Assembly Standing Committee on Water, Parks, and Wildlife

Well, good morning, everyone. We'll call this informational hearing to order, and I just have a few opening remarks, and then I'll turn it over to any of my colleagues who might have opening remarks, and then we'll begin the presentations from our witnesses. So thank you so much for being here.

You know, we're here today to discuss the future of California's water at a moment when the state is trending toward the possibility of yet another low water year. And harkening back to yesterday's hearing that we had, you know, our traditional reliance upon snowpack conditions is uncertain at best.

And suffice it to say, California's water future is tied to an increasingly unpredictable climate condition. Unfortunately, the situation is a new territory for California.

Over the past two decades, our state has experienced multiple severe droughts, each one reinforcing the need to manage our water supplies more carefully and to plan for a future where water may be less reliable than it's been in the past.

Over that time, the Legislature has taken significant steps to improve conservation and efficiency across the urban water sector, but mostly with a focus on residential and outdoor water use. As our water challenges evolve, it's important that we continue to examine whether our policies are keeping pace with the changing demands.

Today's hearing focuses on the commercial, industrial and institutional water sector, which I'm sure many in this room know is called CII. These users make up a substantial share of urban water demand across a broad spectrum of industries.

Given increasing water supply constraints, limited monitoring of many existing CII users, and the growth of large new facilities with significant water demands, it's important that we understand how the sector fits into California's broader water management framework.

The purpose of today's hearing is to examine the state's existing policies governing CII water use, understand how these facilities interact with local water systems, and explore potential pathways for improving transparency, planning, and long term water resilience. I like to say we sort of have the trifecta going on. We've got a water supply that's in jeopardy.

We've got a sector that we haven't paid a whole lot of attention to, for lack of, in our full way of putting it. We haven't monitored it like we have other areas of our water uses. And then we have industry that's changing and some industries are rather thirsty.

So I think it's time to kind of examine this trifecta and see what we can do to make sure that we're prepared. So I think our panelists who have come here today, and I know we've got slide presentations and a lot of good information that will be coming our way.

With that I Do any of my colleagues want to chime in before we start? Not Assemblyman Rogers, Vice Chair.

Thank you, Madam Chair. Thank you all for being here. Really. I'm approaching this from from two perspectives. Is number one from California water issue and I'm interested also in the data center side. We have quite a few data centers looking to come into my region and there's a lot of confusion as to what's what.

So I'll be asking a lot of questions with respect to that. So you'll have to forgive me in advance, Madam Chair, for that. But I think it's important that I ask the questions that have been asked of me so I can bring clarity. Look, I'm not on either side right now.

I want to be informed on the issue so that way I can make a good leadership decision not only for my community for but for California. Thank you.

Excellent. Thank you so much and thanks for being here and your interest in the topic. I know your district has some thirsty users that you're concerned about, so hopefully we'll get into that with that. Let's begin with our first panel. So I'd like to invite the State Water Board and Department of Water Resources.

We have Ryan Bailey from the DWR and then we have Eric Ekdal who is from the Water Board. Good morning to both of you and thank you so much for being here and being willing to explore the trifecta, as it shall be known when you're

ready, please, by speaking in the microphone. Good morning Madam Chair and Members of the Committee. I'm Ryan Bailey. I'm the Water Use Efficiency Branch Manager at the California Department of Water Resources. And it does sound like there may be some follow up questions. So I'm joining by Dr. Sabrina Cook who I think you're familiar with.

The Water Use Efficiency Branch is responsible for providing technical and local assistance for implementation of efficient water management programs, strengthening local drought resilience and broadly is responsible for collecting and analyzing data on California's urban and agricultural land and water use.

Today I'm happy to provide you with some context surrounding the state's water use efficiency and local water management planning efforts and some historical context of requirements as they relate to this broader discussion of CII water use. I'll touch on four main areas. Number one, urban water management plans or UWMPs large development projects.

Thirdly, the SBX 77 legislation of 2009 and number four, conservation as a California way of life legislation of 2018 urban water management Planning act was passed in the early 80s and continues to require urban water suppliers or suppliers to report on current and forecasted water supply and demand for their service area.

UWMPs are due to DWR every five years by suppliers. The water use categories in the plan are broad and to the extent records are available, encompass residential cii, governmental use, agricultural and landscapes, and various groundwater and conjunctive use purposes.

This reporting is at the supplier level and the supplier is often not the water use decision maker at that local level. This is the purview of local, city and or county governments. To this day. Urban water management plans guide and inform local and state level water management decisions.

In 2001, SB610, often referred to as the Show Me the Water Bill, was passed requiring public water systems to prepare water Supply assessments or WSAs for large scale projects essentially to show that you have the water available before the project can move forward. For CII, the bill requires assessments for large scale projects.

I won't go into too many details, but among that list are shopping centers and other business establishments, commercial office buildings, hotels, motels, industrial manufacturing or process processing plants or industrial parks and I can go into some of those details if needed, but again each of those would be have a large scale definition.

DWR doesn't have a direct role in WSAs other than guidance. WSAs are furnished by the water supplier to local governments for inclusion in any environmental documentation for projects subject to the California Environmental Quality act.

During the 2007 through 2009 drought, there was a renewed effort to address the continuing need to modernize water conservation efforts on a statewide scale. 2009's SBX7.7 by former Senator Hertzberg set an ambitious goal of reducing urban water use by 20% by the year 2020. This became known as the 20 by 2020 requirements.

This effort did not, however, consider all water uses. It exempted small suppliers and also excluded process water water necessary for a commercial or industrial process or product. Data center cooling water is considered process water by statute as part of the extensive requirements of SBX7.7.

The 2013 CII Task Force Water Use Best Management Practices Report was prepared for the Legislature. That was an SBX7.7 requirement. The report was informational and intended as a guidance document only. The report relied heavily on available data and technologies and at this point contains dated information. The recommendations included process water BMPs for data centers.

It's cited in the report as the thermodynamic BMPs. Following the five year drought from 2012 to 2016, efforts to take the next step beyond 20 by 2020 came into being.

The 2018 Making Conservation the California Way of Life legislation SB 606 and AB 1668 taken together switched from one size fits all strict water use reduction targets to a framework of meeting individualized efficient water use objectives for suppliers that are calculated based on the unique local conditions.

The legislation also required actions to be taken by suppliers that will result in increased water use efficiency by the CII sectors, also known as CII performance measures. In 2022, DWR released its Recommendation report to the State Water Resources Control Board or State Water Board for the State Water board's rulemaking.

The 2F 2018 legislation recognizes the need to manage CII water use separately from other water use captured under the Urban Water Use objective or targets for suppliers or water budget by suppliers Water Budget Because CI water can be both complex and diverse, some key points of DWR's resulting recommendations for supplier programs are number one a CII water use classification system for use by suppliers to address significant uses of water in their service area.

Number two a threshold of significance for top water users and BMP categories of outreach, technical assistance and education, incentives, landscapes, collaboration and coordination and operational categories and these are targeted to sectors and or individual customers in that service area that are above the individual customer threshold.

Number three that suppliers include programs for educating CII water users on efficient water use and offering or assisting CII water users implement BMPs such as water use audits, fixture and equipment replacement, irrigation system maintenance, irrigation scheduling and others.

And then lastly, broad categories of types of BMPs were recommended so as to remain flexible for new and emerging technologies. The recommendations were not industry specific per se, but best management practices that can be relied upon and again, process water is statutorily excluded from those performance measures. And that's what I have for my report.

Great. Thank you.

Welcome.

Thank you. Chair and Members of the Committee My name is Erik Ekdahl. I'm the Chief Deputy Director for the State Water Resources Control Board. I'll add some additional detail to what my colleague already presented on that was a very thorough and comprehensive overview.

The Board plays kind of a partnership relationship with the Department of Water Resources in the Urban Water use objectives in Making California or Making Conservation a California Way of Life.

The State Water Resources Control Board we have a mission to preserve, enhance and restore the quality of California's water and drinking water for the protection of the environment, public health and all beneficial uses and to ensure proper water resource allocation and efficient use for the benefit of Present and future generations.

We do that through a number of state and delegated federal authorities.

The Clean Water Act, the Safe Drinking Water act at the federal level, Porter Cologne Water Quality Control act, our water rights statutes and authority, and the Sustainable Groundwater Management and all those, plus more health and safety code related to drinking water help inform what we do with the data we collect and how we regulate our water sector.

I want to talk a little bit about CII and some of the work that the board does specific to the making Conservation of California way of life legislation. Before even going down that route. I think it's maybe helpful to talk a little bit about some of the context that brought about that legislation in 2018.

If we go back to 2013, which is just a little over 10 years ago, California entered what was at that time viewed as a generational drought. Once in a generation, that's how low our snowpack and supply was. The last time it had been kind of that low was in 197677.

So about every 40 years or so we got to a point where we were concerned about supplies and recognized at that time that we didn't have perhaps the understanding of water use data that was required to make perhaps pretty rapid fire decisions.

And so there were a number of legislative changes and Executive orders at that time, including a directive to the Water Board to establish conservation requirements for urban water use sectors. And that manifested as kind of a top down percentage cut.

And we looked at the data that we had available at that time, which was pretty coarse resolution, and made some pretty, they were informed decisions, but they were also relying on data that might have been outdated or not fully fleshed out. And so we had kind of tiers, you know, 30% reduction, 25% reduction, 20% reduction.

And a lot of the suppliers noted you came up, or we came up with these top down kind of sledgehammer type cuts. But did that actually reflect what was going on at that urban water use sector at that time? Was there actually a lot of process water? Maybe they had a lot of horses within their community.

Maybe they had a lot of kind of urban agricultural activities that required a greater water use. And it also didn't reflect local climate. You just inherently are going to use more water where it's hot relative to maybe a cool coastal condition.

And so over the next couple of years, really starting in 2015, but working all the way through 2018, there was a concerted effort to look at how do we manage and understand water use data more effectively, but also get that kind of finer resolution data.

So that we don't have to have these top down, very non surgical type cuts. And we really pivot from asking how much water are you using as a whole to are you being efficient with that water? And that's the kind of origin of the 2018. Conservation is a California way of life.

Over the next six years, working with the Department and then the board ultimately adopting regulations in 2024, we have now a pretty comprehensive framework on how we collect urban water use data. There were also changes to the Urban Water Management plan in the 2018 legislation, including a longer period for looking at long term droughts.

I think the previous iteration was you had to look at a three year drought of record and that was expanded to five years. So kind of looking at how we manage how we start to collect this data. So that's a long preamble to what are we doing now with CII and kind of related urban water use data.

So the board, as part of that 2024 regulation, did adopt reporting requirements. And it includes an indoor residential component. It includes an outdoor residential component kind of at the urban water retailer scale how much water are they using and are they being efficient with it?

And there's efficiency standards that were developed in partnership with the Department of Water Resources and other entities. That's all reported to the board in a kind of comprehensive package, including cii, as was described. The CII data comes in as a little bit more aggregated. We don't necessarily break it down by individual CII reporters.

And at the time the understanding was that it didn't really make sense to look at every CII entity in the same way. You wouldn't look at a restaurant the same way that you would as a warehouse.

And there was the need to kind of have this suite of best management practices which were adopted as part of the 2024 regulations on how you can approach efficiency in the CII sector. There's a lot of focus on CII landscapes.

So you can imagine a large business park with rolling acres of green, very irrigated grass that no one's allowed to walk on or use. There are, I think, enhanced standard, not I think there are enhanced efficiency standards for that outdoor component.

And a lot of discussion about how you separate outdoor irrigation using something called dedicated irrigation meters or DIMMs as they're sometimes called. But it doesn't look necessarily at the indoor component.

