CommunityWaterSystemsAlliance

1370N.Brea,Blvd.,Suite238,Fullerton,CA92835

January31,2019

Ms.JeanineTownsendClerktotheBoardSTATEWATERRESOURCESCONTROLBOARDP.O.Box100Sacramento,California95812-2000Via:commentletters@waterboards.ca.govRe:COMMENTS-OptionsforImplementationofaStatewideWaterLow-incomeWaterRateAssistanceProgramDearMs.Townsend: TheCommunityWaterSystemsAlliance(CWSA)wouldliketoprovidethefollowingcommentsonoptionsforImplementationofaStatewideLow-IncomeWaterRateAssistanceProgrambytheStateWaterResourcesControlBoard(SWRCB).CWSAisastatewideinitiativeofwelloperatedandviablewatersupplysystemsthatprovideservicetodisadvantagedcommunitiesaswellasincomelimitedcommunitiesservingseniorsandothersdependingonfixedincomes.

ThereportadequatelyaddressestheproblemCaliforniafaceswiththeimplementationofalow-incomewaterrateassistanceprogram.Weconcurwiththenecessaryrevenuebeinggeneratedbymeansotherthanplacingafeeortaxonconsumers’waterbills,althoughwealsohavesomesuggestions,assetforthinourcommentstoChapter3,below,regardingalternativesmeanstoraisetheneededrevenues.Overall,theW-LIRAprogramcouldimposeburdensoncommunitywatersystemsthatarenotaddressedinthereport’srevenuegenerationandbenefitdistributionoptions.TheneedtoraiserevenuesandadministerabenefitunderW-LIRA,couldalsobeincompetitionwithotherhumanrighttowaterpriorities,aswellasdrainingresourcesfromtheimplementationofnewlawsandregulationsthatarealsounaccountedforintheReport.Ourcommentstothevariouschaptersinthereportfollow.Chapter1:Whyhelphouseholdspayfordrinkingwaterservice?TheneedforLow-IncomeAssistanceinCalifornia#1Healthandlivelihoodimpacts Californiaisuniqueinmanyfacets,includingitsweather,geography,economyandregulatoryclimate.California’swaterdistributionsystem,andthelawsandregulationsthat

Public CommentLow-Income Water Rate Assistance Program

Deadline: 2/1/19 by 12 noon

2-1-19

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governit,arealsounique.Thus,wequestiontherelevanceofapplyingcasesofaffordabilityandpublichealthfromBaltimore,Pittsburgh,andDetroitwhichdiffergreatlyfromCaliforniainmanyways,tosituationshere.IntheReport’sdiscussionof902liensonpropertiesinBaltimorefornon-paymentofwaterbills,thereismissingperspectiveinthatBaltimoreserves1.8millionresidentsandthesuspectedimpactsinvolveabout.002%oftheirusers.UnderSB120,Californiaprotectsrentersfromshut-offswhenlienshavebeensetagainstlandlordsofrentalproperties,avertingthetypesofsituationsthathaveariseninBaltimore.Furtherprotectionsagainstshut-offswerealsorecentlyenactedunderSB998(Dodd). Accordingtoa2010reportbytheACircleofBlue,residentsinU.S.Easterncities,outsideoftheGreatLakesregion,payaboutdoubleforwater,onaverage,whencomparedtoresidentsontheWestCoast,andconsumelesswateroverall.Giventhenecessityofwaterforessentialneeds,atsuchhigherpricesforlowervolumes,itisunlikelythatU.S.Easternresidentsrelegatetheirwaterpaymentstothedisposableincomecategory.TheinferencethatpeoplewillchoosetouselesswaterinCaliforniaastheyfactorpayingforitwithdisposableincomeisthereforenotcomparabletotheEastCoast,includingDetroitandPittsburgh,wherewaterismuchmoreexpensive. MorerelevanttoCaliforniaareaseriessurveyssincethe1990’sbytheNaturalResourcesDefenseCouncil(NRDC)findingthatasignificantnumberofpersonsintheUnitedStates,includingCalifornia,withoriginsinLatinAmericaandAsia,preferbottledwaterastheirmainsourceofdrinkingwater.Otherstudieshavefoundthatmanylowerincomeresidentspayasmuchas600timesmorefordrinkingwaterthroughpurchasesofbottledwaterasaprimarysource.Thishasalsobeentracedtohigherratesoftoothdecayinpopulationsthatrelyonbottledwaterbecauseofthelackoffluoridationinsuchsources. ThereareotherdynamicsatplayinCaliforniathatdrivemanyresidentswithlowincomestochoosemoreexpensiveoptionsfordrinkingwaterfromthetap.Someareculturalwhileothershavetodowiththelegacyofcontaminatedlocalsuppliesininnercitiesandruralareasthatjustifiablycausedistrustoftapwater.Wewouldliketosuggestthataddressingthesystemicissuesthatdrivepeopletomoreexpensivedrinkingwateroptions,suchasbottledwater,willresultinincreaseddisposableincomeandreducedcurrenthealthimpactsspecifictoCalifornia,primarilywithdentaldecay,aspeoplegainconfidencein,andincreasetheiruseof,lessexpensivebutsafedrinkingwaterfromlocalsources.#2Therapidly-risingretailcostofdrinkingwater Again,weassertthatsomelow-incomeresidentsarechoosingtopaymore,byordersofmagnitude,fordrinkingwaterbecausetheydistrusttheirlocaltapwater.AccordingtotheInternationalBottledWaterAssociation(IBWA),theaveragecostpergallonofbottledwater–notcountingsparklingwaters–was$1.21in2013.AccordingtotheUSEnvironmentalProtectionAgency(EPA)thecostoftapwater,whichis$2pereverythousandgallons,is600timeslessexpensivethanbottledwater.Therearenumerousotherissuesrelatedtobottled

