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“Implementation of D.11-05-020: Growth in Water Utility CARW/LIRA Programs”

“Implementation of D.11-05-020: Growth in Water Utility CARW/LIRA Programs”. California Water Association Low-Income Oversight Board October 29, 2012 Sacramento, CA. Overview of California PUC-Regulated Water Utilities Summary of R.09-12-017 and D.11-05-020

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“Implementation of D.11-05-020: Growth in Water Utility CARW/LIRA Programs”

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  1. “Implementation of D.11-05-020: Growth in Water Utility CARW/LIRA Programs” California Water Association Low-Income Oversight Board October 29, 2012 Sacramento, CA

  2. Overview of California PUC-Regulated Water Utilities • Summary of R.09-12-017 and D.11-05-020 • Existing Investor-Owned Water Company (IOWC) California Alternative Rates for Water (CARW) or Low-Income Rate Assistance (LIRA) Programs Presentation Overview

  3. Low-Income Data-Sharing: Program and Goals • Results of Data-Sharing w/ Energy Utilities (by company) • Increases in IOWC CARW/LIRA Participation • IOWC Low-Income Conservation Programs • Current Proceedings Affecting CARW/LIRA Programs • Conclusions/Observations/Lessons Learned Presentation Overview (cont.)

  4. Class A and B Members – 12 • Cal Water; Golden State; San Jose; Cal-Am; San Gabriel Valley; Suburban, Valencia, Park, Apple Valley Ranchos, Alco, Del Oro, East Pasadena • Class C and D Members – 25 • Represents Business Interests of All 137 CPUC-Regulated IOWCs • Principal Activities • Promote sound water policy: utility/customer balance • Provide consensus on regulatory, legislative positions • Internal and external communications • Small system assistance • Forum for sharing best management practices CWA Overview

  5. Total Service Connections: 1.47 million out of 7.5 million total in the state (≈ 20%) • Population Served: 5.6 million out of 37 million (≈15%) • Class A Company Annual Revenues: $1.4 Billion • PG&E ($15b); SCE ($10.6b); Sempra ($7.2b) • Customer Base: 81-90% residential • Water Revenues from Res./Commercial Customers: 57% - 93% - most companies derive >80% of theirrevenues from their smaller customers IOWCs in California

  6. Most Capital Intensive Industry Capital Investment Required to Produce $1 of Revenue • EPA rules require large investment in water quality • Substantial investment needed for distribution system • More capital per revenue than all other utilities • Marginal cost of new source is very high Source: 2009 AUS Utility Reports

  7. Cost Structure vs. Rate Structure Cost Structure vs. Rate Structure

  8. Class A IOWC 2007 CARW/LIRA Penetration Rate: 16.1% • Energy Utilities’ CARE 2008 Penetration Rate: 78.8% • Objectives of Order Instituting Rulemaking (R.09-12-017) • Enhance penetration of IOWC CARW programs among eligible customers • Develop an open yet secure exchange of information that benefits customers and utilities alike • Provide clear guidance on information sharing to regulated and municipal utilities • Protect the confidential nature of customer information • Proceeding Concluded in May 2011 w/D.11-05-020 Customer Info-Sharing OIR

  9. Adopted Guidelines for Sharing Low-Income Customer Information • Eligibility Requirements Adopted for Energy IOUs Apply to IOWCs • IOWCs to Prepare and File Data-Sharing Plans w/CPUC • IOWCs to Establish Memo Accounts to Track Costs • IOWCs, Energy IOUs Executed MOUs/Non-Disclosure Agreements; Coordinated IT Interface; Undertook Trial Information Exchanges in First Half of 2012 • Commenced Formal Data Exchanges in September 2012 Summary of D.11-05-020

  10. Apple Valley Ranchos Water (CARW) • Eligible customer discount: $6.69/month • Non-qualifying customer surcharge: $0.55/month • California American Water (LIRA) • Eligible customer discount: As set, per customer discount in all districts except Monterey varies from $6 to $23 per month; in Monterey Main Service Area, discount is a set amount per service, depending on the number of residents at the premise - it varies from $10 - $20 per month • Non-qualifying customer surcharge: None (tracked in memo account) • California Water Service (LIRA) • Eligible customer discount: 50% off monthly service charge (approx. $6/month) • Non-qualifying customer surcharge: $0.06/Ccf • Non-qualifying customer temporary surcharge: $0.0182/Ccf Existing CARW/LIRA Programs

