CA WATER COMMISSION: The Climate Registry: Water-Energy Nexus; Dam safety fee regulations; 2018 State Water Project Review

At the February meeting of the California Water Commission, the Commissioners heard a presentation on the Climate Registry, approved new regulations for dam safety fees, received an update on the Water Storage Investment Program, and started their annual review of the State Water Project.

THE CLIMATE REGISTRY: WATER-ENERGY NEXUS

The Climate Registry is a non-profit organization governed by U.S. states and Canadian provinces and territories.  The Climate Registry designs and operates voluntary and compliance GHG reporting programs globally, and assists organizations in measuring, reporting and verifying the carbon in their operations in order to manage and reduce it.

John Andrew, Assistant Deputy Director for Climate Change at the Department of Water Resources, began by noting that in 2007, the Department of Water Resources joined the Climate Registry and was one of the first water utilities to do so.  This means the Department has an 11-year consecutive record of calculating, disclosing, and independently verifying their carbon footprint.  He said however, it remains a rarity in California water management as there are only about a half a dozen water utilities with a similar length of record that goes to the extent of third party verification of their carbon footprint.  There are about 400-500 large and medium sized water utilities in the state, so there’s more work to be done to get more utilities to step up and start formally calculating their carbon footprint, disclosing that to the public, and having it independently verified, he said.

Peggy Kellen from the Climate Registry then discussed the work underway to implement the Water-Energy Nexus Registry, a result of SB 1425 sponsored by Senator Pavley and signed by Governor Brown in September of 2016.  The registry is intended to be a mechanism to allow for voluntary action on reporting greenhouse gas emissions for water agencies to help them better build capacity around greenhouse gas accounting and also contribute to the state’s long-term climate resiliency goals.

The legislation designated a number of items to be included in the registry, including a way to build capacity for carbon footprints, documenting emissions baselines to better understand opportunities for emission reductions in water management over time as opposed to just focusing on conservation savings, supporting consistent communication of the greenhouse gas intensity of delivered water, and promoting achievement of greenhouse gas emission reductions, similar to those already achieved by DWR.

The Climate Registry is developing a number of tools to assist in implementing the registry, including greenhouse gas and water data reporting guidance, a web-based reporting tool for both internal tracking and public disclosure, a recognition program, training programs, and live help desk support for emissions questions or assistance with the software.

Over the past year as they have been working to implement the program, they have an engaged working group that met regularly with over 70 organizations participating, including water agencies, state government agencies, private sector consultants, local governments, NGOs, and academia.  An advisory committee also met less frequently and helped review some of the initial drafts.

The greenhouse gas and water reporting guidance is built upon the existing public best practices for greenhouse gas accounting which detailed in the general reporting protocol.  The general reporting protocol outlines the basic structural needs and methodologies that will be useful for businesses and agencies in compiling their inventory.

The Water Energy Nexus Registry Module provides sector-specific guidance, focusing on emissions sources unique to water utilities, such as wastewater treatment or coproducts that are generated, as well as considering boundary questions, renewable energy, water data performance metrics, and verification.

They are working to make sure that their greenhouse gas accounting guidance is in line with industry best practices.  This included performing a thorough review of guidance already available, as well as looking at the IPCC report.

We also took a good look at emissions from reservoirs,” Ms. Kellen said.  “Our understanding there is that may also be being updated as of May 2019 this year by the IPCC so we’ll keep an eye on that.  Right now in the program, the proposal is that reporting emissions from the operations of reservoirs is optional.”

They also looked at water data, working to understand the different types of water data that agencies are already required to report, ensuring consistency with those publicly available numbers, and finding a way to capture this data effectively without increasing additional burden.

The registry will allow for reporting and internal tracking, but based on working group feedback, for the data to be made public through the registry, it must go through some level of third party verification, which is consistent with best practices.  “We have found that those agencies that are already reporting have found a lot of value in this process and see that any costs associated with that tend to be minor in the scope of their operations,” said Ms. Kellen.

