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LandWatch Supports Less Costly Monterey One Water Recycled Water
Dear <<First Name>>;

APOLOGIES: This is a technical and detailed update on CalAm’s proposed desalination plant. There was no easy way to simplify or shorten it. Thank you for your understanding.
 
After many years of proceedings, false starts, and delays, the California Public Utilities Commission (CPUC) is now finally considering a Proposed Decision that would permit California American Water (CalAm) to build a 6.4 mgd (million gallons per day) desalination facility. LandWatch opposes the Proposed Decision because it is the costliest and riskiest water supply alternative.
 
Over the past 10 years, LandWatch has participated in the CPUC proceedings and advocated several partial settlements among the parties. The settlements required more careful analysis of groundwater impacts, provision of water to a disadvantaged community, and CPUC consideration of a proposal for recycled water instead of reliance only on a desalination facility. With LandWatch support, the CPUC approved a 3,500 afy (acre feet per year) recycled water project called Pure Water Monterey, which is now under construction by the Monterey One Water agency.
 
It is now evident that Pure Water Monterey can expand to provide another 2,250 afy of recycled water. Combined with the existing legal supply of 9,044 afy, there would be 11,294 afy. This amount is sufficient to meet the Peninsula’s foreseeable future demand for the next 15-30 years. The recycled water is less than half the price of desalinated water at $1,858 per acre-foot instead of $4,265. The recycled water would also have fewer environmental impacts. It would not harm the Bay, it would use much less energy, and it would run on energy generated from methane waste gas.
 
Last week, LandWatch urged the CPUC to defer construction of a desalination facility unless and until it determines the feasibility of expanding the Pure Water Monterey facility. Based on the work for the Pure Water facility and the Monterey Peninsula Water Management District, LandWatch is confident that the CPUC would find that the recycled water project expansion is faster, cheaper, and less risky than the desalination facility.
 
Regrettably, CalAm and the Proposed Decision reject any consideration of the Pure Water Monterey Expansion. Their rejection is largely based on the claim that the Peninsula needs to produce 14,000 afy of water to meet its water needs. In fact, demand for existing customers has averaged only 10,085 afy for the past five years and has declined each year. A study by the Monterey Peninsula Water Management District shows that growth in demand would average only 177 afy after the moratorium is lifted. Even doubling that growth rate and adding in water needed to supply the Pebble Beach development, plus the foreseeable demand through 2035 would be only a total of 10,635 afy. This is well under the supply that could be provided with the expansion of Pure Water Monterey.
 
CalAm’s future demand estimate is based on the unfounded claim that tourism remains depressed since the recession and that a “bounceback” will require another 500 afy. Absurd. Not only is the 500 afy number taken from thin air, but the record shows that tourism had already recovered by 2016 and that demand in 2016 and 2017 continued to decline.
 
Based on a 1997 study, which has never been produced in the record, CalAm also claims that undeveloped lots will require another 1,181 afy. This claim ignores the fact that these lots will not all be developed at once, that many are undevelopable, and that they will not consume water at the 1997 rate. Again, the actual rate of demand growth for these lots of record from 1997 to the 2013 moratorium was only 177 afy.
 
CalAm predicts that demand will suddenly increase when the moratorium is lifted. But the Peninsula has implemented permanent conservation measures. Moreover, Peninsula customers now pay the highest water rates in the nation. CalAm admits those rates will double to approximately $120/month per household when the desalination facility comes online. What will rates actually be, knowing that construction will be delayed by lawsuits and construction costs will rise? CalAm and the CPUC’s Proposed Decision ignore the fundamental economic reality that a higher price leads to lower demand.
 
CPUC’s Proposed Decision fails to recognize the inherent bias CalAm’s demand forecasts. The company derives profit from capital investments and thus has enormous financial incentives to over-invest in facilities. It has no incentive to purchase less expensive recycled water from a public agency.
 
The CPUC decision also ignores other risks to ratepayers, including mitigation costs if there is physical harm to the aquifer and potential costs if the facility operates below its capacity, which is virtually certain for decades.
 
After reviewing comments on the Proposed Decision submitted by the parties to the proceeding, including LandWatch, the CPUC may act on the Proposed Decision at its meetings on September 13 or 27, 2018. We will keep you posted.
 
Again, apologies for the long email, but this technical and complex issue needed to be relayed to you in its entirety.

Sincerely,

Michael D. DeLapa
Executive Director,
LandWatch Monterey County
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Box 1876 · Salinas, CA 93902 · 831-759-2824 · FAX: 831-759-2825
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