TAC MPRWA Agenda Packet 03-04-13

Agenda
Monterey Peninsula Regional Water Authority (MPRWA)

Technical Advisory Committee (TAC)
Regular Meeting

2:00 PM, Monday, March 4, 2013
Council Chamber
Few Memorial Hall
Monterey, California

CALL TO ORDER

ROLL CALL

PLEDGE OF ALLEGIANCE

REPORTS FROM TAC MEMBERS

PUBLIC COMMENTS
PUBLIC COMMENTS allows you, the public, to speak for a maximum of three minutes on any
subject which is within the jurisdiction of the MPRWA TAC and which is not on the agenda. Any
person or group desiring to bring an item to the attention of the Committee may do so by
addressing the Committee during Public Comments or by addressing a letter of explanation to:
MPRWA TAC, Attn: Monterey City Clerk, 580 Pacific St, Monterey, CA 93940. The appropriate
staff person will contact the sender concerning the details.

APPROVAL OF MINUTES

1. February 25, 2013

AGENDA ITEMS

2. Receive Report Regarding Pacific Grove Small Water Projects and Make
Recommendations As Necessary (Frutchey)

3. Receive Report Regarding Monterey Regional Water Pollution Control Association Feb 27,
2013 Meeting Regarding The Ground Water Replenishment Project (Israel)

a. Discuss Criteria Governance Committee Shall Use in Making Ground Water
Replenishment Recommendation as specified in category A.1 of the Governance
Committee Agreement

4. Receive Report from Cal-Am Water Regarding Progress in Meeting Authority Adopted
Conditions for Monterey Peninsula Water Supply Project

5. Discuss and Review Benefits and Disadvantages of Private Investor-Owned vs. Public
Ownership of Desalination Facilities (Riley)

ADJOURNMENT

Created date 03/01/2013 1:52 PM Monday, March 4, 2013
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The Monterey Peninsula Regional Water Authority is committed to include the disabled in all of
its services, programs and activities. For disabled access, dial 711 to use the California Relay
Service (CRS) to speak to staff at the Monterey City Clerks Office, the Principal Office of the
Authority. CRS offers free text-to-speech, speech-to-speech, and Spanish-language services
24 hours a day, 7 days a week. If you require a hearing amplification device to attend a
meeting, dial 711 to use CRS to talk to staff at the Monterey City Clerks Office at
(831) 646-3935 to coordinate use of a device or for information on an agenda.

Agenda related writings or documents provided to the MPRWA are available for public
inspection during the meeting or may be requested from the Monterey City Clerks Office at 580
Pacific St, Room 6, Monterey, CA 93940. This agenda is posted in compliance with California
Government Code Section 54954.2(a) or Section 54956.

M I N U T E S
MONTEREY PENINSULA WATER AUTHORITY (MPRWA)
TECHNICAL ADVISORY COMMITTEE (TAC)
Regular meeting
2:00 PM, Monday, February 25, 2013
580 PACIFIC STREET
CITY COUNCIL CHAMBERS
MONTEREY, CALIFORNIA

Members Present: Burnett, Stoldt, Riedl, Israel, Seigfried, Riley

Members Absent: Huss, Narigi

Staff Present: Executive Director, Legal Counsel, Clerk

CALL TO ORDER

ROLL CALL

PLEDGE OF ALLEGIANCE

REPORTS FROM TAC MEMBERS

Chair Burnett reported on a meeting he attended with the California Coastal Commission and
Cal Am to discuss permitting issues for the Monterey Peninsula Water Supply Project test
wells. They also discussed the process of for obtaining parallel permits and requested that the
Authority host monthly meetings to stay informed about the project application status. He
indicated that several action items resulted from the meeting for Cal Am to follow up with. Chair
Burnett also took the opportunity to recognize two staff members for their efforts toward
submitting testimony to the California Public Utilities Commission prior to the deadline on
February 22, 2013.

PUBLIC COMMENTS

Chair Burnett opened the item to public comments for items not on the agenda and had no
requests to speak.
APPROVAL OF MINUTES

1. February 4, 2013

On a motion by Member Stoldt seconded by Member Riley and carried by the following vote,
the Monterey Peninsula Regional Water Authority TAC approved the minutes of February 4,
2013 as amended.

