Technical Memorandum Date: To: From: Subject: October 5, 2011 Richard Svindland, Director of Engineering, California American Water

Paul Findley, RBF Consulting Cost Analysis of Water Supply Alternatives

This technical memorandum presents the results of cost analysis for eleven alternatives to solve the water supply deficit in CAWs Coastal Division. It should be noted that these alternatives represent physical solutions and that we have not fully explored permitting and schedule impacts for each of these alternatives. Permitting and schedule impacts will be presented in a subsequent technical memorandum. Alternative 1 Implementation of 10 mgd Marina project; Alternative 2 Implementation of 6.5 mgd Marina project with 2700 AFY MRWPCA Groundwater Recharge in Seaside, and 2700 AFY of Carmel River water used for ASR and injection dilution; Alternative 3 35 mgd Lower Carmel Valley Filtration Plant with a 6900 AFY ASR system in Seaside; Alternative 4 24 mgd Lower Carmel Valley Filtration Plant with a 6900 AFY ASR system in Seaside, with 2700 AFY MRWPCA Groundwater Recharge, and 4200 AFY of Carmel River water used for ASR and injection dilution; Alternative 5 32 mgd Lower Carmel Valley Filtration Plant, a 3. 5 mgd desalination plant in North Marina, and a 5500 AFY ASR system in Seaside; Alternative 6 35 mgd Lower Carmel Valley Filtration Plant, expansion of the Sand City desalination plant from 0.3 mgd to 1.0 mgd, and a 6500 afy ASR system in Seaside; Alternative 7 32 mgd Lower Carmel Valley Filtration Plant, a 3.0 mgd desalination plant near the Naval Post Graduate School, and a 5200 AFY ASR system in Seaside; Alternative 8 20 mgd Lower Carmel Valley Iron Removal Plant, a 5 mgd desalination plant near the Naval Post Graduate School, and a 5100 AFY ASR system in Seaside; Alternative 9 35 mgd Salinas River Filtration Plant with a 6900 AFY ASR system in Seaside; and 1|P a ge

Alternative 10 10 mgd Deep Water Desalination Plant near Moss Landing with a 1300 AFY ASR system in Seaside. Alternative 11 5 mgd Marina project with 2700 AFY MRWPCA Groundwater Recharge in Seaside, 2700 AFY of Carmel River water used for ASR and injection dilution, and implementation of a more aggressive conservation program to reduce demand by an additional 1500 AFY. A potential variation of this alternative would be to obtain additional Table 13 direct diversion rights in lieu of additional conservation.

Regional Project as Basis for Cost Estimating

Capital Costs The capital and annual cost estimates costs for the Regional Project have been estimated by RMC and are shown in a table titled Monterey Bay Regional Water Supply Project, Project Cost Comparison(With Escalation to October 2012). From that reference, it is clear that the estimate is based on an assumption that all of the supply wells for the regional desalination plant are slant wells, and that the costs are in October 2012 dollars. The capital costs for MCWD and MCWRA are also shown in Exhibit C of the Water Purchase Agreement, as follows:

Project Facilities Estimated Base Construction Costs Implementation, Start-up and Acceptance Costs Initial Capital Outfall Expenses MCWD and MCWRA Real Property Acquisition Costs Mitigation Costs Pre-Effective Date Costs and Expenses Project Administration and Oversight Expenses Subtotal Estimated Project Facilities Cost Project Contingency Subtotal - Estimated Project Facilities Cost High-end Allowance (for Accuracy) Total Overall Estimated Project Facilities Cost Reserve Fund Payments Account Costs of Obtaining Indebtedness Total

$140,100,000 $ 29,600,000 $ 3,000,000 $ 2,000,000 $ 2,000,000 $ 14,000,000 $ 3,000,000 $193,700,000 $ 46,700,000 $240,400,000 $ 42,070,000 $282,470,000 $ 6,000,000 $ 9,000,000 $297,470,000

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RMCs cost comparison table also includes an estimate for CAWs regional project facilities, in October 2012 dollars, as follows: Base Construction Cost Post-Effective Implementation Costs Pre-Effective Date Costs and Expenses ROW Easements and Land Acquisition Mitigation Capital Costs (Excluding Contingency) Project Contingency Most Probable Capital Cost with Contingency High End of Accuracy Range Low End of Accuracy Range $ 53,300,000 $ 14,500,000 $ 36,900,000 $ 3,400,000 $ 1,000,000 $109,100,000 $ 22,700,000 $132,000,000 $156,000,000 $118,000,000

From the Settlement Agreement and the CPCN, it is clear that the cost cap of $106.875 million for CAW facilities was set at the mid-point between a most probable cost estimate of $95 million and the high end of the accuracy range at $118.75 million. Using the estimate above, an estimated capital cost of approximately $107 million can be obtained by adding an accuracy allowance of $12 million to $95 million, which is the most probable capital cost with contingency but without CAWs pre-effective costs. An estimate of $404 million for the capital cost of all facilities in the Regional Project can be obtained by adding the estimate of $297 million for MCWD/MCWRA facilities to the estimate of $107 million for CAW facilities. Many of the individual line items in the above cost estimates can be consolidated into facilities or facility categories. The consolidated capital cost estimate for the Regional Project is shown in Table 1. TABLE 1 REGIONAL PROJECT CAPITAL COST
Capital Cost Categories
MCWD/MCWRA Raw Water & Brine Facilities Treatment Facility Conveyance Facilities Total MCWD/MCWRA Facilities Pre-Effective Date Costs Reserve Requirements & Financing Total MCWD/MCWRA Capital Cost CAW Conveyance Facilities Terminal Reservoir ASR System Total CAW Capital Cost TOTAL REGIONAL PROJECT CAPITAL COST $57,300,000 $24,200,000 $25,500,000 $107,000,000 $404,000,000 $56,600,000 $174,200,000 $37,200,000 $268,000,000 $14,000,000 $15,000,000 $297,000,000 Estimated Cost (Oct 2012 $)

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Alternatives
Alternative 1 Implementation of a 10 mgd Marina project Description. This alternative would have the same facilities as the previously described Regional Project. Operation. The assumed operation of Alternative 1 is shown in Table 2. For this alternative and all other alternatives except Alternative 11, the assumed system demand is 15,200 AFY. The total production of new project facilities for Alternative 1 would be 11,800 AFY. The desalination plant would be operated at 10,500 afy (8,800 afy to CAW and 1,700 afy to be returned to Salinas Valley users) and BIRP would be operated to produce a long term average of approximately 1300 AFY of excess Carmel River water to be stored and recovered via the ASR system. The desalination plant would produce 700 AF of excess water to be stored in the ASR system during the 6-month wet season and recovered in the 6-month dry season.

