A joint Policy Advisory Committee (PAC)/TAC meeting was held on November 4, 2008 to discuss Ordinance No. 137. The committees unanimously supported the proposed ordinance. The ordinance was also provided to CAW for review and comment. CAW provided comments on November 12, 2008. These comments are included as Exhibit 10-B. A representative from CAW will be available at the Board meeting.

RECOMMENDATION: Staff recommends the Board adopt the first reading of Ordinance No. 137 after receiving comments from the public. If approved on first reading, the ordinance will be presented for second reading and adoption on December 8, 2008. The proposed effective date of the ordinance is December 31, 2008.

Staff is processing this ordinance under a Statutory Exemption under Section 15282(v) of the CEQA Guidelines (14 CCR §15282v). This exemption is for adoption of Urban Water Management Plans, of which a water rationing plan is one component.

DISCUSSION: While Ordinance No. 137 amends a number of significant areas in the rationing program, the main impetus for this ordinance is the necessity for response to a significant regulatory reduction in supply as could potentially occur with the State Water Resources Control Board or with action by the Seaside Watermaster. Regulation XV presently addresses only physical shortages and emergencies, with the emergency provision being a “catch all” for any regulatory reductions up to now. CAW is uncomfortable with the risk of a soft trigger and has been insistent that an automatic regulatory trigger be added. Without District action to add a regulatory trigger, CAW will pursue a rationing program of its own to respond to regulatory reductions. CAW’s stand-alone plan would result in incompatible rules for rationing. For these reasons, it is beneficial to the community to have a compatible and synchronized rationing program, and it is in MPWMD’s interest to support modifications to Regulation XV that add a regulatory trigger for rationing.

The majority of changes to Regulation XV that are proposed in Ordinance No. 137 affect only a small number of people at this time: The addition of a conservation component and a regulatory trigger to Stage 4 are the most noteworthy amendments to the lower stages of conservation/rationing. Stage 4 has a new conservation action. In the event that Stage 3 is not achieving compliance with the regulatory targets after a reasonable time, CAW must contact its Large Residential Water Users, dedicated irrigation meters, irrigated areas over three acres, and customers that use an average of 12 or more units per month over the prior year and ask for reductions in outdoor water use. A regulatory trigger has also been added to Stage 4 in the event of a legal reduction in supply of 15 percent on any water distribution system other than CAW, which is at a 15 percent reduction by way of Stages 1-3.

Significant changes to the upper rationing stages (i.e., Stages 5-7) include: recognition of water entitlements for Sand City, Pebble Beach and others having contractual agreements for water with the District; clarifications to the calculation of water rations for non-residential water users; a reduction in the minimum non-residential water ration for users that do not respond to the survey that takes into account basic water needs and CAW’s billing limitations; an expanded list of non-essential water uses that the Board may consider limiting in Stages 5-7; suspension of the expiration of Water Use Credits during Stages 6 and 7; suspension of water banking until either MPWMD or CAW can track banking within their respective data management systems or December 31, 2010, whichever is earlier; mandatory conservation conditions of approval of a rationing variance; a limitation on the number of times per week a gardener may irrigate a property; and a requirement that CAW obtain a copy of a Water Permit or a Water Distribution System Permit prior to issuing a portable water meter. On the subject of mobile water distribution systems, there remains a question about how to regulate mobile systems (i.e. water trucks) that estimate loads or report loads to CAW without use of a portable water meter.

“What amount of a regulatory reduction would cause CAW to move to Stage 5, and what would the per person ration be?” This question was repeatedly asked during the committee meetings. The answer depends on several factors, but in general, using Water Year 2006-2007 consumption data and the current Carmel River System production limit of 11,285 AFA, a 15 percent reduction in supply from the Carmel River System would elevate CAW water users to Stage 5. Higher percentage reductions from the 11,285 AFA could result in increasing levels of rationing for the entire system, as well as for any system dependent on the Main CAW system for water or for production offsets (i.e., the Laguna Seca Subarea).

