Water for Los Angeles County

Recommendations 2

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  10 Glendale Water and Power (GWP), Long Beach Water Department, Los Angeles Department of Water and Power (LADWP), Pasadena Water and Power Department, City of San Fernando Public Works Water, and the City of Santa Monica Water Department should support instructional literature and possible funding efforts for home purple pipe installations and gray water systems. Geographic Water Use To gain an understanding of water use, six LAC cities’ water departments were reviewed to see if they were targeting any specific geographic areas. The cities 2009-2010 LOS ANGELES COUNTY CIVIL GRAND JURY FINAL REPORT 97 selected were Santa Monica, Glendale, San Fernando, Long Beach, Pasadena, and Los Angeles. None of the cities questioned targeted specific geographic areas at the current time. San Fernando targeted the top ten internal users for water and has achieved a 5% reduction in use. The city was planning to review the top ten external users of water. HOW WAS THE CITY OF SAN FERNANDO PUBLIC WORKS WATER WAS ABLE TO REPLACE 75% OF ITS WATER CONVEYANCE INFRASTRUCTURE?
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  16 The City of Los Angeles Board of Water and Power Commissioners should establish a full-time position of Inspector General in the City Controller auditor’s office funded by the LADWP. This position would be dedicated to auditing and reviewing activities of the LADWP only. 2.17 The Inspector General for LADWP would be administered and selected by the Los Angeles City Controller. Water Rates Some rate increases for water nationwide were predicated on poor financial management and fraud by the specific water district. Many times water rate increases were dependent on the replacement of the infrastructure. Rate increases reflected the increased cost of acquiring additional water sources. Fixed costs for infrastructure were an ongoing issue in LAC, especially in the City of Los Angeles. Rate increases are a way to force conservation. The rates to the users of water in Los Angeles increased even though more water was being conserved. Because there was a shortage of water in LAC, it was imperative that all residents should use less water on a regular basis. The cost of replacing and retrofitting the infrastructure must still be absorbed. The use of fewer gallons of water means infrastructure repair and replacement expenses would be spread over fewer gallons of water. 114 2009-2010 LOS ANGELES COUNTY CIVIL GRAND JURY FINAL REPORT The LADWP continued to increase the rates for water usage to its customers on a regular basis; primarily as a result that much of the existing infrastructure is over one hundred years old. The rates are evaluated by the BWPC and passed on to the Los Angeles City Council for approval, and finally signed by the Mayor of Los Angeles. LADWP recommended the following objectives to restructure water rates (BWPC Proposal April 23, 2009): 1. To encourage conservation on a year-round basis modify the existing rates so that the differential between the First and Second Tier rates is based on the marginal cost of treated water purchased from Metropolitan Water District of Southern California (MWD). 2. Include all surcharges and pass-through charges in both First Tier and Second Tier rates. 3. Keep the Second Tier base rates the same year-round rather than reduced during the low season. 4. Establish a Third Tier rate based on the marginal cost of recycled water to be imposed for very high usage, consistent with the original concept for LADWP’s water rate structure to provide a forward-looking price signal for the cost of new water supplies. 5. Realign household size adjustments at the First Tier rate using the current best management practices and technologies for indoor water use. 6. Utilize application of climate based conservation data to make adjustments in current First Tier usage blocks. 7. Increase low income and lifeline subsidies. 8. Update General Provision J of the Water Rates Ordinance, Adjustment Factor Limitations, based on the current projections for the adjustment factor components. 9. Modify Water Shortage Year Rates based on experience following initial implementation of these rates in 2009 and incorporate the rate restructuring. Increase the current minimum period for review by the City Council and the Mayor following approval by the Board to implement Shortage Year Rates from fifteen days to thirty days. 10. Eliminate Board approval of the water recycle contract for each LADWP customer and establish the commodity charge as 80% of the total First Tier billing rate for potable water (including adjustments). 11. Set lot size or temperature zone adjustments. 12. Revise the Water Quality Adjustment cap requirements. 13. Revise the Water Procurement Adjustment factor to encourage water conservation and fully recognize the results of demand-side management programs. LADWP water rates were based on establishing a water budget for a reasonable amount of water for each consumer. Consumption within that amount was then charged at First Tier rates. Consumption above the budget was charged at the higher Second Tier rate. 2009-2010 LOS ANGELES COUNTY CIVIL GRAND JURY FINAL REPORT 115 The cost to validate the methodologies and analyses that their rate increases will be based on, included up to $150,000 in consulting services. In addition to LADWP staff expense, it was proposed that a resolution to the BWPC for the adoption of the rate increase be completed by January 2010. The process from proposal to approval was nine months. Water rate increases were approved by Los Angeles City Council and were passed on to the consumers within the city. These rate increases were predicated on water use and conservation efforts. Los Angeles had fixed costs for the delivery of water to the LADWP consumer. Additionally, many cities such as Pasadena, Glendale, Santa Monica, and Long Beach had tiered water rates based on the consumer’s use of water over and above set limits. In early 2010 San Fernando did not have a tiered rate system in place for water usage but was considering this option. There was general public agreement