As part of that 2018 legislation, as was noted, processed water was specifically excluded from the reporting requirements and the requirements of making conservation at California Way of Life in general, we look forward today we're getting this data. Urban water entities are required to report January 1st of every year.

We just got the most recent update from 2025 reported in early January of this year. We're still in the process of compiling that data and putting it together. But again, it's not necessarily clear whether data centers or some of the process waters are fully captured in some of that CII reporting.

I think with that I want to pause, and I know we've been focusing mainly on TAI use, but maybe talk a little bit about data centers, as that's another key component of why we're here today. We do know that there are a couple of hundred data centers in California. The exact number may be unknown.

Estimates range from 250 to over 300. We don't have a clear set of data on how much water each of those is using, but we also know that 95% of California's population is covered by an urban water provider. And any data center that's relying on an urban water provider is subject to that suite of local requirements.

They have to work with that urban water provider. They have to pay a fee to connect to the urban water provider.

That urban water provider is required to develop plans and kind of a projection for estimated water demand and use to factor that into their fees and how they kind of absorb those fees or how they expand their supplies. And any expanded supply must then conform to either the state's water rights construction.

So they can't just take a whole bunch of new water from a stream or river. You have to go through a pretty rigorous or laborious process to get a new water right permit. If you don't have one already, you can contract with another entity.

They can provide you or sell you water, but that entity also must then have kind of the right supply construct, whether it's a suite of other contracts that they themselves hold or their own water rights, or if it's in a groundwater basin covered by the Sustainable Groundwater Management act, must conform to the safe yield, sustainable yield, and the pumping requirements that can be set up at the local level by the Groundwater Sustainability Agency.

And so even though we may not have exact data on kind of how much each individual data center is using, there are a lot of additional overlays that help manage and protect the individuals or within those suppliers from rapid expansions in water supply that are unplanned or unexpected.

I think with that, I'll pause and turn it over to the chair for additional questions.

Excellent. Thank you so much. Any questions from the Committee? Take it away. Assembly Member Gonzalez.

Again, Madam Chair, I apologize in advance for my 3,000 questions that I'm about to ask.

That's what I have a timer for.

Yeah. Kidding. So, first of all, thank you for your. For your honesty and transparency. I heard a lot of that in there. And if you'll forgive my analytical way of thinking, sometimes I'm linear, sometimes I'm in spider webs. So it's important that I try to preface that as we go along. So just for clarity.

Data centers Water is processed water, right? Correct. Okay. Is recycled water processed water? No. What is recycled water categorized as?

I would have to look to my colleague. I may ask my technical expert, Karina Herrera, to join me, if that is acceptable. She directly manages the conservation team at the State Water Board and is prepared to answer those technical questions. Otherwise, I can follow up with you.

I. I think we have it defined in the paperwork as well, doing that and the. But it. Normally we don't invite other witnesses, but it is an informational hearing, and I do want to make it as constructive as possible. So I'm okay with bringing an additional witness forward. Thank you, Madam Chair. Sure.

And apologies to Karina for potentially putting her on the spot. I hope she can also answer these questions.

It's, Karina, this is not a defensive place. This is just—I'm just informational. Right? I want to learn. So, if, if the questions sound a little bit like, oh, man, he's trying to gotcha me. I'm not trying to do that. I'm really just trying to be a good advocate and understand. Okay?

Sure. So how is recycled water categorized?

Yes.

Well, it is reported to the board as recycled water as its own category. Depends on whether it is potable or not potable, where it's being applied. So, we have it reported separately as a zone thing.

It is typically used in the CII sector and we include it in that lump for the conservation as a way of life regulation.

So, it has this kind of its own lane. Right? And when we're looking at data centers, from my understanding, and please correct me if I'm wrong, data centers have the option of a, using, you know, groundwater, river water, you know, snowpack water, number one. Right?

Number two, they can purchase water that has come from one of those areas. They can use processed water or they can use recycled water. Is that correct?

I believe that's correct. Again, we don't look at directly how data centers use their own water. They kind of will have their unique needs.

So, depending on the type of cooling, depending on the type of processed water, you may have different water quality requirements, you may have different needs and standards, and that can affect where their supply comes from. But broadly, yes.

So, if we were put, like I like to say, apples and oranges together, right, what is the best type of water that you would recommend is used at data centers? If now we're looking at, you know, regular groundwater, so on, so forth, the processed water, recycled water.

We wouldn't make a recommendation. I think we're usually very careful not to recommend a specific type of type of water for a specific industrial or process because of that technical component that we just don't know. We aren't experts in the type of cooling that might be needed.

You can have scaling on the cooling equipment, you can have different kind of temperature requirements, and that will affect the type and quality of water that you have. So, we do not weigh in on that level of detail.

Understood.

But if, if we're at a—so, again, remember, I'm trying to, to give, in, be a good advocate, and I'm trying to understand this. And if I have three data centers in front of me and I have to say, all right, this is actually the best way. Let's follow this, this method of doing it.

All things being equal, right? They're all using water, but it's different types of water. As we look to the future of California and we're trying to help inform the industry and not trying to put sledgehammer cuts as you stated, without looking at each specific geographic location and situation, how do I go about guiding my community and industry if I don't have the—they actually let's try to find better technology in recycled water.

Let's try to find whatever the case may be. So, from a—maybe an expert scientist perspective, what would be your analysis and direction?

Maybe I'll jump in first and apologies if it sounds like I'm trying to not answer the question, but I'm also very consciously not trying to answer that question.

I understand.

Not, not again, not to make light of it, but we, we don't weigh in on that.

Like that is a really technical level of expertise in detail that we just don't have that expertise or the authority to weigh in on. But I will maybe respond in saying that we would look at or maybe recommend what is the most sustainable for that community, and that's going to depend on community by community.

Sometimes a community will have a very robust water supply. In a new data center, they'll look at how much water is demanded. It won't really affect their overall supply at all. Others may have constraints and looking at what's—what makes sense long term into this kind of climate change future is a community-by-community decision.

We can use the conservation as a way of life framework as a way to help guide decisions. Are you efficient? Does this make the most sense for your community as a whole? How much water is the community using as a whole? But we wouldn't weigh in and say you should use this specific type of water.

So, thank you for that.

If—and offline—if I were to say I have a community for you, let's call it Imperial County, and it is located next to the Salton Sea, the Colorado River, so on and so forth. IID being the primary water manager in that region.

Offline, could we walk through a series of potential solutions and recommendations for a community such as that that you can provide guidance for someone like myself to be able to help answer some questions?

I believe we could do that using the conservation as a way of life legislation and the data that we get as a framework. Again, I don't know that necessarily we could say, you know, this should use this type of cooling or something like that. But we could say this is how much data we have for this community.

This is what we understand is the current picture. And then, that community would need to be there to respond to questions about where their supply comes from and the resilience/stability of that supply. So, we couldn't weigh in on that part of it.

Could you weigh in on what are the best water management practices for data centers?

We could weigh in on the best management practices for CII as a whole. Those are spelled out in our regulations. I think there's over 25 different recommended options. So, we can definitely weigh in on BMPs. But I think we look at it from the broader category of how are BMPs appropriate for CII facilities as a whole?

How can the state seek to expand conservation standards on new sectors without first conducting an economic analysis and studying the Making Conservation Way of Life Act?

If I am framing the question correctly and please redirect me, if not, the question is how do we understand kind of the impacts of new water demands in use if we don't understand kind of the economics of that water supply? Is that fair?

We look at local communities to understand their own economics and the own economic drivers for their water supplies. The state generally does not weigh in to that level. There are some avenues, I think, in drinking water where we look at technical, managerial, and financial capabilities. That's a little bit different.

And any new data capture or direction by the Legislature to collect more data is something that the board could do at that direction.

Last statement. Thank you for that. And we have a host of folks that are going to be presenting today a couple things that I just want to impress upon not only the community, but us, as legislators, as we look towards the impact of data centers within our community.

Your testimony said we didn't have enough information in the past and made some sledgehammer cuts without looking at each specific geographic location. Because obviously, cookie cutter in the desert where I live is not the same as in Modoc County. Right? Not sure if data centers are captured in the CII reporting from the local level. Right?

We don't have a clear picture on how much water is actually being used. So, for me, as I look at this, I feel it's very important that we understand the total picture as we move forward. Look, I want, I want industry in California. We all want industry in California.

We want jobs, we want to be the leaders of a whole bunch of different things. Not at the expense of the environment. Right? I want clean water, I want clean air, so on and so forth. Right? I've said this on many, many occasions.

But what I feel like we are missing and the conversation, the narrative, is getting in front of us, we're missing a lot of information. And because of that, we're looking at imposing regulations, much like what you stated before, some sledgehammer-like regulations without knowing the full picture. I think from a not sure if data centers are captured in CII reporting, then let's, let's get that information, right?

If we're not sure about X, let's get the total data, right, to then make a good predictive analysis moving forward. And we're missing that. That's what I hear you saying.

So, as we move forward, I really urge my colleagues across the Legislature to be aware that we're missing data and if we have to capture it, let's do that so that way we can inform the narrative versus the narrative informing us. Thank you, Madam Chair.

Senator Caloza, do you have any questions?

Yeah. Thank you so much, Chair. Thanks for your presentation today. You know, I think we kind of heard at some of the reasons why this is really important. You know, in the district next to mine, I represent Northeast LA, East LA, South Glendale, but right next to me is Monterey Park.

So, I'm sure you know of the data center and some of the issues that are happening there locally.

And so, I think, you know, for me, what would be really great to hear is to understand what are some of the long, what are some of the medium long-term challenges that you're seeing with CII users in the state? Is it data centers? Is it something else?

You know, what should we be doing as a State Legislature to really look at the plans and the policies that we really need to work to craft now to better help manage our resources?

I'll weigh in and then please also look to my colleague. Maybe framing how much CII use occurs in California in general, we think roughly about 6% of the total water used in the state is associated with CII use. That could expand in the future, it could shrink in the future depending on where that CII use is focused.

The existing regulations, the conservation as a way of life regulations, really do focus on the outdoor landscape portion of CII use. Again, those sprawling business parks with a lot of grass and just nonfunctional turf that maybe surround them.

But we also do include these best management practices as we highlighted earlier, and those are really just now kind of coming into application and both have a much, much better picture of needs and future kind of direction.

In I think about two years, the CII BMPs, turn to Karina, I think really come into effect between 2027 and 2029. And then, there are additional kind of steps in the efficiency requirements between 2029 and 2040. So, it'll be an iterative and kind of adaptively managed process.

We'll get the better suite of data in the next couple of years. The details in the regulations, they're very specific. And, you know, it requires you to break down by category, by class. We'll get that data in a couple of years. We don't have it yet.

And, you know, the, the parts of Los Angeles that I represent also have things like large sporting events. You know, I represent the Dodger Stadium. Obviously, we know that the World Cup is coming, the Olympics are coming to Los Angeles. How are we getting ahead of the increased water usage during those periods of time?

Is there work that the state is doing for the tourism that's about to, to happen here in, in California?

A lot of that work will be done at the local level.

And I do know that the city and county of Los Angeles, if you look at their overall water use, and this is something that they state fairly often, and they're very proud of, and rightly so, they've grown their population by a million people since 1985, and they actually use less water now than they did in 1985.

So, kind of this ongoing efficiency work, building their own local capacity, they've invested billions of dollars in stormwater capture, new local surface water supplies, Diamond Valley. There's a lot of things that go into kind of providing that sufficient and abundant water supply for things like big tourism events and other activities.

Thanks for that. And are you—how does your agency work with the local water management agencies? How are we listening to some of their concerns and issues since they're on the front lines of what's happening in our communities?

