TAC MPRWA Agenda Packet 01-07-13

Agenda Monterey Peninsula Regional Water Authority (MPRWA) Technical Advisory Committee (TAC) Regular Meeting 2:00 PM,
Monday, January 7, 2013

Few Memorial Hall of Records City Council Chamber 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. 2. November 19, 2012 December 3, 2012 AGENDA ITEMS 3. 4. 5. Review and Provide Recommendation of State Water Board Memo Regarding Water Rights Review and Provide Recommendation for Final Consultants Report: Evaluation of Seawater Desalination Projects Discuss Framework for Decision Making Regarding Public Utilities Commission Testimony on Desalination Project for Testimony Due January 2013 and Provide Recommendation to Authority Board Discuss and Provide Recommendation of Options for Providing Source Water for Ground Water Replenishment Project ADJOURNMENT
6.
Created date 01/04/2013 2:34 PM
Monday, January 7, 2013
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.
Monterey Peninsula Regional Water Authority Agenda Report
Date: January 07, 2013 Item No: 1.
FROM:
Clerk of the Authority
SUBJECT:
November 19, 2012 Minutes
DISCUSSION:
There is no report for this item. A copy of the Draft Minutes will be provided at the meeting.
08/12
MPRWA TAC Meeting, 1/7/2013 , Item No. 1., Item Page 1, Packet Page 1
FROM:
SUBJECT:
December 3, 2012 Minutes
DISCUSSION:
There is no report for this item. A copy of the Draft Minutes will be provided at the meeting.
08/12
FROM:
SUBJECT:
Review and Provide Recommendation of State Water Board Memo Regarding Water Rights
DISCUSSION:
There is no report for this item. Discussion of the attached documents will take place at the meeting.
Attachments:
MPWSP CPUC Memo SWCRB MPWSP Draft Staff Report
08/12
STATE WATER RESOURCES CONTROL BOARD DRAFT REVIEW OF CALIFORNIA AMERICAN WATER COMPANYS MONTEREY PENINSULA CT
TABLE OF CONTENTS 1. Introduction 2. 3. 4. Background Monterey Peninsula Water Supply Project Description Physical Setting 4.1 Groundwater Aquifers 4.2 Groundwater Quality 4.3 Groundwater Recharge and Discharge 4.4 Groundwater Budget 4.5 Groundwater Modeling 5. 6. 7. North Marina Alternative Project Monterey Regional Water Supply Project Proposed Monterey Peninsula Water Supply Project 7.1 Pumping from Unconfined Conditions 7.2 Pumping from Confined Conditions 8. 9. Legal Discussion of Proposed Extraction Wells in Salinas Basin Discussion: 9.1 General Principles of Groundwater Law 9.2 Developed Water 9.3 Physical Solution Discussion 10. Conclusion: 11. Recommendations 1 2 2 5 5 8 8 9 9 10 11 13 14 16 17 18 18 20 23 28 30
i MPRWA TAC Meeting, 1/7/2013 , Item No. 3., Item Page 5, Packet Page 9
1. Introduction
In a letter dated September 26, 2012, the California Public Utility Commission (Commission) asked the State Water Resources Control Board (State Water Board) whether the California American Water Company (Cal-Am) has the legal right to extract desalination feed water for the proposed Monterey Peninsula Water Supply Project (MPWSP). The Commission stated that it is not asking for a determination of water rights, but is instead requesting an opinion as to whether Cal-Am has a credible legal claim to extract feed water for the proposed MPWSP, in order to inform the Commissions determination regarding the legal feasibility of the MPWSP. In a letter dated November 16, 2012, the State Water Board informed the Commission that State Water Board staff would prepare an initial report for the Commission and for public review. Cal-Am proposes several approaches that it claims would legally allow it to extract water from the Salinas Basin (Basin) near or beneath Monterey Bay without violating groundwater rights or injuring other groundwater users in the Basin. The purpose of this report is to examine the available technical information and outline legal considerations which would apply to Cal-Ams proposed MPWSP. This paper will: (1) examine the available technical information; (2) discuss the effect the proposed MPWSP could have on other users in the Basin; (3) discuss the legal constraints that will apply to any user who proposes to extract water from the Basin; and (4) outline information that will be necessary to further explore MPWSPs feasibility and impacts. Ultimately, whether a legal means exists for Cal-Am to extract water from the Basin, as described in its proposal outlined in the California Environmental Quality Act (CEQA) Notice of Preparation 1 (NOP) document, will depend on developing key hydrogeologic information to support established principles of groundwater law.
California Public Utilities Commission, Notice of Preparation, Environmental Impact Report for the Cal-Am Monterey Peninsula Water Supply Project, October 2012, available at: http://www.cpuc.ca.gov/Environment/info/esa/mpwsp/pdf/NOP100812print-ready.pdf
2. Background
In 2004, Cal-Am filed Application A.04-09-019 with the Commission seeking a Certificate of Public Convenience and Necessity for the Coastal Water Project. The primary purpose of the Coastal Water Project was to replace existing water supplies that have been constrained by legal decisions affecting the Carmel River and Seaside Groundwater Basin water resources. The Coastal Water Project proposed to use existing intakes at the Moss Landing Power Plant to draw source water for a new desalinization plant at Moss Landing. In January 2009, the Commission issued a Draft Environmental Impact Report (EIR) for the Coastal Water Project and two project alternatives the North Marina Project and the Monterey Regional Water Supply Project (Regional Project). In October 2009, the Commission issued the Final EIR 2 (FEIR) and in December 2009, it certified the FEIR. In December 2010, the Commission approved implementation of the Regional Project. In January 2012, Cal-Am withdrew its support for the Regional Project and subsequently submitted Application A.12-04-019 to the Commission for the proposed MPWSP as described in their September 26, 2012 letter. In October 2012, the Commission issued a NOP for an EIR for the proposed MPWSP.
12. Monterey Peninsula Water Supply Project Description

According to the MPWSP description in the NOP, the intake system of the MPWSP would consist of eight 750-footlong subsurface slant wells which would extend offshore and terminate approximately 200 feet into the Monterey Bay. These wells would draw water from beneath the ocean floor for use as source water for the proposed desalination plant. The proposed location for the slant wells is a 376-acre coastal property located north of the city of Marina (Figure SWB 1). Approximately 22 million gallons of water per day (mgd) would be extracted from the wells in order to produce 9 mgd of desalinated product water.
Cal-Am, Coastal Water Project, FEIR, October 30, 2009.
The NOP does not provide all the information necessary for the State Water Board to address the issue of water rights. The NOP does not provide information on the proposed depth of the slant wells or provide information on which aquifer(s) the wells will extract water from. Further complicating the analysis, the relationship of the aquifers in the well area to surrounding low permeability aquitards is uncertain. Given these significant unknowns, this State Water Board report attempts to provide the Commission with a review of the MPWSP by assuming the MPWSP hydrogeologic characteristics and response would be similar to one of the project alternatives analyzed in the FEIR. State Water Board staff relied heavily upon the analysis in the FEIR. Of the two project alternatives in the FEIR, the North Marina Project more closely resembles the proposed MPWSP described in the NOP. For this reason, State Water Board staff assumes that most of the information, including the slant wells construction and operation as described in the FEIR North Marina Project Alternative 3 , is applicable to the proposed MPWSP. However, in an effort to be inclusive, this draft report also provides a summary of the Regional Projects hydrogeologic impacts.
FEIR, Section 3.3 North Marina Project, October, 2009.
Figure SWB 1
4. Physical Setting
4.1 Groundwater Aquifers The location of the proposed slant wells is in the 180/400 Foot Aquifer subbasin of the Salinas Valley Groundwater Basin 4 (Basin, Salinas Basin, or SVGB). Figure SWB-2 shows the outline of the 180/400 Foot Aquifer subbasin. The SVGB extends approximately 100 miles from Monterey Bay in the northwest to the headwaters of the Salinas River in the southeast. Major aquifers in the SVGB have been named for the average depth at which they occur. The aquifers from top to bottom include the 180-Foot Aquifer, the 400-Foot Aquifer and the 900-Foot or Deep Aquifer. A near-surface water-bearing zone comprised of dune sands, commonly referred to as the dune sand aquifer, also exists but is considered a minor source of water due to its poor quality. The dune sand aquifer is not regionally extensive and is limited in its extent. 5 It is not a recognized sub-basin within the SVGB. The amount of groundwater in storage in the dune sand aquifer is unknown. Figure SWB 3 is a cross-section taken from the FEIR for the Coastal Water Project that shows the relationship of aquifers and aquitards. The 180-Foot Aquifer is generally confined by the overlying Salinas Valley Aquitard (SVA). The SVA is a well-defined clay formation that extends vertically from the ground surface to approximately 100 to 150 feet below mean sea level (msl) and extends laterally from Monterey Bay to 10 miles south of Salinas. The SVA is a low permeability layer that retards the vertical movement of water to the underlying 180-Foot Aquifer. Studies have shown that in some areas the SVA thins enough to create unconfined conditions in the 180-Foot Aquifer. 6 It is unknown if these unconfined conditions exist in the MPWSP well area.
California Department of Water Resources, Californias Groundwater, Bulletin 118, Central Coast Hydrologic Region, SVGB, February 2004. 5 FEIR, Section 4.2, Groundwater Resources, page 4.2-5, October 2009. 6 Monterey County Water Resources Agency, Monterey County Groundwater Management Plan, Chapter 3 Basin Description, pages 3.7 & 3.8, May 2006.
4
Based on information from logs of two wells located approximately 1/2 mile south and 1/2 mile northeast from the proposed MPWSP slant wells, the top of the SVA is between 150 to 180 feet below msl. The well logs show the top of the underlying 180-Foot Aquifer at approximately 190 to 220 feet below msl. 7
Figure SWB 2
FEIR, Section 4.2 Groundwater Resources, Figure 4.2-3, October, 2009.
6 MPRWA TAC Meeting, 1/7/2013 , Item No. 3., Item Page 11, Packet Page 15
Figure SWB 3
MPRWA TAC M eeti ng , 1/7/2 01 3 , Item N o .3 . , Item Page 12 , Packet Page 1 6
4.2 Groundwater Quality Heavy pumping of the 180-Foot Aquifer has caused significant seawater intrusion, which was first documented in the 1930s. 8 The Monterey County Water Resources Agency (MCWRA) uses the Secondary Drinking Water Standard upper limit of 500 milligrams per liter (mg/L) concentration for chloride to determine the seawater intrusion front. MCWRA currently estimates that seawater has intruded into the 180-Foot Aquifer approximately 5 miles inland. This seawater intrusion has resulted in the degradation of groundwater supplies, requiring numerous urban and agricultural supply wells to be abandoned or destroyed. In MCWRAs latest groundwater management plan (2006), it is estimated that 25,000 acres of land overlie water that has degraded to 500 mg/L chloride. The amount of 500 mg/L chloride water that enters the Basin was reported to be as high as 14,000 acre-feet per year (afa) or 4.5 billion gallons. 9 Efforts have been made to increase fresh water percolation through the Castroville Seawater Intrusion Project (CSIP). 10 The CSIP is a program that distributes recycled water to agricultural users within the SVGB. The program provides a form of groundwater recharge by effectively reducing groundwater extraction in those areas of the Basin that are part of the CSIP area. 4.3 Groundwater Recharge and Discharge Groundwater recharge in the lower portion of the Salinas Valley is largely by infiltration along the channel of the Salinas River and its tributaries. This accounts for approximately 50% of the total recharge within the SVGB. Approximately 40% of the total recharge is from irrigation return water with the remaining 10% due to precipitation, subsurface inflow and seawater intrusion.
California Department of Water Resources, Californias Groundwater, Bulletin 118, Central Coast Hydrologic Region, SVGB, 180/400 Foot Aquifer subbasin, February 2004. 9 MCWRA, Monterey County Groundwater Management Plan, Chapter 3 Basin Description, pages 3.14 & 3.15, May 2006. 10 FEIR 4.2-17.
Approximately 95% of outflow from the Basin is from pumping with the remaining 5% due to riparian vegetation evapotranspiration. Groundwater withdrawal outpaces groundwater recharge of fresh water, which results in overdraft conditions. 11 Historically, groundwater flowed seaward to discharge zones in the walls of the submarine canyon in Monterey Bay. 12 This seaward flow of groundwater prevented seawater from intruding landward into the SVGB. With increased pumping, groundwater flow is now dominantly northeastward. 13 This northeastward flow has allowed seawater to intrude into the SVGB, thereby degrading groundwater quality in the 180 and 400-Foot Aquifers. 4.4 Groundwater Budget The Department of Water Resources calculated that total fresh water inflow into the 180-Foot and 400-Foot Aquifers is approximately 117,000 afa. Urban and agriculture extractions were estimated at 130,000 afa and subsurface outflow was estimated at 8,000 afa. 14 Therefore, there is a net loss or overdraft of approximately 21,000 afa in the 180-and 400-Foot Aquifers. 4.5 Groundwater Modeling 15 As part of the FEIR for the Coastal Water Project, a local groundwater flow and solute transport model (Model) was developed to determine the effects that project pumping would have on groundwater levels and seawater intrusion in the area. This Model was constructed using aquifer parameters, recharge and discharge terms, boundary conditions and predictive scenarios that were developed for a regional groundwater model called the Salinas Valley Integrated Groundwater and Surface Model (SVIGSM). Use of this information allows for consistency between the two models. The Model was developed to specifically focus on the North Marina area and has a much finer cell size than the SVIGSM.
11
MCWRA, County Groundwater Management Plan, Chapter 3 Basin Description, page 3-10, May 2006 DWR, Bulletin 118. FEIR, Section 4.2, page 4.2-9. 14 DWR, Bulletin 118. 15 FEIR, Appendix E, Geoscience, North Marina Groundwater Model Evaluation of Projects, July 2008.
12 13
This allows for improved resolution in the vicinity of the proposed MPWSP. The Model can model seawater intrusion, a capability that the SVIGSM does not have. The Model consists of six layers. The layers represented from top to bottom are: (1) a layer directly beneath the ocean that allows direct connection from the ocean to the aquifers; (2) the 180-Foot Aquifer; (3) an unnamed aquitard; (4) the 400-Foot Aquifer; (5) an unnamed aquitard; and (6) the Deep Aquifer. It should be noted that the Model does not include a layer that represents the SVA. Therefore, the Model assumes that the 180-Foot Aquifer is unconfined. Aquifer parameters such as depth, hydraulic conductivity, specific storability, and effective porosity were obtained from the SVIGSM. In addition, monthly data for recharge and discharge values were obtained from the SVIGSM. The North Marina predictive scenario was run for a 56-year period from October 1948 through September 2004. This is the same period used in the SVIGSM predictive scenarios. Two potential projects were evaluated with the Model: 1) The North Marina Project; and 2) The Regional Project. In both of these alternatives, the 180-Foot Aquifer was modeled as an unconfined aquifer. It is not known if the MPWSP wells would indeed be in unconfined conditions. Consequently, the alternatives results discussed below may or may not be predictive of the MPWSP.
5. North Marina Alternative Project

The North Marina Projects design consisted of six slant wells each constructed with a length of 600 linear feet. The wells would pump between 1,800 and 2,700 gallons per minute (gpm) for a total production of 22 mgd. The Model assumes the slant wells would pump from the 180-Foot Aquifer under unconfined conditions. Modeling results of the North Marina Project show that there would be a decline in groundwater elevations at the slant wells of approximately 15 feet. There would be
about a 2-foot decline in groundwater levels approximately one mile from the slant wells decreasing to less than 0.5 feet about 1.5 miles away. 16 It is likely that the lowering of groundwater levels approximately 2 miles from the slant wells would be negligible. According to the State Water Boards Groundwater Ambient Monitoring and Assessment (GAMA) database, there are approximately 14 wells within a 2-mile radius of the North Marina Project. The modeling results show that inflow to the slant wells from the east (landward direction) would be approximately 3,250 afa of brackish water (13% of total water pumped) and inflow from the west (ocean direction) would be about 21,400 afa of saline water (87% of total water pumped). 17 The rate of seawater intrusion is predicted by the Model to be the same for the North Marina Project as it is for No Project conditions, with the exception of the area in the immediate vicinity of the slant wells. Because the Model shows that the seawater intrusion front remains basically the same with or without the North Marina Project, it is likely that the amount of water (3,250 afa) extracted from the eastern portion of the aquifer will be brackish (intruded) water.
6. Monterey Regional Water Supply Project

The Regional Project assumes that ten vertical wells would pump both saline and brackish water from the 180-Foot Aquifer (Figure SWB 4). Five seaward wells would each pump saline water at about 1,500 gpm, and five inland wells would pump brackish water at approximately 1,700 gpm, for a combined total of 23.4 mgd. The Model assumes that the 180-Foot Aquifer is unconfined.
16 17
FEIR, Appendix E, page 21 (E-28). FEIR, Appendix E, page 22 (E-29).
Figure SWB 4
MPRWA TAC M eeti ng , 1/7/2 01 3 , Item N o .3 . , Item Page 17 , Packet Page 21
12
Results of the modeling show about a 10-foot decrease in groundwater levels near the extraction wells and about a 4-foot decrease approximately 4 miles inland from the extraction wells. According to information from the State Water Boards GAMA database, there are approximately 170 supply wells within 4 miles of the Regional Project. The seawater intrusion problem is improved by the Regional Project as compared to No Project conditions. The Model did not have data showing the relative rates of intrusion under both confined and unconfined conditions.
7. Proposed Monterey Peninsula Water Supply Project

There are two likely scenarios in which Cal-Am would extract groundwater for its MPWSP: 1) pumping from an unconfined aquifer; and 2) pumping from a confined aquifer. Pumping effects differ from an unconfined aquifer compared to a confined aquifer. When water is pumped from an unconfined aquifer, water is removed from the aquifer and the water table in the aquifer is lowered. This lowering or drawdown of the water table is greatest close to the well and gets smaller in all directions as the distance from the well increases. 18 When a confined aquifer is pumped, the loss of hydraulic head occurs rapidly because the release of the water from storage is entirely due to the compressibility of the aquifer material and the water. 19 This means that the same drawdown will be measurable at greater distances from the pumping well. This zone of influence in a confined aquifer is commonly several thousand times larger than in an unconfined aquifer. 20 Therefore, in general, there would be a larger effect to the Basin and an increase in the possibility of injury to existing groundwater users if the MPWSP extracted water from a confined condition than from an unconfined condition.
Driscoll, 1986, Groundwater and Wells, pages 63-64. Driscoll, 1986, Groundwater and Wells, pages 64-65. 20 United States Geologic Survey, Sustainability of Groundwater Resources, Circular 1186. Section A, page 2.
19
18
7.1 Pumping from Unconfined Conditions If pumping were to occur under unconfined conditions, water would be extracted either from the dune sand aquifer or from the 180-Foot Aquifer (if the SVA is not present at the proposed well-site). If pumping were to occur in either of these unconfined aquifers, there would be a lowering or drawdown of the water table creating a cone of depression (or zone of influence) where drawdown would be greatest near the pumps and would get smaller further away from the pumps. Modeling of the North Marina Project predicts that the zone of influence would be approximately 2 miles. If the MPWSP is similar in design to the North Marina Project, then the zone of influence would be roughly the same. Any wells within the zone of influence would be affected by project pumping and possibly cause injury. According to information from the State Water Boards GAMA database, there are approximately 14 wells within 2 miles of the proposed MPWSP (Figure SWB 5). All of these wells are located within the seawater intruded portion of the Basin. The drawdown would change the groundwater gradient within the zone of influence causing a radial flow of groundwater toward the wells. 21 Currently, the predominant groundwater flow direction in the 180-Foot Aquifer is toward the northeast. Project pumping would likely change the flow direction to more of a southwest to westerly direction within the zone of influence. Outside the zone of influence there would be little if any change to groundwater flow direction; however, the rate of flow in the original direction (northeast) would be reduced. Therefore; the MPWSP would slow the rate of seawater intrusion in a landward direction from the wells. The MPWSP would increase the rate of seawater intrusion in a seaward direction from the pumps, but the seawater intrusion would not extend past the zone of influence of the wells.
21
Driscoll, 1986, Groundwater and Wells, 63-64.
Figure SWB 5
As mentioned above, groundwater flow to the wells would initially be from all directions in a radial pattern. However, once the water table is lowered enough to allow direct connection with the ocean, then the majority of pumped water would come from the ocean and a lesser portion would come from the landward side of the aquifer. If the North Marina Project model is applicable, then approximately 87% of the water pumped would come from the ocean side of the wells and approximately 13% of the water would come from the landward side of the wells. 22 It is unlikely that pumping from an unconfined aquifer would extract fresh groundwater since the majority of the water pumped would be ocean water and the seawater intrusion front is approximately 5 miles landward from the pumps. 7.2 Pumping from Confined Conditions If pumping were to occur under confined conditions, water would be extracted from the confined 180-Foot Aquifer. Pumping from the confined 180-Foot Aquifer would lower the pressure head in the aquifer but the aquifer would remain fully saturated. Drawdown in the confined aquifer would occur over a much larger area compared to that in an unconfined aquifer. The total volume of the cone of depression in a confined aquifer could be several thousand times larger than the total volume of the cone of depression in an unconfined aquifer. 23 Therefore, effects from MPWSP pumping would occur over a much larger area that the effects seen in an unconfined aquifer. Modeling in the FEIR did not predict the effects of pumping from a confined condition, so there are no estimates on the extent of potential impacts. Generally speaking, water levels would be lowered in wells much further inland and the effects on groundwater flow direction would be greater. Since pumping from a confined condition would affect a much larger area, there would be a greater likelihood of the MPWSP pumping a certain
22
FEIR, Appendix E, Geoscience, North Marina Groundwater Model Evaluation of Projects page 22 fE-29), July 2008. 3 United States Geologic Survey, Sustainability of Groundwater Resources, Circular 1186. Section A page 2.
portion of fresh water from the aquifer. Since modeling has not been done simulating confined conditions, the extent of the impacts is unknown.
8. Legal Discussion of Proposed Extraction Wells in Salinas Basin

Although the Basin is in a condition of overdraft, the Basin has not been adjudicated and water withdrawals by the Basins users are not quantified by court decree. Water users state the Basins water is managed through cooperative agreements reached by the Basins groundwater users. 24 Users claim that Cal-Ams proposed Project would disrupt the Basins agreements, lead to a costly adjudication, and are barred by principles of groundwater law. 25 Question: Does Cal-Am require an appropriative right to extract brackish water from slant wells that terminate near, or beneath, Monterey Bay? If so, can such a right be acquired and what are the legal constraints on the right? Brief Answer: Cal-Am needs no groundwater right or other water right to extract seawater from Monterey Bay. Based on the information provided, however, the proposed MPWSP could extract some fresh water from within the Basin. An appropriative groundwater right is needed to extract water from the Basin for use outside the parcel where the wells are located. 26 To appropriate groundwater from the Basin, Cal-Am will have to demonstrate that the MPWSP will extract water that is surplus to the needs of groundwater users in the Basin and injury to those users will not result. Because the Basin is in a condition of overdraft, to appropriate water for nonoverlying uses, any fresh water that Cal-Am pumps will have to be replaced. 27
24
Salinas Valley Water Coalition , Letter to State Water Board Chair, Charles Hoppin, (December 3, 2012). 25 See generally, Application 12-04-019 before the California Public Utilities Commission, Opening Brief of LandWatch Monterey County Regarding Groundwater Rights and Public Ownership, July 10, 2012; Opening Brief of Various Legal Issues of Monterey County Farm Bureau, July 10, 2012, available at: www.cpuc.ca.gov . 26 An appropriative groundwater right is not necessary to recover water injected or otherwise used to recharge the aquifer, where the water used for recharge would not recharge the aquifer naturally. 27 Additionally, the Monterey County Water Resources Act, (Stats. 1990 ch.52 21. Wests Ann. Cal. Water Code App.) prohibits water from being exported outside the Salinas Basin.
9. Discussion:
9.1 General Principles of Groundwater Law Groundwater rights may generally be classified as overlying, appropriative or prescriptive. 28 Overlying users of groundwater have correlative rights which are rights similar to riparian users rights, and an overlying user can pump as much water as the user can apply to reasonable and beneficial use on the overlying parcel so long as other overlying users are not injured. ( City of Barstow v. Mojave Water Agency (2000) 23 Cal.4th 1224, 1240 ( Mojave).) In times of shortage, pumping must be curtailed correlatively, to provide each overlying user a reasonable share of the available supply. ( Id. at 1241.) Prescriptive rights are acquired through the taking of water that is not surplus or excess to the needs of other groundwater users. Similar to other prescriptive property rights, if the elements of prescriptive use are metthe use is actual, open, notorious, hostile, adverse to the original owner, continuous and uninterrupted for the statutory period of five yearsa user may acquire a prescriptive right. ( California Water Service Co. v. Edward Sidebotham & Son (1964) 224 Cal.App.2d 715, 726.) Ap hts apply to other users who extract groundwater. p.1241.) Appropriative groundwater rights are not ive rights that apply to surface waters or subterranean streams that are administered by the State Water Board. Unlike appropriative water rights that are permitted by the State Water Board, appropriative groundwater rights are any rights to pump groundwater that do not fall into either the overlying or prescriptive category. 29 No permit is required by the State Water Board to acquire or utilize appropriative groundwater rights.
28 29
Groundwater rights referenced in this report apply to percolating groundwater only. This is generally true. There are other types of rights, including pueblo rights, federal reserved rights, and rights to recover water stored underground pursuant to surface water rights. These other types of rights are not discussed in detail in this report.
Because Cal-Am proposes to export water from the Basin to non-overlying parcels in the Monterey Region, an appropriative groundwater right is required. In order to appropriate groundwater, a user must show that the water is surplus to existing uses or does not exceed the safe yield of the affected basin. ( City of Los Angeles v. City of San Fernando (1975) 14 Cal.3d 199, 214-215, 277-282.) The appropriator must show that the water is surplus to all existing uses in the Basin and the use will not harm or cause injury to any other legal user of water. The burden is on the appropriator to demonstrate a surplus exists. ( Allen v. California Water and Tel. Co. (1946) 29 Cal.2d 466, 481.) But if, after excluding all present and potential reasonable beneficial uses, 30 there is water wasted or unused or not put to any beneficial uses, the supply... may be said to be ample for all, a surplus or excess exists... and the appropriator may take the surplus or excess... ( Peabody v. City of Vallejo (1935) 2 Cal.2d 351, 368-369 ( Peabody).) As discussed previously, because groundwater in the Basin is in a condition of overdraft, to appropriate water for uses outside the Basin, the only way to show there is surplus water available for export to non-overlying parcels is for a user to develop a new water source. Cal-Ams proposed MPWSP would pump brackish water. The exact composition is yet to be determined, but the water is substantially degraded by seawater intrusion and other natural factors. Estimates based on the North Marina Project description are that 13% of the total water pumped through the proposed wells could be attributed to the landward portion of the Basin, and 87% could come from the seaward direction relative to the pump locations. Based on data currently available, the State Water Board is unable to estimate what percentage or proportion of water extracted from the Basin landward of the proposed well location could be attributed to fresh water sources. It is known, however, that the Basins waters are degraded some distance landward from the proposed wells. MCWRA currently estimates that seawater has intruded into the 180-Foot Aquifer
30
Potential overlying uses are often inherently implicated in determining whether a surplus actually exists.
approximately 5 miles inland. It is unknown whether seawater has intruded the dune sand aquifer. It is unlikely that the dune sand aquifer is used extensively due to its reported low water quality. 9.2 Developed Water Water an appropriator pumps that was not previously available to other legal users can be classified as developed or salvaged water. 31 [I]f the driving of tunnels or making of cuts is the development of water, as it must be conceded it is, we perceive no good reason why the installation of a pump or pumping-plant is not equally such development. ( Garvey Water Co. v. Huntington Land & Imp. Co. (1908) 154 Cal. 232, 241.) Further, it is generally accepted that whoever creates a new source of water should be rewarded by their efforts. (See generally Hoffman v. Stone (1857) 7 Cal. 46, 49-50.) If Cal-Am shows it is extracting unusable water that no Basin user would put to beneficial use, then Cal-Am could show its proposed desalination MPWSP would develop new water in the Basin, water that could not have been used absent CalAms efforts to make it potable. Of course, this does not apply to any source water that is considered fresh or non-brackish and would not be considered developed water. Making use of water before it becomes unusable or is wasted is supported both by statute, case law and the California Constitution, which in part states: the general welfare requires that the water resources of the State be put to beneficial use to the fullest extent of which they are capable...and that the conservation of such waters is to be exercised with a view to the reasonable and beneficial use thereof. (Cal. Const., art. X, 2; see also City of Lodi v. East Bay Municipal Utility District, (1936) 7 Cal.2d 316, 339-341 ( Lodi); [salvaged water that would otherwise be wasted should be put to beneficial use].)
The concepts of developed and salvaged waters are closely related and the legal concepts are the same. Technically, salvaged waters usually refers to waters that are part of a water supply and are saved from loss whereas developed waters are new waters that are brought to an area by means of artificial works. (See Hutchins, The California Law of Water Rights, (1956) p. 383.) For purposes of this report, the distinction is largely irrelevant and the term developed waters will be used throughout for consistency.
31
The key principle of developed waters is that if no lawful water user is injured, the effort of an individual to capture water that would otherwise be unusable and unused should be legally recognized. As the court determined in Cohen v. La
Canada Land and Water Co. (1907) 151 Cal. 680 ( La Canada), if water would
never reach or be used by others there can be no injury. ( Id. at p. 691.) In La
Canada , waters which were secured by the construction of tunnels could be

