MINUTES MONTEREY PENINSULA WATER AUTHORITY (MPRWA) TECHNICAL ADVISORY COMMITTEE (TAC) Regular Meeting 2:00 PM, Monday,

March 4, 2013 COUNCIL CHAMBER FEW MEMORIAL HALL MONTEREY, CALIFORNIA Members Present: Members Absent: Staff Present: CALL TO ORDER ROLL CALL PLEDGE OF ALLEGIANCE REPORTS FROM TAC MEMBERS Chair Burnett invited reports from TAC members and had no requests to speak. PUBLIC COMMENTS Chair Burnett invited public comments for items not on the agenda and had no requests to speak. APPROVAL OF MINUTES 1. February 25, 2013 Action: Continued TAC Members Israel and Stoldt requested updates to the document for clarification and TAC agreed to continue this item until the next meeting to allow for incorporation. AGENDA ITEMS 2. Receive Report Regarding Pacific Grove Small Water Projects and Make Recommendations As Necessary (Frutchey) Action: Received Report and Discussed Pacific Grove City Manager Tom Frutchey report on the current status of the Pacific Grove Small Water Projects indicating a full project description was submitted to the California Public Utilities Commission as well as intervener testimony regarding Cal Ams application (A-12-01019). He then indicated that the project is 20% through the design engineering phase and has Israel, Narigi, Riedl, Riley, Siegfried, Stoldt, Burnett Huss Executive Director, Legal Counsel, Clerk

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applied for and received 3 grants to progress the project to 40%. Grants received total $2.6 million with matching funds of $975,000. Mr. Frutchey then reported that financing options are open. They are working with Cal Am as a partner on these projects, have had preliminary discussions with the Monterey Peninsula Water Management District, as well as exploring SRF funds and additional grants. With regard to storage all projects seem to have challenges and they are still exploring options. Water rights also are being explored and discussions are occurring with the Pollution Control Agency as well as meetings with Land Watch and The Farm Bureau. Staff will continue working with other agencies and stakeholders to make these projects a reality. Mr. Frutchey then answered questions from the TAC. Member Riley requested clarification on the partnership with the City of Monterey. Mr. Frutchey explained the Neighborhood Improvement Program is looking to address the storm water flow that is feeding into the Areas of Biological Significance (ASBS) which flows through the David Avenue reservoir area. Chair Burnett requested clarification if this project is identified as a project alternative by the CPUC, what the direction to Cal am would be. Mr. Frutchey first clarified this would be a NON-potable water purchase agreement and indicated that this would replace current local potable water demands. Chair Burnett questioned the status of the CEQA process. Mr. Frutchey responded that it is not resolved at this time and that the CPUC is the potential lead agency. Chair Burnett then questioned the impact of flows with regard to the Ground Water Replenishment project (GWR) to which Mr. Frutchey responded all sewage flows will have to go to the MRWPCA however to what extent that flow is expected to be placed in the aquifer and how much less water will go to the PCA is dependent on a series of factors which he can provide at a later date. Chair Burnett opened the item to public comment and having to requests to speak, brought the item back to the TAC. He then reminded the TAC that the Authority has endorsed the Local Water Projects in principle, but have not yet gotten into the level of detail. Member Narigi questioned the price of water produced by these projects. Mr. Frutchey said that two of the projects appear to be less costly than the cost of potable water, because they treat storm water and dry water flows, but the cost avoidance is the overall advantage and will bring down the costs. The cost avoidance is what makes the projects financially attractive. Mr. Frutchey closed by expressing appreciation to Cal Am for all their assistance and informed the TAC that he considers it a positive partnership. The TAC did not take any action at this time. 3. Receive Report Regarding Monterey Regional Water Pollution Control Agency Feb 27, 2013 Meeting Regarding The Ground Water Replenishment Project (Israel) Action: Received Report and Discussed Member Israel reported on the CEQA planning workshop hosted by the MRWPCA with a purpose for preplanning to understand the issues to integrate within, in addition to talking about 2

