Water-Energy Nexus


Water and energy are inextricably linked. Water-related energy use accounts for nearly 20% of the state’s total energy requirements. Similarly, conservation and efficient use of water are essential to meeting the future demand for water in California and the state’s water savings goals. Reducing energy usage is critical to reducing greenhouse gas (GHG) emissions as required by the Global Warming Solutions Act of 2006 (Assembly Bill 32). The Water Conservation Act of 2009 (Senate Bill X7-7) requires a 20 percent reduction in per capita urban water use by the year 2020. Yet the existing policy structure only focuses on benefits to the energy sector and presents barriers to implementation of worthwhile Water-Energy nexus programs.

On May 22, 2013, ORA filed a Petition with the CPUC to open a proceeding to develop a partnership framework between investor owned energy utilities (IOUs) and the water sector to co-fund programs that reduce energy consumption by the water sector in supplying, conveying, treating, and distributing water, and by agricultural and industrial water customers.

On December 19, 2013, the CPUC issued a Decision granted ORA’s petition to open a new Rulemaking on the Water-Energy Nexus. 


ORA’s Policy Position

ORA is pleased that the CPUC adopted its recommendations to open a new proceeding to explore the important relationship between Water and Energy. ORA supports investigating new policies to consider joint funding of Water-Energy Nexus programs, and addressing the barriers to implementing joint programs that have the potential to realize significant energy and water savings. In order to do this the CPUC must address the fundamental public policy dilemma of how to fund programs where the benefits accrue to more than one agency, but are not cost-effective from any one agency’s perspective. In order to allocate costs in proportion to benefits, the new proceeding will provide the forum for the the CPUC to develop a statewide methodology for calculating energy savings and cost-effectiveness in the water-energy context. The CPUC had previously issued a Decision ordering a current or subsequent proceeding to investigate strategies to overcome barriers to implementation of Water-Energy Nexus programs. This new Rulemaking is the most productive path to accomplish the CPUC's objectives and encompass these major issues:

  • Methodology for determining the energy embedded in water.
  • Methodology for determining water system benefits to water sector partners and other local, state, and federal entities.
  • Methodology for allocating program costs among partners.
  • Strategies for overcoming barriers to joint funding of Water-Energy Nexus programs.
  • Ratemaking treatment and/or other funding mechanisms available to CPUC-regulated water utilities that participate in water-energy nexus program partnerships.
  • Availability of additional state and/or federal funding to increase the feasibility and cost-effectiveness of water-energy nexus programs.
  • Coordination with current and future energy efficiency rulemaking proceedings to ensure consistent treatment of Water-Energy Nexus programs in the utility energy efficiency portfolios.
  • All Party workshop to solicit stakeholder input on the appropriate scope of the new proceeding.

See ORA’s May 22, 2013 Petition requesting the CPUC open a proceeding on the Water-Energy Nexus.

Proceeding Status

See the Proceeding docket.


Other Resources

CPUC Water-Energy Nexus Webpage 

Better than the Sum of their Parts: Taking Advantage of the Water-Energy Nexus to Create Dual-Funded Partnership Programs, CPUC White Paper.

California's Water-Energy Relationship, California Energy Commission.