ADMINISTRATIVE COMMITTEE
3.	Consider ADOPTION OF AN AGREEMENT with California american water regarding reimbursement for mitigation and asR activity expenses
Meeting Date:		September 15, 2009	Budgeted:	N/A
From:		Darby Fuerst,	Program/	N/A
		General Manager	Line Item No.:
Prepared By:		Darby Fuerst	Cost Estimate:	N/A
General Counsel Approval: Approved
Committee Recommendation: The Administrative Committee reviewed this item on September 15, 2009 and recommended ________.
CEQA Compliance: N/A

SUMMARY: This item calls for consideration of an agreement between California American Water (Cal-Am) and Monterey Peninsula Water Management District (MPWMD or District) regarding reimbursement for Mitigation and Aquifer and Storage Recovery (ASR) program expenses in Fiscal Year 2010. A draft agreement is included as Exhibit 3-A. The agreement enables Cal-Am to provide interim funding for MPWMD Mitigation and ASR program, pending further action by the California Public Utilities Commission (CPUC). The proposed agreement is consistent with the District’s approved budget for FY 2010.

RECOMMENDATION: Staff recommends that the Board consider and authorize the General Manager to execute the proposed agreement on behalf of the District with Cal-Am for reimbursement for Mitigation and ASR activity expenses. Further, staff recommends that the Board authorize the General Manager to make minor changes to the final agreement that do not affect the operative language of the agreement.

BACKGROUND: During Cal-Am’s recently-concluded General Rate Case proceedings before the CPUC, concern was expressed regarding the District’s user fee, which is collected as part of the Cal-Am bill. This user fee, which is expressed as a percentage of Cal-Am users’ water and meter charges, is currently set at 8.325 percent and is projected to generate approximately $3.6 million in FY 2010. These fees are needed to fund the District’s ongoing Mitigation and ASR program activities. The CPUC has directed that Cal-Am file an application that addresses the manner in which the Mitigation and ASR program costs are funded by January 2010. District staff is working with Cal-Am staff on this application and its supporting documentation.

In the interim, Cal-Am is not authorized to continue to collect and pass on the user fee to the District. Accordingly, the District’s user fee was removed from Cal-Am’s water bills in July 2009. To ensure uninterrupted protection of the Carmel River and Seaside Groundwater Basin environments, District and Cal-Am staff have developed the proposed agreement to allow continued payment by Cal-Am for the District’s Mitigation and ASR program activities in FY 2010. Specifically, as proposed, Cal-Am would pay to the District a monthly sum equal to a 8.325 percentage user fee on Cal-Am’s meter and water charges, consistent with previous practices. The payment for FY 2010 will be limited to $3,623,900, consistent with the District’s approved FY 2010 budget. The funds will be used exclusively to pay reasonable and necessary costs incurred to implement the District’s comprehensive Mitigation and ASR programs in FY 2010. These costs include District labor and expenses, contract services, supplies, and equipment. Cal-Am is authorized to set up a memorandum account to record any interim payments made to support the District’s Mitigation and ASR Programs.

IMPACT TO DISTRICT STAFF/RESOURCES: The District relies on its user fee to fund its comprehensive Mitigation Program and its ASR Program. Without the revenue from the user fee, each activity would need to end or would be significantly curtailed.

EXHIBIT

3-A Draft Agreement Between California American Water and the Monterey Peninsula Water Management District regarding Reimbursement for Mitigation and ASR Activity Expenses

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