  11. Golden State Water (CARW) • Eligible customer discount: Flat discount equivalent to 15% of avg. CARW customer monthly bill (excluding surcharges) • Non-qualifying customer surcharge: Region 1 - $0.033/Ccf/month; $1.00/month for flat rate customers; Region 2 - $0.0056/Ccf/month; • Region 3 - $0.0035/Ccf/month • Great Oaks Water (LIRA) • Eligible customer discount: 50% of bi-monthly service charge • Non-qualifying customer surcharge: None (tracked in memo account) • Park Water (CARW) • Eligible customer discount: $5.50/month (current); $6.65/month (1/1/2013) • Non-qualifying customer surcharge: $0.00/month; $6.07/month (1/1/2013) Existing CARW/LIRA Programs

  12. San Gabriel Valley Water (CARW) • Eligible customer discount: 50% off monthly service charge • Non-qualifying customer surcharge: None (incorporated into rate design of monthly service charge; will change in new GRC ) • San Jose Water (WRAP) • Eligible customer discount: 15% off total monthly bill • Non-qualifying customer surcharge: $0.20/month • Suburban Water (LIRA) • Eligible customer low-income credit: $6.50 per month • Non-qualifying customer surcharge: $0.014/Ccf • Valencia Water (LIRA) • Eligible customer discount: 50% off monthly service charge • Non-qualifying customer surcharge: $0.04/month Existing CARW/LIRA Programs

  13. Low-Income Data Sharing • Program Details • Data-sharing w/energy utilities • Hard matches automatically enroll in IOWC LIRA/CARW programs • Soft matches automatically enrolled upon verification

  14. Low-Income Data Sharing • Goals • Align energy and water IOU CARE/LIRA programs • Increase water utility LIRA/CARW penetration • Long-term goal of achieving energy IOU penetration levels

  15. Low-Income Data Sharing • Issues • Largely increased water customer participation • Low revenue base over which to spread increased costs • Water companies are highly residential revenue-driven • Water companies have filed to increase the surcharge levels that fund their CARW/LIRA programs

  16. Apple Valley Ranchos Water • 175% increase in participation in LIRA Program • Surcharge increase (recovery from non-LIRA qualifying customers and other customer classes) - will remain at $0.55/month until next GRC (2015) • California American Water • 207% increase in participation • Surcharge increase - TBD • California Water Service • 128% increase in participation • Surcharge increase from $0.01 to $0.06per Ccf • Temporary surcharge:$0.0182/Ccf Low-Income Data Sharing Results

  17. Golden State Water • 53% increase in participation in CARW Program • Surcharge increase TBD (pending GRC application) • Great Oaks Water • 469% increase in participation in LIRA Program • Surcharge increase TBD • Park Water • 328% increase in participation in LIRA Program • Surcharge increase from $2.27/month to $0.00 to $6.65/month Low-Income Data Sharing Results

  18. San Gabriel Valley Water • % increase in participation in CARW program - TBD • Surcharge increase from $0.00 to $0.1297/Ccf (Fontana Water Co. Division – effective when current GRC is completed) and (probably) from $0.00 to $0.0637/Ccf for the Los Angeles Division (in its next GRC) • San Jose Water • 128%increase in participation in WRAP • Surcharge increase TBD • Suburban Water • %increase in participation in LIRA Program - TBD • Surcharge increase TBD • Valencia Water • 386% increase in participation in LIRA Program • Surcharge increase from $0.04/month to $0.91/month Low-Income Data Sharing Results

  19. Pre-SharingAfter • Apple Valley Ranchos Water 1,707 4,695 • California American Water 5,477 16,800 • California Water Service 40,965 93,732 • Golden State Water 30,304 46,504 • Great Oaks Water 431 2,452 • Park Water 2,266 9,697 • San Gabriel Valley Water 22,455 23,566 • San Jose Water 7,994 18,241 • Suburban Water 4,085 TBD • Valencia Water 446 2,168 Increases in Participating Customers

  20. 2009Current • Apple Valley Ranchos Water: 6.9% 24.2% • California American Water: 14.5% 44.8% • California Water Service: 41.6% 93.8% • Golden State Water: 31.1% 58.0% • Great Oaks Water: 13.2% 77.0% • Park Water: 7.1% 35.6% • San Gabriel Valley Water: 72.3% TBD • San Jose Water: 19.9% 55.8% • Suburban Water: 5.5% TBD • Valencia Water: 6.5% 31.1% • Methodology: Each company’s residential customer count was applied to its respective household eligibility percentage, as derived in the CPUC Div. of Water & Audits report, “Assessment of Water Utility Low-Income Assistance Programs” (October 2007; page 17), to derive an estimate of LIRA-eligible customers. The 2009 and 2012 LIRA customer totals were divided by the estimate of LIRA-eligible customers to calculate the penetration percentages above. Current Penetration Increases