considered developed waters as the waters were determined to trend away from the direction of the natural watershed and would never have reached it and would be lost if left to percolate in their natural flow. ( Ibid. ) Under these circumstances, as the waters developed by the tunnels were not waters which would have trended towards or supported or affected any stream flowing by the land of appellant,...she was not injured as an adjoining proprietor or as an appropriator, and hence could not complain or insist upon the application of the rule announced in the cases cited to prevent the respondents from taking such developed waters to any lands to which they might see fit to conduct them. ( La Canada, supra, 151 Cal. a [F]ull recognition is accorded of the right to water of one who saves as well as of one who develops it. ( Pomona Land and Water Co. v. San Antonio Water Co. (1908) 152 Cal. 618, 623-624 ( Pomona) citing Wiggins v. Muscupaibe Land & Water Co. (1896) 113 Cal. 182, 195 ( Wiggins).) [I]f plaintiffs get the one half of the natural flow to which they are entitled delivered, unimpaired in quantity and quality, through a pipe-line, they are not injured by the fact that other water, which otherwise would go to waste...was rescued. Nor can they lay claim to any of the water so saved. ( Pomona, supra, 152 Cal. at p. 631.)
In summary, if there is no injury, a user should be able to develop all water available: The plaintiff could under no circumstances be entitled to the use of more water than would reach his land by the natural flow of the stream, and, if he receives this flow upon his land, it is immaterial to him whether it is received by means of the natural course of the stream or by artificial means. On the other hand, if the defendant is enabled by artificial means to give to the plaintiff all of the water he is entitled to receive, no reason can be assigned why it should not be permitted to divert from the stream...and preserve and utilize the one hundred inches which would otherwise be lost by absorption and evaporation. ( Wiggins, supra, 113 Cal. at p. 196.) As discussed above, in order to take advantage of developed water, Cal-Am must establish that no other legal user of water is injured. Thus, even if the water being pumped is unusable, it could not be treated as developed water unless those who pump from areas that could be affected by Cal-Ams MPWSP are protected from harm. Cal-Am proposes a replacement program for the component of brackish water that it pumps that can be attributed to fresh water supplies or sources in the Basin. Accordingly, export of the desalinated brackish source water would be permissible, and qualify as developed water if Cal-Am can show that all users are made whole and are uninjured by the replacement water supply and method of replacement. Cal-Am could use one or more of several possible methods to replace any fresh water it extracts from the Basin. Cal-Am could return the water to the aquifer through injection wells, percolation basins, or through the CSIP. Cal-Am would need to determine which of those methods would be the most feasible, and would in fact, ensure no harm to existing legal users. The feasibility analysis would depend on site-specific geologic conditions at reinjection well locations and at the percolation areas. These studies need to be described and supported in detail before Cal-Am can claim an appropriative right to export surplus developed water from the Basin.
Cal-Am has to ensure an adequate water supply exists for all legal users and its MPWSP will not injure other legal users in the Basin. This could require implementation of a physical solution. The doctrine is further discussed in the following section. 9.3 Physical Solution Discussion Another legal theory that would support a pathway for Cal-Am to extract groundwater for the proposed MPWSP without resulting in injury to the rights of others would be through implementation of a physical solution. Physical solutions are frequently used in groundwater basins to protect existing users rights, groundwater quality, allow for future development, and to implement the constitutional mandate against waste and unreasonable use. (See California American Water v. City of Seaside (2010) 183 Cal.App.4th 471, 480-481.) A physical solution is one that assures all water right holders have their rights protected without unnecessarily reducing the diversions of others. A physical solution may not adversely impact a partys existing water right ( Mojave, supra, 23 Cal.4th 1224, 1251-1252.) A physical solution may be imposed by a court in connection with an adjudication of a groundwater basin where rights of all parties are quantified, as part of a groundwater management program, or as
From the standpoint of applying the States waters to maximum beneficial use, and to implement Article X, section 2 of the California Constitution, physical solutions can and should be imposed to reduce waste. 33 (See, e.g., Lodi, supra, 7 Cal.2d 316, 339-341, 344-345; City of Santa Maria v. Adam (November 21, 2012, No.HO32750) 2012 WL 5871028; Hillside Memorial Park and Mortuary v. Golden State Water Co. (2011) 205 Cal.App.4th 534, 549-550.) In Lodi a physical solution was imposed to limit the wasting of water to the sea. The
32
Sawyer, State Regulation of Groundwater Pollution Caused by Changes in Groundwater Quantity or Flow (July 1998) 19 Pacific. L.J.1267, 1297.
33
Additionally, Water Code section 12947 states the general policy of promoting saline water conversion to freshwater in the State.
defendant appropriator was required to keep water levels above danger levels for pumping by the senior user or to supply equivalent water to the plaintiff. ( Lodi, supra, 7 Cal.2d 316, 339-341, 344-345 .) Agreement of all parties is not necessary for a physical solution to be imposed. (See Lodi, supra, at p.341, citing Tulare Irrigation District v. Lindsay Strathmore Irrigation District (1935) 3 Cal.2d 489, 574.) In addition, a basin need not be determined to be in a condition of overdraft for a physical solution to be instituted. Although we may use physical solutions to alleviate an overdraft situation, there is no requirement that there be an overdraft before the court may impose a physical solution. ( City of Santa Maria v. Adam, 2012 WL 5871028 at p.10.) Likewise, a physical solution can also be imposed in a basin that is determined to be in a condition of overdraft. (See generally Pasadena v. Alhambra (1949) 33 Cal.2d 908 [in a situation of continued overdraft, the court imposed limits on all users].) Thus, even while the Basin continues to be in a condition of overdraft, to maximize beneficial use of the states waters, Cal-Am may be allowed to pump a mixture of seawater and fresh water, export the desalinated water to nonoverlying parcels, and be required to return its fresh water component to the Basin in such a way that existing users are not harmed and foreseeable uses of
Modeling of the North Marina Project, which may be similar to the MPWSP, indicates that approximately 3,250 afa could be extracted from the landward direction of the slant wells, or approximately 13% of the total water extracted will be water that is contained or sourced from the Basin rather than seawater derived from Monterey Bay. The percentage of this water that is fresh or potable water would have to be determined and the proportion of fresh water that is extracted for the desalination facility would have to be replaced. The exact method for replacing the fresh water extracted will be a key component of any legally supportable project. Replacement methods such as fresh water injection to recharge wells, fresh water delivery to recharge basins, or applying additional
fresh water through the CSIP program, would need to be further examined to implement a physical solution that ensures no injury to other legal users. Whether to avoid injury, the fresh water would be re-injected through recharge wells, delivered to recharge basins, or applied through the CSIP would need to be further examined to implement a physical solution. Cal-Am would need to determine which of those methods would be the most feasible and result in returning the Basin to pre-project conditions. Injection wells would have to be designed to ensure the water is injected into an aquifer that is not degraded. Initial studies would be needed to determine the most suitable location for the percolation basins based on soil permeability. Percolation basins would need to be located where the underlying aquifer does not have degraded water. Based on the information provided in the FEIR, North Marina Project modeling suggests a zone of influence of approximately 2 miles from the proposed extraction wells. 34 Within this zone, there are approximately 14 known water wells. These 14 wells are located within the seawater intruded portion of the Basin. As such, it is unlikely there would be injury to users of these wells from the MPWSP as the wells are within a zone where water quality is significantly impacted from seawater intrusion. Beyond this 2 mile radial zone, the two foreseeable injuries that overlying users could experience are: changes in the composition of the aquifer beneath their wells; and, changes in water elevation in wells thereby requiring additional pumping energy. If unconfined conditions exist at the location of the MPWSP wells, it is unlikely that pumping would extract non-brackish groundwater as the majority of the source water pumped would be ocean water and the seawater intrusion front is approximately 5 miles landward from the proposed well locations. Because pumping from a confined condition aquifer would affect a much larger area in the Basin, there would be a greater likelihood of the MPWSP pumping a certain
34
FEIR, Appendix E, Page 21 (E-28).
portion of fresh water from the aquifer if the aquifer is confined in the area of pumping. Without test wells and data operating under confined aquifer conditions it is not possible to determine at this point what percentage of fresh water would be pumped under confined aquifer conditions. As stated earlier, the burden is on Cal-Am to show no injury to other users. Key factors will be: 1) how much fresh water Cal-Am is extracting as a proportion of its total pumped amount and how much sea water is thus available for export; 2) how it should return the fresh water to the Basin to prevent injury to others; and 3) how extractive rights might adjust in the future as the composition of fresh and sea water changes both in the larger Basin area and the immediate area around Cal-Ams wells. A discussion of projected uses of the Basins waters and potential future conditions in the Basin will not be explored in depth in this report, mainly due to the lack of reliable data to enable the State Water Board to make informed assumptions about future conditions. As discussed in this report, additional data will be necessary to ensure that continued operation of the MPWSP, under different source water extraction scenarios, will not injure other legal groundwater users. If and when the proportion of fresh/seawater changes due to Cal-Ams MPWSP, the physical solution doctrine would allow for an adjustment of rights, so long as others legal rights are not infringed upon or injured. [I]f a physical solution be ascertainable, the court has the power to make and should make reasonable regulations for the use of the water by the respective parties...and in this connection the court has the power to and should reserve unto itself the right to change and modify its orders... ( Peabody, supra, 2 Cal.2d at pp. 383-384.) At some point Cal-Am may reach a limit where it will be infeasible for it to return a like amount of fresh water back to the Basin and still deliver the amount of desalinated water needed for off-site uses. Several scenarios could develop. One possible scenario is that Cal-Am could show that but-for the MPWSP, new fresh water would not be available in the Basin and as it continues to operate the
MPWSP, the increased amount of fresh water available is developed water that would have previously been unavailable both to it and to other users. If this increased freshwater available to Basin users alleviates seawater intrusion issues, as well as provides for a new supply in excess of what would otherwise be available in the Basin, a physical solution could be imposed that would apportion the new water supply and allow the continued pumping. North Marina Project modeling showed that if pumping occurred in an unconfined aquifer over a 56 year period, then pumping would have little to no effect on the movement of the seawater intrusion front. If it is similar, the MPWSP would not pump fresh water within a 56 year period if pumping occurred in an unconfined aquifer. Because pumping from a confined aquifer would affect a much larger area, there would be a greater likelihood of the MPWSP pumping a portion of fresh water from the aquifer. Since modeling has not been done simulating confined conditions, the extent of the impact on fresh water supply or wells is unknown in this situation. Both near and long-term, a physical solution would be a useful tool to ensure an adequate water supply for all legal water users in the Basin and provide an assured supply of groundwater to the Basins users. 35 Even if overdraft conditions continued in the Basin for some time following imposition of the solution, it is possible that Cal-Am could legally continue pumping brackish water so long as the quantity was not in excess of an amount that would be detrimental to the conditions in the Basin and other Basin users rights. When the supply is
35
Some parties argue an adjudication of the Basins rights would be needed for the MPWSP to proceed. While adjudication could provide some benefits to the Basins users it is not necessary for a physical solution to be imposed. For reference, there are three general procedures by which an adjudication or rights to use groundwater in the Basin could be quantified and conditioned: 1) civil action with no state participation; 2) civil action where a reference is made to the State Water Board pursuant to Water Code section 2000; or 3) a State Water Board determination, pursuant to the outlined statutory procedure that groundwater must be adjudicated in order to restrict pumping or a physical solution is necessary to preserve the quality of the groundwater and to avoid injury to users. (Water Code section 2100 et seq.) Whether Cal-Am could force an adjudication of water rights is beyond the scope of this report but will be briefly discussed. As applied in Corona Foothill Lemon Co. v. Lillibridge , (1937) 8 Cal.2d 522, 531-32, an exporter cannot force an apportionment where it is conclusively shown that no surplus water exists and there is no controversy among overlying owners. But a conclusive showing that there is no water available for export does not appear to be the case here. Water that is currently unusable, both due to its location in the Basin and corresponding quality, could be rendered usable if desalinated and would thus be surplus to current water supplies in the Basin.
limited public interest requires that there be the greatest number of beneficial uses which the supply can yield. ( Peabody, supra , 2 Cal.2d at p. 368.) A physical solution could ensure an adequate supply of quantity and quality of groundwater for all users while protecting the rights of overlying users. So long as overlying users are protected from injury, appropriation of water consistent with the principles previously discussed in this report should be possible. As discussed in Burr v. MacClay Rancho Water Co . (1908) 154 Cal. 428, 430-31, 438-39, if an appropriator does not exceed average annual replenishment of groundwater supply, lower users water levels in wells or restrict future pumping, the appropriators use is not adverse to other users. Additional support is found in City of San Bernardino v. City of Riverside (1921) 186 Cal. 7, 20; No injunction should issue against the taking of water while the supply is ample for all. But the respective priorities of each water right should be adjudged, so that if in the future the supply falls below the quantity necessary for all, he who has the prior right may have his preferred right protected. Cal-Am should have the opportunity to show any desalinated water it produces is surplus to the current needs of the Basin, replacement water methods are effective and feasible, and the MPWSP can operate without injury to other users. As discussed earlier, if the MPWSP pumps source water from an unconfined aquifer, there may be no injury to other users outside of a 2-mile radius, with the exception of possibly slightly lower groundwater levels in the seawater intruded area. Based on current information we do not know the exact effects on other users if source water is pumped from a confined aquifer but the effects, in general, will be amplified.
10. Conclusion: The key determination in whether Cal-Am may extract water from beneath the Salinas Basin is whether injury will result to other users or the Basin. If the MPWSP is constructed as described in the FEIR for the North Marina Project the slant wells would pump from the unconfined dune sand aquifer. If groundwater is pumped from an unconfined aquifer and the modeling assumptions in the FEIR for the North Marina MPRWA TAC Meeting, 1/7/2013 , Item No. 3., Item Page 33, Packet Page 37
Project are accurate, then there will be lowering of groundwater levels within an approximate 2-mile radius. Since seawater intrusion occurs in this area, this water developed through desalination is likely surplus to the needs of other users in the Basin. Based on the information available, it is unlikely any injury would occur by the lowering of the groundwater levels in this region. Nevertheless, Cal-Am would be required to show there was no injury and that any fresh water it extracts is returned to the Basin. Modeling for the North Marina Project does not predict that Basin users fresh water supplies would be affected if its wells pump from an unconfined aquifer, which we assume to also be true for the MPWSP. If however, further exploratory testing shows water is removed from a confined aquifer, water levels would be lowered in a larger inland area and the effect on groundwater flow direction would be greater. Since the pumping from a confined condition would affect a much larger area, there would be a greater likelihood of the MPWSP extracting fresh water from the Basin thereby causing impacts to other users in the Basin that would require additional mitigation measures to avoid injury to affected users. If no injury resultsthis would have to be shown through modeling, mitigation, project design or other meansCal-Am could legally pump from the Basin by developing a new water supply through desalination that produces water that is surplus to the existing supply. If Cal-Ams extractions are limited to water derived from brackish or saline sources or areas of the Basin, and it returns all incidental fresh water to the Basin in a method that avoids injury to other users, the MPWSP could proceed without violating other users groundwater rights. A physical solution could be implemented to ensure that all rights are protected while maximizing the beneficial uses of the Basins waters. 36 Such an approach is consistent with the general policy stated in the California Constitution article X section 2, and by a long history of case law that has provided guidance on the solutions that can be
36
At some point, an adjudication of Basin rights could be initiated, this would in no way impact the imposition of a physical solution that could account for the MPWSP and all other users needs in the Basin.
developed to address complex groundwater issues in regions where supply is constrained. The ongoing development of unique solutions tailored to the specific conditions that apply to a given groundwater basin, reflects the understanding that waters in California are too valuable not to be utilized to the maximum extent possible if beneficial uses and other legal users rights are maintained.
11. Recommendations
Additional information is needed to accurately determine MPWSP impacts on current and future Basin conditions. First, specific information is needed on the depth of the wells and aquifer that water will be extracted from. Studies are needed to determine the extent of the dune sand aquifer, the water quality and quantity of the dune sand aquifer, the extent and thickness of the SVA and the extent of the 180-Foot Aquifer. Second, the effects of the MPWSP on the Basin need to be evaluated. A series of test boring/wells would be needed to assess the hydrogeologic conditions at the site. Aquifer testing would be needed to determine the pumping effects on both the dune sand aquifer and the underlying 180-Foot Aquifer. Aquifer tests should mimic proposed pumping rates. Third, a groundwater model will be needed to predict future impacts from the MPWSP. Modeling scenarios will need to be run to predict changes in groundwater levels, groundwater flow direction, and changes in the extent and boundary of the seawater intrusion front. Additional studies will be necessary to determine how any extracted fresh water is replaced, whether through re-injection wells, percolation basins, or through existing recharge programs. The studies will form the basis for a plan that avoids injury to other groundwater users and protects beneficial uses in the Basin.
FROM:
SUBJECT:
Review Final Consultants Report: Evaluation of Seawater Desalination Projects
DISCUSSION:
There is no report for this item. Discussion of the attached final report will take place at the meeting.
Attachments:
Final Report: Evaluation of Seawater Desalination Projects
08/12
Evaluation of Seawater Desalination Projects
Final Report December 2012
prepared for:
Monterey Peninsula Regional Water Authority
by:
Separation Processes, Inc. and Kris Helm Consulting
MONTEREY PENINSULA REGIONAL WATER AUTHORITY
TABLE OF CONTENTS
CONTENTS
EXECUTIVE SUMMARY PROJECT SUMMARIES PROJECT FUNCTION PROJECT PERFORMANCE ECONOMICS IMPLEMENTATION CONSIDERATIONS 1 2 INTRODUCTION PROJECT SUMMARIES 2.1 CALIFORNIA A MERICAN W ATER (C AL A M ) 2.2 D EEP WATER D ESAL (DWD) 2.3 P EOPLES M OSS LANDING (PML)
-
1 1 2 4 5 7 1 1 2 1
-
2 2 24 2 6
-
PROJECT FUNCTION 3.1 CALIFORNIA A MERICAN W ATER (C AL A M ) 3.1.1 Project Purpose 3.1.2 Customers Identified 3.1.3 Adequacy of Treatment Approach 3.1.4 Residuals Handling Feed Water Characterization 3.1.5 3.1.6 Quality of Project Information 3.1.7 Omissions or Fatal Flaws 3.2 D EEP WATER D ESAL (DWD) 3.2.1 Project Purpose 3.2.2 Customers Identified 3.2.3 Adequacy of Treatment Approach 3.2.4 Residuals Handling 3.2.5 Feed Water Characterization 3.2.6 Quality of Project Information 3.2.7 Omissions or Fatal Flaws 3.3 P EOPLES MO SS LANDING (PML) 3.3.1 Project Purpose 3.3.2 Customers Identified 3.3.3 Adequacy of Treatment Approach 3.3.4 Residuals Handling 3.3.5 Feed Water Characterization 3.3.6 Quality of Project Information 3.3.7 Omissions or Fatal Flaws
-
3 1
-
3 1 31 31 31 34 34 34 35 3 6 36 36 36 38 38 38 39 39 39 39 39 3 11 3 12 3 12 3 12
-
PROJECTED PERFORMANCE 4.1 CALIFORNIA A MERICAN W ATER (C AL A M ) 4.1.1 Plant Design Capacity 4.1.2 Targeted Product Water Quality
-
41
-
4 1 41 42
-
December 2012
Page i
INTRODUCTION
4.1.3 Disinfection Strategy 4.2 D EEP WATER D ESAL (DWD) 4.2.1 Plant Design Capacity 4.2.2 Targeted Product Water Quality 4.2.3 Disinfection Strategy 4.3 P EOPLES M OSS LANDING (PML) 4.3.1 Plant Design Capacity 4.3.2 Targeted Product Water Quality 4.3.3 Disinfection Strategy 5 ECONOMICS 5.1 CALIFORNIA A MERICAN W ATER (CA L A M ) 5.2 D EEP WATER D ESAL (DWD) 5.3 P EOPLES M OSS LANDING (PML)
-
4 4 4 4 4 4 4 4 4
3 4 4 4 5 5 5 5 6
5 1 5 5 5 7 5 10
-
IMPLEMENTATION CONSIDERATIONS 6.1 CALIFORNIA A MERICAN W ATER (C AL A M ) 6.2 D EEP WATER D ESAL (DWD) 6.3 P EOPLES M OSS LANDING (PML) 6.3.1 Assessment of Impacts of Seawater Intake Brine Discharge 6.3.2
-
6 1
-
63 67 69 69 6 10
-
REFERENCES
7 1 A1
-
APPENDIX A
LIST OF TABLES
TABLE TABLE TABLE TABLE TABLE TABLE TABLE TABLE TABLE TABLE TABLE TABLE TABLE TABLE TABLE TABLE ES 1 S UMMARY OF P ROPOSED P RODUCT W ATER Q UALITY ES 2 S UMMARY OF E VALUATED CAPITAL AND O PERATING C OST E STIMATES 4 1 S UMMARY OF P ROJECTED P RODUCT QUALITY FROM CAL A M F ACILITY 4 2 S UMMARY OF P ROJECTED PATHOGEN C REDITS FOR CAL A M P ROJECT 4 3 S UMMARY OF P ROJECTED P RODUCT QUALITY FROM DWD F ACILITY 4 4 S UMMARY OF P ROJECTED P ATHOGEN C REDITS FOR DWD P ROJECT 1 4 5 S UMMARY OF P ROJECTED P RODUCT QUALITY FROM PML F ACILITY 4 6 S UMMARY OF P ROJECTED P ATHOGEN C REDITS FOR PML P ROJECT 5 1 S UMMARY OF C HEMICAL U NIT P RICES 5 2 S UMMARY OF E VALUATED CAPITAL AND O PERATING COST E STIMATES 5 3 S UMMARY OF CAL A M CAPITAL C OST E VALUATION 5 4 S UMMARY OF CAL A M O&M COST E VALUATION 5 5 S UMMARY OF DWD CAPITAL C OST E VALUATION 5 6 S UMMARY OF DWD O&M C OST E VALUATION 5 7 S UMMARY OF PML CAPITAL COST E VALUATION 5 8 S UMMARY OF PML O&M C OST E VALUATION
-
4 6 43 43 44 45 46 46 5 2 54 5 6 5 7 58 59 5 10 5 11
-
LIST OF FIGURES
F IGURE ES 1 P ROJECTED CAL A M P ROJECT I MPLEMENTATION S CHEDULE F IGURE ES 2 P ROJECTED DWD P ROJECT I MPLEMENTATION S CHEDULE F IGURE ES 3 P ROJECTED PML P ROJECT I MPLEMENTATION S CHEDULE
-
8 8 8
Page ii
December 2012
TABLE OF CONTENTS
F IGURE F IGURE F IGURE F IGURE F IGURE F IGURE F IGURE F IGURE
2 2 2 6 6 6 6 6
1 CAL A M P ROJECT LOCATION M AP 2 DWD P ROJECT L OCATION M AP 3 PML P ROJECT LOCATION M AP 1 C ONCEPTUAL I MPLEMENTATION S CHEDULE FOR THE CAL A M P ROJECT 2 CAL A M P ROPOSED I MPLEMENTATION S CHEDULE 3 CONCEPTUAL I MPLEMENTATION S CHEDULE FOR THE DWD P ROJECT 4 DWD P ROPOSED I MPLEMENTATION S CHEDULE 5 CONCEPTUAL I MPLEMENTATION S CHEDULE FOR THE PML P ROJECT
-
2 3 2 5 2 7 66 66 67 68 6 10
-
ABBREVIATIONS AND ACRONYMS

AACE Association for the Advancement of Cost Engineering AF Acre-Foot AFY Acre-Feet/Year ASR Aquifer Storage and Recovery Cal-Am California American Water CDPH California Department of Public Health CEQA California Environmental Quality Act CPCN - Certificate of Public Convenience and Necessity CPUC California Public Utilities Commission CRF Capital Recovery Factor Crypto - Cryptosporidium CSIP Castroville Seawater Intrusion Project DWD DeepWater Desal EA Environmental Assessment EIR Environmental Impact Report EIS Environmental Impact Statement EPA U.S. Environmental Protection Agency ERD Energy Recovery Device fps feet per second FPVC Fusible Polyvinyl Chloride\ gfd Gallons per Day per Square Foot GWR Groundwater Replenishment HDPE High Density Polyethylene JPA Joint Powers Authority
December 2012
Page iii
INTRODUCTION
KHC Kris Helm Consulting lb - pound LF Lineal Foot MCL Maximum Contaminant Level MPRWA Monterey Peninsula Regional Water Authority MRWPCA Monterey Regional Water Pollution Control Agency mgd Million Gallons per Day MF Microfiltration MG Million Gallons MLCP Moss Landing Commercial Park MLPP Moss Landing Power Plant MPWSP Monterey Peninsula Water Supply Project NEPA National Environmental Policy Act NOD Notice of Determination NOP Notice of Preparation NOAA National Oceanic and Atmospheric Administration NPDES National Pollutant Discharge Elimination System O&M Operations and Maintenance PG&E Pacific Gas and Electric PML Peoples Moss Landing RO Reverse Osmosis SCADA Supervisory Control and Data Acquisition SDI Silt Density Index SPI Separation Processes Inc. SVGB Salinas Valley Groundwater Basin SWRCB State Water Resources Control Board SWTR Surface Water Treatment Rule TAC Technical Advisory Committee TBD To Be Determined TDS Total Dissolved Solids TOC Total Organic Carbon UF - Ultrafiltration UV Ultra Violet Light
Page iv December 2012
EXECUTIVE SUMMARY
EXECUTIVE SUMMARY
Separation Processes Inc. (SPI) in association with Kris Helm Consulting (KHC) is providing engineering and consulting support to the Monterey Peninsula Regional Water Authority (MPWRA) to assist with the evaluation of three candidate desalination projects on the Monterey Peninsula. This report presents the results of our evaluation of the projects, targeted at replacing supplies currently extracted from the Carmel River but subject to a 1995 order from the State Water Resources Control board to secure an alternate source of supply by December, 2016. The proposed strategy for meeting the projected annual demand within the California American Water service area of 15,250 acre-feet is a multi-pronged approach including permitted extractions from the Carmel River and Seaside Basin, an aquifer-storage and recovery system, and the existing Sand City desalination plant--totaling 6,250 acre-feet; leaving a 9,000 acre-feet gap in supply. Two alternatives are under consideration to compose this final supplya 9,000 acre-feet production seawater desalination plant; or a 5,500 acre-feet seawater desalination plant in concert with a groundwater water replenishment project using advanced treated recycled water of 3,500 acre-feet. This report presents the results of our evaluation of three candidate alternatives for the seawater desalination component of the overall water supply portfolio. California American Water is actively engaged with the California Public Utilities Commission to build a facility and secure the required supply. Two other development groups have proposed alternative projects for considerationDeepWater Desal, LLC and the Peoples Moss Landing Water Desal Project. The three projects were analyzed on functional, performance, economic and implementation grounds in an effort to provide a balanced evaluation for consideration by the MPRWA. This report is based on information collected on each project up through October 15, 2012. It does not cover additional project developments between that time and the date of this report.
PROJECT SUMMARIES The three projects are in the conceptual or preliminary stage of development and all three have as their objective to provide California American Water the seawater desal component of the required replacement water supply under State Water Resources Control Board Order No. 95-10. The DeepWater Desal group proposes to provide an expandable plant capable of serving additional regional water needs as well, outside of the California American Water service area. Brief summaries of the projects follow:
Monterey Peninsula Water Supply Project (MPWSP)

Proponent(s) Location California American Water (Cal-Am) 46-acre site of vacant, disturbed land west of the MRWPCA Regional Treatment Plant (RTP). To supply supplemental desal component of the Monterey Peninsula regional water supply This project is currently under consideration by the California Public Utilities Commission (CPUC). 5.4 mgd or 9.0 mgd
Purpose
Production Volume
December 2012
Page ES-1
INTRODUCTION
DeepWater Desal (DWD)

Proponent(s) Location Purpose DeepWater Desal, LLC, Dynegy Moss Landing Power Plant, MFJK Partnership of the Capurro Ranch, PV2 Solar, and Ecomert Technologies Capurro Ranch Property, north of /Elkhorn Slough Phase 1 to supply supplemental desal component of the Monterey Peninsula regional water supply Phase 2 to supply northern customers Production Volume Phase 1: 4.9 mgd or 9.1 mgd Phase 2: 22.0 mgd
The Peoples Moss Landing Water Desal Project (PML)

Proponent(s) Location DeSal America, LLC composed of Moss Landing Commercial Park, LLC; and Stanley and Patricia-Vance Lueck Moss Landing Commercial Park To supply supplemental desal component of the Monterey Peninsula regional water supply This project is currently proposed as alternative to the CalAm MPWSP. Production Volume 4.8 mgd or 9.4 mgd
Purpose
PROJECT FUNCTION We evaluated the function of each project in terms of project purpose, customers identified, adequacy of treatment approach, residuals handling, feed water characterization, quality of project information, and any omissions or fatal flaws in the information provided. The evaluation was conducted based on information provided in response to a 56-item questionnaire prepared by the MPRWA technical advisory committee and submitted by each proponent; along with additional information each provided in response to specific questions and interviews from SPI and KHC.
All three projects have available sites for building the required treatment facilities; and credible seawater intake and brine disposal approaches, though there are substantive differences among them. Cal-Am proposes to use a group of subsurface slant intake wells (up to eight for the maximum capacity plant alternative); DWD proposes a new screened open ocean intake installed at roughly 65-ft of depth; and PML is considering options to use either an existing seawater intake pump station drawing from the Moss Landing Harbor, or potentially a new screened open ocean intake installed coincident with an existing 51-in diameter concrete outfall pipeline owned
Page ES-2 December 2012
EXECUTIVE SUMMARY
by the Moss Landing Commercial Park. Cal-Am has projected there may up to 3 percent of groundwater from the Salinas Valley Groundwater Basin (SVGB) entrained with their intake supply that would need to be returned (as facility product water) to the basin. For brine disposal, Cal-Am and DWD propose to blend concentrated brine from the desal plants with existing outfall flowsCal-Am blending with the existing Monterey Peninsula Regional Water Pollution Control Agencys wastewater plant outfall; and DWD using the existing cooling water return outfall at the Moss Landing Power Plant. Both sources have sufficient dilution and hydraulic capacities. PML proposes to use their existing 51-in diameter outfall, currently permitted to discharge magnesium-depleted seawater. There is some evidence of disrepair of the outfall in terms of pipeline integrity and condition of the existing diffusers which would need to be addressed along with the permitting of a non-shore diluted brine stream. Cal-Am and PML propose to serve only the identified demand within the Cal-Am service area at the two plant capacity increments under consideration; while DWD envisions a higher capacity regional project, capable of producing up to 25,000 AFY. DWD has not yet secured agreements with any potential customers. In terms of treatment approachall three candidate teams propose to use reverse osmosis (RO) as the primary desalination technology. However, both DWD and PML propose a single pass RO system; while Cal-Am has proposed a partial double or two pass systemtreating a portion of the product water from the first pass RO system with a second RO system and blending the supplies to form the final treated water. The issue relates to the quality of product water produced, more than treatment function; as either approach is considered functional. Pre- and post-treatment approaches are similar. All incorporate granular media filtration of the incoming seawater, with PML following on with a low pressure membrane filtration system (microfiltration or ultrafiltration) to deal with the anticipated higher solids load from water extracted from Moss Landing Harbor. In the case of Cal-Am, the aquifer filtration provided by the slant wells could obviate the need for media filtration; but the potential presence of iron and manganese in the supply could just as well make them necessaryso the approach is considered conservative. In the case of DWD, the incoming seawater extracted at depth will be cold (roughly 15 C) and warmed through a proprietary warming system at the Moss Landing Power Plant prior to transmission to the treatment plant site. All three proponents propose to use calcite beds, carbon dioxide and sodium hydroxide for re-mineralization/stabilization of the RO treated product water and chlorine disinfection. Cal-Am and DWD will require offsite pipelines for feed, product water and brine disposal; while PML proposes to use existing intake and outfall pipelines originating on site; requiring only a product water delivery pipeline. DWDs site location north of the Elkhorn Slough is likely to entail complex issues with crossings for all three of their large diameter pipelines (one 48-in and two 36-in). All three proponents were cooperative with our evaluation and provided all available and requested information. The Cal-Am project through past work on other regional projects as well as ongoing procedures with the California Public Utilities Commission has produced the most detailed information on their project, followed by DWD who have prepared a fair amount of predesign data on their proposed system along with active environmental investigations for their proposed intake. PML is at a more preliminary level of engineering and planning in comparison.
December 2012
Page ES-3
INTRODUCTION
Importantly however, we have not found any fatal flaws of a technical nature associated with any of the candidate projects.
PROJECT PERFORMANCE Performance of each proposed system was gauged relative to categories of plant design capacity, targeted product water quality and disinfection strategy.
For plant capacity, we considered the proposed instantaneous design capacity of each treatment facility in comparison to the required annual production incrementeither 5,500 AFY or 9,000 AFY. What we found were wide variationswith Cal-Am proposing capacities of 5.4 mgd and 9.0 mgd; DWD of 4.9 mgd and 9.1 mgd; and PML at 4.8 mgd and 9.4 mgd. We considered the level of equipment redundancy proposed by each team in the context of the amount of online time it would require a facility at a given rated capacity to deliver the required annual allotment. For Cal-Am, we gauged their planned design capacities adequate considering the need to return flow to the SVGB as well as meet the 5,500 AFY or 9,000 AFY into their distribution system. At capacities of 5.4 mgd and 9.0 mgd, the plant(s) would need to operate 98 percent of the time to meet productionnot overly conservative but achievable given the level of equipment redundancy (including spare process units) in their proposed facility. DWD, with similar proposed levels of redundancy, would have equivalent minimum facility capacity requirements of 5.0 mgd and 8.2 mgd; somewhat lower than Cal-Am as they lack the requirement to return flow to the SVGB. PML did not provide a detailed equipment list indicating numbers of process units; so gauging proposed levels of equipment redundancy was uncertain. However, we feel the facility should have adequate reliability and conducted our evaluation on that basis recommending equivalent capacity ratings to DWD of 5.0 mgd and 8.2 mgd. The product quality produced by the proposed systems would differ based on the configuration of their proposed RO systems. Cal-Ams proposed partial two-pass system could likely achieve chloride, boron, and total dissolved solids (TDS) consistent with current Carmel River supplies; but the single pass systems would not. We consider a lower salinity product supply an asset and evaluated all three projects (from an economic perspective) as having partial two-pass RO systems. The recommended product quality goal is summarized in Table ES-1 .
Table ES-1 Summary of Proposed Product Water Quality
Parameter
Total Dissolved Solids Chloride Boron pH Calcium Alkalinity
Units
mg/L mg/L mg/L units mg/L as CaCO 3 mg/L as CaCO 3
Value
380 60 0.5
>_ 8.0
40 40
Page ES-4
December 2012
EXECUTIVE SUMMARY
For disinfection, the proposed facilities must comply with the Surface Water Treatment Rule and Long-Term 2 Enhanced Surface Water Treatment Rule. Under these regulations, pathogen removal/inactivation requirements are set on a logarithmic (log) scale, with the California Department of Public Health establishing specific log removal for priority pathogens, including giardia, cryptosporidium (crypto), and virus. The levels set will be based on source water quality and other factors, and are expected to be in the range of 3-5 for giardia, 2-4 for crypto, and 4-6 for virus, based on each of the project source waters being classified as surface waters or under the influence of surface waters. We find all three projects are likely to achieve sufficient log removal credits under their proposed treatment schemes to comply.
ECONOMICS A primary focus of our evaluation was to provide a balanced, apples to apples comparison of the candidate projects from an economic perspective. We implemented this by focusing on the following principles:
Uniformity in plant design capacity for the two non-regional approaches; equivalent capacity allocation for the proposed DWD regional project. Equivalency in treatment to achieve: a common RO feed water quality following pretreatment; a common treated water quality goal; and pathogen removal credits required for the applicable supply source. Uniformity in equipment redundancy. Uniformity in unit cost criteria for common items. Uniformity in cost factors applied to aggregated costs (e.g., contingencies; electrical and I&C costs; etc.). Uniformity in unit costs for chemicals and other consumables for treatment evaluations.
To implement the above, we adjusted plant capacities for the evaluation on the basis described in the Project Performance discussion, rating Cal-Ams proposed system at design capacities of 5.4 mgd and 9.0 mgd; and the DWD and PML systems at 5.0 mgd and 8.2 mgd. In terms of treatment process, we attempted to maintain the overall proposed process design of the proponents, but did evaluate all as including a partial (40 percent) capacity second pass RO system. We also assumed N+1 redundancy on all rotating equipment and major treatment process units (e.g., filters, RO membrane trains). We employed an equivalent basis in developing our capital equipment cost estimates, relying on targeted quotes for equipment and SPIs cost information from past, similar seawater RO projects. For indirect costs, we assumed fixed factors and applied them uniformly to each project. We implemented a similar strategy on annual operating and maintenance expenses, using common chemical unit prices along with pricing on common consumables, such as the RO process membranes. The results of our evaluation are presented in Table ES-2 . Legal and financial considerations, such as water rights and payment schedules (for example, Surcharge 2 proposed by Cal-Am) were outside the scope of this evaluation and are not addressed herein. Overall, the costs presented are meant for comparative evaluation on a planning basis. They have an overall accuracy level of -30 to +50 percent.
December 2012
Page ES-5
INTRODUCTION
Table ES-2 - Summary of Evaluated Capital and Operating Cost Estimates

Project Proponent Cost Element Cal-Am 9 kAFY 5.5 kAFY DWD 9 kAFY 5.5 kAFY 9 kAFY PML 5.5 kAFY
CAPITAL COSTS (in Millions 2012 Dollars)

Intake/Outfall Facilities Pretreatment & Residuals Handling Desalination System Post-Treatment Distribution Facilities Site Structures Offsite Trenched Pipelines Indirect Costs 1 Contingency Allowance (30%) Mitigation Allowance (1%) $23.0 $10.6 $22.4 $1.48 $6.14 $11.5 $24.9 $57.5 $47.2 $1.60 $17.7 $7.94 $15.0 $0.88 $5.08 $10.8 $24.9 $50.3 $39.8 $1.30 $-0$11.2 $19.4 $1.48 $3.35 $3.65 $28.3 $54.5 $36.6 $1.20 $-0$7.94 $13.2 $0.88 $3.26 $2.52 $27.3 $47.5 $30.8 $1.00 $-0$20.2 $19.9 $1.66 $0.35 $10.0 $25.1 $67.9 $43.6 $1.50 $-0$13.6 $14.0 $1.07 $0.26 $7.00 $25.1 $62.3 $37.0 $1.20
TOTAL
$206
$174
$160
$134
$190
$161
ANNUAL O&M COSTS (in Millions 2012 Dollars)

Energy Chemicals Expendables Other Proponent Expenses O&M Labor Equipment Replacement2 $5.38 $0.32 $0.69 -$2.69 $1.50 $3.26 $0.19 $0.45 -$2.36 $1.23 $3.73 $0.81 $0.78 $1.59 $2.69 $1.01 $2.29 $0.49 $0.52 $1.45 $2.36 $0.83 $3.98 $0.93 $1.09 -$2.69 $1.16 $2.43 $0.57 $0.65 -$2.36 $0.92
TOTAL
$10.6
$7.49
$10.6
$7.94
$9.85
$6.93
ANNUAL COST OF WATER (in Millions 2012 Dollars)

