WATER SUPPLY PLANNING COMMITTEE
DISCUSSION ITEM
8.	UPDATE ON PURE WATER MONTEREY WATER PURCHASE AGREEMENT REQUIREMENTS
Meeting Date:		March 28, 2019	Budgeted:	N/A
From:		David J. Stoldt	Program/
		General Manager	Line Item No.:	N/A
Prepared By:		David J. Stoldt	Cost Estimate:	N/A
General Counsel Approval: N/A
Committee Recommendation: N/A
CEQA Compliance: Action does not constitute a project as defined by the California Environmental Quality Act Guidelines section 15378.

DISCUSSION:  As construction on the Pure Water Monterey facilities nears completion, it is important to re-focus on the requirements of the District within the parameters of the Water Purchase Agreement. The District will own the water at the point it leaves the Advanced Water Purification Facility. At the Delivery Point (the injection wells) after injection Company Water be owned by Cal-Am, subject to invoicing, and Excess Water will remain under District ownership.

Operating Reserve: Before sales to Cal-Am the District is to establish an Operating Reserve of 1,000 AF. During the next 3 years, an additional 750 AF is to be added, for a total of 1,750 AF. The District will pay Monterey One Water (M1W) for the cost of that water, without the immediate promise of payment from Cal-Am. At an assumed cost of water of $1,900/AF this equates to $1.900 million in FY 2019-20 and an additional $1.425 million in the three years following start-up. That results in $3.325 million tied up in water stored in the ground.

Drought Reserve: Each year for up to 5 years, 200 AF is to be set aside to develop a Drought Reserve. This is water the District can call on for delivery to Cal-Am in the event M1W desires to reduce production at the facility and direct increased source waters to tertiary treatment for delivery to the growers during a drought. The District will pay Monterey One Water (M1W) for the cost of that water, without the immediate promise of payment from Cal-Am. At an assumed cost of water of $1,900/AF this becomes a $380,000 annual requirement for five years. That results in $1.9 million tied up in water stored in the ground.

Reserve Reporting: Every 3 months the District must report the balances and activity in the Reserves.

Budget and Pricing: By May 1 of every year M1W and the District shall agree upon the estimated fixed costs and O&M expenses for the following fiscal year and shall be adopted by both agency’s boards. The Water Rate for the ensuing fiscal shall be set.

Payment: M1W will send a statement of charges due for the previous month. The District must pay M1W within 45 days. The District will bill Cal-Am monthly the Water Rate multiplied by the quantity of water delivered the previous month. Cal-Am has 45 days to pay. This is likely to result in a timing differential between the respective billings that the District will have to absorb.

Meters: M1W is responsible for installation of meters at all points of delivery. However, the District (and Cal-Am) must approve them in writing. All installation, maintenance, repairs, and replacement is done by M1W. M1W will provide annual calibration results done by an outside contractor to the District (and Cal-Am).

Other: A summary of risks is attached as Exhibit 8-A.

EXHIBIT
8-A Risks Under the Water Purchase Agreement

U:\staff\Board_Committees\WSP\2019\08\Item-8.docx