State Water Board workshop on urban conservation efforts, part 3: Urban water suppliers discuss allocation-based rate structures, rationing, and other drought management actions


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At the June 17 meeting of the State Water Resources Control Board, board members heard an informational update on the conservation actions that urban water suppliers have taken in response to the drought.  In this third and final panel, Toby Goddard from the Santa Cruz Water Department discussed how they are implementing rationing in the community, Paul Jones with Eastern Municipal Water District discussed allocation-based rate structures and their effect on conservation, John Woodling from the Sacramento Regional Water Authority discussed how Sacramento water agencies are meeting the challenges of this year and preparing for a dry year next year, and Joe Grindstaff with the Inland Empire Utilities Agency discussed the financial and other impacts of the drought on his service area.

You have all been invited because you are different examples of agencies leading in some cases due to challenging circumstances, in other cases out of the goodness of your heart, and in other cases, just by being farsighted managers, so I appreciate you coming to paint a picture for us of what can be done,” said Chair Felicia Marcus.

Toby Goddard, Santa Cruz Water Department

Our situation with drought is actually very difficult,” began Toby Goddard. “We serve a population of 94,000 people through 25,000 accounts; we’re a medium size retail water utility. We’re organized as a water department of the City of Santa Cruz and therefore our governing board is the city council.”

061714_10_goddard-1_Page_03Santa Cruz is 96% dependent on surface water. “We get our water entirely from rain that falls on the ocean side of the Santa Cruz Mountains,” he said. “Those same mountains that generate rain in the winter also physically and geographically isolate us from the rest of the state and therein lies our particular problem. We do have one small coastal groundwater basin, but by and large we are almost entirely local surface water supply and because of that, we’re vulnerable to drought. There is nothing imported and nothing transferred even between adjacent water districts, so we’re really kind of on our own.”

Average production across the year is about 9 to 10 million gallons a day, he said. “Right now, we’re at about 97 GPCD, and my prediction is that we’ll come in at the end of this year at about 82 GPCD.”

061714_10_goddard-1_Page_06He then presented a graphic of the last three years of their water supply. “This is the third year and we don’t know how long this will last,” he said. “We don’t know what’s off to the right of this chart, but right now we only see 13% of annual average runoff, even with just under half of annual rainfall.”

We have some surface water storage – it’s about 2/3rds of a year supply,” he said.

One of the key recommendations in our 2005 Urban Water Management Plan was to do a comprehensive update of our drought management planning, he said. “It took three years to do this, but we felt like we developed a pretty good plan,” he said. “We actually had to implement it that very year in 2009 when we declared then a stage 2 water shortage, and so we are implementing it now again.”

061714_10_goddard-1_Page_11The drought plan has five stages, and we have declared a stage 3 alert this year, he said. “The idea is that we would declare one stage and hold that for the year, but that doesn’t preclude us from upgrading the situation if we have to,” he said. “We were really borderline about what kind of call it was, but a lot of the things in this plan have already been decided about priorities of use and about how water is to be allocated among classes of customers, so it was helpful to have that all documented and not have to go through those decisions at the same time, because we didn’t have long from when we had to make a call at the end of March to when we had to be rationing on May 1.”

Chair Felicia Marcus asks if during the three years when they were developing the drought plan, did they have a community discussion on outdoor irrigation?

Absolutely,” Mr. Goddard replied. “In fact we paused many times to talk about the difference between what is business and what is irrigation, and some areas where it wasn’t exactly clear, so we came up with compromises in cases and eventually adopted a plan outside of the conflict of the current situation.”

In 2012 and 2013, a Stage 1 water shortage alert was issued, and that stage 1 was extended indefinitely in October of 2013. In February of 2014, the City Council declared a Stage 3 water shortage emergency, and those regulations went into effect in May, he said.

