The California Public Utilities Commission is one step closer to approving the Regional Water Project aimed at creating a new water supply for the Monterey Peninsula.

On Oct. 21, PUC Administrative Law Judge Angela Minkin issued a proposed decision on the controversial desalination project, which would de-salt seawater to provide about 10 million gallons of drinking water per day.

PUC Commissioner John Bohn agreed with Minkin's assessment that the desal project is the Peninsula's best hope for a new water supply. The state has ordered California American Water Co. to stop illegally overpumping the Carmel River by December 2014.

But Bohn disagreed with some of the finer points in Minkin's proposed ruling and offered his own alternative. Among the key differences:

• Minkin suggests a project cost cap of $275.5 million; costs beyond that could not be passed on to Cal Am ratepayers. Bohn proposes a $272.5 million cap; Cal Am could recoup additional costs from ratepayers "upon a showing of exceptional circumstances and…a rigorous reasonableness review."

• Minkin proposes eliminating a cap on Marina Coast Water District's fees paid toward the project, and recommends that any fees MCWD charges for new water connections on the former Fort Ord go toward the project costs. Bohn would bump up MCWD's contribution to $25 million: $22 million in new connection fees, and $3 million for "associated intangible benefits that MCWD will receive from participating in the Regional Project."

• Both proposals would add a representative from the Monterey Peninsula cities to the project's Advisory Committee. But Minkin's version would give the municipal advisor full voting status - which would allow cities to call for arbitration on project-related decisions - while Bohn's would not grant cities that voting power.

The PUC is expected to make its final decision Dec. 2.