Papan Bills to Establish Foundation for Water Rate Equity and to Reform Water Conservation Trigger for State Reservoirs

SAN MATEO – Today, Assembly Bills 754 and 755, introduced by Assemblymember Diane Papan (D-San Mateo) were approved by the Assembly Committee on Water, Parks & Wildlife.

“Every Californian who has a water connection must pay rates based upon the total expenses paid by their providers related to acquiring supply, distribution, capital investment and conservation,” said Papan. “But these costs are driven higher by major consumers, often for largescale outdoor irrigation, that does not reflect the usage of average consumers. This bill will compel utilities to track and identify these misalignments in usage and rates charged.”

As a public health and safety measure, water utilities must maintain systems to meet the maximum possible demand on any given day. Without consideration for rate equity, however, large consumers increase costs for water systems. In drought, these issues are especially exacerbated, as the temporary additional water supplies and conservation programs can be costly to water utilities. As average consumers may conserve water and lower demand, system expenses continue to increase to meet the demands of major water users, compelling public utilities to recoup their overall system costs. As a result, customers who conserve water may be required to subsidize rising costs for those who use the most.

AB 755 will require public water utilities to identify how major water users drive system expenses and will provide greater focus on the root cause of increasing but inequitable rates, serving as a necessary foundation for a more fair and equitable rate structure for the average consumer. Furthermore, AB 755 will require public water utilities to post the cost attributable to major water users on their website along with the overall cost savings if the major water users had met efficiency targets.

Staying focused on the State’s water needs, Assembly Bill 754 will require urban and agricultural water suppliers to initiate demand-side conservation when reservoir levels drop below a target storage curve, adding a dynamic response to potential drought.

“Water conservation requirements in California are triggered when overall supply is less than predicted,” said Papan. “But this approach does not account for impacts reservoir by reservoir which can become depleted well before conservation mandates kick in thus impairing downstream water quality which harms wildlife.”

In 1983, California passed the Urban Water Management Planning Act to ensure water is conserved during drought. The law requires urban water suppliers to prepare a water shortage contingency plan when total water supply is less than predicted. Under these plans, water suppliers must incentivize conservation through differential pricing, public outreach, water waste prevention ordinances, and other actions to reduce demand.

Under AB 754, rather than waiting until overall supplies dwindle, it will require urban and agricultural water suppliers who identify reservoirs as a water source to initiate conservation when reservoir levels drop below critical thresholds. This bill will require these suppliers to identify a target storage level for their reservoir supply needed to satisfy all downstream users and ecological demands. If reservoir levels drop below that target storage level, the water supplier’s reservoir shortage conservation plans will trigger.

“The conservation approach under AB 754 will improve water quality and provide ecological benefits in a more dynamic response to drought,” said Papan. “We can no longer approach what are now perpetual drought cycles without sophisticated resource management.”

Both bills will be considered in the Assembly Committee on Appropriations in May.