061714_10_goddard-1_Page_14Water rationing applies to both single and multi-family customers, but in stage 3, business customers are not rationed, he said. Large irrigation accounts are under rationing but they are under a water budget system, and there are outdoor water restrictions for all customers, he said. “About 80% of our consumption and about 90% of our accounts are under some form of rationing right now.

There’s no perfect system for determining how much water to ration because you don’t know how many people are in a home, and reducing by a percentage penalizes past conservers, he said. “We came up with a plan that came from Goleta Water District which was essentially a flat allotment for our single family residential customers that meets essential indoor needs but is not enough to meet all of their ordinary water demands outdoors,” he said. “It’s accompanied with this enormous penalty rate which functions like a deterrent. If you have additional permanent residents in your home, you can apply for more water.”

Multi-family residences get their allotment based on how many dwelling units there are at the account,” he said. “They scale from 2 units in a duplex to 200 units in an apartment, so you have to have a system that scales up and down in size for the multi-family complex. Ours does and it also has a penalty rate for exceeding the monthly allotment.” He noted that if there is an extraordinary number of people in that particular account, there’s a system to allow for additional water.

061714_10_goddard-1_Page_18Making adjustments to the billing system and bill format to be able to show customers what their allotment is and if they’ve gone over is not a trivial thing, he said. Santa Cruz started the process last August, and it took that long to get it to be in place for this year, he noted.

When you roll out rationing, you have to have a process for extraordinary needs and we have a process; many of these are being approved but others are being denied,” he said.

Large landscapes may not comprise a large number of accounts, but they are a significant proportion of urban water use – about 10% in Santa Cruz, he said. “We have a pretty sophisticated water budget program that’s based on aerial measurement of the landscape plant type, and its tied into real time weather and our billing system.”

We’re managing large irrigation accounts using a water budget tool that came out of the CUWCC and we’ve adapted it and applied it this year as a drought management tool,” he said. “It’s fair because everyone’s budget is different based on size and plant type. However, it’s unfair if you’re grass because choices will have to be made about which plant materials you’re going to want to keep and which ones you’ll sacrifice.”

Mr. Goddard noted that there was earlier discussion about what to manage for, and he wanted to highlight their strategy. “Our system shortfall as we calculated it early in the season was 25%, and in the two previous years, we’ve had 5% calls for cutbacks so we’re looking for a 20% cutback compared to those two years. We have specific production goals, specific reservoir elevations, and volume goals for each month. Fundamentally we’re managing for an end of season reservoir elevation, and the idea is to have enough water in case next year is dry, too. The wisdom that we’ve learned from talking to others is to not be afraid of taking early steps, even if they are obsolete, because if it is dry next year, you’ll have a little bit more to work with. … I think the answer is you have to plan so that if next year is the driest year on record, you’re able to meet your customer’s essential water needs. That’s what we’re doing by having these goals out there.”

061714_10_goddard-1_Page_23He then presented a slide that tracked the average water production for 2012-13 against 2014’s, and noted that they were trending at almost wintertime production levels.

Finally, we are very grateful for the board which approved earlier this year a change in our water rights to reduce the instream flows in Loch Lomond Reservoir so that we could manage the reservoir and have enough to go next year,” he said. “You approved that in February, and we owe you a report back on that change on July 1, and it will be on your desk.”

And so with that … “

Paul Jones, Eastern Municipal Water District

Paul Jones said began by saying his presentation would focus on Eastern Municipal Water District’s allocation-based rate structure. “We have several years of experience with an allocation-based rate structure and I think it’s fairly informative in terms of the amount of sustained conservation and water use efficiency that you can get from these types of rate structures.”

Eastern Municipal Water District was established in 1950, and covers a 500-square-mile service area and 750,000 people, he said. “We serve seven cities and the unincorporated county; we have large urbanized areas and in between and we have agricultural areas, as there’s still a lot of agriculture in southern California, believe it or not. We’re one of MWD’s 26 member agencies; we’re also in a very high growth area … We’re adding about 16,000 new connections per year.”