Alternative 2 Implementation of 6.5 mgd Marina Project and 2700 AFY MRWPCA Groundwater Recharge Description. This alternative is similar to Alternative 1 except that the desalination plant would be reduced to 6.5 mgd capacity and the ASR system would be supplemented with recharge of 2700 AFY of advanced water treatment (AWT) effluent from the Monterey Regional Water Pollution Control Authoritys regional treatment facility. The AWT effluent would be used to recharge the Seaside aquifer with separate injection wells. These separate injection wells are not included in the capital cost estimate for CAW facilities, however, a 5000 feet, 18-inch diameter pipeline is included to transport dilution water to the AWT effluent injection wells. The Transfer Pipeline from the desalination plant to the Monterey Pipeline would be reduced from 36- inch diameter to 24-inch diameter. Operation. For this alternative, it was assumed that the desalination plant would be operated at a constant rate of 6.5 mgd, producing approximately 7300 AFY (6100 AFY to CAW and 1200 to be returned to Salinas Valley users). The Salinas Valley return would be split seasonally, with 400 AFY being delivered during the 6-month wet season, and 800 AFY being delivered during the 6-month dry season. BIRP would be operated to produce a long term average of approximately 4600 AFY of Carmel River water, of which 2700 AFY would be injected in the ASR system as dilution water to match the amount of recharge water received from MPWPCA (required by regulation). It is assumed that CAW would then recover the total recharge amount (AWT effluent plus dilution water) at ASR extraction wells. This alternative would require operation of the Seaside wells during the injection season, and they would not be operated during the 6-month dry-season . The ASR wells would be operated in extraction mode during the 6-month dry season at an average rate of 9.8 mgd, to recover 5500 AFY.

Alternative 3 Lower Carmel Valley Filtration Plant (LCVFP) Description. This alternative, shown schematically on Figure 1, features a seasonally operated surface water filtration plant fed by an extensive system of supply wells (16 wells) and piping (10,000 lineal feet of 12-inch to 42-inch diameter pipe) in the lower Carmel Valley. It is assumed that the raw water supply from the wells would be considered groundwater under the influence of surface water (GWUISW), and thus it would require filtration to meet the Surface Water Treatment Rule

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The LCVFP examined in this analysis would be the primary supply, not a supplement to a desalination plant. The capacity of the raw water supply system and the plant would need to be approximately 35 mgd (54 cfs) in order to capture more water during periods of high river flow and to produce a long term average of 8,900 AFY of excess Carmel River to meet demand during the rainy season and to provide injection water for the ASR system. This and all alternatives promoting an increase in high flow river diversions above the currently permitted maximum instantaneous diversion rate will be of concern to the Steelhead Association and Environmental agencies. In addition to the raw water supply system described above, this alternative also includes the following new facilities: 35 mgd membrane filtration plant, on 6 acres at a location generally south of Carmel Valley Road and east of Carmel Rancho Road, with pressure ultra-filtration (UF) system, UV and chlorination disinfection, 3.5 MG clear well, membrane backwash supply system, waste backwash recovery, solids processing and handling , chemical building, and O&M building; 35 mgd, 4,500 hp treated water pump station on the LCVFP site; 43,000 feet, 42-inch diameter Peninsula Transfer Pipeline, proceeding from the west end of Carmel Valley Road towards 17 Mile Dr, Forest Lake Road, Congress Avenue and Sinex Road to the old Eardley Pump Station at the west end of the alignment for the Regional Projects Monterey Pipeline; 26,000 feet, 42-inch diameter Monterey Pipeline, on the same alignment as the Regional Projects Monterey Pipeline, to the intersection of Del Monte Boulevard and Broadway Avenue. 9,000 feet, 42-inch diameter Seaside Pipeline, proceeding from the intersection of Del Monte Boulevard and Broadway Ave along Broadway Avenue and then to Yosemite Street and then to the east end of the Seaside Pipeline alignment as proposed for the Regional Project; 3 mgd Valley Greens Pump Station, same as proposed for the Regional Project; 6 MG Terminal Reservoir, same as proposed for the Regional Project; 40 mgd, 1,400 hp ASR Pump Station, located at the northwest corner of the intersection of Hilby Avenue and new General Jim Moore Boulevard (GJM);

2 ASR wells at Fitch Park, each at 2.1 mgd injection/4.3 mgd extraction, same as proposed for the Regional Project; 2 ASR wells located along GJM, each at 2.1 mgd injection/4.3 mgd extraction; 12 ASR injection wells, each with 2.1 mgd injection capacity, at various locations north of the existing Santa Margarita ASR wells; 57,000 feet of 16-inch and 30-inch diameter pipeline for ASR well supply/extraction, recirculation, and backflushing; Centralized reclamation facility for ASR backflush; and Centralized chlorination facility for extracted ASR water.

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Table 2 System Flow Rates Alternative 1 6-Month Wet Season AFY SRFP N/A Average Flow (MGD) N/A N/A 7.1 2.9 0.3 N/A 8.2 12.0 3.6 6-Month Dry Season AFY N/A N/A 4,810 70 150 2,000 1,500 N/A 8,500 Average Flow (MGD) N/A N/A 8.6 0.1 0.3 3.6 2.7 N/A 15.2 Alternative 2 6-Month Wet Season AFY N/A N/A 3,250 400 150 1,500 2,700 4,620 6,700 5,520 Average Flow (MGD) N/A N/A 5.8 0.7 0.3 2.7 4.8 8.2 12.0 9.8 6-Month Dry Season AFY N/A N/A 2,850 800 150 5,500 8,500 Average Flow (MGD) N/A N/A 5.1 1.4 0.3 9.8 0 15.2 Alternative 3 6-Month Wet Season AFY N/A 8,870 N/A N/A 150 N/A 4,620 6,700 6,920 Average Flow (MGD) N/A 15.8 N/A N/A 0.3 N/A 8.2 12.0 12.4 6-Month Dry Season AFY N/A N/A N/A 150 6,850 1,500 N/A 8,500 Average Flow (MGD) N/A N/A N/A 0.3 12.2 2.7 N/A 15.2 -

LCVFP N/A Desal (to 3,990 CAW) Desal 1,630 Return Sand City 150 ASR Extraction Seaside Wells MRWPCA N/A BIRP 4,620 6,700 2,020 System ASR Injection

Demand

Supply

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Table 2 - Continued System Flow Rates Alternative 4 6-Month Wet Season AFY SRFP LCVFP Desal (to CAW) Desal Return Sand City ASR Extraction Seaside Wells MRWPCA BIRP
Demand

Alternative 5 6-Month Wet Season AFY N/A 5,510 1,950 150 N/A Avg Flow MGD N/A 9.8 3.5 0.3 N/A 8.2 12.0 9.8 6-Month Dry Season AFY N/A 1,390 560 150 5,460 1,500 N/A 8,500 2.7 N/A 15.2 Avg Flow MGD N/A 2.5 1.0 0.3

Alternative 6 6-Month Wet Season AFY N/A 8,080 N/A N/A 540 N/A 4,600 6,700 6,520 Avg Flow MGD N/A 14.4 N/A N/A 1.0 N/A 8.2 12.0 11.6 N/A N/A 540 6,460 1,500 N/A 8,500 N/A N/A 1.0 11.5 2.7 N/A 15.2 6-Month Dry Season AFY N/A Avg Flow MGD N/A

