3. Preliminary Scoping Memo
As required by Rule 7.1(d)7 of the Commission's Rules of Practice and Procedure (Rules), this OIR includes a Preliminary Scoping Memo. In this Preliminary Scoping Memo, we describe the issues to be considered in this proceeding and the timetable for resolving the proceeding.
The goal is to develop a comprehensive policy framework for recycled water for Class A and Class B water utilities and comparably-sized sewer utilities. As provided in General Order 96-B, a water utility is designated Class A if it serves over 10,000 service connections, and Class B if it serves 2,001 through 10,000 service connections. While sewer utilities are not classified by size, the recycled water policy framework should be applied to comparably-sized sewer utilities, i.e., those with 2,001 or more service connections.
Through the development of a comprehensive recycled water policy framework, we plan to provide greater clarity and guidance to water and sewer utilities that are currently engaged in or anticipate entry into the development, production, conveyance, and/or sale of recycled water products. This proceeding will include workshops addressing the issue areas identified below and will bring groups of relevant experts together to consider the questions enumerated below.
3.1. Issues to be Addressed
In developing this comprehensive recycled water policy framework for water and sewer utilities, the issues to be considered in this proceeding include, but may not be limited to, the following:
Issues Related to Planning
· Determination of quantity, type(s), and use(s) of recycled water currently produced and/or served by the water/sewer utilities.
· Determination of quantity, type(s) and use(s) of recycled water potentially to be produced and/or served by the water/sewer utilities.
· Studies planned or completed by water/sewer utilities on the development and/or retail of recycled water.
· Establishment of mandatory or voluntary delivery and/or production goals for recycled water by type of recycled water.
· Determination of whether the Commission should require utilities to submit recycled water plans.
· Determination of whether the Commission should require public outreach and education to consumers by utilities engaged in the production, sale, and/or delivery of recycled water.
· Determination of the process for adjudicating service area disputes between Commission-regulated utilities and public/municipal water systems also producing and delivering recycled water.
Issues Regarding Cost Allocation
· Determination of how costs of recycled water infrastructure should be allocated among stakeholders, including customers, investor-owned utilities, and public agencies not regulated by the Commission.
· Determination of whether the Commission should require utilities pursuing joint recycled water projects with public agencies to seek public funds to fund project costs in advance of Commission applications, and whether the Commission should grant interim or partial approval until joint projects under consideration for public funds receive notification regarding funding status.
Issues Regarding Rate Design
· Determination of appropriate rate structures and rate designs for recycled water, such as declining block rates, contracts, and funding of infrastructure by customers expected to receive discounts as a result of the project.
· Determination of how utilities can recover lost revenues if recycled water requires lower rates to incentivize its use.
Issues Related to Inter-agency Coordination
· Development of the process for and the roles of the Commission and utilities in addressing inter- and intra- regional situations where competing beneficial uses exist in adjudicated water basins where utilities operate.8
· Exploration of the prospects for broadening access to public funding for utilities for recycled water projects including identifying the role agencies such as the California Department of Water Resources, the U.S. Environmental Protection Agency, the California Department of Public Health, and the State Water Resources Control Board can play in expanding potential funding recipients to include investor-owned utilities solely, or in collaboration with public agencies.
· Determination of how the California Department of Public Health requirements governing water quality for recycled water affect Commission recycled water policy development.
Issue Regarding Environmental Matters
· Determination of when the Commission should serve as lead agency or responsible agency under CEQA for the evaluation of recycled water projects.
· Evaluation of AB 32-related GHG emissions reduction implications in establishing a recycled water policy and related implications for the overall AB 32 policy implementation framework.9
Issues Related to Accountability
· Determination of whether there should be incentives for utilities to meet recycled water goals.
· Determination of whether there should be penalties for utilities failing to meet recycled water goals.
· Establishment of utility reporting requirements for recycled water or inclusion of such water recycling plans as part of a utility's general rate case proceeding.
We also invite parties to identify additional issues that the Commission should consider in this rulemaking.
3.2. Questions
We pose the following questions for all interested parties to address in comments filed in this proceeding. Parties should identify the question to which they are responding.
7 An order instituting rulemaking shall preliminarily determine the category and need for hearing, and shall attach a preliminary scoping memo. The preliminary determination is not appealable, but shall be confirmed or changed by assigned Commissioner's ruling pursuant to Rule 7.3, and such ruling as to the category is subject to appeal under Rule 7.6.
8 Competing beneficial uses might exist, for example, if proposed recycled water projects would reduce return flows to a river, thereby reducing the water supply downstream that could be used to recharge local groundwater supplies.
9 Enhancing the production and use of recycled water is one of six measures included in the AB 32 Scoping Plan targeting GHG emissions reductions in the water and wastewater sector.
