7/30/25 Drought-Proofing Your Wallet: Irrigation Rebates and Water-Wise Landscaping

The Moneywise Radio Show and Podcast Wednesday, July 30th BE MONEYWISE. Moneywise Wealth Management I "The Moneywise Guys" podcast call: 661-847-1000 text in anytime: 661-396-1000 website: www. MoneywiseGuys.com facebook: Moneywise_Wealth_Management LinkedIn: Moneywise_Wealth_Management Guest: Kevin McCusker, Director of Government and Community Affairs for Cal Water website: www.calwater.com/district/bakersfield/

• 0:00Speaker 00

  From the Garo Ellis padded radio room off Stockdale Highway, here is Money Wise. Call or text into the show 24/7 at 396-1000.

• 0:39Speaker 00

  Here is Money Wise.

• 0:44Speaker 01

  Welcome to the Money Wise Show. We are live from the Garo Ellis padded radio room off Stockdale Highway on ESPN Bakersfield, 1230 AM, 101.1 FM, and always streaming at MoneyWiseGuys.com. You can call or text into the show 24 hours a day at 661-396-1000, 661-396-1000. Today, we are your hosts, Sammy Abiyawie and...

• 1:05Speaker 02

  Debbie Lewis.

• 1:07Speaker 01

  Debbie.

• 1:07Speaker 02

  Hi Sammy.

• 1:08Speaker 01

  How are you doing?

• 1:09Speaker 02

  I'm great. I'm doing a radio blitz today.

• 1:11Speaker 01

  Yeah?

• 1:12Speaker 02

  Yeah, I was on our friend Scott Cox's show this morning, which was a blast.

• 1:16Speaker 01

  We've got to upstage him with this one. Steven, how hard is that?

• 1:20Speaker 00

  Not very hard.

• 1:23Speaker 01

  I hope he's not listening. I don't want to get crucified when I go on his show.

• 1:26Speaker 02

  I had fun. He's a good sport.

• 1:30Speaker 01

  Yeah, he is.

• 1:30Speaker 02

  You just have to know how to keep up with him verbally and not be afraid to talk over him.

• 1:35Speaker 01

  Yeah, no, he's good. I actually really like going on his show because the whole day, I'm like, it's like you got a workout in the morning and you're like, all good. It gives me a jolt.

• 1:45Speaker 00

  I think out of all of us, we're the three that knows how to deal with him.

• 1:49Speaker 01

  Seriously?

• 1:50Speaker 02

  Yeah. He does not scare. I like Scott. It makes sense to me.

• 1:54Speaker 01

  Yeah, he doesn't scare me. It's just sometimes my English kind of like stumbles.

• 2:00Speaker 00

  So does his. I promise. There's certain things that you, people could deal with. And I think us three are pretty perfect for him.

• 2:10Speaker 02

  I, I made a comment to Steven after I left the studio saying I had a lot of fun. I would love to go back anytime. But it's also hard for me because I have to remember that I'm representing a company that has a very, uh, good reputation in town. And my personal comedy and my jokes that I like to tell on a personal level, maybe don't align with.

• 2:32Speaker 00

  Our core values.

• 2:34Speaker 02

  Or, you know, like, I have to be very careful when I'm around somebody like Scott that likes to just free form and say whatever comes to mind. Because I want to do that and I can't always do that.

• 2:46Speaker 01

  Can't you go under like a pseudonym?

• 2:49Speaker 02

  An alias?

• 2:49Speaker 01

  Yeah, an alias.

• 2:50Speaker 02

  Not if I'm representing money. I, I should if, yeah.

• 2:54Speaker 01

  I should, I should come up with one, Steven. I'm gonna Google it tonight.

• 2:57Speaker 00

  Well, that's why I have a different radio name for a different show.

• 3:00Speaker 02

  Smart.

• 3:01Speaker 00

  So those just don't, don't go over and over.

• 3:03Speaker 01

  That is very smart. Well, let's get into it, Debbie. Um, today was a big day. The, the Federal Reserve, uh, uh, board met. And, um, voted on keeping the interest rates where they are. Uh, nine to two though. Uh, two of the, uh, governors, uh, dissented. Favouring, uh, a 25 basis point cut. However, Mr. Powell, the, described the current monetary and, and the inflation. The sticky inflation he calls it, and the economic insurgency as a base for us to keep the rates where they are.

• 3:38Speaker 02

  Right.

• 3:39Speaker 01

  And, and, and, uh,

• 3:42Speaker 01

  I, I don't know if I, I agree with him a hundred percent. A lot of people were looking at this meeting potentially to be the first meeting to get a rate cut. But it didn't happen. Now, we're gonna have to wait and see what happens in the month of September. Some of the data that's already coming out stating maybe sixty to maybe seventy percent chance of that rate cut.

• 4:04Speaker 02

  Yeah.

• 4:05Speaker 01

  Again, we're gonna have to wait and see the next couple of months, or maybe August, what happens with the economic data, inflation, tariffs, and see what's gonna happen.

• 4:16Speaker 02

  I'm blanking. The Fed meets every, is it quarterly?

• 4:19Speaker 01

  No.

• 4:20Speaker 02

  No.

• 4:20Speaker 01

  Well, they had a meeting in June.

• 4:22Speaker 02

  Yeah.

• 4:23Speaker 01

  So now, we're not gonna have one in August, but we're gonna have one in September.

• 4:27Speaker 02

  Okay.

• 4:27Speaker 01

  So how did the market react? Ten-year Treasury yield, which is the interest rate typically that is the base for commercial loans and bond market, ticked up a little bit to about four point three four percent. The two-year held at three point eight seven, S and P and Dow close a little bit lower. Nasdaq slightly higher because tech and tech resilience, a lot of the tech companies have been doing really well.

• 4:59Speaker 01

  The Q1 GDP shrunk on an annualized rate. However, it rebounded in the second quarter. A lot of it has to do with us importing so much in the first quarter because of the fear of increased tariffs.