Capital Recovery3 Total Annual Cost $19.1 $29.7 $16.2 $23.7 $9.25 $19.9 $7.75 $15.6 $11.0 $20.9 $9.37 $16.3
Production Cost of Water ($/AF)
$3,300
$4,310
$2,205
$2,850
$2,320
$2,965
1 Includes implementation costs at 25%; ROW easement/land costs, mobilization/demobilization at 2%; electrical and I&C systems at 18%; engineering and
startup at 15%; and additional project proponent prescribed costs. All percentages applied to plant facilities costs.
2 Calculated as 1.5% of plant facilities costs. 3 Capital recovery factor for DWD and PML based on an interest rate of 4.0% and term of 30 years; based on an interest rate of 8.49% and 30 years for
Cal-Am; see additional discussion in Section 5.
Page ES-6
December 2012
EXECUTIVE SUMMARY
Overall, the projected capital and operating costs for each facility are fairly equivalent given the overall accuracy of the estimate and degree of project development. Cal-Ams capital cost is the highest; owing largely to its high intake system cost. PML is proposing to reuse existing intake infrastructure; while DWD has an unspecified separate business entity which will be funding its intake, outside of the assigned DWD facility budget. Cal-Ams operating cost is also relatively high, owing in large measure to higher stipulated energy costs than either DWD or PML roughly $0.13/kW-hr vs. $0.08 kW-hr. The overall water production costs diverge considerably in our evaluation, due to the higher cost of capital assigned to Cal-Am vs. DWD and PML; so while the base costs are similar, Cal-Ams cost of water produced is higher. An expanded discussion of how the capital recovery factor (CRF) for Cal-Am was generated is presented in Section 5.
IMPLEMENTATION CONSIDERATIONS The three projects are at varying states of development in terms of the regulatory permitting process. Cal-Am is further along than either DWD or PML, though DWD has completed or is nearing completion of their initial CEQA compliance documents. Forecast project implementation schedules were identified for each project proponent, based on a select number of key environmental and permitting tasks, including:
1. A project description must be completed. 2. An Environmental Assessment must be made. 3. An EIR/EIS must be completed (CEQA/NEPA compliance). 4. Commercial Agreements must be negotiated/ Cal-Am must obtain a Certificate of Public Convenience and Necessity (CPCN), after certification of the EIR. 5. Jurisdictional Permits must be obtained for facilities impacting Waters of the U.S. 6. NPDES Permits must be amended/obtained. 7. Coastal Development Permits must be obtained. It was further assumed that each proponent had the financial capacity to proceed with predesign preparation/procurement package development such that the project could be put out to final design and construction bid coincident with approval of the final project permits. The schedules are provided below as , Figure ES-2 and Figure ES-3 . The project proponents were invited to provide their updated schedules following publication of the draft report. Cal-Am and DWD each elected to provide a schedule, which are included in Section 6.
December 2012
Page ES-7
INTRODUCTION
Figure ES-1 Projected Cal-Am Project Implementation Schedule
Figure ES-2 Projected DWD Project Implementation Schedule
Figure ES-3 Projected PML Project Implementation Schedule
Page ES-8
December 2012
INTRODUCTION
1 INTRODUCTION
Separation Processes Inc. (SPI) and Kris Helm Consulting (KHC) are providing engineering and consulting support to the Monterey Peninsula Regional Water Authority (MPWRA) to assist with the evaluation of three candidate desalination projects on the Monterey Peninsula. SPI conducted technical and economic evaluations of the proposed projects; while KHC examined issues relating to permitting and environmental compliance. California American Water (Cal-Am) is an investor owned public utility who is responsible for providing the water supply to cities covered within the MPRWACarmel-by-the-Sea, Del Rey Oaks, Monterey, Pacific Grove, Sand City and Seaside. The proposed projects would supplement supply previously extracted for the region from the Carmel River. In 1995, the State Water Resources Control Board (SWRCB) in its Order No 95-10 found that Cal-Am was withdrawing water from a subterranean stream, rather than percolating groundwater; and in the process extracting an average of 10,730 AFY in excess of its valid right of 3,376 AFY. The order required Cal-Am to secure a replacement source of supply by December 2016. The average annual water demand in the region is 15,250 AFY 1 . Currently identified sources include established rights to Carmel River and Seaside Basin waters of 4,850 AFY, the aquifer storage and recovery (ASR) system of 1,300 AFY, and 94 AFY from the Sand City Desalination Plant. This leaves a roughly 9,000 AFY deficit to be made up. Alternatives include a new 9,000 AFY seawater desalination plant; and a new groundwater replenishment (GWR) project of 3,500 AFY in combination with a new 5,500 AFY seawater desalination plant. The technical advisory committee (TAC) of the MPRWA developed a list of 56 questions to submit to the three desalination project proponents, including Cal-Am, DeepWater Desal, LLC (DWD) and the Peoples Moss Landing Desal (PML). Each proponent is proposing to build a desalination facility to satisfy the planned desalination component of the regional water supply. Responses and supporting information were received from each, exhibiting various stages of development and differences in approach. The differences were such that a deliberative, fair comparative evaluation could not be conducted solely on the basis of the information provided. This report presents the results of a more detailed evaluation and analysis conducted by SPI and KHC. The work was conducted based on information provided in the original responses to the questions from the TAC along with supplemental information provided by each proponent. The goal was to provide an apples-to-apples comparison of each project on an equivalent cost basis; along with an evaluation of the realistic implementation schedule for each, taking into account environmental and permitting issues.
1 RBF Memorandum, Recommended Capacity for the Monterey Peninsula Water Supply Project (MPWSP) Desalination Plant, April 20, 2012
December 2012
Page 1-1
PROJECT SUMMARIES
2 PROJECT SUMMARIES
The tabular summaries provided in this section include information on each of the proponent projects, including: Project name Proponent(s) Location Purpose Production volume Key features Facility map Key information provided to review team Persons interviewed/corresponded with
The TAC requested information from each proponent that would satisfy the desalination component of the proposed water supply. Responses received from the Cal-Am and PML groups were generally in line with this request; though there were slight differences in the proposed plant capacities. The DWD response proposed to only serve the higher 9,000 AFY requirement, along with a planned expansion to act as a regional water supply source to other agencies on the peninsula as well as cities north of Moss Landing. DWD did reveal in response to subsequent inquiries how they would serve the 5,500 AFY supply scenario. The information presented for each project represents their current status from the proponents at the time of this report writing.
December 2012
Page 2-1
PROJECT SUMMARIES
2.1 CALIFORNIA AMERICAN WATER (CAL-AM)

Project Name Proponent(s) Location Purpose Monterey Peninsula Water Supply Project (MPWSP) California American Water 46-acre site of vacant, disturbed land west of the MRWPCA Regional Treatment Plant (RTP). To supply supplemental desal component of the Monterey Peninsula regional water supply This project is currently under consideration by the California Public Utilities Commission (CPUC). Production Volume Key Features 5.4 mgd or 9.0 mgd 1. Raw seawater supply through a series of up to eight sub-surface slant wells located on a vacant 376 acre parcel with roughly 7,000 feet of ocean shoreline. 2. Raw water and pump to waste transmission through one of eight candidate alignments. 3. Single-stage, dual media pressure filtration pretreatment. 4. Partial 2-pass RO desalination treatment with energy recovery. Final product has a proposed blend of 60:40 first pass:second pass product. 5. Product stabilization with calcite, carbon dioxide, and sodium hydroxide. 6. Disinfection with sodium hypochlorite and temporary UV. 7. 2 x 1.0 MG product storage tanks, product distribution pumps, and 36-in diameter product pipeline to Cal-Am distribution system near Seaside. 8. 24-in brine disposal pipeline to the existing RTP outfall. 1. TAC response package 2. Response to supplemental questions from SPI and KHC 3. Relevant testimony to the CPUC 4. RBF 2011 memo on implementation schedule risk of regional supply alternatives 5. RFB 2011 memo on cost analysis of regional supply alternatives Richard Svindland
Key Information Provided
Persons Interviewed/Corresponded With
Page 2-2
December 2012
PROJECT SUMMARIES
Figure 2-1 Cal-Am Project Location Map
December 2012
Page 2-3
PROJECT SUMMARIES
2.2 DEEPWATER DESAL (DWD)

Project Name Proponent(s) DeepWater Desal DeepWater Desal, LLC, Dynegy Moss Landing Power Plant, MFJK Partnership of the Capurro Ranch, PV2 Solar, and Ecomert Technologies Capurro Ranch Property, north of /Elkhorn Slough Phase 1 to supply supplemental desal component of the Monterey Peninsula regional water supply Phase 2 to supply northern customers Production Volume Key Features Phase 1: 4.9 mgd or 9.1 mgd Phase 2: 22.0 mgd 1. Raw seawater supply through a new 48-in open intake extending into the Monterey Bay west of Moss Landing at a depth of roughly 65-ft. 2. Raw water transmission through an existing right of way maintained by MLPP to an existing pump station at MLPP for transfer to the site. 3. Proprietary warming system at MLPP which will increase the temperature of the raw water. 4. Transmission of the warmed feed water through a new 36-in pipeline to the Capurro Ranch site. 5. Single-stage, dual media pressure filtration pretreatment. 6. Single-pass RO desalination treatment with energy recovery. 7. Product stabilization with calcite, carbon dioxide, and corrosion inhibitor. 8. Disinfection with sodium hypochlorite. 9. 2.5 MG product storage tank, product distribution pumps, and 30-in diameter product pipeline to Cal-Am distribution system near Seaside. 10. 36-in brine disposal pipeline to MLPP existing cooling water ocean discharge. 1. TAC response package 2. Response to supplemental questions from SPI and KHC 3. Tenera Environmental, Preliminary Modeling of Potential Impacts from Operation of a Desalination Facility Ocean Intake, August 22, 2012 Dennis Ing, Scott Jackson, Jonathan Dietrich
Location Purpose
Page 2-4
December 2012
PROJECT SUMMARIES
Figure 2-2 DWD Project Location Map
December 2012
Page 2-5
PROJECT SUMMARIES
2.3
PEOPLES MOSS LANDING (PML)

The Peoples Moss Landing Water Desal Project DeSal America, LLC composed of Moss Landing Commercial Park, LLC; and Stanley and PatriciaVance Lueck Moss Landing Commercial Park To supply supplemental desal component of the Monterey Peninsula regional water supply This project is currently proposed as alternative to the Cal-Am MPWSP.
Project Name Proponent(s)
Location Purpose
Production Volume Key Features
4.8 mgd or 9.4 mgd 1. Raw seawater supply through an existing intake system drawing from the Moss Landing Harbor. 2. Single-stage, zeolite pressure filtration followed by ultrafiltration (UF) pretreatment. 3. Single-pass RO desalination treatment with energy recovery. 4. Product stabilization with calcite, carbon dioxide, and sodium hydroxide. 5. Disinfection unspecified, but presumed to be with sodium hypochlorite. 6. Product storage in existing site tankage. New distribution pump station and 36-in diameter product pipeline to Cal-Am distribution system near Seaside. 7. Brine disposal through existing 51-in (internal diameter) outfall. 1. TAC response package 2. Project information package dated July 2012 3. Response to supplemental questions from SPI and KHC 4. Video of a portion of the existing outfall. 5. August 2012 Structural Evaluation Report of site structures and outfall, conducted by JAMSE Engineering, Inc. 6. Construction drawings for the outfall (1973) and modifications made to the intake pump station (1968). 7. September 2012 Environmental Issues and Constraints Report by SMB Environmental Inc. Nader Agha, George Schroeder, Stanley Lueck
Page 2-6
December 2012
PROJECT SUMMARIES
Figure 2-3 PML Project Location Map
December 2012
Page 2-7
PROJECT FUNCTION
3 PROJECT FUNCTION
The function of each proponent project is evaluated on the following criteria: Project purpose Customers identified Adequacy of treatment approach Residuals handling Feed water characterization Quality of project information Omissions or fatal flaws
In an initial screening level evaluation 2 , we found no disqualifying criteria for any of the candidate projects. We did however find differences in the level of project development and approach. Each project is discussed separately below.

3.1.1 Project Purpose Cal-Am proposes their project to serve the needs of the identified demand on the Monterey Peninsula within their service area to comply with SWRCB Order 95-10. The proposed treatment plant would serve the identified desalination component of the regional water supply portfolio. They specifically do not propose to provide a plant capacity in excess of defined regional water supply requirements under two scenarioswith GWR and without GWR 3 . 3.1.2 Customers Identified
Treated water would be supplied to the Cal-Water distribution system for service to its current service area. Any groundwater from Salinas Basin drawn through the proposed supply wells would be returned the basin as plant treated water through the Castroville Seawater Intrusion Project (CSIP) ponds 3 . 3.1.3 Adequacy of Treatment Approach
Feed water for the desalination plant would be extracted from subsurface slant wells. Over the long term, feed water is projected to include about 97 percent seawater and 3 percent intruded groundwater from the Salinas Valley Groundwater Basin (SVGB) 3 . The desalination plant will be operated such that on an annual average basis, the plant would return desalinated water to the SVGB in an amount equal to the freshwater extracted from the slant wells.
SPI Memorandum, Monterey Desalination Study Initial Scoping and Constraints Analysis, August 30, 2012 Direct Testimony of Richard C. Svindland Before the Public Utilities Commission of the State of California, filed April 23, 2012
2 3
December 2012
Page 3-1
PROJECT FUNCTION
The preferred site for construction of the slant wells is an approximately 376 acre parcel of land with 7,000 feet of ocean shoreline, located west of the proposed desal plant site. The angle of the slant wells will be determined by a proposed test well program, with a maximum well length of approximately 750 lineal feet. Wells would initially be placed on the beach, as far as possible from the existing shoreline, but avoiding undisturbed dune habitat. This may cause some or all wells to be within the predicted 50-year erosion boundary; however, the expected useful life of the wells is less than 50 years. A contingency plan will be needed for relocating the wells inland in the event that coastal erosion renders the wells inoperable 4. Two design capacities are proposed: (1) seven wells operating at 2,200 gpm per well plus one additional well as a backup, for a total of 22 mgd (15,400 gpm) producing 9.0 mgd of product water; (2) five wells operating at 1,840 gpm per well plus one additional well as backup, for a total of 13.2 mgd (9,200 gpm) producing 5.4 mgd of product water 4 . Eight feed water pipeline alignments are being considered, all of which will be made of HDPE or FPVC, and will have a 30-inch or 36-inch diameter. The final selected alignment would include a parallel 16-in diameter pump to waste pipeline, to allow wasting of initial produced water from a pump following startup. The proposed treatment plant would be located on a vacant but disturbed 46-acre parcel west of the MRWPCA Regional Treatment Plant (RTP). The site would be accessed off of Charles Benson Rd., a two-lane roadway that also serves the MRWPCA RTP along with the Monterey Regional Waste Management District. Access would be via an easement from the Waste Management District. A new turn lane would need to be provided to allow safe access to the proposed desal plant for personnel and chemicals deliveries. Cal-Am is currently in negotiations to purchase the site from the existing land owner. Overall, land acquisition is not a large concern as Cal-Am has the authority to exercise eminent domain privileges should a negotiated purchase prove untenable. Incoming seawater would be stored in two 0.5 MG storage tanks then pumped to granular media pressure filters. Provisions would be included to pre-chlorinate the filter feed if necessary; as well as include proprietary media to remove iron and manganese should it be present in the raw seawater. Filter effluent would be dechlorinated if necessary, then flow to inline cartridge filters prior to routing to the RO trains. The proposed RO system would be arranged as a full single pass and partial second pass; with the second pass product making up 40 50 percent of the final product supply. The first pass trains would include high pressure booster pumps and isobaric energy recovery devices (ERDs); while the second pass trains would be equipped with high pressure booster pumps only. Operating recovery of the first pass trains would be roughly 45.5 percent; while the second pass trains would operate at 90 percent. First and second pass trains, related pumps, and ERDs would be arranged in an N+1 configuration, with a total of four process trains for the 5.4 mgd plant option and six process trains for the 9.0 mgd plant option. 5 The product water from the RO system would be post-treated with calcite and carbon dioxide for stabilization, along with addition of a corrosion inhibitor. For disinfection, the product would be dosed with sodium hypochlorite and stored in two, 1.0 MG storage tanks. Provisions may be included for a temporary or permanent UV disinfection system as well, should conditions warrant (e.g., if additional disinfection credits are required). 5
4 5
RBF Memorandum, Monterey Peninsula Water Supply Project (MPWSP) Project Description, April 20, 2012 Cal-Am Response to SPI Questions, October 3, 2012
Page 3-2
December 2012
PROJECT FUNCTION
Overall the treatment approach is gauged to be sound. The greatest process risk is likely associated with the proposed slant wells. Slant well intake systems can provide significant advantages over traditional open ocean intakes including: Natural filtration Avoidance of impingement and entrainment of marine life No ocean construction impacts No permanent aesthetic impacts.
However, slant wells can also pose more construction challenges than other well types as a result of shallow construction angles and less vertical gravitational force. Slant wells need periodic access to the well head area. In areas where recreation exists (e.g., at a public beach) provision must be made to minimize disturbance 6. Slant well intakes can be used with large desalination plants, with seawater intake capacities of up to 50 mgd 7. Maintenance of well specific capacity long term is unknown; and elsewhere where employed the wells have been known to initially draw from an ancient marine aquifer containing high levels of iron and manganese 8 . Lastly, the specific long term amount of groundwater uptake from the SVGB, estimated at up to 3 percent, is uncertain. Cal-Am plans to install a test slant well to establish site specific operating conditions and generate data which should help to confirm actual conditions and allow development of appropriate mitigation strategies. Cal-Am has already included provisions for removing iron and manganese across their pretreatment filters if necessary. The slant wells themselves can be screened or installed at different angles to control the mix of seawater to diluent water extracted. Cal-Am is currently pursuing permits for the test well. An initial operating period of 6 12 months is planned to develop data required for the EIR CEQA work. Cal-Am has indicated that the test period could extend as long as 18-24 months if additional data is required 5 . Should the test well reveal slant wells to be problematic, a more conventional Ranney sub-surface intake well could be used as an alternative. The conceptual layout would include three vertical caissons and horizontal well clusters located across a 1,000 1,500 feet beach front area. Each caisson would be capable of extracting up to 10 mgd. Costs would roughly equivalent to the proposed slant wells; however, shoreline disruption would be greater. With either intake system, delivered raw seawater quality is likely to be good, with low particulate and silt density index (SDI) levels, making single-stage filtration an acceptable pretreatment approach. The RO process design is conservative, with a full first pass and partial second pass; including N+1 redundancy for all process units. The proposal does not include acidification or antiscalant dosing to the first pass RO system feed water, but this is likely acceptable as the planned recovery of the first pass system is limited to 45 percent. Feed and product storage tanks are arranges as 2 x 50 percent units, allowing the ability to take a tank out
Williams, D.E. Design and Construction of Slant and Vertical Wells for Desalination Intake. IDA World Congress-Perth Convention and Exhibition Centre (PCEC) Perth, Western Austrailia September 4-9, 2011 REF: IDAWC/PER11-050 7 Pankratz, T. A Review of Seawater Desal Intake, Pretreatment & Discharge Technologies. IDA Iran 06 WDTS Proceedings September 17 & 18, 2006 8 Ghiu, S. 18 Month Demonstration of Slant Well Intake System Pretreatment and Desalination Technology for Seawater Desalination. WaterReuse Research Conference Proceedings, June 2012.
6
December 2012
Page 3-3
PROJECT FUNCTION
of service for maintenance. A preliminary site plan indicates the proposed site is sufficient to accommodate the proposed treatment plant facilities and related administrative and maintenance facilities adequately. 3.1.4 Residuals Handling
Plant residuals would be handled in a combination of storage and transfer systems. Backwash waste from the filters would be collected in a 0.5 acre storage pond, with decant disposed with the RO brine. RO brine would be sent to the MRWPCA ocean outfall. Analyses have shown that the outfall has sufficient capacity to accommodate the projected peak brine flow from the plant under all but a worst case hydraulic loading scenario that is anticipated to last for six hours9. In these situations, brine would temporarily be stored on site in a 3.0 MG detention pond. The majority of the time (96 percent) the outfall is projected to have sufficient capacity. Waste residuals from the RO cleaning system would be neutralized and discharged with the brine to the outfall as well; or alternately to the site sanitary sewer if disposal with the brine is not permitted. 3.1.5 Feed Water Characterization
There has been no detailed characterization of plant feed water to date. Data will be generated as part of the planned test well program. 3.1.6 Quality of Project Information
Available documentation for the Cal-Am project is the most extensive and well developed among the three proponents. Primarily this is a consequence of their involvement in the previously proposed regional project with Marina Coast Water District along with filings to the CPUC supporting their proposed project and development of required CEQA documentation. Appendices to their response to the TAC included the following: RBF Memorandum, Monterey Peninsula Water Supply Project (MPWSP) Capital and O&M Cost Estimate Update, April 20, 2012. RBF Memorandum, Monterey Peninsula Water Supply Project (MPWSP) Project Description, April 20, 2012. Direct Testimony of Jeffrey T. Linam Before the Public Utilities Commission of the State of California, Filed April 23, 2012.
Other project related documents were available on the Monterey Peninsula Water Supply Project website, including: California America Water Company, Coastal Water Project, Final Environmental Impact Report, October 30, 2009. Download Filings for Proceeding A1204019
9 Trussel Technologies Inc. Technical Memorandum, MRWPCA Outfall Hydraulic Capacity Analysis, April 18, 2012.
Page 3-4
December 2012
PROJECT FUNCTION
Presentations, including Technical Workshops on Monterey Peninsula Water Supply Project (July 2012); Monterey Peninsula Water Supply Project Presentation (April 2012); and Monterey Peninsula Water Supply Project Presentation (July 2012). Project Map (April 23, 2012). California American Water Application for Monterey Project (PDFA) California American Water Application for Monterey Project (POS, NOA,PDFA) California American Water Direct Testimony of Keith Israel, including a Technical Memo from Trussell Technologies, MRWPCA Outfall Hydraulic Capacity Analysis, April 18, 2012 California American Water Direct Testimony of Jeffrey T. Linam California American Water Direct Testimony of Eric J. Sabolsice California American Water Direct Testimony of F. Mark Schubert, P.E. California American Water Direct Testimony of David P. Stephenson California American Water Direct Testimony of Richard C. Svindland California American Water Direct Testimony of Kevin Thomas Capital Cost Worksheet O&M Cost Worksheet RBF Memorandum, Implementation Schedule Risk Analysis of Water Supply Alternatives, October 24, 2011 RBF Memorandum, Cost Analysis of Water Supply Alternatives, October 19, 2011
Cal-Am also provided a response to questions from SPI, including the following documents:
Overall the information is considered sufficient to evaluate the proposed project from a technical and economic perspective. 3.1.7 Omissions or Fatal Flaws
Our evaluation and investigation of the proposed Cal-Am project did not uncover any perceived fatal flaws of a technical nature or significant omissions of project information.
December 2012
Page 3-5
PROJECT FUNCTION

3.2.1 Project Purpose DWD proposes a project that could serve both the defined demand within the Cal-Am service area for a desal supply of either 5,500 AFY or 9,000 AFY along with an expanded supply for the region with a total plant capacity of 25,000 AFY. The project is predicated on development of certain components (e.g., the seawater intake, feed pipeline, brine pipeline) for the 25,000 AFY plant, with cost allocation based on treated water flow to defined customers. DWD plans to establish a joint powers authority (JPA) composed of local public agencies to ultimately prosecute its project. 3.2.2 Customers Identified DWD seeks to supply either 5,500 AFY or 9,000 AFY to Cal-Am. The balance of the proposed plant capacity would be supplied to other customers. These may include the City of Santa Cruz, Soquel Creek Water Distict, Pajaro Valley Water Management Agency, areas of North Monterey County which may have a need and communities along the Highway 101 corridor between Salinas and Santa Clara. 3.2.3 Adequacy of Treatment Approach DWD proposes two plant design capacities to meet the 5,500 AFY and 9,000 AFY delivery targets4.9 mgd and 9.1 mgd. Each of these capacities is different than the Cal-Am listed flows of 5.4 mgd and 9.0 mgd, respectively. DWD proposes a new passive-screened open seawater intake drawing from Monterey Bay near Moss Landing. Feed water would be withdrawn from a new 48-in. diameter pipe that would replace an existing pipeline previously used by PG&E for offloading fuel oil. The intake pipe would be 10,000 feet long and located at a depth of approximately 65-ft at its end. The pipe terminus would be screened with a passive, cylindrical wedge-wire screen constructed with 2 mm. slot openings and a maximum design velocity of 0.5 fps through the screen to prevent impingement of marine organisms. The intake would cross Hwy. 1 through an existing utility tunnel; or space not permitting, a new crossing. The line would connect to an existing, abandoned pump clear well at the Dynegy Moss Landing Power Plant (MLPP). New pumps would be installed to transfer the influent seawater from the clear well through a new 48-in diameter HDPE pipeline to the project site located roughly one mile north of MLPP along Hwy. 1, a location known as the Capurro Ranch. En route to the site, the water would transition through a proprietary warming system owned by Dynegy, increasing its temperature from roughly 10 C up to as high as 34 C. The project site is currently occupied by an active vegetable distribution facility, with two large, refrigerated buildings on-site. The site is currently owned by MFLK Partnership, who are also equity partners in DeepWater Desal LLC. DWD has secured a 34-year ground lease for the site with an option to extend it for two successive 32-year periods. The site area is 8.14-acres; and DWD has secured an option to lease an additional 8-acre parcel adjacent to the site should additional area be required for plant construction. No feed water storage tanks are proposed, with the supply pumped directly to granular media pressure filters. Provisions would be included to pre-chlorinate the filter feed if necessary; as well as include a filter aid coagulant (ferric chloride). Filter effluent would be dechlorinated if
Page 3-6
December 2012
PROJECT FUNCTION
necessary, then flow to inline cartridge filters prior to routing to the RO trains. The proposed RO system would be arranged as a single pass system. The trains would include high pressure booster pumps and isobaric ERDs. Operating recovery of the first pass trains would be variable between 43 and 47 percent. The RO trains, related pumps, and ERDs would be arranged in an N+1 configuration, with a total of three process trains for the 4.9 mgd plant option and six process trains for the 9.1 mgd plant option. 10 The product water from the RO system would be post-treated with calcite and carbon dioxide for stabilization, along with addition of a corrosion inhibitor. For disinfection, the product would be dosed with sodium hypochlorite and stored in a single 2.5 MG storage tank. Overall the treatment approach is gauged to be sound, though the proposed RO system design would produce a lower quality product than the proposed Cal-Am system, consisting solely of a single pass of RO treatment. The greatest process risk is likely associated with the proposed open intake and feed water delivery system. Water quality sampling conducted at depth has indicated the raw seawater will likely be low in turbidity and suspended solids. This is backed up by available literature. Intake depth can have a significant impact on water quality. Sun rays are absorbed by the ocean surface, limiting photosynthesis and algae quantity as depth increases. It is for this reason that deep water intakes typically provide feed water with less biological activity and fewer suspended solids than conventional open water/surface intakes. However, the disadvantage is that seawater temperature decreases with depth, increasing either membrane surface area or feed pressure required for treatment. On the other hand, more stable annual temperatures at this depth may facilitate plant design and operation 11 . To address the temperature issue, DWD has proposed warming the supply in proprietary system on the MLPP site. The proposed system is subject to a non-disclosure agreement at present, limiting the publicly available information. However, it appears the system will likely be integral to operations at the MLPP, providing a cooling water source. The approach is certainly synergistic, but it also in effect links operations between MLPP and the desal plant to a certain extent, introducing potential reliability issues. In addition, there is no experience with the effect of warming a deep source supply. There is potential for the increase in temperature to cause an increase in biological activity and associated biological fouling within the treatment process. There is no way to gauge the potential magnitude of this risk element at this time. The DWD project proponents do not consider it a large concern and have not proposed a pilot test program on the candidate source water and overall pretreatment process. The issue becomes what would be the impact of a problem discovered once the project was built? Remedies may be limited if the warming process is contingent on an agreement between Dynegy and DWD. If the warming process could be bypassed, then the issues with cold water treatment would come into play, increasing RO system operating pressures and potentially exceeding operating capabilities of installed pumping equipment. The RO process design from an operations perspective is conservative, with N+1 redundancy for all process units. There is no proposed feed storage tank, which is considered acceptable; but the lack of any type of redundancy in product storage is a concern; as any required maintenance on the tank would necessarily require a shutdown of the treatment facility unless suitable temporary
DWD Response to SPI Questions, September 12, 2012 Cartier G., Corsin P. - Description of Different Water Intakes for SWRO Plants. IDA World CongressMaspalomas, Gran Canaria Spain October 21-26, 2007 - REF: IDAWC/MP07-185.
10 11
December 2012
Page 3-7
PROJECT FUNCTION
storage could be obtained. A preliminary site plan indicates the proposed site is sufficient to accommodate the proposed treatment plant facilities and related administrative and maintenance facilities adequately. From a process perspective, the proposed pretreatment system design is likely acceptable. There is sufficient precedence for single stage filtration on open seawater intakes among successfully operating facilities to provide confidence in this approach 12 . The proposal does not include acidification or antiscalant dosing to the first pass RO system feed water, but this is likely acceptable if recovery is limited to the proposed operating range. A larger concern is with the RO system process design as a single pass system which would produce a treated product supply with TDS, boron and chloride levels above the existing supplies from the Carmel River. It is our recommendation that any desalination system incorporating RO as the primary process for Peninsula customers include a partial (at least 40 percent) second pass RO system to further improve product quality, especially at the elevated temperature operation proposed. 3.2.4 Residuals Handling
Backwash waste from the filters would be collected in a 175,000 gallon settling tank, with decant sent to a separate 150,000 gallon tank for disposal along with the RO brine. RO brine would be sent to back to MLPP for disposal along with the plant cooling water through their existing ocean outfall at a projected dilution ratio between 20 and 60 to 1. DWD also proposes to neutralize chemical cleaning wastes and dispose of them with the brine as well. During our site visit it was made clear that an agreement between DWD and Dynegy for use of the cooling water outfall was still subject to negotiation among the parties. 3.2.5 Feed Water Characterization DWD has a buoy in the area of the proposed intake collecting data on salinity, temperature and turbidity at fixed intervals. Comprehensive analytical data is not available at this time. DWD has retained Tenera Environmental to conduct a 12 month study on impingement and entrainment issues. Sampling in support of the study is ongoing. Tenera did conduct a preliminary analysis based on available information and a proposed intake flow of 25 mgd. That report found low projected levels of entrainment. However, additional more detailed analyses are required based on site specific data; in particular to assess the presence of a large, vertical mixing zone at the interface of the submarine canyon in the bay 13 . 3.2.6 Quality of Project Information Available documentation for the DWD project is adequate at this stage of project development. DWD has not yet progressed with their formation of a joint powers authority (JPA) for project implementation and production of environmental permitting packages. Information collected to data has largely been in service of defining the project approach, securing agreements, and developing project cost estimates. The nature of the agreement between DWD and Dynegy is still confidential between the parties.
DWD Response to SPI Questions, September 8, 2012. Tenera Environmental, Preliminary Modeling of Potential Impacts from Operation of a Desalination Facility Ocean Intake, August 22, 2012.
13
12
Page 3-8
December 2012
PROJECT FUNCTION
A listing of documents provided in addition to the response to the TAC is as follows: Product Water Pipeline Alignment Intake Pipeline Hydraulic Grade Line Draft Design Criteria Tenera Preliminary Intake Assessment Conductivity, Temperature and Turbidity Data May 30 June 12, 2012. Raw Water Characterization Program Memo Capital and O&M Cost Estimate Worksheets Site Layout for Capurro Ranch Presentation: An Oceanographic Solution to Product Freshwater, August 2012
Overall the information is considered sufficient to evaluate the proposed project from a technical and economic perspective. 3.2.7 Omissions or Fatal Flaws
We have not identified any fatal flows of a technical nature with the DWD proposed system. The only omissions of information are acknowledged by DWD and related to the agreements between DWD and Dynegy.
3.3
3.3.1