Alternative 7 6-Month Wet Season AFY N/A 5,510 1,670 N/A 150 N/A 4,600 6,700 5,230 Avg Flow MGD N/A 9.8 3.0 N/A 0.3 N/A 8.2 12.0 9.3 6-Month Dry Season AFY N/A 1,670 N/A 150 5,180 1,500 N/A 8,500 Avg Flow MGD N/A 3.0 N/A 0.3 9.2 2.7 N/A 15.2 -

6-Month Dry Season AFY N/A N/A N/A 150 6,850 1,500 Avg Flow MGD N/A N/A N/A 0.3 12.2 2.7

Avg. Flow MGD N/A 11.0 N/A N/A 0.3 4.8 8.2 12.0 12.4

N/A 6,170 N/A N/A 150 2,700 4,600 6,700 6,920

Supply

8,500 -

15.2 -

4,600 6,700 5,510

System ASR Injection

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Table 2 - Continued System Flow Rates Alternative 8 6-Month Wet Season AFY SRFP LCVFP Desal (to CAW) Desal Return Sand City ASR Extraction Seaside Wells MRWPCA BIRP
Demand

Alternative 9 6-Month Wet Season AFY 8,870 N/A N/A N/A 150 N/A 4,600 6,700 Avg Flow MGD 15.8 N/A N/A N/A 0.3 N/A 8.2 12.0 6-Month Dry Season AFY N/A N/A N/A 150 6,850 1,500 N/A 8,500 Avg Flow MGD N/A N/A N/A 0.3 12.2 2.7 N/A 15.2

Alternative 10 6-Month Wet Season AFY N/A N/A 3,970 N/A 150 N/A 4,600 6,700 Avg Flow MGD N/A N/A 7.1 N/A 0.3 N/A 8.2 12.0 6-Month Dry Season AFY N/A N/A 4,850 N/A 150 2,000 1,500 N/A 8,500 Avg Flow MGD N/A N/A 8.6 N/A 0.3 3.6 2.7 N/A 15.2

Alternative 11(*) 6-Month Wet Season AFY N/A N/A 2,650 150 150 1,500 2,700 4,620 6,200 Avg Flow MGD N/A N/A 4.7 0.3 0.3 2.7 4.8 8.2 11.1 6.5 6-Month Dry Season AFY N/A N/A 2,050 750 150 5,400 7,600 Avg Flow MGD N/A N/A 4.7 0.3 0.3 6.4 13.6 -

6-Month Dry Season AFY N/A 2,800 N/A 150 4,500 1,050 N/A 8,500 Avg Flow MGD N/A 5.0 N/A 0.3 8.0 1.9 N/A 15.2

Avg. Flow MGD N/A 5.8 5.0 N/A 0.3 0.8 N/A 8.2 12.0

N/A 3,250 2,800 N/A 150 450 N/A 4,600 6,700

Supply

System

ASR 4,550 8.1 6,920 12.3 2,020 3.6 5,420 Injection (*) Conservation approach presented in this Table. Additional direct diversion from Table 13 would have different values.

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Operation. The assumed supply, demand and facility flow rates used to prepare the O&M cost estimate for this alternative are shown in Table 2. The LCVFP would be operated during the 6-month wet season at an average rate of 15.8 mgd, to produce a long term average of approximately 8870 AFY, of which approximately 5620 AFY would be injected into the ASR wells. At the same time, BIRP would be operating. Together, the two plants would produce water to meet demand during the 6-month wet season (estimated at 6700 AF) and to also capture a long term average of approximately 6920 AF that would be injected into ASR wells. The LCVFP and the BIRP would not be operated during the summer. The ASR wells, supplemented by the Seaside wells and the Sand City desalination plant, would be used to meet demand during the 6-month dry season (May through October). The ASR system would provide a long term average supply of approximately 6850 AFY. The assumed average demand during the 6-month wet season is 12 mgd (range of 9 mgd to 14 mgd). For this 6-monthwet season, the assumed operation for Alternative 3 is as follows: Operate LCVFP at an average of 15.8 mgd (range of 5 mgd to 35 mgd, depending on river flow); Operate the BIRP at an average of 8.2 mgd (range of 6 mgd to 16 mgd, depending on river flow), with 6 mgd (3300 AF in 6 months) being delivered to customers, and a long term 6month average of approximately 2.3 mgd (1300 AF) would be sent to the ASR Pump Station via the Segunda/Crest/Carlton Pipeline route.; Operate the Sand City desalination plant continuously at approximately 0.3 mgd; Operate the ASRPS and ASR wells in injection mode at an average of 12.3 mgd (range of 0 mgd to 40 mgd); Operate the Seaside wells to meet any daily shortfalls caused by demand exceeding the combined output of the SRFP, BIRP, and Sand City desalination plant; Turn off the Valley Greens Pump Station; and Operate the Segunda Pump Station at an average of approximately 3 mgd (range of 1 mgd to 10 mgd).

The assumed average demand during the 6-month dry season is 15.2 mgd (range of 12 mgd to 21 mgd). For this 6-month period, the assumed operation for Alternative 3 is as follows: Turn off the LCVFP and BIRP; Operate the Sand City desalination plant continuously at approximately 0.3 mgd; Operate the ASR wells in extraction mode at 8 mgd to 21 mgd, and an average of 12.2 mgd; Operate the Seaside wells at 2 mgd to 6 mgd, and an average of approximately 2.7 mgd; Operate the Valley Greens Pump Station at approximately 3 mgd in order to maintain Segunda Tank levels, Crest Pipeline flow, and supply to upper Carmel Valley; Operate the Segunda Pump Station at approximately 1.5 mgd to maintain flow in the Crest Pipeline.

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Alternative 4 24 mgd Lower Carmel Valley Filtration Plant with a 6900 AFY ASR system in Seaside, with 4200 AFY Carmel River ASR and 2700 AFY MRWPCA Groundwater Recharge Description. Similar to Alternative 2, this alternative would supplement the ASR system with recharge of 2700 AFY of advanced water treatment (AWT) effluent from the Monterey Regional Water Pollution Control Authoritys regional treatment facility. The AWT effluent would be used to recharge the Seaside aquifer with separate injection wells. It is assumed that CAW would provide up to 2700 AFY of excess Carmel River water as dilution water to the AWT effluent injection wells, and would then recover the total recharge amount (AWT effluent plus dilution water ) at ASR extraction wells. In comparison to Alternative 3, the capacity of the LCVFP, and the associated intake well system and high service pump station, would be reduced from 35 mgd to 24 mgd. The Peninsula Pipeline would be reduced from 42-inch diameter to 36-inch diameter. The number of new ASR wells would be reduced from 16 to 11 (2 new injection/extraction wells and 9 injection-only wells), and the ASRPS capacity would be reduced from 40 mgd to 30 mgd. Operation. The LCVFP would be operated during a 6-month season (November through April) at an average rate of 11.0 mgd, to produce a long term average of approximately 6170 AFY, of which approximately 2920 AFY would be injected into wither the AWT effluent injection wells, or the ASR wells. At the same time, BIRP would be operating. Together, the two plants would produce water to meet demand during the 6-month wet season (estimated at 6700 AF) and to also capture a long term average of approximately 4220 AF that would be injected. The LCVFP and the BIRP would not be operated during the summer. As indicated previously, 2700 AFY of AWT effluent would be separately injected into the Seaside Basin and recovered by the ASR wells. The ASR wells, supplemented by the Seaside wells and the Sand City desalination plant, would be used to meet demand during the dry season (May through October). The ASR system would provide a long term average supply of approximately 6850 AFY.

