BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
AB 975 - Fong Hearing Date: June 30, 2009
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As Amended: June 25, 2009 FISCAL B
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DESCRIPTION
Current law provides that the California Public Utilities
Commission (CPUC) may only require the installation of water
meters if it determines that the meters will be cost effective,
will result in a significant reduction in water consumption, and
will not impose an unreasonable financial burden on the
customer.
This bill deletes that provision.
This bill requires water corporations serving 500 or more
customers to install water meters on all new service connections
as of January 1, 2010 and on all customers by January 1, 2025.
For water corporations serving less than 500 customers, the CPUC
may require the installation of water meters if it finds that
the meters will be cost effective, the meters will reduce water
consumption, or that the cost of metering will not impose an
unreasonable financial burden on the customer.
BACKGROUND
Charging for utility service by the volume consumed is standard
practice, except where the incremental cost of service is
extremely low (e.g. telephone calls). A utility charging a flat
price for an unlimited amount of electricity or natural gas
service would quickly go bankrupt. Most water service is
metered and charged based primarily on the volume consumed.
Water utilities serving more than 3000 connections, whether
regulated by the CPUC or not, are required to install meters and
charge for water by volume on all of their customers by 2025.
The CPUC regulates 140 water utilities providing potable and
irrigation water to more than 6 million Californians. Total
revenue of these utilities is about $1 billion annually. In
2005 the CPUC articulated its policy objectives in regulating
water utilities in a document called its "Water Action Plan".
The plan calls for promoting metered water service to encourage
conservation and encouraging increasing conservation and
efficiency rate designs. According to the CPUC about 15% of
California water utilities have non-metered rates.
COMMENTS
1. According to the CPUC, this bill will affect 24 water
utilities, each serving between 500 - 1999 customers.
Larger water utilities are required to install water meters
pursuant to existing law.
2. At Any Cost? - Underlying this bill is the presumption
that water supplies are short and that unmetered water
service leads to overuse. Consequently, water meters must
be installed and bills rendered on a usage basis to
encourage conservation of a precious and scarce resource,
regardless of the cost and the impact on customers.
The installed cost of a water meter is $500 -$1000.
Reading the meter and creating a volume-based billing
mechanism will create additional costs, all of which will
be born by customers. Under current law the CPUC must
consider the cost-effectiveness of installing meters and
the cost impact on customers before requiring that water
meters be installed. The bill sponsors indicate that the
CPUC's cost-effectiveness test makes it nearly impossible
to require water meters.
Rather than simply requiring water meters irrespective of
cost and customer impact, the author and committee may wish
to consider an alternate approach which allows the CPUC to
exercise judgment as to whether water meters are in the
customer's interest. The CPUC has already expressed a
policy encouraging water meters. On a case-by-case basis
the CPUC could assess whether the cost of the water meter
on customers is reasonable, considering the particular
circumstances of those customers and the utility, such as
cost of construction, adequacy of water supply, the ability
of the customer to absorb higher costs, and whether the
customers were predominantly year-round or part-time.
3. Smallest Utilities Could Also be Required to Meter - For
water utilities serving less than 500 customers, this bill
authorizes the CPUC to require meters if any of the
following three tests is met: 1) the metering is cost
effective, 2) metering will encourage water conservation,
3) metering won't impose an unreasonable burden on the
customers. This is a change from current law which allows
the CPUC to require water meters only if all three tests
are met.
4. Technical Issue - There is a conflict between Section
(b) which requires charges based on volume and Section (c),
which allows for fees or charges which may not be volume
based. This can be fixed by adding "Notwithstanding the
provisions of section (b)(1)," to the beginning of line 36
on page 4.
ASSEMBLY VOTES
Assembly Floor (54-24)
Assembly Appropriations Committee (12-4)
Assembly Water, Parks and Wildlife Committee
(10-2)
POSITIONS
Sponsor:
Sierra Club California
Support:
California Public Utilities Commission
California Water Association
East Bay Municipal Utility District
Environmental Justice Coalition for Water
Friends of the River
GreenPlumbersUSA
Natural Resources Defense Council
Planning and Conservation League
Sierra Club of California
Oppose:
None on file
Randy Chinn
AB 975 Analysis
Hearing Date: June 30, 2009