A reduction of 15 percent over current levels (i.e., Stage 5) would result in per person rations of 60 gallons per person per day for single family residences based on current consumption. That quantity can be directly compared with current average consumption of 70 gallons per person per day. The use of ultra low flush toilets and other low consumption technology makes these reductions achievable without undue hardship. The joint MPWMD/CAW rebate program provides financial assistance with retrofitting to meet reductions in demand, and water savings devices are available without charge at both MPWMD and CAW offices. The ordinance also adds an absolute minimum ration for health, safety and welfare of 35 gallons per person per day. That would be the very smallest amount amount of water any resident would have as a ration, even under the most extreme conditions. In the highest stages of rationing, residential water user would be given highest priority.

The following is a rule-by-rule overview of the significant changes to Regulation XV affected by Ordinance No. 137. In general, the language of Regulation XV has been cleaned up to remove redundancy and unnecessary language. In some cases, portions of a rule that have been deleted have been relocated to the findings (e.g., Rule 161-A). The full text of Regulation XV can be found in the draft ordinance (Exhibit 10-A).

Rule 11 – Definitions

1. The definition of CAW’s subsystems as “Satellite Systems” has been deleted in response to requests by representatives of customers in the Bishop and Hidden Hills systems to be defined as separate water distribution systems. In place of “Satellite Systems,” Ordinance No. 137 defines the individual subsystems, namely Bishop, Hidden Hills and Ryan Ranch.

2. A definition for the Seaside Watermaster has been added.

3. The following definitions were clarified: Large Residential Water User, Main California American Water System, Mixed Use and Mobile Water Distribution System.

Rule 160 – General Provisions

1. Several subparagraphs of Rule 160 were moved to the findings.

2. Rule 160 eliminates the Unaccounted For Water Use exemption for the CAW subsystems, making the Board’s current standard of 7 percent apply to all CAW systems. Note that actual unaccounted for water use is used for purposes of determining Water Rations. This is necessary to ensure that Water Rations are based on actual average system-wide water losses.

Rule 161-163, Conservation Stages 1-3

1. Metering requirements for fire protection systems and landscaping adopted in Ordinance No. 135 have been relocated from Rule 162 to Rule 23.

2. Tables XV-1 and XV-2 have been amended to correct a rounding error adopted with Ordinance No. 134.

3. The Emergency Trigger for Stage 3 may apply to any Water Distribution System when enacted by Resolution of the Board.

4. Stage 3 includes a requirement that CAW notify its customers 30 days prior to implementation of emergency rates in keeping with California Public Utilities Commission (CPUC) requirements. A consistent noticing requirement in District and CAW rules was one aspect of the Settlement Agreement.

Rule 164 – Stage 4

1. A trigger for Stage 4 has been added for non-compliance with known regulatory supply limits that are presently addressed through Stage 3. This Stage 4 trigger affects all water users that are in Stage 3 when Stage 3 is ineffective after 30 days. This provision of Stage 4 impacts any Water Distribution System that relies, in whole or in part, on production or production offsets from the Main California American Water System.

2. A Stage 4 trigger has also been added for a final legal order that results in a reduction in supply of up to 15 percent. This trigger impacts any Water Distribution System other than the main CAW system, which is presently at a 15 percent reduction. Stages 2 and 3 are intended to maintain CAW consumption within the 15 percent reduction requirement.

3. When Stage 4 is triggered, the Water Distribution System Operator must notify all Large Residential Water Users, Dedicated Landscape Irrigation Meter customers, irrigators of three (3) or more acres, and customers who use more than twelve (12) units per month on average of the immediate need for them to reduce outdoor water use and irrigation to the greatest extent possible.

4. Sunset of Stage 4 may occur without Board action when regulatory compliance has been achieved. The sunset of Stage 4 may result in implementation of a lower Stage, as necessary.