Project Purpose
PML proposes a project that could serve the defined demand within the Cal-Am service area for a desal supply of either 5,500 AFY or 9,000 AFY. 3.3.2 Customers Identified
PML seeks to supply either 5,500 AFY or 9,000 AFY to Cal-Am. Supply to other customers is not proposed. 3.3.3 Adequacy of Treatment Approach
PML proposes two plant design capacities to meet the 5,500 AFY and 9,000 AFY delivery targets4.8 mgd and 9.1 mgd. Each of these capacities is different than the Cal-Am listed flows of 5.4 mgd and 9.0 mgd, respectively. The difference results from their targeting deliveries of 5,000 AFY and 10,000 AFY in their response to the TAC and subsequent information provided to SPI. PML proposes to use an existing seawater intake system originally installed to serve the Kaiser Refractories Moss Landing Magnesia Plant back in 1968the same site that is now called the Moss Landing Commercial Park (MLCP). The pump station draws from the Moss Landing
December 2012 Page 3-9
PROJECT FUNCTION
Harbor and supplies water to the site through two 36-in diameter pipelines that cross beneath Hwy. 1 through a pair of 72-in corrugated steel conduits. One of the pipelines has been upgraded to steel throughout its length; while the second maintains a section of the original wood staved piping on site. Proponents have also indicated the ability to repurpose the existing site seawater outfall as dual intake-outfall conduit extending into the Monterey Bay out front of Moss Landing Harbor. The existing concrete outfall is 51-in internal diameter; and could have a new intake line installed in the annular space; with brine flowing out in the opposite direction. Cost estimates provided to SPI were based on use of the existing intake system so this approach forms the basis of our evaluation. The 1968 drawings show the installation of seven pumps. The condition of the pumps at this time is unknown; but would likely require rehabilitation and rework to supply the proposed treatment plant. The pump bowls reportedly draw from below the harbor seafloor, but the actual depth is unknown. The MLCP site still contains infrastructure from the time it was employed as a magnesium extraction facility. The total site occupies roughly 200 acres; with a proposed 25 acre parcel offered for sale or lease as part of the proposed desal treatment plant. Available facilities offered for use include the following: Intake pumps and pipeline and outfall pipeline. Up to four 5.0 MG concrete storage tanks. A 12kV, 12,000 amp electrical service along with two 1,000 amp engine generators. Rail transportation terminal. Non-exclusive easements for site access. Non-exclusive use of a 2,100 gpm well supply source. A 5,000 gpd trailer-mounted pilot plant. Up to 20,000 sq. ft. of existing buildings.
Existing infrastructure is in various states of repair as detailed in two site investigations 14,15 and would require some refurbishment and rework to be acceptable for integration into a municipal drinking water facility. Portions of the site are likewise located within the flood plain 16 and constructed facilities would need to be built in accordance with any ensuing requirements. The proposed PML treatment system would include inlet screens, booster pumps, single stage pressure filters, an ultrafiltration (UF) membrane treatment system, antiscalant dosing system, high pressure booster pumps with pressure exchange type ERDs, single pass RO system, posttreatment system, and product storage and distribution pump station. The RO system would operate at 40 percent recovery and limit operating flux to 8 gfd. The UF system would operate at a proposed flux of 35 gfd.
14 15
Replacement Cost Approaisal Summary Report, prepared by Landmark Realty Analysts, Inc., October 3, 2011. Structural Evaluation, Intake & Outfall Pipelines, Intake Pump Station and Water Storage Reservoirs, The Peoples Moss Landing Water Desalination Project, Moss Landing Green Commercial Park, Modd Landing, CA, August 14, 2012. 16 Monterey County Planning & Building Inspection Department; Meeting September 30, 2004, Agenda Item 6.
Page 3-10
December 2012
PROJECT FUNCTION
The product water from the RO system would be post-treated with calcite and carbon dioxide for stabilization, along with addition of a corrosion inhibitor. For disinfection, the product would be dosed with sodium hypochlorite and stored in existing tankage on site. PML did not provide a detailed list of equipment or a site layout plan, stating that it was too early in the development of their project to have that information developed. It is therefore somewhat difficult to gauge the robustness of their approach. From the narrative description provided and listed membrane area assumptions, it is not clear that the major UF and RO train equipment contain redundant process units. From a process perspective, the proposed pretreatment system design may be acceptable. The largest unknown is the quality of water that will be extracted from the Moss Landing Harbor. There could be organics, metals and other contaminants entrained in the sediments overlaying the supply pumps that could complicate treatment. PML has proposed conducting a pilot study program prior to finalizing their process design, so this should help allay concerns. A previous pilot study conducted at MLPP found that direct UF pretreatment operated in concert with a coagulant was effective at pretreating a supply drawn from the Moss Landing Harbor, but that flux should be limited to 30 gfd 17. A larger concern is with the RO system process design as a single pass system similar to the DWD approach. As stated in that discussion, we recommend including a partial second pass RO treatment system to produce a final product quality more in keeping with current supplies in the distribution system. 3.3.4 Residuals Handling
Pretreatment residuals would come from the proposed filters and UF process units. A backwash recovery system is proposed, with decant sent to the outfall with the RO system brine stream. Neutralized UF and RO cleaning wastes would be treated similarly; or recovered for reuse within the MLCP. Brine would be discharged to the existing outfall. The outfall is currently not in use and there is evidence of disrepair in a video survey conducted sometime prior to 2008 18 . The video shows evidence of several areas of decoupling along the main outfall alignment. Also, according to the original plans, the outfall was installed below grade until the diffuser section 19. However, portions of the main outfall appear to be currently uncovered; and one section shifted uppossibly as a consequence of the 1989 Loma Prieta earthquake. Many of the diffusers are clogged and covered with marine growth; and from the terminus of the outfall it appears it may be largely filled with sandup to half of the circumference. Consequently a fair amount of rehabilitative work would be required to place the outfall into service, and more detailed assessmentincluding an inspection of the interior of the outfallis warranted.
Coastal Water Project Pilot Plant Report, May 2010, MWH. Outfall Video, Moss Landing Marine Lab, California State University. Seawater Outfall for Kaiser Aluminum and Chemical Corporation, Moss Landing, California, by Kaiser Engineers, 1971.
17 18 19
December 2012
Page 3-11
PROJECT FUNCTION
3.3.5
Feed Water Characterization
PML does not at this point have analytical data characterizing the proposed raw water supply. It will presumably be collected during their planned pilot test program. 3.3.6 Quality of Project Information
The PML project is the least developed among the three as evidenced by the level of information provided. They were however very forthcoming in sharing all that was available, including original construction plans for the intake and outfall, video survey of the outfall, and other site specific reports. A listing of documents provided in addition to the response to the TAC is as follows: Construction Plans: Seawater Outfall Construction Plans: Relocation of Sea Water Intake The Peoples Moss Landing Water Desal Project, Important New Updates, July 2012 Response to SPI Questions, September 4, 2012 and September 27, 2012 Environmental Issues and Constraints Report, SMB Environmental, September 2012 Structural Evaluation, JAMSE Engineering Inc., August 2012. Replacement Cost Appraisal Summary Report, Landmark Realty Analysts, Inc., October 2011. Adopted Waste Discharge Requirements Order No. R3-2009-002, National Pollutant Discharge Elimination System (NPDES) Permit No. CA0007005 Moss Landing Commercial Park and Moss Landing Cement Company, Moss Landing Cement Company Facility, Monterey County, March 2009.
Overall, the lack of specificity as to the proposed plant facilities makes the technical and economic evaluation difficult and forces us to make additional assumptions on our own. 3.3.7 Omissions or Fatal Flaws
We have not identified any fatal flows of a technical nature with the PML proposed system. The primary omission is the lack of defined lists of equipment in order to assist in validating cost estimates.
Page 3-12
December 2012
PROJECTED PERFORMANCE
4 PROJECTED PERFORMANCE
This section discusses the following performance issues for each project: Plant design capacity Targeted product water quality Disinfection strategy
Plant design capacity refers to the proposed instantaneous flow achieved by a given plant design to achieve the annual produced water flow of 9,000 AFY or 5,500 AFY. The design capacity of a facility impacts both its construction and operating cost, and must take account of issues such as equipment redundancy, periodic maintenance, and overall online operating factor. The issue of product water quality is closely tied to the proposed demineralization system process design of each facility. As discussed previously, DWD and PML have proposed single pass RO systems; while Cal-Am has proposed a partial (40 percent) second pass system. The two approaches will produce different qualities of final product water from an overall salinity perspective, as well as levels of boron and chloride. In addition to salinity and individual constituent targets, the design must also achieve regulatory pathogen removal thresholds. The California Department of Public Health (CDPH) has primacy to regulate public water systems within the State. As such, they will review these proposed treatment approaches for compliance with the Surface Water Treatment Rule (SWTR) and the Long Term 2 Enhanced Surface Water Treatment Rule. It is anticipated the slant wells proposed for the Cal-Am project would be deemed groundwater under the influence of surface water and subject to the surface water regulations, as would the open intake sources for DWD and PML. Pathogen removal/inactivation requirements are quantified in increments of influent to effluent concentration, expressed in a log scale. For example 3-log removal is 99.9%. CDPH will establish the log removal requirements of a project based on information on the quality of the source water and other factors. The expected ranges of possible requirements for these projects are 3-5 for Giardia; 2-4 for cryptosporidium (crypto); 4-6 for virus. Some project proponents have indicated an expectation the requirements will fall at the low end of the ranges. Each treatment process is assigned a log removal credit for each pathogen. By summing the credits of all processes in the multi-barrier approach (filters, RO, disinfection, etc.) a total credit is achieved to meet or exceed the regulatory requirement. Under the disinfection strategy discussion we consider the removal credits likely achieved by the proposed projects.

4.1.1 Plant Design Capacity Defined demand requirements for the proposed supply to the Monterey Peninsula customers are 5,500 AFY and 9,000 AFY. Plant designs are rated in instantaneous production capacities for the purposes of sizing equipment (pumps, RO membrane trains, etc.) in units of mgd. 1.0 mgd is equivalent to annual production rate of 1,120 AFY. The required minimum plant capacity would therefore translate to 4.9 mgd or 8.0 mgd. This however is not necessarily what we would recommend as a conservative municipal plant design basis. Equipment breaks down, membranes
December 2012
Page 4-1
require cleaning, power outages occur. Without excess treatment capacity or high levels of component redundancy, annual deliveries could fall short. Cal-Am has proposed a design capacity basis of 5.4 mgd or 9.0 mgd. These capacities are fairly close to what you would get by assuming the treatment plant is on-line and producing water 90 percent of the time, which results in capacities of 5.45 mgd and 8.92 mgd. A 90 percent on-line factor is consistent in our experience of a well-designed and operated municipal RO plant that does not have redundant process units (e.g., RO trains). In Cal-Ams case, they are proposing redundant process units, so its likely the facility will be capable of producing its nameplate capacity of 5.4 mgd or 9.0 mgd better than 90 percent of the time. An additional issue specific to Cal-Am however is the potential extraction and return of groundwater from the SVGB. Cal-Am estimates as much as 8 percent of the plants annual production capacity may need to be returned to the basinup to 780 AFY for the 9,000 AFY demand scenario 20 . This has the effect of increasing the annual flow requirement to 5,960 AFY or 9,780 AFY; and corresponding minimum plant design capacity to 5.3 mgd or 8.7 mgd. Looked at another way, the plant would need to run at the proposed design capacity roughly 98 percent of the time to meet the higher delivery requirement. With the level or redundancy in CalAms design we consider this achievable but not overly conservative. 4.1.2 Targeted Product Water Quality
Though Cal-Am has produced a good degree of information to date with regard to their proposed project, the majority has been in service of supporting their CEQA and CPUC approval processes. They have specifically not developed a target product water quality specification, beyond stating the final product water will meet all State Maximum Contaminant Levels (MCLs) and be non-corrosive. Rational for a partial second pass RO system includes concerns over levels of boron, chloride and sodium in the final product water as well 20 . Also in a presentation, Cal-Am projected treated water TDS from the plant of 380 mg/L and chloride level of 60 mg/L to blend with existing supplies with a TDS of 440 mg/L and chloride level of 90 mg/L 21 . From their proposed process design and post-treatment strategy we can however model projected product quality independently. In Table 4-1 we have summarized our projection of water quality produced from a partial two-pass RO process (40 percent blend of second pass product) stabilized with calcite, carbon dioxide and sodium hydroxide.
RBF Memorandum, Monterey Peninsula Water Supply Project (MPWSP) Project Description, April 20, 2012.. Presentation Monterey Peninsula Water Supply Project Presentation to Monterey Co. Water Resources Agency, June 25, 2012.
20 21
Page 4-2
December 2012
Table 4-1 Summary of Projected Product Quality from Cal-Am Facility

Parameter
Total Dissolved Solids Chloride Boron pH Calcium Alkalinity
Units
mg/L mg/L mg/L units mg/L as CaCO 3 mg/L as CaCO 3
Value
380 60 0.5 >_ 8.0 40 40
4.1.3
Disinfection Strategy
Cal-Am has stated their intent for their pathogen removal credits to comply with the Surface Water Treatment Rule (SWTR) and achieve 4 log removal of giardia and 6 log removal of virus. This would be accomplished through a multi-barrier treatment approach including their intake wells, pretreatment filters, RO process, chlorine disinfection, and (if required) UV disinfection. Our evaluation of the proposed Cal-Am process in terms of specific pathogen credits is presented in Table 4-2 . The ability of Cal-Ams slant-wells to receive aquifer (bank) filtration credit is uncertain (dependent on design and local conditions) and the inclusion of UV disinfection is tentative, totals were calculated with and without those values.
Table 4-2 Summary of Projected Pathogen Credits for Cal-Am Project
Parameter
CDPH Requirement (Potential Range) Aquifer Filtration Granular Media Filtration RO UV Chlorination
Giardia
3-5 1 2.5 2 2 0.5
Crypto
2-4 1 2 2 2
Virus
4-6 2 2
2+
TOTAL without Aquifer Filtration Credit & UV TOTAL without UV TOTAL of All
5 6 6+
4 5 6+
6+ 6+ 6+
December 2012
Page 4-3

4.2.1 Plant Design Capacity The original DWD response to the TAC included proposed demand conditions of 25,000 AFY and 10,700 AFY, with plant capacities of 22.3 mgd and 9.1 mgd. In response to questions from SPI, DWD proposed to meet the 9,000 AFY condition with their original 9.1 mgd plant capacity, and the 5,500 AFY condition with a plant rated at 4.9 mgd. Using the same performance metrics discussed above for Cal-Am, the DWD facility would need to operate at an online factor of roughly 100 percent for the 5,500 AFY demand condition; and 88 percent for the 9,000 AFY scenario. Its unclear why DWD used varying assumptions for each condition, but could be a consequence of their larger, regional facility approach and an assumption that the 5,500 AFY supply would be served as a portion of a larger capacity treatment plant. Like Cal-Am, DWD includes sufficient redundancy in their proposed treatment system equipment to justify a greater than 90 percent online factor. On an equivalent basis with CalAm, a 98 percent online factor would result in plant capacities of and 5.0 mgd and 8.2 mgd, respectively. 4.2.2 Targeted Product Water Quality
In their response to questions from SPI, DWD provided their target product water quality which is reproduced in Table 4-3. In general, DWD proposes to provide a product supply that is compliant with all applicable drinking water regulations, is non-corrosive, and compatible with existing supplies in the Cal-Am distribution system.
Table 4-3 Summary of Projected Product Quality from DWD Facility
Parameter
Total Dissolved Solids Chloride Boron pH Calcium Alkalinity, as CaCO 3
Units
mg/L mg/L mg/L units mg/L mg/L
Value
<500 128 <0.9 7.0 8.0 20 - 50 >55
Due to their proposed warming process, the product water will also likely have a temperature between 29 34 C (84 93 F). This may be excessive depending on the temperature of existing supplies within the Cal-Am distribution system, temperature loss during transmission and their ability to blend and lower the delivered temperature to customers.
Page 4-4
December 2012
4.2.3
DWD will achieve required disinfection and pathogen removal credits though media filtration, RO, and chlorine disinfection. We project the overall process to achieve overall requirements as summarized in Table 4-4.
Table 4-4 - Summary of Projected Pathogen Credits for DWD Project
Parameter
CDPH Requirement (Potential Range) Granular Media Filtration RO Chlorination
Giardia
3-5 2.5 2 0.5
Crypto
2-4 2 2
Virus
4-6 2 2 2+
TOTAL
6+
4.3
4.3.1

Plant Design Capacity
The PML response to the TAC included proposed demand conditions of 5,500 AFY and 10,700 AFY, with plant capacities of 4.8 mgd and 9.4 mgd. In response to questions from SPI, PML proposed new capacity increments of 5,000 AFY and 10,000 AFY. Corresponding production capacities were not provided, though a narrative equipment list with design operating flux and membrane area and element assumptions were provided for each scenario. From this information, we calculated a plant design capacities of 4.5 mgd and 9.0 mgdroughly equivalent to producing 5,000 AFY or 10,000 AFY if operated continuously (100 percent online factor). Actual target delivery scenarios for the peninsula are 5,500 AFY and 9,000 AFY. From the equipment information provided it does not appear that any excess membrane area is proposed that would indicate the presence of redundant equipment. With this approach, a lower assumption of achievable plant online factor would be recommended. However, we do not consider the approach good design practice and find it at odds with proposed systems from the other candidate proponents. We have therefore evaluated the PML system in our analysis of having redundant process units and therefore an equivalent system design capacity to DWD of either 5.0 mgd or 8.2 mgd. 4.3.2 Targeted Product Water Quality
PML provided their target RO product water quality in a response to SPI, which is reproduced in Table 4-5Table 4-3 . Included in the response was a statement that final product quality has not been established, but would meet all requirements stipulated in U.S. EPA drinking water standards.
December 2012
Page 4-5
Table 4-5 Summary of Projected Product Quality from PML Facility 1

Parameter
Total Dissolved Solids Chloride Boron pH Calcium Alkalinity, as CaCO 3
Units
mg/L mg/L mg/L units mg/L mg/L
Value
225 131 0.6 6.6 1 1
1 Listed quality is projected permeate from the RO system, prior to final stabilization and pH adjustment.
4.3.3
With their currently proposed pretreatment strategy, sufficient log removal credits for giardia, crypto and virus should be achievable. One unknown however is the level of organics that may be present in the harbor-extracted supply; and the potential to create disinfection byproducts. This issue should be explored in the planned pilot test program, which will also be used to finalize the proposed process design and disinfection strategy. Our evaluation results are presented in Table 4-6 .
Table 4-6 - Summary of Projected Pathogen Credits for PML Project
Parameter
CDPH Requirement (Potential Range) Granular Media Filtration MF/UF RO Chlorination
Giardia
3-5 2.5 4 2 0.5
Crypto
2-4 2 4 2
Virus
4-6 2 2 2 2+
TOTAL
6+
6+
6+
Page 4-6
December 2012
ECONOMICS
5 ECONOMICS
In our original project scoping technical memorandum 2 we recommended the following criteria to evaluate the candidate projects on an equivalent basis: Uniformity in plant design capacity for the two non-regional approaches; equivalent capacity allocation for the proposed DWD regional project. Equivalency in treatment to achieve: a common RO feed water quality following pretreatment; a common treated water quality goal; and pathogen removal credits required for the applicable supply source. Uniformity in equipment redundancy. Uniformity in unit cost criteria for common items. Uniformity in cost factors applied to aggregated costs (e.g., contingencies; electrical and I&C costs; etc.). Uniformity in unit costs for chemicals and other consumables for treatment evaluations.
We accomplished implementing the above principles in large measure in our economic evaluation. We adjusted plant capacities for the evaluation on the basis described in Section 4, rating Cal-Ams proposed system at design capacities of 5.4 mgd and 9.0 mgd; and the DWD and PML systems at 5.0 mgd and 8.2 mgd. In terms of treatment process, we attempted to maintain the overall proposed process design of the proponents, but did evaluate all as including a partial (40 percent) capacity second pass RO system. We also assumed N+1 redundancy on all rotating equipment and major treatment process units (e.g., filters, RO membrane trains). We employed an equivalent basis in developing our capital equipment cost estimates, relying on targeted quotes for equipment and SPIs cost information from past, similar seawater RO projects. For indirect costs, we assumed fixed factors and applied them uniformly to each project. Each factor, expressed as a percentage, was applied to estimated plant construction cost, absent costs associated with off-site trenched pipelines. These factors included the following: 1. Implementation Costs at 25 percent, to include items such as permitting, pre-construction design services, procurement development, and compliance activities. 2. Mobilization/Demobilization costs at 2 percent to account for supply and removal of contractor equipment to the facility during construction. 3. Electrical and I&C Systems cost at 18 percent, accounting primarily for post-service switchgear, motor control centers, drives, conduits, wire and SCADA systems. 4. Engineering and Startup cost at 15 percent, to include contractor engineering, overhead, profit and commissioning expenses. In addition, specific allowances were made to account for offsite right-of-way, easement and land acquisition costs, to cover items such as roadway repair, rehabilitation and replacement, separate from pipeline construction costs. These were applied at $80/LF for offsite trenched pipelines, in the absence of more specific proponent developed estimates. Similarly, additional
December 2012
Page 5-1
ECONOMICS
project specific costs were applied as applicable for things like annual property lease and administrative payments and pilot testing. In addition to indirect costs, final contingency and mitigation allowances were applied. For contingency, we recommend a value of 30 percent at this stage of project development. While some proponent projects have more project definition than others at this stage, we find significant risk elements for each that warrant this level of conservatism. For mitigation, weve applied a 1 percent allowance to the overall project cost. As no project has advanced to the stage where a mitigation plan is in place, we consider it prudent to consider a pro-forma allowance at this time. Capital facilities costs have been aggregated into the following seven categories for presentation: 1. Intake/Outfall Facilitiesincludes costs associated with intake wells and pump stations along with corresponding facilities associated with brine disposal. 2. Pretreatment and Residuals Handling includes facilities for the pretreatment of seawater ahead of the RO system, including filters, chemical feed systems, storage tanks and related facilities associated with the treatment and disposal of any residuals. 3. Desalination System covers the RO membrane trains, high pressure feed pumps, energy recovery devices, and membrane cleaning system. 4. Post-Treatment includes product stabilization systems and disinfection processes. 5. Distribution Facilities includes treated water storage and pumping systems. 6. Site Structures includes buildings, roads, landscaping, site fencing and other structures. 7. Offsite Trenched Pipelines Includes all supply, product and brine disposal pipelines. Product pipelines were estimated to a common terminus in Seaside at the existing CalAm meter location. For annual operating costs and other expenses we implemented a similar approach. Chemical unit prices were standardized across our estimates as listed in Table 5-1.
Table 5-1 Summary of Chemical Unit Prices
Chemical Name
Sodium Bisulfite Sodium Hypochlorite Sodium Hydroxide Lime (Calcite) Carbon Dioxide Scale Inhibitor (antiscalant) Sulfuric Acid Ferric Chloride Corrosion Inhibitor
Unit Price
$0.45/lb $1.12/lb $0.20/lb $0.17/lb $0.22/lb $1.63/lb $0.15/lb $0.40/lb $0.80/lb
Page 5-2
December 2012
ECONOMICS
The rates were primarily based on Cal-Ams response to SPIs questions, though we did use the DWD unit prices for sodium bisulfite. Cal-Ams listed price for sodium bisulfite ($2.70/lb) seemed high and was significantly above other pricing on this chemical that we have seen. In terms of chemical application rates/dosages, we primarily maintained the rates proposed by the individual proponents, unless we found a process-specific reason to adjust them. Similar to the capital cost estimates, annual operating and maintenance (O&M) costs were aggregated for presentation into four main categoriesEnergy, Chemicals, Expendables, and Other. Each facility was assumed to operate full time (365 days per year). Energy costs were developed by estimating loads and efficiencies of motorized equipment items and assigning an electrical unit cost. Cal-Am provided variable summer and winter electrical rates from PG&E at an average annual cost of $0.131/kW-hr. The other two projects in the Moss Landing area proposed rates of $0.08/kW-hr. We were not able to disprove any of the listed rate assumptions and therefore left them as stated by the individual proponents for the purposes of our evaluation. The expendables category includes replaceable media for filters (including MF/UF) and RO process membranes. Equivalent unit costs were used for MF/UF process membranes ($1,000 per module), cartridge filter elements ($16 per 40-in cartridge), and RO membrane elements ($500 per element). Both MF/UF and RO process membranes were assumed to have a 5-year life. The Other category lists separately operations and maintenance labor and equipment replacement costs. Cal-Am provided the most detailed estimate of operation and maintenance labor requirements and costs, which were therefore applied equally across the three projects. It is reasonable to assume at this point that any of the candidate facilities would be operated by a contract operations group with a similar pricing structure. For an equipment replacement allowance, we instituted a common factor of 1.5 percent of the complete system cost (including offsite trenched pipelines but prior to application of indirect costs, contingencies, and mitigation allowances) as an annual expense. The results of our evaluation are presented in Table 5-2 on the following page. The table summarizes our assessment of the relative cost of each project on the common evaluation criteria described above. Based on the information used in its preparation and our overall scope of evaluation, we would consider it a Class 5 estimate as defined by the Association for Advancement of Cost Engineering (AACE), having an accuracy range of -30 to +50 percent. The AACE defines the use of Class 5 estimates as focused on conceptual screening of alternatives. In the context of this project, we consider the costs useful for a comparison of the various proponent projects among themselves, as the costs were developed on an equivalent basis. The overall level of project development and the scope of our evaluation do not warrant the costs to be used on a stand-alone basis as a reliable indication of future construction and operating costs.
December 2012
Page 5-3
ECONOMICS
Table 5-2 Summary of Evaluated Capital and Operating Cost Estimates

Project Proponent Cost Element Cal-Am 9 kAFY 5.5 kAFY DWD 9 kAFY 5.5 kAFY 9 kAFY PML 5.5 kAFY
CAPITAL COSTS (in Millions 2012 Dollars)

Intake/Outfall Facilities Pretreatment & Residuals Handling Desalination System Post-Treatment Distribution Facilities Site Structures Offsite Trenched Pipelines Indirect Costs 1 Contingency Allowance (30%) Mitigation Allowance (1%) $23.0 $10.6 $22.4 $1.48 $6.14 $11.5 $24.9 $57.5 $47.2 $1.60 $17.7 $7.94 $15.0 $0.88 $5.08 $10.8 $24.9 $50.3 $39.8 $1.30 $-0$11.2 $19.4 $1.48 $3.35 $3.65 $28.3 $54.5 $36.6 $1.20 $-0$7.94 $13.2 $0.88 $3.26 $2.52 $27.3 $47.5 $30.8 $1.00 $-0$20.2 $19.9 $1.66 $0.35 $10.0 $25.1 $67.9 $43.6 $1.50 $-0$13.6 $14.0 $1.07 $0.26 $7.00 $25.1 $62.3 $37.0 $1.20
TOTAL
$206
$174
$160
$134
$190
$161
ANNUAL O&M COSTS (in Millions 2012 Dollars)

Energy Chemicals Expendables Other Proponent Expenses O&M Labor Equipment Replacement2 $5.38 $0.32 $0.69 -$2.69 $1.50 $3.26 $0.19 $0.45 -$2.36 $1.23 $3.73 $0.81 $0.78 $1.59 $2.69 $1.01 $2.29 $0.49 $0.52 $1.45 $2.36 $0.83 $3.98 $0.93 $1.09 -$2.69 $1.16 $2.43 $0.57 $0.65 -$2.36 $0.92
TOTAL
$10.6
$7.49
$10.6
$7.94
$9.85
$6.93
ANNUAL COST OF WATER (in Millions 2012 Dollars)

Capital Recovery3 Total Annual Cost $19.1 $29.7 $16.2 $23.7 $9.25 $19.9 $7.75 $15.7 $11.0 $20.9 $9.37 $16.3
Production Cost of Water ($/AF)
$3,300
$4,310
$2,205
$2,850
$2,320
$2,965
1 Includes implementation costs at 25%; ROW easement/land costs, mobilization/demobilization at 2%; electrical and I&C systems at 18%; engineering and
startup at 15%; and additional project proponent prescribed costs. All percentages applied to plant facilities costs.
2 Calculated as 1.5% of plant facilities costs. 3 Capital recovery factor for DWD and PML based on an interest rate of 4.0% and term of 30 years; based on an interest rate of 8.49% and 30 years for
Cal-Am.
Page 5-4
December 2012
ECONOMICS
A Capital Recovery Factor (CRF) is used to convert a single up-front capital cost into an annual amount to be recovered, as if the money was repaid as a loan, based on an interest rate and time period. As listed in Note 3 on Table 5-2, a CRF was used for the DWD and PML projects at an interest rate of 4.0 percent. This rate approximates the cost of tax-exempt borrowing for publicly financed projects which would likely be applicable to DWD and PML. In this case, the CRF equals 0.05783 Cal-Am may not have access to public financing and could have a pre-tax weighted cost of capital based on 5.0 percent market-rate debt (their authorized debt return is 6.63%) and 9.99% percent equity return, grossed up for income and ad valorem taxes. This would result in higher annual costs for Cal-Am than shown. However, there are additional differences in how public versus private capital investments are amortized, the impacts of which are not analyzed in this report. The Monterey Peninsula Water Management District has computed that for Cal-Am, a CRF representing the average annual capital recovery over a 30-year period equals 0.92933 which would result as if the interest rate was 8.49%. This CRF is computed as follows: {[(Pre-Tax Equity Return: 9.99% x 53% x 1.69 gross-up) +(Pre-Tax Debt Return: 5% x 47% x 1.69)-(Interest Paid Tax Off-Set: 5% x 40.25% effective tax rate divided by .99736 collectibles rate)] +(Ad Valorem Taxes: 1.05%)]}/2 + (3.33% annual depreciation) = 0.092933 proxy CRF. Specific additional considerations related to the costs for each project are provided below.

A summary of our estimate of capital system costs to that provided by Cal-Am is provided in Table 5-3 . For the most part, the two estimates align fairly closely. A discussion of individual elements is presented below. We found general agreement with Cal-Ams proposed costs for components of their proposed intake and outfall systems. The slant well installation cost is in line with estimates weve seen elsewhere; and the corresponding pipeline estimates are very detailed for this level of project development. For the pretreatment and residuals handling systems, we found generally close agreementbut did independently adjust costs for the pressure media filters based on an equipment quotation we received. We also provided relatively minor adjustments to their allowances for interconnecting piping, cartridge filters and chemical addition systems. For the desalting system equipment, we priced components of the energy recovery system (isobaric pressure exchangers and booster pumps) based on specific quotes from the manufacturer; and priced the RO trains according to our own cost models similar to the other projects to provide a consistent basis. We also developed our own estimates for the post-treatment system equipment. For indirect costs, we did not find anything particularly objectionable; but did price factor-based costs on the common percentage basis we established. Their cost for land and right-of-way easements was found to be very detailed and comprehensive.
December 2012
Page 5-5
ECONOMICS
Table 5-3 Summary of Cal-Am Capital Cost Evaluation

Cal-Am 1 Cost Element 9 kAFY
Intake/Outfall Facilities Pretreatment & Residuals Handling Desalination System Post-Treatment Distribution Facilities Site Structures Offsite Trenched Pipelines System Subtotal Plant Facilities (PF) Subtotal 2 Indirect Costs3 Implementation Costs (25% of PF) ROW, Easement and Land Costs Mobilization/Demobilization (2% of PF) Electrical, I&C Systems (18% of PF) Engineering/Startup (15% of PF) Additional Proponent Prescribed Costs Subtotal 4 Contingency Allowance (30%)3 Mitigation Allowance (1%)3 $23.0 $9.71 $27.9 $1.25 $6.14 $11.5 $24.9 $104 $79.5 $26.4 $6.20 $1.44 $15.4 $10.8 --0$164 $41.2 $1.60
Evaluated 1 9 kAFY
$23.0 $10.6 $22.4 $1.48 $6.14 $11.5 $24.9 $100 $75.1 $25.0 $6.20 $1.50 $13.5 $11.3 -0$158 $47.2 $1.60
5.5 kAFY
$17.7 $8.52 $19.2 $1.09 $5.08 $10.8 $24.9 $87.3 $62.4 $26.4 $5.20 $1.21 $12.9 $9.03 -0$142 $35.5 $1.40
5.5 kAFY
$17.7 $7.94 $15.0 $0.88 $5.08 $10.8 $24.9 $82.3 $57.4 $25.0 $5.20 $1.15 $10.3 $8.62 -0$133 $39.8 $1.30
TOTAL
1 All costs are presented in millions of 2012 dollars.
$207
$179
$206
$174
2 Plant facilities costs include the System Subtotal, less off site trenched pipelines. 3 Listed percent-cost factors apply only to the SPI developed cost estimates. Indirect costs, contingency, and mitigation allowances shown under
the Cal-Am estimates were provided by them and are presented accordingly without adjustment.
4 The listed subtotal includes both the sum of Indirect Costs and the System Subtotal.
Overall, the relatively high cost of the Cal-Am system is most directly tied to the cost of their proposed intake system; while DWD and PWM have proposed relatively low cost alternatives. Our corresponding operating cost estimates are provided in Table 5-4.
Page 5-6
December 2012
ECONOMICS
Table 5-4 Summary of Cal-Am O&M Cost Evaluation

Cal-Am 1 Cost Element 9 kAFY
Energy Chemicals Expendables Other Operations & Maintenance Labor Equipment Replacement (1.5% of PF) $6.11 $0.63 $0.72 $2.69 $1.61
Evaluated 1 9 kAFY
$5.38 $0.32 $0.69 $2.69 $1.50
5.5 kAFY
$3.73 $0.39 $0.49 $2.36 $1.25
5.5 kAFY
$3.26 $0.19 $0.45 $2.36 $1.23
TOTAL
$11.8
$8.22
$10.6
$7.49
In our estimate we adjusted some assumed operating efficiencies of centrifugal pumps and motors from 80 percent to 75 percent; increasing costs somewhat. However, we decreased the projected average operating pressure of the first pass RO membrane feed pumps and energy recovery booster pumps based on projected operating conditions and water temperature. This had the effect of lowering our overall energy estimate from that provided by Cal-Am. Our chemical cost estimate is likewise lower, owing primarily to our lower unit cost factor for sodium bisulfite. Overall, Cal-Ams projected O&M cost is among the highest of the estimates for the three proponent projectsa consequence of their higher energy cost directly tied to their more than 60 percent higher electrical rate. At an equivalent industrial rate of $0.08/kW-hr, annual energy cost in our estimates would drop to $3.28 million/$2.00 million under each capacity alternative.