• 5:14Speaker 02

  Yeah, get it in, get it in.

• 5:15Speaker 01

  Retailers got a lot of this, which affected our GDP.

• 5:22Speaker 01

  However, on the second quarter, it rebounded strongly, it's about three percent if annualized. The core inflation remains, is near two point seven year over year. But it's higher than the two percent, which is one of the mandates of the Federal Reserve Chairman. And I think that's the reason why he's, he's holding steady. Also, unemployment remained strong at four point one percent. Those are the two mandates, Debbie.

• 5:52Speaker 02

  Okay.

• 5:52Speaker 01

  The federal chairman tries to control or tries to look for before he makes, before he makes decisions on interest rate cuts.

• 6:00Speaker 02

  Right. How many hours do you think it is until President Trump comes back out and tries to fire him?

• 6:06Speaker 01

  I don't know.

• 6:07Speaker 02

  Or says how badly he needs to be fired?

• 6:10Speaker 01

  I did not see this, but Justin Leland told me that they had an interesting press conference where President Trump was holding the cost.

• 6:20Speaker 01

  The expenses for the federal building, Federal Reserve building, and how they had cost overruns to the millions and millions of dollars. And Powell, right next to him, was shaking his head, "No, that's not the case." And when he took the paper away, he was like, "Well, no, that's another building that was built five years ago." So I really don't know when the president is gonna come out and say what's... I don't know. But, soon.

• 6:44Speaker 02

  By the end of the day, probably.

• 6:47Speaker 01

  Yeah.

• 6:47Speaker 02

  He likes to threaten Jay Powell.

• 6:49Speaker 01

  I won't bet you on that. We have a lot of comments and questions from the listeners. Please keep them coming. One of them is from a client of ours, Roxanne. So a lot of love to you, Roxanne. However, this is a financial advisor question, and neither Debbie or I are licensed, so we're not gonna address it. We're gonna address it tomorrow when we have a financial advisor on the show. With that being said, also, Sherrod will be reaching out to you directly, Roxanne, and have a conversation with you. So, thank you for reaching out, and please keep the questions coming. We do have another question, Debbie. It's about credit.

• 7:27Speaker 02

  Oh, yeah. Great show. My question is, how early can a child start to build credit? I've heard some people starting as young as 16, but I wanted to see if that's legal. And if so, how can we start the process?

• 7:40Speaker 01

  So, you can start as early as 13, building credit. The best way to do that, in my opinion, is to add the kid into a parent's credit card. And that's what I'm gonna do as soon as my kid hits 13 in November. I'll add him to my American Express or Citibank card as an authorized user. So, watch out.

• 8:06Speaker 02

  Bold, bold move.

• 8:06Speaker 01

  Well, I'll keep the card in my pocket. That is not to be confused with me handing him over a card. Oh, no, no, no, no, Debbie. No, no. That's not how things are done in Morocco.

• 8:20Speaker 00

  Plus, he's got a job, so.

• 8:22Speaker 01

  Yeah, yeah, yeah, he did, he did, he did. I was very proud of him for a 12, 13 year old to actually look forward to the summer and get a job and make a little bit of money. I was, I was, that was, I was a proud dad mo- moment.

• 8:36Speaker 02

  He's a good kid.

• 8:38Speaker 01

  I'm go- I'm blessed. I am very, very blessed.

• 8:41Speaker 02

  He's a good kid and you and your spouse, your wonderful wife have done a good job.

• 8:47Speaker 01

  Thank you, thank you, thank you. Thank you, Debbie. Thank you. Yeah, so, so the benefits of adding him or adding your kid as a, as a authorized user is, is, it helps build their credit. And, and, and especially between the age of 13 and 19, by the time they get to that age, you have a history of the last six, seven years, which is great. And, and, and typically those kids will end up with a high credit score whenever they want to buy their first car or whatever.

• 9:20Speaker 02

  Right.

• 9:20Speaker 01

  Qualify for education loans and, and however, whatever they need. With that being said, comes the financial responsibility, which you and I talked about off, offline.

• 9:32Speaker 02

  Yeah, I love this topic and it's coming up a lot lately.

• 9:35Speaker 01

  Yes.

• 9:35Speaker 02

  Financial literacy fundamentals for kids, because it's kind of been taken out of our, our education system in the States. I, I believe historically until the 40s, teaching finance and economics was typical. And then around World War II, they started moving towards focusing on theoretical math. So it, it's fascinating. We, coincidentally enough, we are hosting a financial basics workshop meant for teenagers next week. So I've been talking about this a lot and the response that I'm getting from parents and guardians, it is unanimously, "Thank you. This is amazing. We need more of this."

• 10:17Speaker 02

  Which I think there are a lot of people out there that maybe don't know in California specifically. I know California gets knocked a lot for. Being big brother and telling people what to do, but this is where I do agree with California trying to, they are implementing a requirement in high schools. Let's see, by the year 2027, 2028 school year, every high school in California, including charter schools, are required to put kids, teenagers through one semester of financial literacy in order for them to graduate. I think it's brilliant.

• 10:55Speaker 01

  I think so too. I think any type of education we can give our kids early, that's great. But also, especially right before they graduate or in high school, because that's when they get hit with the freedom, I'm moving out of my house, I'm going to college. And all of a sudden, you don't have the boundaries that your parents have set for you for 18 years, 19 years. So, we want to prep them for that world where they're not being taken advantage of by credit card companies on campus. Sign here, sign here, sign here. Any kid that I talk to that got in trouble credit card wise, most of it was on campus.

• 11:29Speaker 02

  Yeah.

• 11:31Speaker 01

  You know, they're, oh, I'm the first one, I'm gonna get a credit card on my own, my mom and dad are not gonna tell me what to do. And all of a sudden,

• 11:39Speaker 01

  we, you know, things just don't go the way they anticipate.