Alternative 5 Marina Desalination Plant and LCVFP Description. This alternative, shown schematically on Figure 2, adds a 3.5 mgd desalination plant to the facilities described in Alternative 3. The desalination plant would be located at the North Marina site. The capacity of the LCVFP would be reduced to 32 mgd. The LCVFP clearwell (3.2 MG) and treated water pump station (32 mgd, 3,600 hp) would be slightly smaller in this alternative than in Alternative 3. In addition to the facilities described for Alternative 3, additional facilities in this alternative would include: 3 vertical feedwater supply wells, each at 2.3 mgd and 250 hp, at locations currently proposed for the Regional Projects desalination plant supply wells; 30,000 feet, 24-inch diameter feedwater pipeline to the desalination plant; 3.5 mgd desalination plant, at location currently proposed for the Regional Projects desalination plant; 0.4 MG clearwell at the desalination plant site; 3.5 mgd, 300 hp desalinated water pump station at the desalination plant site; 1 mgd, 25 hp desalinated water return flow pump station; 10 | P a g e

2,000 feet, 18-inch brine return pipeline to MRWPCA outfall; Desalination plant power system designed to receive electrical power generated from landfill gas; 47,000 feet, 18-inch Desalinated Water Transfer Pipeline from the desalination plant to connect to the Monterey Transfer Pipeline at the intersection of Del Monte Boulevard and Broadway Avenue. 2,000 feet, 12-inch return flow pipeline from desalination plant to CSIP storage pond.

Operation. The assumed supply, demand and facility flow rates used to prepare the O&M cost estimate for this alternative are shown in Table 2. In Alternative 5, the desalination plant would be operated continuously year-round at 3.5 mgd, with 3.5 mgd being delivered to the CAW system during the rainy season, and 2.5 mgd being delivered to the CAW system during the dry season. A portion of the desalination plant production would be returned to Salinas Valley users by delivering approximately 1 mgd to the CSIP storage pond during the dry (irrigation season). The LCVFP would be operated at an average of 9.8mgd (range of 2 mgd to 32 mgd) during the 6-month wet season to produce a long term average of 5510 AFY, of which 4210 AFY would be injected into the ASR wells. BIRP would be operated at an average of 8.3 mgd during the 6-month wet season, with 6 mgd (3300 AF in 6 months) being delivered to customers, and a long term 6-month average of approximately 2.3 mgd (1300 AF) would be sent to the ASR Pump Station via the Segunda/Crest/Carlton Pipeline route. The ASRPS and ASR wells in injection mode would also operate at an average of 9.8 mgd (range of 0 mgd to 40 mgd) during the 6month wet season, and the ASR wells would operate in extraction mode at 6 mgd to 18 mgd (long term average of 9.7 mgd) during the 6-month dry season. All other operational aspects of Alternative 5 would be the same as for Alternative 3.

Alternative 6 Expanded Sand City Desalination Plant and LCVFP Description. This alternative, shown schematically on Figure 3, adds a 0.7 mgd expansion of the Sand City desalination plant (to increase its total capacity to 1.0 mgd) to the facilities described in Alternative 3. In addition to the facilities described for Alternative 3, additional facilities in this alternative would include: One slanted feedwater supply well at 1.4 mgd and 50 hp, at a location near the existing supply wells for the Sand City desalination plant; 2,500 feet, 12-inch diameter feedwater pipeline to the desalination plant; 0.7 mgd desalination plant, single pass, located on the same site as the existing Sand City desalination plant; 100,000 clearwell at the desalination plant site; 1.0 mgd, 100 hp desalinated water pump station at the desalination plant site; 3,000 feet, 12-inch diameter horizontal directional drilled brine discharge pipeline to the ocean, with brine diffuser; 1,500 feet, 12-inch Desalinated Water Transfer Pipeline from the desalination plant to connect to the Monterey Pipeline;

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Operation. The assumed supply, demand and facility flow rates used to prepare the O&M cost estimate for this alternative are shown in Table 2. The LCVFP would be operated at an average of 14.4mgd (range of 4 mgd to 35 mgd) during the 6-month wet season, to produce a long term average of approximately 8080 AFY, of which 5220 AFY would be injected into the ASR wells. The ASRPS and ASR wells would operate in injection mode at an average of 11.5 mgd (range of 0 mgd to 40 mgd) during the 6-month wet season, and the ASR wells would operate in extraction mode at 7 mgd to 20 mgd (long term average of 11.6 mgd) during the 6-month dry season. All other operational aspects of Alternative 6 would be the same as for Alternative 3.

Alternative 7 Monterey Desalination Plant and LCVFP Description. This alternative, shown schematically on Figure 4, adds a 3 mgd desalination plant to the facilities described in Alternative 3. The desalination plant would be located in Monterey near the Naval Post Graduate School. The capacity of the LCVFP would be 32 mgd. The LCVFP clearwell (3.2 MG) and treated water pump station (32 mgd, 3,600 hp) would be slightly smaller in this alternative than in Alternative 2A. In addition to the facilities described for Alternative 3, additional facilities in this alternative would include: 4 feedwater supply slant wells, each at 2.2 mgd and 50 hp, at beach locations; 1200 feet, 18-inch diameter feedwater pipeline to the desalination plant; 3 mgd desalination plant, with partial second pass; 300,000 gallon clearwell at the desalination plant site; 3 mgd, 300 hp desalinated water pump station at the desalination plant site; 3,000 feet, 18-inch diameter horizontal directional drilled brine discharge pipeline to the ocean, with brine diffuser; 1,500 feet, 18-inch Desalinated Water Transfer Pipeline from the desalination plant to connect to the Monterey Pipeline;

Operation. The assumed supply, demand and facility flow rates used to prepare the O&M cost estimate for this alternative are shown in Table 2. In Alternative 7, the desalination plant would be operated continuously year-round at 3 mgd. The LCVFP would be operated at an average of 9.8 mgd (range of 2 mgd to 32 mgd) during the 6-month wet season to produce a long term average of 5510 AFY, of which approximately 3930 AFY would be injected into the ASR wells. The ASRPS and ASR wells in injection mode would operate at an average of 9.3 mgd (range of 0 mgd to 40 mgd) during the 6-month wet season, and the ASR wells would operate in extraction mode at 6 mgd to 17 mgd (long term average of 9.2 mgd) during the 6-month dry season. All other operational aspects of Alternative 7 would be the same as for Alternative 3.

