Groundwater Supply Projects

Citizens proposes to increase supply by means of extracting groundwater in four new wells. ORA contends that only two wells are needed. MSD criticizes any new supply projects embarked upon prior to exploring lower cost options. MSD also reminds the Commission that wells may be a waste of ratepayers' dollars if the wells only provide water for a short time.

In response Citizens attacks the basis of ORA's conclusion that demand today is lower than during the period when we ordered that capacity be raised to 550 gpm. Citizens argues that ORA's calculation is flawed by not including a large commercial stand-by customer, by including water from wells with iron and manganese content that violates secondary water standards (odor, taste, and color), and by not meeting the 550 gpm requirement. Citizens argues that these four wells are needed to comply with the current 550 gpm requirement and must be approved without delay, since wells have a substantial lead time prior to construction and since Citizens' goal is to remove the moratorium on new connections as soon as possible. ORA replies that it did include the stand-by customer in its calculation of lower demand of 440 gpm. However, we note the purpose of this proceeding was not to reinvestigate demand or reevaluate our 1986 order. Particularly for purposes of removing the 1979 moratorium on new hookups, the 550 gpm capacity target continues to be reasonable; otherwise, we may find ourselves having to impose a new moratorium shortly after lifting the old one.

MSD argues that some new wells in this area are not productive as long as generally anticipated, therefore, assets may be wasted on new wells. Should this occur, such assets are removed from rate base. We note, however, that part of the process of choosing a new well site is an evaluation of the site's reliability and impact on other wells in the area. Some uncertainty remains, but other supply options also present uncertainties. Citizens' management of groundwater resources for its Montara District, of course, will be subject to a reasonableness review.

MSD's argument that Citizens has failed to review lower cost options preferred by DWR is unfounded. Citizens analyzed the possibility of supply from Martini and Montara Creeks in its 2000 Master Plan. (Application, Attachment A-Master Plan Update, pp. 2-14 through 2-17.) Citizens notes several problems with heavy reliance on these sources, including the need for water treatment, storage issues, and unreliability of supply in drought periods. Citizens concludes that local groundwater is the more promising source in the short run, but includes funds for studies of other potential sources, including surface water. Citizens reaches the same conclusion about water transfers, namely, that they offer some long-term promise, but no assistance in the short term.

However, significantly, we cannot be sure from the record how many years Citizens considers "short-term" or "long-term." Moreover, because DWR recommends steps to shorten the time to investigate and better evaluate these other supply options, we cannot be certain the status of these options will remain the same in a year or two. DWR recommends that improved monitoring of local creeks and the Denniston sub-basin, and discussions regarding water transfer options, start now. These DWR recommendations may have already been implemented or will be in the near future. In any event, we will order Citizens to participate in implementing these steps and to use newly available monitoring information in its water supply planning.

Further, Citizens should accept MSD's offer to assist in securing and financing proposed or lower cost sources of water. As previously noted, the continued reasonableness of the costs for the Wagner Valley and McNee Ranch wells depends on Citizens demonstrating that no other lower cost supply options are feasible. Moreover, acting alone, Citizens has failed to resolve the water supply problem, and the moratorium has remained in place for 21 years. We, therefore, require Citizens to work with MSD to explore and develop more cost-effective water supply options. Citizens should immediately begin in good faith to explore whether low-cost financing and/or lease options via MSD are possible, and should use such options where costs may be reduced. We further note that should MSD elect to serve Montara District as a wholesale supplier of water to Citizens, this Commission would require Citizens to contract with MSD whenever it provides a cost-effective source of water supply.

In particular, if Citizens elects to proceed with the Wagner Valley and McNee Ranch wells, its Commission filing seeking recovery should document its efforts to work with MSD to provide a lower cost supply solution. For any future recovery proceeding, MSD may present evidence that lower cost financing or jointly-developed supply options were available and rejected by Citizens, the costs of which should be imputed in determining the costs for recovery. Our goal is to secure an adequate and cost-effective water supply that will enable us to end the moratorium that has burdened owners of homes and properties in this community.

Lastly, MSD recommends additional pumping from the airport aquifer. This is provided for in the 2000 Master Plan, and Citizens has submitted a monitoring plan to the Coastal Commission in cooperation with Coastside County Water District. This project is reasonable and will be approved.