• 11:42Speaker 02

  Well, now you have those apps, whatever, businesses like Klarna that are pay, you know, buy now, pay over time, which makes it even more appealing.

• 11:51Speaker 01

  Super easy, like, super easy.

• 11:53Speaker 02

  It's a trap.

• 11:53Speaker 01

  It is, it is, it is. I mean, we, that's one thing I would agree with. I think leverage is a wonderful thing. If you use it to help yourself. Like, we need leverage to buy a house, for instance. With the prices of the homes today, we cannot afford $400,000 median price, like, oh, I'm gonna save until I buy my house. No, you need leverage for that. But what sometimes we can avoid or we don't need is this credit card debt, where you don't have the cash in the bank, but you still want to go and buy, you know, I'm gonna add rims to my car, so it looks cool. Or I'm gonna have the Louis Vuitton bag, or I'm gonna have the newest iPhone, or I'm gonna have this.

• 12:36Speaker 01

  Those are things that we can avoid paying for, especially during, I mean, with credit cards.

• 12:42Speaker 02

  Right.

• 12:43Speaker 01

  And I think the financial education, I'm so happy that we're doing this. Can you tell us, when is this happening Debbie?

• 12:48Speaker 02

  Um, it's next Wednesday, August 6th. It's an early evening event and we are hosting it at the lovely Bakersfield Racket Club, downtown Bakersfield. Unfortunately, we are not doing a live stream option. It's only in person, but it's open to the public. Um, if you are interested in bringing a kid, your kid, your nephew, your niece,

• 13:11Speaker 01

  14 to 19?

• 13:12Speaker 02

  Suggested ages are 14 to 19.

• 13:15Speaker 01

  Okay.

• 13:15Speaker 02

  Um, and we're encouraging parents and guardians to join. It's not required, but.

• 13:20Speaker 01

  Are we providing food or drinks?

• 13:22Speaker 02

  I will be, if you are SVP, there will be a designated slice of pizza with your name on it.

• 13:28Speaker 00

  I've been telling everyone's pizza rolls and hot pockets.

• 13:31Speaker 01

  That'll drive traffic, teenage traffic.

• 13:34Speaker 02

  Well, Scott Cox was asking if I was providing Tommy's pizza and I said, no, but maybe on the side, me and.

• 13:41Speaker 01

  Tell them the age group?

• 13:42Speaker 02

  14, 14 to 19.

• 13:44Speaker 01

  He can't go.

• 13:46Speaker 02

  Oh, cheap shot.

• 13:48Speaker 00

  He has a grandson around that age.

• 13:50Speaker 01

  Okay, alright, alright, alright.

• 13:51Speaker 02

  He said he'd string my tennis racket for free.

• 13:53Speaker 01

  There you go.

• 13:54Speaker 02

  If I had some pizza for him. Yeah, but we're just covering, um, our lovely Seth Perry, who's one of our financial advisors in the MoneyWise office. He has a passion for teenagers and education and presenting on financial literacy. So it's the perfect alignment. He'll be hitting some banking basics, uh, simple budgeting concepts. If anybody out there has heard of a 50, 20, I think it's 50, 20, 30 or 50, 30, 20 budget mechanism, um, building credit like Sammy's talking about with his son and saving, investing, fundamentals.

• 14:28Speaker 01

  Yep.

• 14:28Speaker 02

  And honestly, some of us adults could probably use.

• 14:31Speaker 01

  Oh, yeah.

• 14:32Speaker 02

  It's not just teenagers.

• 14:34Speaker 01

  Budgeting is not a teenage thing. I mean, there are adults and family members of mine where, you know, I still try to coach and teach how to, just put a budget together, stick to the budget. And the first thing, and I think we talked about this on the show before where. When we create a budget, the first mistake we make as individuals is we're not honest with each other as far as the expenditures that we have. So when you're creating that budget, you admit, oh, I go out and eat a lot. Or I buy clothes a lot, or I do this a lot. No, you've got to be very honest with yourself as far as the expenditure so you can control that budget. That's step number one.

• 15:15Speaker 02

  You know, one time in another lifetime, I worked for a local CPA that's a friend of mine and one of the clients, I did kind of data entry of their spending, monthly spending, and I quickly learned of this person's habits. They loved Las Vegas, they loved McDonald's, they also love strippers.

• 15:39Speaker 00

  Strippers and McDonald's.

• 15:41Speaker 01

  It's a good combo.

• 15:43Speaker 01

  It's a combo deal, Stephen.

• 15:46Speaker 02

  Not naming names, of course, but you do see as financial professionals, you do see somebody's habits.

• 15:53Speaker 01

  Yes.

• 15:53Speaker 02

  Right? And sometimes people have to face those habits.

• 15:56Speaker 01

  Yes, yes. Yeah, I said this before, credit card and the usage of credit card is an addiction, in my opinion. It's like any other addiction, you have to work on getting rid of it. And it takes time and it takes energy and it takes effort.

• 16:12Speaker 02

  Discipline.

• 16:12Speaker 01

  Discipline, yes, I would say, yes, definitely. All right, great conversation. We're going to take our first break. When we come back, we have a guest, Kevin McCusker. Did I pronounce it right?

• 16:23Speaker 02

  Yes.

• 16:23Speaker 01

  He's the Director of Government and Community Affairs for California Water Services. Stay tuned.

• 16:27Speaker 00

  Are you nearing retirement and currently working with a financial advisor? Are you not sure if you're invested appropriately? Call our offices at 661-847-1000 to sit down with a MoneyWise financial advisor for a no obligation assessment.

• 16:59Speaker 01

  We're back.

• 17:04Speaker 01

  We have a show, Stephen. I have a guest.

• 17:07Speaker 00

  I was just dancing over here, sorry.

• 17:08Speaker 01

  I have a guest. The music is so good, I need to stop this.

• 17:10Speaker 02

  Always enough time for Tribe Called Quest.

