POLICY ADVISORY COMMITTEE / TECHNICAL ADVISORY COMMITTEE
ITEM:		DISCUSSION
2.	REVIEW A&N TECHNICAL SERVICES ANALYSIS OF NON-RESIDENTIAL WATER USE FACTORS
Meeting Date:			October 31, 2011	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: N/A
Board Action: The Board received this report on October 17, 2011. No further action was taken.
CEQA Compliance: N/A

SUMMARY: In January 2010, the District contracted with A&N Technical Services to review the District’s Non-Residential Water Use Factors (NRWUF) that had not been updated since 1992. The factors are used by the District to estimate the water use capacity of a project, which determines the appropriate Connection Charge and the amount of water that must be available in a Jurisdiction’s Allocation when a Water Permit is issued. The factors are based on regional averages by type of use (e.g., the water use for a full service restaurant is determined by the average water use per seat of full service restaurants on the Monterey Peninsula, and the water use of a retail business is determined by the average water use per square-foot of local retail businesses). The goal of this project was to update the Non-Residential Water Use Factors (Rule 24, Table 2) using current District Water Permit data and California American Water customer consumption data.

Attached as Exhibit 2-A is A&N Technical Service’s Analysis of Non-Residential Water Use Factors. Staff did not recommend any modification to the Non-Residential Water Use Factors when the Board received the report at its October 2011 meeting. However, using the information that was obtained through the study, there are four types of use (dental offices, dry cleaners, pizza take out/delivery and swimming pools) that need additional review to determine if the factor should be modified. Changes to the factors, if necessary, will be done by a Resolution amending Table 2: Non-Residential Water Use Factors at a future Board meeting.

California American Water Use of MPWMD Factors for Billing Allotments

California American Water uses the District’s Non-Residential Water Use Factors to establish baseline allotments for its customers. The District’s factors have been used since the current tiered rates were implemented in 2000.

MPWMD Use of NRWUF During Rationing

MPWMD’s Expanded Water Conservation and Standby Rationing Plan applies the NRWUF factors to various uses to establish Non-Residential Water Use Factors during Stages 5-7.

Report Conclusion and Recommendations

A&N Technical Services was unable to obtain enough “clean” data to make any recommendations on adjustments to the existing factors, other than to identify several factors that require additional staff review. Although there were an insufficient number of samples to gain sufficient information regarding the appropriateness of the factors, the regression models suggested that a small negative trend, reflecting ongoing efficiency improvements, was detectable in many business type categories. This result was anticipated considering that twenty years have passed since the last review and water saving technology has dramatically improved.

The conclusion and recommendations of the study indicate that the use of the District’s NRWUF for Rationing and ratemaking are not appropriate. Three major reasons for this recommendation are cited below:

a. The number of measurement units is missing for almost 38 percent of the active non-residential accounts.

b. The reliability of existing measurement units is unknown.

c. The use of a single measure to standardize constitutes an extremely crude form of a water budget. This estimated water budget can be expected to be an inaccurate definition of efficient water use for most customers.

d. The combination of inaccurate water budget and steep rate tiers will magnify the economic impact of erroneous definitions of water budgets. Customers will rightfully perceive the situation as illogical, unfair, and economically unjust.

In addition to these issues, there were other problems with the data. A&N found that approximately 38 percent of the Non-Residential customers (1,744 out of 4,613 unique active non-residential accounts) were missing documentation to verify the allotment of water assigned to each account. The missing data was collected via mail-in surveys during the implementation phase of the original tiered rate structure in the late 1990’s. When California American Water changed billing systems around that time, the survey information was lost. California American Water has been rectifying this situation during the past year by conducting site audits to verify allotments.

The second area of concern related to a lack of common fields in the District and California American Water’s databases. Specifically, neither system has common identifiers such as the Assessor’s Parcel Number (APN) used by the District or the water customer’s account number and premise number that is assigned by California American Water. The use of property addresses is problematic due to multiple users located at a single address and the use of an APN is problematic when multiple parcels are served by a single water meter. A&N recommends that this data incompatibility be addressed to improve coordination and water conservation planning between MPWMD and California American Water.

Staff is committed to working with California American to find a mutually agreeable common data field. Finding a way to cross-reference data will be needed to expedite rationing enforcement. Staff is scheduled to renew coordination with California American Water on the Standby Rationing Plan in October.

RECOMMENDATION: No action is to be taken on this item.

BACKGROUND: The original NRWUF were established in 1985 when the District’s current permit process was adopted as a means of assessing the Connection Charge. The factors were partially updated annually until 1988. The last update was approved by the Board in 1992.

EXHIBITS

2-A Analysis of Non-Residential Water Use Factors

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