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CALIFORNIA PUBLIC UTILITIES COMMISSION

Water Division

INSTRUCTIONS FOR WATER CONSERVATION,

RATIONING AND SERVICE CONNECTION MORATORIA

Standard Practice U-40-W

SAN FRANCISCO, CALIFORNIA

July 2007

INSTRUCTIONS FOR WATER CONSERVATION,

RATIONING AND SERVICE CONNECTION MORATORIA

A-PURPOSE AND SCOPE

1. The purpose of this standard practice is to provide guidance to Water Division staff, to the public and to utilities as to steps to be taken when the utility suffers from a water shortage. The three levels of action are voluntary rationing, mandatory rationing and a service connection moratorium.

B-BACKGROUND

2. General Order 103, Chart 1, and Standard Practice U-22-W, Determination of Water Supply Requirements of Water Systems, address water supply requirements, but supply can be affected temporarily due to drought or decreased production of a utility's wells. When this happens, utilities may have to resort to mandatory conservation or may have to institute a service connection moratorium.

3. Parties may also protest service area extensions (see Standard Practice U-14-W) over concern that the available supplies may be inadequate to serve the new customers, which would be the equivalent of a service connection moratorium (see Section F)1.

4. The position of the Commission in overall water supply planning was set forth in Decision 99-04-061, April 22, 1999 (see Appendix A to this Standard Practice).

C-DEVELOPMENT OF CONSERVATION AND RATIONING

5. In mid-1976, due to a drought, the Commission opened an Order Instituting Investigation (OII, Case No. 10114, June 8, 1976) to determine what actions to take. In early 1977, the Commission issued an emergency decision that allowed water utilities to distribute water conservation kits and to implement cost effective water conservation programs.

6. The Commission was once again faced with drought conditions in mid-1988. The Commission opened OII 89-03-005 that allowed all classes of water utilities to file a water conservation and rationing plan consisting of two distinct parts: Rule 14.1 (a "voluntary conservation" program) and Schedule 14.1 (the mandatory rationing and penalty part). This plan was based primarily upon the Department of Water Resources and Metropolitan Water District's model plans, but also incorporated aspects of the North Marin Water District, East Bay Municipal Utility District, and California Water Service Company's existing conservation and rationing plans. The main objective of Rule 14.1 and Schedule 14.1 was to have a plan readily available for any utility that needed conservation and/or rationing methods. This plan allowed regulated utilities to achieve conservation of 17.5% to 26%.

7. The drought was officially declared over in February 1993 and the OII was closed. Because history shows that drought occurs in California about once every ten years, Rule 14.1 has remained in place. When conditions become severe, the utility may file an advice letter to institute Schedule 14.1. The Commission must approve implementation of this schedule by resolution.

D-VOLUNTARY RATIONING

8. Voluntary rationing consists of the steps described in Rule 14.1 (Appendix B). This Tariff Rule should be in the tariff book of every utility that might suffer from a water shortage.

E-MANDATORY RATIONING

9. Mandatory rationing consists of the steps described in Schedule 14.1. The utility adds schedule 14.1 to its tariff book by filing an advice letter with full justification. Staff will prepare a resolution for consideration by the Commission. The Commission must approve the imposition of mandatory conservation.

10. Schedule 14.1 may be modified to fit the needs of the utility and its particular water shortage situation. The following provisions are examples of what might be included in a typical Schedule 14.1:

A. Prohibit nonessential and unauthorized water use, including:

i. use for more than minimal landscaping in connection with new construction;

ii. use through any meter when the company has notified the customer in writing to repair a broken or defective plumbing, sprinkler, watering or irrigation system and the customer has failed to effect such repairs within five days;

iii. use of water which results in flooding or runoff in gutters or streets;

iv. use of water through a hose for washing cars, buses, boats, trailers or other vehicles without a positive automatic shut-off valve on the outlet end of the hose;

v. use of water through a hose for washing buildings, structures, sidewalks, walkways, driveways, patios, parking lots, tennis courts, or other hard-surfaced areas;

vi. use of water to clean, fill or maintain levels in decorative fountains;

vii. use of water for construction purposes unless no other source of water or other method can be used;

viii. service of water by any restaurant except upon the request of a patron; and

ix. use of water to flush hydrants, except where required for public health or safety.

