1. Monterey Peninsula Water Management District 1 11.Consider Proposed Agreement with California American Water Regarding Management and Operation of Aquifer Storage and Recovery Facilities /u/joe/ppt/asrpresentations/asragree_15aug05.ppt MPWMD Board Meeting August 15, 2005 Staff Contact: Joe Oliver

2. Monterey Peninsula Water Management District 2 OVERVIEW Board to review status of proposed Management and Operations Agreement with Cal-Am regarding Seaside Basin Aquifer Storage and Recovery (ASR) operations. Board should provide direction as appropriate.

3. Monterey Peninsula Water Management District 3 BACKGROUND Since initiating ASR studies in 1996, the District and Cal-Am have worked cooperatively via Cal-Ams operations and the Districts testing of Carmel River water injected into the Seaside Basin. ASR testing thus far has been undertaken without a formal written agreement between District and Cal-Am. ASR testing program includes recovery of injected water into the Cal-Am distribution system.

4. Monterey Peninsula Water Management District 4 BACKGROUND (continued) Cal-Am distribution system is regulated by the California Department of Health Services (CDHS). Cal-Am has obtained interim approval for temporary operation of the SMTIW, but must obtain a permit amendment for permanent use. CDHS requires an agreement between Cal-Am and the District giving Cal-Am the long-term right (i.e., minimum 15 years) to recover water from the SMTIW into Cal-Ams distribution system.

5. Monterey Peninsula Water Management District 5 CURRENT SMTIW OPERATION LIMITATIONS Without CDHS permit, SMTIW cannot be operated to supply water to the Cal-Am distribution system. Accordingly: SMTIW is not available as a back-up supply to the Cal-Am system, unless specially authorized by CDHS. SMTIW can not be operated for planned recovery of injected water as part of the Districts ongoing ASR water quality investigation. SMTIW can not be operated to help reduce current Seaside Basin pumping impacts.

6. Monterey Peninsula Water Management District 6 AGREEMENT FEATURES Ownership of ASR Facilities (District) and Associated ASR Facilities (Cal-Am) clearly defined. SMTIW operational and functional responsibilities clearly defined in an Operation and Maintenance (O&M) Manual. District responsible for injection; Cal-Am responsible for extraction; all operations to be coordinated with District.

7. Monterey Peninsula Water Management District 7 AGREEMENT FEATURES (continued) SMTIW operations will conform to District-directed water supply budget & strategy. District and Cal-Am will jointly agree to cooperate in securing permits needed to support current and future ASR operations.

8. Monterey Peninsula Water Management District 8 AGREEMENT FEATURES (continued) Cal-Am will not charge for injected water and District will not charge for recovered water from ASR Facilities. Cal-Am will pay for all costs to operate, maintain, repair and replace District- owned ASR Facilities. District will license Cal-Am operation of District-owned ASR Facilities.

9. Monterey Peninsula Water Management District 9 AGREEMENT MODIFICATIONS SUBSEQUENT TO JUNE 16, 2005 BOARD MEETING Requires written consent from MPWMD to operate ASR Facilities for purposes other than injection. Clarifies Cal-Ams responsibility for repair/replacement of ASR Facilities. Restricts Cal-Am from seeking CPUC approval of rates that include profit or return on equity (ROE) from the ASR Facility. License term modified from 20 to 15 years.

10. Monterey Peninsula Water Management District 10 AGREEMENT MODIFICATIONS SUBSEQUENT TO JUNE 16, 2005 BOARD MEETING (continued) Includes non-assignment of agreement by either Party without consent. Requires former Superior Court or Court of Appeal judge as arbitrator. Provides $50,000 limit on arbitrator award. Requires court resolution of disputes exceeding $50,000.