Chapter 3.8Cost-of-Service Analysis

Section § 390

Explanation

This law defines key terms related to water service costs incurred by public entities in California. It explains 'costs of water service for the highest users' as the extra costs, including capital, operation, and maintenance, associated with the increased water service needed by high water users. These costs might include conservation practices, water system retrofitting, and other measures to manage demand and secure additional water supplies.

'High water users' are the top 10% of users by volume or those exceeding their water budget under certain pricing models. A 'public entity' refers to any municipal or political subdivision providing urban water services. Lastly, 'water usage demand analysis' is described as a study to understand water usage and demand on a system run by a public entity.

For purposes of this chapter, the following terms have the following meanings:
(a)CA Water Code § 390(a) “Costs of water service for the highest users” means the difference in costs, including applicable capital costs and operation and maintenance costs, that the public entity incurs directly, or by contract, as a result of the increased water service required by its high water users. “Costs of water service for the highest users” may be reported by customer class, rate classification, or cumulatively, and may include any of the following:
(1)CA Water Code § 390(a)(1) Conservation best management practices, conservation education, irrigation controls and other conservation devices, and other demand management measures.
(2)CA Water Code § 390(a)(2) Water system retrofitting, dual plumbing and facilities for production, distribution, and all uses of recycled water and other alternative water supplies.
(3)CA Water Code § 390(a)(3) Projects and programs for the prevention, control, or treatment of the runoff of water from irrigation and other outdoor water uses. Incremental costs do not include the costs of stormwater management systems and programs.
(4)CA Water Code § 390(a)(4) Securing dry year water supplies.
(5)CA Water Code § 390(a)(5) Procuring water supplies, including supply or capacity contracts for water supply rights or entitlements.
(6)CA Water Code § 390(a)(6) Energy costs for water delivery.
(b)CA Water Code § 390(b) “High water users” means the top 10 percent of water, in terms of volume of water consumed. Alternatively, for a public entity that has allocation-based conservation water pricing pursuant to Section 372, the public entity may define high water users as those customers whose water use is above the water budget assigned to them by that public entity.
(c)CA Water Code § 390(c) “Public entity” means a city, whether general law or chartered, county, city and county, special district, agency, authority, any other municipal public corporation or district, or any other political subdivision of the state that provides retail water service and that is an urban water supplier, as defined in Section 10617.
(d)CA Water Code § 390(d) “Water usage demand analysis” means an analysis conducted to determine water usage patterns and demands placed on a water system operated by a public entity.
water service costs highest water users conservation practices irrigation controls recycled water alternative water supplies water system retrofitting supply contracts energy costs for water delivery public entity water suppliers urban water suppliers water usage patterns water demand analysis allocation-based pricing water budget
(Added by Stats. 2023, Ch. 542, Sec. 1. (AB 755) Effective January 1, 2024.)

Section § 390.1

Explanation

This law requires public entities to analyze water usage demand before or during the process of setting fees for water services. They need to identify and make public the costs of serving the highest water users and the amount of water they typically use each year. This information must be included in their cost analysis, ensuring transparency and compliance with existing laws.

(a)CA Water Code § 390.1(a) A public entity shall conduct a water usage demand analysis prior to completing, or as a part of, a cost-of-service analysis conducted to set fees and charges for water service that are consistent with Section 6 of Article XIII D of the California Constitution and other applicable law. Within the water usage demand analysis, a public entity shall identify both of the following:
(1)CA Water Code § 390.1(a)(1) The costs of water service for the highest users incurred by the public entity.
(2)CA Water Code § 390.1(a)(2) The average annual volume of water delivered to high water users.
(b)CA Water Code § 390.1(b) The costs of water service and the average annual volume identified in paragraphs (1) and (2) of subdivision (a) shall be made publicly available by posting the information in the public entity’s cost-of-service analysis.
water usage demand analysis cost-of-service analysis public entity high water users water service fees fee setting water service charges highest users costs annual water volume transparency public information California Constitution Article XIII D water delivery analysis water demand analysis publishing cost analysis
(Added by Stats. 2023, Ch. 542, Sec. 1. (AB 755) Effective January 1, 2024.)