mprwa tac regular meeting agenda packet 11-19-12

7/30/2019 MPRWA TAC Regular Meeting Agenda Packet 11-19-12

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AgendaMonterey Peninsula Regional Water Authority (MPRWA)

Technical Advisory Committee (TAC)TAC Regular Meeting

2:00 PM, Monday, November 19, 2012City Council Chamber

Few Memorial Hall of RecordsMonterey, California

CALL TO ORDER

ROLL CALL

PLEDGE OF ALLEGIANCE

REPORTS FROM TAC MEMBERS

PUBLIC COMMENTSPUBLIC COMMENTS allows you, the public, to speak for a maximum of three minutes on anysubject which is within the jurisdiction of the MPRWA TAC and which is not on the agenda. Anyperson or group desiring to bring an item to the attention of the Committee may do so byaddressing the Committee during Public Comments or by addressing a letter of explanation to:MPRWA TAC, Attn: Monterey City Clerk, 580 Pacific St, Monterey, CA 93940. The appropriatestaff person will contact the sender concerning the details.

APPROVAL OF MINUTES

1. September 17, 2012

2. October 15, 2012

AGENDA ITEMS

3. Discuss MPWMD Financial Analysis of SPI Cost Comparisons Report

4. Discuss Cal Am Requested Surcharge 2, Impacts to Ratepayers, and Provide Direction toStaff

5. Review Cost Model and Discuss Strategy and Recommendation for CPUC Cost andFinancial Workshops December 11-13, 2012

ADJOURNMENT

The Monterey Peninsula Regional Water Authority is committed to include the disabled in all ofits services, programs and activities. For disabled access, dial 711 to use the California RelayService (CRS) to speak to staff at the Monterey City Clerks Office, the Principal Office of theAuthority. CRS offers free text-to-speech, speech-to-speech, and Spanish-language services24 hours a day, 7 days a week. If you require a hearing amplification device to attend ameeting, dial 711 to use CRS to talk to staff at the Monterey City Clerks Office at(831) 646-3935 to coordinate use of a device or for information on an agenda.


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Created date 11/16/2012 11:57 AM Monday, November 19, 2012

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Agenda related writings or documents provided to the MPRWA are available for publicinspection during the meeting or may be requested from the Monterey City Clerks Office at 580Pacific St, Room 6, Monterey, CA 93940. This agenda is posted in compliance with CaliforniaGovernment Code Section 54954.2(a) or Section 54956.


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MINUTES

MONTEREY PENINSULA REGIONAL WATER AUTHORITYTECHNICAL ADVISORY COMMITTEE (TAC)

Regular Meeting2:00 PM, Monday, September 17, 2012

COUNCIL CHAMBERSFEW MEMORIAL HALL OF RECORDS

MONTEREY, CALIFORNIA

MembersPresent: Stoldt, Israel, Narigi, Riedl, RileyAbsent: None

StaffPresent:

Clerk of the Board Milton

CALL TO ORDER

Chair Stoldt called the meeting to order at 2:06 p.m.

ROLL CALL


PUBLIC COMMENTS

Chair Stoldt invited public comments for items not listed on the agenda. David Armanasco gavean update on the reporting progress and communication with SPI Consultants indicating DeepWater Desal released a comprehensive preliminary study on the modeling of potential impactsfrom the operations of a desalination facility open intake prepared by Tamara Environmental onSeptember 12, 2012 and will be moving forward with a validation study. Having no furtherrequests to speak, Chair Stoldt closed Public Comment.


1. Receive Report From MPRWA Board Meeting of September 13, 2012

Chair Stoldt reported on items presented at the MPRWA Authority meeting on September 12,2012 including receiving the qualitative risk evaluation, but indicated that the primary discussionof the Authority meeting was related to governance and finance. He also recommended thatfuture meeting arrangement include a less formal structure with TAC members sitting at tablesin a discussion format.

2. Receive Other Reports from TAC Members

Member Riedl spoke about attending a water quality protection program meeting from the StateWater Resources Agency Board which gave progress reports on desalination regulations. Hecommented that he received a voice message from Nadar Aga and did not return the call.Member Israel reported that his agency is conducting meetings on groundwater replenishmentand crafting discussions with the growing community and anticipates a 6-month time frame andexpects positive results. Member Riley expressed concern that there is too much concern anddiscussion about governance and time tables and not enough attention being paid to the cost ofwater.


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MPRWA Minutes Monday, September 17, 2012

MPRWA TAC Meeting Minutes

Regular Meeting Minutes - Monday, September 17, 20122

AGENDA ITEMS

3. Discuss Kris Helm Preliminary Findings and Next Steps

Chair Stoldt introduced the item indicating the memorandum provided by Kris Helm had greatpreliminary observations and was encouraged that in the near future data would be available togive the Mayors enough time to make informed decisions for upcoming deadlines and not justfor February filing testimony. He then introduced Kris Helm, the contracted independentconsultant hired by the MPRWA with development analysis and interagency experience withregards to water resources. Mr. Helm discussed his preliminary findings with regards tocompliance with environmental laws, permitting and financing implications.

He indicated that the focus of his review will be scheduling and determining if the project can beimplemented in an acceptable time frame to achieve the deadline. However, he needs tounderstand the processes which lead to the critical path for accomplishing projects.

Mr. Helm discussed the analysis he is strategizing and requested direction for other areas of

concern. He also discussed his plan for an independent assessment for each project as well astheir development schedule.Observations which are relevant presented in the memo, made independently about theadministrative process and the facts which may be significant to the Authority with regard todeadlines and the opportunities to influence the process at specific steps. Discussed the areasthat could lead to a longer process and litigation. Presumptive way to take water with the leastimpact was with a subsurface set of wells. Found to have minimal environmental effects, butother significant issues related to development, not including legal challenges to water rights,quantities of water extracted, questions about specific system, cost and design which led to aninadequate review of the environmental review. Prior environmental review included noanalysis of taking water of the ocean , but from existing diversions, discharges as a sourcewater. 19:38

Observations and Concerns expressed:

CPUC is only reviewing the proposed Cal Am project and not all of the projects.

All projects will have problems reaching the deadline of 2017, and each has thesubstantial risk of not achieving environmental compliance.

Determination of the permits and compliance levels that would need to adhere to: EIR,CEQA, NEPA, Etc. A new intake or discharge system to Monterey Bay would includedFederal Discretionary Approval.

Concern in the record for brine disposal, water intake. The Authority should examine thisquestion more fully including possible ways the JPA could influence the path forenvironmental compliance.

Environmental regulations need to address the cumulative impacts of intake and if thereis a unified approach to handling with a regional

Limited scope versus regional scope

Careful consideration to seek public private partnerships but does not replace CPUCsadvantage.


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Chair Stoldt recommended pushing item number 5 to next meeting.

Tom Rowley spoke representing the Tax Payer Association urging the MPRWA not to let theCPUC relationship with Cal Am interfere with the objective analysis of the two other projectsand he expressed anticipation for the consultants results. David Armanasco spoke Deep WaterDesal indicating he attended a meeting in Sacramento that clarified NEPA/CQUA would becombined project/document which will help with time schedule to a degree.

Nader Aga spoke in support of the Peoples Project that it can meet the deadlines and canobtain necessary permits and requested three things of the Authority; honesty, commitment andfirmness

Paul Hart an attorney with the Peoples Project in Moss Landing spoke in support of Kris Helmsinsights and encouraged the Authority to push for an evaluation of all three projects saying it isin the publics best interest to consider alternatives. He also expressed concern about supportfrom the farming community. Chair Stoldt responded that the Farm Bureau submitted a letter ofsupport for the project echoing that they would support the project as long as it did not takewater from their water supply.

Libby Downey spoke in support of Kris Helm and acknowledged him for his independentanalysis. Safwat Malek expressed appreciation for reviewing multiple projects. Linda McCallamspoke in support of proceeding with a project with a company other than Cal Am. With nofurther requests to speak, Chair Stoldt closed public comment.

4. Discuss SPI Preliminary Scoping and Constraints Evaluation Memorandum and Next Steps(Stoldt)

Chair Stoldt deferred item number 4 to a later meeting.

5. Plan October TAC Meeting Schedule and Agendas

Chair Stoldt recommended returning to the standard schedule of meetings for the month ofOctober, the first and third Monday and the TAC agreed. He also indicated he will send out anemail with requested topics for the next meetings.

