California American Water faces a late 2016 deadline to dramatically reduce the amount of water it takes from the Carmel River. This week it released a new proposal for the Monterey Peninsula water supply to the California Public Utilities Commission.
The cost estimate on Cal-Am's new three component project is between $320-million and $370-million. It includes a small desalination plant in North Marina that will produce either 9-million gallons of water a day or 5.4-million. The size will depend on the other components of the project. Cal-Am’s Manager of External Affairs Catherine Bowie (CB) explains in the following interview with KAZU's Krista Almanzan (KA).
CB: The reason we can make is smaller is that we’re looking at purchasing water from the Monterey Regional Water Pollution Control Agency. They have a groundwater replenishment project, which is essentially highly treated recycled water that can deliver up to 3500 acre feet of water a year. So if that project can come online in time to meet the cutbacks, then we will be able to reduce the size of the desalination plant.
And then the third prong is aquifer storage and recovery (ASR). That’s a program that we do in cooperation with the Monterey Peninsula Water Management District. It’s already in operation, and we’re essentially just looking to expand that program. And the way ASR functions is we take the winter flows off the Carmel River that just goes straight out to the ocean. We have additional water rights, so that we can capture some of that excess flow, and then we store it in the natural underground Seaside Basin for withdraw in the summer months when the river dries up.
KA: How do you increase that if it’s dependent on the weather?
CB: It’s really just a matter of having the additional wells and the pipeline capacity to withdraw the water. So we have the water rights to expand the program to get on average an additional 900 acre feet a year, which of course is all dependent on rainfall, and whether or not the river is flowing in the winter time. But we would be adding additional wells to inject water into the basin, and then pump it back out in the summer time.
KA: To pay for this project Cal-Am estimates that it will need to double its annual revenues, so how would Cal-Am do that? And what does that mean for customers?
CB: Well we applied to the California Public Utilities Commission, that is a state agency which is our primary regulator, and so the California Public Utilities Commission approves our rates; they set our rates. And so we would apply for the increase in revenues, and they review that for prudency. It will be a long process, probably about a year, and involve public meetings, input from various stake holders. There’s parties that intervene in the rate case, and the Division of Rate Payer Advocates is an independent arm of the California Public Utilities Commission that will also weigh in on what the rates for the customers should ultimately be.
KA: But you do have estimates in terms of what it could mean for customer bills. Where do those stand at this point?
CB: So the average bill today is about $34 a month. And with the desalination project, and also the future investments that we know will be needed in the system. For example the removal of the San Clemente Dam, which we are also required to do by the state. And just regular capital improvements that are needed in any water system. With those costs added in, the average water bill we think could go to $60 or even $90 a month.
And the reason for the range is that it really depends on how the costs are going to be apportioned to the various customer classes. How much will be charged to residential versus how much to commercial and that’s actually a subject of another Public Utilities Commission proceeding right now.
So if we kept the same rate design we have today the bills would be, the average bill would be going from $34 to just over $60. But if the rate design changes it could be going from $34 to $90 a month.
KA: With the submission of Cal-Am’s application to the PUC it begins a twelve month process, what happens in the next twelve months?
CB: It’s really a quasi judicial process. So the Public Utilities Commission assigns an administrative law judge, and he or she oversees this whole proceeding where essentially we submit our application. We have testimony on that application. Then you have other parties that join in to the proceeding. So the Division of Rate Payer Advocates is always involved in the proceeding.
In this proceeding we also have interveners. WaterPlus, a local group has intervened. LandWatch Monterey County has intervened. And all of these interveners have the ability to cross-examine. There will probably be evidentiary hearings held, there will be public hearings held.
Then at the end of the process the administrative law judge comes out with a proposed decision, and then the Commission can vote on that decision. They can accept it, reject it, change it. And that’s essentially the process.
KA: So with the twelve month process that lies ahead and also lots of construction that lies ahead, is it possible for this project to be done before customers start having to experience serious rationing?
CB: Yes it’s possible. Getting it done before the dramatic cutbacks take effect really depends on moving through the process as quickly as possible. Certainly if there are major challenges, permitting challenges, and other delays then there will be difficult to meet the deadline. We just have to do everything we can. We think that we’ve developed a proposal that has the least risk in terms of permitting or legal challenge. And we’re just completely focused on moving that forward as quickly as possible.
KA: And those dramatic cutbacks would happen at the end of 2016, what would that look like for customers?
CB: It’s a good question, and the truth is that it’s really hard to imagine. Right now our average residential consumption is the lowest in the state. It’s less than 50 gallons per person per day, which is really minimal. And especially considering that most people around here do have some outdoor use.
The state health standards pretty much say that residents cannot be restricted to less than 35 gallons per person today. That 35 gallons is pretty much the minimum you need for indoor use and health and safety. So when we think about getting to those dramatic cutback levels in 2016 that would essentially cut our available water supply in half.
If you’re providing the residents with the 35 gallon minimum there’s really not much left over for commercial use. So we’ve heard a lot from the hospitality industry talking to the regulators at the state saying, please rethink this cutback schedule because there is no way that our hotels and restaurants and businesses could survive without adequate water.
So like I said, it’s just really tough to imagine what life would be like here with half of the water that we have today. I think there’s no question that it would be dramatically different. There would be a huge impact to our businesses, to our jobs, and just our quality of life, and we just hope that we never have to get there.
KA: With the last effort for the Regional desalination plant which didn’t work out. It was a long process. Is there anything from that process, any effort that was put in to that project that can be salvaged to help make this project move a little bit faster?
CB: Absolutely. So there’s a final environmental impact report for the regional project, it was approved by the Public Utilities Commission which was the lead agency, and we essentially want to build off of that Environmental Impact Report. We’re proposing to the Commission that there be a supplemental EIR. And the reason for that is that one of the alternatives in that EIR, which was studied to the full project level, was the North Marina project, which would be a desal plant utilizing all slant well technology owned by California American Water, and that’s essentially what we are proposing now. So a lot of the environmental work has been done, and we think that that report should still be good for the new plan with some modifications.