CALIFORNIA PUBLIC UTILITIES COMMISSION WATER DIVISION. Advice Letter Cover Sheet

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1 CALIFORNIA PUBLIC UTILITIES COMMISSION WATER DIVISION Advice Letter Cover Sheet Utility Name: California Water Service Company Date Mailed to Service List: 11/21/17 District: California Regulated Service Areas CPUC Utility #: U-60-W Protest Deadline (20 th Day): 12/11/17 Advice Letter #: 2268-B Authorization: Description: Review Deadline (30 th Day): 12/21/17 Tier: 1 X 2 3 Compliance Requested Effective Date: 7/21/17 Request to establish a Phase 1 Sites Reservoir Memorandum Account Rate Impact: N/A The protest or response deadline for this advice letter is 20 days from the date that this advice letter was mailed to the service list. Please see the Response or Protest section in the advice letter for more information. Utility Contact: Natalie Wales Utility Contact: James Polanco Phone: Phone: (408) nwales@calwater.com jpolanco@calwater.com DWA Contact: Tariff Unit Phone: (415) Water.Division@cpuc.ca.gov DWA USE ONLY DATE STAFF COMMENTS [ ] APPROVED [ ] WITHDRAWN [ ] REJECTED Signature: Comments: Date:

2 CALIFO RN IA W ATE R SE R VI CE COMPANY 1720 NORTH FIRST STREET SAN JOSE, CA (408) F (408) November 21, 2017 Advice Letter No B To The Public Utilities Commission of the State of California: California Water Service Company ( Cal Water ) hereby transmits for filing the following changes in its tariff schedules listed below: New/Revised Cancelling CPUC CPUC Sheet No. Title of Sheet Schedule No. Sheet No. XXXXX-W Preliminary Statement AU XXXXX-W XXXXX-W Table of Contents Page 2 XXXXX-W XXXXX-W Table of Contents Page 1 XXXXX-W Purpose Cal Water filed Advice Letter 2268 on July 21, 2017 requesting authorization from the California Public Utilities Commission ( CPUC ) to establish a Sites Reservoir Memorandum Account ( Phase 1 Sites MA ). In the first supplement, AL 2268-A, Cal Water proposed that the Phase 1 Sites MA track incremental costs paid by Cal Water to the Sites Reservoir Authority, up to a cap of $1.05 million, for participation in Phase 1 of the Sites Reservoir Project ( Project ). In this second supplement, AL 2268-B, Cal Water has expanded the language in Section A (Purpose) of proposed Preliminary Statement AU. Background The Sites Reservoir Project ( Sites Project ) is formally known as the North-of-Delta Offstream Storage Project ( NODOS ). 1 The proposal for a Sites Reservoir has a long history and originated in the 1980s in a proposed Stage II of the State Water Project. In brief, an offstream reservoir would be created from winter flood flows of the Sacramento River approximately 78 miles northwest of Sacramento. A map showing a diagram of the proposed facilities is provided as Attachment A. 2 A map showing the location of the proposed Sites Reservoir in relation to Cal Water s northern districts is 1 The name refers to the small community of Sites located in a Northern California valley in Colusa County. 2 Sites Reservoir Map, (accessed 7/20/17).

3 CALIFO RN IA W ATE R SE R VI CE COMPANY Advice Letter 2268-B, Sites Reservoir Memorandum Account Page 3 provided as Attachment B. Operated in coordination with the State Water Project, the Sites Reservoir would store water as well as operate as a hydroelectric plant. Attachment C to this advice letter is a document providing answers to Frequently Asked Questions about the Sites Project. 3 Discussion Overview: The Sites Project Authority ( Authority ) is a joint powers agency made up of local governmental entities within the Sacramento River watershed. In Phase 1 of the Sites Reservoir Project, participants are pursuing Proposition 1 funding through the Water Storage Investment Program described below: In November 2014, California voters approved Proposition 1, the Water Quality, Supply, and Infrastructure Improvement Act of Chapter 8 of Proposition 1 provides $2.7 billion for public benefits associated with water storage projects that improve the operation of the state water system, are cost effective, and provide a net improvement in ecosystem and water quality conditions, in accordance with provisions contained in Chapter 8 (Water Code section (b)). The California Water Commission (Commission), through the Water Storage Investment Program (WSIP) competitive public process, will award and distribute this funding. 4 The California Water Commission ( CWC ) indicates that [j]ust over $2.5 billion is available for project funding of eligible capital costs. 5 The timeline is as follows: August 2017: applications submitted to the CWC will be reviewed by several state agencies; December 2017: CWC releases preliminary cost/benefit scores, and begin preliminary negotiations with project proponents; June 2018: CWC selects final projects. Phase 1 of the Sites Project: Under a Phase 1 Reservoir Project Agreement ( Agreement ) interested parties are participating in the development, financing, and construction of a Sites Reservoir Project that is in a conceptual phase. 6 In return, they will receive a first right to contract for a share of any water supply that is developed, and for storage 3 Sites Project: Frequently Asked Questions, (accessed 7/20/17). 4 Layperson s Guide to the Water Storage Investment Program Regulations, (accessed 7/16/17). 5 Water Storage Investment Program, Application Instructions, page 4 (accessed 7/16/17). 6 Sites Project Authority s Amended and Restated Phase 1 Reservoir Project Agreement (11/21/16 Draft) ( Draft Agreement ) at 7 (Section 5(a)).