Member Riely commented that he was disappointed that the TAC did not receive a copy of therisk assessment or an opportunity to analyze and give input prior to distribution to the Authority.He also requested to agendize a discussion regarding methods to get GWR strategy, as analternate plan, on the fast track to approval to ensure some kind of supply availability that willmeet the schedule and deadline. Member Israel responded that the Monterey Regional WaterPollution Control Agency could put together an analysis of how much impact/assistance GWRwould make to the overall project.

ADJOURNMENT

With no further business to conduct Chair Stoldt adjourned the meeting at 4:08 p.m.


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Lesley Milton, Clerk to the Board, Secretary


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M I N U T E SMONTEREY PENINSULA WATER AUTHORITY (MPRWA)

TECHNICAL ADVISORY COMMITTEE (TAC)Regular TAC Meeting

2:00 PM, Monday, October 15, 2012FEW MEMORIAL HALL OF RECORDS

CITY COUNCIL CHAMBERMONTEREY, CALIFORNIA

Members Present: Israel, Narigi, Riedl, Riley, StoldtMembers Absent: None

Staff Present: Legal Counsel , Acting Executive Director, Committee Clerk

CALL TO ORDER

ROLL CALL

Chair Stoldt called the meeting to order at 2:06 p.m.



George Riley requested that replenishment of the Seaside Aquifer be added to a future agenda.Chair Stoldt directed that the item when agendized should include a formal report and draftproposal.PUBLIC COMMENTS

Chair Stoldt opened public comments for items not on the agenda. George Riley about theOctober 2, 2012 Town Hall meeting discussing Cal Am bill spikes and the lowest costdesalination facility options. David Armanasco spoke about California Public UtilitiesCommission (CPUC) Notice of Preparation and that he identified a mistake on page 12 thatcharacterizes the Deep Water Desal. Incorrectly and notified the CPUC. Doug Wilhelmquestioned the limiting factors of Cal Ams proposed base assumption for replenishment of theSeaside Aquifer at 350 acre feet per year and stated he was concerned with committing to abase assumption because year to year changes occur. Chair Stoldt responded that it is relatedto the capacity factor for which you can run a desalination plant. With no further requests tospeak, Chair Stoldt closed public comment.

AGENDA ITEMS

1. Discussion of Potential Issues/Positions on the CEQA Process in Advance of ScheduledScoping Meetings

Chair Stoldt introduced the item specifying that there are two places for public participation inthe CEQA process. First, the scoping area provides the ability to give input into the range of theenvironmental issues to be addressed in the document. This period invites all responsible


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MPRWA TAC Minutes Monday, October 15, 2012

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agencies to try to coordinate early documentation and coordination on the scope of thedocument and a chance also for others to make recommendations and comments. The reviewand comment period after the draft EIR is released is the second public participation period.

Stoldt indicated the deadline for comments to be received is November 9th, 2012 with scopingmeetings October 24th and 25th. These meetings are chances for the CPUC to orally present

potential issues and this is an opportunity for the TAC to provide the Authority withrecommended messages and or comments to present. Alternatives to address are identified inthe NOP. Chair Stoldt suggested the TAC identify areas of concern that should be addressedby the Authority.

Member Riley questioned the difference between a subsequent Environmental Impact Report(EIR) versus a full EIR. Chair Stoldt responded that subsequent EIRs use many of the previoussupporting documents, where an initial EIR develops the initial studies and documents them.Member Riley asked what triggers NEPA requirements. TAC members came to the conclusionit is difficult to evaluate at this time.

Member Riley asked if the alternatives analysis is evaluated at the project or at the programlevel. The TAC discussed their desire for analysis at the program level. The TAC alsodiscussed concerns about the ability of the Cal Am project to meet the proposed 2016 deadlinedue to the lengthened EIR process and other factors. TAC members agreed that havingmultiple projects evaluated is favorable to ensure a project will meet the 2016 CPUC deadline.Also TAC discussed the possibility of recommending to the Authority the possibility of piecemilling projects as a way to meet the deadline.

Member Israel discussed current results from an MRWPCA analysis of wastewater flowscoming from the Monterey Peninsula and the Salinas Valley. Member Riley spoke to the size ofthe facility concerned about the stated margin of 1,000 acre feet of water per year (af/y)ofwater. Chair Stoldt responded that capacity can always be reduced if it's not necessary andsuggested the project be built where demand is today, or build larger and scale it back when

necessary to reduce the output. Member Riedl suggested addressing the issue of outfall - howwell the outfall will operate for disbursement.

Chair Stoldt recommended addressing two things with the MPRWA Authority. First is projectsizing and the second is any new data which might be available that can affect the analysis. Hethen clarified the next steps the TAC will take. The TAC decided that each member will reviewthe Notice of Preparation and bring back comments and areas of concern andrecommendations that they would like to be forwarded to the MPRW. The TAC agreed to hold aSpecial Meeting October 22 to collectively generate a list of recommendations to forward to theMPRWA prior to its meeting October 22nd so that the MPRWA comments could be formulatedbefore the scoping meetings on October 24 and 25 th. Chair Stoldt opened the item fordiscussion from the public.

City Manager Meurer encouraged the TAC to use extra caution and detail with the CEQAprocess to ensure the projects do not spend years in litigation and appeals, stating the scopinghearing is the opportunity to request the most detailed scope, including review of alternativeprojects at the project level and not the program level. He encouraged review of all types ofwells; slant, rainy and direct and review all of them in the different geographical positions. Mr.Meurer also confirmed that projects built in the Monterey Bay National Marine Sanctuaryrequire a permit from the Sanctuary, which requires a NEPA document. He noted the NEPA


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document needs to be done in coordination from the beginning and not as an afterthought. Mr.Meurer also encouraged the MPRWA to encourage individuals who are active and interested tobe part of the process and get them to comment on the adequacy of the scope of the documentto make it a community based effort. He requested the TAC pass on his recommendations tothe Authority, who are waiting for TAC recommendations about what they should be saying atthe Scoping Hearings.

Bill hood encouraged the TAC to request a specific level of review of the presented alternativesindicating it was not guaranteed by the NOP notice unless requested.

Bridget Hoover from the Monterey Bay National Marine Sanctuary clarified from earlier TACquestions that she has been contacted by ESA doing documentation for the PUC that thedecision was made Cal Am will need to go through the NEPA process. In the short term weasked them to apply for different permits, one for the test well, apply separately, they weregoing to let Cal Am know that this week. With no more requests to speak Chair Stoldt closedpublic comment.

2. Review of Timelines, Schedule for Analysis and Reports from Consultants SPI and Kris Helm

Chair Stoldt confirmed that the Consultant SPI is receiving data back from the different projectsand spoke with Consultant Kris Helm and his preliminary conclusions are very similar to Mr.Meurers in terms of environmental review. Chair Stoldt asked both consultants to provide adraft report by the end of the month, and to a repot prior to that so that the TAC has the abilityto review and comment on it before the MPRWA meeting. By consensus the TAC approved anad-hoc committee to review and comment on the drafts to provide to the Authority. LegalCounsel directed the TAC to limit the ad hoc subcommittee to 2 individuals since the TAC iscurrently a 5 member board.

Chair Stoldt indicated that the following items and deadlines will guide what the TAC will bereviewing in the next two meetings.

October 22, 2012 - Cal Am response due for the public participation proposals

October 24 and 25, 2012 CPUC Public Scoping meetings November 1, 2012 Cal Am report due on the contingency plans

November 9, 2012 - Deadline for providing scoping comments to the CPUC November 15, 2012 Compliance report available from Cal AM

December 11, 2012 Financial WorkshopsStoldt opened public comment on the item. City Manager Meurer suggested having ConsultantKris Helm provide input regarding the discussed October scoping meetings in terms of the

adequacy of the EIR/NEPA scope. He said it would leverage current resources and providevalue in the long run. Stoldt agreed to pursue this option and seeing no request to speak closedpublic comment.

3. Discussion of Recent Public Participation Proposals Under Cal-Am's California Public UtilitiesCommission Application

Chair Stoldt indicated three responses were submitted to the CPUC Public Participationproposal. He stated the first was a joint response from the Authority and Monterey County, a


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copy was included in the agenda packet, the second from the MPWMD which differed only onfinance and ownership, and two filings from the City of Pacific Grove. The first was combinedwith the People's Project encouraging Cal Am to work jointly, and one was looking at PacificGrove specific water projects with the intent to get the golf course of the potable water.Responses from Cal Am regarding the submitted proposals will be available on or after October26, 2012.

Member Riley spoke to Mr. Meurers suggestion to have a contingency plan in place and isconcerned that the Authority needs to discuss this sooner rather than. Chair Stoldt agreed thata contingency plan makes sense in the case the application is mired in litigation for years;something needs to be advanced forward, at the project level and not the program level.

