MINUTES 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: Members Absent: Staff Present: 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: NOES: 7 0 DIRECTORS: DIRECTORS: Huss, Israel, Riedl, Riley, Seigfried, Stoldt, Burnett, None Huss, Israel, Riedl, Riley, Seigfried, Stoldt, Burnett, Narigi Executive Director, Legal Counsel, Clerk

MPRWA TAC Minutes ABSENT: ABSTAIN: 1 0 DIRECTORS: DIRECTORS: Narigi None

Monday, February 25, 2013

AGENDA ITEMS 2. Receive Report and Discuss Outside Agency Actions Regarding the Monterey Peninsula Water Supply Project 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, under further consideration voted 4 to 2, 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, with and 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) 2

a.

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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 observed that when the developer began the project in 1983, energy prices declined immediately even though PG&E had forecast a rise in prices, and the developer sold the LFG project to the District. In the beginning years of operating the project, revenues fell short of operating expenses. Lesson learned: be critical of forecasts. Mr. Merry then discussed different types of power purchase agreements and optimal markets to sell their converted power and indicated that PG&E has a strangle hold on small biomass generators 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 eliminate most or all 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 explore options for converting biogas to CNG 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. 3

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Over the last 5 to 7 years, the generation of in-District (ie, from the Peninsula) waste to the landfill has decreased by 35% which is 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 property sits adjacent to the PG&E natural gas pipeline serving the Peninsula and within a year or two may 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 collection of landfill gas will continue for the next 20 to 40 years. 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 per kilowatt-hour, whereas PG&E is paying 7 to 8 cents. Two years ago renewable power could be sold for 10 cents/kw-hr, or more, 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 hold preliminary discussions with Marina Coast about price, but discussions did not proceed to the point of agreeing on a price before other more pressing matters demanded attention at the MCWD. He also clarified to her that the District will always look to make decisions that are in the best interest of the residents, businesses and member agencies of the District. 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 the natural gas pipeline, or other options. Mr. Merry urged the TAC to consider if purchasing power at the lowest possible cost was a prime objective, even if it was not renewable power; and further, if it was important to buy renewable power, was it a primary objective to purchase the power from the District, as opposed to buying renewable power from a broker. 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 4

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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. 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 reported that MRWPCA approved a budget for Groundwater Replenishment at a Special MRWPCA Board meeting on February 11. He also noted that the Pollution Control Agency has been analyzing the downward wastewater flows trend, 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 as budget approval was delayed. 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 5

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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 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 bringing in more stormwater to the sewer system would be beneficial for projects, such as the Groundwater Replenishment and other recycled water 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