ADMINISTRATIVE COMMITTEE
4.	CONSIDER APPROVAL OF CONSERVATION PROGRAM REIMBURSEMENT AGREEMENT WITH CALIFORNIA AMERICAN WATER
Meeting Date:		September 11, 2007	Budgeted:	Yes
From:		David A. Berger,	Program/	Water Demand Division
		General Manager	Line Item No.: 4-2-4
Prepared by:		Stephanie Pintar	Cost Estimate:	<$300,000 per year
General Counsel Approval: Yes
Committee Recommendation: The Administrative Committee reviewed this item on September 11, 2007 and recommended _________________.
CEQA Compliance: N/A

SUMMARY: This agenda item seeks Board of Directors approval action regarding a proposed agreement with California American Water (CAW). This agreement is a requirement of the CAW General Rate Case approved last November by the California Public Utilities Commission (CPUC), the purpose of which is to reimburse the District for certain water conservation expenditures it incurs. The CPUC authorized a new special surcharge on CAW customer bills to cover the cost of specified District service activities related to operating and enhancing its water conservation education, enforcement, and rebate incentive programs.

RECOMMENDATION: Staff recommends that the Board approve and authorize the General Manager to enter into the proposed Conservation Activity and Reimbursement Agreement between the District and California American Water (attached as Exhibit 4-A.). The General Manager shall further be authorized to make minor, non-substantive amendments if needed to conform to the final agreement as approved by CAW.

BACKGROUND: On November 30, 2006 the CPUC approved the current “general rate case” which authorized CAW customer billing rates to operate and maintain its Monterey District water system during calendar years 2006 through 2008 (Decision 06-11-050). A component of that rate case requested by CAW, and supported by the District, is a new one percent special surcharge to cover MPWMD costs incurred for current and planned improvements related to its Expanded Water Conservation/Standby Rationing and Rebate Incentive service programs. At the District’s request the CPUC included a requirement in the general rate case that CAW and MPWMD enter into an agreement, under which the District is to be reimbursed from special surcharge revenues for specified water conservation activities. Those activities are described in Section I of the agreement. Section II of the agreement requires that CAW reimburse the District based monthly invoices of direct and indirect employee labor cost (at the District’s standard billing rate) incurred in conducting the specified water conservation activities. It also provides for reimbursement of District materials, contract services and other expenses incurred in operating those specified conservation program activities. District staff and legal counsel drafted the proposed agreement in consultation with CAW management and counsel.

IMPACT ON STAFF/RESOURCES: Revenue from the one percent MPWMD special conservation surcharge is included in the District’s fiscal year 2007-8 adopted budget. CAW rates/regulation staff estimates that this special surcharge will generate approximately $300,000 per year. District budgeted expenditures to be reimbursed by CAW from special surcharge revenues include the newly-created Conservation Representative I/II position, as well as project expenditures related to the current Stage 1 Water Conservation community awareness campaign, planned irrigation audit training, the recently-expanded Rebate Incentive Program, and other water conservation education and enforcement activities specified in the proposed agreement.

EXHIBITS

4-A Conservation Activity and Reimbursement Agreement between the Monterey Peninsula Water Management District and California American Water

U:\staff\word\committees\Admin\2007\20070911\04\item4.doc