B. Establish customer water allocations at a percentage of historical usage with the corresponding billing periods of a non-drought year being the base.

C. Establish an allocation of a percentage of historical usage with the corresponding billing periods of a non-drought year being the base for consumption for users of process water (water used to manufacture, alter, convert, clean, grow, heat or cool a product, including water used in laundries and car wash facilities that recycle the water used).

D. Establish a minimum allocation of a number of Ccf per month (one Ccf is one hundred cubic feet) for any customer regardless of historical usage.

E. Establish an exceptions procedure for customers with no prior billing period record or where unusual circumstances dictate a change in allocation.

F. Establish a penalty ("conservation fee") of $2.00 per Ccf for usage over allocated amounts, provided, however, that banking of underusage from month to month is allowed.

G. Provide that penalty funds are not to be accounted for as income, but are to be kept in a separate reserve account for disposition as directed by the Commission.

H. Provide that, after written warning for nonessential or unauthorized water use, for subsequent violations the utility may install a flow restrictor to be left in a minimum of three days. The second time a flow restrictor is installed it may be left in until rationing ends.

I. Establish charges of $25, $50, or actual cost depending on meter size for removing restrictors, and provide that continuing nonessential or unauthorized use may result in disconnection.

J. Establish an appeal procedure first through the utility, then to the Commission staff through the Executive Director, then to the Commission via a formal complaint.

F-SERVICE CONNECTION MORATORIUM

11. A service connection moratorium is sometimes imposed by the California Department of Health Services. The California Water Code, Section 350 et seq., provides that any public water supplier may, after public notice and hearing, declare a water shortage emergency within its service area whenever it determines that the ordinary demands and requirements of its consumers cannot be satisfied without depleting the water supply to the extent that there would be insufficient water for human consumption, sanitation, and fire protection. After it has declared a water shortage emergency, it must adopt such regulations and restrictions on water delivery and consumption as it finds will conserve its water supply for the greatest public benefit. Section 357 requires that suppliers which are subject to regulation by the CPUC shall secure its approval before making such regulations and restrictions effective.

12. Section 2708 of the Public Utilities Code states:

2708. Whenever the commission, after a hearing had upon its own motion or upon complaint, finds that any water company which is a public utility operating within this State has reached the limit of its capacity to supply water and that no further consumers of water can be supplied from the system of such utility without injuriously withdrawing the supply wholly or in part from those who have theretofore been supplied by the corporation, the commission may order and require that no such corporation shall furnish water to any new or additional consumers until the order is vacated or modified by the commission. The commission, after hearing upon its own motion or upon complaint, may also require any such water company to allow additional consumers to be served when it appears that service to additional consumers will not injuriously withdraw the supply wholly or in part from those who theretofore had been supplied by such public utility.

13. To establish a service connection moratorium the utility must:

    a. Hold a public meeting under Section 350 and 351 of the Water Code

    b. Add the following language to each service schedule:

"MORATORIUM

No service shall be provided to any premises not previously served within the ________________________ Service Area as defined on the Service Area Map filed as a part of these tariffs."

G-EXEMPTIONS

14. Some decisions to impose a moratorium contain exceptions. For example in Citizen's Utilities (CUCC) Montara District:

"The moratorium shall not apply to owners of real property who are customers of CUCC on or before the date of this order, or their successors in interest, if any change in the use of their property will not increase their demand upon the system." (D.86-05-078, Ordering Paragraph 3.)

15. D.86-05-078 also provided that prospective customers could seek an exemption from the moratorium by filing an application with the Commission showing that extraordinary circumstances required an exemption.