4 CALIFO RN IA W ATE R SE R VI CE COMPANY Advice Letter 2268-B, Sites Reservoir Memorandum Account Page 4 capacity that may be available from the Sites Reservoir Project. 7 Unlike other potential proposals that include dams, the Sites Project is an off-stream facility that would divert surplus flows from the Sacramento River and its tributaries, but would not stop the river. The project would require the Department of Water Resources to transfer water rights of over 3 million acre-feet to the Authority. With a budget of over $15 million, Phase 1 of the Sites Project includes preparing studies for reservoir operations, studies for the design and construction of the reservoir, and an analysis for potentially including pumped storage to provide renewable energy. 8 The total project cost has been estimated to be $4.4 billion (in 2015 dollars). 9 Cal Water Involvement: In response to an invitation from the Sites Authority for additional entities interested in participating in Phase 1 of the Project, Cal Water submitted a Proposal to Participate, contingent upon approval by the Commission, on August 1, 2016 ( 8/1/16 Cal Water Proposal ). 10 As described in the letter, Cal Water s principal objective(s) that support project participation relate to the company s long-term resource planning goals of developing an increasingly diverse and reliable water supply throughout the State of California. This companywide effort is principally aimed at addressing a host of current and future concerns pertaining to population growth, sustainable groundwater and surface water management, and climate stress. 11 In addition to pursuing recycled water and desalination opportunities in both the private and public/private sectors, a key component of Cal Water s long-term planning is the augmentation and development of new surface water and groundwater storage opportunities. Cal Water s involvement in the Sites Project aligns with the responsibility it has to its customers to engage in regional solutions. Moreover, with its location north of the Delta, Sites Project supplies could potentially be delivered to multiple Cal Water districts throughout the State, through either direct delivery or exchange, via the State Water Project, Central Valley Project and other regional transmission facilities. Counter-Offer and Acceptance: While Cal Water initially requested 35,000 acre feet of Class 1 (priority status) water (later determined to calculate out to a not-to-exceed cost of $60 per acre foot), the Sites Authority provided a counter-offer ( 10/11/16 Sites Counter-Offer ) proposing an allocation of 35,000 acre feet of Class 2 (non-priority status) water (which ultimately calculated 7 Id. at 7 (Section 5(b)). 8 Draft Agreement at Section 5.1 and Section 7.2 (Table 1). 9 Sites Project: Frequently Asked Questions at 3. This supplement adds the clarification that the $4.4 million figure is in 2015 dollars. 10 Letter from Robert Kuta, Vice President-Engineering, Cal Water, to Ms. Anne Nordyke, Board Clerk for the Sites Reservoir Project, dated 8/1/16 ( 8/1/16 Cal Water Proposal ). 11 8/1/16 Cal Water Proposal at 2 (emphasis added).

