BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA DIRECT TESTIMONY OF KRIS HELM

Transcription

1 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA In the Matter of Application of California- American Water Company (U210W) for Approval of the Monterey Peninsula Water Supply Project and Authorization to Recover All Present and Future Costs in Rates A (Filed April 23, 2012) DIRECT TESTIMONY OF KRIS HELM RUSSELL M. MCGLOTHLIN (SBN ) RYAN C. DRAKE (SBN ) BROWNSTEIN HYATT FARBER SCHRECK, LLP 21 East Carrillo Street Santa Barbara, CA Telephone: (805) Facsimile: (805) Attorneys for: MONTEREY PENINSULA REGIONAL WATER AUTHORITY Dated: February 22,

2 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA In the Matter of Application of California- American Water Company (U210W) for Approval of the Monterey Peninsula Water Supply Project and Authorization to Recover All Present and Future Costs in Rates A (Filed April 23, 2012) DIRECT TESTIMONY OF KRIS HELM Q1: Please state your name and business address. A1: My name is Kris Helm. My business address is 4218 Ben Avenue, Studio City, CA Q2: By whom are you employed and in what capacity? A2: I am the principal of Kris Helm Consulting ( KHC ). Q3: What are your responsibilities? A3: I am a senior Water Resources Consultant, advising on issues related to water operations, water recycling and desalination, and well as in policy development, economic and financial analyses, and strategic planning. Q4: Briefly describe your educational background. A4: I hold a Bachelor of Arts degree in Economics from the University of California, Berkeley, California, Q5: Please describe your professional experience. A5: I have over 30 years of experience in water resource issues. I worked ten years for the Metropolitan Water District of Southern California, serving as a Branch Manager within the Water Resources Division as a Groundwater Resources Specialist. I also previously served as the 2

3 Manager of Planning and Operations at the West Basin Municipal Water District from More recently, I have provided program management services to municipal clients and developed water resources solutions for large-scale power generation projects. Q6: Have you testified before the California Public Utilities Commission (CPUC)? A6: No Q7: What is the purpose of your testimony? A7: My consulting firm, KHC, performed consulting support to the Monterey Peninsula Regional Water Authority ( MPWRA ) to assist with the evaluation of three candidate desalination projects on the Monterey Peninsula. In this respect, we evaluated the anticipated government permitting requirements pertaining to the three proposed desalination projects. The results of my findings concerning permitting for the desalination projects were included in a report that KHC developed with Separation Processes Inc., titled, Evaluation of Seawater Desalination Projects, a copy of which is attached to the direct testimony of Alex Wesner filed by the MPWRA concurrently with my direct testimony. The purpose of my testimony is to explain the report s findings and conclusions concerning permitting issues and challenges for the proposed desalination projects. Q8: What were the three proposed desalination projects for which you evaluated permitting issues for inclusion in the report? A8: The three proposed desalination projects included in our evaluation were those proposed by California American Water ( Cal-Am ), DeepWater Desal, LLC ( DWD ), and The People s Moss Landing Water Desal Project ( PML ). Q9: What sources, materials, or personal knowledge did you rely upon in developing your analysis of the permitting issues for the proposed desalination projects? A9: I previously served as Program Management Advisor to the Los Angeles Department of Water and Power. In this capacity, I studied and evaluated permitting issues related to the development of an ocean desalination plant to be co-located at a power plant utilizing oncethrough cooling. I have reviewed the federal and state rules applicable to once-through cooling of power plants and the proceedings before the California Energy Commission related to 3

4 permitting new power plants utilizing once-through cooling including the adjudicative proceedings related to licensing once-through cooling at the Moss Landing Power Plant. I reviewed the State Water Resources Control Board policies on once-through cooling and the Moss Landing Power Plant plan to comply with those rules. I reviewed development of the Carlsbad, Huntington Beach, Dana Point and West Basin Municipal Water District proposed desalination plants. I was a peer reviewer on the Long Beach water department s oceandesalination demonstration project. I have kept abreast of the Coastal Commission s stated position on permitting ocean desalination facilities and participated in review of the State handbook for planning ocean desalination projects. For this evaluation I reviewed numerous reports including reports cited in the joint report KHC developed with SPI. Those included the prior Environmental Impact Report ( EIR ) for the Coastal Desalination Project, the Superior Court s order regarding deficiencies in the EIR, various sources regarding the National Marine Sanctuary s policies for permitting projects within the Monterey Bay National Marine Sanctuary including the Guidelines for Desalination Plants in the Monterey Bay National Marine Sanctuary. I also reviewed numerous reports prepared by the developers of the three proposed projects. Q10: Briefly explain the approach you undertook in assessing the permitting issues for the proposed desalination projects. A10: Each of the projects was evaluated in terms of the major issues it faced for environmental compliance and permitting, and the consequences for the development schedule. The evaluation was performed at a very high level and based upon conceptual rules of thumb. In order to screen the issues of significance, the prior Coastal Water Project EIR was reviewed and largely relied upon to assess facts and mitigation strategies for environmental compliance. That document was presumed to have identified the relevant permits for prior project approaches. Based upon my judgment, the major differences between the three proposed projects and the alternatives described in the Coastal Water Project EIR were assessed to determine the major permits that would need to be obtained and the new environmental assessments that would be necessary. Each of the project sponsors provided estimates of the schedule for implementation including the estimated timing for environmental compliance and major permits. The conceptual schedule and schedule risk were reviewed with the project sponsors for comment in an effort to present consensus on the project schedule and risks. 4

