ITEM: |
CONSENT CALENDAR |
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2. |
CONSIDER APPROVAL
OF CALIFORNIA AMERICAN WATER INTERIM REIMBURSEMENT AGREEMENT FOR THE DISTRICT
MITIGATION PROGRAM |
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Meeting Date: |
May 16, 2011 |
Budgeted: |
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From: |
Darby Fuerst, |
Program/ |
Mitigation |
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General Manager |
Line Item No.: |
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Prepared By: |
Darby Fuerst |
Cost Estimate: |
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General Counsel Review: Reviewed and approved. |
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Committee
Recommendation: The Administrative
Committee reviewed the agreement on May 10, 2011, and recommended that the
Board approve the agreement by a 2 - 0 vote. |
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CEQA Compliance: N/A |
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SUMMARY: District staff and counsel have worked with
California American Water (Cal-Am) staff and counsel to develop an interim
reimbursement agreement to provide Cal-Am funding to continue the District’s
Mitigation Program between May 24, 2011, when the current funding arrangement
ends, and the effective date of final action by the California Public Utilities
Commission (CPUC) on Cal-Am’s amended application to reinstate the District’s
User Fee. Cal-Am has been directed to
file its amended application by May 23, 2011.
It is uncertain when the CPUC will act on the amended application. A copy of the draft Interim Implementation Agreement for 2011 - 2012 Carmel River
Mitigation Program (Interim Reimbursement Agreement) is included as Exhibit
2-A.
RECOMMENDATION:
District staff recommends that the Board authorize the General Manager
to execute the Interim Implementation Agreement between Cal-Am and the District
for the 2011 – 2012 Mitigation Program.
BACKGROUND: Since
1990, the District has implemented a comprehensive Mitigation Program to lessen
the environmental impacts resulting from community water use and Cal-Am
diversions from the Carmel River and Seaside Groundwater Basins. The Mitigation Program has been funded
primarily by a user fee that Cal-Am collected and remitted to the District. In July 2009, the CPUC ordered Cal-Am to
discontinue collection and remittance of the District’s user fee and directed
Cal-Am to file an application addressing the manner in which the Mitigation
Program was funded. In January 2010,
Cal-Am filed the requested application, which included an all-party all-issue settlement
agreement. In March 2011, the CPUC
rejected the settlement agreement and directed Cal-Am to file an amended
application. To ensure that the
Mitigation Program continues pending a decision by the CPUC on Cal-Am’s amended
application, Cal-Am and the District have developed an interim reimbursement
agreement that will provide approximately $1,560,000 per year to continue the
Mitigation Program in Fiscal Year 2012.
Condition 11 of State Water Resources Control Board (SWRCB) Order No.
95-10 specifies that Cal-Am shall be responsible for implementing all measures
in the “Mitigation Report for the District’s Water Allocation Program
Environmental Impact Report” not implemented by the District. Condition 9 of SWRCB Order No. 2009-0060
(2009 Cease and Desist Order) also requires Cal-Am to comply with all
requirements of Order 95-10, including Condition 11. The activities that will be funded under the
Interim Reimbursement Agreement are summarized in the exhibits to the agreement.
IMPACT
ON STAFF/RESOURCES: The proposed interim
reimbursement agreement will provide funding to continue the core activities of
the Mitigation Program. As proposed, no
funding will be provided for additional work at the Water Project 1 site (Phase
1 Aquifer Storage and Recovery [ASR] site) or for water conservation
activities. All capital asset purchases
will be deferred and project expenditures will be minimized.
Under the current reimbursement
agreement, Cal-Am provides funding to the District based a set percentage of
Cal-Am’s revenues from water and meter charges.
This percentage was last modified by the District Board in 2005 and
equals 8.325% of Cal-Am’s revenues.
Based on projected Cal-Am revenues of $36 million in Water Year 2011,
the 8.325% user fee would generate approximately $3 million. Assuming similar revenues in Water Year 2012,
the agreed-upon $1.56 million in interim reimbursement is equivalent to a
4.333% user fee.
Lastly, it should be noted that
the District has filed an application for rehearing of the CPUC’s decision
(D.11-03-035) denying the settlement agreement that was reached among Cal-Am,
the District, and CPUC’s Division of Ratepayers Advocates (DRA) and
disapproving Cal-Am’s request to reinstate the District User Fee, at the rate
established by the District Board. As
stated in the District’s application, the CPUC decision interferes with the
District’s authority to impose and collect a lawfully set user fee and also is
inconsistent with the Commission’s guidelines regarding collection of utility
user fees.
2-A Interim
Implementation Agreement for 2011-2012 Carmel River Mitigation Program
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