• 17:13Speaker 00

  Thank you, thank you.

• 17:15Speaker 01

  Welcome back, Money Wise Show. I'm Sammy Abiyawi with Debbie Lewis. And today, we have our guest, Kevin McCusker. Did I pronounce it right, Kevin?

• 17:23Speaker 03

  Yes, that is correct.

• 17:24Speaker 01

  Kevin is the Director of Government and Community Affairs for California Water Services. Welcome.

• 17:28Speaker 03

  Thank you for having me. Thank you very much, I appreciate it, and I'm happy to be here.

• 17:32Speaker 01

  Yeah, we're very excited to have you here. We have a bunch of questions about water, how we can conserve water, infrastructure. But first, I just want to start with you. How, and tell us a little bit about yourself, and how you got to the position you're in today.

• 17:45Speaker 03

  Yeah, well, so I've been in California now for 25 years. I'm originally from New Jersey. And I was a journalist. I was in newspapers out of college for the first 15, I guess if you count freelancing, first 20 years of my life, or professional life. I left journalism and went into higher ed. I was the PIO and the Marketing Director for a community college in the Central Valley. I did a very brief stint with one of the CSU locations as a Public Affairs and Communications Director, and then I moved over to Cal Water, back into the private sector, and I do Government and Community Affairs.

• 18:27Speaker 01

  Nice. How long ago? July 2015?

• 18:31Speaker 03

  2015 is when I joined Cal Water, yeah. Yeah, so I've been there for just past my 10-year mark.

• 18:36Speaker 02

  Congratulations.

• 18:37Speaker 03

  Thank you.

• 18:37Speaker 01

  A lot of changes since you came on board, I mean...

• 18:40Speaker 03

  Absolutely, yeah. I mean, I came on during the kind of the big, I always refer to it as the big drought. We've had kind of two since in the past 10 years. But that 2015 to 2017 drought was kind of the big drought, right? And there were lots and lots of regulations from the state regarding that.

• 18:56Speaker 01

  That's when we were not allowed to water our front lawns?

• 18:58Speaker 03

  Everybody had watering restrictions, there were water budgets.

• 19:02Speaker 02

  I wish that was normal now, I'd fit in. My lawn would look normal.

• 19:06Speaker 01

  Yeah?

• 19:07Speaker 02

  Dry.

• 19:08Speaker 01

  I'm really thinking about, you know, doing something.

• 19:10Speaker 03

  We call it California Gold.

• 19:11Speaker 02

  Yeah.

• 19:14Speaker 01

  I mean, I go to Otterstown, I go to Nevada, I go to Arizona, and I see a lot of these front lawns. They don't have grass or fake grass. I'm okay with that.

• 19:23Speaker 03

  I think you can have landscaping that's drought tolerant and low water use. That's quite attractive. I think it's a, like anything in aesthetics, it's kind of a thing that you've been kind of, you've learned it over the course of your life, that this is what a good-looking yard looks like. But you can go to other parts of the country or other parts of the world, and the landscaping looks beautiful. It's just not what we're accustomed to.

• 19:42Speaker 01

  That's true.

• 19:43Speaker 03

  In California, maybe what we had grown accustomed to wasn't appropriate for the environment or the habitat we live in.

• 19:50Speaker 02

  Well, aren't we mimicking New England?

• 19:52Speaker 03

  Absolutely.

• 19:53Speaker 02

  Homes, like, came out west, and it's like, that's what they have back there. We'll do it here. It's like, we have very different climates.

• 19:59Speaker 03

  I make that same point all the time, is that you've got this idea, this kind of northeastern idea of what a yard should look like, but we don't live in that climate. We live in a Mediterranean climate.

• 20:09Speaker 02

  Right.

• 20:09Speaker 01

  Yeah, and we don't have the water to do what's... Yeah, I agree.

• 20:13Speaker 03

  We don't. We have water, but we have to use it wisely. And we have to make the decision whether or not something like lawn grass is the wisest way to use that water.

• 20:24Speaker 02

  Which I'd love to just kind of pivot into what you and I talked about at the State of the City luncheon. And I was speaking from personal experience and knowing about the rebate program that Cal Water is offering for people that are looking to convert or explore the concept of converting their lawns, residential and commercially, and how Cal Water is supporting that.

• 20:46Speaker 03

  We have a really robust, really an industry-leading conservation program. And it's a great, it's not only, and so I'll kind of hit it from two points, right? You figure that there's an axiomatic idea that water is a limited resource. So conserving it is axiomatically good, right? Because you're making it go... But more importantly, in your household budget, if you use less water, your water bill is lower than it would be if you used more water. And lastly, what I'd like to hit on is, the funding for the water, for the conservation programs, is in your bill. You're paying for those programs? You should take advantage of them. And so we have rebates for converting your lawn.

• 21:26Speaker 03

  It's called Lawn to Garden Conversion. We have rebates for new smart irrigation controllers. And we have a really, really interesting program, and I've never seen anybody else do it. We call it our Smart

• 21:39Speaker 03

  Excuse me, our smart irrigation tune-up program. If you sign up for it, an expert will come to your house and evaluate your entire outdoor irrigation system and give us a report of recommended fixes and repairs. If you agree to that report, all the work and all the parts are at no additional cost to you.

• 21:56Speaker 01

  That's what I have in my current house right now. I bought the house from my father-in-law, from my in-laws, and I have that. I have the smart thing on my phone where if it raining, even if it's scheduled, it'll stop. If it's too hot, it'll give it like a couple of irrigations a day so it does not dry so much that you need a lot of water.

• 22:12Speaker 03

  Right.

• 22:13Speaker 01

  So it's pretty neat, too.

• 22:14Speaker 03

  Yeah, and so if you've got an outdated system and you sign up for our program, you can get all those things replaced and the work and the parts are already paid for.

• 22:23Speaker 01

  That's awesome.