Alternative 8 Monterey Desalination Plant and LCV Iron Removal Plant For ASR Supply Description. This alternative, shown schematically on Figure 5, would include a 5 mgd desalination plant located in Monterey near the Naval Post Graduate School, and a 20 mgd iron removal plant in lower Carmel Valley (LCVIRP). The LCVIRP would produce water that would be sent directly to the ASR system via an 80,000 feet, 36-inch diameter pipeline. It is assumed that iron removal is required in order to prevent plugging of the ASR injection wells with oxidized iron precipitates. The LCVIRP would not 12 | P a g e

provide sufficient treatment or disinfection to meet the Surface Water Treatment Rule, so water from the plant could not be served directly to customers. Water from the LCVIRP would be sent directly to ASR injection wells, and separate ASR wells would be used for extraction. It is assumed that sufficient separation will be provided between the injection and extraction wells so that the injected water becomes groundwater as it travels from the injection wells to the extraction wells. This alternative would include the following facilities: 20 mgd iron removal plant, on 2-3 acres at a location generally south of Carmel Valley Road and east of Carmel Rancho Road, with aeration towers, contact basin, gravity dual media filters, chloramination system, 2.0 MG clear well, waste backwash recovery, solids processing and handling , chemical building, and O&M building); 20 mgd, 2400 hp treated water pump station on the LCVIRP site; 80,000 feet, 36-inch diameter Peninsula Transfer Pipeline, proceeding from west end of Carmel Valley Road towards 17 Mile Dr, Forest Lake Road, Congress Avenue and Sinex Road to the old Eardley Pump Station and then parallel to the Monterey Pipeline and the Seaside Pipeline to the ASR Pump Station on General Jim Moore Boulevard. 26,000 feet, 30-inch diameter Monterey Pipeline, on the same alignment as the Regional Projects Monterey Pipeline, from the old Eardley Pump Station to the intersection of Del Monte Boulevard and Broadway Avenue. 9,000 feet, 30-inch diameter Seaside Pipeline, proceeding from the intersection of Del Monte Boulevard and Broadway Ave along Broadway Avenue and then to Yosemite Street and then to the east end of the Seaside Pipeline alignment as proposed for the Regional Project; 3 mgd Valley Greens Pump Station, same as proposed for the Regional Project; 6 MG Terminal Reservoir, same as proposed for the Regional Project; 20 mgd, 800 hp ASR Pump Station, located at the northwest corner of the intersection of Hilby Avenue and new General Jim Moore Boulevard (GJM);

2 ASR extraction wells at Fitch Park, each at 4.3 mgd extraction, same as proposed for the Regional Project, (the existing ASR wells at Seaside Middle School and Santa Margarita would be used for extraction only); 1 ASR extraction well (4.3 mgd capacity) located along GJM between the Fitch Park Wells and the Seaside Middle School ASR extraction well; 11 ASR injection wells, each with 2.1 mgd injection capacity, at various locations north of the existing Santa Margarita ASR wells; 35,500 feet of 16-inch, 30-inch, and 36-inch diameter pipeline for ASR well supply/extraction and backflushing; Centralized reclamation facility for ASR backflush; and Centralized chlorination facility for extracted ASR water. Operation. The assumed supply, demand and facility flow rates used to prepare the O&M cost estimate for this alternative are shown in Table 2. In Alternative 8, the desalination plant would be operated year round at approximately 5 mgd, producing 5600 afy. BIRP would be operated at an average of 8.3 13 | P a g e

mgd during the 6-month wet season, with 6 mgd (3300 AF in 6 months) being delivered to customers, and a long term 6-month average of approximately 2.3 mgd (1300 AF) being sent to the ASR Pump Station via the Segunda/Crest/Carlton Pipeline route. The LCVIRP would be operated during the 6month wet season, if excess Carmel River water is available, at an assumed long term average of 5.8 mgd, and a maximum of 20 mgd, to produce 3250 AFY which would be sent directly to the ASR system for injection. The ASRPS and ASR injection wells would operate at an average of 8.1 mgd (range of 0 mgd to 20 mgd) during the 6-month wet season, and the ASR wells would operate in extraction mode at 6 mgd to 17 mgd (long term average of 8.0 mgd) during the 6 month dry season. It should be noted that the assumed operation of this alternative is slightly different than the operation of Alternative 7. System demand during the 6-month wet season would be met by operating BIRP at a constant rate of 6 mgd, the Sand City desalination plant at 0.3 mgd, and the new Monterey desalination plant at a constant rate of 5 mgd. If demand exceeds 11.3 mgd, the difference would be supplied from the Seaside wells, so that excess Carmel River Water produced at BIRP could continue to flow to the injection wells. Excess Carmel River water would also be treated at the new Carmel Valley Iron Removal Plant and routed directly to the ASR injection wells, and no portion of this excess water would be served directly to customers. During the 6-month dry season, demand would normally first be met by constant supplies of approximately 5.0 mgd of desalinated water, 0.3 mgd from the Sand City Plant, and 1.9 mgd from the Seaside Wells. The difference between this combined base supply (7.2 mgd) and demand (up to 24 mgd) would be met with the ASR extraction wells.

Alternative 9 Salinas River Filtration Plant (SRFP) Description. This alternative, shown schematically on Figure 6, features a seasonally operated 35 mgd surface water filtration plant fed by a diversion from the Salinas River. The SRFP is similar in concept to a surface water treatment plant (SWTP) that was discussed in the Coastal Water Project EIR for Phase 2 of the Regional Project. The EIR discusses a 14 mgd membrane filtration SWTP that would operate seasonally to produce a long term average of 2,980 AFY. The EIRs concept was that the SWTP would have provided seasonal augmentation to the supply from the 10 mgd desalination plant constructed in Phase 1. Since the EIRs SWTP plant would operate during the winter, in conjunction with the desalination plant as well as seasonal operation of CAWs BIRP system, all of the production from the EIRs SWTP would be injected in CAWs ASR system. The EIR also indicates that the long term seasonal average capacity of the SWTP could be expanded to 5,800 AFY with expansion of the capacity of the Salinas River Diversion Facility (SRDF) from 36 cfs to 60 cfs, and construction of a perched aquifer storage system for storage of 3,000 AF of Salinas River water. The SRFP examined in this analysis would be the primary supply, not a supplement to a desalination plant. The capacity of the diversion facilities and the plant would need to be approximately 35 mgd (54 cfs) in order to capture more water during periods of high river flow and to produce a long term average of approximately 8,900 AFY. For this reason, this alternative includes a separate intake and pumping station located at the SRDF Inflatable Dam, and 4,000 feet of 48-inch diameter pipeline to convey raw water to the SRDF. In addition to the diversion system described above, this alternative also includes the following new facilities: 35 mgd membrane filtration plant, on 6 acres at the same general location as the EIRs SWTP, with pretreatment ( coagulation, flocculation, sedimentation), pressure ultra14 | P a g e

filtration (UF) system, UV and chlorination disinfection, 3.5 MG clear well, membrane backwash supply system, waste backwash recovery, solids processing and handling , chemical building, and O&M building; 35 mgd, 3,000 hp treated water pump station on the SRFP site; 43,000 feet, 42-inch diameter Transfer Pipeline, in same alignment as proposed for the Regional Project; 10,000 feet, 42-inch diameter Seaside Pipeline, in same alignment as proposed for the Regional Project; 29,000 feet, 36-inch diameter Monterey Pipeline, same as proposed for the Regional Project; 3 mgd Valley Greens Pump Station, same as proposed for the Regional Project; 6 MG Terminal Reservoir, same as proposed for the Regional Project; 40 mgd, 1400 hp ASR Pump Station, located at the northwest corner of the intersection of Hilby Avenue and new General Jim Moore Boulevard (GJM);

