MPWMD BOARD MEETING--DEC 8, 2008--EXHIBIT 15C--QUARTERLY WATER SUPPLY STRATEGY AND BUDGET REPORT: January-March 2009

1. Management Objectives

The Monterey Peninsula Water Management District (District) desires to maximize the long-term production potential and protect the environmental quality of the Carmel River and Seaside Groundwater Basins. In addition, the District desires to maximize the amount of water that can be diverted from the Carmel River Basin and injected into the Seaside Groundwater Basin while complying with the instream flow requirements recommended by the National Marine Fisheries Service (NMFS) to protect the Carmel River steelhead population. To accomplish these goals, a water supply strategy and budget for production within California American Water’s (CAW) Main and Laguna Seca Subarea water distribution systems is reviewed quarterly to determine the optimal strategy for operations, given the current hydrologic and system conditions. This is the first quarterly budget that includes production targets for CAW’s Laguna Seca Subarea systems, i.e., Ryan Ranch, Bishop, and Hidden Hills.

2. Quarterly Water Supply Strategy: January - March 2009

On December 1, 2008, staff from the District, CAW, and the California Department of Fish and Game (CDFG) met and discussed the proposed water supply strategy and related topics for the remainder of December 2008 and the January-March 2009 period. The NMFS representative was unable to attend the meeting. Currently, flow in the Carmel River is fully regulated, with San Clemente Reservoir drawn down to minimum pool, as required by the Division of Safety of Dams (DSOD), and Los Padres Reservoir at 46% of capacity, i.e., 716 AF. Flow in the Carmel River is discontinuous below river mile 8.0. Rainfall during Water Year 2009 to date at San Clemente Dam in the upper watershed has totaled 2.2 inches or 78% of the long-term average at this site. Further, unimpaired runoff at San Clemente Dam for WY 2009 to date has totaled approximately 700 AF or about 40% of the long-term average for this site.

Carmel River Basin Given these conditions, the dryness that has persisted since February 2008, and early season runoff projections, it was agreed that “ dry year” inflows would be used to assess CAW’s operations during the January through March 2009 period. To meet customer demand, CAW would operate its wells in the Lower Carmel Valley in a downstream-to-upstream sequence, as needed. For the quarterly budget, it was agreed that CAW would produce approximately 50, 80, and 90 AF of groundwater from its wells in the Upper Carmel Valley during January, February, and March 2009, respectively. These values assume that sufficient flow in the Carmel River at the District’s Don Juan Bridge gage in Garland Park, i.e., five consecutive days of 20 or more cubic feet per second (cfs), occurs to move from the current restrictive “low-flow” period to the less restrictive high-flow period. These production values reflect typical or median monthly production amounts for these months, based on the 2000-2008 period. In addition, it was agreed that CAW would produce approximately 990, 890, and 1,030 AF of groundwater from its wells in the Lower Carmel Valley during January, February, and March 2009, respectively. Table 1 shows projected monthly releases and diversions from Los Padres and San Clemente Reservoirs for the October 2008 through March 2009 period.

It was also agreed that releases from Los Padres Reservoir would be increased so that flow in the Carmel River at the District’s Sleepy Hollow Weir gage below San Clemente Dam would increase from 5 cfs to 7 cfs in December. This increase would provide additional flow and habitat in the lower Carmel River for juvenile steelhead that are being released from the District’s Sleepy Hollow Steelhead Rearing Facility to the Carmel River. District staff began releasing juveniles from the facility on December 2, 2008. The increased releases from Los Padres Reservoir will be staged so that the flow at the Sleepy Hollow Weir gage increases approximately 0.5 cfs each week over a three week period. Specifically, between December 2 and December 8, 6.0 cfs will be required. Between December 9 and December 15, 6.5 cfs will be required. After December 16, 7.0 cfs will be required.

Lastly, it was assumed that 90, 110, and 125 AF of water would be diverted from the Carmel River Basin and injected into the Seaside Groundwater Basin during the January–March 2009 period. Because of the uncertainty in predicting future rainfall and runoff amounts, this assumption is subject to change.

Seaside Groundwater Basin It was also agreed that, subject to rainfall and runoff conditions in the Carmel River, CAW would cease production from the Coastal Subareas and allow the Seaside Basin to recharge. However, due to the possibility of continued dry conditions, some production from the Seaside Basin may be needed in January and February.

It was also agreed that CAW would produce 16, 14, and 19 AF of groundwater from its wells in the Laguna Seca Subarea of the Seaside Basin for customers in the Ryan Ranch, Bishop, and Hidden Hills systems during January, February, and March 2009, respectively. It is recognized that, based on recent historical use, CAW’s actual production from the Laguna Seca Subarea during this period will likely exceed the proposed monthly targets, which are based on CAW’s allocation specified in the Seaside Basin Adjudication Decision. For example, in the January through March 2008 period, CAW produced 24, 25, and 39 AF from the Laguna Seca Subarea to meet customer demand in the Ryan Ranch, Bishop, and Hidden Hills systems. In this context, the production targets represent the maximum monthly production that should occur so that CAW remains within its adjudicated allocation for the Laguna Seca Subarea. Under the amended Seaside basin Decision, CAW is allowed to use production savings in the Coastal Subareas to offset over-production in the Laguna Seca Subarea.

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