• 22:24Speaker 02

  Light bulbs are going off in my brain.

• 22:27Speaker 03

  So if you go, it's calwater.com/conservation or you just look for the conservation tab and you'll find all of our rebates and programs in there. I do want to, and we talked about this at the luncheon the other day, and it's very important, though, especially if you're talking about rebates like irrigation controllers or washing machines, things like that. Do not go to the store, purchase something because it says low water use, and then bring it home only to find out that it doesn't qualify.

• 22:55Speaker 02

  Right.

• 22:56Speaker 03

  All of the devices that are qualified for rebates are listed on the site by location. So please check that first before you lay out the initial money thinking you're going to get a rebate.

• 23:07Speaker 02

  And with the landscaping replacement, it's also you have to use a contract or a licensed contractor, and there's also, I believe, a very healthy list, but a list of approved plants.

• 23:20Speaker 03

  Yeah, and you can't just go and hardscape your yard. You can't just pave over your yard. There has to be organic plant matter that's included. So there are requirements, and it's important for people to make sure that they go, check the requirements, particularly in those cases where you're laying out money upfront. You don't want to put that money out and then find out later you don't qualify for the rebate.

• 23:42Speaker 02

  Right.

• 23:43Speaker 01

  Yeah, I want to just move into... The first subject you brought up, which is the drought. The drought we had the year you joined Cal Water was that big old drought we had in the state of California, which affected millions of us, but also changed the way we see water, we approach water. What are some of the things that Cal Water has done, infrastructure-wise, but also just planning, to plan for eventual droughts and maybe just conservation of water?

• 24:12Speaker 03

  Yeah, well, that's a, it's a great question. Cal Water's, you know, been kind of on the leading edge of this for a long time already. But I think the 2015 to 2017 drought crystallized it for a lot of people in their minds to better conceive. So we engage in long-term water sustainability planning. There's a process, that's what's called the Urban Water Management Plan. And so what that is, is that's, that's showing the state that you have the water necessary for a community on a 40-year horizon. Now, 40 years doesn't sound like long-term when you're talking about planning, but it's an evergreen process because it has to be updated every five years. So it's 40 years on a continuous.

• 24:52Speaker 01

  On a continuous basis.

• 24:53Speaker 03

  And all of those plans have to account for multiple water scenarios. So that could be wet years planning, a multiple, multi-dry year planning. All of those scenarios have to be accounted for in that long-term planning. Every water provider should be engaged in that. Other things that have come about since then is things like water loss or auditing. There's now a better move towards a, a, a remote metering infrastructure, which gives people better access to real-time information. If there's a leak on your property, if something's going off and you don't know it. All of those things are gaining traction now in the, it, it, it, these things take time to, to gain traction,

• 25:38Speaker 03

  but they're gaining more and more traction. And it's gonna, it's gonna benefit the homeowner and the property owner, because it's not just gonna give Cal Water better information and data. It's gonna give you, the end user, better information about how, how much water you're using. Most people don't really think about how much water they're using.

• 25:54Speaker 01

  I pay attention to that just because I I got hit with the large bill a couple of months ago. I'm like, what's going on? So I went to the bill and I looked and went back through the history of the usage. Your uh your buddy, Stephen, your buddy Gabe was taking too many bats, man, getting into that and running the water almost every, seriously.

• 26:13Speaker 00

  Oh, yeah.

• 26:14Speaker 01

  And it increased increased the bill.

• 26:17Speaker 00

  Runs the water.

• 26:17Speaker 01

  When I changed that for him, it actually affected the bill by about a hundred dollars, hundred fifty dollars that much. So, yes, definitely paying attention to the usage, the bill is is, I think, a consumer thing that we have to do. Our responsibility, we can.

• 26:32Speaker 03

  That's and and particularly, it it should be of current concern to all people. Um, but particularly when you're talking about households that might have limited disposable income. Uh, that that type of water usage that's driving up your bill, if you can better manage that, that's that money could be better used for other purposes. Um, especially if it's not being used efficiently, if you're over watering. Or you could make better choices in your landscaping. In a in an environment like Bakersfield during the summer months, fifty, sixty, even seventy percent of household water use could be outdoor irrigation.

• 27:05Speaker 02

  Yeah.

• 27:06Speaker 03

  And and and that's a big thing. If your if your sprinkler head is broken and you're just shooting water into the into the street or you've got this large expanse of lawn, um, you could make some better choices there.

• 27:18Speaker 02

  Yes. Yeah, and it's something we have control over. There are a lot of things we don't, per se, but that is household to household, we do have control over certain things.

• 27:27Speaker 03

  Absolutely, and some people like to garden. You might make the choice that I'm willing to spend this money on the water because I love whatever I'm doing in my landscape. That's your personal choice and we want to allow for that. Uh, but at the same time, you know, there are state requirements too. Some people have heard about the idea that there the state is ratcheting down a limit on individual per capita indoor water use. Um, that law has been passed and the regulations are in place and we've got till twenty thirty to try and get down to this idea of forty two gallons per day per person.

• 27:59Speaker 01

  I want to talk a little bit more about that when we come back after the break because that's an interesting subject and notion. So when we come back.

• 28:07Speaker 00

  Don't forget, Money Wise is more than a radio show. We're an independently owned local wealth management firm with 60-plus years of collective experience. Our financial advisors are here to help you, Kern County. Together, let's be smart, be safe, be money wise.

• 28:28Speaker 01

  Welcome back to the Money Wise Show. I'm Sammy Abiao. We're here with Debbie Lewis and Kevin McCusker, Director of Government and Community Affairs for California Water Services. We started the conversation in the earlier segment about the water usage in the household and how can people, or some of the regulations that are coming down, Kevin. Can you elaborate on that a little bit, please?

