Montara Sewer District Recommendations

MSD considers both Citizens' and ORA's proposals result in excessive rates violating the utility's obligation under Public Utilities Code Sections 451 and 739.8 to provide rates that are just, reasonable, and affordable.³ MSD points out that the average monthly water bill for a family in the Montara District is $91.24, more than double the average bill in Citizens' Larkfield district, and nearly five times that of Citizens' Sacramento customers. MSD estimates that the Montara average bill will increase to $167 by the end of the seven-year improvement program. MSD anticipates that the rates will also be increased to include costs for the Cal-Am purchase. MSD does not believe Citizens has pursued all low cost options to increase water supply in the district.

Rather than approving the proposed improvement plan, MSD requests that Citizens be required to explore, within the next year, less costly water supply enhancement measures. These include water transfers, reduction of water leakage, diversion of water from Montara and Martini Creeks, water conservation measures, and pumping additional water at the Airport wells.

MSD does not believe Citizens has complied with the requirement in D.97-12-097 to review the DWR Study and incorporate any new economical and operationally feasible projects to augment its water supply sources. MSD believes Citizens has focused on projects that are not economical and would only further increase rates.

MSD contends the DWR Study characterized the negotiation of a water transfer as most favorable and Citizens has not included this option. The study also recognized that if storage is provided, yield from a local stream could be significant. The study suggested that MSD could provide additional opportunities and other advantages in developing water supply options because as a public agency, it may have greater access to low interest and tax-exempt financing for studies and/or project development. MSD contends that Citizens has not sought its help in developing water projects.

MSD also contends Citizens' plan provides estimated costs for new wells that are far greater than, and inconsistent with DWR's proposed estimates. For example, DWR estimates two new wells, one at McNee Ranch and one in Wagner Valley, at $336,008.65, whereas Citizens estimates $2 million for the same wells. MSD contends that Citizens' estimates undermine DWR's conclusion that groundwater projects are a reasonable and favorable option.

MSD contends that DWR recognizes that additional groundwater sources may be inadequate, and that therefore DWR recommends partnerships with local water entities regarding potential water transfer options. MSD contends that water transfers and the development of local surface water should be included as immediate short-term and long-term solutions, rather than solely long-term possibilities.

MSD believes the Commission should order Citizens to: (1) immediately explore diverting additional water from Montara Creek and Martini Creek for storage, treatment, or recharge, (2) implement better conservation practices, and (3) pump additional water at the Airport Well field. MSD requests that these requirements be a condition of any approval of the Master Plan, and also that Citizens be ordered to investigate combining the Montara District with other districts to share common administrative and general services to minimize the rate impact of the improvements. MSD argues that administrative consolidation of Montara with other districts would serve the same purposes as in prior cases where the Commission has approved single-tariff pricing. These purposes (namely, stabilizing rates, making rates more affordable in smaller districts, and facilitating investment in infrastructure and treatment facilities) should all be considered by the Commission in a future proceeding. MSD estimates the rate impact in other districts would be minimal.

If the Master Plan is approved without the above conditions, MSD requests that Citizens be ordered to explore least-cost financing options for the proposed improvements, including the joint development of additional water supplies with MSD through use of its access to low-interest loans from the State and tax-exempt financing. MSD is a public agency with authority to provide water on a wholesale basis, approval for more than $1 million in low-interest loans, and authority to request an additional $5 million in loans per project from DWR for developing water supplies. MSD's efforts to date to work jointly with Citizens and Cal-Am to obtain water transfers and develop additional water supplies using its access to low-cost financing have been unsuccessful.