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Executive Summary for July 22nd

For an overview of the latest news on the California drought, we’ve organized the most recent developments in a curated summary.

Published on July 22, 2015 Read time Approx. 2 minutes

Huge Capacity For New Water-Saving Appliances

A recent analysis by GMP Research found that only 5.5 percent of California’s 33.5 million installed residential and commercial toilets are high-efficiency units using 1.28 gallons per flush, the EPA’s WaterSense standard.

Only 21 percent of faucets and 24 percent of showerheads in California meet the WaterSense standard, according to the study, which was commissioned by Plumbing Manufacturers International.

Surprisingly, California is well behind other states in these statistics. Texas leads in some categories, no doubt owing to its recent prolonged drought. Several Southern and Midwestern states also surpass California.

The study suggests there’s still a lot of low-hanging fruit in municipal water conservation, confirming a 2014 study by Pacific Institute and NRDC.

Feds Provide $18 Million to Help Ease Drought-Caused Job Losses

The U.S. Department of Labor is providing $18 million to provide retraining and other assistance to help those who have lost work in California because of the drought. The money will come from the National Dislocated Worker Grants program.

The money will be used to employ up to 1,000 workers for up to six months with public and nonprofit agencies working to remove dead foliage to prevent potential fires and mudslides. Projects will also renovate and repair public facilities damaged by the sustained drought. California’s Employment Development Department will disburse the funds.

“For those whose ability to provide for their families is most immediately affected by the drought, this funding will provide much needed temporary employment,” Labor Secretary Thomas Perez said in a statement.

Upside to the Drought: Water Utility Stocks

Analysts are getting excited about the investment potential in California’s privately held water utilities. Such is the case despite the severe drought that has many water providers scrambling for more supply and pressuring customers to conserve.

Why the optimism? Because there’s a key difference between government water utilities and those that are privately owned. The latter category are regulated by a different state agency, namely the California Public Utilities Commission. Part of its charge is to ensure utilities — whether they provide water or electricity — continue to earn enough profit to stay healthy no matter what’s going on in the world at large:

On the other hand, government water utilities have a much thornier process to increase water rates during times of shortage. It feels counterintuitive to ratepayers: They’re already suffering with less water, and now bills are increasing, too. Revolt often follows.

One company they’re eying is California Water Services Group, which serves 83 communities in the state. They’re also watching American Water Works, which primarily operates in New Jersey and Pennsylvania.

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