In managing greenhouse gas emission reductions, they focused on understanding the emission reduction opportunities for agency operations so the program looks more at the emission reduction opportunities the water agencies have within their operational boundary as opposed to those associated with particular project or reduction measure.

For performance metrics, there are efficiency metrics which will vary by agency depending on the type of operations that they conduct.  They are also looking at emissions intensity, which can look at a particular process or be system-wide.  There is also a suite of delivery metrics which includes embedded emissions from upstream sources.

We hope it will be very valuable in the long run for water agencies to be able to provide this information to their customers to understand the whole emissions footprint of water that’s being consumed or managed again in some way and then passed on to an end-use consumer,” she said.

They spent quite a bit of time trying to get some consensus on the image (left) to understand the different phases involved in the water use cycle and how they interact.

The metrics will be differentiated between water delivery and wastewater treatment,” said Ms. Kellen.   “The items along the top will look at the water delivery as they are conducted and then delivered to the end user represented by the house in black.  The registry will cover emissions from all of these activities in some capacity based on the operations of the water agency or their ability to report delivery metrics.  We aren’t covering emissions associated with the use phase itself so the house is black, but then we pick it up again as it is being discharged and collected by wastewater treatment.  And then we have the whole process of bringing back to just final treatment or opportunities to account for emissions associated with recycling water and feeding it back up into the water delivery system.”

They have also developed metrics for coproducts, both biosolids and biogas, and so where materials are diverted to that, they would be separately characterized; if products are not being developed that way, all of that waste would go into the waste management category at the bottom, she said.

A recognition program is being proposed which is intended to encourage building a better and bigger inventory over time.  They will have a silver, gold, platinum, and an all-star level.  Silver would be for those just getting started, and then in all categories, there will be one or two additional criteria that need to be met; that could include things like participating in trainings, going through verification, generating or purchasing renewable energy, reporting those performance metrics, tracking emissions over time, and setting and achieving greenhouse gas reduction goals.

During discussions with stakeholders, they heard that water agencies feel that they are doing what they can now and are very interested in ensuring that their operations are climate friendly and contribute to climate resilience in the long run, but they do feel limited by having multiple priorities, including safety and delivering clean water.

They certainly did express a need for incentives to reduce these types of emissions and scale of emissions that could be reduced, and so one of the goals that we have for the Water-Energy Nexus Registry will be to demonstrate the capacity for water agencies to reduce their emissions in their own operations,” she said.  “In preliminary conversations, we have seen that this is an area where there’s not a lot of certainty, so hopefully by tracking this over time, we’ll be able to see what opportunities really lie there, and how much they can contribute to the state’s climate goals as a whole.”

Some of the suggestions for funding those incentives might be updating state funding and grant requirements to recognize reductions or reporting of metrics in a preferential way, providing access to greenhouse gas reduction funding through programs developed under that mechanism, and, more challenging, create new rebate programs for water utilities from the power utilities.

The guidance document is out for public comment until March 5.  “We’re really interested in getting as much feedback as possible,” said Ms. Kellen.  “We want to create a program that is useful for water agencies and water information users.”

DAM SAFETY FEE REGULATIONS

One of the statutory responsibilities of the California Water Commission is to approve DWR’s regulations, and so accordingly, Sharon Tapia, chief of the Department’s Division of Safety of Dams, was before the Commission to request their approval of annual fee regulations for the Department of Water Resources Divisions of Safety of Dams program.

The dam safety program was established 90 years ago after the catastrophic failure of the St. Francis Dam in 1928 which cost 400 lives.  The mission of the program is to reduce life loss and property damage from an uncontrolled release of water as a result of a dam failure or a failure of an appurtenant structure.