5. The District’s notice to non-CAW water users has been clarified. Notification of Non-CAW Water Distribution Systems of one connection will occur by published notice rather than by individual letters. During Stage 4, MPWMD collects necessary information from non-CAW Water Distribution Systems in preparation for Stage 5 and above.

6. Additional water waste enforcement efforts have been added to Stage 4.

Rule 165 -167, Rationing Stages 5-7

1. The most significant addition to Stages 4-7 is a trigger for rationing in response to a final court action forcing production cutbacks in any Water Distribution System. The new language addresses both the Main CAW system (including any subsystem that relies on production from the Main California American Water system in any way) and any other Water Distribution System that may be subject to a final legal order that results in a reduction in supply. Implementation may be suspended in any water system that does not provide adequate consumption information for the District to implement the program.

2. Regulatory rationing as a result of a final legal order that restricts production would apply to the Laguna Seca Subarea water systems as long as those systems rely on the main system to offset their use to avoid replenishment fees or to provide emergency water supply. At this time, the CAW subsystems (i.e., Bishop, Hidden Hills and Ryan Ranch) are limited to 345 acre-feet annually (AFA). During Water Year 2008, the subsystems produced 533 AF. There are options available to CAW to eliminate the subsystems’ reliance on the main system, such as purchasing water rights from other users, developing new supplies, or paying replenishment fees.

3. Regulatory rationing triggered by a final legal order would continue until the triggering order has been lifted or no longer applies to an affected Water Distribution System.

4. Sunset of Stage 5 could result in implementation of any lower Stage.

5. Unaccounted For Water Use for rationing is calculated using the actual average for the preceding 12 months, rather than by using the Board’s Unaccounted For Water Use standard of seven percent. This is necessary to accurately account for water use and to fairly determine water rations. This action was agreed to in the August 11, 2008 Settlement Agreement.

6. Water Distribution Systems with 10 or more connections have a “ration” for Unaccounted For Water Use. There are 11 systems that meet this standard in the MPWMD.

7. The methodology for setting Non-Residential Water Rations has been expanded to include Landscape Water Budgets and BMP audits by MPWMD and CAW. The minimum non-residential ration for water users that do not respond to the survey has been reduced from two units (i.e. 50 gallons per day) to one unit (i.e. 25 gallons per day) to encourage completion of the mandatory water user survey.

8. The ration for mixed use customers was clarified to include an increment of water for each Residential Water User in the Mixed Use. Reference to a “one unit” ration has been deleted, as the ration would depend on the number of residents in each unit.

9. Golf course rations are set using the Landscape Water Budget. Recycled Water User’s rations are calculated using the methodology approved in previous contracts.
10. The Stage 5 Moratorium (Rule 165-F) adds language to recognize Water Entitlements issued by the District in keeping with the contractual agreements.

11. A minimum per person ration of 35 gallons per day has been set for each of the three rationing Stages. This standard is listed in the 2008 Drought Urban Guidebook published by the State of California, Department of Water Resources, Office of Water Use Efficiency and Transfers and applies to “inside residential use”. The data are from the Tampa (Florida) Water Department Residential Water Conservation Study: The Impacts of High Efficiency Plumbing Fixture Retrofits in Single-Family Homes, January 8, 2004. In the event that the minimum standard is set in any rationing stage, customers unable to meet the health and safety targets will receive information or a home water audit that helps them to find and repair leaks.

12. Board consideration of additional water use restrictions by Resolution has been added to each of the three rationing Stages. The language in the ordinance includes a number of suggested conservation measures that the Board may consider.

13. Suspension of Water Use Credit expiration dates has been added to Stages 6 and 7 when there is a moratorium on the use of Water Use Credits. As Water Use Credits expire at a time certain (i.e. after a total of ten years), this provision would allow the extension of the credit for the amount of time Stage 6 and/or 7 was in effect.