5 CALIFO RN IA W ATE R SE R VI CE COMPANY Advice Letter 2268-B, Sites Reservoir Memorandum Account Page 5 out to a not-to-exceed cost of $30 per acre foot). 12 While Cal Water accepted this counter-offer, it is not joining the Reservoir Project Agreement ( Agreement ) as a member of the Joint Authority. 13 Instead, to address the possibility that Cal Water s participation as a privately-owned public utility could jeopardize eligibility for Proposition 1 funding, Cal Water is considered a non-member participating party of the Agreement. 14 In addition, Cal Water and the Authority entered into a side agreement that would allow Cal Water to amicably separate from the Reservoir Project Agreement, with a refund of its Phase I contribution at its discretion ( Side Agreement ). 15 Modifications Made in AL 2268-A (filed 10/27/17) The supplement to AL 2268 filed on October 27, 2017 included substantial modifications to the proposed Preliminary Statement AU as follows: In Section 1, the Purpose of the preliminary statement is modified to limit the memo account to tracking only Phase 1 costs, up to a maximum of $1.05 million. The section is also expanded to provide a more detailed description of the fivephase project. The Applicability language in Section 2 now recognizes that not all regulated ratemaking areas in California may benefit from the Sites Project. The intent of the Sites MA is to recover the majority of incremental costs tracked in the account from ratemaking areas that have the potential to benefit from the Sites Reservoir Project, by amounts proportional to the potential benefits. Because the potential benefits are unknown at this time, Section 2 requires Cal Water to propose a fair approach for cost recovery if and when the company requests cost recovery. The Rates provision in Section 3 is clarified to indicate that the memo account currently has no rate component. Because it is not clear whether costs tracked in the memo account would be more appropriately considered capital or expense, the Accounting Procedure in Section 4 now includes provisions for both options. It also clarifies that the tracked costs may only be related to invoices paid to the Sites Reservoir Authority. Finally, the methodology that should be used for the interest calculation is specified. In Section 5, the Regulatory Procedure is modified to require that a request for cost 12 Letter from James C. Watson, General Manager, Sites Project Authority, to Robert Kuta, Vice President-Engineering, Cal Water, dated 10/11/16 ( 10/11/16 Sites Counter-Offer ) at Letter from James C. Watson, PE, General Manager, Sites Project Authority, to Robert J. Kuta, Vice-President, Engineering, California Water Service Company, dated April 28, 2017, counter-signed by Robert J. Kuta ( 4/28/17 Side Agreement ). 14 Id. at Id. at 2.

6 CALIFO RN IA W ATE R SE R VI CE COMPANY Advice Letter 2268-B, Sites Reservoir Memorandum Account Page 6 recovery be submitted in a formal Commission proceeding, as opposed to the informal advice letter process. Modifications Made in This Supplement, AL 2268-B The title of the proposed memorandum account has been renamed from the Sites Reservoir Memorandum Account to the Phase 1 Sites Reservoir Memorandum Account (or Phase 1 Sites MA ). In Section 1, the Purpose of the preliminary statement is expanded to include the following language based on the second paragraph on page 2 of the 4/28/17 Side Agreement: In the event of an unacceptable or adverse treatment of Cal Water s request for rate recovery or a determination by Cal Water that a CPUC decision will not be timely rendered and final prior to the end of Phase 1, Cal Water may (1) withdraw and would be reimbursed by the Authority for it past payments at the time of this determination or (2) arrange for the transfer of its share in the Project to a party or parties eligible to participate, in either case consistent with the April 28, 2017 letter from James C. Watson, PE, General Manager, Sites Project Authority, to Robert J. Kuta, Vice-President, Engineering, California Water Service Company. The Modified Phase 1 Sites MA Meets the Criteria for a New Memo Account As modified, the proposed Phase 1 Sites MA meets all of the Commission s criteria for the creation of a new memorandum account. 16 (1) The expense is caused by an event of an exceptional nature that is not under the utility s control. The Sites Reservoir Project offers an unusual opportunity for Cal Water. The numerous participants in Phase 1 and their significant financial contributions reflect a strong belief in the viability of the project, 17 a viability that is enhanced by possible state involvement through Proposition 1 funding. In addition, Cal Water is uniquely placed in that it has multiple operating districts that could benefit. Water reliability in several Cal Water districts could be enhanced through existing wholesaler relationships, while in other districts, additional water supply could be made available through the negotiation of new contracts. For these reasons, Cal Water views the Sites Reservoir Project as an event of an exceptional nature. 16 The Commission s criteria are listed as they appear in Resolution W-4824, California-American Water Order Authorizing Memorandum Account to Track Costs Incurred to Address the State Water Resources Control Board Cease and Desist Order for Unauthorized Diversion of Water from the Carmel River in the Monterey District (April 8, 2010), at There are approximately 19 participants in the Sites Project that include water, reclamation, and irrigation districts, mutual water companies, and cities and counties.

