BILL ANALYSIS
AB 975
Page 1
Date of Hearing: May 13, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 975 (Fong) - As Amended: April 22, 2009
Policy Committee: WPW Vote:10-2
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill requires water corporations regulated by the
California Public Utilities Commission (CPUC) to install water
meters on new service connections and on unmetered connections.
Specifically, this bill:
1)Repeals current law limiting CPUC authority to require water
corporations to install water meters unless certain conditions
are met.
2)Requires water corporations with 500 or more service
connections that are not subject to Water Code requirements to
install water meters, to:
a) Install a meter on all new service connections after
January 1, 2010.
b) Install a water meter on all unmetered service
connection by January 1, 2020.
c) Charge customers, as of January 15, 2015, for potable
water based on volume of water deliveries, if water meters
have been installed.
3)Requires water corporations that reach 500 or more service
connections after January 1, 2010, to install water meters on
each unmetered connection within 10 years of attaining 500
connections and charge customers based on the volume of
potable water deliveries, with certain exceptions.
4)Allows water corporations to recover the costs of water meter
installation through rates, fees and charges, subject to the
approval of CPUC.
AB 975
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5)Requires CPUC to ensure compliance with metering requirements.
6)Authorizes CPUC to require a water corporation with less than
500 service connections to install water meters if the
Commission makes certain findings.
FISCAL EFFECT
1)Minor, absorbable costs to CPUC.
2)Unknown but potentially significant costs, potentially in the
millions of dollars collectively, paid by the individual
ratepayers of the state's water corporations, to install water
meters.
COMMENTS
1)Rationale. The author contends existing law regarding water
metering is outdated. In the past, many local communities,
particularly those in some parts of Northern California,
resisted water metering. Existing law concerning water
metering reflects that resistance by creating barriers to
water metering. The author contends that this bill updates
the law to encourage and require water metering in order to
facilitate water conservation.
2)Background.
a) PUC's Regulation of Water Corporations. The CPUC is
responsible for ensuring that the investor-owned water
utilities (water corporations) deliver clean, safe, and
reliable water to their customers at reasonable rates.
There are 129 investor-owned water utilities under CPUC
jurisdiction, providing water serve to approximately 20% of
California's residents.
b) Water Conservation and Water Metering. Water
conservation is an effective, generally low-cost, and
relatively environmentally benign tool to stretch the
state's water supply. Water conservation, can, if
comprehensively adopted, help preclude the need to build
new dams to create reservoirs, divert additional flows from
natural rivers and streams, and construct relatively
expensive water recycling and reclamation facilities.
AB 975
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The success of most water conservation depends on measuring
the volume of water deliveries. A household that does not
have its water deliveries measured will not profit from
water conservation. For households equipped with water
meters, water volume delivered can be measured so as to
determine the price paid for the water. Households that
use less water pay less, while those that use more pay
more. Water meters, therefore, can encourage (or coerce)
water conservation by enabling volume-based water pricing.
c) Municipally Owned Water Agencies Must Meter. AB 2572
(Kehoe, Chapter 884, Statutes of 2004) required all urban
water suppliers-meaning municipally owned water agencies
that supply most of the water in the state-to install
meters and charge for water by volume by 2025 and requires
the installation of meters. The requirements of AB 2572 do
not apply to water corporations, which are subject to this
bill.
d) Existing Law Limits CPUC's Ability to Require Water
Meters. The Public Utilities Code bars CPUC from requiring
water corporations to install water meters unless it
determines that water meter installation would be cost
effective, reduce water consumption, and not impose an
unreasonable financial burden. The financial burden
standard, which the Commission bases on net present value
of future cost-savings, impairs the Commission's ability to
require meters, particularly in areas where water costs are
low.
3)Opposition. There is no registered opposition to this bill.
However, some are likely to oppose the bill because, they
might claim, it unfairly burdens water rate payers.
Presumably, any water conservation that results from the
installation of water meters would benefit a wide range of
water users, possibly all water users in the state. But the
bill gives CPUC the authority to allow water corporations to
recover the costs of meter installation only from those water
corporations' rate payers, not from the larger body of water
users who benefit.
Analysis Prepared by : Jay Dickenson / APPR. / (916) 319-2081