Rule 168 – Water Banks

1. Water Banks are suspended until (a) CAW completes the installation of its new computer system and completes the programming needed to calculate Water Banking credits; or (b) MPWMD completes computer programming needed to calculate Water Banking credits; or (c) December 31, 2010, whichever occurs first.

2. During the suspension of Water Banking, Water Users shall be excused the first time a Water Ration is exceeded in a Ration Year. Second and subsequent offenses are enforced.

Rule 169 – Water Rationing Variance

Mandatory Conditions of Approval have been added to the rationing variance section for both Residential and Non-Residential water users. These include installation of low water consumption technology and drip irrigation when an irrigation system is installed. The proposed toilet standard is 1.6 gallons per flush.

Rule 172 – Landscape Water Audits

1. A requirement that Landscape Water Audits and Budgets be completed when a Dedicated Irrigation Meter is installed was added to Rule 172.

2. The procedure for CAW to review and identify customers that require Landscape Water Audits and Landscape Water Budgets has been clarified.

3. A response time for customers to contact CAW to arrange for an audit has also been added.

4. The water schedule for properties that have a professional gardener has been clarified so that sprinkler irrigation overseen by a professional gardener or landscaper who is available on Site may occur between 9 a.m. and 5 p.m., but is not to exceed two watering days per week. Currently, there is no restriction on the number of days a property can use sprinklers during the day if a gardener is present.

Rule 175 – Water Rationing Enforcement

A flow restrictor exemption has been added for Mixed Use meters to avoid conflicts with the minimum Residential Water Ration.

Rule 23-B-2 – Mandatory Conditions for Action on an Application for a Water Permit to Connect to or Modify an Existing Water Distribution System

Requirements adopted in Ordinance No. 135 (August 18, 2008) requiring separate water meters for outdoor irrigation and fire protection are relocated to Rule 23-B-2 from Rule 161-F and Rule 161-G.

Committee Review

Draft Ordinance No. 137 was reviewed by the Water Demand Committee on September 30, 2008 and on October 27, 2008. The Technical Advisory Committee (TAC) reviewed the concept ordinance on October 7, 2008, and the joint TAC and Policy Advisory Committee (PAC) reviewed the ordinance November 4, 2008. All committees recommended approval of the draft ordinance to the Board.

A meeting between staff and representatives of the Laguna Seca Subarea’s Homeowner’s Associations is scheduled for November 13, 2008 to discuss the proposed ordinance and other recent modifications to Regulation XV. Representatives of the Laguna Seca Subarea were present at both the Water Demand and the TAC/PAC meetings.

BACKGROUND: MPWMD has been involved in water rationing planning and implementation since its inception in 1978. A water rationing plan developed by the Monterey Peninsula Water Management Agency (the predecessor to the MPWMD) was available when the MPWMD was established. The former plan was reviewed and amended in June 1981 with the adoption of MPWMD Ordinance No. 7. The rationing plan was again amended in 1988 (Ordinance Nos. 35 and 37) during drought-related rationing administered by MPWMD that continued through 1991. Water use reductions of approximately 30 percent were achieved during that time.

In 1997, the MPWMD Board of Directors tasked its staff with preparing conservation and rationing plans to address both compliance with State Water Resources Control Board (SWRCB) Order 95-10 and drought. MPWMD staff worked with a variety of community members, including CAW, to conceive and develop the Expanded Water Conservation and Standby Rationing Plan (Regulation XV), adopted as Ordinance No. 92 in 1998, amended by Ordinance No. 119 in 2005, and amended by Ordinance Nos. 134 and 135 in 2008. Regulation XV, implemented in partnership with CAW and in combination with an extensive public awareness campaign and a comprehensive water rate structure that increases the top rates when compliance decreases, has enabled compliance with State Water Resources Control Board (SWRCB) Order No. WR 95-10.

IMPACT ON STAFF/RESOURCES: Staff has not identified any impacts to staff or resources related to the proposed revisions.

EXHIBITS

10-A Draft Ordinance No. 137

10-B California American Water comments on Draft Ordinance No. 137

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