BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                                2015 - 2016  Regular 

          SB 555 (Wolk) - Urban retail water suppliers: water loss  
          management.
          
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          |Version: April 16, 2015         |Policy Vote: N.R. & W. 8 - 0    |
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          |Urgency: No                     |Mandate: No                     |
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          |Hearing Date: May 28, 2015      |Consultant: Marie Liu           |
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          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  







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          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.








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          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.








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          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.


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