16. In D.00-06-020, June 8, 2000 the Commission granted an application and authorized Citizens Utilities to install a water service connection to applicant's property at APN 037-278-090 following cessation of service at applicant's property at 888 Ocean Boulevard in Montara. Costs were to be borne by applicant. The order made it clear that water service could not be reinstated at 888 Ocean Boulevard absent a lifting or easing of the moratorium. Such determinations were also delegated to staff2.

The Commission's Role in Water Planning

The two state agencies primarily responsible for overseeing water planning are the California Department of Water Resources, which is manages the State Water Project and produces the California Water Plan, and the State Water Quality Control Board and Regional Water Quality Control Boards which have authority over water allocation and water quality protection.

In addition to the state agencies which have broad planning and management powers, local government also has a part in water use decisions. For example, county boards of supervisors, county water agencies, land use planning agencies, city governments, municipal water districts and many special districts all have a role in the use of water in California.

In this context, the Commission has recognized the futility of one party taking unilateral action to protect a groundwater basin:

Rehabilitation of the Santa Maria Groundwater Basin is not the responsibility of, and is beyond the physical and financial resources of any single individual, company, or agency. Even if [Southern California Water Company] were to stop drawing from the basin entirely and injected into the basin the entire 7,900 AFY it desires to obtain from the [Central Coast Water Authority], the basin's fundamental problems of declining quantity and water quality would not be solved. Most simply put, the basin's salvation as a water resource requires the immediate, undivided, sincere and selfless attention of all its users.

(Re Southern California Water Company, 48 CPUC2d 511, 519 (D.93-03-066)(emphasis in original).)

The Commission's role is limited to ensuring that each jurisdictional water utility provides its customers with "just and reasonable service, . . . and facilities as are necessary to promote the safety, health, comfort and convenience of its patrons, employees, and the public." (ยง 451.) The Commission has further delineated the service standard in its General Order 103 where it proscribes Standards of Service including water quality, water supply, and water pressure, as well as many other details of service.

The Commission has not, however, dictated to investor-owned utilities what method of obtaining water must be used to meet its present and future responsibility of providing safe and adequate supply of water at reasonable rates. (Southern California Water, 48 CPUC2d at 517.)

Which is not to suggest that the Commission ignores issues of water availability in its regulation of water utilities. The Commission requires that all water utilities prepare, file, and update a water management plan which includes identification of water sources as well as consumption projections over 15 years. These plans are updated by the utility as part of its general rate case.

RULE N0. 14.1

WATER CONSERVATION AND RATIONING PLAN

GENERAL INFORMATION

If water supplies are projected to be insufficient to meet normal customer demand, and are beyond the control of the utility, the utility may elect to implement voluntary conservation using the portion of this plan set forth in Section A of this Rule after notifying the Commission's Water Division of its intent. If, in the opinion of the utility, more stringent water measures are required, the utility shall request Commission authorization to implement the mandatory conservation and rationing measures set forth in Section B.

The Commission shall authorize mandatory conservation and rationing by approving Schedule No. 14.1, Mandatory Water Conservation and Rationing. When Schedule No. 14.1 has expired, or is not in effect, mandatory conservation and rationing measures will not be in force. Schedule No. 14.1 will set forth water use violation fines, charges for removal of flow restrictors, and the period during which mandatory conservation and rationing measures will be in effect.

When Schedule No. 14.1 is in effect and the utility determines that water supplies are again sufficient to meet normal demands, and mandatory conservation and rationing measures are no longer necessary, the utility shall seek Commission approval to rescind Schedule No. 14.1 to discontinue rationing.

In the event of a water supply shortage requiring a voluntary or mandatory program, the utility shall make available to its customers water conservation kits as required by Rule 20. The utility shall notify all customers of the availability of conservation kits.

(continued)

RULE N0. 14.1

(continued)

WATER CONSERVATION AND RATIONING PLAN

A. CONSERVATION - NON-ESSENTIAL OR UNAUTHORIZED WATER USE

No customer shall use utility-supplied water for non-essential or unauthorized uses as defined below:

1. Use of water through any connection when the utility has notified the customer in writing to repair a broken or defective plumbing, sprinkler, watering or irrigation system and the customer has failed to make such repairs within 5 days after receipt of such notice.

