1 Investing in your water … investing in your future California American Water General Rate & Conservation Case Applications

2 Monterey Water District by the Numbers Water system established in ,000 connections; 120,000 population including sub-systems (Ryan Ranch, Hidden Hills, Bishop, Ambler Park, Ralph Lane, Chualar & Toro) 680 miles of water mains 3,012 fire hydrants 18 wells along Carmel River; 8 wells in Seaside Basin Aquifer Two reservoirs, San Clemente & Los Padres 99 storage tanks, 87AF capacity – plan to add 26AF in Elevation: 0’ – 1,210’ (0 – 524 psi) 83 pump stations, 75 pressure regulating stations 7 satellite well systems 90 full-time employees, two-thirds Utility Workers of America representation

3 System Usage by Type Residential 45% Unaccounted-for-Water 12% Multi-residential 9% Commercial 22% Industrial 1% Golf Course 3% Public Authority 9%

4 Current Applications 1.Monterey General Rate Case (GRC) Includes all satellite systems 2.General Office Rate Case 3.Conservation Application 1. Monterey Wastewater GRC 2. Felton GRC

5 Setting Your Water Rates A 20-month Process *DRA = Division of Ratepayer Advocates, an independent entity of CPUC GRC Schedule: Initial proposal filed November 30, 2007 Final Application filed January 30, 2008 Public hearings in Monterey May 8 & 9, 2008 DRA Report on their findings and review August 2008 Evidentiary hearings October 2008 Proposed Decision by Administrative Law Judge April 2009 Final Decision by CPUC Commissioners in June 2009 Final rates effective July 2009

6 GRC Proposed Changes Increase in 2009 mainly driven by Capital Investment ITEM Residential Bill $29.60$52.60$59.03$66.44 Percent IncreaseNA80%12% Revenue IncreaseNA$24.7M$6.5M$7.6M Capital Investment$19.4M$45.1M$79.7M$19.0M  Commercial, Industrial and Public Authority customers will receive the same percentage increase

7 Filings for a Sustainable System 1.ConservationDecember 14, Current GRC + General Office January 30, 2008 For rates in 2009 – Rate of Return May San Clemente Dam Total Cost Recovery Future 5.Next GRC + Support FunctionsMay 2010 For rates in Coastal Water Project EIR & CPCNOn-going review 7.CWP Total Cost Recovery Future –Monterey Customers currently pay for Coastal Water Project preconstruction costs through a surcharge on the bill

8 Capital Investment 62% Labor 8% Seaside Basin & Sand City 16% Other 4% General Office 7% Loss of Consumption 3% Major Drivers of Rate Request 2009 – 2011

9 Capital Investment – 62% 2008 – 2011 ($170M Total) Reduce Leaks: 23% $39M Meet Peak Demand: 8% $13M Protect Environment & Regulatory Compliance: 55% $93M Improve Reliability & Water Quality: 10% $18M Other Improvements: 4% $7M * % of total capital –Construction costs for Coastal Water Project not included

10 Labor – 8% Clerical Position Operations Specialist Systems Operations Specialist Senior Operations Engineer Operations Engineer in Training 4 Maintenance Technicians 4 Utility Workers Valve Turner Backhoe Operator –15 Additional Employees Proposed –Payroll increases & benefits of existing employees

11 General Office & Other – 14% General Office: 7% –Customer Service Center –Belleville Laboratory –Finance & Legal –External Affairs –Other Maintenance & Other: 4% –Power –Chemicals –Supplies –Maintenance projects Loss of Consumption: 3%

12 Regulatory Impacts To Your Water Supply – 16% 1979 – 1988 Historic 1995 – Interim Goal WY st Seaside Reduction ULTIMATE Seaside Carmel River 14,106 AFY 11,285 AFY 3,376 AFY Seaside Basin Coastal 2,700 AFY 4,000 AFY 3,191 AFY1,494 AFY Seaside Basin Laguna Seca 210 AFY 700 AFY 271 AFY 0 AFY TOTAL 17,016 AFY 15,985 AFY 14,747 AFY 4,870 AFY 10,000 AFY reduction from 2009 limit or replacement supply needed

13 Seaside Adjudication Changed Your Supply Decision issued March ,500 AF reduction from recent pumping levels required by % - 20% reduction in overall customer demand or increase in supply needed to meet order –1% reduction in consumption each year until 2021 –This reduction is for Seaside Adjudication Only

Seaside Basin Fees & Sand City Desal Lease – 16% 2009 Amount Over Ultimate Limit 1,866 AF Replenishment Fee $4,600,000 Other Seaside Basin Fees $800,000 Sand City Desal Plant Lease $800,000 Total Fees $6,200,000

15 Conservation Application Filing Further conservation needed due to reduced water supply $1.7M additional annual expenses for conservation items 5% rate increase for conservation expenses – in addition to GRC Rates will impact large users more than average users Estimated water savings = 300 AFY or 97M gallons Accelerated timeline; interim phased decisions

16 State Water Resources Control Board (SWRCB) Draft Cease & Desist Order (DCDO) Enforces Order 95-10, which limits Carmel River diversions to 3,376 AFY (interim goal of 11,285 AFY) SWRCB Order hearings ’92 – ’95: –Determine waters in valley “underflow” - not groundwater –Allowed continued diversion of water from the Carmel River –Required diligent pursuit of alternative water supplies –Established measures to protect environment while diversions continued “Plan B” to Coastal Water Project, ASR, Sand City Desal, Recycled Water and REPOG SWRCB Public Hearing set: –Tuesday April 1, :00 p.m. at Monterey Conference Center

17 Proposed Reduction Schedule Water Year Percent Reduction from Goal Max End of Year Diversion Amount %9,592 AFY %9,028 AFY %7,335 AFY %5,642 AFY Water year = October 1 – September 30 Interim goal = 11,285 AFY (used as base line)

18 Investing in your water … investing in your future California American Water Questions? California Public Utilities Commission Public Advisor’s Office 505 Van Ness Avenue San Francisco, California (toll-free) (415) Case Number: A CPUC Public Participation Hearings May 28 – 7pm, Chualar Elementary School May 29 – 2pm & 6pm, Monterey City Hall