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the series of feasibility options. Needed further input to understand what was necessary to address. The conclusion of the meeting was that if new flows could be identified it would resolve many future challenges of the parties and bring in enough water for the GWR that works around the water rights issues. The next step is to pass on a summary to the consultants, and GWR project team. The first phase has an anticipated completion by June 2013 and CEQA done by second quarter of 2014. CEQA work has been awarded to the local firm Denise Duffy and Associates. Also discussed was to develop Memorandum of Understandings to show and document progress in advance of formal agreements and to discuss eventual water rights. Member Israel then answered questions of the TAC. Member Stoldt agreed that it was productive meeting but acknowledged that a few issue still need to be addressed. Member Burnett questioned a comment made by a rep at the meeting to the effect that the City of Salinas might want to be compensated in addition to the reduced liability. Burnett questioned what other sources of waste water can they be looking at. Member Israel responded by speaking to the increasing role of storm water and how it is considered a liability. The PCA has capacity due to conservation efforts and had in the past rejected storm water but acknowledged that it might be advantageous to consider it as an option. Storage is the key, and certainly the GWR can use it in the winter time. No other use for it unless you can find an alternative storage capability. Executive Director Reichmuth questioned if the MRWPCA has considered splitting GWR into two different flow options. Member Israel indicated it will be addressed in the feasibility study and noted that some of the different sources may be problematic and not cost effective. Member Riedl questioned if the Salinas River water is a potential source. Member Israel affirmed but indicated there are water rights and permitting issues associated and it would be difficult due to implement due to the short time frame. Member Siegfried questioned the phasing of development and indicated that the Department of Public Health requires experience with GWR before a District can initiate flow pipe to pipe. He then questioned how much experience the MRWPCA has, then questioned if the issue has been addressed where specific elements are picked up while the water is in the aquifer. Member Israel indicated the MRWCPA has addressed the safety and the technological issues but their major concern is the ability to move along as quickly as the public is comfortable with. The technology is proven and there is 30 years of demonstrated ability in the Orange County area. Chair Burnett opened the item for public comment and had no requests to speak.

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Discuss Criteria Governance Committee Shall Use in Making Ground Water Replenishment Recommendation as Specified in Category A.1 of the Governance Committee Agreement Chair Burnett introduced the item indicating that this will be just an initial discussion and will be brought back before the TAC as it progresses. He requested that the TAC identify the criteria which the Governance Committee should adopt for making GWR decisions and how to work toward those criteria. He identified the following items which need to be addressed or resolved: cost, timing, completion of process, public outreach (perception) and water rights. The final decision will not be made for a number of years; however a preliminary decision will be needed within two years to have the project completed on schedule. Executive Director Reichmuth encouraged making public outreach a much larger focus. In order to advance the issue of reuse of treated waste water, substantial outreach should be completed by all involved agencies, prior to the project coming online. To date agencies have only focused on the desalination component and not the process for final water. It is time to shift the focus. He recommended that the MRWPCA make a presentation to the Authority Directors at the March 14th, 2013 meeting. Member Narigi encouraged there be more communication about the quality of the finished product as it will be the highest concern from the public. Member Riedl encouraged stable pricing over the long term, and assurance that the project should be robust so it is not affected by drought or water source fluctuation. Member Siegfried spoke to the public outreach comments and indicated from experience it takes at least 10 years to conduct proper outreach that will change behavior. However, there are factors playing in our favor: desperation, as well as other successful examples. He then suggested separation of the outreach of desalination from the GWR processes. He then questioned why the GWR project will determine the desalination facility sizing. Chair Burnett opened the item to the public for comments. Ron Cohen expressed concern over GWR that we are pushing the edge of technology but the problem is that we are desperate for water and any missteps are going to cost all of us dearly, with no reserve to make mistakes. Cautioned the Authority to recognize not only the yuck factor, but also if mistake is made, such as pathogen eradication is not complete, we could find ourselves subject to an outcry with using the treated water. Cautioned if this is an essential part of the strategy for replenishment. With no further requests to speak, Chair Burnett closed public comment. Member Israel responded that there is an tremendous track record as there never has been an association with anyone getting sick or having a problem by using GWR methods. The science is extremely conservative, as compared to other sources of water. Member Stoldt reminded the TAC that the Authority has already endorsed to GWR project and the TAC should try to remain supportive of their policy decision. With no more discussion on the item at this time, Chair Burnett continued to Item 4.