Know that's a very general question, but just curious what engagement you have and outreach you do consistently with them so we understand what they're doing. You know, from my district, I'm in touch with my water agencies pretty frequently and have gone to do many visits with them and so, would love to hear what you guys do.

We work collaboratively with everyone and anyone. I'll actually look to my colleague at the Department of Water Resources. They have a really robust engagement plan, as do Karina and our staff as well. But let me turn it over to Ryan.

Thank you. Again, Ryan Bailey, Department of Water Resources. So, what I can tell you is that urban water suppliers, they develop urban water management plants and those contain water shortage contingency plans, actions that they'll take if they can't make supply and demand meet.

And there's an annual exercise they do where they kind of do a stress test across their service area.

They look at what their expected portfolio of water might be and then look at what their demands might be across their service area and make sure on an annual basis that looking forward, it appears that they can make ends meet.

And if they can't, do they have those actions that they can trigger locally to have people cut back, reduce, constrain water demand so that those things can come back into alignment. And we put together a report with the results statewide with hydrologic information and we provide that to the Water Board every year.

So, we are working with locals, we have webinars to help them do this analysis. Some of them are unfamiliar with doing it and we provide technical assistance.

Thanks for sharing that. Yeah, no, I was more wondering what additional work that you guys are doing outside of their water management plans. But I can follow up with your agencies specifically to understand more. Thanks.

So, I've got a couple questions. DWR, I'm going to start with you. So, many of the proposed best management practices, and I think you touched on these in your remarks, relate to education and outreach, and that sort of thing.

And I guess my question is how do we quantify what water conservation looks like from those kinds of efforts? It seems like you're pushing information but not necessarily getting information back. So, is there a way to—are you quantifying? Let's ask that question first. And if not, is there a way to do so?

Great question. I think the reason that we don't get the, this process water data center metrics in the current framework is because they are so varied, hard to come up with a metric, a target. That—essentially, suppliers are given a budget for their service area and it's calculated, it's things that are known, things that can be determined, like the landscape area for their service area.

Okay. How much, how much grass and other vegetation is there? What are the, what are the scientific water demands for those landscapes? Okay, you can have that budget for that water indoor. We know about indoor water use, right? So, those we can develop.

So, I think the reason that processed water was left out of that framework is that it's, it's, it takes a little bit more to find something objective to hold folks to.

Well, that leads me to my next question and that is, and either of you can answer this question because clearly, indoor water use is different than this processed water. And there are certain industries that you never see the water again, and I think we should be concerned about that.

So, my question is, do you think that it should continue to be exempt from reporting targets, processed water in the CII?

Great question. I'm not sure I have a clear answer. I think if, if disclosable buildings that provide their energy use, for example, US EPA has a program where buildings can disclose, the owners of those buildings disclose certain things like energy use, water use is another component of that that has not been relied upon.

It's voluntary, it's not required. But I think to the extent that we can get more data, direct data for use by state decision makers, by local agencies, by the water supplier, so then we're dealing with a known quantity, I think efforts in that direction would be worthwhile for probably everyone involved.

That's helpful. Did you want to chime in at all?

Just a small note, the—if you go back to 2018, when the legislation was passed, part of the concern about processed water was in fact trade secrets at the time. And so, that is still something I think that we do want to think about.

The degree to which certain types of process water are trade secrets versus not is again not something that the board would weigh in on directly. But the argument was if we have to disclose too much, it might be a competitive disadvantage for some specific types of industries.

And then, to kind of plus up the benchmarking that my colleague was talking about, the energy work that is done, you can kind of compare different classes and categories of industrial use and ask, is one being more energy efficient than the other? You can do something similar for water and that could be a helpful point of comparison.

And certainly, there are other factors that would come into play too, like what kind of climate are you in? And if it's hot in an Imperial Valley in the summer, it might not be quite as hot in other locations. So, that's not necessarily trade secret related. Perhaps it's related on other things, but anyway.

So, for the Water Board, I do have a question. You got about two years of data now, right? You just got '25 in. And so, what do you intend to do with the data? How are you going to—I recognize you think you need more years, but what are you going to do with what you got?

Yeah, the legislation did lay out a very specific kind of sequence of timelines, deliverables, deadlines, and the first one that's coming up is, in fact, January 1st, 2027. And that's the point at which the urban water use efficiency objectives become enforceable. What does enforceable mean, that's something that we're on—we're developing and working on now.

But what we are going to do with the data before 2027 is basically look at our people meeting their urban water use objectives and for those that aren't trying to engage with them before 2027 to see are there variances that they may need to pursue, are there best management practices, are there data collection issues at the local level that maybe they're reporting wrong or they provided poor information or data to us?

So, really trying to work with the suppliers as much as we can up front. In fact, just last week, two weeks ago, we sent a comprehensive report evaluating the data for all of the reporters that had responded to us so far. I think it was over 370 out of the 400 or so that are required to report.

300. And basically, went through and described, here's the data, here, are you meeting your target, are you not? And that's how we're engaging with the data so far. So, using it to evaluate compliance and really looking for ways that we can improve those local suppliers' efforts to become more efficient.

Well, that brings me to one of my other questions. You only cover about 300, 400. You know, we got a lot of water systems out there. Are there resources available to smaller systems who might be facing perhaps a large CII customer that's come into their universe?

So, at the state level, we don't include, I believe it's suppliers that supply less than 3,000 connections or about 10,000 people. They're not covered under the CII regulations. We still have staff that can provide technical assistance if they do have questions about efficiency, but they're not part of that kind of regulatory overview.

We also have our drinking water team, the whole division of drinking water. Again, maybe it's not a drinking water quality issue, but we do look at supply in that context. So, there are staff at the Board that can engage with folks. I'm not sure if we have abundant resources.

We'd have to potentially look at redirecting staff for certain types of questions. But there is at least an avenue where people could reach out to us.

So, just one final question. So, it's my understanding that we're going to have categories by 2029 as it relates to CII users. Do I have that part right?

2028, I believe.

2028. December 31? And it is such then that and then, in 2039, there will be developed best management practices for those 28 categories.

Do I have that right? Okay. All Right.

So, I guess my concern and do you have any concern that that's a really long time frame and if we are getting some big CII users along the way, do you see any, for lack of a better phrase, you know, an off ramp to maybe address with greater urgency some of what might be happening out there in the world of commerce?

I'll offer my high level overview and then please others jump in. But you know, if you go back to 2013, we had this generational drought and then we had another generational drought between 2020 and '22. You know, our water supply just looks fundamentally different than it did in 2009. And we're asking, I think, much harder questions.

The water supply strategy came out in 2022. The new SB 72 that was passed last year looking at developing 9-million-acre feet of additional supply. So, there a lot of new questions we're asking, I think, to respond to this climate reality.

You also look at the development of data centers and how rapidly that has expanded, even in just the last three to five years. The conditions under which the Conservation as a Way of Life legislation were passed in 2018 may be fundamentally different than they are in 2026. And that's a question, I think, for the Legislature, and we can respond accordingly.

Which is why you're here today. Mr. Bailey.

So, maybe one thing that I would share. So, my colleagues that work in groundwater sustainability at the Department who are not here today, I'm going to kind of, you know, stand in for them a little bit.

What I would say would be in rural communities, where they don't have an urban water supplier that are subject to these requirements, we have other frameworks. We have Sigma, right.

So, that groundwater sustainability agency, if it's a large center, large development coming in and they're going to pump a lot of groundwater, then that—those are the checks and balances, is that the best use for that water in that community long term for a sustainable level, level of groundwater pumping?

So, while it doesn't live in this efficiency world that I'm in, it's still very important because it's kind of that catch all to the extent that it concerns groundwater pumping.

So, that's one of the tools that currently exists in the tool, tool chest, if you will. And I think you had mentioned that in your remarks too. Okay, well, that's the way of piecing it together, but we might need some others if we're not in a GSA world and water's being taken from a basin.

But okay, Mr. Gallagher, you came a little bit later. Would you—do you have any questions?

Maybe just really quickly.

Okay.

I think that was kind of where I was going with some of my questioning is it's going to look different depending on what basin you're in. Right? I mean, some areas have really plentiful groundwater supplies and aren't reliant on as much for surface water, right, for example, and again, I think a lot of this has to be made at a local land use level determining, okay, is this something that we can support or not?

But for those, let's say we have a basin that, you know, or a city or town that has, you know, they're in a sustainable groundwater basin with plentiful groundwater supplies and they decide, yeah, we're going to, you know, go forward with a large CII development. We have the water to do it. At this point, are they able to do that or, or are they going to be fall under the, you know, the regulations for CII under conservation is a way alive.

They would be able to move forward, but the decision would be at the local level on whether or not they did so.

But if you're an urban district that has, that is relying on surface water, then that's a different category. Is that right?

Not necessarily. No. I think it, again, depends on do they have abundant surface water, do they have sufficient supplies at that local level by the urban water supplier? So, again, it's kind of a local decision. Very similar to the previous example.

We thought another thing that we—thinking about what just happened with the president's meeting with a lot of these companies where there was a commitment that, hey, we are going to pay for the energy that we have to use and we're going to pay for the development of whatever energy that we have to use.

Could we do maybe something similar on the water side and say, okay, if you're coming in and you want to do this, like, you have to identify, you know, the water source that's going to supply your need if you can't do it, you know, and if it's, or if it's insufficient, how are you going to pay for the development of a new water source to make it happen?

Like, so that—because what I'm concerned about is we're already dealing with all the costs of this and what it really means for a lot of our communities is less water and they're paying more in their rates, which is ridiculous. But now, we're talking about having large water users come in.

Well, look, you better figure out how to pay your way and you're gonna have to deal with the same stuff that we have to deal with. I have food processors, right? A lot of food processors that are dealing with large costs of trying to meet the regulations.

So, I would say anybody new coming in, we should have to play by the same rules. But maybe another thing to think about is, and I don't know if we have this in place and you guys could speak to this, maybe you do at least have to identify that you're going to pay for that cost.

There's not going to be any cost to the ratepayer. If you're going to come in and do this, you do identify the water source, or you pay for the development of a new water source to service your need. Is that something that we could do or is there any things in place that maybe require that right now?

I would put a bookmark and say that I want to double check my response and maybe get back to you. But my understanding is that you can already do that and many of those kind of issues or flags that you just raised are already in place.

So, at the local level, if a new large water user wanted to come in, they pay a connection fee. If they're hooking up to a municipal system, that fee ostensibly is supposed to pay for exactly what you're talking about. And it's supposed to feed into developing new supplies over time. And so, there should be.

And there are existing protections in place that should prevent large spikes in ratepayer costs. But again, we don't know every individual financial structure for every water supplier in the state, and so, there may be unique circumstances for each one.

Can I add one thing? So one thing that we hear from suppliers who don't have direct experience with this, but they all develop their rates, right, for their service area and their customers.

And I think there's kind of a misconception that they can just kind of structure rates kind of however they want for some—to prevent certain things like what you're saying, which would make sense, but there's, I think it's prop to 18, if I'm saying that number correctly, so, there are certain requirements, right, that they can't.

They have to charge each customer what they cost and not subsidizing others. So, there are, you know, constraints there.

Okay, well, thank you. So—and we may get into a little bit more of this when we have the actual some suppliers with us here today in the next panel. So, I thank you gentlemen both for being here and don't be strangers. Let's stay in touch.

Thank you.

So, we'll have our next panel come forward and as you do so, I will make the appropriate introductions. We'll have Ken Jenkins, who is Vice President of Water Resources Planning and Sustainability with the California Water Service. I get water from them. And Melissa Matlock, Deputy Director of California Water Efficiency Plan Partnership. Welcome to you both.