Eastern Municipal Water District has a substantial local resources program which uses brackish water desalination, limited groundwater resources, and an extensive recycled water program. “We’ve reduced our imported water demands since the 90s from about 80% down to about 50%, while at the same time experiencing very substantial growth.”

061714_10_jones_Page_04The foundation of our water use efficiency program is our allocation-based rate structure, he said. “What the rate structure does is it creates an allocation or water budget for each and every customer on our system, and that allocation or budget is based on reasonable needs for efficient use. We then use economic incentives in the pricing where customers who are within allocation are rewarded with fairly reasonable water bills; those who are over allocation pay much, much higher water bills.”

Allocations are individualized to each and every parcel and water user in the service area, looking at both indoor and outdoor uses and combining those into an allocation, he explained. Efficient use is encouraged through the sharply tiered pricing system, rewarding efficiency but also communicating the cost of overuse to the customers as well.

That’s our premise,” said Mr. Jones. “Those who overuse pay a lot more; those who use what they need pay a lot less. Customers like the underlying premise of the allocation system.”

Felicia Marcus asks if they also explain the cost to the collective of having to expand the water supply.

061714_10_jones_Page_05We come up with an individualized allocation for each customer and then the charges that we have over and above that reflect the cost of our highest cost water supply and the costs of all of our water use efficiency programs,” replied Mr. Jones. “We communicate that very clearly with our customers by when we show our different rates for our different tiers, we do attributions to those rates of those different elements, and that’s also required under Prop 218.” He added that revenue from overuse tiers can be used for dry weather urban runoff control programs as well.

061714_10_jones_Page_07The individual allocations for each customer are determined by aerial infrared photogrammetry to come up with an outdoor irrigated area versus hardscaped, and we collect evapotranspiration data for fifty separate zones in the service area to come up with an outdoor allocation that is larger in the summer and smaller in the winter, he said. There are indoor allocations as well, he noted.

When a new customer initiates their service, we ask them the number of persons in the household,” he said, noting that there are variances for special needs or medical needs that add to their indoor allocation. “It’s basically on the honor system … the question earlier was how do you know they are giving truthful information. Our sewer bills are based on the number of people in the household using the data from the customer’s water bill, so if they think they’re going to game the system and say they have five people, well then their sewer bill is going to reflect that financially so it’s kind of self-correcting to some extent.

061714_10_jones_Page_08He then presented a slide showing the prices for the tiers, noting that it goes from a low of $1.73 per cubic foot to a high of $10.36 per cubic foot. “If an average customer is within their allocation, they’ll be about $40 a month on their water. If they are over allocation and they are in tier four, they are going to be over $200 a month, so it sends a very strong pricing signal.”

We also have the ability to apply a drought factor, he said. “What that drought factor does is it is further shrinks down the outdoor portion of the allocation. So as we get in successively more severe water shortage contingency stages, we can shrink the allocation for outdoor more and more and eventually we shrink it down to 0 and then it’s only for indoor and personal use in the very extreme end of the allocation system that we have.”

Board member Steve Moore asked if the fixed costs of the agency can be met by the tier 1 and tier 2 pricing alone.

We do have a fixed monthly meter charge, and it’s fairly modest, but our fixed costs are entirely covered in the fixed monthly meter charge and by tier 1 and tier 2, so we can actually talk about water use efficiency and ask our customers to cut back and not go into the board room and get worried about being able to cover our expenses. It’s purposely structured that way.”

The Water Policy and Science Center at UC Riverside recently did a study of our rate structure, and they came up with some interesting findings, Mr. Jones said. “Even though over a 3-year period, our water rates only went up about 4% per year, to get the same effect that we saw as a result of water pricing, rates would have had to go up by 34% so it really sends the right message. Their conclusion was after controlling the effects for inflation, the recent economic downturn and our other water use efficiency programs, they said the economic effect of the water use allocation based rate structure was a 15% reduction in water use.”

