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Investing in your water … investing in your future

California American Water2009 - 2011 General Rate & Conservation Case Applications

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Monterey Water District by the Numbers Water system established in 1882

38,000 connections; 120,000 population including sub-systems (Ryan Ranch, Hidden Hills, Bishop, Ambler Park, Ralph Lane, Chualar & Toro)

680 miles of water mains

3,012 fire hydrants

18 wells along Carmel River; 8 wells in Seaside Basin Aquifer

Two reservoirs, San Clemente & Los Padres

99 storage tanks, 87AF capacity – plan to add 26AF in 2008 - 2011

Elevation: 0’ – 1,210’ (0 – 524 psi)

83 pump stations, 75 pressure regulating stations

7 satellite well systems

90 full-time employees, two-thirds Utility Workers of America representation

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System Usage by Type

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Residential 45%

Unaccounted-for-Water 12%

Multi-residential 9%

Commercial 22%

Industrial 1%Golf Course 3%

Public Authority 9%

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Current Applications

1. Monterey General Rate Case (GRC)

Includes all satellite systems

2. General Office Rate Case

3. Conservation Application

1. Monterey Wastewater GRC

2. Felton GRC

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Setting Your Water RatesA 20-month Process

*DRA = Division of Ratepayer Advocates, an independent entity of CPUC

GRC Schedule:

Initial proposal filed November 30, 2007

Final Application filed January 30, 2008

Public hearings in Monterey May 8 & 9, 2008

DRA Report on their findings and review August 2008

Evidentiary hearings October 2008

Proposed Decision by Administrative Law Judge April 2009

Final Decision by CPUC Commissioners in June 2009

Final rates effective July 2009

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GRC Proposed ChangesIncrease in 2009 mainly driven by Capital Investment

ITEM 2008 2009 2010 2011

Residential Bill

$29.60 $52.60 $59.03 $66.44

Percent Increase NA 80% 12% 12%

Revenue Increase NA $24.7M $6.5M $7.6M

Capital Investment $19.4M $45.1M $79.7M $19.0M

Commercial, Industrial and Public Authority customers will receive the same percentage increase

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Filings for a Sustainable System

1. Conservation December 14, 2007

2. Current GRC + General Office January 30, 2008

For rates in 2009 – 2011

3. Rate of Return May 2008

4. San Clemente Dam Total Cost Recovery Future

5. Next GRC + Support Functions May 2010

For rates in 2012 - 2014

6. Coastal Water Project EIR & CPCN On-going review

7. CWP Total Cost Recovery Future

– Monterey Customers currently pay for Coastal Water Project preconstruction costs through a surcharge on the bill

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Capital Investment

62%

Labor 8%

Seaside Basin & Sand City 16%

Other 4%

General Office 7%

Loss of Consumption 3%

Major Drivers of Rate Request2009 – 2011

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Capital Investment – 62%2008 – 2011 ($170M Total)

Reduce Leaks: 23%$39M

Meet Peak Demand: 8% $13M

Protect Environment & Regulatory Compliance: 55%

$93MImprove Reliability &Water Quality: 10%

$18M

Other Improvements: 4%$7M

* % of total capital

– Construction costs for Coastal Water Project not included

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Labor – 8%

Clerical Position

Operations Specialist

Systems Operations Specialist

Senior Operations Engineer

Operations Engineer in Training

4 Maintenance Technicians

4 Utility Workers

Valve Turner

Backhoe Operator

– 15 Additional Employees Proposed– Payroll increases & benefits of existing employees

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General Office & Other – 14%

General Office: 7%– Customer Service Center– Belleville Laboratory– Finance & Legal– External Affairs– Other

Maintenance & Other: 4%– Power– Chemicals– Supplies– Maintenance projects

Loss of Consumption: 3%

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Regulatory Impacts To Your Water Supply – 16%

1979 – 1988

Historic

1995 – 2006

95-10Interim Goal

WY 2009

1st Seaside Reduction

ULTIMATE

95-10 + Seaside

Carmel River 14,106 AFY

11,285 AFY 11,285 AFY 3,376 AFY

Seaside BasinCoastal 2,700 AFY 4,000 AFY 3,191 AFY 1,494 AFY

Seaside BasinLaguna Seca 210 AFY 700 AFY 271 AFY 0 AFY

TOTAL 17,016 AFY 15,985 AFY 14,747 AFY 4,870 AFY

10,000 AFY reduction from 2009 limit or replacement supply needed

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Seaside Adjudication Changed Your Supply

Decision issued March 2006

2,500 AF reduction from recent pumping levels required by 2021

15% - 20% reduction in overall customer demand or increase in supply needed to meet order

– 1% reduction in consumption each year until 2021

– This reduction is for Seaside Adjudication Only

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2009 Seaside Basin Fees & Sand City Desal Lease – 16%

2009 Amount Over Ultimate Limit 1,866 AF

Replenishment Fee $4,600,000

Other Seaside Basin Fees $800,000

Sand City Desal Plant Lease $800,000

Total Fees $6,200,000

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Conservation Application Filing

Further conservation needed due to reduced water supply

$1.7M additional annual expenses for conservation items

5% rate increase for conservation expenses – in addition to GRC

Rates will impact large users more than average users

Estimated water savings = 300 AFY or 97M gallons

Accelerated timeline; interim phased decisions

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State Water Resources Control Board (SWRCB) Draft Cease & Desist Order (DCDO)

Enforces Order 95-10, which limits Carmel River diversions to 3,376 AFY (interim goal of 11,285 AFY)

SWRCB Order 95-10 hearings ’92 – ’95:

– Determine waters in valley “underflow” - not groundwater

– Allowed continued diversion of water from the Carmel River

– Required diligent pursuit of alternative water supplies

– Established measures to protect environment while diversions continued

“Plan B” to Coastal Water Project, ASR, Sand City Desal, Recycled Water and REPOG

SWRCB Public Hearing set:

– Tuesday April 1, 2008 1:00 p.m. at Monterey Conference Center

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Proposed Reduction Schedule

Water YearPercent Reduction

from Goal

Max End of Year Diversion Amount

2008-0915% 9,592 AFY

2009-10

2010-1120% 9,028 AFY

2011-12

2012-1335% 7,335 AFY

2013-14

2014- 50% 5,642 AFY

• Water year = October 1 – September 30

• Interim goal = 11,285 AFY (used as base line)

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Investing in your water … investing in your future

California American WaterQuestions?

California Public Utilities Commission

Public Advisor’s Office

505 Van Ness Avenue

San Francisco, California 94102

1-866-849-8390 (toll-free)

(415) 703-2074

Email: public.advisor@cpuc.ca.gov

Case Number: A.08-01-027

CPUC Public Participation Hearings

May 28 – 7pm, Chualar Elementary School

May 29 – 2pm & 6pm, Monterey City Hall