MPWMD BOARD MEETING--MAY 21, 2012--ITEM 14--CONSIDER FIRST READING OF ORDINANCE NO. 153 -- EXTENDING THE DEADLINE FOR EXISTING NON-RESIDENTIAL RETROFITS, ADDING AN INCREASED REBATE FOR CISTERN STORAGE CAPACITY AND AMENDING DEFINITIONS

ITEM:		PUBLIC HEARING

14.	CONSIDER FIRST READING OF ORDINANCE NO. 153 – EXTENDING THE DEADLINE FOR EXISTING NON-RESIDENTIAL RETROFITS, ADDING AN INCREASED REBATE FOR CISTERN STORAGE CAPACITY AND AMENDING DEFINITIONS

Meeting Date:			May 21, 2012	Budgeted:	N/A

From:			David J. Stoldt	Program/		N/A
			General Manager	Line Item No.:

Prepared By:			Stephanie Pintar	Cost Estimate:	N/A

General Counsel Review: Yes
Committee Recommendation: The Water Demand Committee reviewed a similar ordinance on March 28, 2012. The Policy and Technical Advisory Committees recommended approval on April 3, 2012.
CEQA Compliance: Initial study completed and circulated. Comment period ends June 4, 2012.

SUMMARY: Draft Ordinance No. 153 (Exhibit 14-A), extends a deadline for mandatory Non-Residential retrofit requirements for twelve months, increases the Rebate for the first 500 gallons of Cistern storage capacity and amends several definitions. The substance of this ordinance was included in draft Ordinance No. 151, which had been scheduled for Board consideration in April 2012. Ordinance No. 151 has been postponed pending an available agenda. Meanwhile, the extension of the retrofit requirement deadline for Non-Residential Users is crucial, as Ordinance No. 151 is not expected to return to the Board for consideration until August or September. The following summary reviews the action proposed by Ordinance No. 153.

1. Section Three: Definitions (Rule 11)

A. Minor revisions are made to the definitions of Recycled Water, Showerhead, Ultra High Efficiency Toilet (HET), and Urinal.

B. The definition of Shower, Each Additional Fixture, is amended by this ordinance to clarify that an “additional fixture” is each Showerhead beyond the first, with the exception of a single hand-held Showerhead that operates on a diverter. This responds to a staff question regarding installation of timers (required by Rule 142) on multiple showerheads in New Construction.

2. Section Four: Amendment of Rule 141, Water Conservation Rebates^{^[1]}

A. The Water Demand Committee (September 29, 2011), recommended an increase in the Cistern Rebate by adding a higher rebate tier for the first 500 gallons of storage capacity.

B. Due to limited Rebate Program funding, an amendment to Rule 141 restricts Cistern Rebates to Sites supplied with water from the Monterey Peninsula Water Resource System.

3. Section Five: Amendment of Rule 143, Water Efficiency Standards for Existing Non-Residential Uses

Retrofit requirements for Non-Residential uses currently scheduled for implementation on December 31, 2012, are extended for twelve months to January 1, 2014. This extension is due to a delay in approval of the Rebate Program funding by the California Public Utilities Commission (CPUC). Rebate funds were included in the 2012-2014 General Rate Case (GRC) funding request to provide an incentive to meet the retrofit requirements before the deadline. Unfortunately, the GRC, originally anticipated to be approved before January 2012, has been delayed, and funding is not yet available for the Rebate Program. Extending the retrofit deadline will provide an opportunity for Non-Residential Users to offset some of the expense of meeting the new standards after Rebate funding is available.

An Initial Study has been prepared and distributed for comment. The comment period ends June 4, 2012, and staff expects to present a Negative Declaration to the Board for consideration at second reading.

DISCUSSION: When the Board adopted Ordinance No. 141 in November 2009, the Rebate Program was fully funded and was expected to be adequate for the full 2009-2011 GRC. Rebate funds were expected to be used to meet the Non-Residential retrofit requirements until the end of 2012, when the retrofits are (presently) mandated. The subsequent 2012-2014 Rebate Program budget was developed in 2010, envisioning that Non-Residential Users would have two years in the 2009-2011 GRC to take advantage of Rebate funds. However, Rebate Program demand increased dramatically in 2010, and by early 2011, funding had been expended. This left the Non-Residential sector without financial assistance to meet the retrofit requirements.

Staff requested sufficient funding in the 2012-2014 GRC to supplement the required Non-Residential retrofits for one year prior to the retrofit deadline (i.e., from January-December 2012). This Rebate Program budget was considered and approved by California American Water and the Public Utilities Commission’s (PUC) Division of Ratepayer Advocates and is currently awaiting a final approval by the PUC. A consequence of extending the retrofit deadline is the prospect that Rebate Program funding will be expended faster than expected to achieve retrofits that would occur in any case. This could potentially influence the number of voluntary retrofits that would occur. The Board may want to refer this issue to the Water Demand Committee for discussion.

Rescheduling the retrofit deadline will also result in some delay of water savings related to this program. Rule 143 requires Non-Residential water users to replace older toilets with HETs and install High Efficiency Clothes Washers (in place of higher use washers). Car washes must recycle 50 percent of their water use. Visitor-Serving Facilities must have Water Efficient Ice Machines and High Efficiency Urinals. However, because the hospitality industry was required to install water efficient toilets by the year 2000, they are exempt from the HET retrofit requirement until 2020. Water savings resulting from Non-Residential retrofits will contribute to compliance with regulatory restrictions and reduce future water demand. Other District conservation programs focus on lowered water use in new and expanding water uses, changes of ownership or use, and outdoor irrigation.

District staff has estimated that 5 percent of commercial and public authority use, or around 165 acre-feet per year, may be saved with this program. California American Water’s proposed Non-Residential rate structure should provide sufficient incentive for retrofitting to occur before the amended deadline. Staff is confident that delaying the Non-Residential retrofit requirements will not have an effect on compliance with local regulatory water production restrictions during Water Years 2012 or 2013.

RECOMMENDATION: Due to the sensitive timing of this ordinance, staff recommends the Board receive public comment and approve first reading. The ordinance will take effect 30 days after second reading an adoption.

IMPACT ON STAFF/RESOURCES: The changes proposed in this ordinance will increase the level of Rebate activity after funding is available, although some level of increased activity was considered during development of the Rebate Program budget request. Staff will be contacting Non-Residential Users and local plumbing suppliers to provide notice of the retrofit requirements. The ordinance also requires minor modifications to database programming to accommodate the change in the Cistern Rebate. Funding for database programming was included in the Fiscal Year 2011-2012 budget.

EXHIBIT

14-A Draft Ordinance No. 153

U:\staff\Boardpacket\2012\20120521\PubHrng\14\item14.docx

^{^[1]} These amendments are acceptable to the Public Utilities Commission’s (PUC) Division of Ratepayer Advocates.

PUBLIC HEARING

May 21, 2012

Budgeted:

N/A

General Counsel Review: Yes

Committee Recommendation: The Water Demand Committee reviewed a similar ordinance on March 28, 2012. The Policy and Technical Advisory Committees recommended approval on April 3, 2012.