At its year-end meeting, the California Public Utilities Commission (CPUC) issued a new Order Instituting Rulemaking (OIR) designed to create a forum for water and energy-related issues that will enable the CPUC to develop a partnership framework between investor-owned energy utilities (energy IOUs) and the water sector – both investor-owned water utilities regulated by the CPUC and government-owned water and wastewater agencies. The partnerships are intended to promote programs that identify more efficient uses of energy by the water sector in supplying, conveying, treating and distributing water.

The OIR states, in part: “In order to continue to strengthen the State of California’s ability to rely on energy efficiency as an important resource, we must develop more robust methodologies for measuring the embedded energy savings from energy efficiency and conservation measures in the water sector, and for determining the cost-effectiveness of these projects.” The rulemaking will explore how best to develop these methodologies and measure potential benefits for energy and water customers.

The OIR’s scope of work keys on the following:

  • The appropriate methodology for determining the energy embedded in water;
  • The appropriate methodology for determining water system benefits;
  • The appropriate methodology for allocating program costs among partners;
  • Strategies for overcoming barriers to joint funding of water-energy nexus programs for different combinations of partners, e.g., energy IOUs, CPUC-regulated water utilities, public water and wastewater agencies and local government entities;
  • The appropriate ratemaking treatment and/or other funding mechanisms for participating CPUC-regulated water utilities;
  • Availability of additional state and/or federal funding.

Because of the complexity of the policy issues involved and the number and multi-jurisdictional nature of the parties expected to participate, it is anticipated the rulemaking processing timeframe will take at least 18 months.

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