I think we will start with Mr. Jenkins. You are—are you prepared to start or?

I think we're going to have me, Melissa Matlock, start.

Okay. Welcome, Ms. Matlock.

Change the slides.

Okay.

Sorry for the question.

No problem.

We built ours build on each other. So, I think we help answer each other's questions a little bit.

Thank you for that planning.

Sorry, I'm waiting for the slides. There we go. Okay. All right. Good morning, everyone. So, I'm Melissa Matlock. I'm Deputy Director of Cal WEP, or the California Water Efficiency Partnership.

And so, I'm going to go into a little bit quickly about what we are so you can understand where I'm coming from and how I'm representing kind of water suppliers at this level. Okay.

All right. So, Cal WEP, we are a nonprofit and we're made up of members throughout the state of California. Our mission is to really maximize urban water efficiency. We do this through collaboration, kind of joint programming, a shared space for water suppliers to share where they have difficulties.

And we can kind of create solutions at a scale that really helps agencies understand the larger perspective, learn from each other, etc. And so, our members, we have about over 225 members in California. About 77% of them are urban water suppliers. Up and down the state, we've got LA, we've got Brawley, we've got, you know, we've got like all the region there.

So, we're kind of being a little representative of everyone. We also have some businesses and other partners, nonprofit research organizations, the State Board and DWR, also, are members. So, we try to be—create a very inclusive community to help build solutions.

Okay. So, I won't touch on these a little bit too much because Ryan Bailey already touched on some of these planning stuff. But I wanted to create kind of a framework of understanding of what water agencies interact with when it comes to CII at the beginning, during, and kind of after they become connected.

So, you kind of understand a little bit of the information and the difficulties that water agencies are experiencing. So, as Ryan Bailey mentioned, there is the Urban Water Management Plan, that's a 20-year planning horizon that's updated every five years. The most recent update is actually due July 1st, 2026.

So, water agencies are in the midst of this right now. So, what this includes is you're looking at population employment growth projections, you're looking at your city and county specific plans, general plans, how they see growth happening in their region. You're looking at any new constructions that are currently underway or planned or have talked about.

You're looking at their demand. You are forecasting residential CII demand irrigation. If you have recycled water, how you plan on increasing the use of recycled water in your service area.

Your supply portfolio, so if you have local imported recycled groundwater, and you're doing reliability analysis, so you're looking at a normal year characterization, a single dry year, what about five dry years in a row for this 20-year planning period?

And then, you're doing a drought risk assessment as well, which is, if the next five years, starting from today, is a drought and one of the worst droughts we've ever seen, what is your water supply and demand look like and do you have enough water to make that happen?

So, it's a very comprehensive water supply kind of larger assessment of what each urban supplier has to have, and every urban supplier has to do this.

So, key questions that this planning document asks is, does the water supplier have sufficient water supplies to meet the demand over the next 20 years, and then can they meet the demand during consecutive dry years? So, this is the analysis that all water agencies are currently doing and update every five years.

Okay, so that's one aspect on the larger. For the larger urban supplier planning that happens. Then there are also new construction that comes through, which is that water supply assessment or water supply verification. And again, Ryan Bailey touched on this a little bit as well.

So I'll go into this very high level, but these are triggered from large developments. And so I think it's really important for context that urban water suppliers, unless they are a city or a county, have very limited role in terms of approving new developments.

They will assess the water supply that's available and give that information to the entitlement agency, which is typically a city or county. And the city or county will look at that in the larger context to understand, do we approve this project, yes or no. So it's just a little portion of the larger effort.

And basically what the water supplier will do is approve or adopt saying like, yes, we have water for you. No, we don't have water for you. And that's kind of the limited purview that a lot of urban water suppliers have in terms of the planning, new construction that's coming on board.

So the water supply assessment, I have a slide here that shows the different triggers that happens. But typically it's if it's a certain larger housing development, commercial, certain property size, or even if you're going to have a certain amount of water use that's larger than a certain threshold, those are the thresholds that trigger a WSA.

The water supplier is going to conduct this assessment that's going to look at the water supplies projected long term. So it shouldn't just be the initial, it should be what that property is going to use long term, what's the total demand of the project? And then questions like, are you going to be bringing new water supplies?

You know, maybe they have a water right. You know, assessments of that type of stuff. They're going to look at any type of additional codes that that water supplier might have. Like some water suppliers say you have to use recycled water for new development for irrigation. Right? That's already part of the water suppliers code.

If they have recycled water and they have the infrastructure set up. And so, you know, they'll kind of pull into all that information, conduct a larger analysis. Now, there are timings set in this law, SB 610, SB 221. But they also then apply kind of the analysis of the urban water management plan.

So they look at, based on what was in the urban Water management plan, do we have enough supplies to make our demand and everyone else's demand over the next 20 years. And they look at near term drought, long term drought, and multiple year drought as well.

So they're kind of conducting that stress test on each new development as they come in with where they are. And that's why the Urban Water Management Plan is important to be updated every five years. So it's the latest and greatest information.

Okay and so trying to put the frameworks a little bit together here, there's a flowchart that the state has provided and it's busy and a lot, but that's kind of the reality of what happens when we do these type of projects. So the Urban Water Management Plan is that 20 year demand reliability framework.

The WSA is testing the large projects that trigger it against that framework. So together you're aligning growth and supply reliability, CII demand is integrated into your drought planning and you're providing transparency in the development process. And so you can see here, when you are an urban water supplier that is not a city or county, right?

The city or county has certain plans that's like the general plan. The water supplier has their Urban Water Management Plan. They're both kind of forecasting out. Then you have maybe a specific project that comes in and will trigger different actions to happen and they should be relating to each other.

And then if a water supply assessment is required, that goes back to the city or county for them to include as consideration before they approve a plan. So that's something else to just know. The board of the water supplier will adopt that WSA, but that WSA is really just do we have the water? Yes or no.

And they're adopting that analysis, that decision, not adopting whether or not they will provide water to that agency. And if it goes through and doesn't go the WSA route because it's not triggering those things, a developer will come to the water supplier and ask like, am I in your service area? This is my demand.

And the water supplier will say like, yes, you're in my service area, we will serve you. It's called a will serve letter. And usually there are requirements to that as well. Sometimes it's you need to upsize the pipe before it gets to you. You need to invest in a tank, you need to help support.

So some of those questions that were asked earlier do get incorporated into this process before the construction starts happening. Okay. So that's kind of as things are happening and before you know, usually construction is from a developer standpoint.

So the developer may not be the end use customer and they may not know who that end use customer is before kind of that entitlement process happens, they might know a little bit more as they're about to get close to connection, who actually is going to occupy the building that they have built.

So once a customer is in, they're getting water. What do water suppliers typically know? They know the service address, they know the meter size, they know who to contact to bill. They'll be able to know consumption history. That is very different depending on agencies.

Some have AMI meters, which is Advanced Metering Infrastructure that's much more timely, minute reads, et cetera. Most have monthly or bi monthly reads. They'll know your rate classification, how they charge you.

They might be able to tell peak demands if they have AMI and they might be able to say if you're having a high usage or a leak alert. So generally agencies can see total water use at the meter. And so I think that's kind of where we talk about like with processed water.

Water agencies know their supplies, they know groundwater, they know recycled water, imported water that comes up into the meter and then past the meter. They may not know that. And what happens once it goes into that? How much is being used for the toilets or drinking water versus how much is actually going into the process system.

So if that system is not separated at the meter stage, the water supplier may not know that details. That's where we talk about like not knowing how process water is used to being able to exclude that out from individual CII. It's because most water suppliers only know at the meter level.

So they know how much is going to that facility, but they don't know how it's used within the facility and that again, that kind of irrigation, unless there is that dedicated irrigation meter which was addressed earlier, you don't know how much is also going to irrigation.

And one of the biggest issues that water suppliers have is sometimes the billing contact is not that operational decision maker on site, especially for large CII. Right, they've got finance, maybe they outsource their finance. I used to work for a water supplier.

We saw a lot of billing contacts from Seattle and that was just the only contact that you had at that time when they're in the system. Because at the end of the day it was who do you contact to send the bill to and make sure that things are getting paid.

So that can then provide a challenge for offering CII programs when you don't know how water is being used. Sometimes we heard it's proprietary information and it's hard to get the right contact for a water agency.

So offering CII programs, offering CII water use efficiency items can be very difficult and actually a lot more time intensive and staff intensive to be able to offer these type of programs. So the common themes we hear is who is the right contact, who can actually make the decision.

Capital approval cycles are really different and not what you typically see with what we've done with residential. So this is really a large learning curve for a lot of water agencies that have to start getting into the CII realm and offering programs.

Hence why that longer time frame of 2039 to adopt the BMPs is just because you have to get programs developed which require you to get that into your rate structure, which does have a formal process that has to occur. And then you have to make sure these programs work right.

And so you have to actually get the contact, build the programs, et cetera. And when it comes to CII programs, there's also the reality of return on investment or ROI. So CII customers have a lot of additional things that they're focusing on a lot of bills. Sometimes water is not their most expensive bill.

It's not going to be the biggest thing that they're going to be focusing on. So typically what we've seen with CII programs is that ROI needs to be under three years. And that can be pretty difficult to achieve without additional incentives to help bridge the gap and swing the ROI into a more favorable period.

And then again, because water is typically a lower operating cost, it might compete with higher other projects and become lower on kind of that totem pole.

So there's a lot of competing actions that water agencies need to start really learning and investigating and engaging with CIA programs to make sure that the programs that are adopted are very effective in actually saving water. And so CalWEP, you know, I mentioned we're a nonprofit.

And although the deadline for CII programs and BMPs is 2039, many water suppliers are actively engaged in this now and they are concerned about this and trying to figure out how to build their systems long term. So that's where calwep is kind of coming in. I've listed some resources here, but generally we have a CII classification guidebook.

So it's a guidebook on like how to go about classifying your CII customers who has done unique ways of leveraging resources. Someone was sending out their water quality folks that were already doing backflow related things and train them on how to classify customers.

So that way they're actually on site and classifying them at the same time that they were doing something they already had to do. So like that's some of the tips and tricks we're doing is how to leverage resources for water suppliers to get some of these requirements done. Some water folks already have what's called NAISC classification codes.

And so we performed a crosswalk to take those classification codes into the urban water use objective requirement classification codes. So helping those that already have invested in classification meet the requirements of the state new classification requirements. What we've also developed is we have a partnership to do an AI classification pilot program.

So it actually does it at about $1.35 per CII customer to classify them. And it can take thousands and get it done in about a week or two. So if the supplier has the money to be able to do that, it's a much lower cost option, less resource intensive, 95% accurate.

And then what the water supplier can do is actually do something with the data. So instead of spending two years just classifying, they can actually start with programs and looking at who are their high water users. We also did a disposal building identification and mapping tools.

So we took the data that's provided by the disclosable building CEC database and mapped it to water suppliers so they could see what disclosable buildings are in their service area and use that to start reporting already right away.

Additional programs and outreach that we do is AB 1572 which is all geared towards those commercial large landscape properties, non functional turf. We actually created resources that anyone throughout the state can use. It has the shared message, it has the right information. We developed it for General HOA CII education, lots of different requirements.

There's about 46 different pages that are there. We actually have a dedicated website, nonfunctionalturfca.org it's very customer facing and we even have a mapping tool that an agency, CII customer can put in their address, find out who their water supplier is, find out what rebates are available and find out if they have any enforcement around AB 1572.

