Also, Staff preliminary analyses show water use rises with income; most water utilities have regressive rate structures
At the April 5 State Water Board meeting, staff updated the Board on the urban water production and conservation submitted by urban retail water suppliers for February 2022. Staff also shared preliminary analyses on water consumption and income, regressive water rate structures, and water affordability.
February’s numbers for urban water conservation
February continued the dry trend observed in January with unusually warm and dry conditions, resulting in the lowest two-month average precipitation on record. Statewide residential use for February 2022 was 74 gallons per person per day, which is among the higher averages observed since data collection began.
While statewide use was half a percent lower than in February of 2020, cumulative use is still dropping; cumulative savings for July 2021 to February 2022 are at 5.8%, down from 6.4% in January.
This month, there isn’t as clear of a spatial pattern to the water savings; six out of ten regions decreased overall use relative to February 2020. The South Lahontan region had the highest savings at 10.4%, with North Coast following at 5.9%, San Francisco Bay at 4.6%, and Tulare Lake at 3.3%. The South Coast and North Lahontan regions had slight savings of less than 1%. The San Joaquin, Central Coast, Colorado River, and Sacramento River regions all saw increases relative to February 2020.
Executive order N-7-2022
Charlotte Ely, Supervisor of the conservation program in the Office of Research, Planning, and Performance, next discussed executive order N-7-2022, which includes several provisions to protect people and water resources as the state enters the third year of drought
There are three key directives regarding urban water conservation:
A call to all Californians to strive to limit summertime use and use water more efficiently inside and out.
A directive to the State Water Board to consider an emergency regulation by May 25 that would:
require urban retail water suppliers to submit preliminary annual supply and demand assessments a month ahead of the statutory deadline;
require urban retail water suppliers urban suppliers to move to level two of their water shortage contingency plans; and
directs the Water Board to define non-functional, commercial, industrial, and institutional turf and ban its irrigation.
A directive to state agencies to submit a proposal to the Department of Finance for drought mitigation actions, including conservation, by April 15.
Available conservation programs
During the last board meeting, board member Morgan posed two questions to staff: What conservation programs do urban retail water suppliers currently have in place? And what funding opportunities are available to help expand those programs?
The slide shows a review of 317 urban retail water supplier websites from 2020. The chart shows the percentage of agencies with different types of conservation programs. More than half have water loss programs and provide rebates to their commercial, industrial and institutional customers for water-efficient plumbing and devices. About half of the suppliers provide rebates for turf replacement.
Less than half provide rebates for efficient irrigation devices, rebates for residential fixtures and appliances, or surveys for CII and residential customers. Very few are using water budgets or running their own outreach programs, which can be in part because they are benefiting from larger regional outreach programs.
The ACWA website at the bottom of the slide highlights some of the responses by local water purveyors across the state, such as conservation goals, efficiency programs, and long-term water resiliency planning.
“So, in sum, many are doing really great work, but there’s room for improvement,” said Ms. Ely.
Ms. Ely noted there are grant opportunities specifically for urban retail water suppliers for drought response. There is $1.2 billion in the Drinking Water and Clean Water State Revolving Funds at the State Water Board to help get conservation and efficiency programs off the ground. In addition, the Department of Water Resources has several funding opportunities as well.
More funding is expected. The proposed 2022-23 climate budget for conservation and community resilience has $180 million specifically set aside for water conservation efficiency programs, leaks, and turf placement; $145 million for urban and small community drought relief through the Department of Water Resources, and $100 million for urban forestry and greening.
Water consumption and income
At the last meeting, Board member Laurel Firestone posed several questions to staff about the relationship between water consumption, income, and water rates. Ms. Ely noted that the questions are important, and answering them thoroughly will take more time than was available over the last couple of weeks.
The first question was, do we have information on the relationship between average residential gallons per capita per day (GPCD) and median household income? Is it generally true that most low-income customers use less water and therefore have a higher per-capita efficiency than high-income residential customers?
The staff did a literature review of a sampling of the many studies that have been done and found that income and water use are very closely intertwined. As income increases, most of the time, so does water use in part because wealthier households have larger lots. For example, one study found that for each 1000 square foot increase in average lot size, water use increases by 1.8%.
“One of the more contemporary studies was a report from the Department of Water Resources that was an analysis of residential indoor water use in California,” said Ms. Ely. “They found without considering lot size that for each $10,000 increase in household income, indoor use increased by .3 GPCD. So much of the literature suggests and some recent studies have shown that larger lot size is a big part to do with it, but that is not always the case.”