Member Narigi suggested waiting until the November 1, 2012 deadline when Cal Am willpresent a contingency plan to the CPUC.

Member Israel spoke to Member Riley's comments that it's important to have some type ofproject that can be fully or partially completed by 2016 therefore rationing will not be necessary.

Member Riley requested either the MPRWA or the TAC agendize a discussion on alternativeprojects potentially being elevated to a legitimate review in the case that something outside thescope of the EIR fails the process. Chair Stoldt responded that the discussion has been takingplace, but not with the MPRWA. The MPWMD has funding to advance a project or analternative project but there is public concern over one agency to having a majority of theauthority.

Chair Stoldt opened public comment on the item. Libby Downey said Bill Monning advised if thedeadline passes for the Cease and Desist order and the reduction of water is not reached,having an alternative proposal is viewed more favorably by the State than just failing to reachyour deadline. She expressed concern that the MPRWA is taking too long to make decisions.She also spoke to Member Riley's comment questioning funding availability from the MPWMD.

Fred Meurer disagreed with Ms. Downeys comments indicating the MPRWA is moving onmultiple fronts, collecting data in order to make proper decisions and switching tactics now itwould take additional time and resources as all proposed projects have substantial hurdles. Heencouraged the MPRWA to focus on the question before the Authority, to determine if thescope of the environmental documentation is sufficient regardless of which direction theAuthority chooses. It needs to look at all projects and not just the Cal Am Project in the samelevel of project detail. Having no further requests to speak, Chair Stoldt closed public comment.

Chair Stoldt said many people may benefit from attending the public meetings at the MPWMDand MRWPCA. Member Narigi recommended receiving reports from MPWMD and the reports

from MRWPCA. The TAC agendized receiving an update from both the MPWMD andMRWPCA at the next TAC meeting on November 5, 2012.

Member Israel and Riley questioned the possibility of discussing interim projects on the way toa final project in order to get the lowest costs. Member Narigi disagreed recommending thegroup stay focused on the priorities already set. He stated the purpose of this panel is to giveMPRWA TAC comments from the work of the consultants, and the contingency plan, and then


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move into the financing stage.

Member Riedl questioned why the letter submitted to the CPUC on October 1, 2012 wasdifferent from the letter the County of Monterey submitted. Legal Counsel redirected thediscussion to comments on the agenda. With no more business to discuss, Chair Stoldtadjourned the meeting at 3:45 p.m.

ADJOURNMENT

Respectfully Submitted, Approved,

Lesley Milton, Committee Clerk President MPRWA


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Monterey Peninsula Regional Water Authority

Agenda Report

Date: November 19, 2012

Item No: 3.

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FROM: Clerk of the Authority

SUBJECT: Discuss MPWMD Financial Analysis of SPI Cost Comparisons Report

DISCUSSION: Anoral discussion of the attached will take place at the meeting.

Attached: Financial Analysis of SPI Cost Comparison


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Monterey Peninsula Water Supply Project

Financial Analysis of SPI Cost Comparisons

of

Alternative Desalination Projects

Prepared by MPWMD for MPRWA Technical Advisory Committee

Project Proponent

Financial Measure Cal-Am DWD PML

9kAFY 5.5 kAFY 9kAFY 5.5 kAFY 9kAFY 5.5 kAFY

COSTS (in Millions)

Construction Proceeds $207.0 $175.0 $160.0 $134.0 $190.0 $161.0

O & M Cost (2012 $) $11.0 $7.77 $12.3 $9.38 $10.1 $7.06

First Year of Operations 2017 2017 2018 2018 2019 2019

Total Revenue Requirement over Lifecycle (40 Years) $1,331.3 $965.7 $1,355.4 $1,060.0 $1,254.1 $942.2

Net Present Value of Revenue Requirements (2012 $) $508.1 $382.5 $434.5 $342.2 $401.9 $306.5

Revenue Requirement in Common Year, 2019 $29.2 $20.5 $27.1 $21.5 $27.5 $21.5

Amount of Surcharge 2 Proceeds $99.15 $99.15 $0 $0 $0 $0

The net present value was calculated using a 5.0% discount rate. Our other assumptions are as follows:

Cal-Am Financing

47% debt / 53% equity

5.00% debt interest rate

9.99% post-tax equity rate of return

40.75% Effective Tax Rate

35% Federal tax rate

8.84% California tax rate1.05% Ad Valorem Tax Rate

0.2643% Uncollectibles

40 year depreciable life (2.50% factor)

25 year tax depreciable life (4.00% factor)

Use of $99.15 million from Surcharge 2

No SRF Loans

O&M escalation at 2.8% per year

Project operations begin 2017

Public Debt

4.0% interest cost

30 year term

No access to Surcharge 2

Must borrow all interest during construction

Debt service reserve fund equal to one annual debt payment

Issuance costs equal to 1% of proceeds plus reserve

No SRF Loans

O&M escalation at 2.8% per year

Project operations begin 2018 for DWD; 2019 for PML


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Monterey Peninsula Water Supply ProjectFinancial Analysis of SPI Costs for Cal-Am ProjectScenario 1: 9,000 AF Cal-Am PlantWith Surcharge 2; No SRF Loans

Construction Schedule and Costs

Inflated Dollars

Project Component 2012 2013 2014 2015 2016 Totals

Misc Cost 0 0 0 0 0 0

Surcharge 2 0 7,500,000 25,000,000 33,870,000 32,780,000 99,150,000

Other 0 2,938,000 1,225,000 15,070,000 88,617,000 107,850,000

Other 0 0 0 0 0 0

Other 0 0 0 0 0 0

Other 0 0 0 0 0 0

Total 0 10,438,000 26,225,000 48,940,000 121,397,000 207,000,000


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Financial Analysis of SPI Costs for Cal-Am ProjectScenario 1: 9,000 AF Cal-Am PlantWith Surcharge 2; No SRF Loans

Revenue Requirements Calculation

2012 2013 2014 2015 2016 2017

Capital Costs $0 $10,438,000 $26,225,000 $48,940,000 $121,397,000Surcharge #1

AFUDC Amount 0 52,452 237,216 617,313 7,518,185

AFUDC Excluded from ROR 0 37,688 226,135 427,225 2,030,084

Plant(Transfer to CWIP) 0 10,490,452 36,952,668 86,509,981 215,425,166 215,425,166

Accumulated AFUDC Excluded from ROR 0 37,688 263,823 691,049 2,721,133 2,721,133

Accumulated Depreciation 2,838,851

Cumulative Surcharge 2 0 7,500,000 32,500,000 66,370,000 99,150,000 99,150,000

Cumulative Outside Contributions 0 0 0 0 0 0

Cumulative Deferred Taxes 738,453

Rate Base & Return 0 2,968,348 4,226,618 19,573,885 114,256,644 111,160,168

Average Rate Base 0 1,484,174 3,597,483 11,900,252 66,915,265 112,708,406

Equity Return Necessary 5,967,572

Debt Return Necessary 2,648,648

Return Necessary, Gross-Up for Taxes 14,503,751Interest Income Tax Savings, Gross-Up for Taxes -1,816,835

Total Return Required (Pre-Tax) 12,686,917

Expenses

O&M Expense 12,628,689

Purchased Water Cost 0

Ad Valorem Taxes 0 15,584 37,774 124,953 702,610 1,183,438

Depreciation & Amortization 2,838,851

Total Expense 16,650,978

Revenues from Expenses, Gross-Up for Uncollectibles 16,695,053

SRF Loan Repayment 0

Public Agency Contribution Repayment 0

Total Revenue Requirement (Lifecycle) $1,334,035,346 0 7,500,000 25,000,000 33,870,000 32,780,000 29,381,970

NPV of Revenue Requirement (2012 $) $508,983,124 0 7,142,857 22,675,737 29,258,179 26,968,187 23,021,542

Cost of Water ($/A-F) $3,265

Assumptions:Purchase Water Annual Cost $0 (per AF and escalation at 1/2 the O&M rate)

Reduction After Yr 30 $0 (assumes $76,288,000 at 3.70% for 30 years)Purchased Water in AF 0 (GWR included or not)

Annual O&M Expense (2012) $11,000,000 (from SPI Table ES-2)

O & M Cost Inflation Index 2.8% (combination of labor @ 2.0% and non-labor @ 3.23%)

Annual Surcharge 2 Contribution $0 $7,500,000 $25,000,000 $33,870,000 $32,780,000