for the addition of a ratepayer advocate (RPA) responsible to review any rate increases. The RPA should be acceptable to all stakeholders. The RPA must function outside of the LADWP organization. The RPA must be assured of full access to any and all data and information from the LADWP that would be needed to accomplish its goals. The CGJ recommends that funding of the RPA, its staff, and office come from the LADWP. These are funds that are paid by all ratepayers. The selection and appointment process for creating the RPA must be accomplished with the utmost care to assure every interested party in the city of the independence and integrity of the RPA's organization and recommendations. Requirements for the RPA organization would include: • A staff of competent, qualified analysts and experts in the electric and water utility industries who will evaluate all significant proposals and monitor and advise management, when warranted, of any proposed or actual actions or omissions that may adversely affect the LADWP's ratepayers • The ability to monitor and provide transparency to ratepayers of all major projects and project proposals of management • The responsibility to monitor and publicize where necessary efforts by the LADWP to increase rates • The monitoring and publicizing of the status of the infrastructure and technology necessary to run LADWP effectively and efficiently • The review and analysis on a timely and continuous basis of the operations, finances, and management of the LADWP • The Rate Payers Advocate shall be beholden only to LADWP Rate Payers, although it may advise the City Council, the Mayor, and other interested parties • A place at the table at meetings of the Board of Water and Power Commissioners and at the City Council when LADWP affairs are being discussed • Complete independence from the governments of the City, County, and State and any of their suppliers or unions • The necessary education, experience and skills to perform its duties, including an understanding of the operations and finances of public utilities 116 2009-2010 LOS ANGELES COUNTY CIVIL GRAND JURY FINAL REPORT RECOMMENDATIONS 2.18 The City of Los Angeles Board of Water and Power Commissioners should require a detailed analysis of the basis of any rate increase and this analysis should be included in that portion of the rate increase. 2.19 The City of Los Angeles Board of Water and Power Commissioners should provide the basis and details for any rate increases to the public with an appropriate period allowing for public response. 2.20 The City of Los Angeles Board of Water and Power Commissioners should provide the basis and details of any significant changes to the billing process with an appropriate period allowing for public response. 2.21 LADWP should establish a Rate Payer Advocate organization with the duties and structure as defined above. Non-Revenue Water (NRW) NRW was defined as water that has been produced and is lost before it reached the customer. Losses could be real losses through leaks, sometimes also referred to as physical losses or apparent losses (for example through theft or metering inaccuracies). High levels of NRW are detrimental to the financial viability of water utilities, as well to the quality of water itself. NRW is typically measured as the volume of water lost as a share of net water produced. It is sometimes also expressed as the volume of water lost per kilometer of water distribution network per day There are other sources of NRW, the major sources were leaks, evaporation, fire hydrants, inaccurate meters, and unauthorized use. The California Department of Water Resources distinguished between authorized unmetered uses and water losses. Authorized unmetered uses could have included water used for beneficial purposes, such as fire fighting and main flushing. Most definitions identified some of the potential sources of NRW, including water for fire fighting and flushing, leaks and breaks, illegal connections, faulty meters, and other sources. A report entitled Water Conservation a Local and Regional Perspective was submitted to the World Water Forum, by the LADWP and the MWD of Southern California, dated March 2006 with the following statement: “In terms of total actual use within the City, single-family and multi-family dwellings constitute the greatest demands (60% of the total demand). Commercial water use accounts for over 20%, governmental use about 7 percent, industrial use about 4%, and non-revenue water system loss accounts for about 8% of the total water demand. “Non-revenue water is lost in the process of transporting and delivering water to customers. LADWP’s efforts to minimize water loss through an aggressive infrastructure rehabilitation and maintenance program include pipeline rehabilitation, leak detection and repair, meter replacement, and cement lining programs.” 2009-2010 LOS ANGELES COUNTY CIVIL GRAND JURY FINAL REPORT 117 It was also reported on February 2007 in a report titled, Water Loss Control in North America: More Cost Effective Than Customer Side Conservation- Why Wouldn’t You Do It? “LADWP has a relatively low level of real water losses. However, economic analyses have shown that a more aggressive active leak detection and repair policy is economically feasible. Since the part of the project has not started yet it was necessary to estimate the cost for the leak detection and repair program based on average industry cost data. The average cost for the entire program including the cost for a detailed water audit that forms the bases for the intervention program and the cost to detect and repair the leaks was calculated to be $347 per acre foot of water saved.” The CGJ was informed by LADWP that in 2009 the NRW was approximately 4.5%. This would be a significant change from what was reported in the March 2006 report, and was consistent with the February 2007 report that was prepared in conjunction with the 2007 CA/NV AWWA (American Water Works Association) Spring Conference held in Las Vegas. The CGJ reviewed literature on the percent of NRW throughout the United States. The rate went as high as 40% and as low as 2%. The CGJ commended LADWP for maintaining such a low percent on NRW.