7 CALIFO RN IA W ATE R SE R VI CE COMPANY Advice Letter 2268-B, Sites Reservoir Memorandum Account Page 7 The Sites Reservoir Authority, which was created to pursue the possibility of a Sites Reservoir Project, and its members have developed a 5-phase plan for the proposed project with certain deadlines and milestones. Because Cal Water s participation in the Project is subject to the schedule established by the Sites Authority, the timing of the event is not within Cal Water s control. Cal Water nevertheless had the choice of whether or not to become involved in the Sites Project. Accordingly, Cal Water did not agree to participate in Phase 1 until relatively late in the process. The Sites Authority was concerned that having an investor-owned participant could jeopardize Proposition 1 grant funding. Cal Water was concerned about committing funds in the absence of clear Commission support. The parties were therefore able to negotiate the Side Agreement allowing each party to withdraw under certain circumstances. 18 If Cal Water decides that Commission authorization to recover Phase 1 costs is in doubt before Phase 1 ends, the side agreement allows Cal Water to retrieve funds it has paid from the Sites Authority directly, or to retrieve its funds from an interested party through the transfer of Cal Water s rights to the interested party. 19 Now that Cal Water has entered into both the Phase 1 Agreement and the Side Agreement, the timing and amount of invoices received from the Sites Authority, up to the contractual maximum of $1.05 million, is beyond Cal Water s control. (2) Expense cannot have been reasonably foreseen in the utility s last GRC and will occur before the utility s next scheduled rate case. As discussed above, the timing for the different milestones and phases of the Sites Reservoir Project is not within Cal Water s control. Californians did not approve Proposition 1 funding until late 2014, after which Phase 1 of the Sites Project was developed. Given that the Sites Authority decided to solicit additional participants in mid-2016, Cal Water could not have foreseen its involvement prior to the company s July 2015 rate case filing. Further, Cal Water is already incurring costs, and has the potential to incur additional costs through the end of Phase 1 in June 20, 2018, which is before Cal Water s next GRC filing in July (3) Expense is of a substantial nature in the amount of money involved. While Cal Water s first invoice is for $574,700, the Agreement allows Class 2 water to be charged up to $30 per acre-foot. 20 For the 35,000 acre-foot of Class 2 water potentially allocated to Cal Water, Cal Water could be requested to pay up to $1.05 million just for Phase 1 of the Sites Project. There does not appear to be any dispute that this amount is of a substantial nature, and that this criterion for a new memo account is met. 18 4/28/17 Side Agreement. 19 Id. at This is amount is for 35,000 acre-feet of Class 2 water at $16.42 per acre-feet.

8 CALIFO RN IA W ATE R SE R VI CE COMPANY Advice Letter 2268-B, Sites Reservoir Memorandum Account Page 8 Clarification: In its Protest, ORA provides calculations to estimate the investment per AF for which Cal Water could theoretically be responsible, using a total project cost of $5.176 million. 21 While Cal Water neither endorses nor rejects ORA s methodology, Cal Water notes that the total investment cost allocated to Cal Water must be annualized in order to calculate an investment per acre foot using the given methodology. Specifically, to calculate an investment per acre-foot using the information available in ORA s Table, such as a take-rate of 35,000 AF per year, an assumption about the life of the asset would be needed. Assuming a conservative asset life for the dam and related facilities of 40 years, for example, the investment costs would calculate out to $320 per AF, rather than the $12,812 per AF calculated in ORA s Protest. 22 (4) Ratepayers will benefit by the memorandum account treatment. The Sites Project has the potential to create significant ratepayer benefits; if successful, it could mitigate water supply reliability concerns and fulfil regulatory requirements in multiple Cal Water district throughout the State. It is also well-suited to memo account treatment because the districts that will likely benefit, and the magnitude of those benefits, will not be known until the project progresses further. The proposed memo account will allow Cal Water to proceed with Phase 1 of the project, and will give the Commission the opportunity to consider at a later date whether costs tracked in the account are appropriate for recovery through rates, and if so, from whom. As discussed above, Cal Water has also negotiated an agreement with the Sites Reservoir Authority that will allow Cal Water to obtain reimbursement of any Phase 1 payments under certain conditions: The Authority also acknowledges that California Public Utility Commission (CPUC) approval will be necessary in order for Cal Water to recover the costs of [Phase 1 of] the Project through rates charged to water customers. In the event of an unacceptable or adverse treatment of Cal Water s request for rate recovery or a determination by Cal Water that a CPUC decision will not be timely rendered and final prior to the end of Phase 1, Cal Water may (1) withdraw and would be reimbursed by the Authority for its past payments at the time of this determination, or (2) arrange for the transfer of its share in the Project to a party or parties eligible to participate. 23 Finally, ORA has expressed concern that Cal Water s originally requested memo account, and the Sites Project as a whole, cannot be thoroughly evaluated outside of a formal Commission 21 ORA Protest at The updated equation would be $448,415,842 divided by 40 years, divided by 35,000 AF per year = $ AF per year. 23 4/28/17 Side Agreement at 2. Note that, while documents exchanged between the Authority and Cal Water may contain references to Commission approval of Cal Water s involvement in the Sites Reservoir Project, Cal Water is not seeking that approval here. Instead, Cal Water s request is limited to authority to open a new Sites Reservoir memorandum account.