2. Use of water which results in flooding or run-off in gutters, waterways, patios, driveway, or streets.

3. Use of water for washing aircraft, cars, buses, boats, trailers or other vehicles without a positive shut-off nozzle on the outlet end of the hose. Exceptions include washing vehicles at commercial or fleet vehicle washing facilities operated at fixed locations where equipment using water is properly maintained to avoid wasteful use.

4. Use of water through a hose for washing buildings, structures, sidewalks, walkways, driveways, patios, parking lots, tennis courts, or other hard-surfaced areas in a manner which results in excessive run-off or waste.

5. Use of water for watering streets with trucks, except for initial wash-down for construction purposes (if street sweeping is not feasible), or to protect the health and safety of the public.

6. Use of water for construction purposes, such as consolidation of backfill, dust control, or other uses unless no other source of water or other method can be used.

7. Use of water for more than minimal landscaping in connection with any new construction.

(continued)

RULE N0. 14.1

(continued)

WATER CONSERVATION AND RATIONING PLAN

A. CONSERVATION - NON-ESSENTIAL OR UNAUTHORIZED WATER USE (CONT.)

9. Use of water for watering outside plants, lawn, landscape and turf areas during certain hours if and when specified in Schedule No. 14.1 when the schedule is in effect.

10. Use of water for watering outside plants and turf areas using a hand-held hose without a positive shut-off valve.

11. Use of water for decorative fountains or the filling or topping off of decorative lakes or ponds. Exceptions are made for those decorative fountains, lakes, or ponds which utilize recycled water.

12. Use of water for the filling or refilling of swimming pools.

13. Service of water by any restaurant except upon the request of the patron.

B. RATIONING OF WATER USAGE

In the event the conservation measures required by Section A are insufficient to control the water shortage, the utility shall, upon Commission approval, imposed mandatory conservation and rationing. Rationing shall be in accordance with the conditions set forth in Schedule No. 14.1 as filed at the time such rationing is approved by the Commission.

Before mandatory conservation and rationing is authorized by the Commission, the utility shall hold public meetings and takes all other applicable steps required by Sections 350 through 358 of the California Water Code.

(continued)

RULE N0. 14.1

(continued)

WATER CONSERVATION AND RATIONING PLAN

C. ENFORCEMENT OF MANDATORY CONSERVATION AND RATIONING

1. The water use restrictions of the conservation program, in Section A of this rule, become mandatory when the rationing program goes into effect. In the event a customer is observed to be using water for any nonessential or unauthorized use as defined in Section A of this rule, the utility may charge a water use violation fine in accordance with Schedule No. 14.1.

2. The utility may, after one verbal and one written warning, install a flow-restricting device on the service line of any customer observed by utility personnel to be using water for any non-essential or unauthorized use as defined in Section A above.

3. A flow restrictor shall not restrict water delivery by greater than 50% of normal flow and shall provide the premise with a minimum of 6 Ccf/month. The restricting device may be removed only by the utility, only after a three-day period has elapsed, and only upon payment of the appropriate removal charge as set forth in Schedule No. 14.1.

4. After the removal of the restricting device, if any non-essential or unauthorized use of water shall continue, the utility may install another flow-restricting device. This device shall remain in place until water supply conditions warrant its removal and until the appropriate charge for removal has been paid to the utility.

5. If, despite installation of such flow-restricting device pursuant to the provisions of the previous enforcement conditions, any such non-essential or unauthorized use of water shall continue, then the utility may discontinue water service to such customer. In such latter event, a charge as provided in Rule No. 11 shall be paid to the utility as a condition to restoration of service.

6. Any monies collected by the utility through water use violation fines shall not be accounted for as income, but shall be accumulated by the utility in a separate account for disposition as directed or authorized from time to time by the Commission.