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waterassociatedwithpollutionfromplastic,aswellasphthalatesresidualsthatthepublicmaybeingesting. WhilethepriceoftapwaterisalsoacceleratinggivenitslegacyofbeingunderpricedinCalifornia,andtheneedtoupdateaginginfrastructure,demandfortapwaterisalsodeclininginCaliforniaasresidentsadoptconservationasawayoflife.Formanywatersuppliers,thishasmeantrateincreases,aslessunitsofwateraresoldwhilefixedadministrationandoverheadcostsmuststillbemet,andregulatoryandstatutorycomplianceburdenscontinuetoincrease.Yet,waterratesfordrinkingwaterstillarenotapproximatingthecostofbottledwater,andpeoplechoosingthemoreexpensiveoptionbynecessityneedlong-terminvestmentsintheirlocalinfrastructuresotheycantrustitandreducetheircostsastheirconfidenceinlocaltapwaterincreases.Weagreethatraisingrevenuesfromawatermetertaxwouldberegressiveandburdentolowincomeandincomelimitedresidents,defeatingthelegislature’sintentofhelpinglow-incomeresidentsandfamilies.#3-Comparableprogramsexistinothersectors Whilecomparableprogramsexistintheenergysector,specialdistrictsandmunicipalutilitiesarelimitedunderProposition218thatamendedtheCaliforniaConstitutionbyaddingArticleXIIICandArticleXIIIDthateffectivelylimitgovernmenttaxesandassessmentstothecostofservice.Therearenopresentmeansforwateragenciestorecoverthelostrevenueofsubsidizinglow-incomecustomers.ThislimitationiscitedintheExecutiveSummaryoftheDraftReport,andthusweconcurwithconsiderationofoptionsinChapter3(pleaseseediscussionincommentletterunder“Chapter3”).#4-Thelimitationsofstandalonesystemrateassistanceprograms SpecialdistrictsandmunicipalutilitiesarelimitedunderapplicablelawthroughProposition218.Duetothislimitation,manyspecialdistrictsarerestrictedinbeingabletooffertheirownlow-incomerateassistanceprograms,asafindingofsubsidizingalow-incomecustomer’sbillwithrevenuederivedfromanotherratepayercouldgiverisetoaclaimtheutilityisnotprovidingwater“atcost”.Chapter2:ProgramDesignScenarios:Eligibility,BenefitLevelandTotalProgramCost InTable5onpage19,webelievetheallocationof75gallonsperdayforoutdooruseishighwhenappliedtolowerincomewaterusers,manyofwhomresideinmulti-unitapartmentsthatuseminimaloutdoorwater.ThatfactorneedstobetakenintoconsiderationintheanalysissetforthinChapter2.