2 ASR wells at Fitch Park, each at 2.1 mgd injection/4.3 mgd extraction, same as proposed for the Regional Project; 2 ASR wells located along GJM, each at 2.1 mgd injection/4.3 mgd extraction; 12 ASR injection wells, each with 2.1 mgd injection capacity, at various locations north of the existing Santa Margarita ASR wells; 57,000 feet of 16-inch and 30 inch diameter pipeline for ASR well supply/extraction, recirculation, and backflushing; Centralized reclamation facility for ASR backflush; and Centralized chlorination facility for extracted ASR water. Operation. The assumed supply, demand and facility flow rates used to prepare the O&M cost estimate for this alternative are shown in Table 2. The SRFP would be operated during the 6-month wet season at an average rate of 15.8 mgd, to produce a long term average of approximately 8,870 AFY, of which approximately 5620 AFY would be injected into the ASR wells. At the same time, BIRP would be operating. Together, the two plants would produce water to meet demand during the 6-month wet season (estimated at 6700 AF) and to also capture a long term average of approximately 6,920 AF that would be injected into ASR wells. The SRFP and the BIRP would not be operated during the summer. The ASR wells, supplemented by the Seaside wells and the Sand City desalination plant, would be used to meet demand during the 6-month dry season (May through October). The ASR system would provide a long term average supply of approximately 6,850 AFY. The assumed average demand during the 6-month wet season is 12 mgd (range of 9 mgd to 14 mgd). For this 6-month period, the assumed operation for Alternative 9 is as follows: Operate SRFP at an average of 15.8 mgd (range of 5 mgd to 35 mgd, depending on river flow); 15 | P a g e

Operate the BIRP at an average of 8.2 mgd (range of 6 mgd to 16 mgd, depending on river flow), with 6 mgd (3300 AF in 6 months) being delivered to customers, and a long term 6month average of approximately 2.3 mgd (1300 AF) would be sent to the ASR Pump Station via the Segunda/Crest/Carlton Pipeline route.; Operate the Sand City desalination plant continuously at approximately 0.3 mgd; Operate the ASRPS and ASR wells in injection mode at an average of 12.3 mgd (range of 0 mgd to 40 mgd); Operate the Seaside wells to meet any daily shortfalls caused by demand exceeding the combined output of the SRFP, BIRP, and Sand City desalination plant; Turn off the Valley Greens Pump Station; and Operate the Segunda Pump Station at an average of approximately 3 mgd (range of 1 mgd to 10 mgd).

The assumed average demand during the 6-month dry season (May through October) is 15.2 mgd (range of 12 mgd to 21 mgd). For this 6-month period, the assumed operation for Alternative 9 is as follows: Turn off the SRFP and BIRP; Operate the Sand City desalination plant continuously at approximately 0.3 mgd; Operate the ASR wells in extraction mode at 8 mgd to 21 mgd, and an average of 12.2 mgd; Operate the Seaside wells at 2 mgd to 6 mgd, and an average of approximately 2.7 mgd; Operate the Valley Greens Pump Station at approximately 3 mgd in order to maintain Segunda Tank levels, Crest Pipeline flow, and supply to upper Carmel Valley; Operate the Segunda Pump Station at approximately 1.5 mgd to maintain flow in the Crest Pipeline.

Alternative 10 Deep Water Desalination (DWD) Project Description. This alternative includes a 10 mgd desalination facility located about 1 mile north of the Moss Landing power plant, north of Elkhorn Slough. The desalination and conveyance facilities include the following, and the rest of the system is similar to the Regional Project: Intake, intake pump station, outfall, and pier structure on the north side of the harbor outlet; 4,500 feet, 54-inch diameter feedwater pipeline to the desalination facility; 4,500 feet, 36-inch diameter brine pipeline to the outfall; 10 mgd desalination plant including flocculation and UF membrane filtration pretreatment with partial second pass; 3.0 MG clearwell at the desalination plant site; 10 mgd, 1,800 hp desalinated water pump station at the desalination plant site; 98,500 feet of 36-inch pipeline and 10,000 feet of 30-inch pipeline to convey desalinated water from the desalination plant to the Terminal Reservoir; and Monterey pipeline, Terminal Reservoir, ASR system, and Valley Greens pump station identical to the Regional Project.

Operation. The assumed supply, demand and facility flow rates used to prepare the O&M cost estimate for this alternative are shown in Table 2. The desalination plant would be operated to at an average of 8.7 mgd in the 6-month dry period and 7.1 mgd in the 6-month wet period to produce a long term 16 | P a g e

average of 8800 afy. Desalinated water return flow to the Marina Coast Water District system would not be required. All other aspects of this alternatives operation would be identical to operation of Alternative 1.

Alternative 11 5 MGD Desalination Project with GWR and Conservation Description. This alternative is similar to Alternative 2 except that the desalination plant would be reduced to a capacity 5.0 mgd. A more aggressive water conservation program would be implemented to further reduce demand by approximately 1500 AFY. A potential variation of this alternative would be to obtain additional Table 13 direct diversion rights in lieu of additional conservation. Operation. In this alternative, it is assumed that the CAW system demand would be reduced by 1500 AFY to 13,800 AFY, as a result of more aggressive water conservation. The desalination plant would be operated year round at 5 mgd, producing 5600 AFY (4700 AFY to CAW, and 900 AFY returned to Salinas Valley users). The Salinas Valley return would be split seasonally, with 150 AFY being delivered during the 6-month wet season, and 750 AFY being delivered during the 6-month dry season. BIRP would be operated to produce a long term average of approximately 4600 AFY of Carmel River water, of which 2700 AFY would be injected in the ASR system as dilution water to match the amount of recharge water received from MPWPCA (required by regulation). It is assumed that CAW would then recover the total recharge amount (AWT effluent plus dilution water) at ASR extraction wells. This would require operation of the Seaside wells during the injection season, and they would not be operated during the 6-month dry-season . The ASR wells would be operated in extraction mode during the 6-month dry season at an average rate of 9.6 mgd, to recover 5400 AFY.

