A regional water authority committee hashed out a proposed recommendation on a common cost model for California American Water's latest water supply project on Monday.
But the committee didn't offer a suggested stance on the company's controversial project surcharge.
The suggested recommendation on the cost model will include details ranging from including Cal Am-only facilities and test wells to considering a variety of approaches involving the company's proposed surcharge, said Dave Stoldt, Monterey Peninsula Water Management District general manager and chairman of the Monterey Peninsula Regional Water Authority's technical advisory committee.
The suggested recommendation is intended to offer the water authority guidance for the state Public Utilities Commission project cost workshop Dec. 11-13 in San Francisco.
The authority isn't scheduled to meet again until Dec. 13, the same date as a prehearing conference on Cal Am's proposed project following the workshop, but could set a special meeting to review the committee's suggested recommendation.
Cal Am formally proposed a common cost model for the $400 million project as part of a filing with the commission last week. The model emerged from discussions involving the company, the CPUC's Division of Ratepayer Advocates, and the water management district.
Meanwhile, Stoldt said the committee decided Monday not to offer a recommendation on the proposed surcharge itself, which would collect about $99
It is intended to reduce the project's overall cost over the long term. Cal Am would not be allowed to earn an equity return, or profit, on the surcharge revenue.
Instead, Stoldt said the committee will offer the authority an overview of the proposed surcharge and the concerns of those who oppose it, and allow authority members to make up their own minds.
Stoldt said the committee will point out that while the surcharge "makes economic sense" in terms of reducing the overall project cost, there remain unresolved issues regarding size and timing of the proposed charge and who will end up paying for it.
Opponents of the proposed surcharge, including Doug Wilhelm and Dale Heckhuis, argued before the committee that the surcharge was unfair because it placed all the initial risk on the ratepayers, who would have already footed the bill if anything went wrong with the project.
The opposition has argued the surcharge would penalize current Peninsula residents who will have to pay all or most of it and wouldn't be guaranteed ability to enjoy full benefits of the reduction in project cost over the next several decades that it takes to pay off the project loan.
Advisory committee member John Narigi said he understood opposition to the surcharge but said it would also help avoid "rate shock," or a sudden sharp rise in ratepayers' bills when the project cost begins to appear, by increasing rates gradually over time.
Committee member George Riley, who has been vocal in his opposition to the surcharge and recused himself from the committee's discussion on the issue Monday, tried to speak about it from the podium during public comment. But authority attorney Don Freeman advised Riley it would present a potential conflict of interest for him to do so.
That sparked a heated discussion between Freeman and Monterey City Councilwoman Libby Downey, who attended the committee meeting, and Riley and Downey said later they believed Freeman's advice was inappropriate.
After returning to the dais following completion of the surcharge discussion, Riley said he had agreed to recuse himself following his presentation to the authority last week against the surcharge, and a subsequent discussion with Carmel Mayor Jason Burnett and Freeman.
But Riley said he disagreed, and would not comply, with any direction not to offer public comment, and announced that he would recuse himself from the cost model discussion. Downey said she thought it was a "shame" not to hear Riley's perspective.
Jim Johnson can be reached at email@example.com or 753-6753.