Immediately Available Resources to Upgrade the Water Grid and Water Pumping Systems in California
There are many challenges to resolving and planning for medium and long-term water and energy related issues in California. Funding for the necessary water infrastructure improvements and water system energy efficiency is insufficient. Financing and bond funding are limited. Action must be taken to relieve the immediate need. So, what are the options?
Fortunately, California has many no cost or low-cost immediately available options to water infrastructure improvements. The integration of energy planning into water and wastewater improvements can turn energy and water savings projects into self-funded projects, so that the reliance on bond financing is reduced. This can only be possible, however, if the energy and water policy at the Legislature and at the CPUC can be integrated. Some integration challenges do exist, but they can be resolved in the short term as follows:
- Challenge: Current rate-payer funded energy efficiency programs are not equitably distributing spending of energy efficiency surcharges based on water and wastewater agency contribution. Equitable spending can have a huge impact on groundwater pump system upgrades, since most of these facilities are in rural regions that are hard to reach, serving disadvantaged communities, and/or in regions with moderate to high wild fire risk. Current energy and water saving efforts by utilities in California, for the most part, disregard the importance of equitable distribution of energy surcharges to include irrigation and water pumping systems (as compared to all other energy consuming sectors). These surcharges on energy bills impact California ratepayers twice: directly through their energy utility bills; and through their water bills in the form of passthrough surcharges to the water utility. California ratepayers must be protected by minimizing the cost of energy to deliver and treat water and wastewater.
Solution: Ratepayer funded energy efficiency programs should provide technical services and incentives valued at least at the overall share of energy efficiency surcharges paid for by such customers at a statewide level.
- Challenge: Failure to account for the true benefit of energy efficiency in water and wastewater systems. Energy savings in water system benefit rate payers twice, through the avoided costs of energy procurement on electric rates and through the reduced operating costs of water systems on water rates.
Solution: CPUC oversight of energy and water utilities can and should be integrated into both energy and water savings projects. If a water utility or a water supplier is pursuing energy efficiency and water savings improvements, the Commission should consider the situation when the proposed project’s economics are higher than the regulated entity’s approved rate of return. A positive difference is an automatic benefit for ratepayers.
- Challenge: Water and wastewater system operators face many challenges when attempting to implement energy efficiency projects. These barriers include long and elaborate project review processes by IOUs, as well as inconsistent application of EE policy by IOUs among customer segments causing confusion for customers, equipment sellers, service companies and program implementers. Customers often do not have the time nor the resources to participate in unnecessarily complex programs.
Solution: Participation in energy efficiency programs can be made easier by removing the barriers that increase program implementers’ and customers’ costs. The resulting savings in program administration costs would then be available to customers in the form of increased incentives and technical support.
- Challenge: Water and wastewater system operators, farm management companies and individual irrigation customers do not have the internal resources to focus on energy efficiency upgrades and active energy management. Generally, these ratepayers are provided limited options for energy efficiency technical and financial support.
Solution: EE programs should be specifically directed toward rural irrigation, water and wastewater customers and their water suppliers, especially in hard-to-reach regions.
- Challenge: IOU and CPUC policy developed over the past few years have created unnecessarily complicated eligibility requirements for water and wastewater customers to contribute to California’s energy efficiency goals. Examples include preventing water pumps outside of certain plant efficiencies from participating or requiring multiple pump upgrades concurrently, discounted for arbitrary assessments of what they should do anyway.
Solution: The application of EE rules should be standard and consistent for all water customers, and across all of their pumps and systems, without discriminating against single applications versus multiple applications or other subjective policy requirements. Customers and EE programs should be allowed to claim the benefit of the full savings of their projects, regardless of what should have, may have, would have, or could have occurred.
- Challenge: Significant barriers within the current CPUC regulated IOU programs create uncertainty for customers, vendors and 3rd party implementers in terms of capital budgeting and implementation planning, and they should be removed. These barriers include unreasonable conditions and terms, a long project approval process that delays projects and vendor sales, significant discounts in claimable savings, and the retroactive application of new policy (vs prospective application).
Solution: IOU and regulatory barriers applied to energy efficiency projects for irrigation, water and wastewater projects should be removed.
- Challenge: There are no energy efficiency and water conservation programs targeting water and energy use at the power and water plants and their distribution systems. Power cost for auxiliary loads that make up as much as 12% of a power plant’s total generation is subsidized at the power plant level. Cost of power at the power plant is typically priced at cost rather than at the IOUs retail rate level. This disparity in the power plant cost of power for its own use – cost based versus retail based – disincentivizes energy efficiency investments at power or water plants and their distribution systems.
Solution: Improving power plants’ heat rates through available technologies such as the addition of topping and bottoming cycles, optimization of blowers, fans and pumps operations, as well as through many other auxiliary loads should be made a priority. Programs that reduce water use, especially at peaking power plants and in water systems through distributed pump projects that reduce on-peak energy demand, should be promoted.
- Challenge: Water, wastewater and irrigation equipment are assigned unrealistic effective useful lives that are far below the manufacturers’ and industry standard organizations such as ASHRAE or even IRS published equipment depreciation schedules for useful lives or what is actually experienced in the field. Current utility and CPUC program policy further underestimate the impact of energy efficiency in water and wastewater infrastructure by discounting lifecycle impacts to arbitrarily assumed remaining useful lives of existing equipment. These policies are highly unrealistic and drastically different then how water, wastewater, and irrigation segments make their operating and purchasing decisions. The current policy assumes all water systems in California will be improved to maximum efficiency within 1-5 years, when standard practice across most California systems is to keep equipment operating for as long as possible, often over several decades.
Solution: Eliminate unrealistically low equipment life assumptions that unfairly and significantly reduce the amount of available incentives for irrigation, water and wastewater customers and significantly reduce a water and energy efficiency programs’ benefit cost ratio.
- Challenge: Current policy restricts the ability of water and wastewater utilities and irrigation customers to invest in energy efficiency upgrades in function of wet/dry years. IOU programs often do not provide enough flexibility to customers to plan around California’s drought cycles. For example, groundwater pumps which will demonstrate maximum benefits during dry years are often not eligible for enough incentives and technical support during wet years, when they are not operating.
Solution: Modifications must be made to the IOU programs to allow program implementation around California’s drought cycles and/or provide flexibility to the existing programs to adjust energy efficiency and water conservation implementation processes.
With improved policies and the removal of barriers, irrigation, water and wastewater customers can upgrade their infrastructure and help meet California’s energy and climate goals using mostly their own funding, energy efficiency incentives and available financing mechanisms.
The State of California faces an uncertain climate future and must find ways to adapt. These “immediately available resources” can contribute significantly to our objectives through better regulation enabling the available energy and water efficiency programs in disadvantaged, rural communities and in high risk wild fire regions. This low-cost strategy will go a long way towards helping California adapt and serve as a model to other states.
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