AYES: 6 DIRECTORS:
Burnett, Riedl, Siegfried, Israel, Narigi, Riley
NOES: 0 DIRECTORS: None
ABSENT: 2 DIRECTORS: Huss, Narigi
MPRWA TAC Meeting, 3/4/2013 , tem No. 1., tem Page 1, Packet Page 1
MPRWA TAC Minutes Monday, February 25, 2013

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ABSTAIN: 0 DIRECTORS: None

AGENDA ITEMS

2. Receive Report and Discuss Outside Agency Actions Regarding the Monterey Peninsula Water
Supply Project

a. Monterey County Board of Supervisors - (Burnett)

Chair Burnett reported that the Monterey County Board of Supervisors supported and adopted
the Authoritys position statement as well as discussed the issue of the statement of principles.
The Governance committee document was unanimously approved and the Board appointed to
the governance committee the primary representative Supervisor Potter and an alternate
representative the Supervisor from the Salinas region. Chair Burnett acknowledged it as an
important step to have a united voice with all six member city mayors and all five supervisors to
have the same stance. The Board endorsed the statement of principles in general, but did not
formally adopt the position statement as their own due to pending litigation and settlement
agreement with Cal Am. Chair Burnett opened this item to public comment, and having no
requests to speak, turned to the next report from Member Stoldt.

b. Monterey Peninsula Water Management District - (Stoldt)

Member Stoldt reported on the Monterey Peninsula Water Management District Board meeting
on January 30, 2013 and approved similar actions including stronger support for Ground Water
Replenishment, and pending the identification of non substantive changes, approved the
Governance document. MPWMD re-endorsed the concept of a public contribution as well as
several other financial suggestions. The Board voted 6-0 to oppose surcharge two, and
continued to endorse further evaluation of backstops. The issue of project sizing, a general
statement of support, was deferred to a special meeting on February 12, 2013 where the Board
agreed with the demand forecast and project sizing, facility sizing 1,252 acre/feet with GWR,
1,952 acre/feet without GWR.

Chair Burnett opened the item for comments from the public. Sue McCloud spoke to a letter
published in the Monterey Herald opinion page from Member Stoldt, thanking him for making a
complicated project more understandable to the public. She then suggested publication of the
same Article in the Salinas Californian. Nelson Vega questioned why Member Stoldt did not
include the costs per acre foot because he thinks the public is only concerned about the cost
and if the project can be built He then requested that the Authority help Cal Am attain the source
water need for the MPWSP project. With no further requests to speak, Chair Burnett closed
public comment.

c. Monterey Regional Water Pollution Control Agency - (Israel)

Member Israel deferred to report on this item until Agenda Item 4.

d. Monterey Regional Waste Management District Presentation of Availability of Landfill Gas for
Power Generation (W. Merry)

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William Merry from the Monterey Regional Waste Management District made a presentation on
efforts to make the landfill gas (LFG) to energy project viable enough to sell power to a
desalination facility. The District has been producing energy through the landfill gas to energy
program for 30 years. Mr. Merry discussed that the LFG program is an economic benefit for a
small to medium landfill however there have been many lessons learned over the course of the
project. He discussed one project that the District undertook that consisted of an energy
purchase agreement with PG&E that was an economic loser to the District due to
unforeseeable energy cost fluctuation.

Mr. Merry then discussed different types of purchase agreements and optimal markets to sell
their converted power and indicated that PG&E has a strangle hold on adding new generation
to the grid. That would be a disincentive to go forward with energy production, but an
agreement with the MPWSP project would be an over the fence or direct access agreement
and would not be subject to PGE fees. He also indicated that the District currently has the
opportunity to sell gas as boiler fuel and in the future is considering increasing generation of
energy to 7 megawatts. Mr. Merry also explained that the District is exploring the option to turn
the landfill gas into compressed natural gas to fuel vehicles and currently has an informal
agreement with the MRWPCA to run vehicles on the alternative fuel. Mr. Merry further
explained that efforts to diversify opportunities to utilize landfill gas is a redundancy that small
producers can use to stay profitable. He encouraged the Authority to urge Cal Am to consider
the District energy as a way to close the loop by buying local energy.

Items/challenges that would need to be addressed if the MPWSP would consider Purchasing
power from the District:
The district is actively engaged in making decisions for the next 10 to 20 years. They
need to use the LFG productively or flare it off.
Addressing the imbalance: if the demand is higher than the supply? On a growth scale.
They are producing 24/7. Tolerance for supply changes
Identification of the redundancy requirements
Identification of the demand including: continuous, average demand; maximum; and
seasonal
Identification of the tolerance for electric power supply to be down (in the event of a
PG&E mandated shut down, or Natural Disaster)
What is facilitys power redundancy requirements/plan
What is facilitys anticipated down time?
What would MPWSP be willing to pay for power on a kilowatt-hour basis? District will
need to be paid at market rates
When would MPWSP wish to negotiate, sign a power sales agreement?

