1. 1 State Water Resources Control Board Draft Cease and Desist Order Community Leader Workshop March 28, 2008

2. 2 State Water Resources Control Board (SWRCB) Order 95-10 SWRCB Order 95-10 hearings ’92 – ’95: –Determined waters in valley “underflow” - not groundwater –Allowed California American Water (CAW) to continue to divert water from the Carmel River –Required CAW to diligently pursue alternative water supplies –Established measures to protect Carmel River and habitat

3. 3 About the Draft Cease and Desist Order (DCDO) Proposed by SWRCB staff Sent via certified mail to Kent Turner, January 15, 2008 It was a surprise Changes Order 95-10, which originally limited CAW Carmel River diversions to 3,376 AFY with an interim goal of 11,285 AFY to: –Limit diversions to 5,642 AFY over next 7 years with a reduction diversion schedule –Is a 50% reduction from interim goal of 11,285 –Results in a 33% reduction in total customer usage from today

4. 4 What the DCDO alleges CAW has not complied with Order 95-10 Unauthorized diversions constitute a “trespass” Hearings on the DCDO will be held prior to adopting a final order Reduction diversion schedule recommended

5. 5 DCDO proposed reduction diversion schedule Water Year Percent Reduction from goal Max End of Year Diversion Amount 2008-09 15%9,592 AFY 2009-10 2010-11 20%9,028 AFY 2011-12 2012-13 35%7,335 AFY 2013-14 2014-50%5,642 AFY Water year = October 1 – September 30 Interim goal = 11,285 AFY (used as base line)

6. 6 California American Water’s position In compliance with Order 95-10 –Diligently pursuing an alternative water supply –Implementing required mitigation measures –Meeting interim goal of 11,285 through customer conservation Proposed reduction schedule is problematic –Imposes requirements that company cannot control –Jeopardizes health and safety –Doesn’t recognize water supply project schedules with realistic delays Requested a hearing Opposing entities and individuals to becoming a “party” to proceeding Encouraging entities and individuals to enter “policy” statements into the record at April 1 hearing

7. 7 What CAW is doing to meet regulatory requirements Pursuing appropriative permits for Carmel River water rights –Joint water rights owner with MPWMD, Phase 1 Aquifer Storage and Recovery – up to 2,426 AFY –Application to legalize 2,984 AF identified in Table 13 of SWRCB Decision 1632 (1995) Pursuing additional sources of water supply –Coastal Water Project and alternatives –Sand City desal plant –Seaside Basin recycled water project –Partnership with Marina Coast Water District Seeking contracts with other water rights holders More aggressive conservation programs being implemented

8. 8 Regulatory impacts to your water supply WY 2007WY 2009WY 2012WY 2015 ULTIMATE 95-10 + Seaside Carmel River 10,444 AFY 9,592 AFY9,028 AFY5,642 AFY 3,376 AFY Seaside Basin Coastal 3,626 AFY 3,191 AFY2,872 AFY2,585 AFY1,494 AFY Seaside Basin Laguna Seca 426 AFY 271 AFY244 AFY220 AFY 0 AFY TOTAL14,496 AFY13,054 AFY12,144 AFY8,447 AFY4,870 AFY % Reduction from 2007 NA 10%16%42% 66% 9,626 AFY reduction from 2007 usage or replacement supply needed

9. 9 Sources of water supply to meet regulatory requirement 200920122015Ultimate Golf course reduction 130 Sand City desal 30028026094 Conservation 3009001,0001,300 Aquifer Storage & Recovery Phase I 400500600920 Aquifer Storage & Recovery Phase II -- Unaccounted for water recovery --75150375 Storm water -- 300 Subtotal 1,1301,8852,1403,119 Required replacement 1,4422,3526,0499,626 Shortfall 3124673,9096,507

10. 10 Regional Water Demands Existing Customers' Need Regulatory Replacement Need9,626 AFY Current Replacement Projects( - 3,119 AFY) Subtotal Existing Customers’ Need6,507 AFY General Plan Amount City of Monterey705 AFY City of Seaside582 AFY City of Carmel-by-the-Sea288 AFY City of Sand City386 AFY City of Pacific Grove1,264 AFY City of Del Rey Oaks48 AFY Monterey County (unincorporated)1,135 AFY Monterey Peninsula Airport District138 AFY Subtotal General Plan Need4,546 AFY Non-CAW Need Marina Coast Water District2,400 AFY North County9,013 AFY Subtotal Non-CAW Need11,413 AFY TOTAL REGIONAL NEEDS 22,466 AFY

11. 11 Regional Plan Projects Proposed supply will address following needs: Will water project or projects deliver water to meet schedule? Regional Project Range (6,500 AFY – 22,500 AFY) Existing CAW customer amount 6,507 AFY General Plan amount4,546 AFY Other non-Cal-Am amount11,413 AFY TOTAL22,466 AFY

12. 12 Schedule of Proceedings Tuesday, April 1: Public policy hearing –Monterey Conference Center, 1:00 p.m. Thursday, June 19: Evidentiary hearing –Cal/EPA Building, Sacramento

13. 13 Questions & Answers