ITEM:		ACTION ITEMS
15.	PROVIDE DIRECTION TO STAFF ON PREPARATION OF AN ORDINANCE TO DELAY WATER CREDIT EXPIRATION DATES
Meeting Date:			October 18, 2010	Budgeted:	N/A
From:			Darby Fuerst	Program/		N/A
			General Manager	Line Item No.:
Prepared By:			Stephanie Pintar	Cost Estimate:	N/A
General Counsel Review: N/A
Committee Recommendation: The Water Demand Committee reviewed this item on September 30, 2010, and recommended an ordinance be developed to suspend credit expiration during a CPUC approved moratorium.
CEQA Compliance: N/A

SUMMARY: Water Use Credits are documented when (1) there is a Permanent Abandonment of Use, or (2) following the installation of Ultra-Low Water Use Technology not required by the District, or (3) when there is a temporary removal of a use, such as a Change of Use. The credit process allows the reuse of the reduced increment of water on the same Site. Credits may be transferred to other Sites pursuant to Rule 28. Water Use Credits resulting from a Permanent Abandonment of Use (i.e., demolition or permanent removal of plumbing or fixtures, or replacement of fixtures with state-of-the-art equipment or high efficiency appliance credits) allow the reuse of the reduced increment of water on a Site for up to ten years.

At the August 16, 2010, meeting, the Board considered a request by Director Brower to extend the expiration date of Water Use Credits by two to five years due to the current economic conditions. The request was continued until a full Board was present. The staff report for the August agenda item is attached as Exhibit 15-A.

In August 2010, staff met with representatives of the parties involved in California American Water’s (Cal-Am) request for a moratorium to comply with the State Water Resources Control Board (SWRCB) Cease and Desist Order 2009-0060 (CDO). The California Public Utilities Commission (CPUC) is presently considering Cal-Am’s moratorium request and a decision is anticipated before the end of the year. Information obtained during two meetings in August indicates there is considerable uncertainty about what projects would be impacted by a moratorium.

District staff is recommending the Board consider the potential effects of a CPUC-approved moratorium on properties that have a Water Use Credit or an On-Site Water Credit and direct staff on preparation of an ordinance that would temporarily delay the credit’s expiration date if it is subject to a moratorium. The District’s Expanded Water Conservation and Standby Rationing Plan allows extension of the expiration date for credits in Stages 6 and 7, but the plan does not consider moratoriums by other entities that may impact credits in earlier stages.

DISCUSSION: The moratorium requested by California American Water may impact properties with Water Use Credits and Water Credits. Staff attempted to assess the extent of this possible impact, and was able to identify approximately 8.44 acre-feet per year (AFY) of Water Use Credits and Water Credits, including credit available to Quail Lodge (1.07 AFY), Presidio of Monterey (1.34 AFY) and Naval Postgraduate School (2.68 AFY). A full quantification of potential Water Credits available is not possible without an intensive effort that would involve reviewing every property file in the District’s database for current unused credits.

As mentioned previously, the District postpones the expiration dates of Water Credits during Rationing Stages 6 and 7 of its Expanded Water Conservation and Standby Rationing Plan. During those stages, a District-imposed moratorium on the use of credits occurs. The moratorium requested by California American Water pursuant to the SWRCB CDO would not trigger Stage 6 or 7. If the Board agrees that a non-MPWMD moratorium justifies a suspension of credit expiration dates, an ordinance is required to change the District rules. The ordinance process takes a minimum of three months unless there is urgency. The CPUC is likely to rule on California American Water’s moratorium request within that timeframe.

The Water Demand Committee discussed this item on September 30, 2010, and recommended that the Board direct staff to prepare an ordinance to suspend the expiration dates of Water Credits that are impacted by a CPUC-approved moratorium for the duration of that event. The ordinance would be specific only to Water Credits that are impacted by a CPUC-approved moratorium.

RECOMMENDATION: The Board should discuss this item and direct staff on preparation of an ordinance to suspend the expiration of Water Credits and Water Use Credits in the event there is a CPUC-authorized moratorium that impacts valid water credits. The ordinance can be drafted with an effective date that mirrors the implementation date of a CPUC order.

BACKGROUND: At the July 21, 2010, Water Demand Committee meeting, the committee reviewed a request by Director Brower for consideration of an extension of Water Use Credits due to the current economic situation. This item was also discussed at the August 16, 2010, Board meeting. At the Board meeting, it was agreed to defer this item to the next meeting at which all Directors will be in attendance. This item is slightly modified to address a CPUC authorized moratorium rather than an extension of credits due to economic conditions, however the Board may discuss both issues during its dialogue.

IMPACT ON STAFF/RESOURCES: N/A

EXHIBITS

15-A Action Item 22, August 16, 2010

U:\staff\word\boardpacket\2010\20101018\ActionItems\15\item15.doc