The graph below shows the relationship between a water supplier’s average residential water use in GPCD and the median household income of all of their customers. Each dot represents a single supplier. Median household income is on the y-axis. On the x-axis is residential gallons per capita per day (or RGPD), which represents how much water is used on average for the residential sector within that supply or service area.
“In the San Joaquin Valley and most of Southern California, there is a clear trend that shows as median household income rises, so does residential water use,” she said. “In climate zone eight, for example, which is the graph on the left, residential water use increases by one GPCD for roughly every $800 in median household income in Southern California. In the inland climate valley zone or zone nine, residential water use increased by one GPCD for every roughly $540 increase in median household income.”
She noted that the relationship is not as strong in other climate zones, such as the Bay Area. And at the statewide scale, the relationship is fairly weak, partly because the unique factors that drive water use in different parts of the state aren’t considered, such as climate, lot size, historic investments in conservation and efficiency, and the cost of water.
The pie chart shows the relationship between population, income, and water consumption for Ventura and parts of Los Angeles County. Because there isn’t detailed demographic data across the suppliers’ service area, the chart looks at the population of suppliers serving communities in which the median household income falls into different income brackets.
“Communities with a median household income of $100,000 or larger represent about 30% of the population and consume about 41% of the region’s water,” said Ms. Ely. “These trends are not as pronounced in other regions of the state. For example, in the Bay Area, regardless of the median household income of the community served, residential water use appears more or less proportional. While these trends are visible when looking across climate zones, they’re more meaningful, accurate, and we expect more pronounced at smaller scales.”
She noted that the Board has gathered more granular data before for other purposes, such as the COVID financial impact study done at the end of 2020. For that study, they obtained the number of households in some form of water debt binned by zip code. If the Board collects more granular data with the associated demographics, it would be useful to understand conservation potential and the equity implications of the Board’s work.
Ms. Ely recalled how at a recent webinar, a company demonstrated their tool that is designed to help integrate demographic and water use data to fine tune conservation opportunities. For an agency in California, the tool was used to develop water budgets for every residential customer within the supplier service area. The conservation strategy involved applying efficiency standards for indoor and outdoor residential water use. Suppliers can calculate tailored water use allocations for each household in their service area using data, such as the number of occupants and lot size.
“They found that 30% of the households were on average 211% above their individual budgets,” she said. “The tool estimated that 30% of the customers who appear to be residing in a quite affluent area use 60% of the agency’s water. So when thinking about opportunities to conserve within the service areas of suppliers, knowing which customers use the most water and how they might be affected by different conservation strategies is really critical.”
Water rates and regressive water rate structures
Another question Board Member Laurel Firestone posed during the last meeting: do we have information on where water systems are instituting rate structures that are regressive and charge low use customers more per gallon than high use customers?
To answer this question, the staff dug deep into the rate and residential water use data submitted through the electronic annual report. For the last several years, urban retail water suppliers have been providing water cost data at 6, 9, 12, and 24 per 100 cubic feet or HCF. Ms. Ely noted that for comparison purposes, 6 HCF for a four-person household is about 36 gallons per capita per day, which is approximately what a household would be using if it were equipped with efficient fixtures and appliances. 24 HCF for a four-person household would be about 145 gallons per capita per day, which represents about the top 10% of residential water users.
The slide shows the statewide findings for how much customers were paying per unit of water at 6, 9, 12, and 24 HCF. The chart on the upper right shows the median values per HCF at 6,9,12 and 24 HCF; The median price for 6 HCF is $6.50 per unit; at 24 HCF, it is $3.45.
“The data suggests that the statewide median cost per unit at six HCF is almost double the median cost per unit at 24 HCF,” said Ms. Ely. “In other words, the data suggests that half of the suppliers in California have rate structures that effectively charge customers who use six HCF nearly twice as much per unit of water than they do customers that use 24 HCF.”
Another way of considering this data is to look at how many suppliers have a 6 to 24 per HCF ratio over one. The statewide median value is 1.88; any value over one suggests a rate structure that effectively provides a bulk discount for a limited and precious resource.
Ms. Ely noted that of the 312 retail water suppliers, 95% of them have a 6 to 24 per HCF ratio greater than one, as shown in the histogram on the bottom right.