Mr. Merry answered questions from the TAC. Member Siegfried asked if the District had the
ability or would consider selling the LFG in raw form to the desal facility instead of processing it
at your facility, so that the facility would be able to use that heat generated during combustion
to make the process more efficient. Mr. Merry responded by discussion of the supply source
and lifespan of the landfill. Regulations from the state are requiring greater diversion from the
landfill. On the waste water side, there is a push to develop power generation through solids.
Over the last 5 to 7 years, the generation of waste to the landfill has decreased by 35% which is

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for a variety of reasons, including a fundamental shift by consumers to buy smaller and
construction and demolition waste has been repressed from the economy. Contracts for
bringing waste from other areas is making up for lost tonnage and revenues and even with
those contracts the District has an anticipated lifespan of 150 more years. He indicated that the
District facility is on top of the natural gas pipeline and within a year or two would have the
ability to feed natural gas into the pipeline for sale.
Member Stoldt asked about proven reserves for landfill gas. Mr. Merry indicated that an
average forecast for LFG was thought to be 20 years, 30 to 40 years in a drier environment.
The District, however, is still generating gas from the part of the landfill that was filled 50 years
ago. In future years, they are looking at minimizing what is going into a landfill, but box gas
collection is an optional technique.
Mr. Merry responded to the question about current power sales costs and indicated that power
the District sells as renewable in the bay area is making 8.5 cents where PG&E is charging 7 to
8 cents. Two years ago 10 cents was the going rate, but depends on markets as solar and
Wind overbuilt. Over the fence agreements are advantageous because there are fewer fees
and processing charges.

Chair Burnett opened for public comment. Libby Downey questioned the market rate of power
and how Marina Coast was able to get a better rate. She expressed frustration at the statement
made by Cal Am Representative Rich Svinland that the MPWSP would not purchase power
from any company outside of PG&E. Nelson Vega questioned the reliability of the power in the
event of a disaster and also questioned the financial ability to weather price fluctuations. With
no further requests to speak, Chair Burnett closed public comment.

Mr. Merry responded to Mrs. Downey, indicating that the District did talk to Marina Coast about
price, but was not able to reach an agreeable price and he clarified to her that the District will
always look to and make decisions that are in their best interest. Speaking to Mr. Vega's
comment about reliability, if they were to form an agreement there would be redundancies built
into the system such as a contract with PG&E, the ability to tap into natural gas line or other
options.

Chair Burnett clarified that one of the Authority adopted positions includes having direct
decision making ability with regard to the procurement of all non PG&E power. The pending
Governance committee could work together with the District on this issue.

3. Report from Cal-Am Regarding Test Well Design, Development and Permitting

Cal Am Representative Richard Svindland updated the TAC regarding the test well design,
development and permit progress indicating that there is a meeting scheduled with the
company Semex this week to finalize their permission to proceed by accepting the operation
will not affect their ability to harvest sand. This permission is needed to be able to submit for
permits before the Coastal Commission as early as August, and as late as October, in time to
construct prior to the snowy plover nesting season.
Mr. Svindland reported that design is under way, using the first presented design and modifying
for the current site. The process of procuring the test well has begun with intention to drill
November 1, 2013. This schedule does include the process of obtaining the permits from City
of Marina. He then answered questions from the TAC.

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Chair Burnett opened the item for public comment, having no requests to speak, closed public
comment. He requested at the next TAC meeting that Cal Am provide an update on all eight
conditions the Authority has approved.