The Division of Safety of Dams has jurisdiction over 1,246 dams; it is a diverse inventory of dams that are of various heights, capacities, and downstream hazard potential.  The dams are owned by private individuals, cities, counties, utilities districts, homeowners associations, and the state.  Ms. Tapia noted that within each of these ownership categories, there is at least one high hazard dam.  The inventory of dams is also diverse in the age of the structures, the type, the size, as well as the geologic and seismic regimes where these dams are located, and the level of analysis needed to monitor the safety of these dams.

There are six main functions of the overall program:   Maintenance inspections, surveillance monitoring, design review and construction oversight, reevaluations, emergency response, and inundation maps.  Maintenance inspections and reevaluations were bolstered by the passage of AB 1270 which now sets the frequency of inspections as well as the operation and cycling of gates and valves.  Ms. Tapia also noted that there are other parts of the program not listed on the slide, such as staying abreast of current best practices in dam safety engineering and working with national organizations to promote dam safety.

DIVISION OF SAFETY OF DAMS FEE REGULATIONS

In 2004, the Division of Safety of Dams program became 100% special funded through fees paid by dam owners, whereas prior to that, it was fully funded by the general fund and the fees paid by the dam owners to the program were deposited directly into the general fund.  In July of 2017, SB 92 modified Section 6307 of the water code to require the DSOD adopt by regulation a schedule of fees to cover reasonable regulatory costs in carrying out the program.  These include the amount to cost of inundation maps, amount to repay budgetary loans, and a prudent reserve.

What it did is it removed our fee schedule from statute and required that our fee schedule be established through regulation,” said Ms. Tapia.  “SB 92 also required that emergency regulations be established; those were initially adopted on March 25 of 2018 and they are valid up to March 25 of 2019 and expire on the 26 of March.  No additional fee provisions were given at that time for any alternate funding for the program through SB 92 nor were any additional reduced rates for dam owners considered at that time.”

The DSOD has developed regulations that outline a methodology to be used to develop the annual fees, rather than an annual fee schedule.  They followed a methodology approach also used by the Air Resources Board that is based on three principles: it captures the regulatory impact that the more complex dams place on the program, it’s within the Department’s statutory authority, and it establishes parameters that are generally very objective and well defined, rather than subjective.

These regulations were initially presented to the Commission last September and they have since been modified as a result of public comment received during the 55-day comment period.  Based on comments received, the initial fee formula was modified to include a parameter for critical appurtenant structures (CAS) that would collect 15% of the revenue of the fees while at the same time the dam fee component of the equation would be reduced by 15%.

These modified regulations we feel better align the annual fees to those dams that generally require the greater regulatory oversight with respect to dam safety,” said Ms. Tapia.

There are 214 dams that have critical appurtenant structures, which are defined as a structures with a height of 25 feet or more, stores greater than 5000 acre-feet or has the potential to impact life or property.  These are water-bearing structures as they hold back part of the reservoir.  The new CAS fee would be limited to capping the assessment to no more than 2 CAS per dam and it would not apply to low hazard dams.

About 214 dams would have an overall fee increase.  A dam with two CAS would have a higher fee increase than a dam with only one.  There are 14 dams with no change, and over 1000 dams will have a fee reduction because they don’t have any CAS.

There are 107 dam owners that own dams that would be subject to the new CAS fees.  Some of these owners have only one dam, other owners actually own a portfolio of dams, both with and without CAS structures, so they may have a change or an actual reduction in their overall portfolio cost of their dams.

COMMENTS ON ABILITY TO PAY

There were other comments received during the comment period, but some comments could not be incorporated because either it was clearly not within the Department’s statutory authority to be able to make the proposed changes, the proposed metrics did not align well with the impact on the program, or the proposals are better addressed through greater outreach to dam owners and the public regarding the program and the fees.