• 28:52Speaker 03

  Yeah. So we talked, I mentioned water loss auditing. That's related to a set of laws that are referred to as the Sustainable Groundwater Management Act. However, I want to transition back to the household idea, which is often what's referred to in the industry or in politics as the conservation as a way of life framework. And that's a series of laws that regulate how much water you can use in your household. And there's some fairly big limits that have been put on indoor water usage per person. And so that these laws were, they were passed. And so I know a lot of people don't like them, but the horse has

• 29:33Speaker 03

  left the barn with regard to that. And so we're trying to adjust to that. And right now, we're trying, people are supposed to get down to by 2030, 42 gallons per person per day for indoor water use. That's fairly low for California. There are some communities that are there, but not very many, particularly not in the Central Valley. And so one of the things we were just discussing during the break and for your audiences, take your January water usage. That's when most people are not irrigating their yards very much. You really shouldn't be during that time of year. It's a great time of year. So if you take your January usage and take about 90% of it, right, times it by 0.9, then divide that by the number of people in your household, that'll give you a pretty

• 30:18Speaker 03

  good proxy for how much indoor water use per person you're using every month. Then you would obviously divide that by the number of days in the month and you get a per day. And that'll give you a sense of where you're at because you're supposed to get down to 42. And water providers who don't get down there potentially at some point in this process could be looking at state fines up to $10,000 per day.

• 30:40Speaker 02

  Ooh.

• 30:41Speaker 01

  Wow.

• 30:42Speaker 02

  Wait, what? I think I...

• 30:44Speaker 01

  That's a big... That's a big... No, these are some of the things we don't pay attention to as consumers.

• 30:51Speaker 03

  Right.

• 30:52Speaker 01

  You know, because you see the water bill and you pay it. A lot of the time you don't look at the details unless you get shocked by a large dollar amount on the bill. Then you start going back, hey, what's going on, like I did.

• 31:02Speaker 03

  Yeah. And in some cases, you know, nobody wants... We want the water to be affordable. That's extremely important to us. And I'm sure there are people who are going to be skeptical when I say that, but it's true. But there also is this idea of sending price signals. As you get into these higher tiers of usage, you're trying to send a price signal to people to get their attention and say you need to pull back on how much water you're using. The other thing I would say too is that water conservation, we've done a statewide of all of our systems in the state, hired some academics and a research firm to look at how conservation affects the overall cost of the enterprise. And in a case where surface, between surface water and groundwater, it can reduce our

• 31:47Speaker 03

  operating costs anywhere from 3 up to 20% lower than it would be without conservation. Those are savings, again, that get passed on to the customer.

• 31:56Speaker 01

  To the consumer, yeah, yeah. I have... I wanted to talk about, we talked about some of the infrastructures and ideas, things that... Consumers eventually are paying for that you wanted to just talk about. And how they are, what you're doing right now, maybe some of the projects you're looking into doing in the future.

• 32:17Speaker 03

  Absolutely. I think one of the things that I hear the most is that people want to understand why the water bill is what it is. Why does it cost what it costs? So here's one of the first things I want to point out, which is mostly what you're really paying for is water service, not water. Right? You're paying for water service. So that includes not only the water, that includes the infrastructure, the pipes, the wells to get it up out of the ground, or the treatment facilities to make it safe to drink, the pipes that bring it to your house so that it comes out of your tap. That's all part of the water service. And most infrastructure, all infrastructure really, has a useful lifespan. And so it doesn't matter whether you're talking about a bridge or a water main. If that water main is fifty, sixty, seventy-five years old, it's gonna have to be turned over.

• 33:02Speaker 03

  It's gonna have to be replaced. And so we look at things like, well, how old is the, how old is the, the infrastructure? What's the leak history on it? And then the other thing we consider when we're talking about which water mains are gonna get replaced versus others, is what's the consequence of failure? So let's say you run a, an emergency room, right, a, a trauma center. Well, if, if I lose water service because my main breaks on my residential street, that's bad. If the trauma center loses water service because the main breaks, that's potentially catastrophic.

• 33:37Speaker 01

  Yes.

• 33:37Speaker 03

  So those are not gonna get ranked the same when we're talking about turning over.

• 33:41Speaker 01

  I see.

• 33:42Speaker 03

  And that's part of how we do the, how we manage what's gonna get replaced when. And so we invest in the water system, and although people might not conceptualize it that way, that is to their benefit. If a well is no longer functioning, replacing that well to keep supply moving around the city is an important investment. But that does show up over time in customer bills. It's, it's a small fraction of the bill, but it, it, it gets paid back over the useful lifespan of, so it's almost like a mortgage that you're talking about.

• 34:16Speaker 01

  Appreciate it over a certain amount of time and then it's passed on to the bill of every

• 34:20Speaker 03

  Right.

• 34:21Speaker 01

  consumer.

• 34:21Speaker 03

  Exactly, and so that's how the, that's how the kind of regulated water industry and regulated utility service in general functions. So it's a different model than the municipal model, but it, you know, people can have different opinions about which one's better. They both have benefits and they both have downsides and it's understandable.

• 34:42Speaker 01

  So these projects sound very costly. Infrastructure projects are very costly by nature. How do you finance those? Are these bonds that you sell? Are these just?

• 34:51Speaker 03

  Yeah, so we have, we have, you know, traditional debt service and then we also have equity investment and that's kind of the, the California Public Utilities Commission. Their function is to look at all of our expenses, all of our operating costs and everything we're doing that has to be justified. And then they set a number of things. They set, they approve how much we can spend during a given cycle and the projects that go along with it to a certain extent. They, they set the rates. We make a proposal about what the rates should be so that we can recover our operating costs and our revenue requirement,

• 35:32Speaker 03

  but they make the final determination whether or not our proposal is prudent and just or not. And then the last thing they set is the actual cost of capital. How much do we get for debt service? How much do we get for return on investment overall?

• 35:50Speaker 01

  Yeah, that's, that's, to me, that's what's interesting because a lot of the time we forget that these things are expensive. As a consumer, my bill comes and I, if I don't pay, well, hey, the water went up.

