As Cal-Am has repeatedly stated and demonstrated throughout this proceeding, the Monterey district is confronting severe supply limitations. The continued use of potable water for landscape irrigation is unreasonable and fundamentally at odds with resource limitations confronting Cal-Am in the Monterey district.
Transitioning users of potable water for landscape irrigation to non-potable alternatives is an urgent obligation of Cal-Am. While rate design can and must provide financial incentives for customers to make this change, Cal-Am has an important role in providing alternative supply options. As pointed out by the Independent Reclaimed Water Users Group, such alternative projects could have lasting benefits to the district's customers.
Demonstration projects, feasibility studies, and other means to develop, evaluate, and implement the innovative solutions called for by the American Water directives require leadership from Cal-Am. We find that these types of projects are a necessary companion effort to adopting a rate design that provides financial incentives to transition from potable to non-potable water use for irrigation. Cal-Am did not anticipate this outcome and has not sought such funding in this proceeding. We will, therefore, authorize Cal-Am to file an application for alternative supply projects for landscape irrigation.
As discussed above, American Water's corporate directives, with which we agree, state that "innovative solutions" particularly for large irrigation users are appropriate where, as here, existing water supply capacity is limited. The record shows that the City of Pacific Grove is analyzing, apparently without Cal-Am's support, a stormwater recovery project to serve the Pacific Grove golf courses.270 The record suggests that other options may be available as well.271 Cal-Am should assign a high priority to developing and implementing alternative options for large-scale potable water irrigation users.
270 Hearing Exh. 77 at p. 8.
271 See generally Hearing Exh. 77.