Secondly,werecommendthatFootnote44bedeletedinitsentirety.Thatfootnoteis

insultingtowatersuppliers,aswithoutanysupportorjustification,itinsinuatestheywouldsomehow“gamethesystem”bymanipulatingratesetting,althoughitisnotentirelyclearfromthetextofthenotewhatbenefitawatersupplierwouldderivefromsuchconduct.Thattextissimilarlyproblematicwherelaterinthenote,theReportreferenceswatersystemrepresentativesstatingtheywouldnotengageinsuch“strategicratesetting.”Thebottomline

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fromourperspectiveisthatFootnote44addsnosubstancetotheReport,andhasthepotentialtodistractfromsomeofthegoodpointstheReportmakes. Chapter3:RevenueCollectionOptions CWSAsupportsarevenuecollectionprogramthatdoesnotrelyontaxingwatermetersorapplyinganyadditionalfeetoacommoditycharge,whichweagree,areregressiveoptions.However,whiletherecommendedtaxingofincomesofover$1millionisapossiblepartialsolution,itcouldcreateanunreliablesourceofrevenuestosustaintheW-LIRAprogramduringeconomicslumpswhenthetotalearnersinthehigherincomebracketsdecline.Suchreductionswillneedtobeplannedforwithasustainablerevenuesourcetobackfillanysuchshortageswhenthatcontingencyoccurs. Apossiblealternativerevenuesourcewouldbetoapplyataxonprofitsinindustriesthatrelyongovernmentincentiveprograms,suchaselectriccars,solarenergy,waterconservationdevicesandpractices(i.e.CaliforniaFriendlygardens),wheretherevenuesfundingtheincentivesaresupportedthroughtaxesappliedtoallincomeand/orpropertytaxpayers.Thiscould“equalize”thetaxcontributionsoflowerincometaxpayerswhohelptosubsidizetheincentives,butthemselvesbenefitlessfromsuchincentives,whichinsteadbenefitpersonsandentitieswithhigherincomes.Forexample,duringeffortstoincentivizelawnreplacementprogramsduringthelastdroughtendingin2016,itwasfoundthattheprimarybeneficiariesofthe$300millionincentiveprogramwereresidentsinthewealthycommunityofRanchoSantaFe.Yetthefundingbehindthoselandscapeincentiveswasderivedthroughtherate-payersandallpropertyownersintheMetropolitanWaterDistrictofSouthernCalifornia.Thesameisthecasewithincentivesforsolarpowerandelectriccarsthatarefundingbyalltheresidentsofthestate.Onemajordrawbackoftheserecommendationsisthepatternoffundsthathavebeenredirectedinthestatebudgettofillbudgetshort-falls.Hencethestatelegislaturemustcommittopreservingthesourcesandallocationofthesefunds. Whilesomewouldarguethatthetaxonbottledwaterisregressive,it’smoreakintotieredwaterpricingthatprovidesadisincentiveforoveruse.Thisappliestobottledwatergiventhatithasbeendocumentedtoresultintoothdecayonpopulationsthatover-relyonitasadrinkingwatersource. NonethelesstherearemajorissueswithraisingnewformsoffundinginaddressingthehumanrighttowaterthroughaW-LIRAprogram.First,theefforttogeneraterevenuesfortheW-LIRAprogramcompeteswitheffortstoidentifyandgeneratefundingtoassistchronicallyfailingwatersystems.Thisisparticularlyaproblembecausethehasbeennocomprehensiveassessmentoftherevenuerequirementsforaddressingchronicallyfailingwatersystemsacrossthestate.Secondly,theefforttogeneraterevenuesforbothW-LIRAandtohelpchronicallyfailingsystemstoaddressthehumanrighttowater,maycompetewithotherhumanrighttowaterpriorities.Forexample,thefiresin2017and2018,destroyedentirecommunities

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entailingdestructionofthewatersystemsaswell.Attimes,localwatersystemsprovedinadequateinfightingthefireswhenpowerfailuresledtodecreasesinwaterpressureaswell.Inresponsetothisfactor,somevulnerablecommunitiesareattemptingtoraiselocalrevenuestoincreasetheresiliencyoftheirwatersystemstodealwithemergencysituationspreservingthehumanrighttowaterunderextremeconditions.Aslongasthereisnocomprehensiveandstrategicplantodealwiththehumanrighttowaterasappliedtoabroadvarietyofcircumstancesandallresidentsofthestate,needsforfundingtoaddressonepriorityforthehumanrighttowaterwillbecompetingwithotherpriorities. Chapter4:OptionsforBenefitDistributionandAdministrativeFeaturesofaStatewideLow-IncomeRatepayerAssistanceProgram Recentlegislationdealingwithconservation,groundwatermanagement,drinkingwaterquality,customershut-offregulations,aswellasregulationsimposedbyregionalwaterqualityandairqualityauthorities,haveimposednewmandatesinreportingofdataandcompliancemeasuresonwatersystems.Failuretomeetnewlymandatedreportingandcompliancerequirements,comewiththethreatofexpensivefinesbystateandregionalregulators.Thus,thefinancial,technicalandstaffingresourcesrequiredfromwatersupplierstoaccommodateanewW-LIRAprogram’sadministrativerequirementswouldbeincompetitionwiththestate’sothernew,extensive,andcostlymandates. DistributingthebenefitthroughwaterbillsisproblematicforreasonscitedintheSWRCBreportgiventhatmanyrenters,forexample,wouldnotbereachedthroughthismeans.Also,webelievedistributingtheassistancethroughelectricalproviderswillbeverycomplicatedandcumbersomeintransmittingdatafromwatersupplierstoelectricalproviders.Afurthercomplicatingfactoristhatwatersystemboundariesgenerallydonotalignwithanelectricalprovider’sboundariesandtheremaybeinstanceswhereonewatersupplierisservedbytwo,ormore,electricalproviders.

