The California Water Efficiency Partnership (CalWEP) is proud to support Senate Bill 1469, a vital piece of legislation aimed at enhancing water conservation efforts across the state. Introduced to address a longstanding disparity in rate-setting mechanisms, this bill represents a significant step toward creating parity between investor-owned electric and water utilities regulated by the California Public Utilities Commission (CPUC).
Why SB 1469 Matters
California's ongoing drought underscores the importance of robust water conservation programs. However, achieving the necessary reductions in water demand presents challenges for utilities. When water suppliers succeed in reducing demand, their revenue often declines, even though system costs remain the same. This disincentivizes aggressive conservation efforts, a challenge that SB 1469 directly addresses.
Currently, electric utilities benefit from a revenue decoupling mechanism under Public Utilities Code 739.10. This ensures that errors in sales projections during rate-setting don’t result in significant revenue over- or under-collection. Unfortunately, investor-owned water utilities lack this mechanism, leaving them vulnerable to revenue shortfalls when customers embrace conservation measures.
The Benefits of Revenue Decoupling
SB 1469 would allow investor-owned water utilities to implement revenue decoupling, aligning their financial stability with California's water conservation goals. By eliminating the financial disincentive to pursue aggressive conservation programs, the bill ensures that water utilities can remain financially viable while promoting sustainable water use.
Moreover, the bill creates parity with energy utilities in California, which have long benefited from decoupling mechanisms. Without access to the rate stabilization funds available to public water suppliers, private water utilities face unique challenges in managing revenue shortfalls. SB 1469 would address this gap, enabling investor-owned water companies to reconcile revenue shortfalls more effectively and equitably.
A Step Toward a Sustainable Future
By supporting SB 1469, CalWEP reaffirms its commitment to maximizing urban water efficiency and conservation throughout California. This legislation will help align the financial models of investor-owned water utilities with the state's pressing water conservation needs, fostering a more sustainable future for all Californians.
CalWEP urges policymakers and stakeholders to prioritize this important legislation and ensure its passage. Together, we can create the conditions necessary for effective and sustained water conservation efforts statewide. Download the letter.