Cost Comparison
Capital Cost Table 3 provides a comparison of the capital costs of Alternative 1 and the other alternatives. Compared to the $404 million estimated capital cost for the Regional Project, the capital cost for the alternatives range from $277 million (Alternative 1) to $583 million (Alternative 10). Base construction costs are essentially the same for Alternatives 3 and 9, but land acquisition costs would be expected to be higher for Alternative 3 in order to acquire property in Carmel Valley for new supply wells and the filtration plant. However, this higher land acquisition cost disadvantage of Alternative 3 is offset by its cost advantage in financing costs. For Alternative 10, a cost estimate of $38,500,000 was received from DWD for the intake, outfall and pier systems. It was assumed that this cost included the feedwater and brine pipelines to and from the desalination plant, and also an intake pump station. It was also assumed that this cost was expressed in 2012 dollars, and that it includes construction costs and contingency and accuracy allowances, but does not include project implementation (permitting, environmental mitigation, engineering, project management) or right-of-way acquisition costs. RBF estimated these costs and included them in the $42.9 million cost shown for this line item in Table 3. RBF generated the capital cost estimate for the desalination plant and conveyance system, using the same estimating approach as was used for the other alternatives, in order to allow direct comparison to the other alternatives

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O&M/Annual Cost Table 4 compares the estimated annual cost for operation and maintenance (O&M) and other annual costs for Alternative 1 ($13.2 M) to estimated O&M/annual costs of the other alternatives (ranging from $5.2 M for Alternative 3 to $17.6 M for Alternative 2). The O&M cost estimates were prepared for an assumed total CAW demand of 15,200 AFY. If demand is less, then O&M costs would be less, but the reduction in O&M costs would not be proportional to the reduction in demand, primarily due to the effect of fixed costs for labor and repair and maintenance. As expected, Alternatives 5, 6 and 9 have lower O&M/annual costs than Alternative 1, primarily due to the reduced amount of desalinated water produced by each alternative, and the resulting reduction in power costs. Alternative 9 has higher treatment chemical costs than Alternative 3, because it would treat water diverted directly from the Salinas River, with highly variable turbidity and organic carbon content, whereas Alternative 3 would be treating water pumped from alluvial wells. The estimated O&M/annual cost for Alternatives 5, 7, and 8 are similar ($10.8 M, $10M, and $10.9 M, respectively) and are the highest of the non-GWR alternatives because they would have higher energy costs to produce more desalinated water and they would have significantly higher labor costs due to the requirement to staff two treatment plants. Unit Costs Table 5 compares the unit costs for water for Alternative 1 to the unit costs of water for the other alternatives. The unit cost for Alternative 1 is estimated at $3970/AF, compared to the unit costs for the other alternatives which range from $4160/AF for Alternative 2 to $6280/AF for Alternative 7. CAWs annualized capital costs were calculated at a capital recovery factor (CRF) of 0.093 (8.5% interest rate, 30 year term). For sake of discussion, a calculation of annualized capital costs was prepared at a CRF of 0.051 (3% interest rate, 30 year term) so as to determine the effect of financing cost on the overall cost. For Alternative 10, the annualized capital costs DWDs portion of the project were calculated using a CRF of 0.057 (4%, 30 years) per DWDs draft analysis. Also, the unit costs were calculated by dividing the total annualized costs by the total water production of all project facilities, and this total production is the amount of project production received by CAW (10,100 AFY) plus the amount of desalinated water that is produced and returned to Salinas Valley users in order to avoid exportation of Salinas Valley groundwater. For the Regional Project and Alternative 1, the amount of desalinated water to be returned to MCWD would be 1700 AFY, and the total project production would be 11,800 AFY. For Alternative 2, the amount of desalinated water to be returned would be 1200 AFY, and the total project production would be 11,300 AFY. If the total annualized costs are divided by 10,100 AFY (the amount received by CAW), the unit costs of Alternative 1 would be $4640/AF, and the unit cost of Alternative 2 would be $4650/AF. Similarly, if the total annualized costs of Alternative 5 are divided by 10,100 AFY, the unit costs would be $5580/AF.

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TABLE 3 CAPITAL COST COMPARISON (2012 Dollars in Millions)

Capital Cost Categories
Owned by Others Raw Water & Brine Facilities Treatment Facility Conveyance Facilities Total Facilities TOTAL Owned by Others CAW Raw Water and Brine Facilities Treatment Plants Conveyance Facilities Terminal Reservoir ASR System TOTAL CAW TOTAL PROJECT
$50.2M $221M $271M $271M $56.3M $173M $83.7M $24.1M $25.3M $362M $362M $49.4M $139M $70.6M $24.1M $32.3M $316M $316M $27M $186M $88.7M $24.1M $149M $475M $475M $20.1M $145M $82.6M $24.1M $110M $382M $382M $42.9M $172M $102M $24.1M $149M $490M $490M $43.8M $202M $89.1M $24.1M $149M $508M $508M $68.1M $243M $89.3M $24.1M $149M $573M $573M $71.5M $172M $72.3M $24.1M $171M $511M $511M $13.5M $187M $86.5M $24.1M $149M $461M $461M $42.9M $113M $64.5M $24.1M $32.3M $277M $277M Alt 1 Alt 2 Alt 3 Alt 4 Alt 5 Alt 6 Alt 7 Alt 8 Alt 9 Alt 10 Alt 11

$0.8M $138M $24.1M $149M $312M $583M

TABLE 4 O&M/ANNUAL COST COMPARISON (2012 Dollars)

Annual Cost Categories
Power Chemicals Membrane/Media Replacement Equipment Repair and Replacement Labor and Miscellaneous Costs Total Annual O&M Cost Outfall User Charge & Annual Inspection Groundwater Monitoring Program Recharge Water Purchases Total Other Annual Cost TOTAL O&M /OTHER ANNUAL COST Alt 1
$5.66M $1.07M $0.57M $1.77M $3.11M $12.2M $0.45M $0.55M $1.0M $13.2M

Alt 2
$4.38M $0.78M $0.46M $1.44M $3.02M $9.8M $0.45M $0.55M $6.8M $7.8M $17.6M

Alt 3
$1.54M $0.16M $0.36M $1.40M $1.71M $5.2M $0 $0 $0 $5.2M

Alt 4
$1.36M $0.16M $0.29M $1.07M $1.64M $4.5M $0 $0 $6.8M $6.8M $11.3M

Alt 5
$3.34M $0.51M $0.54M $2.28M $3.41M $10.0M $0.25M $0.55M $0.8M $10.8M

Alt 6
$1.90M $0.22M $0.42M $1.50M $1.97M $6.04M $0.06M $0 $0.06M $6.1M

Alt 7
$3.33M $0.46M $0.53M $2.15M $3.38M $9.9M $0.20M $0 $0.16M $10.1M

Alt 8
$4.31M $0.63M $0.30M $2.10M $3.36M $10.7M $0.20M $0 $0.20M $10.9M

Alt 9
$1.51M $0.51M $0.36M $1.52M $1.67M $5.6M $0 $0 $0 $5.6M

Alt 10
$6.00M $1.33M $0.95M $1.91M $3.48M $13.7M $0 $0 $0 $13.7M

Alt 11
$3.50M $0.61M $0.30M $0.80M $2.97M $8.2M $0.45M $0.55M $6.8M $7.8M $16.0M

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 TABLE5 UNITCOSTCOMPARISON
CostCategories
ProjectProduction(AFY) CAWCapitalCost($M) OtherCapitalCost($M) OtherAnnualized CapitalCost @CRF=0.057($M/yr) TotalO&M&Other AnnualCosts($M/yr) CAWAnnualized CapitalCost @CRF=0.093($M/yr) TotalAnnualizedCost w/CAWCRF=0.093 ($M/yr) UnitCost, CAWCRF@0.093 ($/AF) CAWAnnualizedCapital Cost@CRF=0.051 TotalAnnualizedCost w/CAWCRF=0.051 ($M/yr) UnitCost, CAWCRF@0.051 ($/AF)