So again, we're creating all these things at scale for water suppliers to be able to point to instead of having to recreate themselves. Coming soon, which I'm really excited about, is our CII Outreach Best Practices Guidebook. So helping water suppliers set up CII programs and start actually outreaching.

So we interviewed agencies that have already great CII programs, figured out what they're doing, capturing those best practices, lessons learned and, and creating a guidebook for new suppliers to come in and say like this is what you could do to create a good CII program, something that's going to be effective for you.

So that's coming in spring 2026. We also are working on a Excel work workbook that's going to help identify their high water users and do some of the classifications once they have things classified, highlight who their high water users are, highlight if they have their programs identified, et cetera.

Just kind of creating some good data analysis at the water supplier level. And then something that I'm really excited about again, I shared that a lot of agencies are working on CIBMPs and we've heard from our conversations that like the operational BMP category is pretty difficult and people don't know what the type of programs to do.

So we are actually creating an interactive online CIIBMP database that's also going to have water saving metrics tied to it.

So we're actually going to analyze, using measurement and verification data to understand what water savings are associated to CII programs, looking at what's the resources involved, what's the staffing, who's involving rebates, who has this program, what are their best practices for implementing this program and creating a much larger database for water agencies to go and pull from and learn from each other on what are different CII BMP programs that they could implement at their own agency.

We also host training, so we have what's called the water energy connection training and that's where we look at the water energy nexus. So we know that energy is really important to water supply to CII customers.

So we talk to them about that as well as what water programs can happen as well and how they can kind of save both energy and water at the same time with different improvements. Something that's also not listed here is that we are working with our larger national organization, the Alliance for Water Efficiency.

They are working on a data center primer, which is a document that will help throughout the state. If a, if a data center is coming to your service area, what do you need to do? What do you need to ask from a- for a water supplier?

And we're developing a California specific version of that to line in with the, the codes and requirements that we have that most other states don't have. And so that's it for my presentation.

I can see why you went first. Is our friend from Cal Water going to tell us, Mr. Jenkins, that you're using AI to track all your CII users? You're going to touch on that, aren't you?

I will just cover that right now, which is we did use AI to classify our CII customers with great success.

Inquiring minds wanted to know.

We are definitely using these tools.

Okay, great. Take it away. And thank you, Ms. Matlock. It was very informative.

Thank you, Chair Members. Thank you for having me. Again, my name is Ken Jenkins. I'm the vice President of water resources planning and sustainability for California Water Service.

So I'll tell you a little bit about who we are just for context and then really want to spend some time with you digging into the details from a supplier level standpoint. Right. Melissa did a great job of talking about it from kind of a planning high level how you do these things for suppliers.

What I hope to do is provide some on the ground examples of this as well as speak to and provide data on what the diversity of use looks like in the CII sector. So this is us.

We have, we have a number of service areas that we have in California from as far north as Chico down to the Palos Verres Peninsula in Southern California, Central Valley, Bay Area, coastal. We have about a half a million service connections throughout the state. We serve a population of about 2 million people.

We have some service areas that have less than 3,000 connections. Our largest has more than 60,000 connections. So a lot of diversity in the types of systems that we serve and the supply sources that they use. We heard earlier, we talked about recycled water, other supply sources we utilize in various ways throughout our service areas.

Groundwater, surface water, purchase water and recycled water are really dependent on the community and the needs of that community. And we have a good mix of both residential and non residential customers.

So this, the, this is showing you kind of customer water shares the amount of water that is used by the different sectors in each of our service areas.

It's a bit of an eye chart from a distance, but what I would want to point out maybe at a high level is this is significantly different across each of our service areas and it will be significantly different for suppliers throughout the state. We have a huge mix of this.

We have some districts that are 90% plus, single family residential use. We have other service areas that have a significant amount of CII use and recycled use. And so that really guides us in terms of how we develop programs and we develop ways in which we can help customers.

At a higher level, residential use across our service areas is about 67% of our water use. CII water use is about 33%, so about 2 thirds, one third. When you further break down the CII sector for our use, commercial customers use about 22%, institutional customers use about 7% and industrial customers use about 5% of our total water use across California.

Then if we further break it down, we talk about these different sectors, the energy Star classifications. That's a requirement of the new regulations. This is what it looks like for us. We've gone through this exercise and we did use AI as a tool in putting this together.

And you can see there's a broad spectrum of categorical uses across the state. Manufacturing, industrial, lodging and public services are our top three uses from a category standpoint in CII.

And one thing I would point out is, and others have talked about it, but it can, it is very challenging even within a classification, to benchmark against different customers. And I'll give you two examples of this. If we think about a hotel, right? Hotel that falls under lodging, residential.

You may have a hotel that's 50 rooms and that's all it is, right?

You may have another hotel that is a resort type hotel that has different services, has a restaurant on site, has a spa on site, has a pool, has a lot of other elements to it that benchmarking against those two really are comparing apples to oranges. And so there's our challenges there.

The other example I would give is in the education category. If we're thinking about the different uses of, say an elementary school, which is included in that category, versus a college or university that's in that category, those are very different uses even within the same category of use under CII.

So here's where I'm going to talk about diversity in the amount of use that we see in these different sectors. And so what this is showing is what's the ratio of our top 5% of users in each of these categories compared to the median use in that category? Right.

And so the takeaway here is single family residential use. Our top 5% of users in that category use about three times as much as the median single family residential customer. It's a fairly narrow band of usage when you think about it. In totality, as you go up this multifamily is about 7.6. commercial is 13.2, institutional is 17.4.

And you get to industrial, there's a high level of diversity in industrial use. Our top 5% of customers compared to the median use, 55 times as much as the median industrial customer. So as we start thinking about how we pull programs together, this plays a big role in doing that.

We can have fairly standardized programs for customer classes that have narrower use. But when we get into those upper tiers where it's 55 or 17, for instance, those really require a more customized approach to programs. So speaking of programs, standard program, most suppliers have very similar programs to this to varying degrees.

Toilet incentives, urinal incentives, sprinklers, outdoor devices, as well as our lawn to garden program, which is a turf removal, turf conversion program. These work for certain CII customers. Right. If a hotel is replacing their toilets, they're going to fall into the standard program and that's where they're going to be.

But for most of those customers that have really unique needs or unique elements to their water use, we have a customized incentive program as well. And so these cover really non standard projects. We do have standards for this.

So minimum, there have to be a minimum savings of at least around 75,000 gallons over the lifetime of the project. The payback period needs to be two years or greater. And calling back to what Melissa said as we talk about ROI, she referenced a three year payback period.

That's typically businesses are looking for for investment in an opportunity. Our requirement is that payback period needs to be two years or greater for them to be considered for the project.

Because the goal of the program really is to provide the incentive to bring that ROI down to a level they will actually utilize the program, do a project and realize those savings. So we're trying to bring that ROI into alignment with what their goals are. We do not include O&M or new construction.

We provide a maximum of 50% of the project cost. There is a cost share associated with this for the customer. So they have skin in the game as well as we do in working and collaborating with them.

We base the rebate on the projected savings, thousand gallons saved over the project life, which is typically going to max out at 10 years for us. We do require pre qualification and the reason for that is we really want to set expectations.

We want to understand what that use looks like for that customer so we can right size what we're doing with them and can work again collaboratively, collaboratively with them. So a couple specific examples that I'll share with you. The first case study is Carson Hydrogen project.

This particular facility uses high pressure steam and natural gas to create hydrogen and they use reverse osmosis as part of their process. What their project was is they upgraded their RO system. They replaced their treatment, their membranes in their treatment system with high efficiency models that then used a double pass configuration.

What that allowed for was for them to recycle the reject water from the first pass and then utilize it in a second pass to be able to treat and potentially use for their process water. They also installed a new recovery system.

It purified that second pass through water that was reject, and they used that for cooling tower water to cool. What this did is it increased their system efficiency from about 69% to 84%. And that resulted in a 77 gallon per minute reduction in water use. And you go, okay, 77 gallons per minute.

But when you have a facility that's operating effectively year round throughout 24 hours a day, that translates to about 40 million gallons a year in water savings from doing this project. And so we were able to partner with them and provide an incentive to help move that, move that project forward.

Another element I would mention about this project that is that it required a full plant shutdown in order to do this work. So when businesses are looking at projects, projects, especially ones that are this impactful to their business, it really has to be the type of return for them to, to incentivize them to move.

Move forward with the project. Second one I'd mention is it was a commercial laundry service, a large commercial laundry service. So it's not a laundromat, it's a very large that, that manages laundry and, and those type of services for companies that bring it in, they service those.

Again, this was a new RO system, a new RO process that they put in place. You can imagine being able to reuse the water from their facility requires them to get soap out of the water.

It requires them to get other elements that, from clothes and other things that they've cleaned out of that water to be able to use it again for the cleaning process. So they use an RO process for that. And this allowed them to reuse that water.

You can see on the lower right of the screen or the slide here, you can see what the water looks like before and then after the treatment process takes place. That had about 50 million gallons of lifetime savings associated with that project.

Across those two projects, we provided about $125,000 in incentives for those two projects to move forward. And the last one I'd mention is a Salinas Fire Department collaboration that we had with a DRAFTS unit. So DRAFTS stands for Direct Recirculating Apparatus, Firefighting Training, Sustainability. So we're going to just call it DRAFTS for the purpose of this conversation.

The easy explanation to this is that fire departments use a lot of water for training purposes. And so what this allows them to do is recirculate that water and use the same roughly 2,500 gallons of water for their training. It goes into it, it recirculates it, and they reuse it for the training.

It reduces the water needed on a per training basis from about 50,000 gallons to that 2,500 gallons. Based on the number of training exercises they do in a year, that's about just under 6 million gallons a year in savings. And we provided roughly $125,000 incentive to purchase. Purchase this device. This is the eighth device.

We've had a lot of success working with our fire departments in getting units into place. This is the eighth one. We've had two for the Los Angeles County Fire Department, one for the Visalia Fire Department, one for Ventura County, Stockton, this Salinas one, Monterey County and our South San Francisco Fire Department have all participated in this program.

And really kind of the takeaways from this and you've heard it kind of throughout the other speakers so far, again, significant distribution diversity in CII water use. One size does not fit all. These are very resource intensive projects.

They typically take at least a year or longer from the start of someone coming to us and having interest or us identifying a potential customer. It takes a very long time from that point to when you actually get the project into place and saving water.

So it is very resource intensive, both from a staff time and from a cost standpoint. But ultimately, if we're going to do work in the CII sector, we have to meet those customers where they actually are.

We can't just develop a single type program where they have to come to us and fit within that structure all the time because often they don't fit within that structure and you're just going to lose those opportunities.

So it requires a mix of standard and customized programs and the resources to be able to kind of follow through on those, identify the customers.

You know, I would tell you that much of the time I think people make make a mistake that high water use in and of itself does not mean inefficient water use and low water use in and of itself does not mean efficient water use. They can be correlated, but they do not necessarily mean the same thing.

There are different water needs for different applications. So really the sweet spot that we're looking for as we evaluate and identify customers for potential participation in the program is that they are using large amounts of water and they're inefficient.

They can create efficiencies in their process or in the way they use water, which allows us to then focus on the right customers given the resources that are needed for it.

Excellent. Thank you so much.

I'm the last woman standing chair. No, that was really interesting. Thank you so much for your presentation. Thank you, Ms. Matlock, for that very thorough overview. Thank you, Mr. Jenkins, for your presentation as well.

You also service parts of my district in East Los Angeles, so we're closely with some of your folks there in East LA, like Mr. Jim Crawford, who's wonderful and had an opportunity to tour that facility. Just curious about the use of AI and kind of analyzing all the CII user data. I know it's a lot.

If you were to do it manually, can you just talk to us a little bit about. Is this the first time you use that to analyze. What was that like?