Many comments were received regarding the ability to pay the increased fees.  “I know a lot of dam owners struggle with some of the provisions in our statute, especially the ability to pay,” Ms. Tapia said.  “There are some discounted rates, but we don’t feel it’s clear in our statutes for us to be able to make these decisions in a regulation, because it would shift costs over to other dam owners being fully by funded by dam owners.  There were multiple reasons why ability to pay was an issue, and they are all very valid reasons.  Some dam owners have disadvantaged communities they serve; they have no or limited ability to pass on costs, they don’t generate any money from their reservoir, they have previously negotiated power contracts that are long-term, so those rate increases that they didn’t know about weren’t incorporated into those contracts, and there’s the Prop 218 requirements that a lot of dam owners have to adhere to.  However, we didn’t feel like we had the clear authority to be able to put in additional discounted rates into the regulations.

The fees are due July 1.  There is no grace period; they put one in but OAL removed it, citing that they did not have statutory authority to do that.  Comments also wanted one-year notice of fee increases, but that’s not possible as DSOD doesn’t always know what the increases are.

Some owners may think we have discretion over our budget, and we really don’t.  We have to adhere to the labor negotiations and the costs, as well as the Governor’s state budget process, so greater owner outreach and public outreach about what our program does, what the fees support would benefit in this area.

Ms. Tapia’s presentation went into detail on the new formula and how fees are distributed out through fee structures, as well as details on DSOD’s budget.

At end of the month, they plan to submit the regulations to OAL and anticipate their approval in April.  They will use the current formula for July 1st of this year, and start the new fee structure on July 1st, 2020.

Commission voted unanimously to approve the new regulations.

WATER STORAGE INVESTMENT PROGRAM

The Commission discussed a potential resolution to address the distribution of funds from the Water Storage Investment Program should any additional funding become available, which could occur if a project drops out or if a project didn’t ultimately meet statutory or regulatory requirements.  A resolution is a just a recommendation to the future Commission; the future Commission could still make a different decision on what to do.  The draft resolution states that additional funding go to the rank 3 projects to their full funding request amounts or to their full eligible amounts.  If there were still additional funds after that, there could be an expedited solicitation.  The Commissioners wanted more time to consider the resolution so the item will return at a future date.

Staff also updated the Commissioners on the water storage projects.  Second quarterly reports were due at the end of January and have been posted to Commission website on the project pages.  All reports indicate progress for all of the projects.  Some information that was provided included updates on planning efforts, consultant contracts, updates on JPA formations where there are any, any minor schedule updates.

Staff held orientation meetings for the contracts for public benefits between the applicants and the administering agencies with commission in attendance.  Public could listen in.  The general purpose of the meeting is to understand the applicant’s schedule for constructing the project, the permits needed, and how those permits might affect contracts for public benefits.  Also discussed were the best ways to communicate and coordinate the process, the roles and responsibilities, and the information needs of the administering agencies to develop the contracts.  The meetings were productive.

Invoices for early funding are just starting to come in so the funds will soon be moving out the door.

ANNUAL SWP WATER REVIEW

Another statutory obligation of the California Water Commission is to monitor and report on the construction and operation of the State Water Project on an annual basis.  Accordingly, Commission staff has proposed an outline for the 2018 annual review.  Executive Officer Jennifer Ruffolo ran down a synopsis of all that happened with the State Water Project during the past year.  She noted the 2018 report will be centered around the themes of aging infrastructure and climate change, and consistent with past reviews, the 2018 review will describe DWR’s work in 2018 on planning, including FloodMAR, Delta Conveyance, and ecological restoration in the Delta.  It will also highlight SWP operations and constructions, including projects listed in the 2017 report, and any other activities related to addressing subsidence of the aqueduct.

Commission staff will have a draft report for the next Commission meeting; the Commission can have a conversation to develop findings and recommendations and then staff will complete the report and submit it to the Commissioners for review and approval at a subsequent Commission meeting.

COMING NEXT MONTH …

Agenda items include a presentation on DWR’s FloodMAR project, an update on Model Water Efficient Landscape Ordinance, and the draft report of the annual review of State Water Project.

FOR MORE INFORMATION …

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