061714_10_jones_Page_11He then presented a slide of Eastern’s water use efficiency results. “Bear in mind that we’re in a very dry area so we started out with a fairly robust baseline of about 212 per capita per day using the 20×2020 metrics,” he said. “Right now, we’re seeing a sustained about 155 gallons per capita per day, which is about a 25% reduction; our compliance target is 184 and the statewide average is about 198. Now part of that is attributable to the rate structure, but a big part of it is attributable to the device incentives that we’ve offered with some of the revenues from the water structure plus from our water wholesaler Metropolitan, and it’s both indoor and outdoor water use efficiency programs that we do with our customers.

We’ve really focused on landscape standards,” he said. “When we provide water service for a new development, we plant check that to make sure it complies with the landscape ordinances and we do not allow non-functional turf. You can have turf for play areas, or what we call functional areas, but we do very strong emphasis on climate appropriate landscaping in our service area.”

We have a lot of customer-focused outreach,” he added. “There’s a lot of education with this type of a rate structure and we really spend the time with customers on that.”

061714_10_jones_Page_12These water efficiency efforts translate into other metrics, such as a drop in energy consumption, he said. The cost to implement the allocation-based structure with the billing engine changes, the customer education, and everything else was about $3.2 million, he said. The infrared photography and setting up the allocation is about $24 per customer account, he said. “But we’re saving about $10.9 million dollars per year on water costs, so the payback period for this is almost immediate. We’re also saving about $2.6 million per year on energy costs and I think the reduction in greenhouse gas emissions is also substantial.”

In summary, Eastern is very supportive of the allocation-based rate structure as it encourages efficient use, and it’s a very fair premise, he said. “It’s one of the only rate structures that communicates two ways with customers, because I can look at my set of customer bills every month and really focus on the habitual over water users. It also identifies and provides urban runoff benefits and energy benefits, and I don’t think we should look past that.”

We’re really going for a structural change where we’re trying to get people to change their landscaping, and this is really what the standard is in our service area now, and I think we’ve seen a very substantial reduction overall,” he said. “When you combine these programs with the rate structure itself which has demonstrated 15% savings, you’ll get higher savings potential when you reinvest those over-allocation revenues into those conservation and other programs.”

John Woodling, Sacramento Regional Water Authority

061714_10_woodling_Page_03The metropolitan area of urban and suburban Sacramento has 22 primary water providers,” began John Woodling. “There are some small water companies, some privately served trailer parks and things of the like, but essentially 22 water providers serving about 2 million people. That creates some complexity. We have a variety of institutional differences, municipalities, investor owned utilities, water districts, and mutual water companies. We have a variety of geography, a variety of land use settings, and a variety of sources of supply. And even within the same sources of supply, a variety of types of water rights and entitlements, so it becomes complex first of all to implement programs on a region-wide basis, but also to track and report back on the progress.”


061714_10_woodling_Page_04“In 2014, we quickly realized that it wasn’t going to be 20×2020 but 20×2014, and so the Regional Water Authority board on January 9th adopted a resolution urging all the members to take actions to reduce water use at least 20%,” he said, noting it was about a week or a week ahead of the Governor’s call. “Right now, most of the member agencies are at 20% in their drought stages, either mandatory or voluntary with some a little bit lower and several somewhat higher.”

061714_10_jones_Page_05One of their first actions was to revamp the ability to communicate to customers what was expected of them, so they revamped the region’s water efficiency/water conservation website,, he said. The website has an interactive map where residents can go to their address, find out who their water provider is and what’s expected of them. Mr. Woodling pointed out that while everybody may be asking for 20%, the watering days may be different, or other restrictions might vary. The map includes information on who to contact and a number to rat out your neighbor who is not complying, he said. “It’s been helpful to residents, it’s been helpful to landscapers to understand, and it’s been helpful to others that we didn’t foresee, such as realtors. This has been very helpful in outreach this year.”