• 36:02Speaker 03

  Yeah.

• 36:02Speaker 01

  But when you explain it the way you explained it, no, it's not just the water, it's the pump, it's the lifting pump, it's the, it's the actual pipe, it's the labor that's put all that together. It, it makes more sense in my head.

• 36:14Speaker 02

  And locally, we're also having this conversation as a community with the sewage

• 36:19Speaker 03

  Right.

• 36:20Speaker 02

  rates potentially going up, which I think they are, but there was a strong pushback by the public. And of course, nobody wants their bill to go up, but it needs to be an ongoing education of

• 36:32Speaker 03

  People have to understand

• 36:33Speaker 02

  This has not been updated in a very long time. Do you want to be drinking feces?

• 36:39Speaker 03

  Exactly. And the answer is no, at least for me. But the

• 36:43Speaker 01

  I think the answer is no for everybody.

• 36:45Speaker 03

  The, I don't want to speak for anybody besides this. The, but the point being, you constantly have to have this dialogue going where you're explaining the value proposition of saying, nobody wants to pay more for anything.

• 36:57Speaker 01

  Yeah.

• 36:57Speaker 03

  But the overall trend in reality, regardless of whether it's utility service or anything else, is not usually one of declining costs, it's one of increasing costs.

• 37:05Speaker 01

  That's right.

• 37:06Speaker 03

  So just look at, let's look at the California Consumer Construction Cost Index, right? In the past four years, the cost of construction in California has gone up something like 40%. That's in a four-year cycle. Well, what is infrastructure? Infrastructure is construction.

• 37:22Speaker 01

  That's right.

• 37:23Speaker 03

  So every project, the number of projects that are necessary to operate an enterprise the size of the Bakersfield Water System is not a small number of projects every year. So it's not that we're doing more projects, it's that each project is increasing in cost. You also think about, and I'm not trying to, you know, power companies are also regulated utility services, but the cost of power has gone up.

• 37:48Speaker 01

  Yes.

• 37:48Speaker 03

  Well, it takes a lot of power

• 37:49Speaker 01

  To the tune of about 40% in the last four years, too.

• 37:52Speaker 03

  And how do you think you move water around the city?

• 37:54Speaker 02

  Right.

• 37:55Speaker 03

  It takes, how do you get water out of the ground?

• 37:57Speaker 01

  That's right.

• 37:57Speaker 03

  How do you move water uphill when people uphill need it? Takes a tremendous amount of power. All of those things go into the cost of water. Treatment chemicals. That's something that is a relatively small component in the operating cost, but that's something that was relatively flat in price for a long time and has recently spiked over the last four or five years.

• 38:18Speaker 01

  It did spike because of the war in Ukraine. We were talking about this with John Cox, as far as growers are seeing a lot of the impact of chemicals in the last four or five years because of the war in Ukraine. A lot of the chemicals we use in agriculture come from that country and we're seeing that impact, it sounds like we're seeing that impact on water as well.

• 38:41Speaker 02

  We have a comment that came through.

• 38:43Speaker 01

  Yes, this we do, yeah.

• 38:45Speaker 02

  When we lived in Nevada, we had to have a rock garden, but when we were leaving, they were beginning to allow artificial turf. What is the name of the program your guest mentioned? Smart irrigation?

• 38:55Speaker 03

  So there's two distinct ones there. The one for changing your landscape is the lawn to garden conversion program. And so for Cal Water, if you're, you have to be a Cal Water customer, I should make that clear too. And so that would be things like changing your lawn, replacing it with, say, like I'm considering taking what little lawn I have in the front yard out and putting in like creeping thyme. We don't use that grass. We don't, my kids don't play on it, there's no use for it. So we're considering making those types of changes, a rock, gravel, and some, but you still need some organic plant material to qualify. We do not provide rebates for, for artificial turf.

• 39:40Speaker 03

  And I can explain that because there is no longitudinal studies available for what the effect of water percolating through fake grass is doing to the water in the aquifer. And so I'm not saying fake grass is, is good or bad. What I'm saying is that it's an evidence-free environment about what the long-term consequences of water quality might be. A lot of the turf replacement, artificial turf replacement products could include things like PFOS chemicals. A lot of people have heard about those in the news lately. We're in the process now of installing treatment up and down the state to address new PFOS regulation. We don't want to contribute to that. Yeah. And so until there's good longitudinal evidence to say that it's safe to install

• 40:25Speaker 03

  these products, we're not including them on the, on the rebate. Doesn't mean you can't do it, it just doesn't qualify for a rebate.

• 40:32Speaker 01

  Doesn't qualify for the rebate, which, which leads me to another question. We've talked about some of the rebates and stuff, but low-income people, are there programs to help?

• 40:43Speaker 03

  Yes.

• 40:44Speaker 01

  And so how can they access that?

• 40:46Speaker 03

  So again, go to our, go to our website, that's calwater.com, and you want to look it up under customer assistance. So we have what's called a customer assistance program. It's income-based, so we don't have anything based on age or anything like that. We do get, we get asked about that a lot, and I certainly understand the concern there, but it's, it's specifically income-based. If you qualify for the power company's care program, if you're on TAMP or if you're on any of these other, you're going to qualify for ours. And what it does is it takes, there's really two components to your water bill. And I, you know, I could come back another time and talk about how to read your water bill, but there's a monthly service fee and then there's a consumption fee.

• 41:29Speaker 03

  The consumption fee is based on how much you use. But there's a monthly service fee, even if you don't use any water, you're getting charged for that monthly service fee. If you're on customer assistance, you get 50% off that monthly fee. The other thing we've done recently is we've really reconfigured our rates. And so people who are in the higher usage tiers have noticed it. The people who are in the lower tiers might have noticed that their bill may have gone down. Now, the first six units of water are extremely discounted. And the idea here is between the customer assistance discount and the zero through six, first six units discount, that the, that the, the water you absolutely need to live is as low cost as possible.

