Discussion

There is little disagreement that CalAm faces significant challenges in meeting the Monterey Peninsula's water needs. We have been called on to
address those challenges many times in the past, including in some proceedings

still pending before us. ² To date there has been no long-term solution. In the proceeding leading to D.04-07-035, ORA sought to have CalAm file an application that would place before us the question of whether a moratorium on new hookups and water use expansion is needed. CalAm agreed to do so, and we so ordered. CalAm has met that D.04-07-035 obligation by filing today's application. In that decision, we described at length the overusage and overproduction problems CalAm faced during the summer of 2004. Those problems are summarized above; we need not repeat the details here.

Two parties protested CalAm's application: MPWMD and ORA. We first review below CalAm's position, and then each of the protests along with CalAm's reply.

CalAm's Position

CalAm's application argues that no moratorium is presently required. Rather, CalAm would have us allow it to work first with MPWMD to amend CalAm's and MPWMD's existing rules to include a moratorium provision that would ensure future Carmel River water production does not violate SWRCB Order WR 95-10. CalAm would then come back with a new application to update its current water conservation tariff to incorporate those rules. CalAm cites four primary reasons for taking this position: community reaction; successful compliance with SWRCB Order WR 95-10 in 2004; effective measures taken to reduce usage; and discussions with MPWMD.

In preparation for filing this application, CalAm held two public hearings in the local area to receive public comments as required under Water Code Section 350 et seq. The transcripts from those hearings show that local reaction, from local government representatives, business owners, and individual citizens, was almost uniformly negative. Most opposed a moratorium, some spoke of the need for allowing exceptions, others of developing new sources and reducing waste. One speaker supported the moratorium. In addition, CalAm includes in the application a letter opposing a moratorium from the Monterey County Mayors' Association on behalf of the mayors of all six Monterey Peninsula area cities served by CalAm,³ and individual letters from two of those cities, the Monterey Peninsula Chamber of Commerce, and the Independent Reclaimed Water Users Group. Those letters express views that a moratorium would be unfair to the community, devastating to the local economy, in violation of MPWMD's existing regulations, blind to CalAm's allegedly excessive system water losses, and unnecessary. The Commission has received similar letters from local government, groups and individuals since issuing D.04-07-035.

CalAm believes that its experience in addressing the threat when overproduction loomed in mid-2004 also demonstrates that no moratorium is necessary. In addition to the successful conservation rate design the Commission approved on short notice, CalAm undertook an ambitious campaign of customer outreach, focus groups, and conservation incentives. While others may not agree, CalAm argues that its system water losses are lower than the industry standard and will benefit further from an ongoing series of main replacement projects and other system monitoring and improvement measures.

Lastly, CalAm argues that its Tariff Rule 14.1 conservation and standby rationing plan, and MPWMD's Ordinance 92 after which it is modeled, only address production shortfalls (physical supply shortages, primarily from drought or other emergency), not overconsumption that could lead to violations of SWRCB's Order WR 95-10. Given the opportunity, CalAm would like to work with MPWMD to update the ordinance to include a moratorium provision designed to control consumption when production threatens to exceed SWRCB-mandated levels. Once it completes that process, it would file a new application to amend its Tariff Rule 14.1 to incorporate the new moratorium provision.

MPWMD's Protest

MPWMD agrees with CalAm that no hookup moratorium is presently required. It also agrees that Ordinance 92 is not designed to address a consumption crisis where excessive consumption threatens to increase production over SWRCB's mandated limit.

Rather than attacking overconsumption by adding additional moratorium provisions to Ordinance 92 (and by implication, to Tariff Rule 14.1), however, MPWMD plans to proceed with a public process to modify its regulations to address potential overconsumption-driven violations of SWRCB Order WR 95-10 in other ways. MPWMD already has the statutory authority to impose a moratorium or other restrictions on water use, should that become necessary, and already controls water demand by setting a maximum number of connections and supply quantity for each water system. No new CalAm water meter is set without a permit from MPWMD and authorization from the local jurisdiction to debit its water allocation for the resulting use. MPWMD supports emergency conservation rates of the type the Commission approved during 2004 in D.04-07-035, and would like to see the resulting WRAM excesses used to fund community conservations programs. Finally, it argues once again that CalAm's system water losses are excessive and renews its call for CalAm to reduce them.⁴

MPWMD also agrees with CalAm's recommendation and the Commission's preliminary determination that no evidentiary hearing is required.

ORA's Protest

ORA takes no position at this time on whether a moratorium is the best solution to the problem. Instead, it would have the Commission schedule a prehearing conference and public participation hearings while it pursues discovery. It plans to consider public input and evaluate other possible alternatives including other automatic conservation rate design trigger mechanisms that could help reduce consumption. While it refers to "possible evidentiary hearings," its protest does not state that an evidentiary hearing will be needed. Nor, if it is requesting such a hearing, does it include a statement of "the facts the protestant would present at an evidentiary hearing to support its request for whole or partial denial of the application."⁵

In its reply to ORA's protest, CalAm does not agree that an evidentiary hearing should be required in this application. But, to the extent the Commission
may desire to evaluate a possible moratorium and other alternatives, CalAm suggests that addressing the issue in its pending general rate case (or in this application consolidated with the general rate case) would conserve resources while giving ORA and other interested parties an opportunity to fully analyze the options.