Basedontheshortcomingsofthoseotheralternatives,CWSAsupportsanalternativewherethebenefitisdistributedthroughtheexistingElectronicBenefitTransfer(EBT)program.WhiletherearecostsassociatedwithcreatinganewEBTprogram,purchasesofbottledwater,forexample,arepermittedintheexistingEBTprogramandCalFresh.Somewatersupplierscurrentlybottletapwater,orprovideitviawatervendingmachines,asademonstrationtoboostconfidenceinthedrinkingwatersupply.Thus,thecalculatedsubsidycanmatchtheamountofvolumeinincrementsofliterswhichiscommontobottling,equalto9ccf(equivalenttoindooruseof55gpcd),forexample,authorizingacommensuratepaymenttoaneligiblepersons’EBTorCalFreshaccount.

Theexisting-EBToption,aswellastheSWRCB’apreferredoptionthroughtheCARE

programhaveotherlimitationsnotaccountedforinthereport.Bothoptionsprovidebenefitrecipientswiththeabilitytousethefundsallottedorcreditedtotheiraccounts,fornon-drinkingwaterexpenditures.Hence,arenter’shumanrighttowaterneeds,forexample,could

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beleftunaddressedifalandlordfailstopaytheirwaterbill.Secondly,failureofabenefitrecipienttopaytheirwaterbill,notwithstandingtheW-LIRAbenefit,willtriggeradditionalsubsidiesandfeewaiversmadepossiblethroughSB998(Dodd)bythewatersupplier.CONCLUSION: TheW-LIRAprogramwillimposeadministrativeandfinancialburdensoncommunitywatersystemsthatarenotaddressedinthereport’spreferredrevenuegenerationandbenefitdistributionoptions.TheneedtoraiserevenuesandadministerabenefitunderW-LIRAregardlessoftheoptionschosen,areincompetitionwithotherhumanrighttowaterpriorities,aswellascompetingwithnewlawsandregulationsthatarealsounaccountedforintheReport.WeurgetheStateWaterResourcesControlBoardtoreporttothelegislatureacomprehensiveandstrategicapproachintheimplementationofaW-LIRAprogramthatisinalignmentandnotcompetingwithotherprioritiesforthehumanrighttowaterandrecentlyenactedlegislationaffectingconservation,affordability,groundwatermanagement,andlocalregulationsaswell.WealsourgetheStateWaterResourcesControlBoardtorecommendaprogramthathasareasonablechanceofbeingimplementedgiventhereportingandcomplianceburdensalreadybeingfacedbythestate’scommunitywatersystems.Thankyoufortheopportunitytoprovidetheprecedingcomments.Inparticular,weappreciatetheflexibilitydemonstratedintherevenuesourceandrevenuecollectionalternatives,asthosealternativesavoidplacingincreasedburdensandcostsonwatersystems.Sincerelyyours,ForDisadvantagedandSeverelyDisadvantagedCommunities:

DavidArmstrongGeneralManagerSouthMesaWaterCompanyRiverside&SanBernardinoCounties

RayKoliszGeneralManagerTwentyninePalmsWaterDistrictSanBernardinoCounty

DougNunneleyGeneralManagerNorthoftheRiverMunicipalWaterDistrictKernCounty

MarinaWestGeneralManagerBigHornDesertViewWaterDistrictSanBernardinoCounty

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ForDisadvantagedandSeniorCommunities:

PaulE.Schoenberger,P.E.GeneralManagerMesaWaterDistrictOrangeCounty

ErikHitchmanAdministrativeDirectorPuenteBasinWaterAgencyLosAngelesCounty

ForSeniorCommunities:

DanFeronsGeneralManagerSantaMargaritaWaterDistrictOrangeCounty

LisaOhlundGeneralManagerEastOrangeCountyWaterDistrictOrangeCounty

LisaYamashita-LopezGeneralManagerRubioCanonLandandWaterLosAngelesCounty