Outside Contribution for Debt? N Amount ---> $0 $0 $0 $0 $0

Contribution Principal Due $0

Contribution Interest Due $0

Contribution Length of Loan 20 years

Contribution Interest Cost 2.50% (SRF at 2.5% per Linam testimony A.13; 3.70% for municipal debt)

Outside Contribution for Equity? N Amount ---> $0 $0 $0 $0 $0

Contribution 2 Principal Due $0

Contribution 2 Interest Due $0

Contribution 2 Length of Loan 30 yearsContribution 2 Interest Cost 3.70% (SRF at 2.5% per Linam testimony A.13; 3.70% for municipal debt)

AFUDC Rate - 2016 4.98% (approximation based on Stephenson testimony, Attachment 5)

AFUDC Rate thru 2015 1.00% (approximation based on Stephenson testimony, Attachment 5)

Equity Ratio 53% (Stephenson testimony A.11, A.51; Assumes future capital structure per A.11-05-003)

Equity Rate of Return 9.99% (Stephenson testimony A.11, A.51; Assumes future capital structure per A.11-05-003)

Debt Ratio 47% (Stephenson testimony A.11, A.51; Assumes future capital structure per A.11-05-003)

Debt Interest Cost 5.00% (Linam testimony A.13; Future capital structure per A.11-05-003 would be 6.63%)

Effective Tax Rate 40.750% (Linam testimony A.12)

Gross-Up Factor 1.683 (based uncollectibles rate and state and federal tax rates as shown)

Ad Valorem Tax Rate 1.050% (Stephenson testimony A.57; Linam testimony A.12)

Gross-Up for Uncollectibles 99.736% ( 0.2643% uncollectible revenues)

Discount Rate for NPV 5.00%

Total Acre-Feet Production 9,000

Depreciation Summary:

Remaining Years of Book Depreciation 40

Composite Depreciation Rate 2.50% (based on 40 year life; Linam testimony A.12)) 2,838,851

Cumulative Book Depreciation 2,838,851

Remaining Years of Tax Depreciation 25

Tax Depreciation Rate 4.00% (based on 25 year tax life) 4,651,007

Cumulative Tax Depreciation 4,651,007

Excess of tax over book 1,812,156

Deferred Taxes 738,453


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Summary of Annual Costs

Total Net Present

Revenue Value of

Surcharge 2 Depreciation Pre-Tax Return Property Taxes O&M Costs Requirement Requirement

2013 7,500,000 7,500,000 7,142,857

2014 25,000,000 25,000,000 22,675,737

2015 33,870,000 33,870,000 29,258,179

2016 32,780,000 32,780,000 26,968,187

2017 2,838,851 12,686,917 1,183,438 12,628,689 29,337,895 22,987,008

2018 2,838,851 12,309,320 1,148,216 12,982,292 29,278,679 21,848,201

2019 2,838,851 11,902,527 1,110,270 13,345,796 29,197,444 20,750,078

2020 2,838,851 11,495,578 1,072,310 13,719,478 29,126,218 19,713,771

2021 2,838,851 11,088,630 1,034,350 14,103,624 29,065,454 18,735,851

2022 2,838,851 10,681,681 996,389 14,498,525 29,015,446 17,812,967

2023 2,838,851 10,274,732 958,429 14,904,484 28,976,496 16,941,957

2024 2,838,851 9,867,783 920,469 15,321,810 28,948,912 16,119,8372025 2,838,851 9,460,834 882,509 15,750,820 28,933,014 15,343,795

2026 2,838,851 9,053,885 844,548 16,191,843 28,929,127 14,611,175

2027 2,838,851 8,646,936 806,588 16,645,215 28,937,590 13,919,475

2028 2,838,851 8,239,987 768,628 17,111,281 28,958,747 13,266,336

2029 2,838,851 7,833,038 730,667 17,590,397 28,992,953 12,649,530

2030 2,838,851 7,426,089 692,707 18,082,928 29,040,575 12,066,959

2031 2,838,851 7,019,141 654,747 18,589,250 29,101,988 11,516,645

2032 2,838,851 6,612,192 616,787 19,109,749 29,177,578 10,996,722

2033 2,838,851 6,205,243 578,826 19,644,822 29,267,742 10,505,432

2034 2,838,851 5,798,294 540,866 20,194,877 29,372,888 10,041,118

2035 2,838,851 5,391,345 502,906 20,760,333 29,493,435 9,602,216

2036 2,838,851 4,984,396 464,946 21,341,623 29,629,815 9,187,255

2037 2,838,851 4,577,447 426,985 21,939,188 29,782,471 8,794,846

2038 2,838,851 4,170,498 389,025 22,553,485 29,951,859 8,423,683

2039 2,838,851 3,763,549 351,065 23,184,983 30,138,448 8,072,533

2040 2,838,851 3,356,600 313,104 23,834,162 30,342,718 7,740,2342041 2,838,851 2,949,652 275,144 24,501,519 30,565,166 7,425,695

2042 2,838,851 2,584,484 241,081 25,187,562 30,851,977 7,138,452

2043 2,838,851 2,261,317 210,936 25,892,813 31,203,918 6,876,079

2044 2,838,851 1,938,373 180,812 26,617,812 31,575,847 6,626,702

2045 2,838,851 1,615,429 150,688 27,363,111 31,968,078 6,389,541

2046 2,838,851 1,292,486 120,563 28,129,278 32,381,178 6,163,913

2047 2,838,851 969,542 90,439 28,916,898 32,815,730 5,949,173

2048 2,838,851 646,599 60,315 29,726,571 33,272,335 5,744,715

2049 2,838,851 323,655 30,191 30,558,915 33,751,611 5,549,968

2050 1,440,809 81,092 7,564 31,414,564 32,944,030 5,159,212

2051 0 0 0 32,294,172 32,294,172 4,816,610

2052 0 0 0 33,198,409 33,198,409 4,715,691

2053 0 0 0 34,127,964 34,127,964 4,616,886

2054 0 0 0 35,083,547 35,083,547 4,520,151

2055 0 0 0 36,065,887 36,065,887 4,425,4432056 0 0 0 37,075,732 37,075,732 4,332,719

99,150,000 95,122,887 207,509,270 19,356,508 910,184,408 1,331,323,073 508,143,534

Note: No adjustment for uncollectibles for depreciation and Ad Valorem.

Discount rate utilized = 5.00%


18/40


Financial Analysis of SPI Costs for Cal-Am ProjectScenario 1: 9,000 AF Cal-Am Plant

With Surcharge 2; No SRF Loans

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

45,000,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

O&MCosts PropertyTaxes

PreTaxReturn Depreciation

Surcharge2


19/40

Monterey Peninsula Water Supply ProjectFinancial Analysis of SPI Costs for Cal-Am ProjectScenario 2: 5,500 AF Cal-Am PlantWith Surcharge 2; No SRF Loans

Construction Schedule and Costs

Inflated Dollars

Project Component 2012 2013 2014 2015 2016 Totals

Misc Cost 0 0 0 0 0 0

Surcharge 2 0 7,500,000 25,000,000 33,870,000 32,780,000 99,150,000

Other 0 2,293,000 2,561,000 5,738,000 65,258,000 75,850,000

Other 0 0 0 0 0 0

Other 0 0 0 0 0 0

Other 0 0 0 0 0 0

Total 0 9,793,000 27,561,000 39,608,000 98,038,000 175,000,000


20/40



Revenue Requirements Calculation

2012 2013 2014 2015 2016 2017

Capital Costs $0 $9,793,000 $27,561,000 $39,608,000 $98,038,000Surcharge #1

AFUDC Amount 0 49,211 237,414 577,333 4,650,121

AFUDC Excluded from ROR 0 37,688 215,353 493,695 1,554,815

Plant(Transfer to CWIP) 0 9,842,211 37,640,625 77,825,958 180,514,079 180,514,079

Accumulated AFUDC Excluded from ROR 0 37,688 253,042 746,737 2,301,552 2,301,552

Accumulated Depreciation 1,976,563

Cumulative Surcharge 2 0 7,500,000 32,500,000 66,370,000 99,150,000 99,150,000

Cumulative Outside Contributions 0 0 0 0 0 0

Cumulative Deferred Taxes 520,785

Rate Base & Return 0 2,316,685 4,925,605 10,791,738 79,536,752 77,389,039

Average Rate Base 0 1,158,343 3,621,145 7,858,671 45,164,245 78,462,896

Equity Return Necessary 4,154,375

Debt Return Necessary 1,843,878

Return Necessary, Gross-Up for Taxes 10,096,907Interest Income Tax Savings, Gross-Up for Taxes -1,264,804