9 CALIFO RN IA W ATE R SE R VI CE COMPANY Advice Letter 2268-B, Sites Reservoir Memorandum Account Page 9 proceeding. Cal Water has therefore agreed to seek any cost recovery of Phase 1 expenditures only through a formal Commission proceeding, and to make any request to track costs beyond Phase 1 in a formal Commission proceeding. Requested Effective Date This advice letter is submitted with a Tier 2 designation pursuant to Water Industry Rules 7.3.2(5) and (7) of General Order 96-B. Cal Water is requesting that this filing become effective on July 21, 2017, the date upon which AL 2268 was originally filed, in order to allow Cal Water to begin tracking the first payment to reserve the opportunity to participate in the Sites Reservoir Project. Notice Customer Notice: This is a Tier 2 advice letter that does not require customer notice because there is no increase in rates. Service List: In accordance with General Order 96-B, General Rules 4.3 and 7.2, and Water Industry Rule 4.1, a copy of this advice letter will be mailed or electronically transmitted on November 21, 2017 to competing and adjacent utilities and other utilities or interested parties having requested such notification. Response or Protest Anyone may respond to or protest this advice letter. A response supports the filing and may contain information that proves useful to the Commission in evaluating the advice letter. A protest objects to the advice letter in whole or in part and must set forth the specific grounds on which it is based. These grounds are: (1) The utility did not properly serve or give notice of the advice letter; (2) The relief requested in the advice letter would violate statute or Commission order, or is not authorized by statute or Commission order on which the utility relies; (3) The analysis, calculations, or data in the advice letter contain material error or omissions; (4) The relief requested in the advice letter is pending before the Commission in a formal proceeding; or (5) The relief requested in the advice letter requires consideration in a formal hearing, or is otherwise inappropriate for the advice letter process; or (6) The relief requested in the advice letter is unjust, unreasonable, or discriminatory (provided that such a protest may not be made where it would require relitigating a prior order of the Commission.) A protest shall provide citations or proofs where available to allow staff to properly consider the protest. A response or protest must be made in writing or by electronic mail and

10 CALIFO RN IA W ATE R SE R VI CE COMPANY Advice Letter 2268-B, Sites Reservoir Memorandum Account Page 10 must be received by the Water Division within 20 days of the date this advice letter is filed. The address for mailing or delivering a protest is: Tariff Unit, Water Division, 3 rd floor California Public Utilities Commission, 505 Van Ness Avenue, San Francisco, CA water_division@cpuc.ca.gov On the same date the response or protest is submitted to the Water Division, the respondent or protestant shall send a copy by mail (or ) to us, addressed to: Natalie Wales California Water Service Company 1720 North First Street, San Jose, California Fax (408) or nwales@calwater.com Cities and counties that need Board of Supervisors or Board of Commissioners approval to protest should inform the Water Division, within the 20 day protest period, so that a late filed protest can be entertained. The informing document should include an estimate of the date the proposed protest might be voted on. The advice letter process does not provide for any responses, protests or comments, except for the utility s reply, after the 20 day comment period. Replies The utility shall reply to each protest and may reply to any response. Each reply must be received by the Water Division within 5 business days after the end of the protest period, and shall be served on the same day to the person who filed the protest or response. If you have not received a reply to your protest within 10 business days, contact California Water Service Company at CALIFORNIA WATER SERVICE COMPANY /s/ Natalie D. Wales Director of Regulatory Policy and Compliance Enclosures cc: Ting-Pong Yuen, ORA

