WATER SUPPLY PLANNING COMMITTEE
ITEM:		ACTION ITEM
2.	DISCUSS AND RECOMMEND DISTRICT POSITION ON CAL-AM APPLICATION 12-04-019 RE: GOVERNANCE, OWNERSHIP, AND FINANCE
Meeting Date:			September 11, 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: Intervenor testimony for Cal-Am Application 12-04-019 is due in February, however what “Public Agency Participation Proposals” are due October 1^st. The CPUC describes these proposals in the following:

“While the Application contemplates some complementary public agency projects (groundwater replenishment and aquifer storage and recovery), there may be opportunities for one or more public agencies to have a direct role in the Monterey Peninsula Water Supply Project itself. The idea of a private-public partnership in the area of financing was floated in the Workshop, for example. Other areas of possible collaboration may exist, and it is reasonable to consider those to the extent that they are feasible and sufficiently developed to allow implementation in a timely manner. While Cal-Am may believe that the window for altering the project to include public agency participation has closed, Cal-Am should be open to and seriously consider in good faith any public agency proposal for direct participation in the MPWSP made to it no later than October 1, 2012. Any such proposals must be adequately detailed to show that they are technically, legally and economically feasible. Cal-Am shall file a progress compliance report by October 26, 2012 on any public agency participation proposals.”

The District must formulate its principle arguments, especially as they relate to governance, ownership, and finance.

RECOMMENDATION: The Committee should discuss and recommend a position to the Board on each of the following items. The Committee may also wish to develop recommendations on additional items it may identify.

DISCUSSION:

A. What are the key areas that governance should address? (e.g. transparency, budget and rate impacts, operation planning, integrated management of ground and surface water, regulating future supply, etc)

B. What are the differences between an Operating Committee, an Advisory Committee, and an Oversight Committee such as the Water Quality and Operations Committee of the Salinas Valley Reclamation Plant?

C. Is there a governance structure that might be acceptable to Cal-Am and the Cities that the District wants to pursue?

D. Shall the District demand public ownership or simply offer to be the public owner should a public owner be desired by all parties?

E. Should the District offer to be the Public “Partner” for financial issues?

F. If State Revolving Funds require a public partner, will the District serve in that role?

G. Would the District offer to substitute its public credit as a backstop to Cal-AM’s creditworthiness in order to reduce the cost of Cal-Am’s debt? This might require the use of a “stand-by water purchase agreement,” a “rate covenant,” and other standing commitments.

H. Would the District consider a debt issuance of its own, secured by Prop 218 water supply charges, to make a “contribution” to the project in order to reduce Cal-Am equity and rate base?

I. Would the District consider a debt issuance of its own, secured by a surcharge on Cal-Am bills, to make a “contribution” to the project in order to reduce Cal-Am equity and rate base?

J. Does the District have an opinion on Surcharge 2 “pay-as-you-go” financing for a portion of the project?

K. Does the District have an opinion on the sizing of the Project? (Overall projected sizing of proposed Monterey Peninsula Water Supply Project is 15,250 acre-feet)

L. Does the District have an opinion on stranded costs for the Regional Desalination Project?

M. Does the District have on opinion on the future capital costs of source well replacement?

N. What, if anything, does the District wish to say about the capacity of grey water or cisterns by 12/31/16 – an issue raised during the workshops?

O. What, if anything, does the District wish to say about the capacity of additional conservation by 12/31/16 – an issue raised during the workshops?

EXHIBITS

2-A Evaluation of Financing Alternatives - DRAFT

2-B Summary of Potential Governance Responsibilities

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