Many agencies have ramped up the number of personnel working on enforcement, so across the region, we’ve had almost 6000 water waste warnings or citations since January,” he said. “About half have actually hired new staff, reassigned staff or retrained staff to do enforcement of their water waste ordinances. Most are limiting watering to three days a week; many are at two days a week now, and we’re trying to get everybody to at least considering two days a week in response to the Governor’s second executive order. Many have also increased the outreach budget so we can get the word out, so we’re putting about an additional $600,000 this year beyond the standards.”

The Regional Water Authority has taken several actions, some of which were already in the works and others which are ramped up for the drought, he said. “We’ve expanded the public outreach, we have an ongoing school education partnership with the Sacramento Bee, and we’re starting a project to look at budgets for large landscapes, so in a sense we’re starting the first step. It really is an evolution where this region will be in a decade or two decades where other parts of the state are now in response to some of the challenges they’ve had.”

We started a program this year to not just give rebates on efficient fixtures, but do direct installations, he said. “It serves two purposes: it replaces fixtures especially toilets that might not be replaced, and it spends the money to make sure we get those replacements, as opposed to giving rebates when someone’s going to remodel their bathroom and all they can buy is an efficient toilet,” he said. “We’re also trying to target some of the economically disadvantaged communities.”

We’ve held gray water workshops and we are working with the car wash association to push people towards car washes that reuse water as opposed to washing cars at home, he said. “We’ve been working with the Northern California Golf Association to have them tell us how they can save water but also continue to provide their product, and so we’ve had a lot of opportunity to learn from industries how they can get this done in a way that we don’t put some kind of arbitrary burden on them that may or may not be the most effective way to save water.”

061714_10_woodling_Page_08In January and early February, we were looking at a Folsom Reservoir that was at 160,000 acre-feet, less than 20% of total capacity, but very little operational storage left, he said. “There was a lot of media attention on the drought. We had tens of thousands of people who were out wandering around because they wanted to see a gold rush era town that was no longer underwater and who were walking around where their water supply for the summer should be, so it really got people’s attention. It gave us the opportunity to reach out to them, tell them what we expected, tell them how to do it, and get a good response. I wouldn’t wish this upon anybody, but if you’re trying to get the point of drought across, it was very effective.”

061714_10_woodling_Page_09Mr. Woodling then ran down the numbers for the region. “We collected the data from members for 2011, 2012, 2013, and the first five months of 2014,” he said. “We concluded similarly like your staff that 2011 was one wet year, so the spring didn’t have a lot of irrigation demand and we were still just coming out of the recession so water use was down due to economic activity. We looked at 2013 and said, 2013 from a precipitation standpoint was incredibly dry. We received less precipitation in the spring last year than we did this year, so we took 2012 and 2013 and we averaged those, and then looked at the 2014 monthly water use compared to that. We also wanted to take February through May because we really started the outreach and started putting the requirements in place at the end of January and February, so we’re really looking at February through May and comparing to the prior two year average, and on that basis we see 18.4% reduction in water production. I think staff showed for the entire Sacramento River hydrologic region about 10, but that includes 2011, which was a low number, and it includes January, which was kind of an aberration.”

If we look just at 2013 compared to this year, we’re at 24%, so the customers have stepped up is really what it comes down to,” he said. “The people are listening, they are paying attention, and you see it if you drive around this region that the lawns are brown and yellow. They aren’t lush and green like they have been in the past.”

061714_10_woodling_Page_10He then presented a chart of water use from 2011 to 2014, noting that the blue line is 2014. “From February through May, even when water use climbed in May, because we had people starting to irrigate, we still maintained that separation between the blue and the red lines,” he said. “We’re keeping this up. Hopefully this means we can keep it up through June, July, and August, and it’s going to be tough. It’s going to get hot … and people may start to get drought message fatigue because they’ve been getting it since January so we’re going to have to increase outreach and enforcement to keep that trend low.”

