BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2874


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          Date of Hearing:  April 12, 2016


                  ASSEMBLY COMMITTEE ON WATER, PARKS, AND WILDLIFE


                                 Marc Levine, Chair


          AB 2874  
          (Beth Gaines) - As Amended March 15, 2016


          SUBJECT:  Groundwater sustainability agencies:  fees


          SUMMARY:  Requires a groundwater sustainability agency (GSA),  
          before imposing or increasing a fee relating to a groundwater  
          basin that includes a water corporation regulated by the Public  
          Utilities Commission (CPUC) to notify the CPUC.


          EXISTING LAW:  


          1)The Sustainable Groundwater Management Act (SGMA), requires  
            all groundwater basins designated as high or medium priority  
            basins subject to critical overdraft to be managed under a  
            groundwater sustainability plan by January 31, 2020, and all  
            other high or medium priority groundwater basins to be managed  
            under such a plan by January 31, 2022.


          2)Authorizes any local agency or combination of agencies  
            overlying a groundwater basin to become a GSA for that region.  
             A combination of local agencies may form a GSA by using a  
            joint powers agreement, or a memorandum of agreement or other  
            legal agreement.  Authorizes a water corporation regulated by  
            the CPUC or a mutual water company to participate in a GSA  








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            through a memorandum of agreement or other legal agreement.  
            Provides that this authority does not confer any additional  
            powers to a nongovernmental entity.


          3)Authorizes a GSA to impose fees, including but not limited to,  
            permit fees and fees on groundwater extraction, to fund the  
            costs of a groundwater sustainability program.


          4)Authorizes the CPUC to regulate privately owned electric,  
            natural gas, telephone, water, and sewer utilities, and to  
            process utility rate change requests.


          FISCAL EFFECT:  Unknown


          COMMENTS:  This bill requires GSAs under SGMA to notify the CPUC  
          before imposing a fee, as authorized under SGMA.


          1)Author's Statement:  The author has introduced this bill to  
            protect customers of water utilities regulated by the CPUC  
            from the effects of a potential lack of coordination between  
            GSAs and the CPUC.  This will ensure a process is in place to  
            notify the CPUC of any GSA decisions that could affect  
            customers' water rates.  Without coordination between GSAs and  
            the PUC, customers of regulated water utilities could be  
            harmed through changes in fees and ground water rights.  


          2)Background:  There are over 108 investor-owned water utilities  
            under the CPUC's jurisdiction providing water service to about  
            6 million Californians, or 16 percent of California residents.  
            The CPUC investigates water and sewer system service quality  
            issues, and analyzes and processes utility rate change  
            requests. Regulated private water utilities are not allowed to  
            change rates or the terms of service to their customers  








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            without the CPUC's approval.



          While SGMA allows an investor-owned utility to be a member of a  
            GSA, not all communities are including investor-owned  
            utilities in the GSAs that they are forming.  The sponsors of  
            this bill are concerned that in those instances in which an  
            investor owned utility is not a member of the GSA, and the GSA  
            imposes a fee, the utility may not be authorized by the CPUC  
            to impose a surcharge on its customers in order to collect the  
            fee.  The notice requirement would alert the CPUC regarding  
            the proposed fee.   

          The California Water Service Company cites an example of a 2014  
            case where they filed an application with the CPUC seeking  
            authority to apply surcharges on customers, phased in over 8  
            years, to mitigate groundwater overdraft in the Upper Kings  
            River Basin.  The purpose of the surcharges was to fund  
            groundwater recharge projects under a cooperative agreement  
            between the City of Selma and the Consolidated Irrigation  
            District (District) which supplies irrigation water to farmers  
            in the area.  A dispute between the District and the City over  
            urban development led to a cooperative agreement through which  
            both groundwater extraction and new urban development would be  
            allowed to continue, and water customers in the City would be  
            assessed surcharges to pay for groundwater recharge projects.   
            The Office of Ratepayer Advocates intervened in the case and a  
            settlement agreement was ultimately reached.  
          3)Prior and Related Legislation:  SB 1168 (Pavley), Chapter 346,  
            and AB 1739 (Dickinson), Chapter 437, Statutes of 2014,  
            together enacted SGMA, which requires that each high- and  
            medium-priority groundwater basin be managed pursuant to a  
            groundwater sustainability plan by January 31, 2020, if in  
            critical overdraft, or by January 31, 2022, with the goal of  
            achieving sustainability within 20 years.











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          SB 13 (Pavley), Chapter 255, Statutes of 2015, among other  
            things, authorized a mutual water company to participate in a  
            GSA and provided that a water corporation or a mutual water  
            company may participate in a GSA through a memorandum of  
            agreement or other legal agreement.      
          4)Support Arguments:  None received.


          5)Opposition Arguments:  None received.


          REGISTERED SUPPORT / OPPOSITION:




          Support


          California Water Association




          Opposition


          None on file.




          Analysis Prepared by:Diane Colborn / W., P., & W. / (916)  
          319-2096













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