JOINT MEETING OF THE POLICY ADVISORY AND TECHNICAL ADVISORY COMMITTEES
ITEM:		ACTION ITEMS
2.	REVIEW ACTION BY MPWMD IN RESPONSE TO FINAL CEASE AND DESIST ORDER AGAINST CALIFORNIA AMERICAN WATER
Meeting Date:			November 30, 2009	Budgeted:	N/A
From:			Darby Fuerst,	Program/
			General Manager	Line Item No.:
Prepared By:			Stephanie Pintar	Cost Estimate:	N/A
General Counsel Review: Yes
Committee Recommendation: N/A
CEQA Compliance: This ordinance is exempt under Section 15269, Emergency Projects

SUMMARY: At its November 16, 2009, meeting, the MPWMD Board directed staff to present an ordinance to the Board on December 12, 2009, to delay implementation of Stage 5 and implement Stage 3 of the Expanded Water Conservation and Standby Rationing Plan. This direction is in response to the State Water Resources Control Board’s (SWRCB) October 20, 2009, action to adopt the Cease and Desist Order (CDO) against California American Water. Although the District has been successful in having the court issue a stay on the Order, a majority of Board members directed staff to take further action to reduce water use in the event the stay is overturned. Staff recommended emergency implementation of Stage 3, which requires Large Residential Water Users (average use of 32 units per month), Dedicated Irrigation Meters, and irrigated areas over three acres to adhere to Water Budgets set by a Certified Irrigation Auditor. California American Water supported the recommendation. District Rule 165 requires implementation of water rationing when a final CDO requires reductions of more than 15 percent of base year use. The recently-issued CDO triggers Stage 5.

In response to the Board’s direction, staff has prepared an urgency ordinance (Exhibit 2-A) to allow implementation of a lower conservation stage when there is convincing evidence that existing demand reduction efforts will meet regulatory cutbacks from a final CDO. The General Manager has credible evidence at the time to support a position that production can be maintained in compliance with the CDO without water rationing. This potential is supported by the previous year’s production, imposition of new rates that will discourage high use, and a plan to focus on high outdoor water users, rather than all Cal-Am customers.

Draft Ordinance No. 142 will be presented as an Urgency Ordinance, requiring five affirmative votes to pass on first reading. If it does not pass on first reading, the ordinance will return to the Board for second reading on January 28, 2010, and if passed on second reading, would take effect on March 1, 2010. Staff’s recommendation to adopt the ordinance with urgency will allow the high upper tier rates to keep water use below reduced production targets.

Reduced demand during the time while the court decides the validity of the CDO will ensure that the community is not placed in a no-win situation if the court decides against the District and California American Water. Stage 3 implements both the requirement for certain water users to maintain outdoor water use within a “water budget,” and it implements Public Utilities Commission (PUC)-approved Conservation Rates. The Conservation Rates double the top two tiers of the 5-tiered rate structure, providing a strong disincentive for excessive water use. Declaration of Stage 3 also provides California American Water with additional funding for outreach and community education efforts.

In addition to adopting an ordinance that would allow the General Manager to delay implementation of Stage 5, the Board will consider adopting resolutions to modify the daily production targets shown as Tables XV-1 and XV-2 in Rule 162 and to immediately implement Stage 3 due to the threat of the CDO. The proposed amended targets are shown as Exhibit 2-B and 2-C. Review and amendments to Tables XV-1 and XV-2 take place quarterly, including at the December Board meeting. The proposed amendments would reduce production targets to the levels contemplated in the CDO.

RECOMMENDATION: The Policy Advisory Committee (PAC) and Technical Advisory Committee (TAC) should review the planned response to the CDO and make a recommendation to the Board supporting the proposed ordinance, adoption of the amended production targets and the emergency implementation of Stage 3.

IMPACT ON STAFF/RESOURCES: The impact of implementing rationing on the community is high. Beyond the cost of labor and overhead to run a rationing program, there are unavoidable economic costs, particularly to local businesses who may not qualify for rationing variances and to Jurisdictions who have planned use of their remaining water allocations. To avoid water rationing (and the corresponding moratorium) at the outset, staff is proposing interim measures that will reduce demand and ideally maintain water demand below regulatory limits.

EXHIBITS:

2-A Draft Urgency Ordinance No. 142

2-B Table XV-1 – Regulatory Water Production Targets/Cal-Am Water System

2-C Table XV-2 – Regulatory Water Production Targets/Cal-Am Satellite Systems

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