061714_10_woodling_Page_11Mr. Woodling then turned to the issue of what they would do if next year is dry, too. “Conservation and demand side is very important, but ultimately we need to think about supply side as well, so we’re working on a number of actions this year,” he said. “Many are underway already and many we will try and get funding from the IRWM drought grant, but essentially we’re working on projects that can take the water that we have, much of which has been groundwater, and be able to move it to the places that are at risk from reduced surface water, so a number of places we’re either drilling or rehabilitating groundwater wells. There are a number of places where we need booster pumps. The eastern half of this region primarily operates on gravity when there’s water in Folsom Lake. We need facilities so that we can take water from the groundwater basin and push it back up the hill to those areas that don’t overlie the groundwater basin, and in a number of places, some interties between agencies, so we can share water supplies from those who have water to those that don’t.”

Joe Grindstaff, Inland Empire Utilities Agency

Joe Grindstaff began by noting that the Inland Empire Utilities Agency (IEUA) covers seven cities, eight retailers, and about 850,000 people at the west end of San Bernardino County. “We’ve been successful over the last few months at really beginning to conserve water, but it’s started off slow,” he said. “In January we used 25% more water than we had the previous three years, and in February, we used 9% more. In March we finally went the right direction … for May the numbers are still preliminary but are still better than 20% so we’re moving in the right direction. I think the communication has worked. I would encourage you to continue that, communicating often is really important. The public responds.”

IEUA is a wholesaler, and only one of our retailers has developed a rate based structure similar to Eastern’s, he said. “For most of our retailers, the drought is a problem financially. So if we are extremely successful and reduce water usage by 25 or 30%, their revenues typically go down. Our largest agency only gets 5% of their revenue from the meter charge and their fixed costs are much, much higher than that, and in the last drought, they actually had to lay off 10% of their staff because they had a similar problems, so one of the objectives for us is to find a way to help agencies make the transition to a sustainable rate structure that covers their fixed costs and also encourages conservation.”

While we have conserved water, that doesn’t mean that we take less water from the north,” said Mr. Gindstaff. “We have a combination of surface water, groundwater, and deliveries from the State Water Project, and surface water supplies are virtually non-existent, so given that Met has not enforced a shortage, our member agencies prefer to take water from Metropolitan rather than use their precious groundwater resources. Right now, my expectation is that next year, Met will implement a drought allocation plan. I could be wrong; depends on the weather, but it’s what we have to plan on, and I think we’ll be able to sustain that because we have significantly invested in groundwater management over the last few years and dealt with those issues knowing that this was coming. We’ve invested about $250 million on recycled water and we’re still in the process of developing that system. We don’t use every drop now as we’re required under a river settlement to discharge some water to the river, but we’re actually in negotiations with other agencies to bring in recycled water from their areas to help make up our water supply.

You asked us if you should adopt emergency regulations,” Mr. Grindstaff said. “At the risk of being the party here that all the water agencies hate, I say yes. I appreciate the fact that you are the adults in the room, if you will, and actually have the ability to say this is what should happen, so I think it would be very helpful to people if they actually knew what the standards are. I think that would be an immense contribution to where we are going.”

We have been on this long journey with water use efficiency and I’m proud that we’re working on the 20×2020, but in the long run, I think we can all see that we’re going to have to go significantly beyond that, but that ought to be based on needs,” he continued. “My view is that at some point, the state board needs to be the party that actually helps set the rules and sets the standards that we all have to live with. You can do that in a way that says this is an appropriate use of water. You can help set standards on the kinds of rate structures that are sustainable and that would allow people to make appropriate investments and to do proper water conservation.”

We don’t know if it’s going to be wet or dry next year, but we do know that the Colorado River looks like it’s not recovering quickly,” he said. “Unless there’s something exceptional, we’ll likely to continue to face dry times in California so I think you have an opportunity to help us all figure out how we move ahead.

For more information …

  • To view the power points from all presentations, click here.

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