FILED

BEFORE THE PUBLIC UTILITIES COMMISSION 7-12-17

OF THE STATE OF CALIFORNIA 04:59 PM

Application of California-American
Water Company (U210W) for Approval
of the Monterey Peninsula Water Supply Application 12-04-019
Project and Authorization to Recover All (Filed April 23, 2012)
Present and Future Costs in Rates.

COMMENTS OF PLANNING AND CONSERVATION LEAGUE

FOUNDATION AND SIERRA CLUB ON JOINT STATEMENT OF
ISSUES

ROGER B. MOORE
Rossmann and Moore, LLP
2014 Shattuck Avenue
Berkeley, CA 94704
Tel: (510) 548-1401
Fax: (510) 548-1402
Email: rbm@landwater.com
Attorney for
PLANNING AND CONSERVATION
LEAGUE FOUNDATION

LAURENS SILVER
California Environmental Law Project
PO Box 667
Mill Valley, CA 94942
Tel.: (415) 515-5688
Fax: (510) 237-6598
Email: larrysilver@earthlink.net
Attorney for SIERRA CLUB

Dated: July 11, 2017

These comments are filed pursuant to the June 14, 2017 ruling by Burton W. Mattson
for ALJ Gary Weatherford, The dates for filing a Statement of Issues and comments
are extended. The Statement of Issues shall be filed and served by June 30, 2017.
Comments, if any, on a Statement of Issues shall be filed and served by July 11, 2017.

Support for Additional Testimony on Updated Water Demand Estimates and

Project Costs

The Planning and Conservation League and Sierra Club fully support the
Administrative Law Judge and Assigned Commissioners call for testimony on
updated demand estimates and costs. As detailed below, actual water usage data from
the years since the original demand testimony was provided in this proceeding are
relevant and of important probative value to issues in this proceeding.

Additional Testimony regarding the Potential Additional Supplies From the

Pure Water Monterey Project

In Exhibit A of the Joint Statement of Issues filed on June 30, 2017 several parties
supported the Planning and Conservation League and Land Watch Montereys
suggestion the next hearing include testimony on the potential for additional supplies
from the Pure Water Monterey Project to California American Water.

The Monterey Pollution Control Agency (which is constructing and will operate the
Pure Water Monterey Project) in its portion of the Statement of Issues offered to
provide information on whether more than 3,500 acre feet annually could be
provided from the Pure Water Monterey Project to CAW. And, if possible, provide
approximate cost and timing.

Similarly in its statement of issues the Monterey Peninsula Water Management

District offered to sponsor witnesses on Pure Water Monterey expansion, costs and
schedule.

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Relevance of Additional Testimony on Potential Additional Supplies From the
Pure Water Monterey Project.

There are five justifications for including such testimony in the next round of
hearings: relevance to sizing of the desalination project; reduction in controversy;
timing of implementation; potential for reduced costs to ratepayers, and reduced
greenhouse gas emissions.

Relevance to the sizing of the desalination project. Initial implementation of the Pure
Water Monterey Project has already allowed a significant reduction in the proposed
sizing of the desalination project (See Relevant History below). Increased supply
from an expanded Pure Water Project along with possibly reduced demand estimates
could result in further significant reduction in desalination plant sizing.

Reduction in Controversy. Without taking any position on the merits of any of the
objections to CALAMs Monterey Water Supply Project, a reduction in the sizing of
the desalination project would presumably reduce alleged impacts on the Salinas
River groundwater aquifer and related issues.

Timing of Implementation. Even though the deadline for compliance with the Cease
and Desist Order was extended by the State Water Resources Control Board to 2021,
that leaves barely enough time for implementing the desalination project under a best
case schedule. Known controversies and the potential for additional litigation could
extend the schedule significantly past 2021.

By contrast the Pure Water Monterey Project has proceeded expeditiously. Here is a
summary of its progress:

Advanced Water Purification Facility Bids came in on Thursday, June 29, 2017.

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 Injection Wells - Completed the construction of the deep monitoring well and
drilling another monitoring well. These activities are in Phase 1. Phase 2 Injection
Well Facility design is well underway and will proceed quickly once Phase 1 is
completed.

Conveyance Pipeline Their partner, Marina Coast Water District, has the item out
to bid as well.

Source Water Facilities - Blanco Drain Diversion Structure: The contractor is

getting the last few administrative details cleaned up. Construction will start in early
July.

Additional information as part of their $103 million 1-percent, 30 year SRF loan,
they qualified for a $15M grant for construction related items.

They also submitted a grant request with the City of Salinas for the stormwater
components of the Pure Water Monterey project. They were awarded a $10M grant
back in December. They are in the final stages of negotiation of the agreement with
the State.

Permits They have received most if not all the required permits to begin
construction on all of the facilities. They are currently in the process of developing
the new parameters of the NPDES permit with the regional board.
Administrative items They submitted their first set of reimbursements to the State
for soft cost (planning and design) reimbursement.

Potential For Reduced Costs to Ratepayers. Because the Pure Water Monterey
Project is already proceeding to construction, there may be significant cost saving
opportunities associated with an expansion of the facility. It is our understanding
that the treatment equipment is modular. We understand that there is remaining
physical space for the equipment. Much of the ancillary infrastructure is already
large enough to accommodate an increase in capacity.