Total Return Required (Pre-Tax) 8,832,103

Expenses

O&M Expense 8,920,446

Purchased Water Cost 0

Ad Valorem Taxes 0 12,163 38,022 82,516 474,225 823,860

Depreciation & Amortization 1,976,563

Total Expense 11,720,870

Revenues from Expenses, Gross-Up for Uncollectibles 11,751,895

SRF Loan Repayment 0

Public Agency Contribution Repayment 0

Total Revenue Requirement (Lifecycle) $967,567,999 0 7,500,000 25,000,000 33,870,000 32,780,000 20,583,998

NPV of Revenue Requirement (2012 $) $383,095,350 0 7,142,857 22,675,737 29,258,179 26,968,187 16,128,101

Cost of Water ($/A-F) $2,287

Assumptions:Purchase Water Annual Cost $0 (per AF and escalation at 1/2 the O&M rate)

Reduction After Yr 30 $0 (assumes $76,288,000 at 3.70% for 30 years)Purchased Water in AF 0 (GWR included or not)

Annual O&M Expense (2012) $7,770,000 (from SPI Table ES-2)

O & M Cost Inflation Index 2.8% (combination of labor @ 2.0% and non-labor @ 3.23%)

Annual Surcharge 2 Contribution $0 $7,500,000 $25,000,000 $33,870,000 $32,780,000

Outside Contribution for Debt? N Amount ---> $0 $0 $0 $0 $0

Contribution Principal Due $0

Contribution Interest Due $0

Contribution Length of Loan 20 years

Contribution Interest Cost 2.50% (SRF at 2.5% per Linam testimony A.13; 3.70% for municipal debt)

Outside Contribution for Equity? N Amount ---> $0 $0 $0 $0 $0

Contribution 2 Principal Due $0

Contribution 2 Interest Due $0

Contribution 2 Length of Loan 30 yearsContribution 2 Interest Cost 3.70% (SRF at 2.5% per Linam testimony A.13; 3.70% for municipal debt)

AFUDC Rate - 2016 3.60% (approximation based on Stephenson testimony, Attachment 5)

AFUDC Rate thru 2015 1.00% (approximation based on Stephenson testimony, Attachment 5)

Equity Ratio 53% (Stephenson testimony A.11, A.51; Assumes future capital structure per A.11-05-003)

Equity Rate of Return 9.99% (Stephenson testimony A.11, A.51; Assumes future capital structure per A.11-05-003)

Debt Ratio 47% (Stephenson testimony A.11, A.51; Assumes future capital structure per A.11-05-003)

Debt Interest Cost 5.00% (Linam testimony A.13; Future capital structure per A.11-05-003 would be 6.63%)

Effective Tax Rate 40.750% (Linam testimony A.12)

Gross-Up Factor 1.683 (based uncollectibles rate and state and federal tax rates as shown)

Ad Valorem Tax Rate 1.050% (Stephenson testimony A.57; Linam testimony A.12)

Gross-Up for Uncollectibles 99.736% ( 0.2643% uncollectible revenues)

Discount Rate for NPV 5.00%

Total Acre-Feet Production 9,000

Depreciation Summary:

Remaining Years of Book Depreciation 40

Composite Depreciation Rate 2.50% (based on 40 year life; Linam testimony A.12)) 1,976,563

Cumulative Book Depreciation 1,976,563

Remaining Years of Tax Depreciation 25

Tax Depreciation Rate 4.00% (based on 25 year tax life) 3,254,563

Cumulative Tax Depreciation 3,254,563

Excess of tax over book 1,278,000

Deferred Taxes 520,785


21/40




Total Net Present

Revenue Value of

Surcharge 2 Depreciation Pre-Tax Return Property Taxes O&M Costs Requirement Requirement

2013 7,500,000 7,500,000 7,142,857

2014 25,000,000 25,000,000 22,675,737

2015 33,870,000 33,870,000 29,258,179

2016 32,780,000 32,780,000 26,968,187

2017 1,976,563 8,832,103 823,860 8,920,446 20,552,973 16,103,792

2018 1,976,563 8,569,290 799,345 9,170,219 20,515,417 15,308,920

2019 1,976,563 8,285,307 772,855 9,426,985 20,461,711 14,541,756

2020 1,976,563 8,001,213 746,355 9,690,941 20,415,072 13,817,724

2021 1,976,563 7,717,119 719,854 9,962,287 20,375,823 13,134,437

2022 1,976,563 7,433,024 693,354 10,241,231 20,344,172 12,489,557

2023 1,976,563 7,148,929 666,854 10,527,986 20,320,332 11,880,877

2024 1,976,563 6,864,835 640,353 10,822,769 20,304,520 11,306,3172025 1,976,563 6,580,740 613,853 11,125,807 20,296,962 10,763,913

2026 1,976,563 6,296,645 587,352 11,437,329 20,297,890 10,251,814

2027 1,976,563 6,012,551 560,852 11,757,574 20,307,540 9,768,274

2028 1,976,563 5,728,456 534,352 12,086,787 20,326,157 9,311,647

2029 1,976,563 5,444,361 507,851 12,425,217 20,353,992 8,880,379

2030 1,976,563 5,160,267 481,351 12,773,123 20,391,303 8,473,008

2031 1,976,563 4,876,172 454,850 13,130,770 20,438,355 8,088,151

2032 1,976,563 4,592,077 428,350 13,498,432 20,495,422 7,724,509

2033 1,976,563 4,307,983 401,850 13,876,388 20,562,783 7,380,854

2034 1,976,563 4,023,888 375,349 14,264,927 20,640,727 7,056,030

2035 1,976,563 3,739,793 348,849 14,664,345 20,729,550 6,748,947

2036 1,976,563 3,455,699 322,348 15,074,946 20,829,556 6,458,577

2037 1,976,563 3,171,604 295,848 15,497,045 20,941,060 6,183,953

2038 1,976,563 2,887,509 269,347 15,930,962 21,064,382 5,924,162

2039 1,976,563 2,603,415 242,847 16,377,029 21,199,854 5,678,345

2040 1,976,563 2,319,320 216,347 16,835,586 21,347,815 5,445,6922041 1,976,563 2,035,225 189,846 17,306,982 21,508,617 5,225,439

2042 1,976,563 1,780,596 166,094 17,791,578 21,714,831 5,024,322

2043 1,976,563 1,555,588 145,106 18,289,742 21,966,998 4,840,636

2044 1,976,563 1,330,736 124,131 18,801,855 22,233,285 4,666,014

2045 1,976,563 1,105,885 103,157 19,328,306 22,513,912 4,499,913

2046 1,976,563 881,034 82,183 19,869,499 22,809,280 4,341,856

2047 1,976,563 656,183 61,209 20,425,845 23,119,800 4,191,395

2048 1,976,563 431,332 40,235 20,997,769 23,445,899 4,048,108

2049 1,976,563 206,482 19,261 21,585,706 23,788,012 3,911,597

2050 835,578 47,028 4,387 22,190,106 23,077,099 3,613,997

2051 0 0 0 22,811,429 22,811,429 3,402,278

2052 0 0 0 23,450,149 23,450,149 3,330,992

2053 0 0 0 24,106,753 24,106,753 3,261,200

2054 0 0 0 24,781,742 24,781,742 3,192,870

2055 0 0 0 25,475,631 25,475,631 3,125,9722056 0 0 0 26,188,949 26,188,949 3,060,475

99,150,000 66,062,163 144,082,387 13,440,035 642,921,168 965,655,753 382,503,661

Note: No adjustment for uncollectibles for depreciation and Ad Valorem.