  21. LIRA Customers as % of Total Residential Customers • YE 2011Current • Apple Valley Ranchos Water 9.9% → 26.7% • California American Water 3.7% → 11.3% • California Water Service 12.4% → 23.4% • Golden State Water 15.0% → 22.0% • Great Oaks Water 2.2% → 12.8% • Park Water 8.4% → 38.7% • San Gabriel Valley Water 19.2% → 28.4% • San Jose Water 3.9% → 9.3% • Suburban Water 5.1% → TBD • Valencia Water 1.5% → 8.4%

  22. Apple Valley Ranchos Water • Three-tiered conservation quantity rates for residential customers • Free water audits to all customers • Cash for Grass to all customers – partnership with Mojave Water Agency • California American Water • Low Income Toilet Direct Install Program • Low Income Toilet exchange program (self install) • California Water Service • Three-tiered conservation quantity rates for residential customers • Bathroom Fixture Replacement Program • Conservation Kit Program • Residential Water Use Survey Program • High-efficiency sprinkler nozzles Low-Income Conservation Programs

  23. Golden State Water • Low-income toilet direct install program; Multi-family direct install • Free water audits; free indoor conservation kits; free outdoor conservation kits/devices • Great Oaks Water • Three-tiered conservation quantity rates • Recommendations to obtain free water audit • Park Water • Two-tiered conservation quantity rates for residential customers • Low Income Toilet Direct Install Program • Low Income Toilet Direct (self-installed) • Free water audits to all customers Low-Income Conservation Programs

  24. San Gabriel Valley Water • Direct toilet install to CARW customers only • Rebates, conservation kits, turf removal directed to all customers • San Jose Water • Two-tiered conservation quantity rates for residential customers • Free water audits to single- and multi-family customers • Rebate programs offered to SJWC customers via SCVWD • Suburban Water • High-efficiency toilet program • Valencia Water • Upon enrollment in LIRA, outreach letter is sent offering free water saving devices, free water audits, and explaining rebate programs. Low-Income Conservation Programs

  25. Apple Valley Ranchos Water/Park Water • Bill inserts; Company Newsletters; All public events, fairs, PPHs, etc. • Company websites w/link to application • Application presented to all new customers • English, Spanish (Park) • California American Water • Bill inserts; website; outreach at all community events • CSR notices to delinquent or near-delinquent customers • English, Spanish • California Water Service • Bill inserts (full color flyer w/applications; company website • Applications in customer centers • English, Spanish (where applicable) Advertising and Promotion

  26. Golden State Water • Website, customer mailers, pamphlets at public meetings • “Hotline” for customers to speak directly w/Low-Income Dept. CSR • English, Spanish, Chinese • Great Oaks Water • Information on LIRA program provided on every bill • CSRs personally discuss LIRA program eligibility and discounts w/customers who have trouble paying their bills • San Gabriel Valley Water • Bill inserts; website; direct-mail postcard to CARW customers; outreach at public/community events • Customer service representatives • English, Spanish Advertising and Promotion

  27. Advertising and Promotion • San Jose Water • Bill inserts; website; customer service representatives • English, Spanish, Vietnamese • Suburban Water • Community outreach and education conservation programs • Valencia Water • Upon enrollment in LIRA, outreach letter is sent offering free water saving devices, free water audits, and explaining rebate programs • Website, posted in lobby, customer bills

  28. California American Water’s Current GRC Settlement: Low-Income Assistance Proposal • D.12-09-020 – California Water Service • Temporary surcharge (36 months) to amortize memorandum account balance • Increase in Surcharge from $0.01 per Ccf to approximately $0.06 per Ccf • Establish balancing account for implementation costs • Maintain memorandum account for administrative costs • R.11-11-008: Rate Consolidation OIR Proceedings Affecting LIRA Programs

  29. The information-sharing program has been successful – dramatic increases to date in water IOU LIRA programs • The IT issues with the energy utilities were far more complex and difficult than originally contemplated • LIRA/CARW eligibility criteria limits ability of water IOUs to achieve high penetration levels of energy IOUs • CPUC’s eligibility percentages derived from 2000, 2006 census data and encompass all residential citizens; water IOU participation limited to single-family dwellings, so eligibility universe should be limited to single-family dwellings • Primary eligibility based on customer participation in the energy CARE program; however, water companies solicit all residential customers • Difficulty reconciling existing recertification procedures with the automatic enrollment from the data-exchange program Lessons Learned

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