BACKGROUND
Cal Am provides water services to approximately 39,000 residential, commercial, and industrial customers in the Monterey District.
Decision (D) 06-11-050, Ordering Paragraph (OP) 5, states in relevant part:
"Cal Am is authorized to file advice letters seeking Commission authorization for rate offsets in the Monterey district for the following
capital projects when each has been completed and placed in service no earlier than the year indicated and at costs not to exceed those indicated:
c. Arsenic Treatment Project, test year 2006, maximum cost of $3,530,000."
The Arsenic Treatment Project consists of: The Ambler Plant and the Luzern Project. Drinking water from the Arsenic Treatment Projects has to be compliant with revised Federal and State safe drinking water standard for Arsenic. The Federal and State standard requires that the maximum contaminant level (MCL) for Arsenic should be less than 0.010 mg/L or 10 parts per billion (ppb) (revised arsenic standard).
Ambler Plant
The Cal Am - Ambler Park water system is located adjacent to the south side of State Highway 68 approximately ten (10) miles west of the city of Salinas. The water system provides drinking water to the residential areas of Ambler Park, Rimrock, and Corral de Tierra. The water system is classified as a community water system that uses groundwater to provide drinking water to an estimated population of 1,109 through 396 metered service connections.
Water quality testing at the Ambler park wells indicated that the maximum levels of arsenic, iron and manganese exceeded the MCL levels that are permitted by Federal and State safe drinking water standard. The Ambler Plant provides treatment for the removal of iron, manganese, and arsenic from raw ground water through a "single pass" filtration process manufactured by Pureflow. The disinfection is accomplished through sodium hypochlorite injection. The design flow through the treatment plant is 600 gallons per minute. The Ambler Plant has been in operation since September 15, 2008.
The project description approved by the Commission required the Ambler Plant to include disposal of residuals from the plant.1 At present, Cal Am is unable to provide an estimate of capital costs or ongoing costs associated with a solids waste or sludge handling facility as it has not finalized the design. The company has indicated that it
plans to recover costs associated with this portion of the project in its next General Rate Case (GRC) filing.2
Luzern Project
The Luzern Well is located in Seaside. Records indicate that the arsenic level from the well was in the 10 to 13 parts per billion (ppb) range. A blending station was selected as the preferred alternative to comply with the revised arsenic standard by mixing raw water from the Luzern Well with treated water from the Seaside Ozone Plant. Cal Am indicates that the Luzern Project is complete.
In AL 713 and AL 713-A, Cal Am is requesting recovery of $3,124,799 for the Arsenic Treatment Projects. Cal Am seeks recovery of these costs through a revenue requirement increase of $443,622 or 1.3%. Cal Am proposes to recover a portion of the increase through a quantity surcharge of $0.0474 per 100 cubic feet. The remaining balance would be recovered through a meter-based surcharge.
Ambler Plant Permit Requirements
The CDPH issued a Water Supply Permit (Permit) to Cal Am on March 19, 1994 for the Ambler Plant. This Permit was later amended on August 25, 2008.3 The following are relevant provisions from the Permit:
"1) The Cal Am Ambler Park District water system shall comply with all requirements set forth in the California Safe Drinking Water Act, California Health and Safety Code and any regulations, standards or orders adopted there under."
"2) All water supplied by the Cal Am Ambler Park water system for domestic purposes shall meet all state and federal drinking water standards."
"31) Cal Am must conduct quarterly analysis of the arsenic sludge waste to determine the chemical characteristics to establish whether the sludge meets the criteria for disposal at the Monterey Regional Waste
Management District (MRWMD) landfill. If the sludge passes the characterization testing, Cal Am will dispose of the sludge with MRWMD. If the sludge fails to meet the criteria for disposal at the MRWMD landfill, Cal Am must dispose of the arsenic sludge at a licensed landfill approved to accept the characterized waste."
In addition to the above, Cal Am is required to submit reports related to treatment plant operations, appropriateness of the media used in the plant and water quality testing and reporting.
1 California-American Water Company, Monterey Division, Arsenic Removal Facilities, Investment Project 02-085 (A.02-04-022):
"...... Several technologies will be considered and pilot tested to find the most cost-effective process. One of the technical challenges of the project is the disposal of residuals. Pilot testing will include residual characterization and an evaluation of disposal options........ Detailed design will be undertaken after selection of a treatment technology based on the results and conclusions of the pilot testing program. The design will allow for an automated operation of the treatment facilities, proper handling of residuals, and monitoring from a remote location."
2 "Additional capital costs for sludge handling facilities are under alternative review. Operating costs are dependent on the characterization of the sludge...... It is anticipated that sludge handling alternative improvements will be analyzed with a preferred alternative selected and included under the next General Rate Case submission." Cal Am response to Division of Water and Audits Data Request, dated December 11, 2008.
3 Amendment to the Domestic Water Supply Permit issued to California American Water - Ambler Park District, Original permit: 84-013, Permit Amendment: 01, dated August 25, 2008.
