AGENDA

REGULAR MEETING OF THE MONTEREY PENINSULA REGIONAL WATER AUTHORITY TECHNICAL ADVISORY COMMITTEE 2:00 p.m. Monday, August 6, 2012 Monterey City Hall Council Chamber 580 Pacific Street, Monterey, CA 93940
1. Call to Order 2. Roll call 3. Public comment on matters not on the agenda 4. Report on July 23, 2012 and August 1, 2012, MPRWA Board Meetings 5. Reports from TAC members 6. Reports by Proponents for Cal Am Project, Peoples Project and DeepWater Desal Project (Information Only) 7. Update on California Public Utilities Commission (CPUC) Application 12-04-019 (Information Only) 8. Update on Consultant Services activities (Discussion) 9. Report on Monterey Water Supply Planning (Information Only) 10. Consider Qualitative Risk Assessment (Discussion/Action) 11. Plan August 20, 2012, TAC meeting agenda (Action) 12. Adjournment

Monterey Peninsula Regional Water Authority Technical Advisory Committee (TAC) Desalination Project Risk Assessment Revised 7-24-12

Below is presented a summary of TAC qualitative judgments of relative risk on selected desalination project issues. In trying to compare projects, consider how each issue will present higher or lower, more or less, risk. 1 = highest risk; 5 = lowest risk. Rate each issue relative to the factual or understood situation when compared to other desalination projects. The selected issues have not been determined to be equal, therefore totaling the columns is premature. Rating: 1 = Risk is high, problems are expected and would have serious consequences. 2 = Risk is substantial, problems are likely, could cause concern or delay. 3 = Risk is above average, will require special attention to avoid problems. 4 = Risk is average or normal. Problems can be overcome with adequate attention. 5 = Risk is low or not substantive. Problems are not expected. All averages were based on six raters, except as noted with *. Section A: TECHNICAL A1. Water Source / Water Rights Cal-Am DeepWater Peoples Slant Wells 70 Open Surface Ocean Open Ocean 1 4 2 2 2 2 1 5 5 1 3 2 2 4 3 2 2 2 1.5 3.33 2.67

Comments

Salinas River Basin has unique issues Surface intake has changing regulations Slant wells unproven, water rights issues, environmental issues for open ocean as well (especially sea life entrapment) Moss Landing Harbor intake will have high impacts No confirmation that DeepWater Desal has had impingement/entrainment data reviewed Open water intakes will require NEPA review Ocean intake is common throughout world, without water rights issues Peoples has option for surface or deep water intake Cal-Am has resources to resolve relevant issues. For other two, expect issues to surface during permitting Believe Cal-Am test will be approved at Coastal Commission to determine validity. DeepWater and Peoples permitting process could pose challenges

A2. Pre-Treatment / Water Quality Cal-Am DeepWater Peoples 1 4 2 4 4 2 4 4 4 4 4 2 5 3 3 4 3 2 3.67 3.67 2.5

Comments Harbor intake pre-treatment nearly impossible, DeepWater sources by far best option Surface intake has changing regulations Concerns over Peoples turbidity and marine life from a Moss Landing Harbor Intake Desal filters are standard technology and variously fabricated to meet common needs. Peoples project source water intake from the harbor would require more extensive pre-treatment due to the High organic levels in the feed water.[Mickley] The concern raised is for the organic content of the feed water and the variability of feed water content with time.[Mickley] Cal-Am has ability to determine. Testing of DeepWater and Peoples needed. Concern with Harbor intake with Peoples. Comments Cal-Am has access to existing outfall. DeepWater needs new outfall. Peoples needs new permit and retrofit Cal-Am uses MRWPCA (best/easiest to permit), others have issues Peoples retrofit may be extensive based on photographic evidence from 2006 study Peoples has existing outfall and permit for previous use. Renewal is easier than new Cal-Am has access to existing outfall, however, sufficient dilution water may not be available during times when MRWPCA has zero discharge. DeepWater needs new outfall. Peoples needs new permit & retrofitting People's and DeepWater will need some work to confirm permitting Outfall for DeepWater and Peoples needs additional work and permitting.