Alt1
11,800 $362

Alt2
11,300 $316

Alt3
10,100 $475

Alt4
10,100 $382

Alt5
10,700 $490

Alt6
10,100 $508

Alt7
10,100 $573

Alt8
10,100 $511

Alt9
10,100 $461

Alt10
10,100 $312 $271 $15.4

Alt11
8,600 $277

$13.2

$17.6

$5.2

$11.3

$10.8

$6.1

$10.1

$10.9

$5.6

$13.7

$16.0

$33.7

$29.4

$44.2

$35.5

$45.6

$47.2

$53.3

$47.5

$42.9

$29.0

$25.8

$46.9

$47.0

$49.4

$46.8

$56.4

$53.3

$63.4

$58.4

$48.5

$58.6

$41.8

$3,970

$4,160

$4,890

$4,640

$5,270

$5,280

$6,280

$5,780

$4,800

$5,760

$4,860

$18.5

$16.1

$24.2

$19.5

$25.0

$25.9

$29.2

$26.1

$23.5

$15.9

$14.1

$31.7

$33.7

$29.4

$30.8

$35.8

$32.0

$39.3

$37.0

$29.1

$45.1

$30.1

$2,680

$2,980

$2,910

$3,050

$3,340

$3,170

$3,890

$3,660

$2,880

$4,460

$3,500

PerTable5,theleastexpensivecostperAFregardlessonthefinancingrateisAlternate1. OtherConsiderations Oftheelevenalternativesdiscussedabove,onlyonewasconsideredinCPUCsCoastalWaterProjectEIR (Alternative1,whichwaspreviouslycalledtheNorthMarinaAlternative).Implementationofanyofthe otheralternativeswouldrequireadditionalenvironmentalimpactanalysis,recertificationoftheEIR, amendmentandreapplicationfortheCPCN,andamendmentoftheapplicationtotheCaliforniaCoastal Commission.Theserepermittingcostsarenotspecificallyestimatedinthecostestimatesinthis technicalmemorandum,althoughitcouldbearguedthattheyareincludedunderprojectcontingency. Moreimportantly,repermittingoftheprojectwoulddelayimplementationwellbeyondtheOctober 2012midpointofconstructionthatisthebasisofestimatingcapitalcostsinthismemorandum,andthe resultingimpactsofinflationonprojectcostsarenotreflectedinthiscostanalysis. Alternatives3through9arebasedonanassumptionthatwaterrightscouldbeobtainedtodivert significantamountsofwaterfromeithertheCarmelRiverortheSalinasRiverwithattendantrightsto 20|P a g e

deliversomeofthedivertedwaterdirectlytocustomersand/ortostoresomeorallofthediverted waterintheSeasideGroundwaterBasin.Eveniftheserightscouldbesecured,transitionalrightswould needtobenegotiated,overaperiodcoveringseveralyearsofinitialoperation,toallowsomeminimum levelofdiversionfromtheSalinasRiverand/orfromtheCarmelRiver(above3,376AFY).These transitionalconditionswouldneedtobeineffectuntilsuchtimeassufficientwaterhasbeenstoredin theASRsystemtoprovidesupplyduringamultiyeardrought. SinceAlternatives5,7,8and11allhaveasignificantdesalinationplanttofurnishayearroundbase supply,thetransitionperiodwouldbeshorterthaninAlternatives3,4,and6,withlessimpactto CarmelRiverflows.Also,Alternatives5,7,8and11wouldbeabletoprovidealargerminimumamount ofsupplyintheeventofadroughtintheinitialyearsoftheproject,beforeanASRreservehasbeen established.Forexample,inAlternative8,thetotalCAWsupplyavailableintheyear2020withoutASR wouldbeapproximately10,900AFY,orapproximately2/3ofthe15,200AFYdemandthathasbeen assumedforthisanalysis. ImplementationofAlternative9alsopresumesthatSalinasRiverwaterisofsuitablequalitythatitwill bepossibletomeetdrinkingwaterstandardswithmembranefiltrationtreatment,i.e.,nanofiltrationor reverseosmosiswillnotberequired.Anothernecessaryassumptionisthatregulatoryorpublic concernsoverwaterqualityissuesdonotpreventSalinasRiverwaterfrombeingstoredintheSeaside GroundwaterBasin. Aswithallotherscenariosthathavebeenconsideredoverthelastsevenyears,thecostestimatedoes notincludeanycostsforupgradingtheBIRPtocomplywiththeSurfaceWaterTreatmentRule. However,sinceAlternatives3through7doinvolveimplementationofanewlargetreatmentplantusing CarmelRiverWater,theopportunitytoabandontheBIRPandincreasethesizeoftheLCVFP(to50+ mgd)wouldpresentitself,andthiswouldincreasetheimplementationcostsofthisalternative. ImplementationofAlternative8isbasedonASRinjectionofCarmelRiverwaterproducedbytheLCVIRP thathasnotbeentreatedtomeettheSurfaceWaterTreatmentRule.Theassumptionisthatthe resultingsupplyofwaterproducedfromseparateASRextractionwellswillnotbeclassifiedas groundwaterundertheinfluenceofsurfacewater,andwillthusbeexemptfromtheSurfaceWater TreatmentRule. ThealternativesthatinvolveaLowerCarmelValleyFiltrationPlantarepremisedonanassumptionthat landandROWcouldbesecuredintheLowerCarmelValleyinreasonabletimeframes,atlandpricesof $750,000peracreforacquisition,and$75,000peracreforeasements.Atthistime,itisnotknownif thesearereasonableassumptions. Itisnotfullyknownifthe1500AFYofconservationcanbeachievedforAlternative11;however,the needforthislevelofconservationmaybesomewhatreducedpriortotheyear2021whentheamount ofwateravailablefromtheSeasidegroundwaterbasinwillbegreaterthanthe1500AFYthatwas assumedforthisanalysis.Additionally,changestotheTable13directdiversionmaybeabletoreduce theamountofconservationneededforthisalternate. Summary Wehavereviewedpossiblephysicalsolutionstothepeninsulaswatersupplyshortageonanequal basis.Thenextstepistocompleteanassessmentofthepermittingandscheduleimpactforeach alternative.Thiswillbepresentedinasubsequenttechnicalmemorandumatwhichpointafinal recommendationastothemostattractivealternateoralternatescanbedetermined.

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