11 !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Delevan Intake Pumping/Generating Plant UV 45!!!!!!! Sacramento River!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Moulton Weir Attachment A!!! Tehama-Colusa Canal GCID Main Canal 0 2 Scale in Miles LEGEND Existing Canal County Line New Delevan Pipeline Road 68 New TRR Pipeline!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! New Substation New Pump/Generating Plant Road 69 Existing Paved Road New 110 kv Transmission Line New Recreation Area Glenn Co.!!!!!!!!!!!!!!!!!!!!!!!!!!! Recreation Area East Side Rd!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Colusa Co. Golden Gate Dam Inlet / Outlet Works Colusa Switch Yard TRR Delevan Rd Delevan Diversion / Release Funks Creek 5 Recreation Area Holthouse Reservoir Delevan and TRR Pipeline Sites Reservoir 1.8 MAF Sites Dam Stone Corral Creek Maxwell Sites Rd Maxwell Rd New 110 kv Line Existing WAPA 500 kv Existing WAPA 230 kv Existing PG&E 230 kv Huffmaster Rd Leesville Road to Huffmaster Road

12 Attachment B

13 Attachment C Sites Project: Frequently Asked Questions The following questions and answers are meant to respond to the most common questions about the Sites project. Q: How would Sites benefit California? A: California operates one of the most extensive and sophisticated water storage and conveyance systems in the world. However, the basic elements of California s water delivery system have remained virtually unchanged for 40 years, while the population of the state has nearly doubled. These facts, coupled with the effects of drought, climate change, and growing environmental and agricultural needs, are putting the system under considerable pressure. Sites Reservoir, as a place to store extra water, provides increased operational flexibility to our water delivery system. Sites is a cost effective way to deal with the growing demands on California water, does not dam an existing river, or require expensive retro-fitting of existing facilities. Sites will provide a needed backstop to help the state s primary water delivery system react to the potential impacts of climate change, which is expected to bring less snow runoff and flashier storms. During drought years, Sites can be refilled from just one or two high flow storm events. For instance, in the drought year of , Sites could have captured 410,000 acre-feet from just two storm events that winter. If Sites were operational this past rainy season, it would have added over one million acre-feet from the El Nino storms. In an average water year, Sites will be able to add 500,000 acre-feet of water to be used by California homes, farms, and businesses, and the ecosystem. During critical dry years, Sites would boost water available to California during the summer by an estimated 250,000 to 300,000 additional acre-feet. FOR MORE INFORMATION: As an offstream storage project, Sites will increase environmental flows for fish while providing much needed operational flexibility to deliver water for consumptive and economic uses. In addition, hydroelectric power generated at Sites during outflows could compensate for fluctuations in wind and solar power generation. PAGE 1 OCTOBER 2016

14 Attachment C FAQs Q: How will Sites benefit the environment? A: Sites is the only proposed storage project that combines the public benefits of water storage with the ecosystem benefits of increased environmental flows in the Sacramento River. Up to half of Sites annual water supplies can be dedicated to environmental flows, which will improve water quality for endangered fish, reduce salinity levels in the Sacramento-San Joaquin Delta (Delta), and enhance Pacific Flyway habitat for migratory birds and other native species. If Sites had been operational in 2015, an additional 240,000 acre-feet of cold water would have been available to support critical salmon migration in the Sacramento River. In dry and critical years, Sites will provide an additional 250,000 to 300,000 acre-feet of coldwater pools to help endangered Salmon populations. Q: How will Sites improve water quality? A: Aside from its ability to store water, Sites provides much needed operational flexibility to California s water system. Sites will be designed to fill during high flow events in the wet season. During these high flow events, Sites will capture water that can then be used during summer months to improve water quality in the Delta when it is at its worst, and provide environmental flows when it is needed most. Q: Under what conditions would Sites divert water? A: Diversions to Sites Reservoir would only be possible if specific criteria are met: 1. After senior water rights holder demands have been met; 2. When Delta flows are in excess according to DWR s operations control office; and 3. If Sacramento River flows at Freeport and Delta diversion locations are greater than the required minimums. Q: How will Sites impact water supply availability? FOR MORE INFORMATION: A: Currently, there are a limited number of reservoirs that hold water above the Delta in Northern California, and they must maintain water quality standards, salinity levels, and environmental habitat protection during dry summer months. The Delta is the state s biggest water bottleneck, home to a rigid (and some argue outdated) system that does not respond well to crisis. Sites would increase North of Delta storage by 23 percent, giving water managers more flexibility to meet the state s water needs while ensuring habitat protection and improving environmental conditions. PAGE 2 OCTOBER 2016