• 42:12Speaker 01

  That's good.

• 42:13Speaker 03

  And, and now if you're a higher income person, you still get those first six units at a discount. But you might choose to use-

• 42:20Speaker 01

  So, everybody gets that?

• 42:21Speaker 03

  Yeah, everybody gets that. So, the first six units, extreme discount, less than a dollar per unit. A unit is 748 gallons of water, by the way. Okay. And so, it's what, 100 cubic feet. And so, you get those first six at less than a dollar a unit. And so, if you're a low volume user, and our research indicates that there's a big overlap between people who are low income and who are low volume users, you're getting that discount and, but if you're, even if you're not low income, you might not be getting customer assistance, but you're still benefiting from that first tier, what we call that lifeline rate.

• 42:59Speaker 01

  Yeah, it sounds like it's a reward for you just doing your part and conserving water.

• 43:04Speaker 03

  Exactly. And so, if you're a low income household and that's all the water you use, because you might not have landscaping or, or anything, or a swimming pool or anything that's contributing to higher water use, you're getting the benefit and it's helping your household because of the benefit. But if you're, if you, even if you're not income qualified, you're getting the benefit by being a good steward of a, of a limited resource.

• 43:27Speaker 01

  So, so, a lot of, if we're going to a drought tomorrow, and it's a lasting drought, are there any plans of building these desalination plants like other countries are doing? I mean, I was watching YouTube the other day, Saudi Arabia, Israel, a lot of the Middle East countries are like the leading countries in the development and construction of these facilities. Is there, are there any plans in the state of California to do such thing?

• 43:51Speaker 03

  There is a, we're not involved in it. There is a, there is a hotly contested project up in Monterey County. I'll say this about desal. And we're involved in some research that has to do with brackish desal as opposed to marine desal, talking about the difference in the, in the salt content. But, in the past, it's been perceived as too costly. It's, it's power intensive, and you have this, this waste product that's

• 44:20Speaker 01

  The brine.

• 44:21Speaker 03

  The brine is fairly expensive to, to manage and to dispose of. So, it is cost intensive. However, I will say that if you're in an environment where people are constantly dealing with water scarcity, and the price of that commodity is going up, what once might be considered too expensive, might start to look more appealing over time. I don't know that we're there yet, but, you know, we also have to look at what's developing in, you know, there are people trying to do some fairly new research in desal. And, you know, we'll see where that leads. But, for the, for the time being, we're not personally, Cal Water's not involved in desal. But that, you know, the state's approach to desal could change over time depending on other factors.

• 45:05Speaker 01

  I was just interested in recycling. You, you mentioned recycling. Are we able to capture most of the, the water that we use and recycle that and put it back into usage again?

• 45:16Speaker 03

  We have the technology. Where, we just started doing some project with Caltrans up in the Bay Area where we're irrigating some Caltrans property with water that's reclaimed by the city of Redwood City. And we're piping that out to water their, their landscaping. And we'd love Love to see more of that over time. I think there's just now, there's always been an interest in California, but the regulatory framework to allow people to do it is just starting to develop now. So I think you'll see some growth there in the future, and I think it's needed. I think you also have an element of how you're going to use the water, right? It tertiary treated water, people are fine putting it on the landscape,

• 45:58Speaker 03

  they might not be fine putting it in their sinks. Now, that's, you know, that's just a personal kind of thing that some people struggle with. I've been to the water reclamation site up in the Bay Area, and I drank the water and it was fine. I brought bottles home for my kids, but only one of them would drink it.

• 46:17Speaker 01

  Yeah, it's, I mean, it's an interesting concept. It looks, I mean, it sounds to me, I mean, if we can use it for irrigation at least, and if it's, and if it's not harmful, why not?

• 46:27Speaker 03

  Yeah, and it's, the, the, the thing they have to consider is when it comes to the cost of water overall, is the most effective source, or the way to develop new sources is to actually just make the existing supply go further. That's the most cost-effective way to do it. So if you have a chance to reclaim water and reuse it, that's going to be in the long run, more cost-effective than trying to develop new sources of water. So that, and, and again, the interesting way to think about things. The same amount of water has been on the planet for billions of years. There's not more water or less water. The same amount is. It's where is it, and what, and what condition is it in? Is it above the ground? Is it below the ground?

• 47:11Speaker 01

  Yeah.

• 47:12Speaker 03

  Is it over there? Is it here? Is it frozen? Is it in the air? Is it liquid? Is it drinkable? Is it not drinkable? Those are the things that change.

• 47:19Speaker 01

  I, I have one more question. The housing, we have a huge housing activity, especially here in Bakersfield, Kern County, because it's an affordable space for a lot of people coming from LA, even out of state. Is, are you guys, do you guys take that into consideration for whatever projects you're doing, the growth?

• 47:37Speaker 03

  We do. Yeah, in our water resource planning, we have to account for growth projections. Those come out of local general plans, as well as state projections for population growth, and we account for that in the water supply planning.

• 47:50Speaker 01

  Very interesting today. I would love to have you back to talk a little bit more about how to read the bill. I think it would be very interesting, but other things too. This is fascinating just to understand the water, the water situation, especially in the state of California. Stephen?

• 48:04Speaker 00

  We'll definitely have to have him back. I want to learn how to read my bill as well.

• 48:08Speaker 02

  I feel like we've barely nicked the surface. No pun intended.

• 48:11Speaker 03

  I'd be happy to.

• 48:13Speaker 00

  We appreciate it. I'll be in touch and tune in tomorrow as we, Scott Hanson from Level One Financial coming back right here on the Money Wise Show. Until then, be smart, be safe, be money wise.

• 48:32Speaker 04

  Securities offered through LPL Financial, member FINRA/SIPC. Investment advisory services offered through LPL Financial. LPL Financial and Money Wise Wealth Management are independently owned and operated.