BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular SB 555 (Wolk) - Urban retail water suppliers: water loss management. ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: April 16, 2015 |Policy Vote: N.R. & W. 8 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 28, 2015 |Consultant: Marie Liu | | | | ----------------------------------------------------------------- SUSPENSE FILE. Bill Summary: SB 555 would require urban retail water suppliers to submit an annual water loss audit report to the Department of Water Resources (DWR) beginning in 2017. This bill would require DWR and the State Water Resources Control Board (SWRCB) to establish rules related to the water loss audits and to establish water loss performance standards. Fiscal Impact (as approved on May 28, 2015): One-time costs of $400,000 from the General Fund to DWR to develop the rules guiding the water audit reports. Unknown ongoing costs, but likely in the range of $150,000 to $200,000, from the General Fund to review audits annually, provide technical assistance to urban water suppliers, and update the water audit report regulations every five years. Background: The Urban Water Management Planning Act (act) requires all urban water suppliers to prepare and adopt an urban water management plan. In order for an urban water supplier to be SB 555 (Wolk) Page 1 of ? eligible for a water management grant or loan from the state, it must be implementing the water demand management measures in its urban water management plan. Last year the Legislature passed and the Governor signed SB 1420 (Wolk), which requires the urban water management plan include a calculation of the distribution system water losses. The loss calculations are to be based on the water system balance methodology developed by the American Water Works Association (AWWA). Proposed Law: This bill would require, beginning January 1, 2017, each urban retail water supplier to annually submit a water loss audit for the previous calendar year. The audit must identify steps taken in the preceding year to increase the validity of the data, reduce the volume of apparent losses, and reduce the volume of real losses. This audit must be validated by the chief financial officer, the chief engineer, or the general manager of the urban retail water supplier and determined complete by DWR. This bill would require DWR to do the following: By January 1, 2017, to adopt rules that: (1) require the audit to be conducted in accordance with the method adopted by the AWWA; (2) establish the process for validating an water loss audit report; and (3) establish the method and timing of submitting a water loss audit report to DWR. These rules must be updated every five years and within six months after the release of any revisions by the American Water Works Association to its water audits method. Determine whether validated audits are complete. Water suppliers would have 90 days to resubmit an audit that was deemed incomplete. Post validated water audits on its website in a manner that allows for public viewing and comparisons across water suppliers. Provide technical assistance using available funds, including funding. In consultation with the SWRCB, develop metrics for reporting year-over-year progress on water loss reduction. SB 555 (Wolk) Page 2 of ? This bill would also require the SWRCB to adopt rules by July 1, 2020, that would mandate urban retail water suppliers to meet performance standards for water losses. Related Legislation: SB 1420 (Wolk) Chapter 490, Statutes of 2014 required urban water management plans (UWMPs) to include quantification of water loss in the distribution system and would allow UWMPs to include projected water savings. Staff Comments: To adopt the rules required by this bill regarding the conduct of water loss audits, submittal of reports, validation of reports, and reporting metrics, DWR would need to develop regulations at a one-time cost of $400,000, including costs for two PYs. DWR notes that that part of these regulatory costs is the staff time to review the AWWA water loss audit method to ensure that it appropriate for California and to consider any potential modifications to that method. Staff notes that the bill requires that the rules be "in accordance" with the AWWA methods, which would give DWR leeway in making changes to the method as DWR sees fit. This bill would also require DWR to determine whether the water loss audit reports are complete, validated, attested, or congruent with known characteristics of water system operations. DWR estimates annual review costs of $150,000 to $200,000 to review 400 reports each year. The regulations guiding the development of the water loss audits would be required to be updated every five years or within six months after the release of an update to the AWWA methods. It is unknown at this time whether substantial revisions would be necessary after five years or whether updates to the AWWA methods would require significant regulatory changes. However, staff believes that it is reasonable to assume that these ongoing activities could be achieved within the above estimated ongoing costs. SB 555 (Wolk) Page 3 of ? Staff notes that the bill also requires DWR to provide technical assistance to water suppliers' water loss detection programs, including, but not limited to "funding." According to the author, the intention is not for DWR to provide funding to water suppliers for their water loss detection programs, but for DWR to provide assistance in identifying local or non-state funding sources. Staff recommends that the bill be amended to clarify what responsibilities are included in technical assistance. This bill would also require the SWRCB to adopt rules requiring urban retail water suppliers to meet water loss performance standards and to assist DWR in their development of metrics for water loss reduction progress. The SWRCB estimates that they will need one PY at a cost of $140,000 for three years for these responsibilities. -- END --