5 Although the prior EIR identified more than 25 discretionary approvals which must be obtained for the project alternatives, our review focused on a simplified list of discretionary approvals based upon our judgment that these approvals would most likely dictate the critical path for project development. Approvals related to Intake of Seawater Approvals related to Project Discharge Jurisdictional permitting for water of the US Coastal Development Permitting Moreover, a highly simplified list of tasks for Environmental Compliance was created around these discretionary approvals. Those tasks in order are: 1. A project description must be completed. 2. An Environmental Assessment must be made. 3. An EIR/EIS must be completed. (CEQA/NEPA Compliance) 4. Commercial Agreements must be negotiated/ Cal Am must obtain a Certificate of Public Convenience and Necessity (After Certification of EIR) 5. Jurisdictional Permits must be obtained for facilities impacting waters of the U.S. 6. NPDES Permits must be amended/obtained 7. Coastal Development Permits must be obtained Q11: What did you conclude are the principal permits that must be obtained for each of the respective proposed projects that may materially affect project schedules? A11: The principal permit that each of the projects will be required to obtain and which is likely to affect project schedules is a Coastal Development Permit from the California Coastal Commission. For the Cal-Am project, a Coastal Development Permit would be required both for its development of a test slant well and for the ultimate subsurface intake system. Each of the projects will also require a National Pollutant Discharge Elimination System ( NPDES ) permit issued by the Regional Water Quality Control Board. Finally, if a project involves the installation of infrastructure within the Monterey Bay National Marine Sanctuary ( MBNMS ), the project will need to obtain an Office of National Marines Sanctuaries permit from National Oceanic and Atmospheric Administration ( NOAA ). We conclude that the DWD and PML projects will both require permits from NOAA because they will involve construction of new intake and/or discharge facilities on the seabed of the Marine Sanctuary. The Cal Am project may also require a permit from NOAA if its intake gallery impacts the seafloor. 5

6 Q12: What did you conclude were the primary challenges concerning Coastal Development Permitting from the California Coastal Commission? A12: We concluded that to permit a desalination project in Monterey County, the California Coastal Commission will likely require the least environmentally harmful feasible alternative for the source water intake. Subsurface water intake is likely to be viewed by the Coastal Commission as the least environmentally harmful alternative, and therefore, we anticipate that the Coastal Commission will require that subsurface intake be fully explored for feasibility before considering proposals for permitting of an open water intake. In other words, we anticipate that the Coastal Commission will not permit an open water intake unless subsurface intake options are proven to be infeasible or environmentally less desirable than the proposed open-water intake. The Cal-Am Project proposes to pursue subsurface intake in order to avoid significant environmental impacts and comply with permitting policies. Q13: Did you conclude that any other responsible permitting agencies will also require demonstration of infeasibility of subsurface intake before considering permitting of an open water intake? A:13 Yes, we concluded that NOAA will also likely require demonstration of infeasibility of subsurface intake before considering permitting of an open water intake. Q14: On what information or source did you conclude that the Coastal Commission and NOAA will apply a policy preference for subsurface intake of source water? A14: Although there has not been formal rulemaking completed to provide rules for approval of new intakes for desalination projects, the California Department of Water Resources released an Ocean Desalination Planning Handbook in In pertinent part, this handbook provides guiding principles for permitting ocean desalination projects including the roles of various State agencies. We also reviewed statements regarding the evaluation of open water intakes in the NOAA policy guidelines for the MBNMS. These NOAA guidelines express a clear preference for subsurface intake, if feasible, over open water intakes. We also spoke with the director of water quality for the NMS. This information and applicable implications are summarized in a memorandum I issued to the MPWRA, titled Permitting Concerns, Open Intake on January 29, 2013, which is attached to my testimony as Exhibit MPRWA Exhibit 8. 6