15 Attachment C FAQs Q: Would public money fund Sites? A: Up to 50 percent of Sites may be paid for by California s Proposition 1 Water Bond funding. If the project receives Proposition 1 funding, the money will pay for the public benefits of the project and create a source of water that is specifically earmarked for the environment. In addition, the water provided by Sites will help augment a statewide water system that provides safe drinking water to 25 million Californians, supports a productive agricultural economy, and will make additional environmental water available during critical summer months. Q: If the state funds Sites, would the benefits outweigh the costs? A: Sites is projected to cost $4.4 billion in 2015 dollars. Recent studies of Sites Reservoir estimate that its overall return on investment for the state would be from $61 million to $71 million per year. In addition, outside investment from water districts around the state has increased and the Sites Project Authority has secured committed investors. Although all of the financing aspects are not finalized, the Sites Project Authority has used a conservative cost estimate and fully intends to drive costs down by using alternative delivery methods and potentially a low interest loan program from the federal government. More importantly, when considering a future of scarce water supplies, the benefit of Sites far outweighs the cost. Q: Are dams and reservoirs effective methods of addressing drought? A: Sites Reservoir is a modern solution to California s water challenges. Today, California s water system is extremely rigid and has very little room for error. Sites will provide needed flexibility for the state to respond to future crisis. It will also be the first surface water storage project in California to create a dedicated source of water specifically for public benefit to improve environmental conditions in the Sacramento River and Delta. The unique location of Sites and status as an offstream reservoir will allow it to capture huge storm surges on the Sacramento River and store that water for dry summer months without blocking fish migration or damming an existing river. FOR MORE INFORMATION: S I T E S P R O J E C T. O R ITE S PROJ EC T PAG E 3 OC TOB E R 2016

16 CALIFORNIA WATER SERVICE COMPANY 1720 North First Street, San Jose, CA Revised CPUC Sheet No. XXXXX-W (408) Canceling CPUC Sheet No. XXXXX-W Table of Contents - Page 1 The following listed tariff sheets contain all effective rates and rules affecting the rates and service of the Utility together with information relating thereto: Sheet Subject Matter Service Area Schedule No. CPUC Sheet No. Title Page 5613-W Table of Contents Page 1 Table of Contents XXXXX-W (C) Page 2 Preliminary Statements XXXXX-W (C) Page 3 Preliminary Statements XXXXX-W Page 4 Preliminary Statements XXXXX-W Page 5 Rate Schedules - All Districts XXXXX-W Page 6 Rate Schedules - District Specific XXXXX-W Page 7 Rate Schedules - District Specific XXXXX-W Page 8 Rate Schedules - District Specific XXXXX-W Page 9 Rate Schedules - District Specific XXXXX-W Page 10 Rate Schedules - District Specific XXXXX-W Page 11 Service Area Maps W Page 12 Rules XXXXX-W Page 13 Rules XXXXX-W Page 14 Sample Forms W Page 15 Sample Forms 2926-W (continued) (To be inserted by utility) Issued by (To be inserted by CPUC) Advice Letter No B PAUL G. TOWNSLEY Date Filed Decision No. Name Effective Vice President Resolution No. Title

17 CALIFORNIA WATER SERVICE COMPANY 1720 North First Street, San Jose, CA Revised CPUC Sheet No. (408) Canceling CPUC Sheet No. XXXXX-W XXXXX-W Table of Contents Page 2 Sheet Subject Matter Service Area Schedule No. CPUC Sheet No. Preliminary Statement AA Preliminary Statement AA Preliminary Statement AB Preliminary Statement AC 8637 Preliminary Statement AD Preliminary Statement AE Page Preliminary Statement AE Page Preliminary Statement AF 9025 Preliminary Statement AG 9032 Preliminary Statement AI Preliminary Statement AJ 9671 Preliminary Statement AK Preliminary Statement AL Preliminary Statement AM Preliminary Statement AN Preliminary Statement AO Preliminary Statement AP Preliminary Statement AQ Preliminary Statement AR Preliminary Statement AS Page Preliminary Statement AS Page Preliminary Statement AT XXXXX-W Preliminary Statement AU XXXXX-W ( N ) Rate Schedules: ALL DISTRICTS Service to Company Employees ED Surcharge to Fund Public Utilities Commission Reimbursement Fee UF Rate Support Fund RSF Low Income Ratepayer Assistance LIRA Low Income Ratepayer Assistance LIRA Low Income Ratepayer Assistance LIRA PBOP Surcharge PB 7049 Additional Surcharges/Surcredits AS Page Additional Surcharges/Surcredits AS Page Additional Surcharges/Surcredits AS Page Additional Surcharges/Surcredits AS Page ANTELOPE VALLEY DISTRICT Residential Metered Service Leona Valley AV-LEO-1-R Nonresidential Metered Service Leona Valley AV-LEO-1-NR Residential Metered Service AV-LAN-1-R Nonresidential Metered Service AV-LAN-1-NR General Metered Service Fremont Valley/Lake Hughes AV-FM Limited Residential Flat Rate Service Lake Hughes AV-LH-2R 2550 Private Fire Protection Service AV BAKERSFIELD DISTRICT Residential Metered Service BK-1-R Nonresidential Metered Service BK-1-NR Residential Flat Rate Service BK-2R Private Fire Protection Service BK Public Fire Hydrant Service BK BAYSHORE DISTRICT Residential Metered Service - South San Francisco Service Area BAY-1-R Nonresidential Metered Service - South San Francisco Service Area BAY-1-NR Private Fire Protection Service BAY (continued) (To be inserted by utility) Issued by (To be inserted by CPUC) Advice Letter No B PAUL G. TOWNSLEY Date Filed Decision No. Name Effective Vice President Resolution No. Title