We have summarized our estimated capital cost of the DWD treatment facility in relation to costs prepared by DWD in Table 5-5 .
December 2012
Page 5-7
ECONOMICS
Table 5-5 Summary of DWD Capital Cost Evaluation

DWD 1 Cost Element 9 kAFY
Intake/Outfall Facilities Pretreatment & Residuals Handling Desalination System Post-Treatment Distribution Facilities Site Structures Offsite Trenched Pipelines System Subtotal Plant Facilities (PF) Subtotal 2 Indirect Costs3 Implementation Costs (25% of PF) ROW, Easement and Land Costs Mobilization/Demobilization (2% of PF) Electrical, I&C Systems (18% of PF) Engineering/Startup (15% of PF) Additional Proponent Prescribed Costs Subtotal 4 Contingency Allowance (30%)3 Mitigation Allowance (1%)3 $-0$16.7 $17.2 $2.41 $4.96 $4.13 $33.9 $79.3 $45.4 $13.5 -0$0.77 $6.18 $9.27 $18.3 $127 $9.27 -0-
Evaluated 1 5.5 kAFY

$-0$11.6 $11.5 $1.57 $3.32 $2.63 $33.1 $63.7 $30.6 $10.3 -0$0.47 $3.77 $5.65 $15.1 $99.0 $5.65 -0-
9 kAFY
$-0$11.2 $19.4 $1.48 $3.35 $3.65 $28.3 $67.4 $39.1 $16.9 $5.68 $0.78 $7.04 $5.87 $18.3 $122 $36.6 $1.20
5.5 kAFY
$-0$7.94 $13.2 $0.88 $3.26 $2.52 $27.3 $55.1 $27.8 $16.9 $5.68 $0.56 $5.01 $4.18 $15.1 $102 $30.8 $1.00
TOTAL
$136
$105
$160
$134
the DWD estimates were provided by them and are presented accordingly without adjustment.
The increased cost of our estimate is largely due to the addition of a 40 percent capacity second pass RO system to their facility. We also increased cost of the intake and other trenched offsite pipelines to account for tunneling beneath the Elkhorn Slough at $1,500/LF. Crossing the slough will likely be difficult and may have a higher cost, but we lack information to at this stage of assessment to provide a more detailed analysis. DWD also appeared to use higher unit cost and installation factors than we employed; but then a comparatively low contingency allowance of 12 percent. It is also worth considering that the proposed DWD facility is a regional project with a build out capacity of 25,000 AFY. Intake and brine disposal pipelines are sized for the ultimate plant capacity; and the totals listed in the DWD and SPI estimates for these items as well as site facilities represent a flow based proration. DWD also prorated equipment costs for the 5,500
Page 5-8 December 2012
ECONOMICS
AFY plant alternative off their costs developed for the 9,000 AFY plant (9.1 mgd capacity); while we developed separate equipment and facilities estimate for the 5.0 mgd and 8.2 mgd plant sizes. Lastly, the DWD cost for the intake system is limited to the pipeline from MLPP to the Capurro Ranch site. Specifically omitted are the new 48-in deep water intake pipeline, modifications to the MLPP intake pump station, and the proprietary warming system equipment. According to DWD, the costs for these facilities will be borne by a separate entity/project and provided to DWD for use as part of the regional desalination facility, subject to an annual lease (accounted for in the O&M cost estimate). This accounting is largely the reason for the low capital cost associated with the DWD in relation to the Cal-Am and PML projects. It does however result in a higher O&M cost, summarized in Table 5-6 .
Table 5-6 Summary of DWD O&M Cost Evaluation
DWD 1 Cost Element 9 kAFY
Energy Chemicals Expendables Other Other Proponent Expenses Operations & Maintenance Labor Equipment Replacement (1.5% of PF) $2.68 $0.47 $1.31 $1.59 $2.36 $0.93

$1.62 $0.28 $0.89 $1.45 $1.43 $0.64
9 kAFY
$3.73 $0.81 $1.02 $1.59 $2.69 $1.01
5.5 kAFY
$2.29 $0.49 $0.68 $1.45 $2.36 $0.83
TOTAL
$9.34
$6.31
$10.6
$7.94
Overall we project a higher energy cost estimate for the DWD project based on an assumed energy rate of $0.08/kW-hr throughout; where DWD appears to have used a $0.04/kW-hr rate for some of their on-site facilities. The projected cost of chemicals is higher in our estimate as well, as DWD omitted accounting for the cost of post-treatment chemicals in their estimate (calcite, carbon dioxide and sodium hydroxide). Our cost of expendables however is reduced, based largely on what appears to be a lower unit cost factor with the RO process membranes, even including the additional membranes associated with the second pass RO system. Included in the category of Other Proponent Expenses for DWD are the annual lease costs associated with their plant site and intake facilities as well as annual profit. This category of expense has the effect of raising their overall annual costs to be roughly equivalent to Cal-Am, even though their costs for energy, chemicals and expendables are lower.
December 2012
Page 5-9
ECONOMICS
5.3
The results of our capital cost evaluation of the PML project are presented in Table 5-7.
Table 5-7 Summary of PML Capital Cost Evaluation
PML 1 Cost Element 9 kAFY
Intake/Outfall Facilities Pretreatment & Residuals Handling 2 Desalination System 2 Post-Treatment2 Distribution Facilities Site Structures Offsite Trenched Pipelines System Subtotal Plant Facilities (PF) Subtotal 3 Indirect Costs4 Implementation Costs (25% of PF) ROW, Easement and Land Costs Mobilization/Demobilization (2% of PF) Electrical, I&C Systems (18% of PF) Engineering/Startup (15% of PF) Additional Proponent Prescribed Costs Subtotal 5 Contingency Allowance (30%)4 Mitigation Allowance (1%)4 $-0See Note 2 $56.0 See Note 2 $-0$10.0 $25.0 $91.0 $66.0 $42.0 See Note 4

$-0-
9 kAFY
$-0$20.2 $19.9 $1.66 $0.35 $10.0 $25.1 $77.2 $52.1 $19.3 $30.2 $1.04 $9.38 $7.82 $0.20 $145 $43.6 $1.50
5.5 kAFY
$-0$13.6 $14.0 $1.07 $0.26 $7.00 $25.1 $61.0 $35.9 $19.3 $30.2 $0.72 $6.47 $5.39 $0.20 $123 $37.0 $1.20
See Note 2 $28.0 See Note 2 $-0$7.00 $25.0 $60.0 $35.0 $21.0 See Note 4
$133 See Note 4 -0-
$81.0 See Note 4 -0-
TOTAL
$133
$81.0
$190
$161
2 PML supplied costs for Pretreatment/Residuals Handling, Desalination System, and Post-Treatment were provided as a single lump sum and are
presented here accordingly.

the PML estimates were provided by them and are presented accordingly without adjustment.
PML presented their costs for the main treatment facilities as a lump sum number, making comparison of individual equipment estimates impossible. That said, the respective totals closely match. The disparity between the estimates at the 9,000AFY alternative is likely due to the difference in system capacity assumed9.4 mgd for PML 8.2 mgd in our estimate.
Page 5-10
December 2012
ECONOMICS
PML provided an allowance of $3.0 million for repair and upgrade to their existing intake pump station and outfall pipeline. We have no basis at this stage to recommend a higher estimate, but do note that a comprehensive evaluation of the current state of the outfall pipeline and attendant repair requirements is not available at this time. It may be that when such evaluations are conducted, the price could increase. PML also provided single lump sum costs for indirect expenses, including project contingency allowances. We find these allowances insufficient for a project at this stage of development with significant undefined issues. PML still intends to validate their treatment approach through a planned pilot testing program, making reliance on estimates prepared on the current process design questionable. We also point out that the indirect and contingency allowances applied are uniform across our evaluation for the three projects. PML does have a high cost associated with ROW, land and easement allowances. This is a combination of the prescribed $25 million cost of the MLCP 25-acre site and related facilities, along with a roughly $5 million dollar allowance for ROW and easements associated with the product water pipeline. Overall the PML facility capital costs fall in the middle of the three proponent projects; and notably higher than the DWD estimate which shares comparatively low intake and outfall system costs in comparison to Cal-Am. The primary reason for this is their expanded pretreatment system, including both media filtration and MF/UF treatment to treat the supply extracted from the Moss Landing harbor. The results of the O&M cost evaluation are presented in Table 5-8.
Table 5-8 Summary of PML O&M Cost Evaluation
PML 1 Cost Element 9 kAFY
Energy Chemicals Expendables Other Operations & Maintenance Labor Equipment Replacement (1.5% of PF) $4.46 $1.32 $0.79 $0.94 $1.33

$2.23 $0.66 $0.39 $0.94 $0.81
9 kAFY
$3.98 $0.93 $1.09 $2.69 $1.16
5.5 kAFY
$2.43 $0.57 $0.65 $2.36 $0.92
TOTAL
1 All costs presented in millions of 2012 dollars
$8.84
$5.03
$9.85
$6.93
Overall our estimates closely match those provided by PML; with any differences attributed primarily to the differences in the 9,000 AFY plant design capacity assumption discussed above along with the addition of a second pass RO system to their process. The projected operating costs of the PML system are the lowest of the three proponents. The fact that they have additional process equipment is reflected in their higher energy, chemical, and expendable category expenses in relation to DWD. Those categories are higher than the comparable Cal-Am costs as well, with the exception of energy. Though PMLs projected energy use is higher; their lower cost of electricity results in a lower annual cost.
December 2012 Page 5-11
IMPLEMENTATION CONSIDERATIONS
6 IMPLEMENTATION CONSIDERATIONS
Each of the projects has been evaluated in terms of the major issues it faces for environmental compliance and permitting, and the consequences for the development schedule. The evaluation was performed at a very high level and based upon conceptual rules of thumb. In order to screen the issues of significance, the prior Coastal Water Project EIR 22 was reviewed and largely relied upon to assess facts and mitigation strategies for environmental compliance. That document was presumed to have identified the relevant permits for prior project approaches. Based upon our judgment, the major differences between the three proposed projects and the alternatives described in the Coastal Water Project EIR were assessed to determine the additional major permits that would need to be obtained and the new environmental assessments that would be necessary. Each of the project sponsors provided estimates of the schedule for implementation including the estimated timing for environmental compliance and major permits. The conceptual schedule and schedule risk identified by the Consultants were reviewed with the project sponsors for comment in an effort to present consensus on the project schedule and risks. Although the prior EIR identified more than 25 discretionary approvals which must be obtained for the project alternatives, this review focused on a simplified list of discretionary approvals based upon our judgment that these approvals would most likely dictate the critical path for project development. Approvals related to intake of seawater Approvals related to project discharge Jurisdictional permitting for water of the U.S. Coastal Development Permitting
Moreover, a highly simplified list of tasks for environmental compliance was created around these discretionary approvals. Those tasks in order: 1. A project description must be completed. 2. An Environmental Assessment must be made. 3. An EIR/EIS must be completed (CEQA/NEPA compliance). 4. Commercial Agreements must be negotiated/ Cal-Am must obtain a Certificate of Public Convenience and Necessity (CPCN), after certification of the EIR. 5. Jurisdictional Permits must be obtained for facilities impacting Waters of the U.S. 6. NPDES Permits must be amended/obtained. 7. Coastal Development Permits must be obtained.
22
California American Water Company, Coastal Water Project, Final Environmental Impact Report, October 30, 2009
December 2012
Page 6-1
The prior EIR found that two methods of intake of seawater would not cause a significant impact on the marine environment: 1. The use of a subsurface intake was presumed to cause no adverse impact to the marine environment. 2. The use of discharge from the MLPP would not cause an increased use of water from the marine environment, and thus would not cause an impact as long as the power plant continued to use once-through cooling. The Prior EIR similarly found that there was no significant impact to the marine environment under two proposed methods of brine discharge: 1. The blending of waste products (primarily waste brine) with the MLPP discharge would sufficiently dilute the discharge to avoid significant impacts. 2. The use of the MRWPCA ocean outfall would cause sufficient mixing of the waste brine and other products to avoid significant impacts. With regard to financing risk as it applies to proceeding with at-risk design development activities, we have not reviewed the extent to which the project sponsors have investors that are willing to shoulder financial risks associated with development of the proposed desalination projects. For any project to be successful there must be financial backing sufficient to pay development expenses prior to the issuance of major permits and the execution of definitive commercial agreements for project implementation. We have developed project implementation schedules for the project based upon an assumption that investors assessment of contingent risks would not delay logical development activities that affect the critical path for project implementation. For example, it has been assumed that all of the projects could proceed with preliminary design and definition of engineering parameters through activities such as pilot testing prior to the issuance of major permits, even though there is substantial financial risk to these endeavors. Thus the schedules could be overly optimistic when considering these financial risks. We have noted in the generic schedules herein that in addition to project review under CEQA and NEPA, there are a number of discretionary approvals whose issuance may address issues beyond those normally required for certification of these environmental documents. The State of California created an Ocean Desalination Handbook which included policy guidance from the California Coastal Commission and other State agencies to provide some guidance on the criteria that would be used in discretionary review of projects. Similarly NOAA has issued policy guidance regarding the process for obtaining discretionary approvals within the Marine Sanctuary. Notably: The Coastal Commission will consider how effectively the project will protect and enhance the marine environment There is a strong preference among State and Federal agencies for sub-surface intake compared to open-water intake. Open water intakes must be demonstrably preferable. Review of environmental effects of the projects should include consideration of projects contemplated in the future and by others to ensure adequate evaluation of the
Page 6-2
December 2012
potential cumulative impacts of projects. Mitigation/enhancement strategies should be coordinated and piecemeal approvals avoided. There is a preference for public ownership of ocean desalination projects compared to private ownership.
It is highly speculative and beyond the scope of this report to fully analyze how each of the projects may manage gaining discretionary approvals. We offer some observations: A comparison must be made between the logical means of taking water from the marine environment to ensure that the selected method is preferred. It is to the schedule advantage of any project that all projects be fully evaluated. Comparison/evaluation of environmental impacts to the marine environment and the mitigation strategies should include consideration of future projects and cumulative impacts. Public stewardship and oversight should be detailed prior to review by the Coastal Commission.

The implementation path for the Cal-Am proposal is very well defined. Moreover, the CPUC is aggressively pushing forward implementation of the project. The CPUC has published a schedule for completion of the EIR and CPCN for the project. Cal-Am has provided an estimated schedule for implementation of the project following the CPCN. The Notice of Preparation (NOP) issued by the CPUC indicates that a Subsequent EIR is being prepared. Following Scoping Hearings on October 25 and 26, a Scoping Report will be prepared describing the project and the project alternatives that will be considered in a Draft EIR scheduled for circulation July 1, 2013. The Scoping Report will describe alternatives to the CalAm project prior to the CPUCs hearing testimony on the proposed CPCN. Hearings will be concluded prior to the issuance of the Draft EIR. The Final EIR will be issued prior to final approval of the CPCN. Although it is unusual for the administrative process for CPCN to precede the issuance of at least a draft EIR, the CPUC found that it was not in the publics interest to delay the CPCN proceedings because it would risk non-compliance with the 2016 State imposed deadline to reduce diversions of Carmel River water. The risks affecting the Cal-Am development schedule have been carefully evaluated and the professionals working on compliance for Cal-Am and the CPUC are exceptionally capable. Descriptions of contingent risk for the project should be viewed in a context that all development options have unresolved risks, and that it is not possible to define a perfect path which balances the competing objectives of all parties. Moreover, there are a number of legal uncertainties related to the path of development that can be assessed but not resolved at this time. One legal question regards the structure of commercial agreements for the desalination project. The Cal-Am proposal depends upon the CPUC acting as lead agency for environmental review which is apparently appropriate only when Cal-Am would own and operate the facilities of the desalination project. As noted below, there are conceptual advantages to public ownership of the assets for a project of this type, which may significantly enhance the prospects for political and
December 2012
Page 6-3
legal approvals necessary for the project to succeed. Thus there is something of a conundrum for the MPRWA--the CPUCs legal authority and sophistication to act as a lead agency for CEQA creates a schedule advantage. Moreover, the simplicity of the commercial agreements when CalAm owns all facilities creates schedule advantages in the CPCN administrative process, but that ownership structure creates contingent risk and political opposition to the project which could delay ultimate approval. Separate from these political considerations, the primary risks for schedule delay appear to be related to uncertainties for the development of slant wells as intake for the proposed project. Those risks are further broken down: 1. There are questions regarding the legal right of Cal-Am to install and operate slant wells in the proposed locations. It appears that there are paths to resolve this issue through commercial agreements with other entities which do have a clear legal right to install wells. How these issues are resolved is considered too speculative to be presented. 2. Design of the intake system and to a lesser extent the treatment system depends upon results from a well testing program that is not completed. That leads to uncertainty in the design which could change the project description and affect the schedule for CEQA/NEPA compliance. Moreover, Coastal Development Permits are needed both for the installation of test wells and for the ultimate intake system, which adds to uncertainty regarding when the system can be fully described. Perhaps the biggest risk to schedule is the potential that the results of a well testing program were to change the design of the intake system compared to the project description uses in CEQA documents, resulting in a change of significance such that the CEQA process would be substantially reset. It appears that Cal-Am has conservatively estimated the yield of the slant wells and thus conservatively estimated the environmental effects of the proposed intake system. However, Cal-Am has described some potential for the test well program to warrant a change from slant wells to Ranney style collectors which would require analysis in the CEQA documents of this option. 3. The nature of approval from NOAA for the installation of intake facilities is uncertain. It appears likely that approval is discretionary and would require compliance with NEPA. The administrative process for approval and the uncertainty of the outcome causes some schedule risk. The potential installation of Ranney collectors as an alternative to the slant well intake system would require discretionary approval of the NOAA. Environmental reviews in support of such an approval would have to comply with NEPA. Moreover, NOAA has verbally opined to the TAC that approval of even the slant wells may be of a discretionary nature which requires NEPA compliance. Presumably this will be resolved during scoping hearings, but the CPUC schedule for CEQA compliance may need to be adjusted if for overall schedule considerations the process is adjusted to allow concurrent review of environmental assessments under both CEQA and NEPA. Alternatively, if the CPUC elects to base its approval schedule upon only CEQA compliance and ignore potential NEPA compliance, it would add to the overall project schedule to have a separate environmental
Page 6-4
December 2012
review for the purpose of issuance of Federal Permits necessary for the installation of an intake system. There is a lesser risk associated with permitting the discharge of concentrated brine and other waste products from the desalination treatment process. It is possible that questions regarding the adequacy of the mitigation via blending brine with the receiving waters may be raised. It is also possible that legal questions regarding the path for regulatory approval under the distributed authority of the NPDES program could delay the issuance of brine disposal permits. The other primary source of schedule uncertainty and risk for the Cal-Am project, identified by Cal-Am appears to be related to the California Coastal Commissions approval of a Coastal Development Permit for the full-scale project. The Coastal Commission would normally act after Certification of Environmental Compliance and after all other permits have been obtained. Two sub-questions have been identified as unresolved. 1. What is the process and timeline to issue Coastal Development Permit for the test wells? 2. What is the timeline for issuance of Coastal Development Permit for the ultimate intake system? The first question primarily is a process question. There needs to be CEQA review of the test well program. Potentially other permits need to be issued and then the Coastal Commission needs to meet and approve the application. Although the CPUC has considered the issue of whether Cal-AM can finance the test wells, the timeline to obtain permits, install the test wells and incorporate the results from the test wells into the overall project development plan is not fully defined. The second question also causes some uncertainty as to the timeline. As pointed out by RBF, issuance of significant permits, culminating in a Coastal Development Permit can take as little as 4 months following certification of CEQA to more than 5 years with a highly controversial project. Perhaps two primary questions of interest to the California Coastal Commission are: 1. Has the project been designed to protect and enhance the Coastal and Marine Environment? 2. Does adequate public oversight of the intake system and the dependent seawater desalination project exist to adequately protect the public trust values for the coastal environment under California law? The extent to which these questions are adequately addressed during CEQA review and the issuance of a CPCN by the CPUC may largely determine the timeline for issuance of a Coastal Development Permit. Based upon the CPUC schedule for CEQA compliance and CPCN and the minimum likely schedule for issuance of major permits thereafter, we have prepared a conceptual implementation schedule for the Cal-Am project as presented on Figure 6-1 .
December 2012
Page 6-5
Figure 6-1 Conceptual Implementation Schedule for the Cal-Am Project
The above schedule presumes no delays to the design and construction of the desalination plant based upon development of the intake systems. Also, no project delays are assumed to be associated with obtaining project financing. It is presumed that project financing would be needed prior to major construction activities but would not delay design or test-well activities. In response to our request Cal-Am provided an updated schedule for development of its project, shown below in Figure 6-2 .
Figure 6-2 Cal-Am Proposed Implementation Schedule
The Cal-Am schedule is largely consistent with the schedule we developed. However, it shows a delay in the construction of test wells. We intend to more fully address these delays in an updated report to be issued in January. It is noted that the delay in test well construction can possibly delay the project in two ways. 1. The delay in the development of test wells adds imperative that the project description for CEQA evaluations be conservative. Completion of the test wells now takes place after presumed certification of CEQA documents. 2. The delay of the test wells requires preliminary design for the full scale project to overlap the well testing program. This has potential to delay the issuance of design/build documents for the project and could delay final project delivery. The overall delay in final delivery of the project could be as much as one year. However, impacts of the delayed test well program upon the overall development schedule will be more fully analyzed in an update of this report in January 2013.
Page 6-6
December 2012