4. Receive and Discuss Update on Ground Water Recharge, Aquifer Storage and Recovery, and
Pacific Grove Small Water Projects

Member Israel presented the report and indicated the Pollution Control Agency has been
analyzing the rate of flows and have identified different flow trends and projections for flows in
different scenarios, including combining other water sources. The PCA still anticipates the
project being completed on schedule by December 2016. Member Israel expressed gratitude
for the article in the Newspaper from the Water Management District as well as from the
Authority.
Member Israel then expressed concern that over the last year there has not been a significant
amount of money or effort on public outreach. There is a budget, but it has not been utilized.
With this type of project there are many issues and misconceptions many being factual
information competing with opinion and interpretation. The MRWPCA is intending to ramp up
efforts including scheduling trips to Orange County to work with staff that has a great outreach
program which they can learn from. Member Israel answered questions from the TAC.
Chair Burnett offered that as the public outreach effort begins, please look to Mayors and
Authority as a partner expressing the idea that the message and the messenger are important.
The Mayors have been unanimous in support of GWR and they should be used as a resource.
Member Riley expressed concern about the Authoritys future decision points undermining the
commitments of the PCA in the future. The TAC discussed the ability of the project to proceed,
the commitments that have been made and the potential hurdles that could obstruct the
process.

Chair Burnett opened the item to public comment. Nelson Vega spoke to the cost of water, and
the unresolved issue of source water. He requested that the TAC encourage the Authority to
request an extension to the Cease and Desist Order deadline and look at the most cost
effective way to get water. Jim Cullem spoke to and provided an article from the MIT
Technology Review Magazine indicating concerning points include the availability of funding for
public outreach and encouraged the Authority to be more proactive and focus on the public
outreach and the potential for GWR, with the yuck factor. Suggest we preempt with good
examples of effective GWR campaigns so people understand the water cycle before it is placed
in the Seaside Aquifer. With no further requests to speak, public comment was closed.

Burnett responded that the Authority is working to re-engage the State Water Board on having
a periodic meeting regarding the CDO but clarified that they Authority would not be requesting
an extension at this point, but engaging now with the Board will allow them to see the progress
the region is making which will only help if they do ask for an extension in the future. The TAC
discussed optional outreach methods and tours that would help engage and educate the public
and local agencies on this issue, but refocused to say the goal is to focus efforts and keep
things moving at this time.
Member Stoldt then reported on the Monterey Peninsula Water Management Districts ASR

6
project indicating that six of the eight wells have been constructed. The Third and fourth well
are owned and operated at the Seaside Middle school and will be completed during summer
vacation. Wells five and six are part of the application for MPWSP. Permits will be restructured
to accept water from anywhere instead of a specific source. There is an eight well total capacity
at this time, and could potentially increase to 10 in the future. Additionally the WMD is
expanding a back flush pit for the third and forth site. He reported that funding is strong, and
progress is strong. Chair Burnett opened the ASR discussion for public comment, and having
no requests to speak, closed public comment.

Israel made a clarifying statement that these projects are all conscious not to take water that
would impact other areas or projects. He also commented on the role of storm water indicating
the PCA is exploring the use of the winter water flows and that Pacific Grove has been using
grant funding to divert storm water from the bay, and wants to develop projects to help
encourage the community to divert storm water flow from the bay back to the PCA.

5. Receive Testimony Submitted to California Public Utilities Commission February 22, 2013
Deadline for Application (A- 12-04-019) Based on the MPRWA Approved Position Statement
(Information Only)

Burnett spoke to the item and indicated it was for information only then opened the item to the
public for comment. Having none, closed public comment.
Executive Director Reichmuth clarified the agenda items for the next meeting. Having no further
business to come before the TAC, Chair Burnett adjourned the meeting.

ADJOURNMENT

Respectfully Submitted, Approved,

Lesley Milton, Committee Clerk President MPRWA
Monterey Peninsula Regional Water Authority
Agenda Report

Date: March 04, 2013
Item No: 2.

08/12

FROM: Prepared By: Clerk to the Authority

SUBJECT: Receive Report Regarding Pacific Grove Small Water Projects and Make
Recommendations As Necessary

DISCUSSION:

There is no written report for this item. An oral presentation from Pacific Grove City Manager
Tom Frutchey will take place at the meeting.


Agenda Report

Item No: 3.

08/12


SUBJECT: Receive Report Regarding Monterey Regional Water Pollution Control
Association Feb 27, 2013 Meeting Regarding the Ground Water Replenishment
Project (Israel)

DISCUSSION:

There is no written report for this item. An oral presentation from TAC Member Israel will take
place at the meeting.


Agenda Report

Item No: 4.

08/12


SUBJECT: Receive Report from Cal-Am Water Regarding Progress in Meeting Authority
Adopted Conditions for Monterey Peninsula Water Supply Project

DISCUSSION:

There is no written report for this item. An oral report will be given by a representative from Cal
Am at the meeting.


Agenda Report

Item No: 5.

