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

California Water AssociationLow-Income Oversight Board

October 29, 2012Sacramento, CA

Presentation Overview

• 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

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Presentation Overview (cont.)

• 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

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CWA Overview• 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

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IOWCs in California

• 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 their revenues from their smaller customers

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Most Capital Intensive Industry

Source: 2009 AUS Utility Reports

• 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

Capital Investment Required to Produce $1 of Revenue

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Cost Structure vs. Rate StructureCost Structure vs. Rate Structure

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Customer Info-Sharing OIR

• 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

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Summary of D.11-05-020

• 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

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Existing CARW/LIRA Programs

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

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Existing CARW/LIRA ProgramsGolden 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)

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Existing CARW/LIRA Programs

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

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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

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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

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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

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Low-Income Data Sharing Results

• 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 $0.06 per Ccf Temporary surcharge:$0.0182/Ccf

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Low-Income Data Sharing Results

• 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

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Low-Income Data Sharing Results

• 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

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Increases in Participating Customers

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Current Penetration Increases2009 Current

•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.

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LIRA Customers as % of Total Residential Customers

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Low-Income Conservation Programs

• 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

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Low-Income Conservation Programs

• 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

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Low-Income Conservation Programs

• 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.

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Advertising and Promotion

• 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)

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Advertising and Promotion

• 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

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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

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Proceedings Affecting LIRA Programs

• 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

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Lessons Learned

• 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

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