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Reduced Greenhouse Gas Emissions. Because the salt concentration in waste water
is only a fraction of that in ocean water the energy requirement for the reverse
osmosis process common to both treatments is substantially less for waste water
recycling. That means that recycling waste water at an expanded Pure Water
Monterey Project would have a significant reduction in energy demand.

To the extent that any of the energy in a desalination project would be from carbon
based fuels there would be a green house gas reduction benefit from expanded
supplies from the Pure Water Monterey Project.

Relevant History Of the Groundwater Recharge Issue (aka Pure Water

Monterey Project) In This Proceeding.

The Planning and Conservation League Foundation was the first to identify the
potential for water recycling to meet some of CALAMs water demands and comply
with the Cease and Desist Order.

PCLFs Motion to Establish Criteria for Decision on Desalination Plant Sizing Filed
12-12-12 set the stage for much of what has transpired in this proceeding:

For the reasons discussed above, PCLF moves that the Commission establish
objective criteriafollowing appropriate input from the partiesto guide the
decision on the size of the desalination plant. PCLF urges that these criteria include
clearly defined milestones in the groundwater project planning process that will
determine whether that projects implementation is sufficiently certain to merit
downsizing the desalination plant, as well as a cost standard for comparing the output
from the two projects.

Although The Administrative Law Judge did not act on that motion, the parties did
develop just such criteria, as described in the Planning and Conservation League
Foundations Opening Brief on Settlement Proposals, January 21, 2014:

Beyond the settlement proposals likelihood of ensuring the most rapid resolution of

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the water supply problems currently facing the Monterey Peninsula, the proposals
also address PCLFs objective that Cal-Am adopt the most environmentally
preferable alternative. Specifically, PCLF has argued that Cal-Am should build a
larger desalination plant only if the concurrently proposed groundwater
replenishment (GWR) project does not materialize within the applicable time frame.
To that end, PCLF filed a motion on December 12, 2012 (Motion to Establish
Criteria for Decision on Desalination Plant Sizing) to request the establishment of
criteria that will guide the Commissions decision on whether to allow a smaller or
larger desalination plant based on progress toward implementation of the GWR
project. That motion sparked extensive discussion among the parties and eventually
led to a multi-party workshop on the subject in June 2013. Following that workshop,
the Governance Committee has taken the lead in developing appropriate criteria to
determine whether the GWR project is sufficiently close to implementation to allow
the downsizing of Cal-Ams desalination plant. Section 4 of the Comprehensive
Agreement incorporates those criteria, and PCLF believes that the Comprehensive
Agreement fully addresses PCLFs concern and, if the Commission adopts the
settlement proposal, eliminates the need for the Commission to rule on PCLFs
original motion, which initiated the development of the sizing-decision criteria.

As noted below, these criteria were specifically cited in the CPUC decision approving
the Water Purchase Agreement between CALAM and the Monterey Pollution
Control Agency.

DECISION ON CALIFORNIA-AMERICAN WATER COMPANYS

APPLICATION FOR APPROVAL OF THE MONTEREY PENINSULA
SUPPLY PROJECT SPECIFICALLY IN REGARDS TO PHASE 2 (adopted by
CPUC on September 15, 2016)

We judge the merits of the Revised WPA using two sets of criteria. First,
parties argue the viability and reasonableness of the GWR and WPA can be measured
by applying the nine criteria used in the Large Settlement Agreement. The
Commission has not adopted the Large Settlement Agreement, and may or may not
ultimately do so. Nonetheless, we agree with parties that the nine criteria are
important elements in considering the viability of the GWR and the reasonableness
of the WPA.

Criterion 5 requires a showing that the GWR is on schedule to be operable on or

before the later of (a) the then-effective date of the CDO or such other date as the
SWRCB states in writing is acceptable or (b) the date the MPWSP desalination
project is scheduled to become operable.

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The GWR is expected to begin initial operation in late 2017, with deliveries of water
to applicant in early 2018. The CDO deadline is December 31, 2021. Thus, the GWR
is expected to be operable before the CDO deadline.

In addition it was the Planning and Conservation League and Sierra Club that
recommended adding an initial milestone for the Pure Water Monterey Project to the
compliance schedule for the extended Cease and Desist Order. Sierra Club/ PCL
letter of July 11, 2016. (Letter attached as Exhibit 1). In its Modification Order
the SWRCB adopted the recommended milestone. Absent that milestone, CALAM
and its customers would have had to suffer water supply cutbacks.

STATE OF CALIFORNIA STATE WATER RESOURCES CONTROL BOARD

ORDER WR (2016-0016 adopted July 19, 2016)

For purposes of calculating a reduction to the Effective Diversion Limit, the

following Milestones and Deadlines will apply:

Start of construction of the Cal-Am components of the Pure Water Monterey

project, meaning commencement of physical work after issuance of required
regulatory permits and authorizations to begin work by September 30, 2017.

Dated: July 11, 2017 By: /s/ Roger B. Moore

Attorney for Planning and Conservation League

Foundation

Dated: July 11, 2017 By: /s/ Laurens Silver

Attorney for Sierra Club