You know, I know there's larger conversations here about the use of AI, but this might be one of those instances where, you know, it really did help us analyze large amounts of information that sounds like would have taken us a very long time to do and help build up that capacity at your agency.

Yeah, so we used. And this. This was the first time we've used AI for this type of purpose. And it was really specific to the classification piece of the requirements. And so we did use it to then do that classification across the groups. I found it to be very, very, very successful.

We worked with a consultant to assist us with this work.

And we had, about, more than 10 years ago, had gone through a classification exercise using those NAICS codes, so the North American Industrial Classification System, and we've updated that at least one, I think, two times since then, and had actually planned on potentially using that information to use the CAL Web tool to crosswalk those codes over to the new classification system, the Energy Star classification system that's required.

And what we found is that many of those NAICS codes are outdated. They aren't necessarily kept up to date in the database that they're stored in elsewhere. And we were finding a lot of mismatches where we know our systems and things were coming back and like, that's not what that is. Right.

So you start at that level and you start to kind of question some of the information, which then led us to move towards kind of this AI model which takes a lot of additional information and puts that together and classifies them. We feel very comfortable that the classifications that we have utilized using that process are accurate.

We'll continue to refine that process as we go forward, but we found it to be very useful and significantly more efficient than it otherwise could have been, which is really important for us, when we're talking about we have close to 50,000 CII accounts throughout, throughout the state.

And so we need to find ways to be efficient and manage this as effectively as possible. Where next step for us is, we're going to be taking this and looking at, are there, is there a.

Is there a role for AI in doing what the other thing which you've just described, which is evaluating the actual water use of customers, we aren't going through what is effectively a more manual process to be able to identify those customers.

Can we take this to a different set of priorities and use AI to then start looking at which customers may be best suited for particular programs and then utilize that to do outreach to those on programs that they may be best suited for so that you're giving them information that is useful to them, which makes them much more likely to engage and potentially participate.

Thank you for that, Mr. Jenkins. And when we talk about potential future use, just so I understand, you mean so they can use some of, maybe like the rebate programs and some of the programs that you're offering that they may not know about, Correct? Yeah. And I think that's really important.

I know that when my team does outreach in East La, where you service, there's a lot of, what's your zip code? Let's find out where you qualify, because everyone comes from all over Los Angeles and we're always trying to figure out what programs they qualify for.

And I think at the end of the day, we can use different terms to describe the end user, the client, the constituent, the ratepayer. But ultimately this is the stuff that keeps folks up at night, which is their water Bill, their utility Bill, and how do we lower these costs for constituents.

And so, yeah, I look forward to hearing more updates about how this is progressing, how you're continuing to use technology to lower the cost for constituents. And also just wanted to thank you for your team specifically in east la, because they don't just manage the water, they're really out in the community doing a lot of good work.

So I just wanted to commend you on the community service piece as well.

Appreciate that. I'll reach out to Jim and we'll find some time maybe to do a little bit more deep dive on the conservation work and what's available to customers.

Well, they were very thorough presentations. Just when I thought I had another question, you'd answer it. So congratulations on that score. When you talked about the workbooks, for example, I'm just going to give you an example, Ms. Matlock. When you talked about the workbooks.

I thought, well, that's all well and good for industries that we know a lot about. And even if you don't know what kind of process a particular brewery is using, you know that a brewery probably uses X amount of water.

And you can probably separate part of that for the toilets because you know how much toilet you use. The building might have six toilets or something like that, you know. So I figured, zero, well, you could probably get the workbook on those types of industries very quickly.

But then all of a sudden you talked about nationally there is some data center information and you're trying to tailor that to California. So I thought I had you there, but I didn't.

So I appreciate that you are trying to modernize because it's part of this hearing is about not only are traditional industries, for example, the heavy launderer that you showed us or the hydrogen plant, but what are some other additional newer uses, although the hydrogen plant probably is a little bit newer in being a big water consumer.

I did have one question, Mr. Jenkins, before I move on to something else. Did they. You said they went through about three rounds of how they were using their water, that hydrogen plant, and they got more efficient and then did the water, was it ultimately used, meaning there wasn't anything left, or they actually were able to emit some of the recycled water on that third round and put it back in. I was just curious.

Yeah. So overall, that efficiency increase that I mentioned was really what they attained overall with the upgrades. So they went, I think, with 69 to 84% recovery of water use.

So there is still a portion of that water that ultimately cannot be reused on site, but they're reusing and able to utilize about 84% of the water that went through.

That's where your efficiency kind of comes in. Correct. But it is an ultimate use at a certain point. And those are the things that I'm kind of worried about in this role because water is such a finite resource.

And so while you might be efficient along the way, I think we do have to have some data on how much is actually getting used. And it's gone. Which is not in your purview. And I'm not suggesting as much or. But I do want to find out on the plans that we're updating every five years.

Are we updating those plans as it relates to efficiency? Because you talked a lot about cities, their General plan, how much building they were using, all those kinds of things. But it's a little bit harder with existing customers who Might be doing some upgrades that you don't even know about that they didn't get rebates for.

It just lowered their water Bill. So I'm wondering, are there efforts afoot that you take into account for existing big CII users to become more efficient and you know about them in your reporting.

So I'll touch on it first and if you want to add anything. Yeah. So we do incorporate efficiency into that planning document and a number of other planning documents. And the way in which we do that is we calculate a number of different components.

So we do look at passive savings, which are for plumbing code changes that may occur. So as customers that had purchased a device 20 years ago, as they transition and upgrade or purchase, or that the toilet doesn't work anymore, they're replacing their toilet, there's new plumbing code in place that'll increase efficiency of that device for that customer.

So we incorporate those passive savings due to the plumbing code and project those forward. We also look at active savings that's primarily tied to our conservation program. So we know what the budget looks like, what the activity is going to be. We estimate those water savings and incorporate those into projected demand going forward.

So there are those types of elements that then do are embedded in our demand projections that we utilize for planning purposes.

Those are very formal. It might be that a customer has done something and you may not know about it.

Correct. Some of that will be capped, some of that will be captured in the passive savings depending on all those devices are that are being replaced. But you're absolutely right.

There are other elements that if they decide to make a change three years into something where it's not going to be captured there and they don't utilize our program or incentive to do that. No, those would not necessarily be captured. I will say that this is every five year process.

So and we're looking at a very, you know, long time after that 20 year period. So as those things happen, they will then get incorporated into the next update to that plan, but not necessarily in the plan that we're completing now.

Right, sure, sure. I was just curious. So question about the relationships with CII users and how you might be of assistance. How does that come about that somebody's gonna do this upgrade? I know what makes an upgrade intriguing, like the return on investment and whatnot. But are you proactively going to your CII users?

And the reason why I'm asking is because some could change rather quickly. And so what you might use to cool down, like in the hydrogen example, you said ultimately it's used to cool down some of their facilities that may change or different times of year could be air cooled. I don't know. I'm just giving you various examples.

So how does that, within that relationship you with your customers, how does it come about that you'll be these upgrades are discussed and implemented and a couple, couple different ways.

So directionally it can come from us. Right. We do go and we analyze our customer use and identify again those high use customers. We typically don't know the efficiency of that use until we can actually sit down and have a conversation with the customer and understand what they're using water for.

And so we'll go through that process and sometimes there's a good fit and sometimes there's not for various reasons. And so if there is, then we'll move forward on really learning more about a specific project that they may be able to implement how our program fits with that. Another way is they will come to us, right?

And so they'll be seeking out for especially these large projects that are hundreds of thousands, millions of dollars. They will come to us proactively and ask us if we have any programs that can actually, they can actually utilize to help offset some of that cost and then we'll engage with them in that way.

And I say there's a third way which is really just being active in our community, whether it's through like the Chamber of Commerce or other organizations where that's another avenue for us to be able to provide information to CII customers and they may have a different relationship with those customers that they can then provide recommendations on things that they may do and how they can work with us.

Yeah. And I think if I add from the agencies that like we've talked to that are feeding into our guidebook of kind of best practices, the biggest things that they've said is you want to establish kind of what's like a concierge service in a sense. And that like we are, we are here to help.

We're not just laying the law, we're not just giving you a Bill, but we actually are your helping hand here. And so it's like creating kind of a real relationship, a real friendship with them and making sure that like, hey, let's do a small win. Let's just like change this out.

It's free, it's an easy entry into there. You see success, you see us as a reliable partner and then you come to us.

And so it's creating like a different cycle of a relationship there for long term kind of partnership with the CI customers, which is a very different and unique approach than how it's been done for, like residential customers.

So it definitely does require different resources, different attitude, different approaches to be able to one, get the right person, talk to the right person, show them success, show them a partnership, and then again creating kind of customized programs that actually fit their needs and that you know what their business is, that you're not wasting their time showing something that they're like, well, we don't even have that on our property.

You have to really create tailored information, know what's going on with them and work with them. And so it's creating a program around that, not just kind of free for all information, but actually developing tailored requirements and tailored information.

And I would say from that initial conversation, it may be three or four or five years later that they may ultimately come to us and say, hey, we have something now, or this thing makes sense.

Maybe there's a new technology, maybe there's something different change in management, you know, a lot of different factors as to why they may ultimately be interested. And it may not happen the first time you talk to them.

And so you kind of just maintain, to Melissa's point, you maintain that relationship and eventually it may actually get to a point where you're achieving water savings from it.

But again, that requires a lot of, a lot of resources, a lot of hand holding, a lot of kind of walking through things with them to kind of understand it from both sides.

Yeah, well, you know, we talk a lot about data and measuring water, measuring water uses, and that could be in the example of the hydrogen plant, three different times that you're using the water.

So my goal is that water agencies can get that information on a more regular basis so that they know what they're dealing with and they know how to plan for it. So that brings me to some other questions about big water users and the impact on the system.

So the first thing I want to talk about is swings in water use. So it might be such that you have a CII facility that might sometimes draw very large amounts of water and. And then other times it does not, and I guess, or very little.

So how do water utilities sort of manage those swings that facilities might have? Because I'm assuming you have to have the infrastructure obviously all the time for the highest use, but then it's an expensive proposition, not only for the current user, but perhaps on the system as a whole.

Yeah. So as you said, suppliers are responsible for providing a safe, reliable supply 24 hours a day, seven days a week 365 and so it does require the infrastructure needed to do that.

And so as part of our planning, kind of infrastructure planning, we not only look at average day demand, we look at max day demand, we look at peak hour demand.

Because in all of those circumstances we need to be able to provide service reliably to all of our customers at pressures that are, are needed to be able to do that. And so as part of that planning process, we identify kind of what our, what our peaking factors are.

So from a Max day demand standpoint, most of the time, and again, this can vary depending on the makeup of any individual system. But we're looking at anywhere from a 1.5 to 2.72.8 peaking factor.

So what that means is Max day demand, the Maximum day for a 24 hour period use is about one and a half to kind of two and a half, three times greater than the average day demand is. Right. And so we have to develop infrastructure in order to meet that Max day demand or that peak hour demand.

So to the extent that there are customers that place that need on the system, then we have to develop that infrastructure. And that is likely to be more impactful to a smaller system than it is to a larger system where they have many other uses besides that large customer.

It gets, for lack of a better way of describing it, kind of gets blended into the use a little bit more. You may not have as much of a peaking factor in a large system for a single large customer, depending on the use than you would in a very small.

And like I said, we serve across the board. We serve very small systems and we serve very large systems. And so we really see the differences between those. I do, I would speak to one other thing I think related to this, which is we do require as part of that WSA process.

And what we have is a will serve letter process as well, where we will include for that if there is a new development coming online, we go through that process.

