JOINT MEETING OF THE POLICY ADVISORY (PAC) AND TECHNICAL ADVISORY (TAC) COMMITTEES--OCT 25, 2010--ITEM 1--CONSIDER RECOMMENDATION TO THE BOARD ON AN ORDINANCE TO SUSPEND EXPIRATION DATE OF WATER CREDITS

POLICY ADVISORY (PAC) AND TECHNICAL ADVISORY (TAC) COMMITTEES

ITEM:		ACTION ITEMS

1.	CONSIDER RECOMMENDATION TO THE BOARD ON AN ORDINANCE TO SUSPEND EXPIRATION DATE OF WATER CREDITS

Meeting Date:			October 25, 2010

From:			Darby Fuerst
			General Manager

Prepared By:			Stephanie Pintar

General Counsel Review: N/A
Committee Recommendation: The Water Demand Committee reviewed this item on September 30, 2010, and recommended an ordinance be developed to suspend credit expiration during a CPUC moratorium.
CEQA Compliance: N/A

SUMMARY: Water Use Credits are documented when (1) there is a Permanent Abandonment of Use, or (2) following the installation of Ultra-Low Water Use Technology not required by the District, or (3) when there is a temporary removal of a use, such as a Change of Use^{^[1]}. The credit process (Rule 25.5) allows the reuse of the reduced increment of water on the same Site. Credit may be transferred to other Sites pursuant to Rule 28. Water Use Credits resulting from a Permanent Abandonment of Use (i.e., demolition or permanent removal of plumbing or fixtures, or replacement of fixtures with state-of-the-art equipment or high efficiency appliance credits) allow the reuse of the reduced increment of water on a Site for up to ten years.

In August 2010, staff met with representatives of the parties involved in California American Water’s request for a moratorium to comply with the State Water Resources Control Board (SWRCB) Cease and Desist Order 2009-0060 (CDO). The California Public Utilities Commission (CPUC) is presently considering the moratorium request and a decision is anticipated before the end of the year. Information obtained during two meetings in August indicates there is considerable uncertainty about what projects would be impacted by a moratorium.

At the October 18, 2010, regular meeting, the District’s Board considered the potential effects of a CPUC-approved moratorium on properties that have a Water Use Credit or an On-Site Water Credit. The Board directed staff to prepare an ordinance that would temporarily suspend a credit’s expiration date if the credit is subject to a moratorium. The District’s Expanded Water Conservation and Standby Rationing Plan allows extension of the expiration date for credits in Stages 6 and 7, but the plan does not consider moratoriums by other entities that may impact credits in earlier stages. The moratorium requested by California American Water pursuant to the SWRCB CDO would not trigger Stage 6 or 7.

The moratorium proposed by California American Water may impact properties with Water Use Credits and Water Credits. Staff attempted to assess the extent of this possible impact, and was able to identify approximately 8.44 acre-feet per year (AFY) of Water Use Credits and Water Credits, including credit available to Quail Lodge (1.07 AFY), Presidio of Monterey (1.34 AFY) and Naval Postgraduate School (2.68 AFY). A full quantification of potential Water Credits available is not possible without an intensive effort that would involve reviewing every individual property file in the District’s database for current unused credits.

The ordinance process takes a minimum of three months. The CPUC is likely to rule on California American Water’s moratorium request within that timeframe. The ordinance will be specific only to Water Credits that are impacted by a CPUC-authorized moratorium. The CPUC has scheduled two Public Participation Hearings on Cal-Am’s request to impose a moratorium in its Monterey District. These hearings are scheduled for Monday, December 13, 2010 at the Monterey City Hall Council Chambers at 2 p.m. and 7 p.m.

RECOMMENDATION: The Policy Advisory Committee/Technical Advisory Committee should discuss this item and consider a recommendation to the Board on the proposed ordinance. Specifically, the ordinance will suspend the expiration date of Water Credits and Water Use Credits in the event there is a CPUC-authorized moratorium that impacts valid water credits. Only those credits influenced by a moratorium will have a suspension of the expiration, and the suspension would remain in place until the moratorium is released. At that time, the credit timeline would be restored. The ordinance will be drafted with an effective date that mirrors the implementation date of a CPUC order.

IMPACT ON STAFF/RESOURCES: N/A

EXHIBITS

None

U:\staff\word\committees\pactac\2010\20101025\01\item1.doc

[1] Capitalized terms are defined in Rule 11 of the MPWMD Rules and Regulations found online at http://www.mpwmd.dst.ca.us/rules/2010/Sept/TOC.htm

October 25, 2010

General Counsel Review: N/A

Committee Recommendation: The Water Demand Committee reviewed this item on September 30, 2010, and recommended an ordinance be developed to suspend credit expiration during a CPUC moratorium.