“For context, I think it’s important to keep in mind that suppliers include both fixed and variable charges on water bills as a way of ensuring revenue stability,” she said. “Many have embedded their costs into fixed charges with relatively little charges associated with actual water consumption. The effect of this is that customers who are using the most water are given sort of a bulk discount and that they’re paying less per unit as they consume more.”
She also noted that 5% of California agencies have progressive rate structures that disincentivize higher water use.
The graph is from the Alliance for Water Efficiency’s recent report and assessment of water affordability and conservation potential in Long Beach, California. The report evaluated water affordability in Long Beach and how efficiency and conservation can help families, particularly disadvantaged families, lower their water and sewer bills.
The Alliance for Water Efficiency calculated the average annual cost of water and sewer for a single family customer in Long Beach and then expressed it as a percentage of the average annual income for each household of different income brackets. So for example, the midpoint for $10,000 to $15,000 income is about $12,000 per year. The average annual water and sewer bill of $824 would represent 6.6% of the annual household income for these households. As households earn more money, water and sewer costs represent a smaller and smaller fraction of their average annual income.
Ms. Ely then concluded by briefly recapping the key findings. “In some climate zones, there appears to be a strong relationship between higher income communities and higher average water use. This is consistent with research that has been done over the last several decades. In most places, but not all, higher water using customers pay less for each unit of water consumed. But again, 5% of urban suppliers do appear to charge more per unit of water as customers consume more.”
She also noted that Board Member Laurel Firestone had also asked, do we know how these rate structures correspond to overall water use and conservation practices? In other words, do systems with more aggressive rates tend to use more water?
“This is a very big question, as it turns out, and while anecdotally we can say yes, with the time we had, we found few examples for which this is the case,” she said. “We need to do a much more robust analysis to evaluate how rates might influence water use across the state. So there’s a lot more to look into here.”
“The last point is that this analysis would really benefit from more granular data, and data accounting for these other factors that influence water use, because it’s not just climate, it’s also lot size, it’s also what kind of investments have been made previously to get more efficiency programs off the board, so we could do that kind of analysis; it would just take more time.”
Chair Joaquin Esquivel said he appreciated the breakdown of what is a complicated topic – a lot of different water agencies, different sizes, and different communities. “But the core work here of continuing to drive conservation, given not just this drought, but the increasing aridity in the West that we know we have to adapt to, is really important,” he said. “I appreciate the executive order that directs us to define non-functional turf. We continue to understand that outdoor water use can largely drive critical needs for conservation in the state. So I appreciate the breakdown.”
Board Member Laurel Firestone said that one of her takeaways is the continued need to look at GPCD as the target, even more so than the amount saved. “We have a lot of inequities right now in terms of who is using water and how reductions and use may be felt,” she said. “Really, what we’re all striving to do is get to efficient water use and as efficient as we can in the state. I think it also just highlights where the state will be doing a lot of conservation investments right now. And, and importantly, doing it into where we’re going to see the most bang for the buck in terms of reducing water use. But that is investing in some of the higher income and higher use water systems in the state. So as we look at how we use those investments and implement conservation, I’m really paying attention to and understanding how equity plays into that and who is receiving those benefits and who isn’t.”
“We have an ongoing need in the state to look at affordability. Part of how we can get to affordability is having rate structures that aren’t regressive and ensuring everyone can afford a basic amount of water and aren’t effectively subsidizing high water users. There are so many facets of this issue. If we think about how we promote both affordability and conservation, it’s aligned in that we want to ensure that folks can afford water and that if you’re using very little water, you do not have to pay higher rates per gallon. So I really appreciate the work that’s been done. Of course, there’s more to do.”
Board Member DeDe D’Adamo said she is grappling with the extent to which disadvantaged communities will be impacted in the long term as the state switches over to efficiency standards. “So when you come back, it would be great if you could pull out indoor versus outdoor. Because it just strikes me that these larger lots that are using so much more water, I know there are a lot of different factors, but we’re probably talking about newer homes that have more efficient appliances. So it just drives back to the outdoor discussion.”
“Then looking at lower medium household income households, teasing out multifamily dwellings, so that we can look at that comparison in terms of the efficiency standards,” she continued. “Again, focusing on outdoor and what sort of additional burden might there be for disadvantaged communities, but trying to isolate better the type of households that would be having to make adjustments going forward. Presumably, many multifamily dwellings wouldn’t have those issues. I know, it’s complex and all that, but in disadvantaged communities, unfortunately, often they don’t have parks and outdoor spaces to begin with.”