18 CALIFORNIA WATER SERVICE COMPANY New CPUC Sheet No North First Street, San Jose, CA (408) CPUC Sheet No. XXXXX-W XXXXX-W Preliminary Statement (continued) AU. PHASE 1 SITES RESERVOIR MEMORANDUM ACCOUNT (PHASE 1 SITES MA) ( N ) 1. PURPOSE: The purpose of the Phase 1 Sites Reservoir Memorandum Account (Phase 1 Sites MA) is to track the costs for payments made to the Sites Project Authority (Authority) for Phase 1 of the proposed "Sites Reservoir," an off-stream project located on the west side of the Sacramento Valley (approximately 10 miles west of Maxwell), currently projected to yield up to 500K acre- feet of water per year. The Phase 1 Sites MA is capped at the estimated $1.05 million maximum payment for Phase 1. In Phase 1 of the project, state grant funding under Proposition 1 (approved in 2014) is being pursued and draft environmental impact studies are being prepared. There are five phases of the project, with the construction of facilities beginning in 2022 under Phase 4. The project is anticipated to be operational in In the event of an unacceptable or adverse treatment of Cal Water s request for rate recovery or a determination by Cal Water that a Commission decision will not be timely rendered and final prior to the end of Phase 1, Cal Water may (1) withdraw and would be reimbursed by the Authority for its past payments at the time of this determination or (2) arrange for the transfer of its share in the project to a party or parties eligible to participate, in either case consistent with the April 28, 2017 letter from James C. Watson, PE, General Manager, Sites Project Authority, to Robert J. Kuta, Vice-President, Engineering, California Water Service Company. 2. APPLICABILITY: The Phase 1 Sites MA may be applicable to all regulated operations in California. A request for recovery of amounts in this account will identify the proposed ratemaking areas from which recovery is being sought, and will be accompanied by a justification for the proposal. 3. RATES: The Phase 1 Sites MA currently has no rate component. 4. ACCOUNTING PROCEDURE: The entries made to the Phase 1 Sites MA may include the following. These entries are not cumulative and are tracked in order to preserve the range of potential regulatory outcomes the Commission may elect if recovery is granted. Expenditure Entries a. Amounts equal to invoices paid to the Sites Reservoir Authority for Phase 1 of the project, up to a cap of $1.05 million. Revenue Requirement Entries b. Amounts equal to the revenue requirement of each expenditure recorded in (a.) as if it were shareholder-funded (including return on investment, income taxes, ad valorem tax, depreciation, other taxes and fees). Interest c. Interest calculated based on the average balance in each segment of the account multiplied by 1/12th of the most recent month s interest rate on Commercial Paper (prime, 90-day), published in Federal Reserve Statistical Release H REGULATORY PROCEDURE: Requests for recovery of any balance in the Phase 1 Sites MA shall be made in a general rate case or a separate application. Requests for recovery shall include a showing that the costs requested for recovery are not included in rates. ( N ) (To be inserted by utility) (To be inserted by Cal. P.U.C.) Advice Letter No B PAUL G. TOWNSLEY Date Filed Decision No. Name Vice President Effective Resolution No. Title Issued by

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