DWD presented a schedule identifying their major milestones for project implementation. The schedule presented and the discussion of permitting by the DWD team displays a sophisticated understanding of the likely process and pitfalls associated with completing environmental review and obtaining major permits for the proposed desalination project. The schedule presented would presume that the major permits (last being the Coastal Development Permit) would be issued about the middle of the third quarter of 2013. This is based upon a schedule that is much more optimistic than the generic schedule we developed as shown on Figure 6-3 .
Figure 6-3 - Conceptual Implementation Schedule for the DWD Project
The schedule above represents a delay in project implementation of more than 34 months compared to the schedule developed by DWD. This major difference is examined below. DWD has suggested that an Environmental Checklist and Applicants Environmental Assessment (EA) are very nearly completed. Based upon DWDs demonstrated understanding of the process for environmental review of the project, the Consultant has accepted this assurance although the completed EA has not been reviewed. DWD has presumed a schedule for their EIR/EIS of nine months from the completion of an EA. Given the level of controversy for the installation of a new seawater intake and the potential construction of a new facility for brine discharge, it seems likely that the period for scoping hearings, preparation of a draft EIR/EIS and the adjustment of the project analyses would take much longer. In the above schedule the Notice of Determination (NOD) for the EIR/EIS would take place approximately 3 months later than the NOD issued by the CPUC for the Cal-Am project which is based upon a Subsequent EIR process. The proposed schedule for a new EIR/EIS is comparable to the schedule adopted by the CPUC. Our schedule also adds four months for the issuance of a CPCN for CalAms participation in the project. It is possible that this process could run concurrent with other processes to obtain major permits. But for conservatism this is shown as a critical path activity. The schedule presumes a 12 month process for obtaining Jurisdictional Permits for facilities which are impacting the Elkhorn Slough. The process to obtain Section 404 permits from the U.S. Army Corps of Engineers would take place after issuance of a Notice of Determination for the EIS. A 404 permit appears to be required for construction of new pipelines crossing the Elkhorn Slough to connect the desalination plant to the intake and discharge facilities of the Moss Landing Power Plant and to convey product water from the desalination plant to the
December 2012
Page 6-7
CalAm system. It is quite speculative to assess how long that process would actually take. The Corps would consult with U.S. EPA and EPA would likely take some time to review the project given both the nature of temporary construction impacts and due to potential concerns regarding indirect impacts of the project upon the Elkhorn Slough. The 12-month period for issuance of this major permit is based upon a presumption of some controversy for the project and a presumption that the Elkhorn Slough is a wetlands area of national significance. Our schedule further presumes that the issuance of NPDES permits for the intake and discharge would follow the issuance of Jurisdictional Permits. This is based upon an assumption that the RWQCB would not review the permits until final approvals had been given for all construction which affected the intake and discharge. Thus, permits to construct the intake and brine line would have to be in hand prior to conducting the administrative process for issuance of NPDES permits. The RWQCB process for issuance of permits has proven to be an administrative process surrounded by controversy. Thus it is quite speculative to assess a time frame for issuance of these permits. The schedule includes six months for the issuance of a Coastal Development Permit by the California Coastal Commission. The Coastal Commission would consider this permit only after the EIR/EIS had been certified and all other major permits have been issued. The process for issuance of this permit in a highly controversial project sponsored by Poseidon Resources in Carlsbad, California took many years following certification of environmental documentation. The assumption of six months for this process is based upon an assumption that there would be some contention of facts during the administrative process to issue this permit but that the prior extensive review would have resolved these issues. Nonetheless the time period for issuance of this permit is highly speculative. DWD provided an updated schedule for their project in response to our request. It is shown below in Figure 6-4 .
Figure 6-4 DWD Proposed Implementation Schedule
From their proposed schedule, we note the following:
The DWD updated schedule has eliminated the time period for the issuance of jurisdictional permits for pipelines crossing the Elkhorn Slough. It is intended that an update to this report issued in January would more fully analyze the effects upon development schedule of the relocation of the project. However, DWDs decision to re-locate the project south of the Slough greatly simplifies the permitting by
Page 6-8
December 2012
eliminating this potentially controversial permit and would undoubtedly shorten the permitting schedule for the project. DWD has also estimated much shorter time duration for CEQA/NEPA compliance than the generic schedule we developed for the project. We continue to believe that it is reasonable to expect that the level of controversy for this project would dictate a longer period for CEQA/NEPA compliance as we have included in our schedule. DWD has also estimated a much shorter period for design and construction. We continue to present a period for design and construction which is longer than estimated by DWD and is consistent with delivery via bid to a design-build contractor who would manage design, construction and equipment procurement.
While the implementation schedule will be revisited following the receipt of additional information from DWD about the proposed relocation of the project and the anticipated date of having a completed project description for CEQA/NEPA review, the project schedule will apparently shorten substantially. Taken together with the potential delays in the Cal-Am project, it is difficult to discern a substantial difference in schedule between the two projects.
6.3
PML has presented a report by SMB Environmental describing the general path for environmental review, permitting, and commercial agreements which are key to implementing a proposed project. The report does not present a detailed schedule for implementation. However, the report offers general insights into the approach to project implementation. Based upon generalized rules of thumb we endeavored to estimate a project development schedule. Two major issues were identified related to a project description and Environmental Assessment for the project: 1. Assessment of the impacts of seawater intake. 2. Assessment of the impacts of brine discharge. 6.3.1 Assessment of Impacts of Seawater Intake
With respect to how the project would assess the impacts of the projects proposed use of seawater, PML has proffered that as a matter of law, the proposed desalination projects use of seawater from the intake in Moss Landing Harbor should be compared to the 60 MGD use that is currently permitted for the Moss Landing Commercial Park. Thus it is presumed in the SMB report that the intake of seawater for the desalination project would not increase the take of water from the marine environment. As such, the projects use of seawater could have no adverse impact upon the environment. In the schedule below, we have taken a different view and presumed that the projects proposed use of seawater would be compared to a no-project alternative in which seawater would not be used. Thus an assessment would have to be made of the potential impacts of use of seawater. This would include baseline monitoring and complex modeling to determine the impingement and entrainment impacts of use of the intake. If PML is correct and for purposes of the Environmental Assessment, EIR/EIS and Coastal Commission Permitting, the project be presumed to use no water from the marine environment compared to
December 2012
Page 6-9
the existing no-project alternative, then completion of the Project Description and Environmental Assessment phase of work could be substantially shortened from what is presented and shown on Figure 6-5 .
Figure 6-5 - Conceptual Implementation Schedule for the PML Project
It is important to note that in the schedule presented above, the time for Project Description and Environmental Assessment phases presume that a detailed assessment of the projects potential impingement and entrainment of marine organisms would have to be made. In this regard it is significant to note the prior findings of fact by the Regional Water Quality Control Board made relative to the existing NPDES permit for the Moss Landing Commercial Park (Order R3-20090002, Permit CA000705). Based upon a volumetric approach that compared the Moss Landing Cement Plant Project to previous 316(b) studies at the adjacent Moss Landing Power Plant, the RWQCB found that use of up to 60 MGD of seawater through the existing intake structure in Moss Landing Harbor would have negligible potential impingement and entrainment impacts. Thus it is also possible that the project may avoid detailed assessments of the potential impacts of use of seawater and rely instead upon prior work to determine that the use of seawater would not cause a significant impact upon the marine environment. 6.3.2 Brine Discharge
PML has described a near zero liquid discharge treatment system that would substantially reduce volumes and potential impacts from brine discharge. But that process is not described. It is thus not possible to independently assess potential impacts from the proposed discharge of brine. This leads to a great deal of uncertainty with respect to our assessment of the plan for implementation. A discharge which would require construction of a new discharge structure could take substantially longer than the generalized schedule above, a discharge that would by observation have no potential impact upon the marine environment would take substantially less time than shown in the schedule. Although it is possible to make a generalized assessment of the PML project plan for implementation as described above, that generalized schedule is not directly comparable to the analysis that is possible with the Cal-Am project which has a detailed project description and an environmental assessment which has already been subject to public review in a prior EIR. It is highly likely that as the more detailed project description is developed and Environmental Assessments are completed, controversial issues will arise that will require re-assessments and
Page 6-10
December 2012
analyses which will delay processing of the environmental compliance documents and major permits. In the Cal-Am project those issues are well understood and the potential areas of controversy are well documented.
December 2012
Page 6-11
REFERENCES
7 REFERENCES
1. RBF Memorandum, Recommended Capacity for the Monterey Peninsula Water Supply Project (MPWSP) Desalination Plant, April 20, 2012. 2. SPI Memorandum, Monterey Desalination Study Initial Scoping and Constraints Analysis, August 30, 2012. 3. Direct Testimony of Richard C. Svindland Before the Public Utilities Commission of the State of California, filed April 23, 2012. 4. RBF Memorandum, Monterey Peninsula Water Supply Project (MPWSP) Project Description, April 20, 2012. 5. Cal-Am Response to SPI Questions, October 3, 2012. 6. Williams, D.E. Design and Construction of Slant and Vertical Wells for Desalination Intake. IDA World Congress-Perth Convention and Exhibition Centre (PCEC) Perth, Western Austrailia September 4-9, 2011 REF: IDAWC/PER11-050. 7. Pankratz, T. A Review of Seawater Desal Intake, Pretreatment & Discharge Technologies. IDA Iran 06 WDTS Proceedings September 17 & 18, 2006. 8. Ghiu, S. 18 Month Demonstration of Slant Well Intake System Pretreatment and Desalination Technology for Seawater Desalination. WaterReuse Research Conference Proceedings, June 2012. 9. Trussel Technologies Inc. Technical Memorandum, MRWPCA Outfall Hydraulic Capacity Analysis, April 18, 2012. 10. DWD Response to SPI Questions, September 12, 2012. 11. Cartier G., Corsin P. - Description of Different Water Intakes for SWRO Plants. IDA World Congress-Maspalomas, Gran Canaria Spain October 21-26, 2007 - REF: IDAWC/MP07185. 12. DWD Response to SPI Questions, September 8, 2012. 13. Tenera Environmental, Preliminary Modeling of Potential Impacts from Operation of a Desalination Facility Ocean Intake, August 22, 2012. 14. Replacement Cost Approaisal Summary Report, prepared by Landmark Realty Analysts, Inc., October 3, 2011. 15. Structural Evaluation, Intake & Outfall Pipelines, Intake Pump Station and Water Storage Reservoirs, The Peoples Moss Landing Water Desalination Project, Moss Landing Green Commercial Park, Modd Landing, CA, August 14, 2012. 16. Monterey County Planning & Building Inspection Department; Meeting September 30, 2004, Agenda Item 6. 17. Coastal Water Project Pilot Plant Report, May 2010, MWH. 18. Outfall Video, Moss Landing Marine Lab, California State University.
December 2012
Page 7-1
REFERENCES
19. Seawater Outfall for Kaiser Aluminum and Chemical Corporation, Moss Landing, California, by Kaiser Engineers, 1971. 20. RBF Memorandum, Monterey Peninsula Water Supply Project (MPWSP) Project Description, April 20, 2012. 21. Presentation Monterey Peninsula Water Supply Project Presentation to Monterey Co. Water Resources Agency, June 25, 2012. 22. California American Water Company, Coastal Water Project, Final Environmental Impact Report, October 30, 2009.
Page 7-2
December 2012
APPENDIX A
APPENDIX A RESPONSES TO COMMENTS ON NOVEMBER DRAFT REPORT
December 2012
Page A-1
MPRWA EVALUATION OF SEAWATER DESALINATION PROJECTS November 2012 Draft Report Review Comments and Responses
DRAFT REPORT
No.
Comment By
Page No.
NA
Date of Comment
MPRWA TAC M eeti ng , 1/7/2 01 3 , Item N o . 4 . , Item Page 73 , Packet Page 11 3
Comments
Response/Action
DeepWater Desal, LLC
NA
NA
The three proposed projects offer differing sources and methods of securing source seawater for 11/13/2012 desalination - marine well water, shallow harbor water, and deep ocean water. Each carries its respective set of risks with regard to quality, source supply, reliability, and schedule. DWD is proposing a conventional screened, low velocity, open-ocean intake located at depth below the photic zone to secure a reliable supply of high quality source water for the desalination plant. Our research shows that the deep water intake location ensures stable high quality (low turbidity) raw water along with an insignificant risk of impingement and entrainment of living organisms. Preliminary tests 11/13/2012 conducted so far confirm our observations, and DWD is presently conducting extensive on-going water quality monitoring and oceanographic studies collecting data which we expect to further confirm these findings. With respect to successful construction and reliability of a deep water intake, there is effectively zero net technical risk in the location being proposed .. l"his method of open water extraction of source water for RO desalination plants is used for more than 98% of the desalination plants currently in operation worldwide By contrast, Cal Am appears to be proposing a largely unproven alternative intake method using beach located slant wells to extract source water. This method requires a unique set of conditions to exist for serious consideration of this method as a reliable long-term supply of raw water. Slant wells for source water extraction are entirely dependent on site-specific geological conditions. Therefore, a thorough 11/13/2012 knowledge of conditions is necessary including computer modeling, test boreholes, pump testing, and pilot testing. Environmental concerns regarding the impact of a large well field in the Monterey Bay Marine Sanctuary can be expected, and cannot be adequately addressed by a single test well. Experience elsewhere suggests that determination of the suitability of any one site can consume years of research and testing prior to consideration for implementation, if at all feasible. In addition, test wells for the Cal Am project have not yet been permitted, constructed or operated to demonstrate the feasibility of this approach for source water extraction. Nor can the potential impact on existing aquifer withdrawal rates and quality be accurately estimated until the full-scale system is actually operational; which could cause delays in operation if additional treatment components are needed or plant capacities change. The timeline to permit, construct and adequately test slant well 11/13/2012 technology at the Cal Am site may likely consume a minimum of 12 to 16 months (versus the 6 months estimated by Cal Am and included in the SPI report, reference Figure 6-1 ). If the test well is not successful after testing, significant schedule impacts would result, and an alternative source water extraction method will have to then be developed, permitted and constructed, further delaying the schedule. The People's Moss Landing project proposes to extract source water from the Moss Landing Harbor. Again, experience confirms that harbor water is of extremely poor and variable quality and will require, at a minimum, additional pretreatment process steps to reliably produce feedwater to the RO membrane that meet the SWRO membrane specifications. The first failed desalination project at Moss 11/13/2012 Landing in 2006 attempted to use the Moss Landing Harbor water but had its pilot testing thwarted by source water quality issues. Until the proposed pretreatment is extensively pilot tested, it is not possible to finalize either the design or the cost of the proposed project. Pilot testing for pretreatment of highly contaminated source waters would typically require 12-months to capture seasonal effects on the proposed process. DWD respectfully submits that the potential cost, risk and schedule impacts of the three candidate methods of source water extraction are not equivalent. Cal Am's proposed slant well alternative intake clearly offers the greatest risk as there is only one successfully operating, large capacity, i.e. (greater than 5 mgd) SWRO drinking water facility utilizing slant well technology anywhere in the world (Oman 11/13/2012 Sur) of which we are aware. The Sur plant takes advantage of meeting all site-specific requirements supporting beach wells; and was built after 3+ years of testing. to prove this was possible with the support of extensive computer modeling and field testing. The 21 mgd facility requires 32 wells and the well field consumes more than 12 acres. The People's project has the next highest risk associated with the design and operation of a pretreatment system that can reliably treat the very poor quality harbor source water to the very high standards required by SWRO membrane. This risk can only be mitigated by extensive pilot testing of 11/13/2012 duration of at least 12-months to account for seasonal water quality changes and for accurate source water characterization; impact on the proposed pretreatment processes, and removal due to contaminants such as oil and grease and harmful algal blooms.
Agreed. We have accounted for this in our evaluation. We do not agree that the proposed screened open intake carries a significant advantage at this stage of project development to warrant placing it above other alternatives. The necessary marine studies are not complete, so presupposing results is by definition speculative. Open intakes are not preferred by State regulators at present, and only considered for approval when a sub-surface alternative has been ruled out. It therefore presents a comparatively high regulatory threshold. Finally, the installation of the proposed intake pipeline is not without risk--it will entail construction activities in sensitive habitat that could prove controversial. Cal Am has employed competent design professionals in establishing the proposed subsurface intake wells, including Dennis Williams of Geoscience, Inc. Dr. Williams investigated and designed the successful slant demonstration well in Dana Point, California, which has operated well throughout its 2-year operating period, following predictable capacity trends. It is our opinion that Cal Am and its engineering team are engaged in a conservative, deliberative design approach consistent with a successful outcome.
NA
Cal Am's schedule for installation of the proposed test well is being adjusted based on revised information. The impacts of this change will be addressed in the supplemental report schduled for January 2013.
NA
We have reviewed the previous pilot work conducted at MLPP and disagree with the characterization that it was "thwarted" by water quality issues. The study evaluated UF pretreatment and found it successful. PML is proposing two-stage pretreatment incorporating granular media filters followed by UF. We consider this approach consistent with the previous work and adequately conservative. They have further proposed to conduct a 12-month pilot program (included in their schedule) to validate the overall process design. The costs for their pretreatment system as proposed are included in our evaluation, along with the schedule impacts of their pilot program
NA
See above response regarding the slant well issue.
NA
The PML project and our evaluation includes the recommended measures.
Page 1 of 13
MPRWA.DraftReport.ReviewComments
DRAFT REPORT
No.
Comment By
Page No.
Date of Comment
MPRWA TAC M eeti ng , 1/7/2 01 3 , Item N o . 4 . , Item Page 74 , Packet Page 114
Comments
Response/Action
NA
All three proposed projects have proposed reverse osmosis as the desalination process and the 0 & M costs associated for each project should be roughly equivalent so far as the RO system is concerned. However, both the Cal Am and Peoples projects contain process equipment that is not required for the DWD project. Cal Am has the added 0 & M costs associated with its slant well field and People's has 11/13/2012 the added costs associated with its additional pretreatment steps (ultrafiltration). Yet, the SPI report has assigned the highest 0 & M cost to the DWD project. Intuitively, this does not seem to be a technically sound conclusion. However, without reviewing the 0 & M cost work-up prepared by SPI we cannot be more specific in ascertaining how SPI arrived at this conclusion. DWD would appreciate the opportunity to review SPI's cost evaluation worksheet to assess whether any incorrect assumptions may have been used in the evaluation The most notable difference is the inclusion of a row labeled "Other Proponent Expenses" only to the DWD project. The Cal Am and PML projects have no costs identified in this row, but SPI assigned a number from DWD's input that is duplicated in other costs identified as Chemicals and O&M Labor. Our submission clearly identified what was in our costs. We know from our own analysis of the Cal Am and PML projects that they have similar "Other Proponent Expenses". The figures provided for Chemicals is significantly higher than Cal Am while we included chemicals in our "Expendables" category. We clearly identified "O&M Labor" in our submission sized for the plant and design characteristics. As a result, the 0 & M Costs were overstated by $2.94 million for the 9kAFY plant and overstated by $2.78 million for the 5.5kAFY sized plant. We are inserting Table ES-2 from the SPI report with DWD's corrected numbers below eliminating the duplicated costs and overstated energy costs.
Based on subsequent correspondence between DWD and SPI, we feel we have traced the source of the discrepancy primarily to the line item listed as "Other Proponent Expenses", which we failed to fully understand from the DWD supplied costs originally. The quantity listed in the draft report overlaps with O&M labor estimate included in our cost evaluation. The O&M costs will be revised in the final report to reflect the new information.
NA
11/13/2012
See response above.
10
NA
Schedule forecasting is by nature speculative. However, we have noted that Figure 6-1 -Conceptual Implementation Schedule for the Cal Am Project forecasts the slant well test program will be completed in 9-months commencing 2"d quarter of 2013; and the generic schedule proposed by SPI contains the following condition " ... presumes no delays to the design and construction of the desalination plant based upon development of the intake systems." (Ref. page 57). We sincerely question whether this assumption is reasonable given the uncertainty of permitting, construction and the required test period duration discussed above. The only experience with large capacity slant wells in California is an 11/13/2012 ongoing slant well test program at Doheny Beach in southern California being conducted for the South Orange Coastal Ocean Desalination Project that commenced in 2005 and is not scheduled to conclude until 2013. It would be helpful if SPI would share the rationale and basis for its stated assumption. It should also be noted that the Cal Am schedule would be substantially impacted should the test program not be ultimately successful, which would entail going to an entirely new method for source water extraction. We believe that it is appropriate to reflect this risk element in the evaluation, which in our view is substantial.
We will adjust Cal Am's schedule for the test well program according to new information received in a supplemental report due in January 2013. Cal Am's engineering team is actively engaged in the design and proposed construction sequence for the test wells, and we find their schedule credible from an engineering and construction perspective. Permitting concerns as stated, speculative--but we do note a preference of State regulators for subsurface intakes at present which could smooth their path to approval.
Page 2 of 13
DRAFT REPORT
No.
Comment By
Page No.
Date of Comment
Comments
With respect to the Conceptual Implementation Schedule for the DWD Project, Figure 6-2, we note that the schedule listed by SPI is substantially longer than we forecast. There are two tasks items that we believe should be revised: Task Item 6. Desai Plant Preliminary Design - DWD can execute preliminary design concurrently with the prior task items. Unlike either the Cal Am or the Peoples projects, DWD can accurately determine its design source water quality (and is presently collecting the necessary data needed with instruments deployed in the ocean off Moss landing and regular water sampling). Cal Am cannot characterize its design feedwater until the completion of the slant well test program. Although Cal Am has tried to anticipate the raw water quality and incorporated additional pretreatment components to possibly treat the feed water, only an analysis of the feed water from the actual tested in-field conditions will direct the extent and associated capital and operational cost impact this will have on the plant. Likewise, the Peoples project must first complete its 12-month pilot testing for similar reasons. Task Item 3. Jurisdictional Permits -As noted in the report, DWD has previously been barred from disclosing certain information related to its project due to a binding non-disclosure agreement. We are pleased to now be able to disclose, that DWD is currently engaged in exclusive negotiations for a building south of Elkhorn Slough as an alternative location for the seawater reverse osmosis plant portion the project. This will result in a reduction of capital arid aperating costs and an acceleration of the schedule relative to the Jurisdictional Permits as it will not be necessary route piping that crosses the Elkhorn Slough. While we acknowledge the Slough does have logistical challenges, this alternative effectively eliminates the 12-month schedule item associated with such Jurisdictional permitting. The associated costs savings are $5.5 million in CapEx for the 9kAFY plant size and $2.7 million for the 5.5kAFY plant size. Additionally, the annual 0 & M Costs are lower by $1 07/AFY for a total cost of $1 ,91 0/AFY for the 9kAFY plant and $2,292/AFY for the 5.5kAFY sized plant.
Response/Action
11
NA
11/13/2012
The proponent's updated schedule was solicited since the original draft and has been presented in the report. It has not been fully analyzed but neither is it fully accepted. With respect to Task 3, text has been added to the report to note that a relocation of the project as indicated would substantially lessen the project schedule duration. However, this has not been fully analyzed since this information came to light so late. With respect to Task 6, proponents have indicated a tremendous schedule advantage in all phases of design and construction compared to the generic schedule presented by the Consultants. Both points of view are presented in the report.
12
NA
Because of the critical nature the desalination plant and the necessity to meet the cease and desist order deadline, we respectfully submit that the DWD project offers the lowest risk of significant changes in cost and schedule. Because the DWD project relies on a conventional intake for the supply of high quality source water for desalination, the risk elements for the DWD project are limited to regulatory We believe the advantages cited are excessively speculative given the review and permitting. While both the Cal Am and Peoples project are also subject to regulatory and 11/13/2012 present state of project development; and do not warrant a described permitting risk, they have added significant, material technical risk as well. In the case of Cal Am, the preference in our evaluation. risk associated with relying on a novel and largely unproven and site specific method of source water extraction; and in the case of the Peoples project, the challenge of reliably producing high quality RO feedwater from a very contaminated and highly variable source water. Single pass RO system proposed by DWD and PML-while Cal Am partial double or two pass ystemwhat are advantages/disadvantages and what is cost factor for single vs double? All three projects would supply water into the Cal Am distribution system to integrate with existing supplies. For an apples to apples comparison, we saw it as necessary to compare the projects on the basis of achieving a consistent quality of product water. Single and partial-double pass RO system would produce markedly different qualities of product water--so we performed our evaluation on the basis of all projected incorporating a partial second pass RO system. It should be noted that this was in an effort to provide a balanced evaluation of the projects. Actual facility construction could proceed on either basis, subject to agreement of interested parties and State regulators.
13
Sue McCloud
NA
11/13/2012
14
Sue McCloud
ES-7
15
Sue McCloud
NA
PML has included $3.0M in their cost estimates to provide upgrades to their existing intake and outfall facilities. This, in concert with the 30 overall cost contingency included in our estimates is sufficient to account for potential costs at this stage. Does energy cost use MRWMD power-also green aspect if this energy generated from landfill methane Energy costs were supplied by the individual proponent teams. We validated their costs to a certain extent, but were not in a position to is used. 11/13/2012 recommend sources of energy. In general, proponent teams have an incentive to procure the lowest cost sources of energy for their proposed project on their own. If PML cannot use all or part of intake infrastructure-what is cost differential 11/13/2012
Page 3 of 13
DRAFT REPORT
No.
Comment By
Page No.
ES-7 NA NA NA
Date of Comment
Comments
Response/Action
The schedules show each project's forecast development from October 2012 on. The schedule start date and subsequent activities are our best estimate of progress going forward. The legal risk of the various projects was outside the scope of our evaluation. The costs presented for the 9 kAFY project reflect installation of 7 slant wells; costs for the 5 kAFY project reflect installation of 5 slant wells. Estimates for both facility sizes are presented in the report. We feel sufficient information is included in the report regarding the SVGB for the purposes or our evaluation. DWD is proposing to proportionally share costs associated with intake and brine disposal facilities proportionally among the Phase 1 and 2 projects. Remaining project facilities would only be constructed for the Phase 1 plant requirement and costs are reflective of that. In service of achieving a balanced evaluation, we will remove the use of corrosion inhibitors from the DWD and PML estimates. We feel sufficient post-treatment will be achieved by the calcite, carbon dioxide, and sodium hydroxide systems included in all three projects. Noted, will amend the description. The costs are roughly comparable--will so state. Yes, use of the Dynegy tunnels is subject to a pending agreement between DWD and Dynegy. The costs would be borne by other entities outside the desalination facility. Evaluated costs for DWD represent the total cost of the facility in production of water. All sites have sufficient space to accommodate temporary storage tanks. No additional costs were ascribed. The results of the DWD intake studies are anticipated to be available Spring 2013. Unknown, but likely not significant. The PML site is an area of the flood plain that does not require flood insurance, so the risk is gauged to be low. See more detailed response above, but it was in service of providing a balanced, apples to apples cost evaluation for the purposes of this report. Agreed, though we feel the $3.0M cost provided by PML as described above along with the overall 30% contingency provide sufficient conservatism at this stage of project development. Costs are included in the evaluation; and a primary reason why Cal Am's plant sizes are higher in the evaluation than PML or DWD. The costs include pumping, treatment and return pumping and piping systems to the existing CSIP ponds. Cost estimates are part of the engineering services we provide. As described, we primarily looked to validate costs provided by the proponents by preparing our own companion estimates. The purpose of our estimates is to provide a balanced comparison of the three projects on an equivalent basis.
16 17 18 19
Sue McCloud Sue McCloud Sue McCloud Sue McCloud
Implementation schedules expand for each of 7 points, where is each project now in the process and 11/13/2012 what steps are yet to be accomplished and in what time frame. 11/13/2012 11/13/2012 11/13/2012 Would be helpful to have a map with SVGB superimposed over the Cal Am project. DWD talks about Phases 1 and 2-yet text seems to talk about infrastructure being done at the outset-if so, will the desal project be helping to pay for the larger cost project Saw no mention of legal action impact for any of the projects. Calam project- do costs reflect 8 slant wells or 5 and shouldn't costs have both costs?
20
Sue McCloud
NA
11/13/2012
21
Sue McCloud
NA
11/13/2012
Both DWD and PML use corrosion inhibitors-is this for intake and outflow pipes? As it does not appear in the Cal Am costs.
22 23 24 25 26 27 28
Sue McCloud Sue McCloud Sue McCloud Sue McCloud Sue McCloud Sue McCloud Sue McCloud
3-2 NA NA NA NA 3-8 NA
Page 3-2 small matter but the 46 acre parcel is accessed by an easement from the Monterey Regional Waste Management District. 11/13/2012 Fall back for Cal Am's slant wells would be the Ranney well but no indication of cost difference. DWD intake pipe crossing Hiway 1-what is involved in using existing tunnel and was this taken into time 11/13/2012 factor for necessary permissions DWD refers to proprietary systems of MLPP-how will costs be obtained 11/13/2012 11/13/2012 11/13/2012 11/13/2012 11/13/2012 Recommendation for partial second pass RO treatment system-cost Was lack of redundancy for product storage figured in forsome suitable temporary storage? When will additional analysis to assess the vertical mixing zone at the interface of the submarine canyon be completed Cost of construction with in the flood plain
29
Sue McCloud
NA
11/13/2012 Several unknowns relative tothe outfall-costs and time
30
Sue McCloud
3-11
11/13/2012 What is process/cost of returning groundwater to the Salinas Basin
31
Sue McCloud
NA
11/13/2012 Economics-evaluated-how and by SPI? Page 5-6 top of page you independently adjust costs and developed your own estimates-hope share systems with someone.
32
Sue McCloud
5-6
11/13/2012
Page 4 of 13
DRAFT REPORT
No.
Comment By
Page No.
Date of Comment
Comments
I also still sit on the board of the Monterey Regional Waste Management District and have recently stepped down as its Vice Chair. It is in that capacity that I wanted to talk to you. Specifically I wanted to know what figure are you using for energy cost? As you perhaps know, the District is planning for a $20M plus new generator to increase the amount of methane gas we convert into energy. It just so happens that our monthly board meeting was this past Friday. At this meeting staff presented 3 years of revenue info re the utilization of landfill gas which currently produces 5 megawatts of renewable energy; thus saving the district about $350k in deferred power purchases and sells the excess on the grid. We presently have 2 power sales contacts with PG&E and 3Phases Energy. Williiam Merry is the GM for the District and an engineer. As I understand it you two have not talked and I think perhaps you should to compare the cost of District energy (which I will send or have sent to by email) with your cost projections. We are interested in making this as green a project as possible and in keeping revenues local. First, the estimates for Cal-Am's cost of desal water.appear to be unusually low considering that CalAm's capital costs are $47 million higher than those of Deepwater. Further, I can't find project management fees and Cal-Am's profits from the project in the cost estimates. For information, Cal-Am's project management fees are $25.9 million and Deepwater's are $17.9 million. Dave Stoldt tells me that CalAm's profit level would be approximately $8 million declining by $250,000 each year due to depreciation of assets. Finally, there is an assumption in the [SPI] analysis that warrants comment. That assumption is that Cal-Am's $99 million proposal for zero-cost, advanced funding of its project, courtesy of Peninsula ratepayers, will be operative. This is surprising. The proposal is yet to be approved by the CPUC and has many drawbacks for ratepayers. At a minimum, $99 million in project equity for ratepayers is mandatory if this proposal is to be acceptable. Second,Cai-Am has recently advised that it is looking at a host of contingencies for slant wells. These include: (1) Shallower slant wells; (2) Horizontal Ranney wells; (3) Open ocean intake nearby; (4) Slant well at Moss Landing; (5) Open ocean intake at Moss landing; (6) Locating the desal Plant at Moss Landing. At a minimum, these contingencies give rise to uncertainty and risk as to the course of the CalAm project. Question: Did [SPI] sort through the potential consequences of invoking these contingencies for their impact on Cal-Am's implementation schedule? Third, the environmental information that would support cross comparisons of the intake/outfall systems wasn't available to [SPl]. This information will come from EIRs currently under preparation. This is important because environmental impact information will be absolutely necesary in order to evaluate (1) The impact on sea life; (2) The impact on the seabed particularly from brine disposal; (3) The impact on sea water intrusion. Question 1 : Will these matters fall by the wayside because it is judged that EIR completion times are too far into the future? Question 2: Would this be acceptable to permitting authorities? The final SPI Report should have a listing, at the beginning of the report, of the key assumptions underlying the report's analysis. An example of a key assumption might be that Cal-Am is eligible for public financing.
Response/Action
33
Sue McCloud
NA
11/18/2012
Proponents are incentivized to procure the lowest cost of energy for their projects.
Cal Am's cost of capital will be amended in the final report to reflect their higher cost of financing and overall financial model. This will be accomplished by using a higher, representative capital recovery factor for their project. With regard to the proposed surcharge, we make no mention of it in the report as it is outside the scope of our evaluation. All proponents are gauged to have sufficient capital to pursue their projects going forward--we make no representation further than that. The surcharge is part of an active process at the CPUC and that information is publicly available. Our report reflects information available as of October 15, 2012 for the three projects. The Cal Am contingency plans were in response to an order from the CPUC. We consider the potential for implementation of any of the plans overly speculative at this point. Part of the reason for the recommended 30% cost contingency included in our evaluation is to account for unknowns of this nature.
34
Dale Hekhuis
NA
11/13/2012
35
Dale Hekhuis
NA
11/13/2012
36
Dale Hekhuis
NA
11/13/2012
Text has been added to the report to clarify these points. Detailed assessments of potential impacts of intake and discharge are central to the environmental review of all projects.
37
Dale Hekhuis
NA
11/21/2012
Assumptions are primarily schedule related and these are described adequately in the discussion of proponent schedules. Cal Am's financing model will be adjusted as described above. The economic evaluation in the report seeks to present total costs of each project for production and supply of potable water from a seawater desalination facility on an equivalent basis. We agree that Cal Am has a different cost of capital and will amend that evaluation in the final report. The specifics of funding Cal Am's project are outside the scope of our evaluation. We have assigned a uniform project implementation cost to all three projects in our evaluation to cover project development prior to construction. We feel this estimate, along with the 30% overall project contingency, is sufficient to account for typical delays in project development forecast at this time. Evaluations beyond that are outside the scope of this study
38
Dale Hekhuis
NA
SPI should prepare a memo, for inclusion in the report, listing all costs that dropped out of the the cost analysis because they did not fit an apples to apples comparison format. Simply because costs may not 11/21/2012 have fit the format is no reason to ignore them. At a minimum, the report reader needs to know up-front what Cal-Am's profits are. Ratepayers will be paying for these profits. With regard to the $99 million of advance funding, it should be made clear that it is only a proposal that is yet to be vetted by the CPUC and the DRA. There may be changes in what Cal-Am has asked for in the final version. I feel that it's improper to use a proposal, and that's all that advance funding is, without making it clear to the reader that it is a proposal. As my colleague Doug Wilhelm has recently suggested, an estimate of the additional costs that could be incurred by the slippage of the project completion schedules that SPI has come up with - anywhere 11/21/2012 from 8 months to a year beyond the deadline - is in order. Just how serious is the slippage from a cost standpoint? That is what SPI should be asked to come up with. 11/21/2012
39
Dale Hekhuis
NA
40
Dale Hekhuis
NA
Page 5 of 13
DRAFT REPORT
No. 41 42 43
Comment By
Ron Weitzman Ron Weitzman Ron Weitzman
Page No.
NA NA NA
Date of Comment
11/9/2012 11/9/2012 11/9/2012
Comments
Why the capital structure of 57 equity to 43 debt when the current capital structure is 42 equity to 58 debt? Why 5% interest rate for Cal Am when it currently charges ratepayers 6.48%? Why the interest rate of 4% for a public agency when it could probably get 3.5% or less, and it is a lot more likely to have access to state revolving-fund money at 2.5% than Cal Am? How does the $207 million cost for Cal Am's 9,000 acre-foot project in the table comport with the $365 million in Cal Am's proposal to the CPUC?
Response/Action
The discussion of Cal Am's financing structure will be amended in the final report. The discussion of Cal Am's financing structure will be amended in the final report. The discussion of Cal Am's financing structure will be amended in the final report. The costs provided to the CPUC include additional, common distribution facilities within Cal Am's system that were not included in the project--as they apply equally to all three. Further, the CPUC had Cal Am include an additional contingency in their cost estimate to achieve a "maximum credible cost" for planning purposes. Our evaluation considered all three projects with a common 30 percent contingency alone. PML project timeline has been corrected from the original report. However, the timeline for project description and EIR/EIS remain generic based upon assumed need for detailed evaluations of project intake and discharge impacts. Text has been added to reflect potential delays in the CalAm Project due to delays in the test well project but these have not been fully analyzed. DWD has presented an updated proponent's schedule. See response above. The evaluation of all three projects on an equivalent RO treatment basis does not unbalance it; rather it balances it in evaluating all three projects on an equivalent basis. The Cal Am financing model will be adjusted in the final report. DWD plans to establish a JPA composed of public agencies to own its project. Will clarify in the final report. DWD does not to our knowledge extract groundwater as part of its intake system. For Cal Am, the issue is being vetted through the CPUC process and it's considered unnecessarily speculative at this point to presuppose an outcome. As a general rule, the CPUC as a State agency has broad authority to overrule other agency ordinances in the service of establishing a necessary public water supply. A higher cost of capital for Cal Am will be included in the final report. The cost evaluation in the report covers a 30-year term. Costs beyond that are outside the scope of this evaluation. Not significant. Cal Am is currently offering assessed costs for the property, which would likewise be the cost of any eminent domain The costs will be born under the proposed project structure by a separate entity. That fact is integral to DWD's proposed project. Costs are included as described above. The text is revised to clarify this point. Period for project description includes time for evaluation of intake and discharge impacts associated with the PML project. In the case of DWD a schedule for these evaluations has been presented. In the case of CalAm, the project relies upon prior determinations that the project would have no significant impacts from intake or brine disposal The extent of Phase 2 facilities installed during Phase 1 is limited and accounted for in our evaluation.
44
Ron Weitzman
NA
11/9/2012
45
Ron Weitzman
NA
11/9/2012
The timeline is what troubles me most. The SPI report is based on data available in July. Since then, Cal Am's project has been delayed at least a year, and Cal Am may even have to start all over because of the waterrights issue. The Pacific Grove project is likely to begin work on its EIR before the end of the year, not years off, and since July the project has changed its seawater intake plans so it will not require special pre-processing of the intake water.
46
Ron Weitzman
NA
Why does the Cal Am total capital cost for the 9,000 acre-foot project in each of the two reports differ 11/12/2012 substantially from the $365 million in Cal Ams CPUC proposal? (Likewise, for the 5,500 project) In comparing apples to apples, why does the SPI consultant load the comparison in favor of the Cal Am project by adding a second pass-through RO to the two non-Cal Am projects while using a 4% interest rate for all projects (Table ES-2) when the rate is much lower for a public than for a private project? Why does the SPI consultant not consider that the DeepWater project cannot own or operate a 11/12/2012 desalination plant in Monterey County because it has no public partner? Why does the SPI consultant not take into account the state Agency Acts prohibition of groundwater (not just fresh water, but any groundwater) exportation from the Salinas Valley Groundwater Basin, except for Fort Ord? These last two items are fatal flaws for the DeepWater and Cal Am projects. 11/12/2012 11/12/2012
47
Ron Weitzman
NA
48
Ron Weitzman
NA
49
Ron Weitzman
NA
50 51 52 53 54
Paul Hart Paul Hart Paul Hart Paul Hart Paul Hart
5-4 NA
(i) would like to see the capital recovery for Cal-Am in Table 5-2 reflect a higher cost of capital, such as 11% (ii) believes there are advantages to ownership in that future lease costs after the thirtieth year should 11/14/2012 be reflected in overall cost of projects which assume leases, in that ownership costs are fully amortized over thirty years; (iii) If Cal-Am needs to assert eminent domain to gain site control, what will be the impact on cost? 11/14/2012 11/14/2012 11/14/2012 11/14/2012 (iv) Did not feel DWD third part intake costs were adequately reflected. (v) Wants to be sure the additional capital and operating costs related to extraction, treatment, and return of Salinas Valley groundwater are fully included in the costs of potable water delivered. (vi) Would like clearer explanation for the difference in timelines why is the PML schedule extended for a detailed project description, but not the other projects?
5-8 NA
55
Paul Hart
NA
11/14/2012
56
Paul Hart
NA
(vii) If DWD is a large regional project, with large upfront fixed costs, and the DWD analysis assigns 11/14/2012 only a percentage of those costs, who is paying for the rest and what are the risks that such costs are ultimately passed onto the Peninsula customers?
Page 6 of 13
DRAFT REPORT
No.
Comment By
Page No.
NA
Date of Comment
Comments
Response/Action
57
Nader Agha
Expressed concern that SPI used data from PMLs July submittal, but should have used the updated 11/14/2012 October 2012 submittal.
58
Nader Agha
NA
11/14/2012
59
Nader Agha
NA
11/14/2012
60
George Riley
5-6,5-7
11/12/2012
61 62 63
George Riley George Riley George Riley
NA NA NA
11/14/2012 11/14/2012 11/14/2012
Our evaluation included all information provided by PML up to October 15, 2012. We are not aware of any specific inconsistencies with information presented in the draft report. Also expressed disagreement with the reports schedule and believes the environmental document PML Both the PML and DWD have suggested an EIR/EIS review schedule which is potentially shorter than the timeframe presented by the CPUC. has produced, which he referred to as a focused EIR, would expedite the schedule. The report continues to present a generic schedule which is longer than suggested by the project proponents. We do not see adequate rationale to suggest that the EIR for PML or DWD can be completed more quickly than the CalAm proposal. Disagreed with the cost numbers developed by SPI as inconsistent with the estimates PML has already All costs were evaluated on a consistent basis across all three projects. The primary cost increase for PML was that associated with a higher made overall project contingency, which we consider warranted at this stage of development. In trying to understand a few charts, I repeated the math, but found errors. This will not ruin your day, but there are significant math errors on two charts. (for Cal Am and DWD, not PML). Both tallies relate to the same items, but erroneously. Chart 5-3 CAW, and chart 5-5 DWD. The Intake/Outfall cost category in the table includes fixed facilities as well, In Line 8, Plant Facilities (PF) Subtotal All are wrong for CAW and DWD. Footnote 2 referred to including storage tanks and pump stations. We will amend the table to excluding 'off site trenched pipelines', which are Intake/Outfall and distribution. Deducting the numbers break the costs out separately so that costs within the table can be in the chart does not give you the subtotals shown. calculated from the information shown. The subtotal seems like an attempt to isolate some costs for better understanding, but these subtotals are not used any where else in the report. At least I could not find another reference. Maybe these subtotals have been used in financial models (yours?), but I doubt it. That is why I think it will not ruin your day, or SPI either. No, though the issue will be investigated in a supplemental evaluation [Was] the periodic replacement of the slant wells factored into the cost analysis for CalAm's proposed project? following the final report due in January 2013. What is the state of ownership at the end of the 30 year analysis period (terminal year) and can that be The cost evaluation included a 30-year term for the purposes of the report. factored into the analysis? (since presumably all of the plants operate for longer than 30 years) Presumably lease payments for DWD would continue past that time. (i) Where is each project in terms of site control and does it introduce more variability than reflected in the report? (ii) Will an EIS (federal review) be required of Cal-Am and what effect would it have on the Cal-Am schedule? Site acquisition is not considered a significant barrier to any of the candidate projects. The CPUC has solicited input in the scoping hearings to determine if a Federal EIS is required. Depending upon the approach to compliance, an EIS could add 4 months to up to two years to the schedule. Text has been revised to note this uncertainty. The seawater intake is not proprietary, but rather the warming system. Information will be available once agreements have been finalized between DWD and Dynegy, presumably in the next two months. Yes, for the Cal Am project. The PML Schedule has been revised in the text. DWD has shown a proponent's proposed schedule which is substantially shorter than shown in the original draft. The Text comments on this change.
64
George Riley
NA
11/14/2012
65 66 67
George Riley George Riley George Riley
NA NA NA
(iii) The proprietary intake is an unknown when will more information become available and what 11/14/2012 impact will it have on the analysis? (iv) Is the additional capital and operating costs related to extraction, treatment, and return of Salinas Valley groundwater are fully included in the costs of potable water delivered? (v) it appears there are several items in the Cal-Am schedule being performed simultaneously can 11/14/2012 more tasks be done in parallel to shorten the other projects schedules? 11/14/2012 Profit included as a cost: Apples to apples is incomplete without some component (or comment) about profit. Cal Am will not undertake a project without a profit component. I asked DWD (2 people) if there was profit built into its numbers, and the answers were yes. SPI expanded those numbers, so if profit was already built in, you expanded profit as well. Not apples to apples. I also asked Nader Agha if profit was built into PML numbers. He said no, since most of his asset sale 11/22/2012 numbers were based on depreciated or discounted values, and he does not seek to make a profit on the desal project. Since this is not easy for apples to apples, I have these questions: a) Can you generate an apples to apples for an estimated cost component for profit? b) If profit is built in for DWD, should you exclude it from DWD, or add it to Cal Am? c) Could you verify if profit is in the PML project at all, and if so how, and if yes, how do you present it?
68
George Riley
NA
Cal Am's cost of financing will be adjusted to incorporate their costs, including profits. DWD included their profit in the O&M cost category labeled "Other Proponent Expenses". The cost of PML's site was included as $25M from their supplied documentation.
Page 7 of 13
DRAFT REPORT
No.
Comment By
Page No.
Date of Comment
Comments
Response/Action
69
George Riley
NA
70
George Riley
NA
Profit excluded as cost: If profit is not to be in your comparisons, it should be specifically commented on as needing further evaluation. Cal Am will undergo a deep review by Division of Ratepayers Advocates in CPUC procedures. There is no comparable deep review for DWD or PML, unless it 11/22/2012 occurs by local agencies. So profit has two tracks for review, and should not be treated casually. It will be a known component of Cal Am costs, and so far is relatively unknown for DWD and PML. Will you suggest a procedure for evaluating costs for profit, or a way to address profit and other variable costs that SPI excludes from its report? Schedule question #1. You have indicated you will review these again. I point out one item--Cal Am has several parallel tracks in its schedule--EIR, CPCN and slant well testing. These are expected to merge at later dates. On the other hand, DWD and PML have sequential linear tracks, where similar steps are not run in parallel. Of course your schedule layout has more time for the two at ML, and 11/22/2012 much less time for Cal Am. Your recommended track is linear yet you make no acknowledgement of the higher risk of Cal Am's sequential tracks, i.e., the potential for litigation for procedural grounds. Potential litigation based on inadequate time or consideration of related matters will be a significant risk. You should fully acknowledge these differences, unless you intend to correct for them. Schedule question #2. Section 6.3.1 on PML, SPI refers to an existing NPDES permit and a finding by RWQCB that "use of up to 60 MGD of seawater through the existing intake structure in Moss Landing Harbor would have negligible potential impingement and entrainment impacts." SPI observes these 11/22/2012 facts, yet concludes that PML schedule will require deeper analysis (and delay) because of speculative comparisons to a "no-project alternative". Furthermore PML has an alternative intake option using its large 54" to 60" discharge pipe for inserting a new intake pipe. Can SPI reconsider its conclusions on the PML schedule with a greater reliance on the facts? Comparing "existing infrastructure and entitlement" (PML) to "design and build" (Cal Am and DWD). SPI has made no analysis of the different schedule impacts between two projects (Cal Am and DWD) 11/22/2012 that have no or limited site control, no permit history for intake and/or discharge, and no entitlements for those permits. Whereas PML has all of the above, which could be positive elements for expediting the schedule. Can SPI comment on this? (i) Slant wells appear to be a large cost component is it worth it relative to the use of Ranney wells? 11/14/2012 11/14/2012 (ii) What would be the difference in cost?
See response above.
CalAm has presented a revised schedule for the project. This has not been fully analyzed but text has been added to note the schedule risks associated with delay of the test wells. DWD has presented a proponent's schedule which substantially shortens the project schedule and this is commented upon. PML schedule has been corrected
71
George Riley
NA
The report duly notes that it is possible that PML can certify an EIR without a detailed analysis of the effects of operation of the intake without detailed evaluations of the effect upon the marine environment. The schedule in the report has not been revised. Based upon experience with other ocean desalination proposals in California, it is presumed that substantial evaluations of this potential impact would ultimately be required. Site control is an advantage to PML and the text has been revised on the other projects to note the risks associated with this issue. Permit history has not been considered a factor. The potential entitlement of prior permits is noted in the original text and has not been revised. The costs are comparable. Not significant; potentially slightly less for the Ranney alternative due to reduced connecting piping requirements. As presented, beginning in October 2012. We consider it reasonable based on the level of equipment redundancy proposed. At base however, our evaluation did not consider plant sizing; rather we sought to use consistent sizing/redundancy criteria across the three projects to provide a balanced cost evaluation. Ultimately, plant capacity is an issue for the CPUC and project proponents.
72
George Riley
NA
73 74 75
John Narigi John Narigi John Narigi
NA NA NA
11/14/2012 (iii) Where is each project in the schedule right now? (iv) Is the operating assumption of running the Cal-Am facility at 98% capacity realistic or sensible should capacity be larger? 11/14/2012
76
John Narigi
NA
77
John Narigi
NA
78
John Narigi
NA
79
John Narigi
NA
80
John Narigi
NA
The schedule will be updated to reflect the new date, currently forecast as Nov. 2013, in a supplemental report due in January 2013. The project EIR for CalAm is presumed to cover the larger size project that does not depend upon groundwater replenishment project moving forward. 11/14/2012 This consideration of maximum potential impacts is appropriate and should prevent substantial delays from occurring should the groundwater replenishment project be aborted or delayed. (vii) What would the two Moss Landing projects charge Cal-Am as the wholesale cost of water how is The structure of a future water supply agreement among the parties is 11/14/2012 outside the scope of our evaluation. that to be determined? (viii) What are the cost and schedule issues, if PML infrastructure is determined to be in worse condition The major schedule drivers relate to environmental and permitting issues. Presumably a more detailed assessment of current infrastructure condition than described? 11/14/2012 would be undertaken as part of the predesign process. There is sufficient time within the proposed construction schedule to accommodate rehabilitation of facilities as needed. 11/14/2012 (v) What is the schedule for slant well testing and Coastal Commission approval, and does the Cal-Am schedule adequately reflect it? (vi) What impact will the groundwater replenishment CEQA delay have on the overall Cal-Am CPUC application and schedule?
Page 8 of 13
DRAFT REPORT
No.
Comment By
Page No.
Date of Comment
Comments
(i) the water quality of each proposed project appears to vary, as described in chapter 4 is there a common standard, and does the financial analysis bring them to the common standard?
Response/Action
The information provided in Chapter 4 summarizes the quality produced by the proponents' proposed systems. In our cost evaluation, we assumed each treatment facility would produce a consistent quality of water; and amended proponent costs accordingly. Agreed, will update text. Brine dispersion was not included in the evaluation, beyond a review of the Trussell Technologies Inc. investigation which we found credible at this stage. Presumable the issue will be investigated further as the project predesign and permitting processes advance. We do not consider it a large technical concern. Agreed.
81
Rick Riedel
NA
11/14/2012
82
Rick Riedel
NA
11/14/2012
(ii) We should be reminded that the fatal flaw sections are technical in nature, not legal and/or political, which do pose significant risk (iii) Does the analysis adequately address whether sufficient dispersion of brine discharge can be achieved, and if not, what is the incremental cost to do so?
83
Rick Riedel
NA
11/14/2012
84
Rick Riedel
NA
85
Rick Riedel
NA
86 87
Rick Riedel Rick Riedel
NA NA
11/14/2012 Change statements to ... no [technical] fatal flaws were found ... Add Legal and financial considerations, such as water rights and payment schedules (such as Surcharge 2 by Cal Am), were not evaluated. You may want to elaborate on why it is inappropriate to 11/14/2012 consider potential cost associated with financing the project in this type of report. Also, you may want to provide caveats for the accuracy of the estimated costs and that the cost analyses given are for evaluating the feasibility of the alternatives and are not intended to reflect potential actual costs. 11/14/2012 How were the finished water quality values derived shown in the tables in Section 4? Do the differing finished water quality values in Section 4 affect the cost comparisons given in Section 5? If so, is it possible that the cost analyses be revised so that every alternatives treatment scheme is 11/14/2012 modified (e.g. not require 40% second pass) so as to provide the same finished water quality? Two of the potential desal projects, DWD and PML, are proposing to use open ocean intake without considering any alternatives to open ocean intake. My understanding is the Coastal Commission would consider open ocean intake in the event that it is shown to be the "least environmentally harmful 11/21/2012 feasible alternative." That is, the Coastal Commissions Policy is to not allow an open ocean intake unless it is demonstrated that other alternatives are unfeasible. To my knowledge, no work has been performed to date by either DWD or the PML to demonstrate this. 11/21/2012 Should DWD be given credit (i.e. either a greater RO flux or lesser energy usage) to account for the preheat? Page 3-11 states that PML will pretreat with coagulant and UF. Is it cost effective to remove coagulant with UF? Is it necessary to add flocculation prior to filtration?
Agreed.
They were extracted from information provided by the proponents. The cost evaluation we prepared did assume a consistent product water quality; and proponent costs were adjusted to include the required treatment process equipment. Minimal text has been added to Section 6 of the report to discuss Coastal Commission and NOAA policies. However, time and budget constraints do not allow a thorough evaluation of these comments. The report notes that this should be a focus of future analyses. It is desirable though uncertain that the CPUC EIR and proponents' EIR's would offer a comparison of open intake and subsurface intakes for comparison. The JPA has made thoughtful comments in the scoping hearings which would improve the Energy costs will be adjusted to account for differences in pumping requirements among the three proponent projects. Coagulant can be used successfully with MF/UF. The overall PML pretreatment design was maintained as proposed with the understanding that a planned one year pilot program would be used to finalize the process design. Information on the existing equipment was not provided. In general, the contingency allowance and proposed rehabilitation allowances provided by PML should be adequate to cover potential rework. Cal Am has a high pumping cost associated with it's supply wells along with a higher cost of electricity; while DWD had an artificially high cost associated with its proponent expense category as described above. The costs will be adjusted in the final report. Noted, will correct. We consider the terms synonymous but will change to non-corrosive. Chapter 4 presents the proponent proposed system designs; along with our proposed adjustments to their respective facility capacities. Additional sensitivity analyses related to cost of energy and slant well replacement will be included in a future supplement to the final report. The economics would not change much as the major shared cost component is the planned intake pipeline which is not part of their costs. Most facilities would be built for the required plant capacity increment in Phase 1 and include those costs alone.
88
Rick Riedel
NA
89
Rick Riedel
NA
90
Rick Riedel
3-11
11/21/2012
91
Rick Riedel
NA
11/21/2012
92 93 94 95 96
Rick Riedel Mayor Burnett Mayor Burnett Mayor Burnett Mayor Burnett
NA ES-9 4-4 4-5 NA
11/21/2012 11/13/2012 11/13/2012 11/14/2012 11/14/2012
97
Mayor Burnett
5-7/5-8
11/14/2012
The existing infrastructure at PML may be a liability, instead of an asset. For example, I believe that California Dept of Health requires all pumps for water systems to be lead free. Most older pumps contain some lead as an alloying element. Do the existing PML pumps contain lead? Another example, many older storage tanks contained PCBs in the caulking. Do any of the PML tanks contain PCBs at a level that may be of concern? The lower O&M costs for PML is counterintuitive considering the feed water from the harbor is potentially both highly variable and contains more organics than the other alternatives. That is, O&M costs for PML are estimated to be lower than the other 2 alternatives. I would expect PMLs O&M costs to be greater. "10,730 AFY in access of its valid right of 3,376 AFY." Should be "in excess of..." "In general, DWD proposes to provide a product supply that is compliant with all applicable drinking water regulations, is non-aggressive..." Should this be "non-corrosive? DWD and PML appear to underproduce in the 5,500 AFY scenario as shown, for example, on page 45? It would useful to identify the key variables that affect cost and schedule and request SPI do a sensitivity analysis on those. For example, they already have done sensitivity analysis on the cost of electricity at least for Cal-Am's project. Determine how sensitive the cost effectiveness of DWD is to the assumption that they will be able to build a 25,000 AFY plant. If that does not come to pass and the capital costs of pipes, etc will need to be spread across a smaller volume of water, how much more expensive is that water per acre foot?
Page 9 of 13
DRAFT REPORT
No. 98 99 100 101 102
Comment By
Mayor Burnett Mayor Burnett Mayor Burnett Mayor Burnett Mayor Burnett
Page No.
NA NA NA NA NA
Date of Comment
Comments
Response/Action
It is a risk that will need to be evaluated as the project advances. From a technical perspective, there is no reason to believe the existing intake could not be reused. There are barriers to implementation of any of the three projects. With the 2016 deadline, schedule risk should likely have primacy in the absence of gross cost differentials. Unknown. They are currently not the preferred alternative within State regulatory authorities and therefore subject to unknown schedule risk. The overall regulatory framework has changed since Poseidon started its project, so it's difficult to draw firm conclusions. The surcharge issue is currently being examined through the CPUC and is not included in the scope of this evaluation. See above. Cal Am's cost of financing will be adjusted in the final report. Will correct. Will update.
11/14/2012 What happens to PML and DWD if MLPP is shut down or once-through cooling ceases? For PML, how do costs change if existing intake system is unusable? 11/14/2012 How should we evaluate schedule risk versus cost of water? 11/14/2012 11/14/2012 How much will it cost our communities to have a project delayed by 6 months? What can be learned about schedule risk (especially for open ocean intake) from the Poseidon experience? 11/14/2012 Questioned the use of Surcharge 2 for funding a portion of the Cal-Am project, suggesting that it should 11/14/2012 be made available to the public projects or removed from the Cal-Am analysis especially since the CPUC may not allow it in whole or in part. 11/14/2012 Also questions the use of Surcharge 2. Questioned why the capital costs for the Cal-Am project are so much lower than Cal-Ams published 11/14/2012 estimates in their application and presentations to the community. 11/13/2012 two lines up from bottom Cal-Am should read DWD Replace Text in Footnote 3: Capital recovery factor for DWD and PML based on an interest rate of 11/30/2012 4.0% and term of 30 years; based on an interest rate of 8.49% and 30 years for Cal-Am. A Capital Recovery Factor (CRF) is used to convert a single up-front capital cost into an annual amount to be recovered, as if the money was repaid as a loan, based on an interest rate and time period. As listed in Note 3 on Table 5-2, a CRF was used for the DWD and PML projects at an interest rate of 4.0 percent. This rate approximates the cost of tax-exempt borrowing for publicly financed projects which would likely be applicable to DWD and PML. In this case, the CRF equals 0.05783
103 104 105 106 107
Doug Wilhelm Dale Hekhuis Safwat Malek Dave Stoldt Dave Stoldt
NA NA NA 5-8 5-4
108
Dave Stoldt
5-5
Cal-Am may not have access to public financing and could have a pre-tax weighted cost of capital based on 5.0 percent market-rate debt (their authorized debt return is 6.63%) and 9.99% percent equity return, grossed up for income and ad valorem taxes. This would result in higher annual costs for Cal-Am 11/30/2012 than shown. However, there are additional differences in how public versus private capital investments Will update. are amortized, the impacts of which are not analyzed in this report. The Monterey Peninsula Water Management District has computed that for Cal-Am, a CRF representing the average annual capital recovery over a 30-year period equals 0.92933 which would result as if the interest rate was 8.49%. This CRF is computed as follows: {[(Pre-Tax Equity Return: 9.99% x 53% x 1.69 gross-up) +(Pre-Tax Debt Return: 5% x 47% x 1.69)(Interest Paid Tax Off-Set: 5% x 40.25% effective tax rate divided by .99736 collectibles rate)] +(Ad Valorem Taxes: 1.05%)]}/2 + (3.33% annual depreciation) = 0.092933 proxy CRF
Page 10 of 13
DRAFT REPORT
No.
Comment By
Page No.
Date of Comment
-
Comments
Response/Action
109
Larry Parrish
NA
Independent fact checking Several months ago (perhaps a year) Cal Am produced an internal study on comparative costs of a new water project, which included about 11 different options covering desalination, ASR (aquifer storage & recovery), GWR (ground water recovery), conservation, and perhaps other sources. The options covered varying combinations of these water sources and the costs for each option, including desal. Well, if you review that Cal Am study I think you will find that the estimated costs of the Cal Am water project (desal) in that study vary greatly from the estimated costs represented in 11/27/2012 the SPI Report and the financial analysis prepared by the MPWMD for the MPRWA. Why is there such a difference in costs between these two studies? What has changed? Also, evidently the three proponents of desal proposals answered a 55 question questionaire. Is there independent verification of the information that was provided in those questionaires? If not, there certainly should be. To be sure, ALL of the information provided by Cal Am, DWD, and PML should be verified by independent sources.
-
This study evaluated costs provided by the proponents as of October 15, 2012 for their current projects. Evaluation of other cost estimates was not a part of our evaluation. With regard to the proponent questionnaires, we did evaluate their responses as part of the information we reviewed and considered as part of work. Where we found the information was insufficient, we asked additional questions of the proponents and/or adjusted costs in our economic evaluation.
110
Larry Parrish
NA
Total Costs of Desal Any estimates of the cost of a new desal plant MUST include ALL of the costs associated with the 11/27/2012 construction of the desal plant. This would include the $99 million surcharge; finance charges; profits by the builder of the plant (Cal Am); litigation costs; wells; land acquisition; etc. ALL costs must be included! !!
-
We believe all applicable costs related to the facility permitting, design and construction have been considered.
-
111
Larry Parrish
NA
Delays Delays in permitting, construction, litigation, political dickering, etc. will undoubtedly increase the 11/27/2012 final pricetag of the desal project and these should also be included in the total cost. This may entail some difficulty in estimating the costs due to delays, but should be included at least as estimated costs.
-
The recommended 30 percent overall project contingency should b sufficient to cover many of the unknowns related to the project at this time.
112
Larry Parrish
NA
Missing the deadline There is a deadline in the CDO 95-10 which could also effect the final pricetag of desal. My opinion is that the water will not be shut off - affected cities and the county can declare a state of emergency which will override the order by the State Water Board. However, some rationing may occur. If rationing does occur, this could also affect the final price of desalination. Cal-Am has stated publicly several times that if conservation (also known as rationing) increases, the cost of water per acre-foot ($/AF) will also increase in some proportionate formulized fashion. Cal-Am has fixed costs and are legally entitled to recover those costs. The actual amount of 11/27/2012 water they distribute is then somewhat irrelevant. If they sell a million AF of water, or ten million AF, they will still attempt (successfully) to recover a relatively similar amount from the ratepayer based on their expenses. This means a RATE INCREASE. Well, such a rate increase will increase the overall price per AF of water , which will likewise affect the final average $/AF of the overall project. This should be factored into your evaluation also. I guess you need to determine how soon each project can be completed, and of course the longer it takes to complete the project, the more expensive it will be. Cost controls This may not figure into your evaluation at this time, but upon selection of and approval of a final 11/27/2012 project, there should be sufficient cost control guarantees written into the final agreement. Cost overruns should be accounted for and costs beyond that should be borne by the builder of the project.
The outcome of a missed deadline is speculative at this time; and an evaluation of the impacts are outside the scope of our evaluation.
113
Larry Parrish
NA
Noted.
Page 11 of 13
DRAFT REPORT
No.
Comment By
Page No.
Date of Comment
Comments
Response/Action
114
Alan Haffa
NA
The Report makes it sound like the fact that Cal Am's slant wells will be in the path of future shore erosion in the next 40 years a minor issue because the life of the project is only 30 years. That seems insane to me. We are spending 200+ million on a project whose life is only 30 years? If we have to 11/27/2012 redrill the slant wells in 30 years, a short window for such a large capital project if you ask me, then that cost should be factored into their plan. In my view, the shore erosion is a "fatal flaw" for the CalAm plan. The Report assumes that all three projects will spend the same amount on financing, but is that a reasonable assumption? My understanding is that Cal Am cannot borrow at the preferred rates a government body can, but the other two projects will not go forward without a sponsoring public agency and the correspondingly lower bond rates. This seems like a large cost factor that the SPI report ignores essentially. (See note 3 and bottom of page 5-4 and 5-5, which says that a "uniform capital recovery factor was used across all three projects at an interest rate of 4.0 percent."). My estimate based on the percents given on 5-5 is that financing for Cal Am would cost 22 Million more. The Report claims on page 3-3 that there will be no permanent aesthetic impacts from CALAms project, but their slant wells will occupy 700 feet of shoreline with industrial equipment in a place that currently has nothing like that--how can that not be a permenant negative aeshtetic impact? The claim on page 3-7 about DWD stretches credibility: "there is no expereince with the effect of warming a deep source supply. There is potential for the increase in temperature to cause an increase in biological activity and associated biological fouling within the treament process." Really? They are taking water from deep under the ocean where there is far less organic material to begin with, and filtering it. Now, are we supposed to believe that in the amount of time it takes to warm the water and pipe it to the treatment center that this deep water will suddenly sprout with life? It seems like a very weak assumption ont he part of SPI and while it is true that there is no experience proving otherwise, there is also no experience proving that it will occur and common sense argues against it. How will source water that is lower in "turbidity and suspended solids" than the other two projects suddenly experience an outbreak in biological fouling just because of warming the water? On page 3-8 "the nature of the agreement between DWD and Dynegy is still confidential between the parties" IS a legitimate concern. The public needs to know the nature of that agreement to predict long term costs and that is a non-starter to any negotiations with DWD. On page 3-10 the report claims that PML is in a flood plain. How serious is this threat? How often has the area been flooded in the past 100 years? Can the facility be built to be flood protected?
Cal Am is currently evaluated design and location of the slant well facilities that will place major infrastructure outside of the erosion zone. Further, a supplemental evaluation will examine the impact of increase replacement frequency for the slant wells.
115
Alan Haffa
5-4,5-5
11/27/2012
Cal Am's cost of financing will be adjusted in the final report.
116
Alan Haffa
3-3
11/27/2012
The intake pumps will be located in subgrade vaults, limiting the surface impacts.
117
Alan Haffa
3-7
11/27/2012
Biofouling of RO membranes is a common challenge for open-intake seawater desal facilities and is not primarily a consequence of multicellular marine organisms, but rather bacteria--which can be present at depth. Generally, bacterial growth rates and patterns can accelerate with increases in temperature--a feature that has been observed at facilities treating the warm water return from power plants.
118
Alan Haffa
3-8
11/27/2012
The agreement is nearing completion and should be available for review soon. The overall risk is low as described above.
119
Alan Haffa
3-10
11/27/2012
120
Alan Haffa
NA
The pipe disrepair in PML is legitimate concern but it seems like it should involve less permitting costs to repair existing pipes rather than seek permission to install new ones. It seems like given the concerns As stated above, PML has included costs for repair of its intake and outfall 11/27/2012 with the pipes and pumps, PML should assume all new equipment in costing the project. In comparing facilities; along with an overall 30% cost contingency we applied in our evaluation. PML and DWD I would like to see a cost comparison that assumes new equipment/capital for PML. On page 4-6 the report argues that an "unknown level of organics may be prsent in the harbor-extracted supply." This seems reasonable; however, it also seems likely for the Cal Am slant well, which after all, is taking water from beneath sand dunes. The only project that can reasonable assume a low level of organics in source water is DWD. The Report rightly assumes that DWD and PML will add second pass reverse osomosis, just like Cal 11/27/2012 Am proposes. We can't afford to spend this much money and then have a poor tasting supply of water. That would be a horrible outcome The report says that Cal Am will have to acquire land for its treatment facility that it does not own and that it could use eminent domain. It wasn't clear to me that the costing included the cost of this land acquisition and likely court related costs if it went to eminent domain. Aside from that, I don't know that we want to be associated with a project that has to use eminent domain if other options are available. 11/27/2012 Based on this, I have even more concerns with the CalAm proposal both because of the Slant Wells (aesthetic impact AND erosion and cost of rebuilding) and the potential litigation over eminent domain. Additionally, it is still the most expensive plan even when you assume comparable bond rates, which is a bad assumption. 11/27/2012 Moss Landing Commercial Parkway (MLCP) provided SPI with full responses to their requests for information regarding the proposed desal plant at MLCP. The information provided by MLCP has been distorted in the evaluation prepared by SPI and does not accurately reflect our responses.
121
Alan Haffa
4-6
Disagree, the level of organics in well supplies is generally lower than in open intakes.
122
Alan Haffa
NA
Agreed.
123
Alan Haffa
3-2
The cost of eminent domain acquisition of Cal Am's site is not expected to significantly increase cost or the overall project schedule. Cal Am is actively engaged in acquiring its proposed site at this time.
124
Don Lew
NA
12/4/2012
We feel we fairly represented information provided by PML in our evaluation and report.
Page 12 of 13
DRAFT REPORT
No. 125 126
Comment By
Don Lew Don Lew
Page No.
NA NA
Date of Comment
12/4/2012 12/4/2012
Comments
We will not continue to participate in a so-called comparison when the information provided to you for comparison has been distorted, misinterpreted and changed without out permission. If you want information as to what we are referring to with regard to the inaccuracies please call me so the supporting documentation can be provided to you. I can be reached at 925-586-2433.
Response/Action
The report is solely the work product of SPI and KHC. Per instructions from the MPRWA, all comments were to be provided in writing.
Page 13 of 13
FROM:
SUBJECT:
Discuss Framework for Water Authority Board Making Decision Regarding Public Utilities Commission Testimony on Desalination Project for Testimony Due January 2013
DISCUSSION:
There is no report or attachments for this item. An oral discussion will take place at the meeting.
08/12
FROM:
SUBJECT: DISCUSSION:
Discuss and Provide Recommendation of Options for Providing Source Water for Ground Water Replenishment Project
There is no report for this item. A discussion of this item and the attached will take place at the meeting.
ATTACHMENTS:
Summary and Discussion of MRWPCA Recycled Water History and Associated Water Rights CPUC Water Rights Brief
08/12
DRAFT
Rev 1/4/2013
Summary and Discussion of MRWPCA Recycled Water History and Associated Water Rights
NOTE: Below is a draft staff summary and limited discussion of some of the key points related to development of recycled water as it pertains to MRWPCA and others. It also includes various water rights issues that have been raised by the parties.
Background In the 1980s, MRWPCA funded (with substantial grant assistance) a research study called MWRSA that proved that it would be safe to use recycled water on food crops (that did not further processing.) Based on this, between 1988 -1992, MRWPCA worked with the Agency now called MCWRA on developing a full scale project for irrigation of 12,000 acres of crops in the Castroville area. The key to making the Castroville Irrigation Project viable was the receipt of low interest loans (40 year term and 0% interest) from the Bureau of Reclamation. The Bureau had a cap of about $30 million for a loan so the proposed project was split into two parts; the Treatment Plant (SVRP) and the Distribution System (CSIP). MRWPCA applied for a $20 million Bureau loan for the SVRP treatment plant. Since MRWPCA was the applicant, and the SVRP was located on about 30 acres of Agency land, MRWPCA was the owner of the plant. MCWRA reimbursed MRWPCA for both loan amortization as well as SVRP operational costs. The Bureau required a design study to support the loan. The Bureau also reviewed the agreement between the MRWPCA and MCWRA. Also in the same timeframe (1988 1992) MRWPCA knew that it would want to develop urban recycled water projects in the future. However, it wasnt clear how large and when these urban projects would be needed. So in 1991 MRWPCA hired CH2M Hill to do a study. They identified that for the first phase of Urban Recycled Water Irrigation; about 1,500 AFY would be needed. And long term, roughly 3,000 AFY would be a reasonable goal. CH2M updated the report in 1996 indicating that the long term recycled water potential could be as high as 4,000 AFY. So MRWPCA put the above urban use figures in the draft 1992 agreement with MCWRA. However, the Bureau said that if we wanted a loan that would cover the full cost of the SVRP Treatment Plant, we would have to leave urban out of the base agreement. However, after further discussion, the Bureau said we could refer to urban reuse as a possible future water project provided that the specifics were mentioned only in an attachment. Thus, as we discuss below, we included such language in exhibit C of the agreement. As part of Board discussion in 1991 and 1992, some MRWPCA Members wanted to limit the quantity of recycled water transferred to MCWRA so that we would also have enough for 1 MPRWA TAC Meeting, 1/7/2013 , Item No. 6., Item Page 2, Packet Page 130
future urban recycle water needed. However, the MCWRA was adamant that it needed up to 19,500 AFY of recycled water to make the project viable. Bureau Loan Report So based on input from the MCWRA, CH2M Hill prepared a design report supporting the Bureau Loan. (Note: a similar report was prepared by Boyle Engineering for MCWRAs distribution project loan) Per attached tables on summary pages 7 and 8 of the loan design report, a total of 30,000 AFY of water would be needed for irrigation of 12,000 acres of crops. 19,450 AFY (65%) would be from recycled water and about 10,500 (35%) would be from groundwater. For the 12,000 acres in the project, 2.5 acre feet of water per acre was needed as calculated by estimated cropping water needs. Thus 12,500 acres x 2.5 AF/Acre= Total demand of 30,000 AF of water each year. It was anticipated that MRWPCA flows would increase from about 20 MGD (22,000 AFY) in 1990 to full build out of 29.6 MGD (33,000 AFY) in 2005. For MRWPCA to supply 19,500 AFY of recycled water, table IV-2 shows that the plant would need to be close to full capacity. Also, the distribution of the quantity of recycled water needed monthly was shown in the same table. That monthly distribution for 19,500 AFY was later included as Exhibit B to the 1992 joint agreement between MRWPCA and MCWRA. Project Environmental Review In December 1990, a joint draft EIR/EIS was prepared for the project. Project assumptions were the same as those noted in the Bureau Loan Report. Following public meetings and comments, a final EIR was completed and certified by MCWRA in late 1992. Current Recycled Water Operations The Recycled Water Treatment Plant (SVRP) has now been in operation since 1998. However, from the beginning, it has been confirmed that overall CSIP irrigation demand for the 12,000 acre project has been much less than the 30,000 AFY of water originally estimated. As shown in the attachment A, total overall annual demand has varied from 16,663 AFY to 23,155 AFY with an average of 19,544 AFY over the last 13 years. This includes on average 12,400 AFY of recycled water and 7,144 AFY of well/river water. The annual variations in demand were expected due to seasonal changes in annual precipitation and cropping patterns. However, the overall average water demand reduction was not. Apparently, the estimates of crop water use supplied by MCWRA in 1992 were very conservative and have turned out to be higher than shown in the original bureau design report. However, it is important to note that on average about 63% of the project water comes from recycled water with 37% from wells/river over the last 13 years. These percentages are very similar to those originally projected 20 years ago and in fact for FY 2010/11 the percentages were exactly 65 and 35 (attachment B).
In the interim and as shown on the attached graph, about 8,000 AFY continues to flow to the ocean. Over the last 15 years, this amounts to a waste of about 30 billion gallons of valuable water resources. Summary Highlights of 1992 Joint Agreement with MCWRA (Attached) Summary Highlights of 2002 Amendment No. 3 (Attached) Contract Performance Per the 1992 and 2002 contracts, MRWPCA has met the key provisions as follows. Obtained a $20 million project loan from the Bureau Constructed the recycled water project within project budget and schedule Successfully operated the project for the last 15 years Provided recycled water (12,400 AFY avg) to meet MCWRAs basic water demand Provided supplemental water as needed to meet irrigation needs during dry winters Provided suitable water quality that allowed for a variety of crops Have avoided significant plant disruptions in water supply Completed the filter loading study
Monterey Peninsula Water Transfer Over the last 15 years, about 58 billion gallons of wastewater has been converted into recycled water and used by Salinas Valley Growers to help reduce seawater intrusion. Groundwater Replenishment (GWR) Project Awareness Over the last six months, comments have been made by some in the Salinas Valley that they were surprised to hear of the proposed GWR project and its timing. As shown on the attached tabulation, MRWPCA has made a number of various notifications to inform the public and the Salinas Valley about the project over the last seven years. Current Wastewater Trends For the first ten years after the 1992 agreement, there was a slow rise in wastewater process at the treatment plant. However, in the ten years after 2002, the trend has been downward. As shown on the attached graph, overall flows have declined by about 14% during that period. However, in the case of the peninsula, flows are down about 28% during this period. While there is probably some flow reduction due to the economy we believe the primary causes of the reductions are due to conservation and water rates. For conservation, modern appliances such as high efficiency clothes and dishwashers have up to 80% reduced water consumption compared to standard models. For rate impact, as shown on the attached graph, we see a dramatic reduction in flow that coincided with Cal Ams new tiered rate structure that was implemented in January 2010 (see attached graph). In projecting future flows, we predict that conservation and water rate increases will hinder flows from returning to the early 2000 levels. Consequently, it is doubtful that the plant will 3 MPRWA TAC Meeting, 1/7/2013 , Item No. 6., Item Page 4, Packet Page 132
process more than 20,000 AFY in the foreseeable future. This is much less than original projections of 30,000 AFY by 2005. Water Rights Analysis Since water rights was a key issue in our discussions with the Growers and MCWRA, MRWPCA had an external water rights analysis prepared for the MRWPCA Board of Directors and the CPUC in July 2012. For their part, the MCWRA prepared the attached water rights chart. Per our August 21, 2012 letter to MCWRA, MRWPCA requested that MCWRA respond back regarding our detailed water rights analysis. The MCWRA/Growers have said that they feel that they have 19,500 AFY of water rights. For MRWPCA, our position is that MRWPCA rights, as outlined in our formal water rights analysis, must be considered in more detail along with those of MCWD. Since the projected production from the plant may be not be able to supply enough recycled water for everyones rights and future needs, we need to find additional water sources. Discussion While the irrigation project was originally projected to use 30,000 AFY of water (19,500 AFY of recycled water along with 10,500 AFY of well/river water), it has only needed a total of 19,544 AFY annually to irrigate the 12,000 acres within the project area. Now the growers apparently want to use the unused winter water to expand the irrigation project area by about 20 to 25%. Expansion of the project area was not discussed in the Bureau design report or in the 1992 or 2002 agreements with the MRWPCA. At the same time, MRWPCA has needs for recycled water that are outlined in the Exhibit C of the 1992 agreement and quantified in detail in the 2002 Third amendment. A secondary change to the original design projections relates to cropping. Originally, the recycled water was thought to be so salty that only artichokes and certain vegetables could be grown (Bureau Loan Report Table III-3). However, over the last 10+ years, strawberry production has been successful and has dramatically expanded. We understand that strawberries tend to be more profitable and use more water than the originally projected crops. In 1992, the MCWRA provided the original estimates to MRWPCA on projected water use. However, they have turned out to be much less than expected. The MRWPCA board in 1992 agreed to provide water for a very worthy irrigation project. However, they did not intend to provide extra water beyond what was needed to make the original project successful. MRWPCA has always wanted to do urban recycled water projects and has noted so in our agreements. Expansion of Grower Project Should the Growers want to expand their service area beyond the original 12,000 acres, they would need to store winter recycled water for use in the summer. However, this is likely a very expensive and technically difficult regulatory project. Our opinion is based on analysis of a 2008 MCWRA proposed project and our recent review of storage options.
Dispute Resolution MRWPCA has suggested a couple of ways to move the discussions forward: 1) use an outside third party or mediation to help develop some type of compromise on the issues 2) seek a quick court review of the issues and a legal determination of water rights. MRWPCA Financial Support for SVRP/CSIP Since project inception in the late 1970s and through the first 15 years of operations, MRWPCA has provided almost $20 million in direct and indirect financial support as shown on the attached table. Conclusion There is enough recycled water for grower expansion and MRWPCA urban needs provided that the parties can find a way to work out the remaining issues. MRWPCA will be preparing a specific proposal that will confirm such opportunities. Such a document could then be used to prepare a 4 th Amendment that meets Grower needs as well as those for MRWPCA and MCWD.
U:\BETTY\General Manager\MCWRA\History of MRWPCA Water Rights Agreements\1-4-13\Summary & Discussion of MRWPCA RW History & Associated Water Rights.doc
MRWPCA Water Reclamation Facility for Crop Irrigation Project P.L. 984 Application Report (1992)
Summary
Summary
Project Development . . . .
Page I-7
III
IV
PROJECT NOTIFICATION: Information provided regarding Groundwater Replenishment Project 1. Tours of Orange County Water District Replenishment System provided to at least six people that are associated with the Salinas Valley 2. Provided GWR Updates at two Grower Annual Meetings over the last 7 years 3. Press Conference announcing startup of expedited GWR (Oct 2011) 4. GWR Project proposed as part of original EIR as alternative water project for Regional Water Project (2008-2009) 5. REPOG meetings supporting Regional Water Project (2007-2009) 6. MRWPCA Board minutes/reports (last 7 years) 7. MRWPCA Strategic Planning Goals since 2005 8. GWR public outreach conversations with stakeholders 9. Monterey Water Forum (Oct 2011) and more public forums since 10. Monterey Peninsula Water Supply Project project proposal to CPUC (early 2012) 11. Discussions with Dave Chardavoyne, Interim MCWRA General Manager, and staff on January 12, March 7 and April 3, 2012 regarding the GWR project. 12. Seaside Water Forum (March 14, 2012) 13. Meeting with Dale Huss and Mike Scattini in early May, 2012
MONTEREY PENINSULA FLOW OCTOBER 08 TO SEPTEMBER 12

