CalWEP Provides Testimony Supporting Decoupling for California American Water

Published: April 19, 2022

April 19, 2022

The California Water Efficiency Partnership (CalWEP) recently provided testimony before the California Public Utilities Commission (CPUC) in support of the Water Revenue Stabilization Program (WRSP) proposed by California American Water in its General Rate Case. This mechanism, often referred to as “decoupling,” aligns water utility revenues with fixed costs, removing financial barriers to robust water conservation efforts.

The Need for Decoupling

CalWEP’s testimony, delivered by Mary Ann Dickinson, highlighted the critical role decoupling plays in enabling water utilities to pursue aggressive conservation programs without the risk of revenue shortfalls. As California continues to navigate challenges like prolonged drought, mandatory water-use targets, and groundwater supply limitations, investments in water conservation are not only beneficial—they’re essential.

Decoupling ensures that utilities remain financially stable while promoting water efficiency, avoiding the traditional model where reduced water sales lead to financial strain. This stability allows utilities to focus on long-term conservation initiatives that save water, lower system costs, and ultimately benefit customers.

Key Points from the Testimony

In her testimony, Dickinson emphasized the following:

  • Decoupling eliminates the disincentive for utilities to implement water conservation programs, aligning financial health with conservation goals.
  • Long-term water conservation lowers system costs, reducing rate increases for customers over time.
  • Without decoupling, utilities often resort to increasing fixed charges, disproportionately impacting low-income customers—a practice CalWEP believes should be avoided.
  • Similar mechanisms have been used successfully in the energy sector, demonstrating their value in balancing conservation and revenue stability.

A Collaborative Approach to Solutions

CalWEP’s support for decoupling reflects its broader mission to maximize urban water efficiency through innovative policies, research, and collaboration. The testimony also referenced the legislative backing of Senate Bill 1469, which requires the CPUC to consider decoupling mechanisms for investor-owned water utilities with more than 10,000 connections.

By advocating for these changes, CalWEP aims to ensure that water utilities are equipped with the financial tools needed to address California’s pressing water challenges effectively and equitably.

Looking Forward

As the CPUC considers California American Water’s proposal, CalWEP remains committed to supporting practical, forward-thinking solutions that enable utilities to achieve conservation goals while maintaining affordability for customers. Decoupling represents one such tool, aligning the financial realities of water utilities with the need for sustainable water use.

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