BILL ANALYSIS Ó SB 551 Page 1 Date of Hearing: July 14, 2015 ASSEMBLY COMMITTEE ON WATER, PARKS, AND WILDLIFE Marc Levine, Chair SB 551 (Wolk) - As Amended July 6, 2015 SENATE VOTE: 27-9 SUBJECT: State water policy: water and energy efficiency. SUMMARY: Establishes a State policy recognizing the nexus between water and energy and requiring that water use and water treatment be as energy efficient as feasible and that energy use and generation be as water efficient as feasible. Specifically, this bill: 1)Finds and declares that water and energy are vital to California's economy and inextricably linked and that energy generation can be water intensive. 2)Further finds and declares that water treatment and wastewater disposal account for nearly 20% of the electricity and 30% of the nonpowerplant-related natural gas consumed in California. 3)Establishes a State policy that water use and water treatment SB 551 Page 2 shall operate in a manner that is as energy efficient as feasible and that energy use and generation shall operate in a manner that is as water efficient as feasible. 4)Requires all relevant state agencies to consider the water and energy efficiency policy when revising, adopting, or establishing policies, regulations, and criteria pertinent to the use of energy and water. 5)Defines feasibility as capable of being accomplished in a successful manner within a reasonable period of time taking into account specified factors including, but not limited to, cost, environment, public health, and technology. EXISTING LAW: 1)Establishes the policy of the state and the intent of the Legislature to promote all feasible means of energy and water conservation and all feasible uses of alternative energy and water supply sources. 2)Finds and declares that waste or unreasonable use of water imposes unnecessary and wasteful consumption of energy to deliver or furnish the water, and it is necessary, therefore, to determine the quantities of water in use throughout the state to the maximum extent that it is reasonable to do so in order to reduce that energy consumption. FISCAL EFFECT: According to the Senate Appropriations Committee analysis this bill would create cost pressures, potentially in the millions of dollars to the General Fund and various special funds to increase grant awards, reprioritize programs, and SB 551 Page 3 change state operations to increase electricity and water efficiency. COMMENTS: According to research performed by the California Energy Commission (CEC), "water and energy resources are inextricably connected, and this is known as the Water-Energy Nexus." This bill would create a new state efficiency policy with regard to the Water-Energy Nexus. Author's statement: According to the author, water transportation, treatment, and use require a great deal of energy, while energy generation also requires water. The author specifies that, "transportation and treatment of water, treatment and disposal of wastewater, and the energy used to heat and consume water account for nearly 20% of the total electricity and 30% of non-power plant related natural gas consumed in California." The author adds that, "demand for water and energy resources is expected to rise due to population growth and also as the result of climate change. California must take every measure to ensure that both water and energy efficiencies are maximized by developing water and energy policies that recognize the nexus between these two vital resources." Background: Focus on the Water-Energy Nexus is growing. The CEC, in its policy report California's Water-Energy Relationship (Prepared in support of the 2005 Integrated Energy Policy Report Proceeding (04-IEPR-01E)) found that "the relationship between the water sector and the energy sector is complex and highly interdependent." The report also found that "currently, most water and energy system are internally optimized on a single utility basis. Systems are rarely optimized in coordination with other systems (water, wastewater, electric, and natural gas) or with their customers, missing opportunities to reduce total SB 551 Page 4 energy consumption, shift loads off-peak, or maximize energy generation." The report states that "energy demand in the water sector will likely increase over time due to a number of factors, including population and urban load growth, increased water and wastewater treatment because of more stringent water quality regulations to protect water quality, and market, economic, regulatory, and legislative changes." Some energy think tanks are linking food to the nexus as well. In the February 2015 Scientific American article A Puzzle for the Planet, Michael Webber, Deputy Director of the Energy Institute at the University of Texas at Austin states that in "July 2012 three of India's regional electric grids failed, triggering the largest blackout on earth. More than 620 million people - 9 percent of the world's population - were left powerless. The cause: the strain of food production from a lack of water. Because of a major drought, farmers plugged in more and more electric pumps to draw water from deeper and deeper belowground for irrigation. Those pumps, working furiously under the hot sun, increased the demand on power plants. At the same time low water levels meant hydroelectric dams were generating less electricity than normal." California, Mr. Webber concludes, "is facing a surprisingly similar confluence of energy, water, and food troubles" that require "new policy thinking." Related legislation: SB 471 (Pavley) recognizes the nexus between water and energy and water and reduction of greenhouse gas emissions and includes reduction of greenhouse gas emissions associated with water treatment among the investments that are eligible for funding from the Greenhouse Gas Reduction Fund. SB 471 is pending in the Assembly. Supporting arguments: Supporters state that the "water sector SB 551 Page 5 in this state can use around 20% of total energy" and that "as we work to increase energy efficiency and reduce greenhouse gases we should consider every sector, including water." Supporters conclude that this bill will "ensure real energy savings and that we adopt the smartest water policies going forward." Other parties make their support contingent on the author adding amendments to this bill specifying that the policy does not create a "loading order" that would "direct water managers to use the least energy-consumptive water first, and through a progression, only utilize the most energy-consumptive water supplies (such as desalination and potable reuse) as a last resort." These supporters also dispute the energy-consumption figures in the findings of the bill and recommend other figures. Opposing arguments: None on file. REGISTERED SUPPORT / OPPOSITION: Support Sierra Club of California California League of Conservation Voters San Diego County Water Authority (if amended) SB 551 Page 6 Opposition None on file Analysis Prepared by:Tina Leahy / W., P., & W. / (916) 319-2096