To hear officials with the Monterey Peninsula Water Management District (MPWMD) tell it, all is smooth sailing between the district and the California-American Water Co. (Cal-Am), at least in regard to the processing of Cal-Am''s proposal to build a new dam on the Carmel River.

But a formal request by Cal-Am to the California Public Utilities Commission (PUC) for new water rate increases, a moratorium on new water hook-ups, and a contingency rationing plan have been perceived by some MPWMD board members as a direct challenge to their authority. The PUC is scheduled to hold public hearings on Cal-Am''s requests in Monterey on June 24 at 10am, at an as-yet-to-be-determined location. But board members claim Cal-Am''s challenge to their authority could undermine the district''s control of Peninsula water use and place it in the hands of Cal-Am and the state.

"I believe the citizens are looking at who is in control, Cal-Am or the water board," says Division 1 Boardmember Alvin Edwards. "When they see Cal-Am go to the PUC after we say no [to rationing and a moratorium], people feel Cal-Am is running the show. In my opinion, we''re supposed to manage any rationing plan and it should come from the district, not the state or Cal-Am. If the board is saying no, then Cal-Am should be able to accept that."

"Once a moratorium is imposed from Sacramento, it will stifle innovation and private initiative to develop new water sources or to conserve," says MPWMD Board Chair Bob Ernst, a supporter of a new dam. "[Their proposal] strikes me as a heavy-handedness that''s more symbolic and stifles competition to Cal-Am. That is what is being lost in the argument. This is a deliberate attempt to regulate the way people live in our current water structure."

"To be discussing rationing undermines the credibility of the people in the water business, the district and Cal-Am of all people, who are unable or unwilling to expend the necessary resources to explain why they''re doing it," adds Division 5 Boardmember Dick Ely, who says the district is developing its own contingency rationing proposal which will be ready for consideration by the end of September.

Cal-Am''s request for a water moratorium and rationing plan comes in response to the State Water Resources Control Board''s (SWRCB) 1995 order, limiting Cal-Am and MPWMD water production from the Carmel River and Seaside aquifer to 11,285 acre-feet. Cal-Am was fined $168,000 last year for failing to meet that limit, and although it appears Cal-Am will meet the production limit this year, it is concerned about future years when there is less rain.

"Some directors feel we''re trying to undermine their authority, but when they fail to act, we have to." says Larry Foy, Cal-Am''s outgoing vice president and general manager. "I think our working relationship is good but we just look at the situation differently, the issue of a legal versus an actual water emergency."

At a May 18 meeting, the MPWMD board unanimously directed staff and legal counsel to formally oppose Cal-Am''s rationing and moratorium proposal, although it supported Cal-Am''s conservation measures.

That board decision came subsequent to an April 16 letter to the SWRCB''s Division of Water Rights Chief Ed Anton, asking him to exercise his authority to modify the SWRCB''s conservation requirement and limit, suggesting that compliance with the limit can be achieved through local control and expanded voluntary conservation efforts.

"Cal-Am had asked us as of last fall to consider a moratorium, and because the allocation is all used up, we don''t see why a moratorium would result in water savings," explains Ernst. "We''ve tried stay out of meddling with [the cities''] land-use issues, and within the jurisdictions that still have water, the consensus of the board is it should be up to the city councils to decide."

But Cal-Am also wrote to Anton on April 28. In that letter, Cal-Am essentially distanced itself from the water district and underlined Cal-Am''s own efforts to comply with the state order through its moratorium and rationing proposals. Cal-Am only tepidly endorsed the MPWMD''s request for relief at the end of the letter, stating that the water agency would welcome a "positive" response to the MPWMD''s request.

Sources with the MPWMD remain hopeful Anton will accede to the district''s request prior to the PUC hearing, thereby obviating the need for Cal-Am''s rationing plan. MPWMD sources suggest a negative response from Anton could precipitate a legal response by the MPWMD.

"It''s imperative we get a response prior to the PUC hearing process," says a water district official speaking off the record, "and if the state is not reasonable in exercising its authority, that would be the opportunity to challenge the SWRCB. It doesn''t make sense to impose a limit when water is flowing to the river, and when there is no damage by our use this year. Either you have a regulated or a physical shortage, and if you don''t have either, why ration?"

From Foy''s perspective, the state may only respond positively to the MPWMD''s request if they feel the Peninsula''s current abundance of water should take precedence over the legal constraints imposed by the SWRCB.

"I think [the SWRCB] will hear the district''s concerns that there is no emergency," says Foy, who remains doubtful that Anton will honor the water district''s request. "From a water supply standpoint, that is true, that what we have is a legal constraint, but the district is not willing to accept that legal restraint on the community.

"Just because we''ve filed a rationing plan doesn''t mean it goes into effect," adds Foy. "The district doesn''t recognize why we want to do this. It wants staff to have a plan at the end of the water year but if we get in trouble this summer we won''t have a plan in place."

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MPWMD Division 2 Boardmember Ron Chesshire maintains the water district is fully aware of why Cal-Am has requested approval of a contingency rationing plan. He believes the district''s opposition has more to do with maintaining its authority than the merits of the rationing proposal.

"We as a board have asked Cal-Am to work with us and this is the second or third time we''ve been blindsided by them," says Chesshire. "Most of their maneuvering is legal to some extent, and as the water service provider under state order, they''re doing what they feel they must legally to cover themselves, but they''re not cooperating with us or we would be in on what they are doing."

There have been suggestions that Cal-Am''s rationing and moratorium proposals were intended to strengthen its hand with the public in respect to building a new dam. But MPWMD General Manager Darby Fuerst agrees with other boardmembers that Cal-Am''s proposals are more of a defensive move in relation to the SWRCB''s order.

"I don''t think [Cal-Am''s request] has anything to do with the dam," says Fuerst. "They want to be in the best position if the community is not in compliance."

Regardless of the differences between Cal-Am and the district over the necessity for rationing and a moratorium, Fuerst doesn''t believe it will impact the fate of the dam.

"I don''t think it complicates relations with the district, and [the dam] will be based on the merits of the project and what is in the best interests of the community," Fuerst insists. "What led up to that won''t affect the decision."

As to the future of Cal-Am''s proposal to build a new dam, Ernst suggests the project may only get built as a public/private partnership, which means Peninsula residents may still have a say regarding the fate of the project.

"I think Cal-Am might be obligated to accept public financing, and if any public monies are involved, the board will put the matter to a vote." says Ernst. "The district

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