Next Steps

The findings and conclusions in today's decision address many of the substantive issues raised by Cal-Am's application.

As discussed above, Cal-Am's application sought Commission approval of "a program to fund projects currently performed by the District that are properly the Company's responsibility" by authorizing Cal-Am to "collect funds required by the [District] to carry out projects on behalf of the Company and which the Company would otherwise have to carry out."²³ As also set forth above, the parties to the settlement agreement represented that the application met the Commission's ratemaking standards by being "non-duplicative, and reasonable and prudent." For reasons set forth in D.09-07-021 and reiterated above, we decline to approve the ratemaking proposal in the application as filed. Similarly, we repeat our support for the joint project approach to funding the Carmel River Mitigation program and the Aquifer Storage and Recovery Project.

Therefore, to ensure that Cal-Am fully discharges its responsibilities for the Carmel River Mitigation Program, we will authorize Cal-Am to amend its application within 60 days of the effective date of today's decision by filing and serving one of the following;

1. a joint program proposal for the District to perform the Carmel River Mitigation measures based on an updated version of the budget set out in Attachment 1, and to fund the District's portion of the Aquifer Storage and Recovery Project, or

2. implementation plan for Cal-Am to assume direct responsibility for the Carmel River Mitigation measures, should the District cease to implement these measures.

As noted above, Cal-Am has been recording payments to the District in a memorandum account, and the District has been performing all Carmel River mitigation measures since July 2009. Under the unique circumstances and history of the District's user fee and mitigation program, including particularly that the funds have been remitted to a government agency, we find that it is reasonable to allow Cal-Am to recover the amount recorded in the memorandum account. We will also require that the account be closed in 60 days to bring the unique circumstances to an end.

The Monterey Peninsula Water Management District User Fee Memorandum shall close 60 days after the effective date of this order. Cal-Am is authorized to file a Tier 2 advice letter to amortize the amounts recorded in that account over 12 months with interest to be calculated based on the 90-day commercial paper rate.

²³ Application at 2 - 3.