If there is this infrastructure that is needed in order to serve that development, we will make that a requirement for that, that development to, to bear the cost of that. So the concept is that growth pays for growth. So if there is a need to grow, that they're responsible.

Our existing customers should not be saddled with that, that cost of that infrastructure. And so we do look at that as part of that go that planning process. When we go through that.

Well, that's exactly where I was headed. I wanted to know who was paying for the growth. Okay, well that's Very helpful. And so it's not just a connection fee, but it might be if one, if a particular provider has to increase

their size, might be, might be a new well, might be dedicating land to us to develop a well as part of that their development area. So there can be a number of different things that go along with that in order to be able to provide service to them and continue to provide service to our existing customers.

That's across the board in all of our service areas. We go through that process. In our San Francisco Bay area districts specifically, we also have a development offset program.

So that requires that any project that is going to have a net new demand of 50 acre feet or more per year is required to pay a per acre foot fee of projected demand. They pay a fee on that to develop new supply. So those are kind of two related but different things.

So they pay an actually per acre fit per acre foot cost for us to identify and develop new supply to meet the needs of that development.

And okay, that's helpful. But my question is, what if you can't find that supply? What if climate change makes it so difficult for you to find that supply? Where does that leave us?

Yeah, so that would be part of the WSA or the WILSERF letter process. So we're still going to be identifying there whether it's feasible for us to either we have existing supply or we can develop the new supply to do it.

If we find that we can't develop the new supply and then that goes into that analysis and the ultimate results of that, what I would say is there are a number of tools that we have to be able to meet that demand. Right. It can be expansion of existing supply sources that we're using.

So if there's the ability to use more of what we already have, there could be development of a recycled water system. Right. We could require that that fee could be used to then develop that type of system. And there's still the demand management or efficiency side of things too that we can utilize that for.

To the extent that we can make the existing system more efficient, that frees up water for other uses. So really we're looking at the entire picture of those to determine how best to utilize those dollars to get to a place we don't want to be the constricting factor. Right.

And because these, as have been said before, these are local land use decisions that, you know, a city or a county or other entity may want to move forward with, you know, our responsibility is to the greatest extent possible identifying how best we can serve that development and if we can reliably serve that

development, and that's based on the estimate that you're getting from the purported from the future user.

It is. It's a combination of something, though. So they provide us with, with their number. We actually do our own independent analysis based on our conversations with them to identify whether we believe that that number is reasonable. We're never going to get to an exact number of gallons.

But what we're looking for in kind of our analysis is based on what we think what you've told us you're going to be using for. And so it does rely on them accurately telling us what they're going to be using it for.

We will do kind of an independent look at does this number make sense based on everything else we know about this type of use?

And I will say that's what the data center primer that we are working on is going to focus on, is making sure that you're asking the right questions for data centers to be able to run your own calculations.

Right, like what are key considerations, like what are their cooling center that they're going to use, what's that infrastructure, stuff like that, to help make sure that as people may have never dealt with data centers coming to their area, they're able to ask the right questions to perform the right analysis and to be prepared.

Great. I have no further questions. I thank you both for being here and we'll move on to our next panel. So as you come up, I will lay out the introductions of. I think Shaolei is going to be on our screen. And we have Heather Cooley.

So Shaolei is an associate professor of electrical and computer engineering from UC Riverside. And Ms. Heather Cooley is chief research and Program officer for, from the Pacific Institute.

Great. Thank you.

Good morning.

Good morning. Thank you, Chair Pappin, for your leadership in bringing us together on this important topic. And for the Committee Members, I will start and I do have some slides, if you could pull those up. I'm Heather Cooley. I'm chief research and Program Officer at the Pacific Institute.

We are an independent nonprofit research institute focused on creating and advancing solutions to the world's most pressing water challenges. Today I'm going to talk a bit about commercial, industrial and institutional water use, and I'll also touch on water use for data centers as well. Next slide, please.

I'd like to start just by giving some context on commercial and industrial and institutional water use in California. We've been talking about that this morning. Looking statewide, the CII sector accounts for about 30% of urban water use. It's shown there.

I kind of tinted them all blue so you could sort of group them CIA Water use can vary dramatically though from region to region. So it ranged from about 22% to 40% in each of the state's hydrologic region. As Ken spoke to. It also can vary quite dramatically from water supplier to water supplier.

The figure on the left shows the use between 1998 and 2002. It's the most recent year for which data are available. Obviously we're in 2026 and things do change. So the idea of more and better data, I think will be a theme throughout my presentation.

We can show on the right though, I'm showing the trend in CII water use again between 1998 and 2022. CI water use before 2010, it was well over 21/2 million acre feet. Since then we've seen it decline. It's been averaging a little bit under 2.4 million acre feet in that recent five year period.

So it peaked in and around again 20092010. We had drought, we had an economic downturn, and I think that was one of the reasons we've seen that reduction. The categories, though, are imprecise. That's due in part to differences in how water supply agencies have historically categorized their customers.

So in some areas, apartments and other multifamily housing may be grouped as commercial. Similarly large landscapes that gets bundled into CII water use, but that can include residential landscapes and HOAs as well. So it's been a pretty messy category overall and.

And that I think is one of the drivers though for the improvements in the categorization that we heard a little bit about today.

I think that's gonna be really important going forward as we better understand really what's underneath all of that, because there's a lot happening over that time period, even though we're not really able to see that. Next slide, please.

So late last year, the Pacific Institute released a new analysis of the potential to save water through water efficiency improvements. It was a national study. I've pulled out some of the results for California.

That study looked at opportunities using existing technologies and practices to save water for the residential, the CII sectors, as well as for reducing real water losses in the water distribution system. Here I'm just showing the results for the CII sector. I'll say that, though, we found additional savings opportunities across all sectors.

And it's been talked about California has seen significant reductions in water use, significant efficiency improvements, and that has Been a good thing. It's enabled us to weather these more frequent and intense droughts that we're experiencing and the additional pressures. It's enabled our economy to continue to grow. It's enabled our population to grow.

So the savings we've achieved to date have been critically important. We identify that there are still more that we can do. That's not to say we haven't done a lot. I want to really highlight that we have done a lot and there's more that we can do. And that too is a good news story.

We find looking specifically at the CII water sector and for this analysis we use that energy star portfolio manager that you heard a bit about. There is water reporting that is possible, it's voluntary, but from that we're able to get at water use intensity for different CII subsectors based on those intensities.

We then developed three different scenarios for potential savings. In the basic efficiency, we could see savings of around 17% all the way up to 64%. In that highest efficiency, we see the biggest savings in food service, in office buildings, and in healthcare subsectors. But again, opportunities across sectors.

We also see, though, that there are savings possible across various end uses. That includes looking at replacing bathroom fixtures. It includes optimizing cooling systems. We heard a little bit about that. And reusing processed water. We heard about some of the processed water opportunities today. Those exist as well.

By saving water, the businesses are reducing their vulnerability to shortage and rising water, wastewater and energy costs. Energy costs are often a driver. As such, water efficiency goes hand in hand with business resilience, but also more broadly, economic resilience. Should I be advancing these slides? I'm sorry, I've been asking for it, but I can do that here.

Okay, Here I want to shift gears a little bit. I want to talk about daily water use. And the average daily water use I think was talked about for large commercial buildings. These are data from the US Energy Information Agency.

It is from their commercial building energy consumption survey from 2012 that while an energy focused survey, they did ask questions about water use, which is where these data come from. They haven't since done that. And so that's a gap. But these represent the best data available.

Again, another opportunity for us to be shoring up some of this information. Because of the data limitations in their responses, they only were comfortable reporting values for large commercial buildings of 200,000 square feet and more. So that's what I'm showing here. So we can see average daily water use varies across the subsectors.

Again, That's a theme we've heard that can range from an average of 3,000 gallons per day for large warehouses to 74,000 gallons per day for inpatient health care buildings. I know there's been a lot of question and discussion about data centers and how they fit into this picture.

So on the right of this image I've provided some estimates for data centers. Though I would note that data are extremely limited. There's only a handful of estimates out there. But what we can see from the available data, these are showing consumption, right? So I'll talk a little bit about that in a second.

But what we see for small data centers, they're using about 18,000 gallons per day or consuming about 18,000 gallons per day. So those small data centers, that's pretty on par with what we see in large commercial buildings, right? That would fall well within the bounds that we're showing here.

But as we look at some of the larger, the mid sized data centers, for example, those consume hundreds of thousands of gallons per day. And hyperscale data centers are consuming several millions of gallons per day. So well above what we've seen in a typical sort of commercial building.

I want to just underscore that these represent average daily consumption. And I think Shao Le Ren will talk a little bit more though about how data center water use shows high Max demand or it's very peaks and it peaks around times when it's hot and dry.

Those are precisely the times that we see water constrained and energy constrained. So something to consider. The other point I will note. The data that are out there around consumption suggests that about 75% of the water used by data centers is consumed. So their actual water withdrawals are about 33% higher than this.

So I just wanted to give you a sense of the context for that. One thing to speak to is that data center landscape is evolving. So the figure on the left is showing the past and projected shifts in the types of data centers operating in the US in 2010. Most were internal data centers.

So these are typically integrated into larger buildings. They're managed by the businesses as part of their sort of IT of their own IT systems. Multi tenant data centers or colocation centers as they're sometimes referred, provide space for companies to host their hardware off site.

That company then is that third party is providing power, cooling, networking, security, other types of services. And the hyperscale data centers are these large scale facilities operated by major technology companies like Amazon or Microsoft or Google.

Those three actually collectively own more than half of them, as is shown the large co located and hyperscale data centers are where most of the growth is occurring. So we're seeing that big shift away from the smaller the internal data centers towards these much larger, heavier water use, more concentrated use and more peak use.

Finally, the figure on the left is showing plants in California that are operating in construction or plan data centers by county. This is data as of the middle of December of 2025. It's from the U.S. Department of Energy. Data centers planned or in construction or would double California's data center capacity in terms of energy use.

And has shown that growth is in 10 counties, including Santa Clara, which has the largest, at least in absolute terms. Imperial County, Kings County, Contra Costa and San Joaquin. So we're seeing some of that growth in areas that have traditionally had data centers. We're also though seeing growth in areas that have not traditionally had data centers.

So something to consider. So let me just summarize very quickly before I turn it over. The commercial and industrial institutional water use represents about a third or 30% of urban use statewide, or 2.4 million acre feet per year. We will get better data on this. It's a little bit of a fuzzy number now.

There's significant opportunities for water savings across subsectors and across end uses. That is good news as we see water supply challenges intensify in California and across the West. These are opportunities for us to be able to continue to be a robust, have, you know, have a robust economy while still meeting the needs of people and the environment.

Available data indicate that modern large data centers are much more water intensive than a typical commercial development. And we need more and better data both to anticipate but also to address some of the local and regional impacts and to your point, to help us plan for the future. So that's the end of my comments.

I'll now turn it over to xiaolei.

Thank you. Ms. Cooley. Professor Ren, welcome. Nice to see you. Nice to see you.

Should I share my screen or. Let me make it full screen?

Okay, here. All right, so you can all see my screen?

Yes, we can see you. Go right ahead.

Morning everyone. Good morning, Assembly chair and Members. Thanks for inviting me to be here to present some of our research. And I'm Shaolei Ren. I'm an Associate Professor of Electrical and Computer Engineering from the University of California, Riverside. I'm not representing the University of California, I'm just presenting the research in my personal capacity.

Again, this presentation, not to give you a pro or against data center construction, instead we just give you some informative data based on our prior research and public data. As we all know, data centers are getting everywhere. Some of them were built in rural communities, but now also they were built in in those downtown LA.

