BOARD AGENDA MEMORANDUM
Government Code § 84308 Applies: Yes ☐ No ☒
(If “YES” Complete Attachment A - Gov. Code § 84308)
SUBJECT: Title
Receive Information on the Consultant Study Regarding Santa Clara Valley Water District’s Water Use Projections, Water Demand Elasticity, Customer Affordability Study, and Provide Feedback to Staff as Needed.
End
RECOMMENDATION: Recommendation
A. Receive information on consultant study regarding Santa Clara Valley Water District’s water use projections, water demand elasticity, and customer affordability, including study scope, objectives, and status update; and
B. Provide feedback to staff as needed.
Body
SUMMARY:
Santa Clara Valley Water District (Valley Water) has engaged two consultants to perform a study to validate or suggest refinements to Valley Water’s current water use projections for Valley Water-managed water use, analyze water demand elasticity, and determine or address the affordability of water to residents and businesses within Santa Clara County (the Study). The majority of County residents and businesses receive water service from a retailer, while Valley Water acts as the water wholesaler. Study results may impact future Valley Water groundwater charges.
Background:
The Financial Planning and Revenue Collection office manages long-term forecast models and the annual rate setting process for the Water Utility. Water charges are adopted annually. Based upon feedback received from the Board during previous long-term forecasting cycles, staff pursued a study to inform future rate setting cycles.
The consultants - Raftelis Financial Consultants, Inc. and Hazen and Sawyer - have been tasked to provide analyses for the following Study scope and objectives:
1. Analyze water use projections in Santa Clara County, for retailers, their direct customers, and private well owners to better determine Valley Water-managed water use projections. Valley Water-managed water use translates to revenue for Water Utility.
2. Prepare a water demand elasticity analysis to better understand how rates impact water demand.
3. Determine the affordability of water provided by Valley Water to Santa Clara County residents and businesses now and based on future rate projections.
Valley Water staff and Valley Water’s consultants both recognize that the scope of this Study presents unique challenges, one of which is obtaining detailed water usage data from non-Valley Water sources.
Staff anticipates technical memorandums for each of the three (3) analyses to be completed, followed by a final report documenting the study.
Study Updates:
Task 1: Water Use Projections key takeaways are:
• Valley Water’s approach to projecting water use is consistent with peers
• Forecast-to-actual water use has been largely accurate, with reduced variance in recent years
• High level statistical analyses demonstrate that the current approach yields reasonable ranges for near-term demand
• Water use overall continues to trend downward
• Tools exist to refine the forecasting method, if desired
A technical memorandum for Task 1 has been drafted and will be included as part of the final Study report. Details from the June 24, 2025 update to the Board on Task 1 is included in Attachment 1.
Task 2: Water Demand Elasticity Analysis objectives are to assess Retailer’s water demand sensitivity to Valley Water’s wholesale rates, and understand the effect on Retailer’s customers. Some preliminary takeaways are:
• Water use in Santa Clara County is generally inelastic with respect to price
• There is a high correlation and common trend between Valley Water and Retailer’s volumetric rates
Task 3: Water Affordability Analysis objectives include identifying water utility affordability metrics for Santa Clara County. Some preliminary takeaways are:
• Based on multiple affordability indicators residential water bills are generally below threshold levels
• Based on both the Poverty Prevalence Indicator and Household Burden Indicator, nearly all Retailer water providers fall within the Low Burden category
• An estimated 38,500 households - equivalent to 6.2% of Santa Clara County households - could have water bills that are unaffordable (defined as annual water bills that total more than 2% of reported household income)
Staff plans to bring a final Study update to the Board as appropriate.
ENVIRONMENTAL JUSTICE IMPACT:
Further analysis is necessary to determine the environmental justice impacts associated with results of the Study. Updated environmental justice determinations will be included in future Study updates.
FINANCIAL IMPACT:
There is no financial impact associated with this item at this time. Future changes to District-managed water use projections could impact future groundwater production and other water charges.
CEQA:
The recommended action does not constitute a project under CEQA because it does not have potential for resulting in direct or reasonably foreseeable indirect physical change in the environment.
ATTACHMENTS:
Attachment 1: SCVWD 06242025 Item 3.4 Conformed Copy
Attachment 2: PowerPoint
UNCLASSIFIED MANAGER: Manager
Darin Taylor, 408-630-3041