A3. Discharge Cal-Am DeepWater 5 3 4 3 4 2 2 4 4 3 4 3 3.83 3.0

Peoples 3 3 4 4 3 3 3.33

A4. Proven Technology Cal-Am DeepWater 2 5 3 5 1 5 1 3 3 4 4 4 2.33 4.33

Peoples 5 5 5 3 4 4 4.33

Comments Slant well technology for water has not been proven in Cal-Am. Ocean intake is proven worldwide. Proven technology for DeepWater and Peoples approaches. Cal-Am proven except for slant wells No proven slant well technology for water Technology for slant wells looks promising but need pilot work to confirm water quality %. Also, don't

know how long wells will last. For DeepWater and Peoples, existing technology is good but need pilot data to show it works in this application Technical knowledge-- test well planned by Cal-Am. DeepWater and Peoples has proven technology but not tested on specific sites A5. Permits Cal-Am 5 3 3 3 3 3 3.33 DeepWater 3 3 4 2 3 3 3.0 Peoples 3 3 5 1 3 2 2.83 Comments Cal-Am should permit easiest if slant wells proven. DeepWater should permit next easiest because of depth of intake. Peoples' will be difficult unless offshore option is chosen vs. harbor intakes Dont see much differential in the permits as it relates to the technology Cal-Am will require more permits from land use jurisdictions and for access under Bay All will have complex permitting issues None proven, Harbor intake questionable

Section B: SCHEDULE B1. Environmental Impact Report (EIR) Cal-Am DeepWater Peoples Supplemental Full Full 5 2 2 3 1 1 1 5 5 2 4 4 3 1 1 3 1 1 2.83 2.33 2.33

Comments Cal-Am can do supplemental EIR; others start new DeepWater and Peoples will need full EIR both CEQA and NEPA Cal-Am partial EIR expected to be contested, cause delays. Full EIR from the start will avoid later problems The risk for a full EIR is not as great a supplemental because it will be vetted through the public review process Expect full EIR for DeepWater and Peoples. Cal-Am supplement should be much faster Cal-Am supplement OK; DeepWater and Peoples need full EIR within allowed time-frame Comments Nod to Cal-Am (if slant wells work, easiest to permit); DeepWater has NOAA on their side but discharge questionable w/ Dynegy; Peoples has storm water discharge but no intake or brine discharge permits (but wonder how they discharge existing package plant) Peoples has an existing discharge permit and history of prior use Cal-Am is at greater risk because their proposal to

B2. Permits - Difficulty Cal-Am DeepWater 4 3 3 3 3 3 2 3 3 3 2 3 2.83 3.0

Peoples 2 3 4 3 4 3 3.17

operate a desal facility may be contrary to County Ordinance prohibiting operation by private entity Cal-Am has lots of issues but good resources. Permits will likely require some pilot work for both DeepWater and P Each has challenges. Cal-Am, if slant well test not successful B3. Litigation Risk Cal-Am DeepWater 1 1 2 4 1 5 1 2 2 3 3 3 1.67 3.0 B4. Site Control / Easements Cal-Am DeepWater In process Partial 3 3 3 3 3 3 2 2 3 3 3 3 2.83 2.83 B5. Date to Deliver Cal-Am DeepWater Jan 2017 Dec 2016 1 1 1 3 2 1 5 1 2.25* 1.5 Peoples 1 4 5 2 3 3 3.0 Comments All equally bad Expect some litigation over open water intakes Litigation exposure by Cal-Am for EIR, water rights, public ownership, and ongoing inter-party from RDP Cal-Am has resources to resolve litigation All subject to potential litigation. Cal-Am has resources to handle Comments Cal-Am has identified locations, but no signatures. Peoples owns site. All can discuss easements, etc Peoples is owned and zoned industrial Sites determined. Peoples owns

Peoples Full 4 4 5 3 4 4 4.0

Peoples Jan 2016 1 4 1 1 1.75

Comments Consultant will review this, along with costs Because of litigation potential, don't really think anyone can meet deadline. Peoples is most optimistic and least realistic Shorter Peoples schedule allows time for dealing with problems. Cal-Am schedule is extremely tight and requires smooth path on every issue, which is unlikely Don't know how DeepWater and Peoples can complete in time without pilot data and permits. CalAm has already started and has resources to get most issues resolved but likely that at least one could cause some delay Cal-Am only project in front of PUC. Litigation potential for all

B6. CPUC Process Cal-Am DeepWater 4 2 5 2 4 1 3 1 5 2 5 2 4.33 1.67

Peoples 2 4 5 3 4 4 4.0

Comments CPUC process has authority to approve. Other two are outside CPUC process with no ready-made process Can change if Moss Landing desal projects are included in CPUC EIR process. Cal-Am needs to force every approval, even within CPUC Cal-Am knows and is part of CPUC process. Others would need to find a way to be added in