And some of the data centers are just coming to these residential communities. So they are just essentially everywhere, including in California. So since today we're talking about data center water, then a natural question is why do data center use water?

Well, the reason is one of the major ways of data center use water is for cooling and actually efficient cooling. According to one leading technology company's sustainability report, water is the most efficient means of cooling in many places.

And another leading technology company just recently released in their press report that evaporated cooling, using water to evaporate the facility can reduce the electricity demand by 25 to 35% during the summertime. And that's the time when the power grid is at the most stressed levels.

So the water evaporative cooling is a very efficient way and can also very economically way of coding the system for those large scale facilities. And then how much water do data center use?

Well, we did some recent studies on analyzing the data center water use in the US. So we look at the industry reports from hyperscale data centers and also from colocation providers. We use their current average as the baseline.

And in the baseline case in 2030, the US data center could be using up to about 140 billion gallons of water per year. This is water withdrawal. So this amount of water is roughly the same as LA DWP's annual water supply. But in the more efficient case, more opportunistic case, this number can be reduced by about 1/2.

So this total number of water withdrawal sounds a lot, or it could sound very small since it's just 4.5 million people's water supply per year. But there's no national reservoir and data centers are just receiving water, mostly potable water, from individual municipal water systems. A more important question is where and when these data centers use water.

Unfortunately, many of the Community systems are just so tiny. And actually in the U.S. according to the EPA's report, more than 98% of the community water systems are small or medium. The small water systems are serving just 3,300 people per system. The medium sized water system is serving up to 100,000 people. They are really small.

And most of the community water system do not have the available surplus capacity to serve large industry demand like data centers. Here's one. A water allocation agreement between a water utility and a leading technology company's data center in Indiana.

So this data center will be receiving up to 8 million gallons per day of water capacity and plus 4 million gallons per day of wastewater processing plant processing capacity. And this capacity will not be delivered until 2031.

So this means before 2031, even though this data center is fully built, it may not be fully operational because of the water capacity shortage. Another data center is here, another data center in West Des Moines in Iowa. The left figure shows the monthly water usage of that data center.

You can see during the summertime it uses a lot of water. But during the wintertime and the springtime, there's not much water usage. Because this type of data center is using evaporative cooling assistance only during the summer, they don't use water 24/7 or year-round.

Instead, they are only using water during the hottest days of the year. And that's also the time when the other users need water most. The middle figure shows the percentage of the data center water compared to the total water usage by largest 20 water users in West Des Moines Water works.

You can see again in the summertime, this single data center is using about 1/3 of the top 20 water users combined total number. The last figure is showing the peaking factor. This is a technical metric. So this is here we're showing the monthly peaking factor is the maximum monthly usage to the average monthly usage.

So data center, because there's highly concentrated water usage, they have a high peaking factor of 4.3. But the other industry users, commercial users, they typically have a more steady way water usage pattern. Their monthly peaking factors are often between 1 and 3. So a more important metric is the daily peaking factor.

But unfortunately we don't have the daily data for this particular case. So according to California's regulatory guideline, if you don't have the daily data, just multiply the monthly peaking factor by at least 1.5. So this means if we do some estimate, this daily peaking factor for this facility is at least 6.5.

So that means the peak daily water usage is about 6.5 times as the average daily water usage. And when you do that water allocation, you probably need to allocate even more to deal with this worst case scenario. Another difference between the data center water usage and other residential other public water users is this high composability ratio.

So according to the data that we have surveyed from the real industry disclosure, data center typically consume or evaporate about 75 to 80% of the water they withdraw. On the other hand, according to the USGS study, on average, the national average public water consumptive rate is a consumptive ratio of just 12%.

So this means when data center gets the water, they will be some evaporating or losing much of the water they get from the municipal water system. On the other hand, mostly the residential water usage or other commercial water usage is returning most of the water back to the wastewater processing plant.

This is a key difference between how data center and other users use water. To address this data transparency issue, we also look at those sustainability reports by those technology companies. Some of them are reporting their per site level water usage, including water discharge, water withdrawal and water consumption, which is the difference between water withdrawal and water discharge.

But all of them only focus on the annual water usage. As we have already shown, the data center water usage is much spikier. It's more concentrated around the summertime, maybe just a couple of months depending on the climate, or maybe even just a couple of weeks in those colder climates like Wisconsin.

This type of peak demand impact is missing from this annual water usage numbers. Outside California, we're also seeing some state level, federal level legislative efforts to address still data center water usage. And most of them focus on reporting and so data transparency. Besides the direct water usage, there's another component which is called offset water use.

And data center needs a lot of electricity and generating electricity uses a lot of water as well. This picture shows a nuclear power plant where there are two gigantic cooling towers evaporating water 24/7. And at the bottom there's a data center getting one third of the nuclear power plant generation to power the servers.

So this is considered offset water and I would say in this case it's probably even on site water. So this offset water usage is often a blind spot in current water reporting. So let's come back to this question. How much water do data center use?

Well, at this point I would say we don't know because there's not much data and even though there's some annual number, we don't know the peak water usage demand. Thank you.

Thank you so much. Dr. Ren, I welcome Assemblymember Hart. Do you have any questions that you'd like to pose? We can try, but we don't know. I just have one question, if you could just take me through the slide again that says you have to be 6.5% more prepared to accommodate the peaks. Is that correct?

Yes. And I think we heard that's the measure data in West Des Moines, Iowa. And that's for just one particular data center. This ratio really depends on the climate. So in other places, this ratio, for example, in Virginia, we are also seeing this ratio to be 10.

And in Wisconsin, for one planned data center, the peaking factor is actually 30. So basically, looking at the total annual number is not really a meaningful metric. For many of the new data centers. We actually need to look at the peak power, peak water demand.

That is a more useful indicator for the impact of data centers on the local public water system supplies.

So it just depends on the climate at any given time? Among other things.

Yeah.

Okay, So let me. I guess my question is, do you see that it could be feasible? Because Ms. Cooley, you also talked about consumption and how are we defining consumption? Because it might be that a data center uses the water a certain number of times and then it's fully consumed and it is gone.

And that's what worries me with this finite resource that is water. So I guess my question is, and you may know the answer, you may not, is it feasible for large CII users like a data center to become self reliant or water positive through their own technological innovations?

And maybe Professor Ren has seen more of it, I don't know. Ms. Cooley, would you like to take a stab at that?

Yeah, I'll just start and then Professor Ren, if you have anything to add, I'd certainly invite you to as well. What we are seeing are there are advances and there are advanced technologies out there that could dramatically reduce the water and energy for cooling.

You know, for example, there are more companies that are looking at liquid cooling right now. They're using air cooling and then they have to cool the air. Essentially. Those aren't yet standard. There's a lot of research and innovation. I understand there are some facilities that may be doing that, but it's not universal.

Professor Ren, do you have anything you want to add on that?

I think by today's definition of water positive, it's possible that they bring more water than they actually consume on an annual basis. But this number is totally based on the volumetric numbers.

So it's not necessarily reflecting the actual impact on municipal water supply, especially during the summertime, since a data center uses water in a very different way than the recommendation than the other regular water users. And also as you have mentioned, the cooling system innovation is ongoing, is evolving really rapidly.

So we are seeing this direct to chip cooling, which can lower the, which can tolerate a higher temperature, reduce the water usage a lot. But in California, most of the data center today are colocations data centers. So they have a different type of demand and constraints than those hyperscale data centers.

What type of water they're using and what type of cooling system they're using is less clear to me.

You still have to be prepared for the unexpected heat wave or whatever it might be and water suppliers have to kind of plan for that.

And so when you're looking at different conceptive rates and the conceptive rate of data center, as Professor Ren pointed out, is much higher than your average Joe building, I do worry about my friends, the water suppliers who were in the panel before you.

Okay, and are you seeing trade offs in onsite and off site water use and availability for large CII facilities during the siting process? You know, some of them might choose a different site because of various water restrictions or availability. You might not know.

But in general, there is a trade-off between energy usage and water usage. So according to some leading technology companies' disclosure, if you use water evaporative cooling, you can save the energy by annual energy by about 5 to 10%.

But whether this water versus power or energy trade off is a factor into their data center siting decisions or not, I'm not sure. I think. Maybe the offset water is not really considered.

Yeah, I'll just add to it. You know, as you noted, there is a trade off where a facility may use less water on site but is increasing its energy use. And then there is the off site water use associated with generating that electricity. Those are often not considered or valued.

The cost of energy, it's typically a cost decision. Right. And with energy cost is high, it tends to weigh in favor towards the thing that's going to have the lower energy use. So I do think that's a factor.

One thing I will add though, you know, California has a lot of renewables on its grid, unlike you know, most other states. And because there's less water typically required for most renewables, including solar PV and wind.

So as California has increased its use of renewables, that has reduced the water intensity of its energy grid. So as we continue to do that, that'll then, you know, improve water. Water and energy conditions. So those trade offs aren't as significant in California as they.

Your off site might be less, although you could still have a fair amount of heat that you're looking to cool with because off site. Okay, I got it. All right. I don't have any further questions unless there's anyone else. Okay.

Well, I thank you to our final panel for doing as much predictive information as you could provide us. I know it hasn't been easy and we will.

I certainly think that one of the things that we have to work on is how do we get the necessary data on the usage, recognizing that there are many factors that can. Not all data centers are equal. Or you pick your sector, which is why we have 29 categories in the CII world.

But we're going to continue to work on providing the data so that agencies can plan. I think that's our biggest thing. And then what's the impending cost that comes along with that to make sure that it's equitable to all users out there. So I thank you so much for being here.

And with that, we'll take some public comment. So come on forward.

Good Morning, Madam Chair. Mr. Hart. Beth Olhasso, on behalf of Water Reuse California. Water Reuse California and its Members have a strong policy that you hear us say all the time that water supply strategy is not a one size fits all. So I'm not standing up here and saying all data centers need to use recycled water.

We don't want you to do that to us. So we're not going to ask for that to anybody else. But I think that there is an opportunity for us and this Committee and the Legislature to tackle the issue and discuss how recycled water can play more of a role in data centers.

As Ms. Cooley just noted, data center growth in the San Joaquin Valley is big, but there's not a ton of recycled water development in the San Joaquin Valley. So is there a place for the state and data centers to help develop recycled water supplies in the San Joaquin Valley? And that collaboration could have an ancillary benefit.

Say that we collaborate on a recycled water system. We could use some for data centers and some to recharge groundwater, which we know is another issue. So I just think there's an opportunity for us to kind of expand the conversation.

And I hope Water Reuse California can be that resource and we can kind of be at the table and figure out how we can maybe solve a couple problems at and find a way to help rate payers, help water supply, help groundwater recharge and just kind of figure this all out. It needs to be a bigger conversation. Thank you.

Good morning, Madam Chair and Member Hart. My name is Madi Richards and I'm the policy manager for California Coastkeeper Alliance. We've heard a lot today about how not all CII users are the same.

And CCK really wants to make sure that some of those differences are reflected in the way that data centers in particular are regulated, especially with respect to. Can I move this up a little bit? Thank you.

Especially with respect to reporting requirements to begin to address some of those data gaps that we've heard about today, as well as with the rates that those data centers are charged if they're high water users and on rates.

We believe it's really important that where data centers are using a lot of water, especially consumptively, that where they're contributing, contributing to the water supplies that municipal water suppliers have to acquire, as well as additional infrastructure that they are the pay, they are paying for those costs in the rates that they pay and that low use customers and particularly low income customers are not subsidizing those rates. Thank you.

Anyone else? Thank you so much for those thoughtful comments. Going once, going twice. We are adjourned. Thank you.