7 Q15: Did your conclusion regarding the permitting challenges for open water intake affect your assessment of the schedules and likely pace of development for the respective proposed projects? A15: We concluded there is substantial permitting risk associated with the intake method proposed by the DWD and PML projects because both propose to use an open water intake. The DWD project proposes to use an open water ocean intake at a depth of 20 meters or more located off shore utilizing pipelines previously used for delivery of fuel oil to the Moss Landing Power Plant. The PML proposes to use an intake in the Moss Landing harbor presently permitted for the Moss Landing Commercial Project. 1 Neither, to my knowledge has proposed specific testing of subsurface intake methods as alternatives to open water intake. The Cal-Am project proposes to use a subsurface intake located at the Cemex property on the coast within the Salinas Valley. Cal-Am s method of subsurface intake is proposed to either be slant wells or subsurface radial collectors, such as a Ranney well system. While Cal-Am s proposed intake faces other potential challenges (e.g., allegations of potential harm to Salinas Valley Groundwater Basin users), from a permitting perspective, we concluded that the proposed subsurface intake proposal for the Cal- Am project affords that project a permitting advantage over the other two projects. Q16: Did you conclude that the necessary NPDES permitting presents any significant challenges for any of the proposed projects? A16: The PML project proposed a discharge reduction system which I could not review. They described a possible need to permit a new point of discharge. The DWD project proposed a method of disposal of waste products that the prior EIR found did not create a significant impact, as did the Cal-Am project. For purposes of our evaluation of scheduling, we assumed a period of time to obtain these permits prior to obtaining financing for project construction. We noted that there could be future challenges to the methods for mitigation of brine impacts approved in the prior EIR but assumed that the conclusions of the prior EIR were valid. 1 PML has proffered that, as a matter of law, the PML project s use of seawater from the Moss Landing Harbor should be compared to the 60 MGD use that is permitted for the Moss Landing Commercial Park, and that because the PML project would not increase the permitted use of seawater, PML argues the PML project would not increase the take of water from the marine environment. We were not certain that this position is accurate and instead assumed that the PML s take of seawater from the harbor would be compared to a no-project alternative, and therefore the impingement and entrainment impacts on marine life from the harbor intake would need to be fully evaluated in federal and state permitting processes and associated environmental review. 7

8 Q17: Did you conclude that there were other significant permitting challenges for any of the three proposed projects? A17: Yes, however as noted in the approach above, although the prior EIR identified more than 25 permits, including permits regarding potential take of endangered species, we assumed that the schedules proposed by the applicants had considered these permits and that the mitigation plans proposed were sufficient to obtain those permits. Our review focused on the way in which the projects would interface with the marine environment. We believed that these impacts and their effects on required permits would be the primary determinants of project schedule. For the Cal-Am project, we concluded that it was uncertain whether the project will require a permit from NOAA (and associated NEPA compliance) for Cal-Am s intake infrastructure. This issue will likely ultimately depend on whether Cal-Am s intake infrastructure impacts the seafloor. We also noted that the test well program could alter the design of the intake system and potentially require a reassessment of impacts and permitting for the intake system. We also noted that plans should be developed for a program that would protect and enhance the marine environment (a requirement of Coastal Commission review for the Coastal Development Permitting) rather than simply mitigate the impacts from proposed intake of seawater and disposal of waste brine to the marine sanctuary to a level of insignificance. Q18: Did you recommend any course of action for the MPRWA to facilitate resolution of the permitting challenges? A18: Yes, we recommended that the MPRWA work with CPUC to dovetail the administrative process for the issuance of a CPCN with the environmental review and permitting process for the project including administrative hearings by the California Coastal Commission. We recommended that the MPWRA meet with the CPUC to request concurrent review of the project by the California Coastal Commission. We urged this dual-track approach so that the Cal-Am project will be further along in the Coastal Development Permitting process when the CPUC issues a Certificate of Public Convenience and Necessity ( CPCN ) for the project. The Coastal Commission has a different standard of review and different concerns than would be addressed by the CPUC in its CEQA review or in a CPCN. Thus, engaging the Coastal Commission early to begin addressing these concerns is one of the most important ways (perhaps the single most effective way) to accelerate ultimate delivery of the project. Finally, noting the Coastal 8

9 Commission s concerns regarding ongoing public oversight and stewardship over coastal resources and the marine environment, we urged the MPRWA to work with Cal-Am and the CPUC to ensure that appropriate public agency oversight and stewardship over the desalination project would be in place. We also recommended that MPRWA coordinate with CPUC to seek a determination from NOAA as to whether Cal-Am is likely to require a permit from NOAA as a result of potential seafloor alteration as part of its source water intake infrastructure. If so, Cal-Am should immediately begin processing an application with NOAA for this permit together with the development of an Environmental Impact Statement under NEPA so to avoid future project delay. Q19: Does this conclude your testimony? A19: Yes. 9