7. Water Service at Multi-Unit Apartments

Section 2705.5 does not apply to multi-unit apartments which are not submetered and there is no other statute in the Public Utilities Code that establishes nonpublic utility status for landlords who do not submeter but do bill tenants for water.¹² Likewise no statute establishes nonpublic utility status for landlords who separately bill tenants for hot water or filtered water (that is, water that is in some way different than the commodity supplied to the landlord by the water corporation).

Therefore, we begin with the basic jurisdictional conclusion discussed above, in section 6.1 of this decision. In the hypothetical situation where the apartment water system has been dedicated to public service, the landlord must obtain a CPCN from this Commission for authority to operate as a public utility, and the Commission must establish water rates, before tenants can be billed for water service. Were the Commission to conclude a multi-unit apartment was illegally billing for water service (that is, where the landlord's actions permitted dedication to be inferred) then the Commission would have authority to issue a cease and desist order. If no dedication has occurred (and as we discuss in section 6.1, this is a factual question) then the matter is a landlord/tenant issue subject to local rent control authorities if a rent control ordinance applies, or to the jurisdiction of the civil courts.

The apartment lobby argues at length that we should determine, as a generic rule, that the provision of water by a landlord as an accommodation to apartment tenants should never be considered public utility service. We do not believe existing law permits us to draw that conclusion. Dedication, as we have discussed, is a factual question. However, we do not think that future case-by-case examination of the facts pertinent to potentially numerous individual complaints filed at the CPUC by multi-unit apartment tenants provides a feasible governmental solution. Moreover, should the still relatively small number of formal complaints filed at the Commission become a steady stream, the fiscal consequences upon the Commission would be considerable.

The record developed in this proceeding does not permit us to conclude to what extent landlords may be relying upon the dedication doctrine as a shield and then levying unfair water charges on their tenants. We heard from a number of outraged apartment tenants, at the Anaheim PPH and elsewhere, who clearly believe they are being unfairly billed, often by billing agencies with whom the landlord has contracted to impose a RUBS regime. Some of the most moving public input and correspondence we received has focused on this issue. Water conservation undisputedly is an important state policy in California, as it is in much of the arid western United States. We cannot conclude, based on the anecdotal information in the record, that any of the "RUBS" methodologies proposed are fair or that they result in water conservation, in fact.

Because the issues of water allocation at nonsubmetered multi-unit apartments may prove to be, in many instances, landlord/tenants disputes over which this Commission has no jurisdiction, we refrain from making specific legislative recommendations. Nevertheless, we believe this investigation has yielded two outcomes of value: (1) an analysis of the existing law governing these issues, including the doctrine of dedication, that demonstrates the need for legislation if further consumer protections are desired; and (2) an identification of the key considerations for shaping policy in this area - reasonableness of charges, administrative feasibility, and water conservation.

Providing for some economic means of submetering -- or better yet - directly metering each unit in existing multi-unit apartments would appear to solve much of the existing problem. Several parties have advised us that new, electronic metering technologies are being developed which could be used in existing units, though others have cautioned that accuracy has not been proven. Jurisdictional issues bear upon the law governing metering of water (as well as gas and electricity). The CPUC's General Order 103 sets the standards for water meters and for meter reading applicable to CPUC-regulated water corporations. The standards for submeters at multi-unit apartments (or MHPs) fall within the province of local weights and measures jurisdictions and/or the Division of Measurement Standards (DMS) within the California Department of Food and Agriculture, under Bus. & Prof. Code § 12100 et seq. DMS uses the specifications, tolerances, and other technical requirements adopted by the National Conference on Weights and Measures, which is sponsored by the National Institute of Standards and Technology (NIST).

Finally, similar to our recommendation in section 6.2.2 above, we urge the Legislature to consider mandating that all new multi-unit apartment construction includes an individual water meter for each unit. Our record does not provide estimates of the costs of this proposal, but if economic, it certainly would avoid future of issues raised in this proceeding.