ITEM:		DISCUSSION ITEM
16.	WATER SUPPLY PLANNING
Meeting Date:			February 23, 2012	Budgeted:	N/A
From:			David J. Stoldt,	Program/	N/A
			General Manager	Line Item No.:
Prepared By:			David J. Stoldt	Cost Estimate:	N/A
General Counsel Review: N/A
Committee Recommendation: N/A
CEQA Compliance: N/A

SUMMARY: The District has adopted a leadership position in the community with respect to water supply planning that is important to meeting the impending Supply Gap beginning in 2017 as a result of legally imposed reductions in water production from the Carmel River and Seaside Basin. The District continues to weigh and consider additional water supply concepts, in addition to its adopted projects and alternative projects, as they arise.

RECOMMENDATION: The Board may wish to discuss two items:

(a) Proposed responses to the Monterey Peninsula Regional Water Authority letter attached as Exhibit 16-A; and

(b) Recent developments in water supply planning for the Peninsula, including the District’s role and responsibilities.

DISCUSSION: In early January, a Joint Exercise of Powers Agreement (JPA) to create the “Monterey Peninsula Regional Water Authority” (Authority) by and between the six Peninsula cities was released and the JPA was ratified by the respective city councils. The Authority first met on February 9, 2012 and the meeting was attended by the District’s Community Relations Liaison. On February 14, 2012 the District received the attached letter requesting input from the District on several key issues. The General Manager sent an immediate reply that our Board would not be meeting until February 23, 2012 but will address the correspondence and then respond again shortly thereafter.

With respect to water supply planning, based on recent discussion with members of the community, other agencies, and California American Water (Cal-Am) the portfolio of projects that appear to best resolve the Peninsula’s water needs with respect to replacing unlawful diversions are a combination of (i) a desalination facility, (ii) continued implementation of Aquifer Storage and Recovery (ASR), and (iii) Monterey Regional Water Pollution Control Agency’s (MRWPCA) groundwater replenishment (GWR) project. The District remains the developer of ASR in partnership with Cal-Am and the District has been working jointly with MRWPCA to develop a joint financing plan to bring GWR forward, and which is subject of Action Item 17 in this agenda. Hence, the primary unknown is what the parameters of a desalination plant may be.

There are two apparent paths developing with respect to desalination that the Board may wish to discuss. One path might involve a Cal-Am owned-and operated plant with Cal-Am acting as lead agency for implementation. A second path might involve a public-financed and/or owned project. In both cases, among the key issues remain:

· Requirement and timeline for a new CEQA process or not

· Additional technical assessment and scoping of project alternatives

· Ease in permitting

· Water rights

· Cost of financing and operations

· Litigation risk

At its January 24, 2012 prehearing conference at the California Public Utilities Commission (CPUC), Cal-Am told the Commission that it would file a proposed replacement water supply project within 90 days. There has been no specific proposal made by Cal-Am yet.

Director Potter, as Chairman of the Board of Supervisors, has called for a meeting of the regions’ mayors, supervisors, public agencies, and Cal-Am where these issues may also be discussed.

EXHIBITS

16-A Correspondence received from the Monterey Peninsula Regional Water Authority

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