3. Procedural Background
The complex procedural history for this proceeding was set forth in D.09-12-017. Since the issuance of the Scoping Memo Ruling in Phase 2, parties have been negotiating a collective solution to ameliorating the water supply problems on the Monterey Peninsula. After a series of productive Alternative Dispute Resolution (ADR) sessions and several formal status conferences, on April 7, 2010, the Settling Parties jointly filed and served a Motion to Approve Settlement Agreement that recommended approval of the Regional Project. As contemplated by the Settling Parties, the proposed Settlement Agreement and attached Implementing Agreements resolve all issues in Phase 2 of this proceeding.9 On June 10, 2010, Citizens for Public Water became a signatory to the proposed Settlement Agreement.
DRA, MPWMD, and Citizens for Public Water timely filed and served comments, objecting to the proposed Settlement Agreement on several grounds, and proposed several modifications to the Settlement Agreement and the WPA. DRA supports the Regional Project but has raised significant concerns about the costs and accountability of the Settlement Agreement and the WPA. DRA makes the following recommendations:
1. Establish a firm cost cap of $2,200 per-acre-foot on the facilities associated with the source wells and the desalination plant;
2. Require MCWD to pay a share of the Regional Project, which DRA establishes at 16.2% of costs and eliminate the ceiling on fees from new connections that MCWD will contribute to the Regional Project;
3. Require the intake wells to be slant wells unless they are found to be infeasible in testing;
4. Require pilot testing and contingency planning;
5. Do not require Cal-Am ratepayers to pay for a second pass using reverse osmosis technology;
6. Ensure that any unallocated water will become the property of Cal-Am;
7. Ensure that MPWMD and the Monterey Peninsula Cities become an effective part of the governance of the Regional Project;
8. Require that O&M costs of the desalination plant be examined in a future phase of this proceeding;
9. Adopt a cost cap for the Cal-Am only facilities of $86.6 million; and
10. Modify the ratemaking proposals in the Settlement Agreement to provide effective ratepayer protection.
MPWMD has similar concerns regarding financing, fairness, governance and protection for Cal-Am ratepayers. In addition to cost issues, MPWMD adamantly declares that it requires a fully participatory seat on the Advisory Committee and asserts that decision-making by the Advisory Committee must be subject to public meeting and Public Records Act protocols. We examine each of these recommendations below.
Cost workshops were convened on May 10 and 11, 2010, and evidentiary hearings were held on June 8 - 11, 2010. PPHs were held in Monterey and in Seaside on June 28 and 29, 2010. Parties filed and served concurrent opening briefs on July 2 and concurrent reply briefs on July 16, 2010. The proceeding was submitted upon the filing of concurrent opening and reply comments regarding proposed changes to the make-up of the proposed Advisory Committee (§ 6 of the Water Purchase Agreement) on July 28 and August 4, 2010, respectively. Oral argument was convened before Commissioner Bohn and ALJ Minkin on November 10, 2010.10
9 The Settling Parties anticipate that Cal-Am will file an application at the Commission to address the issue of Cal-Am's long-term financial obligations for this Project and its impact on Cal-Am's financial viability.
10 The date for oral argument was changed in response to MCWD's motion filed on October 26, 2010. The ALJ granted the request for the change in date but denied the request to convene final oral argument before a quorum of the Commission. We note that no party requested final oral argument in their opening briefs, as was set forth in the Scoping Memo Ruling issued on March 26, 2009. We affirm the ALJ's electronic ruling here.
