Water agencies and businesses raised concerns about the potential of the state\u2019s energy policies to significantly drive up water costs if they fail to account for the complex water-energy \u201cnexus.\u201d Energy is the second largest tab for the water sector, just after capital costs. The state\u2019s water supplies are a huge economic driver. The State Water Contractors and California Business Roundtable Aug. 20 called for better integration of the state energy and water agencies\u2019 climate protection and renewable energy policies and regulations. Moving to carbon-lite energy resources will come with a price tag if state energy and water agencies don\u2019t better coordinate \u201cto avoid unintended consequences,\u201d said Jeremy Carl, Stanford\u2019s Hoover Institute director of research. The water sector is the largest energy consumer in the state, using 20 percent of the electricity. Rob Lapsley, California Business Roundtable president and chief executive officer, noted his organization plans to sponsor a bill seeking better agency integration along with more transparency on energy, climate, water and transportation policies the next legislative session. This session\u2019s effort, AB 1763, which sought to expand the California Energy Commission\u2019s Integrated Energy Policy Report, died in June. Much of the focus at the Wednesday meeting at the state capitol was on the cost impacts of reducing emissions at the massive State Water Project. Operated by the Department of Water Resources, it stretches 600 miles to supply about 2.5 million acre-feet to 25 million families and businesses, and 750,000 acres of farmland. It uses huge quantities of energy to move the water, particularly up hill, with its project hydro plants supplying about 60 percent of needed resources. \u201cThe energy services it provides are profound,\u201d said Tim Haines, State Water Contractors\u2019 deputy general manager, energy. He noted that the State Water Project services include flexible power supplies to the state. It typically runs its hydro at peak periods, which helps the grid operator meet demand, and turns on its pumps to move water at night when energy demand is low. Flexible power also is key to the integration of intermittent solar and wind energy resources. In addition, the project is the largest source of demand response in California, with replacement power estimated at $50 million a year. \u201cThere is nothing else in the state that the California Independent System Operator can turn to that has that much control to keep the lights on,\u201d Haines added. By 2020, the project expects to supply 70 percent of the power from carbon-free power supplies needed to move water from the Bay Delta to Central and Southern California, much of it from the project\u2019s hydro plants. By 2050, Water Resources aims to have the project power be 100 percent carbon free, with project hydro and hydro imports, as well as solar and other renewable resources part of the mix, said Veronica Hicks, chief of DWR\u2019s Power Planning and Risk Management Office. At issue is the impact on water rates. \u201cWe are not suggesting we are suddenly on wrong track but let\u2019s take a pause and take stock of what is front of us and do a course correction,\u201d Haines said. While raising concerns about costs and inadequacies of state agency sensitivity to the water-energy nexus, speakers gave short shrift to energy efficiency and water conservation. Using water more efficiently cuts energy use, reaping negawatts and carbon emission reductions. It also stretches finite water supplies, which is critical during droughts. San Bernardino Valley Municipal Water District manager Douglas Headrick said his agency was getting more serious about water conservation and offering some rebates for water savings measures, including more efficient irrigation. He also noted the problems of lawns in a semiarid region. \u201cThe English tea garden is not sustainable,\u201d said Headrick.