10 9 FLOW, M GD 8 7 6 5 4 3
ONDJFMAMJJASONDJFMAMJJASONDJFMAMJJASONDJFMAMJJAS
08 09 10 11 12
MPRWA TAC M eeti ng ,1/7/201 3 , Item N o .6 . , Item Page 14 , Packet Page 142
Cal Ams New Rate Structure
MONTH/YEAR
Series1
MPRWA TAC Me
Annual Avg RTP Flows Over Past 10 Years

MPRWA TAC M eeti ng , 1/7/201 3 , Item N o .6 . , Item Page 1 6, Packet Page 144
23 21 19 17 15
MGD
21.49
RTP: 14 % reduction
18.48*
13 11
12.47
Salinas: 10% reduction

11.25*
10.65
9 7 5
6.25
MP: 28% reduction
4.49*
3 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 * estimate
MRWPCA Original Annual Flow Projections (2001)

30 29 28 27 26
/Averag e riuw t ivi vaul
Actual Average Annual Daily Influent Flow (MGD) Projected Average Annual Daily Influent Flow (MGD) Current Plant Operational Capacity and Use Permit Limit 29.6 MGD Trendline Average Flow Since 1998
25 24 23 22 21 20 19 18 17 16
Current Trend
Year
Year
/Averag e riuw t ivi vaul
MRWPCA Contributions for Development and Support of Using Recycled Water for Agricultural Irrigation
1. RTP Facility It was more expensive for MRWPCA customers to operate facility at current site than other locations closer to Peninsula (pump station energy + land). MWRSA Study MRWPCA customers paid $1 million of total study costs of $8 million. SVRP Land Current value of land. It is higher than other land since it was originally permitted as available for landfill operations. Solar MRWPCA spent internal $ (including legal) for SVRP Solar Project. SVRP also located on 6 acres of MRWPCA property. Almost 20 billion gallons About 30% of total CSIP recycled water comes from the Peninsula. Insurance Agreement required as to contribute up to $75K annually of project insurance cost SVRP Operational Savings 1) By providing incremental (by the hour) labor, costs are reduced as compared to SVRP/CSIP hiring full-time electrical, mechanical staff; and 2) numerous field and lab testing/studies have identified ways to reduce chemical dosages and SVRP operational costs. No water safety problems Due to prior preparations and high priority, staff has taken a proactive and conservative approach to SVRP and CSIP operations. An example was our successful response to the spinach crisis a few years ago. CP 375 Most of internal MRWPCA Administrative staff time charged for recycled water (conferences, etc.) efforts is not billed to growers. FLEWR The Filer Loading Study by MRWPCA saved SVRP capital expenditures. In addition, MRWPCA funded about $200K of the $1.3 million study. Shared Operational Facilities By expanding our existing operations building, the growers save the extra cost for a stand-along Ops facility. Also by sharing operations on an incremental basis with our existing operational activities, SVRP did not have to hire separate operators for a stand alone facility. Separate facilities would have required four or more full-time operators. MRWPCA RTP Investment Tertiary plant/SVRP only possible by having MRWPCA spend $75 million for existing secondary plant that went on line in 1990. MRWPCA also spent another $125 million for regional interceptors, pump stations, and outfall. Replacement Value the replacement value of the entire MRWPCA system would be about $500 million in current dollars. Value of Bureau Loan By having MRWPCA obtain a Bureau Loan (40 years, 0% interest), Growers realized substantial savings as compared to conventional financing.
2. 3.
4.
5. 6. 7.
8.
9.
10.
11.
12.
13.
14.
Packet Pa abou WPCAd .. 1/7/2013 Item contri , Item Page SUMMARY: E MPRWA TAC Meetin g,ect andin .., irect No. 6. .. utionsto the project totag. e 148 t $20 Million
Rev 1/2/13
Highlights and Key Provisions of Amendment No. 3 to 1992 Joint Agreement