08/12


SUBJECT: Discuss and Review Benefits and Disadvantages of Private Investor-Owned vs.
Public Ownership of Desalination Facilities (Riley)

DISCUSSION:

There is no written report for this item. An oral presentation given by TAC Member Riley will
take place at the meeting.

ATTACHMENT: Public Ownership Of Desal ??? By Citizens For Public Water, Monterey
Peninsula
PUBLIC OWNERSHIP of DESAL ???

From: Citizens for Public Water, Monterey Peninsula March 1, 2013

BACKGROUND
Water is a natural resource vital for all life and survival. Local supplies from Carmel River and
Seaswide Basin are over-drafted and are being restricted. New supplies are required for ongoing
viability of the Monterey Peninsula. Desal is one supply option, and the most expensive. One choice
about desal is to 1) continue with Cal Am monopoly ownership and control of major water production,
including new desal facilities, or 2) convert to public ownership of new desal production facilities.

CAL AM CORPORATE
MONOPOLY
PUBLIC OWNERSHIP
AGENCY/PARTNERSHIP

BASIC DIFFERENCES
Fundamental corporate requirement to
generate profit and investment equity growth
Fundamental requirement to honor a public
trust and serve the public interest
Profit and equity growth can conflict with
public trust and public interest
Public agency accountability does not
include any profit or equity considerations.
About 20% of Californians get water from
corporate or private providers. 15%
nationwide
About 80% of Californians get water from
public agencies. 85% nationally.
Investor Owned Utilities (i.e., Cal Am) are
regulated by CA Public Utilities Commission
(CPUC)
Public utilities are regulated locally, under
state law.
Distribution of product water to customers is
a natural monopoly. Production of product
water for distribution is not a natural
monopoly.
Public agency production can sell product
water to the monopoly distribution purveyor.
Cal Am has no local meetings open to the
public, and no requirement to do so. Only
the CPUC holds local meetings, and then
only to review a specific Cal Am project.
Public agencies are subject to state law
regarding public notice, public hearings,
open meetings, public access, and public
official accountability to conflict of interest
and campaign contribution laws.
The CPUC has jurisdiction over privately
owned utilities,
CPUC has no jurisdiction over publicly
owned systems

COSTS AND SAVINGS
Return to Cal Am is 8% +/- (based on an
average of return on equity of 10% and
interest on debt of 6%.
Public agencies make no profit. Debt cost is
about 4%, substantially less than corporate
debt.
Corporate bonds are taxable, Public bonds are tax free.
A $400 million capital project financed over
30 years will have profit and interest costs of
another $600 million
A $400 million capital project with public
bond financing will add about $400 million, a
savings of about $200 million over 30 years.
Corporate utilities must pay income and
property taxes
Public agencies pay no income taxes. They
pay no property taxes, but may make 'in lieu'
payments to other public agencies.
Corporate utilities are not eligible for federal
and state grants.
Public agencies are eligible, and can lower
costs with grants.
Corporate utilities are eligible for limited
public low interest loans.
Low interest loans were initially intended for
public agencies, and are more likely to
available, and in larger amounts.

NOT LOCAL VS LOCAL
Cal Am headquarters are in San Diego. It is
a is wholly owned subsidiary of American
Water Works, with its headquarters in New
Jersey.
The full range of decision-makers would be
known, and they would be local.
American Water Works is a powerful market
force in the water industry. No. 1 in the
USA. Headquarters in New Jersey..
Local control by people who live here will
more likely consider our needs, and those of
our children, grandchildren and great
grandchildren.
Administrative costs for off-site activities
such as policy and financial management,
computer and call center services, are
exported out of the Monterey Peninsula
economy.
Public ownership would reduce the amount
of expenses that are exported. The monies
needed for local services would churn in the
local economy.
Cal Am lists no local phone numbers. Call
Center is out of state. Reps are not familiar
with local area. .
Ratepayers could report leaks and complain
if necessary to a local office, and to someone
who knows the area.
All customer payments, including 8% profit
+/-, and 1%-2% administrative costs, are
exported out of the local economy.
Customer payments would go directly and
completely to the public entity, and probably
through local banks.
CA review and approval proceedings take
place at CPUC in San Francisco.
With a local public water agency, all project
proceedings at the CA Public Utilities
Commission (CPUC) would be eliminated.
Only rate-setting for Cal Am purchased water
and distribution would go to CPUC.


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