Technical Workshops on Monterey Peninsula Water Supply Project A July 26 & 27, 2012

Disclaimer This presentation contains material that are for discussion purposes. Various graphics contains numerous estimates which are beyond our control and subject to change. These graphics are for illustration purposes only. 2

3 Topics for July 26-27, 2012 Technical Workshop 1.Demand Projections 2.Available Water Supply 3.Project sizing, costs and ratepayer impacts 4.Project governance 5.Contingency planning in light of possible impediments to project completion and to meeting the December 2016 deadline

4 Demand Projections What are the current, short-term and long-term demand projections for the Monterey District? How do the demand projections compare with various filings at the Commission? What assumptions concerning growth, conservation, infrastructure improvements and better management of non-revenue producing water underlie the demand projections? How might changes in demand projections affect the sizing of the Monterey Peninsula Water Supply Project?

System Demand – Max Month 5 New Supply 751 AF ASR 325 AF 18,100 AFY 1,533 AF1,388 AF1,255AF New Supply 751 AF Seaside 491 AF Seaside 325 AF Sand City 25 AF Carmel R 70 AF

System Demand - Annual 4,944 AFY (Firm) 10,306 AFY New Supply 9,006 Carmel R 3,376 Seaside 1,474 ASR 1,300 Sand City Desal 94 Total Supply Capacity = 15,250 AFY 18,100 12,200 13,290 6

7 Long Term Demands Lots of Record (LOR) = 1181 AFA General Plan Build Out (GPBO) = 4545 AFA Seaside Basin Replenishment = TBD by Water Master For Demand Scenarios : Uses 5 year Avg. Demand as Starting Point. Uses 25 year and 50 year payback of Seaside Basin Uses 7 year and 20 year development of LOR Assumes Sand City growth occurs over 25 years Assumes no ASR for initial 5 years. Assumes GPBO starts at 100 AFA after LOR

Demand Scenarios 8

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Maximum Month in Scenarios 11

Demand Comparison to Previous Filings 12 TOTAL ESTIMATED MONTEREY MAIN SYSTEM PRODUCTION (Acre Feet AF) FEIR 15, CPS 14,798 16,500 18, UWMP 15,285 18, GRC Application 14,000 14, GRC Application 12,821 12, GRC Decision 11,938

13 Non-Revenue Water (NRW) – Main System 12 Mo. Period Production Consumption NRW Oct 07 – Sep 0813,98912,093 1,840 (13.2%) Oct 08 – Sep 0912,91711,641 1,303 (10.1%) Oct 09 – Sep 10 12,60911,295 1,275 (10.6%) Oct 10 – Sep 11 12,38111,239 1,445 (12.3%) Jul 11 – June 1211,53310,5031,030 (8.9%) All values in acre-feet

14 Non-Revenue Water (NRW) Opportunity 12 Mo. Period Production Consumption NRW Jul 11 – June 1211,53310,5031,030 (8.9%) Main System Unavoidable Annual Real Losses = 770 AF Current NRW – UARL = 260 AF Infrastructure Leakage Index = 1.08 * UARL is estimated using the AWWA Audit Software

Main Breaks 15

$ Conservation Spend Per Customer 16

17 Available Water Supply What possible impediments lie in the path of receiving water, on a dependable basis, from the following sources: Recycled water Aquifer Storage Recovery (ASR) Replenishment Sand City Desalination Plant Slant Wells California-American Water Company (Cal-Am) owned Desalination plant facilities

System Production with and without GWR EIR Demand (AFY)15,250 Seaside Wells (AFY)1,474 Sand City Desal (AFY)94 Carmel River Legal Right (AFY) 3,376 ASR Recovery (AFY)1,300 Desal to CAW (AFY)9,006 Required Plant Size* (MGD)9.0 *By Comparison, North Marina Project proposed an 11 MGD (12,300 AFY) and the RDP proposed a 10 MGD Plant (11,200 AFY) EIR Demand (AFY)15,250 Seaside Wells (AFY)1,474 Sand City Desal (AFY)94 Carmel River Legal Right (AFY) 3,376 ASR Recovery (AFY)1,300 GWR Recovery (AFY)3,500 Desal to CAW (AFY)5,506 Required Plant Size* (MGD)5.4 WITH GROUNDWATER REPLENISHMENTWITHOUT GROUNDWATER REPLENISHMENT 18

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20 Project Sizing, Costs and Ratepayer Impacts Based on the net demand and available supply, what is the optimal size of the project and estimated cost of the total project and Cal- Am only facilities? Normal practice would be to size Facilities to meet a 19,795 AFA demand and initially operate them at less than 50% of capacity. Connection Fee should be collected to supply water over 15,250 AFA Estimated Cost of facilities are as follows: 9.0 MGD Plant = $260M 5.4 MGD Plant = $213M Cal-Am Facilities = $107M Total Cost range: $320M - $367M

Project Sizing, Costs and Ratepayer Impacts (continued) What is the cumulative impact on ratepayers if all current Cal- Am requested rate increases were approved by the Commission? 21

Assumptions: Usage = 1ccf = 100 cubic feet = 748 gallons Proposed 2017 bill includes multiple estimates Reflects data from May Projected Impact to Monterey Water Bills ProjectUsage (ccf) 2012 Current Monthly Bill 2017 Projected Monthly Bill Range $ Increase Related to Water Supply Project 25 th Percentile Bill3$21.12$40 - $59$17 - $26 50 th Percentile Bill5$28.90$54 - $83$22 - $37 Average Bill6$34.09$64 - $97$29 - $43 75 th Percentile Bill8$44.48$86 - $126$35 - $56 95 th Percentile Bill16$146.58$299 - $511$119 - $223 Average Commercial Bill62$348.97$709 - $774$288 - $356

23 Project Governance What are Cal-Am’s plans for governance-related issues on the project? How will project oversight and governance ensure participation by ratepayers? What possible impediments face Cal-Am’s proposed governance structure?

24 Contingency Planning in Light of Possible Impediments to Project Completion and to Meeting December 2016 Deadline What are potential issues that could delay or derail the project? What are Cal-Am’s contigency plans, and related cost and scheduling implications, if: o State Revolving Funds are not available or are significantly limited or delayed? o ASR replenishment water is significantly limited or not available? o Grey water is not available for recycling? o Slant wells do not meet project technical criteria? o Environmental issues require relocation of desalination facilities or slant wells? o Capacity or availability of outfall is insufficient? o Amended Ocean Plan sets brine disposal standards that are incompatible with the project as proposed? o Dynamics of sea water intrusion change in unexpected manner? o Project delays occur due to water rights-related issues; ownership- related issues; permitting; acquisition of land for desalination facilities

Questions? 25