CPUC Gives Cal Am Customers A Future Water Bill Reduction

Sep 1, 2020

California American Water customers will see their bills drop by 10 to 15%, but they will have to wait to see it happen. The California Public Utilities Commission (CPUC) voted 4 to 1 Thursday to eliminate a surcharge, known as WRAM.

Cal Am Spokesperson Catherine Stedman said the decision will not have an immediate effect on bills. The surcharge is not sheduled to be removed until January 2024, she said.

What Is WRAM?

When you pay your water bill, most of the money goes toward maintaining the pumps and pipes that deliver the water, rather than the water itself. So, when customers use less of it, companies like Cal Am see less revenue without a reduction in costs. And that usually means less profit, or a loss for the company. WRAM was designed to make up for that loss. It stands for “Water Revenue Adjustment Mechanism.”

In the case of Cal Am, which provides water to the Monterey Peninsula and other surrounding areas, the WRAM was also designed to encourage water conservation. According to Richard Raishmiere, the problem is that the WRAM didn’t do that. Raishmiere is with the Public Advocates Office, the independent consumer advocate at the CPUC.

“The analysis showed that those companies with the mechanism and those companies without had marginal to no difference in year to year conservation,” Raishmiere said.

Following the vote, the Public Advocates Office said in a news release, “The decision will significantly reduce the potential for high surcharges on water bills, benefiting both low-income customers and customers who use less water.”

The WRAM will be replaced by the Monterey Style Water Revenue Adjustment Mechanism (M-WRAM). 

According to the Public Advocate’s Office, the new mechanism, “will increase affordability and bill transparency by tying the volume and frequency of surcharges solely to conservation efforts.”

Catherine Stedman with Cal Am said the company is concerned about the long-term effects of the decision on low-income customers and those who use water efficiently.

She added that WRAMs have been used by many utility companies and have proven to be an effective way to promote conservation and investment in infrastructure.

Cal Am is one of the many businesses that supports KAZU.