BILL ANALYSIS Ó
AB 401
Page 1
ASSEMBLY THIRD READING
AB
401 (Dodd)
As Amended April 8, 2015
Majority vote
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|Committee |Votes |Ayes |Noes |
| | | | |
| | | | |
|----------------+------+--------------------+----------------------|
|Utilities |9-3 |Rendon, Achadjian, |Patterson, Hadley, |
| | |Burke, Cristina |Obernolte |
| | |Garcia, Eggman, | |
| | |Quirk, Santiago, | |
| | |Ting, Williams | |
| | | | |
|----------------+------+--------------------+----------------------|
|Appropriations |12-5 |Gomez, Bonta, |Bigelow, Chang, |
| | |Calderon, Daly, |Gallagher, Jones, |
| | |Eggman, |Wagner |
| | | | |
| | | | |
| | |Eduardo Garcia, | |
| | |Gordon, Holden, | |
| | |Quirk, Rendon, | |
| | |Weber, Wood | |
| | | | |
| | | | |
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AB 401
Page 2
SUMMARY: This bill requires the Department of Community Services
and Development (CSD), in collaboration with the Board of
Equalization (BOE) and relevant stakeholders, to develop a plan to
fund and implement a Low-Income Water Rate Assistance Program by
January 1, 2017, for households with less than 200% of the federal
poverty guideline level.
FISCAL EFFECT: According to the Assembly Appropriations
Committee:
1)Potential general fund (GF) or special fund cost pressures,
possibly in the millions of dollars, for the implementation of
the plan.
2)Increased GF costs to CSD in the $350,000 range over a two-year
period to conduct the feasibility study and develop the rate
assistance program.
3)Minor, absorbable costs for the BOE to participate in the
development of the plan.
COMMENTS:
1)Purpose. According to the author, water affordability is a
central element to water access. When water costs make water
unaffordable, it can pose a health and safety issue and a myriad
of administrative and political problems. Households paying an
amount for water that exceeds an affordability threshold are
considered to be paying a cost that is unaffordable and a high
burden.
2)Background. This bill, in part, is a result of the struggle
between the Community of Lucerne (Lake County) and the
investor-owned water utility (IOU) Cal Water. In July 2012, Cal
Water filed a request with the California Public Utilities
Commission (CPUC) for a water rate increase of 77% over three
AB 401
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years to ratepayers in Lucerne, one of Lake County's most
disadvantaged communities. The average resident's water bill,
according to local news accounts, would have doubled from $62.85
to $124.22 per month. Lucerne is an area with a median annual
household income of approximately $25,000, as opposed to the
statewide median annual income of approximately $61,000.
A recent pending settlement between CPUC and Cal Water would not
drastically increase water rates in Lucerne. However, over
recent years, Lucerne has been subject to large rate increases.
In 2005, Cal Water sought a 247% rate increase, receiving CPUC
approval for a 120% rate increase. In 2009, Cal Water requested
an increase of 54.9%, and received approval for an increase of
41.8%.
The United States Environmental Protection Agency and the
California Department of Public Health use a "water
affordability threshold" to factor in variable costs of living
across California. For example, at a threshold of 1.5%, a
household at the California median income of $61,000 would not
be expected to pay over $915 per year for water ($76.25 per
month). Households with water bills exceeding this threshold
are considered to be paying a cost that is unaffordable and a
"high burden." In the case of Lucerne, it is estimated an
affordable monthly bill would be $32.50 or less. In reality,
the average bill is $85, which is about 2.5 times the affordable
amount.
3)Water Services Providers. The CPUC is charged with ensuring
California's 115 investor-owned water utilities and 14
investor-owned wastewater utilities provide safe and reliable
water to customers at reasonable rates. Water utilities
regulated by the CPUC deliver water service to about 16% of the
state's population.
The remaining water customers in California are served by
publicly-owned utilities (POUs) (cities, water districts, and
AB 401
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mutual water companies), which are self-regulated and not under
CPUC jurisdiction. POUs must restrict water rates to the cost
of service. It is unclear how POUs will be able to offer rate
assistance without violating special tax and fee laws.
4)The Department of Community Services and Development. CSD
partners with a network of private, non-profit, and local
government community service providers dedicated to helping
low-income families achieve and maintain self-sufficiency, meet
their home energy needs, and reside in housing free from the
dangers of lead hazards. As such, CSD is the appropriate state
agency to perform this study.
5)Previous Legislation. Last year, a very similar measure, AB
1434 (Yamada), passed the Assembly Utilities and Commerce
Committee but was held in the Senate Appropriations Committee.
Analysis Prepared by:
Sue Kateley / U. & C. / (916) 319-2083 FN:
0000673