7. The charge for removal of a flow-restricting device shall be in accordance with Schedule No. 14.1.

(continued)

RULE N0. 14.1

(continued)

WATER CONSERVATION AND RATIONING PLAN

D. APPEAL PROCEDURE

Any customer who seeks a variance from any of the provisions of this water conservation and rationing plan shall notify the utility in writing, explaining in detail the reason for such a variation. The utility shall respond to each such request.

Any customer not satisfied with the utility's response may file an appeal with the staff of the Commission. The customer and the utility will be notified of the disposition of such appeal by letter from the Executive Director of the Commission.

If the customer disagrees with such disposition, the customer shall have the right to file a formal complaint with the Commission. Except as set forth in this Section, no person shall have any right or claim in law or in equity, against the utility because of, or as a result of, any matter or thing done or threatened to be done pursuant to the provisions of this water conservation and rationing plan.

E. PUBLICITY

In the event the utility finds it necessary to implement this plan, it shall notify customers and hold public hearings concerning the water supply situation, in accordance with Chapter 3, Water Shortage Emergencies, Sections 350 to 358, of the California Water Code. The utility shall also provide each customer with a copy of this plan by means of billing inserts or special mailings; notification shall take place prior to imposing any fines associated with this plan. In addition, the utility shall provide customers with periodic updates regarding its water supply status and the results of customers' conservation efforts. Updates may be by bill insert, special mailing, poster, flyer, newspaper, television or radio spot/advertisement, community bulletin board, or other appropriate methods.

SCHEDULE NO. 14.1

MANDATORY WATER CONSERVATION AND RATIONING

APPLICABILITY

    This schedule applies to all water customers served under all tariff rates schedules authorized by the Commission. It is only effective in times of rationing, as required by Rule No. 14.1, and only for the period noted in the Special Conditions section below.

TERRITORY

    This schedule is applicable within the entire territory served by the utility.

WATER USE VIOLATION FINE

    When this schedule is in effect, the water use restrictions of the conservation program, in Section A of Rule 14.1, become mandatory. If a customer is seen violating the water usage restrictions, as outlined in Rule No. 14.1 and the Special Conditions below, the customer will be subject to the following fine structure:

    First offense - written warning

    Second offense - $25

    (of the same restriction)

    Third offense - $50

    (of the same restriction)

    Each additional offense - $25 more than the previous fine imposed.

    (of the same restriction)

    Offenses for separate water use restrictions will each start at the warning stage.

    The water use violation fine is in addition to the regular rate schedule charges.

(continued)

SCHEDULE NO. 14.1

MANDATORY WATER CONSERVATION AND RATIONING (CONT.)

FLOW RESTRICTOR REMOVAL CHARGE

    The charge for removal of a flow-restricting device shall be:

    Connection Size Removal Charges

    5/8" to 1" . . . . . . . . . . . . $25.00

    1-1/2" to 2" . . . . . . . . . . $50.00

    3" and larger . . . . . . . . . Actual cost

SPECIAL CONDITIONS

    1. This tariff schedule shall remain in effect for period of six (6) months from the effective date set forth below.

    2. There shall be no use of utility-supplied water for outside plants, lawn, landscape, and turf areas between the hours of 3:00 a.m. to 8:00 p.m., regardless of address or day of the month.

    3. Water use violation fines may be applied to violations of Section A of Rule No. 14.1, which prohibits non-essential and unauthorized uses of water.

    4. Water use violation fines must be separately identified on each bill.

    5. All bills are subject to the reimbursement fee set forth on Schedule No. UF.

1 In Resolution No. 4154, August 5, 1999, the Sierra Club protested Valencia Water Company's Advice Letters 84 and 85 for service area extension. The Commission found in the favor of Valencia, that it had adequate supplies, but ordered the utility to file its Water Management Program by application so the long-term water availability issues could be heard.

2 D.86-05-078, May 28, 1986, Ordering Paragraph 4.

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