Discount rate utilized = 5.00%


22/40


Financial Analysis of SPI Costs for Cal-Am ProjectScenario 2: 5,500 AF Cal-Am Plant

With Surcharge 2; No SRF Loans

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

45,000,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

O&MCosts PropertyTaxes

PreTaxReturn Depreciation

Surcharge2


23/40


Financial Analysis of SPI Costs for DWD ProjectScenario 3: 9,000 AF DWD Plant

No Surcharge; No SRF Loans


Total Net PresenTotal Debt Service Net Revenue Value o

Principal Due Interest Due Debt Service Reserve Used Debt Service O&M Costs Requirement Requiremen2013 $0 $0 $0 $0 $0 $0 $0 $2014 0 0 0 0 0 0 0 2015 0 0 0 0 0 0 0 2016 0 0 0 0 0 0 0 2017 0 0 0 0 0 0 0 2018 3,895,788 8,739,800 12,635,588 505,424 12,130,164 14,516,563 26,646,727 19,884,192019 4,051,619 8,583,968 12,635,588 505,424 12,130,164 14,923,027 27,053,191 19,226,192020 4,213,684 8,421,904 12,635,588 505,424 12,130,164 15,340,871 27,471,035 18,593,472021 4,382,231 8,253,356 12,635,588 505,424 12,130,164 15,770,416 27,900,580 17,984,962022 4,557,520 8,078,067 12,635,588 505,424 12,130,164 16,211,987 28,342,151 17,399,622023 4,739,821 7,895,766 12,635,588 505,424 12,130,164 16,665,923 28,796,087 16,836,472024 4,929,414 7,706,173 12,635,588 505,424 12,130,164 17,132,569 29,262,733 16,294,582025 5,126,591 7,508,997 12,635,588 505,424 12,130,164 17,612,281 29,742,445 15,773,05

2026 5,331,654 7,303,933 12,635,588 505,424 12,130,164 18,105,425 30,235,589 15,271,022027 5,544,920 7,090,667 12,635,588 505,424 12,130,164 18,612,377 30,742,541 14,787,682028 5,766,717 6,868,870 12,635,588 505,424 12,130,164 19,133,523 31,263,687 14,322,252029 5,997,386 6,638,202 12,635,588 505,424 12,130,164 19,669,262 31,799,426 13,873,982030 6,237,281 6,398,306 12,635,588 505,424 12,130,164 20,220,001 32,350,165 13,442,162031 6,486,773 6,148,815 12,635,588 505,424 12,130,164 20,786,161 32,916,325 13,026,102032 6,746,243 5,889,344 12,635,588 505,424 12,130,164 21,368,174 33,498,338 12,625,172033 7,016,093 5,619,494 12,635,588 505,424 12,130,164 21,966,483 34,096,647 12,238,732034 7,296,737 5,338,851 12,635,588 505,424 12,130,164 22,581,544 34,711,708 11,866,192035 7,588,606 5,046,981 12,635,588 505,424 12,130,164 23,213,827 35,343,991 11,506,982036 7,892,151 4,743,437 12,635,588 505,424 12,130,164 23,863,814 35,993,978 11,160,572037 8,207,837 4,427,751 12,635,588 505,424 12,130,164 24,532,001 36,662,165 10,826,432038 8,536,150 4,099,437 12,635,588 505,424 12,130,164 25,218,897 37,349,061 10,504,072039 8,877,596 3,757,991 12,635,588 505,424 12,130,164 25,925,026 38,055,190 10,193,012040 9,232,700 3,402,887 12,635,588 505,424 12,130,164 26,650,927 38,781,091 9,892,812041 9,602,008 3,033,579 12,635,588 505,424 12,130,164 27,397,153 39,527,317 9,603,012042 9,986,088 2,649,499 12,635,588 505,424 12,130,164 28,164,273 40,294,437 9,323,222043 10,385,532 2,250,056 12,635,588 505,424 12,130,164 28,952,873 41,083,037 9,053,032044 10,800,953 1,834,634 12,635,588 505,424 12,130,164 29,763,553 41,893,717 8,792,072045 11,232,991 1,402,596 12,635,588 505,424 12,130,164 30,596,933 42,727,097 8,539,972046 11,682,311 953,277 12,635,588 505,424 12,130,164 31,453,647 43,583,811 8,296,382047 12,149,603 485,984 12,635,588 12,635,588 0 32,334,349 32,334,349 5,861,902048 0 0 0 0 0 33,239,711 33,239,711 5,739,082049 0 0 0 0 0 34,170,423 34,170,423 5,618,832050 0 0 0 0 0 35,127,195 35,127,195 5,501,102051 0 0 0 0 0 36,110,756 36,110,756 5,385,842052 0 0 0 0 0 37,121,857 37,121,857 5,273,002053 0 0 0 0 0 38,161,269 38,161,269 5,162,512054 0 0 0 0 0 39,229,785 39,229,785 5,054,352055 0 0 0 0 0 40,328,219 40,328,219 4,948,452056 0 0 0 0 0 41,457,409 41,457,409 4,844,76

$218,495,000 $160,572,625 $379,067,625 $27,292,869 $351,774,756 $1,003,630,486 $1,355,405,242 $434,527,37

Assumes 4.0% interest rate, issuance costs, and reserve fund

Bond Sizing: Assumptions: O&M ExpenseMaturity of Bonds 35 years 12,300,000 in 2012 $

Proceeds 160,000,000 Interest-Only Period 5 years 14,516,563 in 2018 $Capitalized Interest 43,699,000 Interest Rate on Bonds 4.00% 2.80% escalation rateDebt Service Reserve Fund 12,635,588Debt Issuance Costs 2,163,346 Discount Rate for NPV 5.00%Balancing Amount -2,933Issuance Amount 218,495,000


24/40




$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

$45,000,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33

O&MCostsDebtService


25/40






Principal Due Interest Due Debt Service Reserve Used Debt Service O&M Costs Requirement Requiremen2013 $0 $0 $0 $0 $0 $0 $0 $2014 0 0 0 0 0 0 0 2015 0 0 0 0 0 0 0 2016 0 0 0 0 0 0 0 2017 0 0 0 0 0 0 0 2018 3,262,819 7,319,800 10,582,619 423,305 10,159,314 11,070,354 21,229,669 15,841,902019 3,393,332 7,189,287 10,582,619 423,305 10,159,314 11,380,324 21,539,639 15,307,812020 3,529,065 7,053,554 10,582,619 423,305 10,159,314 11,698,973 21,858,288 14,794,542021 3,670,228 6,912,391 10,582,619 423,305 10,159,314 12,026,545 22,185,859 14,301,202022 3,817,037 6,765,582 10,582,619 423,305 10,159,314 12,363,288 22,522,602 13,826,922023 3,969,718 6,612,901 10,582,619 423,305 10,159,314 12,709,460 22,868,774 13,370,892024 4,128,507 6,454,112 10,582,619 423,305 10,159,314 13,065,325 23,224,639 12,932,342025 4,293,647 6,288,972 10,582,619 423,305 10,159,314 13,431,154 23,590,468 12,510,52

2026 4,465,393 6,117,226 10,582,619 423,305 10,159,314 13,807,226 23,966,541 12,104,732027 4,644,009 5,938,610 10,582,619 423,305 10,159,314 14,193,829 24,353,143 11,714,272028 4,829,769 5,752,850 10,582,619 423,305 10,159,314 14,591,256 24,750,570 11,338,522029 5,022,960 5,559,659 10,582,619 423,305 10,159,314 14,999,811 25,159,125 10,976,842030 5,223,878 5,358,741 10,582,619 423,305 10,159,314 15,419,806 25,579,120 10,628,652031 5,432,833 5,149,786 10,582,619 423,305 10,159,314 15,851,560 26,010,875 10,293,382032 5,650,147 4,932,472 10,582,619 423,305 10,159,314 16,295,404 26,454,718 9,970,502033 5,876,153 4,706,466 10,582,619 423,305 10,159,314 16,751,675 26,910,990 9,659,492034 6,111,199 4,471,420 10,582,619 423,305 10,159,314 17,220,722 27,380,036 9,359,862035 6,355,647 4,226,972 10,582,619 423,305 10,159,314 17,702,902 27,862,217 9,071,132036 6,609,873 3,972,746 10,582,619 423,305 10,159,314 18,198,584 28,357,898 8,792,872037 6,874,268 3,708,351 10,582,619 423,305 10,159,314 18,708,144 28,867,458 8,524,642038 7,149,238 3,433,381 10,582,619 423,305 10,159,314 19,231,972 29,391,286 8,266,022039 7,435,208 3,147,411 10,582,619 423,305 10,159,314 19,770,467 29,929,782 8,016,642040 7,732,616 2,850,003 10,582,619 423,305 10,159,314 20,324,040 30,483,355 7,776,112041 8,041,921 2,540,698 10,582,619 423,305 10,159,314 20,893,113 31,052,428 7,544,072042 8,363,598 2,219,021 10,582,619 423,305 10,159,314 21,478,121 31,637,435 7,320,182043 8,698,141 1,884,478 10,582,619 423,305 10,159,314 22,079,508 32,238,822 7,104,132044 9,046,067 1,536,552 10,582,619 423,305 10,159,314 22,697,734 32,857,049 6,895,582045 9,407,910 1,174,709 10,582,619 423,305 10,159,314 23,333,271 33,492,585 6,694,242046 9,784,226 798,393 10,582,619 423,305 10,159,314 23,986,602 34,145,917 6,499,832047 10,175,595 407,024 10,582,619 10,582,619 0 24,658,227 24,658,227 4,470,292048 0 0 0 0 0 25,348,658 25,348,658 4,376,632049 0 0 0 0 0 26,058,420 26,058,420 4,284,932050 0 0 0 0 0 26,788,056 26,788,056 4,195,152051 0 0 0 0 0 27,538,121 27,538,121 4,107,252052 0 0 0 0 0 28,309,189 28,309,189 4,021,192053 0 0 0 0 0 29,101,846 29,101,846 3,936,942054 0 0 0 0 0 29,916,698 29,916,698 3,854,452055 0 0 0 0 0 30,754,365 30,754,365 3,773,692056 0 0 0 0 0 31,615,488 31,615,488 3,694,62