Section C: COMMUNITY CONCERNS C1. Public Ownership Cal-Am DeepWater No Yes 1 3 2 4 1 3 3 1 2 4 3 3 2.0 3.0

Peoples Yes 1 4 5 1 4 2 2.83

Comments Cal-Am has decided to own, w/o public partner Cal-Am says public ownership not needed; don't believe it. Peoples deal with PG very "iffy." DeepWater deal with Moss Landing Harbor best chance because it offers revenue potential for MLH for easements for intakes Cal-Am could prevail in legal test; County has started litigation to make determination Peoples is in active negotiation with PG No project currently has a public partner. CPUC may act as public partner for Cal-Am project Cal-Am has issues to resolve. Others still need firm partner Courts will determine Cal-Am rights. Peoples no agreement signed with PG. DeepWater Moss Landing Harbor District, not sure of status Comments

C2. Governance Structure Cal-Am DeepWater None Wants JPA 1 2 1 4 2 4 2.33 3 3 3 2 3 3 2.83

Peoples Talking to PG 3 3 4 1 3 3 2.83

Cal-Am wants no part of local gov't. Peoples and DeepWater recognize need Most relevant agency is one within Cal-Am service area Cal-Am is governed by CPUC and California regulations that give it the exclusive right (i.e. franchise) to build, own, and operate water delivery to its customers. Other projects are in active negotiations for public partner for governance Cal-Am might welcome some local limited input. Others need a firm local partner

 Cal-Am portfolio has public representation within two of the three components. If partnership required, should be Water Management. CPUC authority will be determined vs County. DeepWater and Peoples same as C-1

DRAFT
To: TAC From: George Riley Subj: Risk Assessment Observations July 22, 2012

Note to TAC: I found two errors of addition in the gridMy fault B6 PUC process Cal Am should be 4.33, not 4.67. C1 Public ownership DWD should be 3.0, not 2.83. I confirmed all the other additions, and they are correct. I made these changes to my copy, and made the compilations described below.

Background: The MPRWA created the TAC and asked it to analyze the three proposed desalination
projects to determine if any will meet the December 31, 2016 timeline, be cost effective, and provide the necessary volume of water supply. TAC started with a questionnaire to the three proponents, with 56 specific questions. All three responded within the deadline. From this compilation of responses and additional information from presentations and other documents, TAC narrowed its focus. TAC settled on four areas of greatest concern: cost, technical issues, schedule, and community concerns.

Cost: The different methods and explanations were confusing. TAC requested MPRWA to fund a
consultant review to generate an 'apples to apples' comparison. An RFP was issued, and is in process.

Risk Assessment by TAC:

The other three areas of concern (technical, schedule and community) were isolated for an assessment of risk by TAC members. A total of 13 separate items were determined to be of relatively high risk of causing delay or being contentious that special attention was warranted. All 13 were considered equal. A numerical scale was developed to help form relative distinctions of risk. The assessment format intended to capture TAC member perceptions of facts and understandings. It was not intended to be statistically valid; however it was intended to be a collective view of TAC members. In the scale of ranking, 1 is very high risk, and 5 is relatively low or normal risk. The scale does not indicate that one project is better than another, nor is it a precise measure. However it did indicate the subjective and collective opinion of relative risk.

Overall Ranking (Lower number = higher risk, higher number = lower risk)
Cal Am Total of rankings Avg 35.73 2.75 Deep Water 37.49 2.88 Peoples 39.57 3.04

Highest risk areas of concern:

1.5 1.67 1.75 2.0 2.25 2.33 Summary

Water rights Litigation No public ownership Schedule Unproven technology, No governance Six areas

Schedule CPUC process Schedule

Need full EIR Three areas

Need full EIR Three areas

Lowest Risk Areas

3.83 4.0 4.33 Summary CPUC process Two areas Proven technology One area Discharge CPUC process, Site control Proven technology Three areas

Highest and Lowest quartiles:

The risk rankings between the highest of 1.5 and lowest of 4.33 can be separated into the common use of quartiles. The highest risk quartile is 1.5 through 2.2. The lowest risk quartile is 3.6 through 4.33. Highest Risk Quartile Lowest Risk Quartile Three areas Three areas Two areas Two areas One area Three areas

More than half the TAC agreed on the highest risks (the most 1 and 2 rankings)?
Six agree Five agree Four agree Summary Water rights Litigation Public ownership, Governance Four areas EIR requirements Two areas Pre-treatment, EIR requirements Two areas CPUC process