Regional water supply project proposed for Monterey Bay area

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PACIFIC GROVE, CA, March 30, 2010 -- In a press conference held this morning in Monterey, California American Water officials joined the Monterey County Water Resources Agency, Marina Coast Water District and a gathering of local elected officials to announce a tentative agreement had been reached to develop a regional water supply project proposed for the Monterey Bay area.

"After years of study, negotiation and public input, we have very good news to report," said California American Water President, Robert MacLean. "This proposed agreement paves the way for a collaborative project, which is also the lowest cost and most environmentally friendly of the many options that have been considered."

The project -- a combination of desalination and underground storage of winter river flows -- will satisfy state demands to reduce the Monterey Peninsula's reliance on the Carmel River for its water supply and serve future water needs for customers of the Marina Coast Water District.

The key project component will be a 10-million-gallon-per-day desalination facility located in North Marina and owned by Marina Coast Water District. It will draw a combination of seawater and brackish groundwater from wells that will be owned by the Monterey County Water Resources Agency. The brine will be discharged through an existing ocean outfall structure belonging to Monterey Regional Water Pollution Control Agency. California American Water will purchase water from the project and will build and own a 10-mile pipeline to deliver water from Marina to its customers on the Monterey Peninsula. California American Water will also construct additional storage facilities required to operate the project as well as infrastructure needed to expand its Aquifer Storage and Recovery program, which captures excess winter flows from the Carmel River and stores them in the Seaside groundwater basin for withdrawal in the dry season.

California American Water is required by the State Water Resources Control Board to reduce its historic diversions from the Carmel River by nearly 70 percent. The regional water project will meet that objective while providing residents of the semi-arid region with a drought-proof water source.

"This project has the support of environmental experts because it avoids impacts to marine life by utilizing inland wells to draw seawater instead of a direct ocean intake pipe," MacLean said. "We're also committed to exploring the possibility of alternative energy sources -- such as methane gas from the landfill in Marina - to generate electricity and reduce our carbon footprint."

The total cost for the wells, desalination facility, the pipeline and water storage components is estimated between $280 and $390 million.

In order for the project to proceed, the California Public Utilities Commission must approve the agreement reached between the parties and issue a Certificate of Convenience and Public Necessity. A decision is expected later this year, which will allow the project proponents to move ahead with final design and construction work.

California American Water, a wholly owned subsidiary of American Water (NYSE:AWK) , provides high-quality and reliable water and/or wastewater services to approximately 600,000 people.

Founded in 1886, American Water is the largest investor-owned U.S. water and wastewater utility company. With headquarters in Voorhees, N.J., the company employs more than 7,000 dedicated professionals who provide drinking water, wastewater and other related services to approximately 16 million people in 35 states, as well as Ontario and Manitoba, Canada. More information can be found by visiting www.amwater.com.

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