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Receive Report from Cal-Am Water Regarding Progress in Meeting Authority Adopted Conditions for Monterey Peninsula Water Supply Project Cal Am Representative Catherine Bowie presented the update on the eight Authority adopted conditions of support for the Monterey Peninsula Water Supply Project. She indicated that condition _ has been fully met with the adoption of the Governance Committee document. The other conditions were spoken to in order of adoption: Contribution of Public Funds. To date Cal Am has received a proposal from Monterey Peninsula Water Management District to outline a structured proposal. Everyone agrees they are good concepts but issue have been identified. All three parties have been meeting to work through the issues. Governance Committee: Rob McLean was authorized to execute the Governance agreement and Chair Burnett clarified if the agreement has been finalized and has been adopted by the Authority Electricity Rates: Cal Am has been successful in revising the original estimate from 12.9 cents to 9 cents per hour and PG&E will continue to work to further reduce. Rich Svinland offered to complete a formal study to analyze this and could work with the TAC for that analysis. Limiting the Use of Surcharge Two: Cal Am is open to continue discussions. A model has been developed which outlines the impacts of delaying the use of surcharge two and it was significant. Test Wells: Addressing Tim Durbins testimony. The PUC EIR consultant for GEO science has resealed a memo that refutes that of Mr. Durbins testimony. It has been sent to the PUC. Second, the meeting with Semex last week granted the permission necessary to complete the permit for the City of Marina. The permits remaining are from the Coastal Commission and the State lands Commission. All three should be filed in the next three weeks. The Coastal Commission hearing should be in August or October. The project will also file an application with army corps of engineers. Collaborating with Local Public Agencies; Cal am and the Authority have been participating in meeting with Coastal Commission and are willing to engage with other necessary agencies. Clarification of NEPA requirement: Will be answered by the EIR Team. She mentioned the determination of requiring a NEPA permit will not be a decision made by Cal Am but by other permitting agencies. Exploring Other Intake Methods: CPUC required a quarterly report be made available to the public, which needs to include updates to the contingency plant. The first will be due July 31, 2013 and will be required though 2017. Also, Mr. Svinlands supplemental testimony includes detailed description of the contingency plans, and that document is available on the project website www.mpwsp.org SRF Funding: The State Water Resources Control Board cannot put into writing Cal Ams ability to access to SRF funding, until the EIR is complete. There is a letter between agencies that could apply, but a formal letter will have to wait. Addressing Sea Level Rise: Spoke to Mr. Svinlands last presentation which explains that this has been addressed and a detailed description can be found in the supplemental testimony. Ms. Bowie then answered questions from the TAC. Chair Burnet clarified that competing for a NEPA permit would make the project eligible for federal funds, which makes it important to push for an answer. He then requested clarification regarding the condition that Cal Am pursue a contingent intake strategy, in parallel to the current strategy and questioned why Cal Am is not 5

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proceeding with this. He also asked if Cal Am is looking for more direction from the CPUC before actually expending to develop the contingency further. Cal Am representative John Kilpatrick responded that Cal Am has fully listed the contingency plans, but will pursue the slant wells consistent with the ocean plan requirements. He indicated Cal Am wants to follow that one through until that becomes unfeasible and does not want to develop other contingencies in parallel. Chair Burnett countered that the Authority has a different position, and questioned how to rectify the two positions. He questioned if it was an issue with funding and expressed that the two groups need to work through this issue. Mr. Kilpatrick responded that their current funding only allows for pursuing the test well at this time. Chair Burnett opened the item for public comment. Tom Rowley expressed concern that it seems like we are continually raising issue or sub issues that dont really have a deadline. He encouraged the Authority to assign a deadline or a timeline with every project or issue for it to be resolved or completed by. He also recommended that an alternate source of feed water should be addressed. With no further requests to speak, Chair Burnett brought the discussion back to the Board and requested that Executive Director Reichmuth review all eight conditions adopted by the Authority regarding the MPSWP to see which ones have been competed or mark a status of. Member Stoldt questioned the response statement regarding the memo submitted by Tim Durbin. Since it was rejected by the Administrative Law Judge and resubmitted last week, he questioned if Cal Am will address it directly in the testimony so it becomes part of the public record. Ms. Bowie indicated that she is not sure, but the testimony rebuttal is due Friday. 5. Discuss and Review Benefits and Disadvantages of Private Investor-Owned vs. Public Ownership of Desalination Facilities (Riley) In the interest of time, the TAC unanimously agreed to continue this item until the next meeting. ADJOURNMENT The meeting was adjourned at 3:51 p.m. Respectfully Submitted, Approved,

Lesley Milton, Committee Clerk

Jason Burnett, MPRWA TAC Chair