(1) Page 2: E (2) Page 2: H (3) Page 8: 3.03 (d) (4) Page 9: 4.02 (5) Page 13: 11.05 (b) (6) Page 15: 17.01 (7) Page 16: 17.02 Noted that exhibit C of 1992 agreement contemplated future urban recycled water projects Amendment No. 3 to provide both urban and agricultural benefits Adds Section (d) to confirm that MRWPCA urban allocation would not be committed to Ag project. Thus the amount would also be subtracted from the 19,500. MRWPCA flows to be deducted from that available for Ag project
MCWRA has option to purchase SVRP and associated land should MRWPCA cancel contract Outlines MRWPCAs need and project commitment for urban recycled water as originally proposed in 1992. This table shows the quantity and timing of MRWPCAs entitlement for recycled water. NOTE: On Jan 1, 2013, MRWPCA can obtain 3,900 AFY of recycled water plus water not used by MCWRA Limits summertime water that can be taken by MRWPCA. Exhibit D is a sample table of summer water demand MRWPCA may store recycled water, including any surplus. MCWRA shall cooperate with such storage plan For obtaining such new water entitlements, MRWPCA will conduct a filter loading study to increase filter capacity of the SVRP to at least 25 MGD Note: MRWPCA completed this study in 2009 and was able to provide 29.6 MGD (not 25 MGD) of filter capacity. MRWPCA may develop in-plant storage basin to store winter flow
(8) Page 17: 17.03 (9) Page 18: 17.05 (10) Page 20: 17.09
(11) Page 20: 17.09 (c)
Rev 1/2/2013
Highlights and Key Provisions of 1992 Agreement

The base agreement between the MCWRA and MRWPCA was adopted in July 1992. Some key highlights are noted below: (a) Pages 1 & 2: A&G (b) Page 3: 1.05 (c) Page 5: 3.01 (d) Page 6: 4.01 (e) Page 7: 4.02 (f) Page 7: 4.03 (a) (g) Page 8: 4.08 Purpose of the contract is to develop this project to slow seawater intrusion in Salinas Valley Project was built to accommodate future intertie uses (such as urban recycled water) MRWPCA will own project, at conclusion of contract, MRWPCA will also be the property owner. Recycled water shall be delivered to MCWRA in accordance with basic and supplemental demand Basic demand would be up to 19,500 AFY of recycled water. Sample monthly demand schedule is attached as exhibit B Water demand in extended term (about 2037) is reduced from 19,500 AFY to just that from the Salinas Valley Delivery of supplemental demand is subject to allocations made for future intertie projects (such as urban recycled water) Monthly basic demand for recycled water The project goal was to produce at least 19,500 AFY of recycled water Attached Table 2.1 of 1990 Project EIR shows quantity of recycled water usable for irrigation Notes sometime in future up to 3.5 MGD (about 3,900 AFY) of recycled water might be used by MRWPCA for urban projects
(h) Exhibit B: (i) Exhibit C: Page 1 (J) Exhibit C: Page 2 (k) Exhibit C: Page 2
MPRWA TAC M eeti ng , 1/7/2 01 3 , Item N o .6 . , Item Page 54 , Packet Page 1 82
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA In the Matter of the Application of CaliforniaAmerican Water Company (U 210 W) for Approval of the Monterey Peninsula Water Supply Project and Authorization to Recover All Present and Future Costs in Rates
Application No. A.12-04-019 (Filed April 23, 2012)
OPENING BRIEF OF THE MONTEREY REGIONAL WATER POLLUTION CONTROL AGENCY REGARDING WATER RIGHTS FOR A GROUNDWATER REPLENISHMENT PROJECT
Martha H. Lennihan LENNIHAN LAW A Professional Corporation 1661 Garden Highway, Suite 102 Sacramento, CA 95833
Date: July 11, 2012
TABLE OF CONTENTS Page I. II. INTRODUCTION BACKGROUND 1 . 2 . 4 4 5 .. 6 6 . 7 8 . 9 . 9 10 10 .. 11 12 12 . 12 14 14
III. RIGHTS TO TREATED WASTEWATER A. MCWD 1989 Annexation Agreement B. MCWD MCWRA 1996 Annexation Agreement C. 1922 MCWRA-MRWPCA Agreement (as Amended) 1. MCWRA Rights 2. MRWPCA Rights under Amendment No. 3 D. 2009 RUWAP MOU IV. AMOUNT OF WATER AVAILABLE TO MRWPCA A. Assumptions B. Initial Term 1. 3,900 AFY 2. Unused Water C. Extended Term V. TIMELY DEVELOPMENT OF A GWR PROJECT A. Two Potential Sources of Influent for the GWR Project B. Measures for Development of a Feasible GWR Project VI. CONCLUSION
-i-
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA In the Matter of the Application of CaliforniaAmerican Water Company (U 210 W) for Approval of the Monterey Peninsula Water Supply Project and Authorization to Recover All Present and Future Costs in Rates
Application No. A.12-04-019 (Filed April 23, 2012)
OPENING BRIEF OF THE MONTEREY REGIONAL WATER POLLUTION CONTROL AGENCY REGARDING WATER RIGHTS FOR A GROUNDWATER REPLENISHMENT PROJECT I. INTRODUCTION The Monterey Regional Water Pollution Control Agency (MRWPCA) files this brief in response to Administrative Law Judge Weatherfords request dated June 1, 2012 for briefing of the water rights issues in CPUC Proceeding A.12-04-019. This brief addresses water rights with respect to the Groundwater Replenishment Project only. 1 The concept of a Groundwater Replenishment (GWR) Project 2 is to treat wastewater to an advanced level at an Advance Treatment Facility (ATF), which would enable that water to be injected
1 MRWPCAs understanding is that the CPUC approvals requested herein by Cal Am for the desalination project, and for the Groundwater Replenishment Project, are different. Nonetheless, we want to respond in good faith regarding the water rights question for the GWR Project, and do so in this opening brief. 2 We refer to a GWR project throughout this brief for simplicity. The GWR project is proposed to be developed by the MRWPCA in collaboration with others. Consistent with the California Environmental Quality Act (CEQA), no determination has been made regarding which version of a GWR project may be pursued, alternatives (including the no project alternative), mitigation, and other factors which are evaluated during the CEQA process.
into a natural groundwater basin, such as the Seaside Groundwater Basin. The injected water would mix with the native water, and can be subsequently withdrawn for potable or other use. MRWPCA has invested in extensive research on water quality and treatment necessary to enable such injection. A GWR project was evaluated at the programmatic level in the Coastal Water Project Environmental Impact Report. A decision was made to relegate GWR to a subsequent phase, putting it on a back burner. With the recent demise of the Regional Desalination Project, a new opportunity has arisen to include a GWR project as a component of the Monterey Peninsulas urgently needed water supply solution. Additional information regarding the potential for a GWR project, including schematics of facility locations and a work plan, are included as Attachments A through E of the Direct Testimony of MRWPCA General Manager Keith Israel filed April 23, 2012 in conjunction with Cal Ams application in this proceeding. MRWPCA offers its assistance to develop a GWR project in light of that projects potential to be a valuable contribution to the replacement water supply for the communities in Cal Ams Monterey District, the majority of which are member agencies of the MRWPCA, and an important element of our regional economy. For reasons explained below, the support of other community members is needed to make this a reality. The question has been raised whether the MRWPCA has sufficient rights to the use of treated wastewater3 . In this brief, MRWPCA sets forth its understanding of the availability of such water to it.
II. BACKGROUND MRWPCA owns and operates two wastewater treatment plants that are employed to treat wastewater influent provided by a number of Monterey Peninsula and Salinas Valley entities that are
For simplicity, influent and treated wastewater is sometimes referred to herein as water.
member agencies of the MRWPCA. The original plant is the Regional Treatment Plant (RTP), where community wastewater is treated for discharge to the ocean. MRWPCA also owns and operates the ocean outfall. In the mid-1990s, MRWPCA constructed and now operates the tertiary treatment plant known as the Salinas Valley Reclamation Project (SVRP), where it treats water for agricultural irrigation via a project known as the Castroville Seawater Intrusion Project (CSIP). MRWPCA operates the CSIP by agreement with the Monterey County Water Resources Agency (MCWRA). The SVRP and the CSIP are projects being operated in partnership with the MCWRA and growers in the Salinas Valley. There is no urban application of recycled water at this time. MRWPCA and Marina Coast Water District (MCWD) have separately, and jointly, worked on plans for such use. MCWD is not presently using, but has certain rights to the use of, water as described below. MRWPCA has agreed to commit a significant increment of its right to water for MCWDs proposed urban irrigation project to serve Marina and the former Fort Ord, known as the Regional Urban Water Augmentation Project (RUWAP). For the GWR project, MRWPCA would employ an advance treatment process at a new ATF. The ATF would produce water of a quality eligible to be injected into the Seaside Groundwater Basin. There is little seasonal variation in influent flow to the RTP, which remains substantially the same year round. The bulk of demand for both agricultural and urban irrigation occurs during the summer months and, depending on the year type, spring and fall months. Treatment and injection for GWR can be done during the winter months, and during the shoulder months, where needed to avoid interference with other rights of use. Extraction from the Seaside Groundwater Basin can occur later, at any time of the year. The groundwater storage thus serves a valuable function. MRWPCAs goal is to pursue a GWR project that can be undertaken while fully respecting the rights of the other two agencies to the use of wastewater. There certainly is ample water physically
available. Over the last thirteen years, the amount of unused water treated at the RTP and discharged out of the ocean outfall has averaged over 10,600 Acre-Feet per Year (AFY). The question whether the quantity of MRWPCA water rights is sufficient, taking into account and respecting the amounts to which MCWD and MCWRA are respectively entitled to use, is discussed in Part IV below. Water rights background necessary to understand the underpinnings for that information is provided in Part III below.4 III. RIGHTS TO TREATED WASTEWATER The determination of water availability is predicated on the existing rules and primary agreements that address the allocation of water. This summary is necessarily non-exhaustive, but will serve to set the stage for the subsequent discussion and conclusions. The starting point is that the owner of a wastewater treatment plant such as the MRWPCA has the exclusive right to the treated wastewater it produces as against anyone who has supplied the water discharged into the wastewater collection and treatment system, including a person using water under a water service contract. (Water Code 1210.) This rule can be varied by contractual arrangement. ( id. ) The MRWPCA has entered into a number of such contracts. The primary rights of the three entities with contractual rights to treated wastewater produced by MRWPCA are addressed below. These are not presented in any order of priority. A. MCWD 1989 Annexation Agreement In 1989, Marina Coast Water District was annexed into the MRWPCA. That annexation agreement (a copy of which is attached as Exhibit 1) provides MCWD with the right to:
The information set forth in this brief is necessarily non-exhaustive. Each agreement contains considerable detail, and each possible evaluation of water availability relies on factual assumptions. Our endeavor has been to put forth a reasonable representation of the agreements and the facts as we understand them.
4
... obtain from the MRWPCA, at the regional treatment plant, treated wastewater for reuse by the MCWD in quantities equal to the volume of MCWD wastewater treated by MRWPCA and such additional quantities as from time to time are not committed to any other users for beneficial use. MCWDs cost for such treated wastewater will be the MRWPCAs incremental cost over secondary treatment, to meet applicable local, state and federal requirements for water reuse, not to exceed the lowest amount charged to any other user by the MRWPCA for treated water. Water reclaimed by the MCWD will not be used in violation of any condition placed on the MRWPCA in connection with its Use Permit No. 3188, dated August 12, 1987, issued by the County of Monterey for the RTP. (1989 Annexation Agreement, 12.)
B. MCWD - MCWRA 1996 Annexation Agreement In 1996, MCWD was annexed into the MCWRAs Zones 2 and 2A pursuant to the 1996 Annexation Agreement (a copy of which is attached as Exhibit 2). The most relevant of the many topics addressed in that agreement is MCWDs right to receive tertiary treated water from the SVRP, in satisfaction of MCWDs 1989 Annexation Agreement rights. Section 5.6 provides in relevant part: In satisfaction of paragraph 12 of the MRWPCA Annexation Agreement, MCWD will pay to MCWRA the incremental cost over secondary treatment to receive tertiary treated water from MRWPCAs planned tertiary treatment facilities at its regional treatment plant. . . . Section 5.7 also establishes a 300 AFY cap for MCWD from April through September, allowing amounts deferred to be taken during the winter months of October through March: . . . during the months of April through September, MCWD agrees to defer taking any water over 300 afy it is entitled to take from the tertiary treatment plant under the MRWPCA Annexation Agreement. . . . (Section 5.7.2) At the time of both of the 1989 and 1996 Annexation Agreements, MCWDs service area and boundaries were the same as they are today (see, e.g., Exhibits A and B to the 1996 Annexation Agreement). MCWD now proposes to expand its service area to include the former Fort Ord. MCWD
5
has asserted that its water rights under the Annexation Agreements expand with its service area expansion. There may be a dispute regarding whether MCWDs right to water is based upon the area as annexed, or can expand to include influent from former Ft. Ord. 5 C. 1992 MCWRA-MRWPCA Agreement (as amended). The June 16, 1992 Agreement between Monterey County Water Resources Agency and Monterey Regional Water Pollution Control Agency for the Construction and Operation of a Tertiary Treatment System (1992 Agreement) provided for the construction and operation of the SVRP by the MRWPCA to provide water treated to a level adequate for agricultural irrigation, for use by the CSIP. (A copy of that agreement is attached as Exhibit 3.) Financing for the SVRP was obtained using resources of both the MCWRA and the MRWPCA. MRWPCA provides the wastewater influent that is treated at the SVRP, and then delivered to the CSIP. The CSIP is a distribution system providing water for agricultural irrigation. The 1992 Agreement has been amended three times. The amendment that generated the MRWPCA rights to water is Amendment No. 3, also known as the Third Amendment (a copy of which is attached as Exhibit 4). 1. MCWRA Rights
Section 3.03 of the 1992 Agreement, as amended pursuant to Amendment No. 3, provides that MRWPCA commits all of its incoming wastewater flows to the project from sources within the 2001 MRWPCA service area to the CSIP, up to 29.6 million gallons per day (mgd), except for: (a) flows taken by MCWD per the Annexation Agreements; (b) losses; (c) flows not needed to meet MCWRAs authorized demand; and
MRWPCA believes that the more reasonable interpretation may be that the amount of influent to which MCWD is entitled is based upon the service area boundaries as they existed at the time of both Annexation Agreements (sometimes referred to as the Annexation Agreement amount.) Without waiving any rights, in this filing we analyze it both ways, which demonstrates that it does not impact the sufficiency of water supply needed for a GWR project.
5
(d) flows to which MRWPCA is entitled per Articles IV and XVII of Amendment No. 3. There have not been any MRWPCA service area expansions beyond the 2001 boundaries. MCWRAs basic demand in the Initial Term of the 1992 Agreement, as amended, is capped at 19,500 acre feet (AF). (Article IV, Section 4.02, Amendment No. 3.) Also in the Initial Term, MCWRAs supplemental demand applies to excess water, which supplemental demand is subject to MCWD and MRWPCA rights and to allocations made to other future intertie projects by MRWPCA or others pursuant to Section 1.05. (Sections 4.07 and 4.08, Amendment No. 3.) MCWRAs demand in any Extended Term is capped at the amounts of water delivered to MRWPCA that originated in the Salinas Valley (Section 4.03, Amendment No. 3) 6, and the right to use unused water on an as available basis (Section 17.04, Amendment No. 3.) The Initial Term commenced on the effective date of the agreement in 1992. MRWPCAs rights were established pursuant to the Third Amendment to that agreement, in 2002. The Extended Term starts the later of 2035 or the year following both USBR loans being paid off (Section 11.02, Amendment No. 2), which is scheduled to occur by the end of 2037. Hence, the relevant starting date of the Extended Term should be January 1, 2038. 2. MRWPCA Rights under Amendment No. 3
MRWPCA has rights to two categories of water: (1) 3,900 AFY starting in 2009 and throughout the Initial Term, and the full amount of non-Salinas Valley influent during the Extended Term 7 , which in 2010 was over 6,000 AFY; and (2) unused water during both terms, further described as follows:
8
MCWD provides water to its existing service area with water originating in the Salinas Valley. MCWD intends to use the same water source for its proposed service area expansion to include the former Ford Ord. During the Extended Term, the amount of water MCWD takes will not affect the water available to MRWPCA. 7 In addition, MRWPCA can use certain amounts of unused MCWD Annexation Agreement water.
6 8
As mentioned above, this description is not exhaustive.
(a) During the Initial Term: As of 2009, MRWPCAs allocation is 3,900 AFY (Section 17.02, Amendment No. 3), subject to a seasonal cap. During the period of May through August, the maximum is 766 AFY + 11% (not to exceed +/-850 AFY). (b) During the Extended Term, MRWPCA is entitled to the amount of wastewater which originates in areas not included in the Salinas Valley as set forth in Section 4.03, and which was delivered to MRWPCA during the year preceding the year for which water deliveries are requested (Section 17.04, Amendment No. 3). There is no seasonal cap (Section17.03, Amendment No. 3). (c) MRWPCA may use unused water in either term. (Sections 17.02 and 17.04(c), Amendment No. 3). D. 2009 RUWAP MOU MCWDs RUWAP is intended to provide recycled and desalinated water service to areas on former Ft. Ord, and an additional 300 AFY of desalinated water to MCWDs other service areas. It also anticipates the possibility of MRWPCA separately providing 300 AFY of water to the Monterey Peninsula. In June 2009, MRWPCA and MCWD entered into a Memorandum of Understanding (MOU) with respect to the RUWAP (a copy of which is attached as Exhibit 5). Section 1.2 of the RUWAP MOU provides that: Under the selected Hybrid Water Alternative, MCWD would provide 2,400 AFY for redevelopment of the former Fort Ord, 300 AFY of recycled water could be provided for the Monterey Peninsula, and an additional 300 AFY of desalinated water could be provided to supply MCWDs other service areas. As a result of Addendum 2 to the RUWAP EIR, up to 1,727 AFY of recycled water would be used for the project. The RUWAP EIR, in Section 3.2, anticipates that subsequent project-level environmental review will be necessary prior to implementing the component to provide 300 AFY to the Monterey Peninsula. MRWPCA has previously committed 650 AFY of its summer water to the RUWAP during May ////
through August; MCWD committed its 300 AFY of summer water during April through September. 9 Both parties committed additional quantities as needed during the months of September through April from MRWPCA, and October through March from MCWD allocations. MCWD has not yet proceeded with the RUWAP. Public documents indicate that MCWDs currently proposed project is between 780 AFY (MCWD 2010 Urban Water Management Plan, Table 4.4) or 1,000 AFY (Coastal Water Project FEIR, Table 5.2). While there is programmatic CEQA/NEPA review of a 1,727 AFY project, including a Monterey Peninsula component, the project-level approved project is 1,427 AFY. Because of its environmental review status, because it could be bid, constructed and in operation in the near term, and because MRWPCA presently intends to use the 300 AFY it reserved for the Monterey Peninsula portion of RUWAP for the GWR, in this brief MRWPCA primarily refers to RUWAP as a 1,427 AF project (exclusive of the Monterey Peninsula component). IV. AMOUNT OF WATER AVAILABLE TO MRWPCA A. Assumptions
Every quantitative evaluation of water availability requires assumptions. A non-exhaustive list of our main assumptions follows. Additional assumptions and data sources are identified in the Declaration of Robert B. Holden (attached hereto or filed herewith) and in the endnotes on Exhibits 6 through 13 to that Declaration. 1. Except where otherwise stated, influent to the RTP in acre feet per year is based on actual 1990 2011 amounts for the Initial Term, and actual 2010 amounts for the Extended Term 10, which is the relevant available data.
These summer seasons for MCWD and for MRWPCA, when the amounts of water available to those agencies is capped, differ in accordance with provisions of the 1996 Annexation Agreement for MCWD and the Third Amendment to the 1992 Agreement for MRWPCA. The shoulder months are April and September, when MCWD is subject to a summer cap and MRWPCA is not. 10 The Extended Term requires data to allocate the influent sources as between the Salinas Valley, Monterey Peninsula, and MCWD, as described in Part V, below. Available 2010 flow data was used for this analysis.
9
2.
To be conservative, the full volume of MCWD water under the 1989 and 1996 Annexation Agreements was first deducted (we also discuss proposed MCWD actual use, which is considerably less). We adhere to the seasonal restrictions on both MCWD and MRWPCA contained in the 1992 and 1996 agreements. RUWAP winter water allocations are not quantified under the RUWAP MOU. Because MCWD cannot take any water during the shoulder months of April and September, we have assumed for purposes of this analysis that MRWPCA provides all of the shoulder month water, and MCWD provides the remaining winter water. Evaluation of the respective allocations is based on available data, contractually established amounts, and actual use where a record exists. In one instance where differing contract interpretations are known, we analyze it both ways.
3.
4.
Sections B and C below summarize our conclusions. Additional detail is provided in Exhibits 6 through 13 and the Declaration of Robert B. Holden attached hereto. B. Initial Term
During the Initial Term, MRWPCA has two sources of water: the remainder of its 1992 Agreement 3,900 AFY right, after its RUWAP commitment is deducted, and the right to use unused water. 1. 3,900 AFY. After subtracting the amounts MRWPCA has committed to the RUWAP
(see discussion above), MRWPCA has 116 - 200 AFY of water it can use during April - August (or other months) without interruption. MRWPCA can also take the remainder of its 3,900 AFY entitlement (2,987 AFY) without interruption because there is sufficient influent to meet MCWDs full Annexation Agreement amount 11 , and satisfy the 3,900 AFY remainder. If MCWDs Annexation Agreement amount is interpreted to include influent from a service area expanded to encompass the former Fort Ord, as asserted by MCWD, the outcome remains the same for
This is conservative in that it is substantially more than MCWD proposes to use during the Initial Term. For example, according to Table 4.4 of MCWD's 2010 Urban Water Management Plan, the proposed RUWAP is 780 AFY, of which a portion will come from MRWPCAs rights.
11
10
MRWPCA as regards the remaining amount of the 3900 AFY (See, Exhibits 6 and 10 compared to Exhibits 7 and 11.) The conclusion that there is adequate influent to meet both MCWDs Annexation Agreement amount and MRWPCAs 1992 Agreement right is conservative in that there are significant amounts of influent remaining after deduction of the sum of the MCWD plus MRWPCA amounts. 2. Unused Water. MRWPCA can also use unused, or surplus, water. Surplus water is
typically not very reliable. However, again conservatively assuming that the MCWD full Annexation Agreement amount (far more than projected actual use) is deducted at the onset, and that amounts available for CSIP use are also deducted during the months of CSIP demand, there remains surplus during the winter months. This includes surplus during November, December, January and February, months when CSIP has very limited demand even in dry years (and we have assumed that such demand is met). The amount of surplus during these months varies from 4,695 to 5,369 AF at a CSIP current actual demand of 12,219 AFY, and from 3,775 to 4,449 AF at a CSIP 1992 Agreement demand of 19,500 AFY (See Exhibits 10 and 11.) To be conservative, the foregoing evaluation of surplus excludes the surplus usually available in the months of March and October. If MCWD surplus is added to the foregoing November-February surplus amounts, the surplus increases by 688 AF over the four-month period (assuming MCWD Annexation Agreement boundaries; see Exhibit 6); and by 1,360 AF (assuming MCWD expanded boundaries; see Exhibit 7). These amounts exclude MCWDs 514 AFY commitment to the RUWAP at the 1,427 AFY project size. The lowest amount of winter surplus identified above, 3,775 AF, requires only about 525 AFY of MRWPCAs 3,900 AF right for the GWR project influent demand of approximately 4,330 AF for a
11
product water amount of 3500 AF 12 . C. Extended Term
During the Extended Term, MRWPCAs 1992 Agreement right changes such that the amount remaining for it after its RUWAP commitment is deducted is over 5,200 AFY, based on Monterey Peninsula 2010 flows. As with the Initial Term, there is more than sufficient inflow to meet both MRWPCA and MCWD agreement amounts. MRWPCAs over 5,200 AFY of 1992 Agreement right is greater than the approximately 4,330 AFY projected to be needed to produce 3,500 AF of ATF product water. In addition, there likely will be surplus water during the November-February period, which MRWPCA may use and firm up pursuant to the Third Amendment. (Sections 17.04 (c) and (d), respectively). V. TIMELY DEVELOPMENT OF A GWR PROJECT A. Two Potential Sources of Influent for the GWR Project
MRWPCA has two project source water concepts in the development stage. The first is a GWR project using existing influent to the RTP. As outlined above, there is more than sufficient water from this source for the GWR project, in part due to the capability of the GWR project to use winter water. MRWPCA believes that it can increase the certainty associated with the surplus water during the Initial Term, while also avoiding any impact on the water allocated to MCWRA for agricultural irrigation and that allocated to MCWD for municipal uses. To that end, it has initiated preliminary discussions with MCWRA. It appears to the MRWPCA that it is in the best interest of the entire North Monterey County community, both urban and agricultural, to maximize the benefits of the considerable water supply
The Direct Testimony of Keith Israel filed April 23, 2012 in this proceeding conservatively estimated this amount at 4,400 AFY. MRWPCA engineers have since refined this estimate to the range of 4,320-4,330 AFY.
12
12
available to address as much of the Monterey Peninsulas water shortfall as is reasonably feasible with a GWR project, and to reduce the ocean discharge of treated wastewater. MRWPCAs second project concept involves accepting a new source of influent to the RTP. Given the availability of existing MRWPCA rights and surplus winter influent flows for GWR, this element should not be necessary. We describe it briefly, however, in light of the possible benefits of its inclusion. This additional source of influent could be from the City of Salinas Industrial Wastewater Treatment Facility (IWTF). Presently, the water collected by the City is primarily from agricultural commodity processing facilities. The IWTF receives the wastewater into a large aeration pond for treatment and then into adjacent holding ponds for additional biological treatment and natural disposal methods. The volume of treated industrial wastewater ranges from 0.5 MGD to over 4 MGD. IWTF could benefit from diverted flows to facilitate pond and facility maintenance and expanded facility capacities in the future. MRWPCA has existing conveyance structures in close proximity to the IWTF supply pipeline. A shunt could be installed to interconnect the IWTF flows to RTP for treatment. There is sufficient capacity at the RTP beyond that needed for the CSIP and the RUWAP (or all of MCWDs Annexation Agreement water), because the capacity of the RTP is over 33,000 AFY. MRWPCA has had very preliminary discussions with the City of Salinas regarding the proposal of assisting with Industrial Wastewater Treatment flow diversion. This concept has potential benefits for the City by delaying major facility upgrades, improved plant performance by incorporating a more aggressive pond maintenance program and possible expanded plant capacity to attract more processing facilities. The diverted flows could have potential benefits for the MCWRA and the growers, particularly when the water is available during the summer months. ////
13
B.
Measures for Development of a Feasible GWR Project
Understanding that considerable work is required to realize a feasible GWR project, Cal Am, MPWMD and MRWPCA entered into the GWR MOU, a copy of which is attached to the Cal Am Application for Approval of the Monterey Peninsula Water Supply Project filed April 23, 2012. Financing, enhancement of water right reliability and environmental compliance are amongst the tasks to be accomplished. In order to allow the potential for this project to be realized, the plan provides that a decision regarding the viability of a GWR project will be made in a manner allowing time for project development, while respecting the timeline within which a decision as to the sizing of a desalination plant must be made. Cal Am anticipates that it will initiate construction of a desalination plant in the fourth quarter of 2014. (See, Direct Testimony of Richard C. Svindland, page 38, lines 21-27, filed in connection with Cal Am Application for Approval of the Monterey Peninsula Water Supply Project filed April 23, 2012.) Therefore, a decision regarding the feasibility of a GWR project, including the size of the project (i.e., the amount of product water the GWR project would contribute), needs to be made in advance of commencement of construction. MRWPCA, and the agencies with which it is coordinating, propose to be prepared by that time, or earlier if feasible, to provide the needed information and otherwise participate in making that decision. MRWPCA respectfully requests that the CPUC allow for that opportunity in its actions with respect to the instant proceeding. VI. CONCLUSION There is adequate water available for a GWR project. MRWPCAs rights during the Initial Term, and measures to improve their reliability, are discussed above. During the Extended Term, the MRWPCA rights provide a more than adequate quantity of water.
14
MRWPCA is coordinating with Cal Am and MPWMD, and will seek to coordinate with the MCWRA, in furtherance of this project. The cooperation of these entities will be necessary to realize the potential benefits of this project for the communities that are subject to the State Water Resources Control Board cease and desist order. We believe that the GWR Project can be, and needs to be, accomplished in a manner that avoids any conflict with the allocations of water to the MCWD and MCWRA. GWR is a meritorious project that can contribute materially to solving the Monterey Peninsula communities water supply shortfall. Since the inception of the Monterey Peninsula Water Supply Project, the parties have known that GWR project development and evaluation actions, including environmental review, need to be accomplished. This is now in process. MRWPCA respectfully requests that the CPUC proceed in a manner that will accommodate the time necessary for this to be done, in accordance with the approach described above.
Dated: July 11, 2012
Respectfully submitted,
/s/ Martha H. Lennihan Martha H. Lennihan LENNIHAN LAW A Professional Corporation Attorneys for Monterey Regional Water Pollution Control Agency
15
ATTACHMENTS Exhibit No. 1. 2. 3. 4. 5. MCWD 1989 Annexation Agreement MCWD MCWRA 1996 Annexation Agreement 1992 MCWRA MRWPCA Agreement Amendment No. 3 to the 1992 MCWRA MRWPCA Agreement 2009 Regional Urban Water Augmentation Project MOU

Declaration of Robert B. Holden: 6. 7. 8. 9. 10. 11. 12. 13. Initial Term with MCWD Annexation Agreement Service Area Initial Term with MCWD Expanded Service Area Extended Term with MCWD Annexation Agreement Service Area Extended Term with MCWD Expanded Service Area Surplus Water, Initial Term with MCWD Annexation Agreement Service Area Surplus Water, Initial Term with MCWD Expanded Service Area Surplus Water, Extended Term with MCWD Annexation Agreement Service Area Surplus Water, Extended Term with MCWD Expanded Service Area
16
All correspondence, pleadings, orders and notices in this proceeding should be directed to the following: Martha H. Lennihan LENNIHAN LAW A Professional Corporation 1661 Garden Highway, Ste 102 Sacramento, California 95833 Telephone: (916) 646-4460 Email: mlennihan@lennihan.net Robert R. Wellington George C. Thacher WELLINGTON LAW OFFICES 857 Cass Street, Suite D Monterey, California 93940 Telephone: (831) 373-8733 Email: attys@wellingtonlaw.com Keith Israel General Manager Monterey Regional Water Pollution Control Agency 5 Harris Court, Bldg. D Monterey, California 93940 Telephone: (831) 372-3367 Email: keith@mrwpca.com
17
EXHIBIT 1
EXHIBIT 2

TAC MPRWA Agenda Packet 01-07-13

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

TAC MPRWA Agenda Packet 01-07-13

Uploaded by

Copyright:

Available Formats

Agenda Monterey Peninsula Regional Water Authority (MPRWA) Technical Advisory Committee (TAC) Regular Meeting 2:00 PM,

Monday, January 7, 2013

Created date 01/04/2013 2:34 PM

Monday, January 7, 2013

Monterey Peninsula Regional Water Authority Agenda Report

Date: January 07, 2013 Item No: 1.

Clerk of the Authority

November 19, 2012 Minutes

Monterey Peninsula Regional Water Authority Agenda Report

Date: January 07, 2013 Item No: 2.

Clerk of the Authority

December 3, 2012 Minutes

Monterey Peninsula Regional Water Authority Agenda Report

Date: January 07, 2013 Item No: 3.

Clerk of the Authority

MPWSP CPUC Memo SWCRB MPWSP Draft Staff Report

12. Monterey Peninsula Water Supply Project Description

Cal-Am, Coastal Water Project, FEIR, October 30, 2009.

FEIR, Section 3.3 North Marina Project, October, 2009.

FEIR, Section 4.2 Groundwater Resources, Figure 4.2-3, October, 2009.

MPRWA TAC M eeti ng , 1/7/2 01 3 , Item N o .3 . , Item Page 12 , Packet Page 1 6

5. North Marina Alternative Project

6. Monterey Regional Water Supply Project

FEIR, Appendix E, page 21 (E-28). FEIR, Appendix E, page 22 (E-29).

MPRWA TAC M eeti ng , 1/7/2 01 3 , Item N o .3 . , Item Page 17 , Packet Page 21

7. Proposed Monterey Peninsula Water Supply Project

Driscoll, 1986, Groundwater and Wells, 63-64.

8. Legal Discussion of Proposed Extraction Wells in Salinas Basin

Canada , waters which were secured by the construction of tunnels could be

FEIR, Appendix E, Page 21 (E-28).

Monterey Peninsula Regional Water Authority Agenda Report

Date: January 07, 2013 Item No: 4.

Clerk of the Authority

Review Final Consultants Report: Evaluation of Seawater Desalination Projects

Final Report: Evaluation of Seawater Desalination Projects

Evaluation of Seawater Desalination Projects

Final Report December 2012

Monterey Peninsula Regional Water Authority

Separation Processes, Inc. and Kris Helm Consulting

MONTEREY PENINSULA REGIONAL WATER AUTHORITY

MONTEREY PENINSULA REGIONAL WATER AUTHORITY

MONTEREY PENINSULA REGIONAL WATER AUTHORITY

F IGURE F IGURE F IGURE F IGURE F IGURE F IGURE F IGURE F IGURE

ABBREVIATIONS AND ACRONYMS

MONTEREY PENINSULA REGIONAL WATER AUTHORITY

MONTEREY PENINSULA REGIONAL WATER AUTHORITY

Monterey Peninsula Water Supply Project (MPWSP)

MONTEREY PENINSULA REGIONAL WATER AUTHORITY

DeepWater Desal (DWD)

The Peoples Moss Landing Water Desal Project (PML)

MONTEREY PENINSULA REGIONAL WATER AUTHORITY

MONTEREY PENINSULA REGIONAL WATER AUTHORITY

MONTEREY PENINSULA REGIONAL WATER AUTHORITY

MONTEREY PENINSULA REGIONAL WATER AUTHORITY

Table ES-2 - Summary of Evaluated Capital and Operating Cost Estimates

CAPITAL COSTS (in Millions 2012 Dollars)

ANNUAL O&M COSTS (in Millions 2012 Dollars)

ANNUAL COST OF WATER (in Millions 2012 Dollars)

Production Cost of Water ($/AF)

Cal-Am; see additional discussion in Section 5.

MONTEREY PENINSULA REGIONAL WATER AUTHORITY

MONTEREY PENINSULA REGIONAL WATER AUTHORITY

Figure ES-1 Projected Cal-Am Project Implementation Schedule