$182,995,000 $134,483,570 $317,478,570 $22,858,457 $294,620,113 $765,370,241 $1,059,990,353 $342,153,13



Proceeds 134,000,000 Interest-Only Period 5 years 11,070,354 in 2018 $Capitalized Interest 36,599,000 Interest Rate on Bonds 4.00% 2.80% escalation rateDebt Service Reserve Fund 10,582,619Debt Issuance Costs 1,811,816 Discount Rate for NPV 5.00%Balancing Amount 1,565Issuance Amount 182,995,000


26/40




$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

$45,000,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33

O&MCostsDebtService


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Financial Analysis of SPI Costs for PML ProjectScenario 5: 9,000 AF PML Plant




Principal Due Interest Due Debt Service Reserve Used Debt Service O&M Costs Requirement Requiremen2013 $0 $0 $0 $0 $0 $0 $0 $2014 0 0 0 0 0 0 0 2015 0 0 0 0 0 0 0 2016 0 0 0 0 0 0 0 2017 0 0 0 0 0 0 0 2018 0 0 0 0 0 0 0 2019 4,893,738 10,978,600 15,872,338 634,894 15,237,445 12,253,867 27,491,312 19,537,562020 5,089,488 10,782,850 15,872,338 634,894 15,237,445 12,596,976 27,834,420 18,839,432021 5,293,067 10,579,271 15,872,338 634,894 15,237,445 12,949,691 28,187,136 18,169,672022 5,504,790 10,367,548 15,872,338 634,894 15,237,445 13,312,282 28,549,727 17,527,052023 5,724,981 10,147,357 15,872,338 634,894 15,237,445 13,685,026 28,922,471 16,910,372024 5,953,981 9,918,357 15,872,338 634,894 15,237,445 14,068,207 29,305,652 16,318,482025 6,192,140 9,680,198 15,872,338 634,894 15,237,445 14,462,117 29,699,561 15,750,31

2026 6,439,826 9,432,513 15,872,338 634,894 15,237,445 14,867,056 30,104,501 15,204,812027 6,697,419 9,174,920 15,872,338 634,894 15,237,445 15,283,334 30,520,778 14,681,012028 6,965,315 8,907,023 15,872,338 634,894 15,237,445 15,711,267 30,948,712 14,177,962029 7,243,928 8,628,410 15,872,338 634,894 15,237,445 16,151,182 31,388,627 13,694,752030 7,533,685 8,338,653 15,872,338 634,894 15,237,445 16,603,416 31,840,860 13,230,532031 7,835,032 8,037,306 15,872,338 634,894 15,237,445 17,068,311 32,305,756 12,784,482032 8,148,434 7,723,904 15,872,338 634,894 15,237,445 17,546,224 32,783,669 12,355,822033 8,474,371 7,397,967 15,872,338 634,894 15,237,445 18,037,518 33,274,963 11,943,792034 8,813,346 7,058,992 15,872,338 634,894 15,237,445 18,542,569 33,780,013 11,547,692035 9,165,880 6,706,458 15,872,338 634,894 15,237,445 19,061,761 34,299,205 11,166,832036 9,532,515 6,339,823 15,872,338 634,894 15,237,445 19,595,490 34,832,935 10,800,572037 9,913,816 5,958,523 15,872,338 634,894 15,237,445 20,144,164 35,381,608 10,448,282038 10,310,368 5,561,970 15,872,338 634,894 15,237,445 20,708,200 35,945,645 10,109,382039 10,722,783 5,149,555 15,872,338 634,894 15,237,445 21,288,030 36,525,474 9,783,282040 11,151,694 4,720,644 15,872,338 634,894 15,237,445 21,884,095 37,121,539 9,469,462041 11,597,762 4,274,576 15,872,338 634,894 15,237,445 22,496,849 37,734,294 9,167,402042 12,061,673 3,810,666 15,872,338 634,894 15,237,445 23,126,761 38,364,206 8,876,612043 12,544,139 3,328,199 15,872,338 634,894 15,237,445 23,774,310 39,011,755 8,596,612044 13,045,905 2,826,433 15,872,338 634,894 15,237,445 24,439,991 39,677,436 8,326,952045 13,567,741 2,304,597 15,872,338 634,894 15,237,445 25,124,311 40,361,755 8,067,202046 14,110,451 1,761,887 15,872,338 634,894 15,237,445 25,827,792 41,065,236 7,816,962047 14,674,869 1,197,469 15,872,338 634,894 15,237,445 26,550,970 41,788,414 7,575,832048 15,261,864 610,475 15,872,338 15,872,338 0 27,294,397 27,294,397 4,712,582049 0 0 0 0 0 28,058,640 28,058,640 4,613,842050 0 0 0 0 0 28,844,282 28,844,282 4,517,162051 0 0 0 0 0 29,651,922 29,651,922 4,422,522052 0 0 0 0 0 30,482,176 30,482,176 4,329,862053 0 0 0 0 0 31,335,676 31,335,676 4,239,142054 0 0 0 0 0 32,213,075 32,213,075 4,150,322055 0 0 0 0 0 33,115,042 33,115,042 4,063,362056 0 0 0 0 0 34,042,263 34,042,263 3,978,22

$274,465,000 $201,705,145 $476,170,145 $34,284,250 $441,885,894 $812,199,238 $1,254,085,132 $401,906,21





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$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

$45,000,000

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O&MCostsDebtService


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Principal Due Interest Due Debt Service Reserve Used Debt Service O&M Costs Requirement Requiremen2013 $0 $0 $0 $0 $0 $0 $0 $2014 0 0 0 0 0 0 0 2015 0 0 0 0 0 0 0 2016 0 0 0 0 0 0 0 2017 0 0 0 0 0 0 0 2018 0 0 0 0 0 0 0 2019 4,146,835 9,303,000 13,449,835 537,993 12,911,842 8,565,575 21,477,417 15,263,592020 4,312,709 9,137,127 13,449,835 537,993 12,911,842 8,805,411 21,717,253 14,699,092021 4,485,217 8,964,618 13,449,835 537,993 12,911,842 9,051,962 21,963,804 14,158,062022 4,664,626 8,785,210 13,449,835 537,993 12,911,842 9,305,417 22,217,259 13,639,472023 4,851,211 8,598,625 13,449,835 537,993 12,911,842 9,565,969 22,477,811 13,142,312024 5,045,259 8,404,576 13,449,835 537,993 12,911,842 9,833,816 22,745,658 12,665,632025 5,247,070 8,202,766 13,449,835 537,993 12,911,842 10,109,163 23,021,005 12,208,53

2026 5,456,952 7,992,883 13,449,835 537,993 12,911,842 10,392,219 23,304,061 11,770,132027 5,675,230 7,774,605 13,449,835 537,993 12,911,842 10,683,202 23,595,043 11,349,612028 5,902,240 7,547,596 13,449,835 537,993 12,911,842 10,982,331 23,894,173 10,946,192029 6,138,329 7,311,506 13,449,835 537,993 12,911,842 11,289,836 24,201,678 10,559,112030 6,383,862 7,065,973 13,449,835 537,993 12,911,842 11,605,952 24,517,794 10,187,652031 6,639,217 6,810,618 13,449,835 537,993 12,911,842 11,930,919 24,842,760 9,831,122032 6,904,786 6,545,050 13,449,835 537,993 12,911,842 12,264,984 25,176,826 9,488,882033 7,180,977 6,268,858 13,449,835 537,993 12,911,842 12,608,404 25,520,246 9,160,292034 7,468,216 5,981,619 13,449,835 537,993 12,911,842 12,961,439 25,873,281 8,844,772035 7,766,945 5,682,891 13,449,835 537,993 12,911,842 13,324,359 26,236,201 8,541,752036 8,077,623 5,372,213 13,449,835 537,993 12,911,842 13,697,441 26,609,283 8,250,682037 8,400,727 5,049,108 13,449,835 537,993 12,911,842 14,080,970 26,992,812 7,971,052038 8,736,757 4,713,079 13,449,835 537,993 12,911,842 14,475,237 27,387,079 7,702,362039 9,086,227 4,363,608 13,449,835 537,993 12,911,842 14,880,544 27,792,385 7,444,142040 9,449,676 4,000,159 13,449,835 537,993 12,911,842 15,297,199 28,209,041 7,195,942041 9,827,663 3,622,172 13,449,835 537,993 12,911,842 15,725,520 28,637,362 6,957,342042 10,220,769 3,229,066 13,449,835 537,993 12,911,842 16,165,835 29,077,677 6,727,912043 10,629,600 2,820,235 13,449,835 537,993 12,911,842 16,618,478 29,530,320 6,507,282044 11,054,784 2,395,051 13,449,835 537,993 12,911,842 17,083,796 29,995,638 6,295,062045 11,496,976 1,952,860 13,449,835 537,993 12,911,842 17,562,142 30,473,984 6,090,912046 11,956,855 1,492,981 13,449,835 537,993 12,911,842 18,053,882 30,965,724 5,894,472047 12,435,129 1,014,707 13,449,835 537,993 12,911,842 18,559,391 31,471,233 5,705,422048 12,932,534 517,301 13,449,835 13,449,835 0 19,079,054 19,079,054 3,294,142049 0 0 0 0 0 19,613,267 19,613,267 3,225,122050 0 0 0 0 0 20,162,439 20,162,439 3,157,542051 0 0 0 0 0 20,726,987 20,726,987 3,091,382052 0 0 0 0 0 21,307,343 21,307,343 3,026,612053 0 0 0 0 0 21,903,948 21,903,948 2,963,202054 0 0 0 0 0 22,517,259 22,517,259 2,901,112055 0 0 0 0 0 23,147,742 23,147,742 2,840,332056 0 0 0 0 0 23,795,879 23,795,879 2,780,81

$232,575,000 $170,920,059 $403,495,059 $29,051,644 $374,443,415 $567,735,309 $942,178,724 $306,479,13





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$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

$45,000,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33

O&MCostsDebtService


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Agenda Report


Item No: 4.

08/12


SUBJECT: Discuss Cal Am Requested Surcharge 2, Impacts to Ratepayers, and Provide

Direction to Staff

DISCUSSION: There is no report for this item. A discussion will take place at the meeting.


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Agenda Report


Item No: 5.

08/12


SUBJECT: Review Cost Model and Discuss Strategy and Recommendation for CPUC Cost

and Financial Workshops December 11-13, 2012

DISCUSSION: Anoral discussion of the attached will take place at the meeting.

Attached: California-American Water Company Compliance Filing On The Monterey PeninsulaWater Supply Project Financial Model


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BEFORE THE PUBLIC UTILITIES COMMISSION

OF THE STATE OF CALIFORNIA

Application of California-American Water

Company (U210W) for Approval of theMonterey Peninsula Water Supply Project andAuthorization to Recover All Present and FutureCosts in Rates.

A.12-04-019(Filed April 23, 2012)

CALIFORNIA-AMERICAN WATER COMPANY

COMPLIANCE FILING ON THE MONTEREY PENINSULA WATER SUPPLY

PROJECT FINANCIAL MODEL

Sarah E. LeeperJavier E. NaranjoCalifornia-American Water Company333 Hayes Street, Suite 202San Francisco, CA 94102Telephone: 415.863.2960Email: [email protected]: [email protected]

Attorneys for ApplicantCalifornia-American Water Company

Dated: November 15, 2012


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1

BEFORE THE PUBLIC UTILITIES COMMISSION

OF THE STATE OF CALIFORNIA

Application of California-American WaterCompany (U210W) for Approval of theMonterey Peninsula Water Supply Project andAuthorization to Recover All Present and FutureCosts in Rates.

A.12-04-019(Filed April 23, 2012)

CALIFORNIA-AMERICAN WATER COMPANY

COMPLIANCE FILING ON THE MONTEREY PENINSULA WATER SUPPLY

PROJECT FINANCIAL MODEL

Pursuant to theAdministrative Law Judges Directives to Applicant and Ruling on

Motions Concerning Scope, Schedule, and Official Notice, dated August 29, 2012, California-

American Water Company (California American Water) respectfully submits this compliance

filing to provide a financial model that can be used to compute various revenue requirement

scenarios for the Monterey Peninsula Water Supply Project. California American Water worked

jointly with representatives from the Division of Ratepayer Advocates (DRA) and Monterey

Peninsula Water Management District (MPWMD) to develop the financial model,1

attached

hereto as Attachment 1.

The attached financial model reflects the collaborative efforts of DRA, MPWMD, and

California American Water and includes the input of these interested parties. Counsel for DRA

and MPWMD have authorized the undersigned to state that they support the model, as well as

the use of the model as the basis for a common methodology.2

1 In addition to an in-person meeting that took place amongst these parties at MPWMD's offices on Tuesday,

October 30, California American Water, DRA, and MPWMD also met on other occasions to develop the model.

2 By telephone, on November 15, counsel for MPWMD and DRA represented that they support the model and based

on the input of their clients believe that the model can be used as the basis for a common methodology to calculate


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2

Dated: November 15, 2012 Respectfully submitted,

By: /s/ Sarah E. LeeperSarah E. LeeperAttorney for ApplicantCalifornia-American Water Company

the various revenue requirement scenarios.


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Attachment 1


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onterey Water Supply Project

y Assumptions

nt Assumptions Project Summary ($MM)

Plant Size (MGD) 9.0

Capital Scenario High End Capital Investment

vs. Most Probable Capital Scenario +25.0% Desal Plant $254

nclude CAW-Only Facilities? No CAW-Only Facilities 0

AFUDC 12

Mobilization/Demobilization 2.0% Total Project Cost $267

Engineering/Startup 15.0%

mplementation 20.0% CAW Rate Base at Year End 2017

Elec, Inst & Control Systems 40.0% Utility Plant * $260

Contingency 25.0% SRF Funded Costs * 0

Mitigation Allowance 1.0% Surcharge Funded Costs * (102

Exclude Test Well? Yes Pub Agency Funded Costs 0

Deferred Taxes (

Ground Water Recharge Total CAW Rate Base $157

Annual AF 0 * Net of depreciation & amortization

Cost per AF ($) $3,000

Total Cost to Customer

ancing Assumptions CAW Pre-Tax Equity Cost $14Cost of Capital CAW Pre-Tax Debt Cost 3

Cost of Equity 9.99% Depreciation & Amortization 4

Cost of Debt 5.00% General Taxes

Equity % 53.00% Fixed O&M 2

Debt % 47.00% Variable O&M 6

Year 1 CAW Rev Req ($MM) $33

Cost of Capital 7.64% Customer SRF Surcharge 0

Public Agency Costs 0

Other Debt Rates Total Yr 1 Cost to Customer $33

Short Term Debt Rate 1.00%Short Term Debt Cap ($MM) $20.0 Fixed Cost per AF $2,6

SRF Debt Rate 2.50% Variable Cost per AF $6

SRF Term (yrs) 20 Total Cost per AF $3,3

SRF Assets Exempt from Prop Tax? Yes

CAW Captial Structure

CAW Financing Scenario 3 - CAW Equity & Debt / SRF CAW Equity 53.0

% of SRF Debt in CAW Cap Structure? (Max = 47.0%) 0.0% CAW Debt 47.

SRF Borrowings ($MM) $0.0 SRF Debt 0.0

Total 100.0

charge & Contribution Assumptions

Utilize a Surcharge? Yes

Period % of Mont Revenue Req Start Date End Date

Period 1 30.0% 07/01/13 12/31/13

Period 2 45.0% 01/01/14 06/30/14

Period 3 60.0% 07/01/14 12/31/14

Period 4 60.0% 01/01/15 06/30/15

Period 5 60.0% 07/01/15 12/31/15

Period 6 60.0% 01/01/16 06/30/16

Period 7 60.0% 07/01/16 12/31/16

Non CAW Debt via Public Agencies (ie. Public Agency Contribution, SRF Funding off CAW Debt Balance Sheet)

Contribution Amount ($MM) $0.0

Contribution Date Jan-14

Financing Rate 2.5%

Financing Term 20


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mprwa tac regular meeting agenda packet 11-19-12

Documents