Water rate increases loom as settlement outlines big hikes (full story)

Claremont residents will see a spike in their water rates starting in January 2013. The increase at this point is set at 15 percent based on a recent settlement with the water company.

Golden State Water Company and the Division of Ratepayer Advocates (DRA) reached an agreement last month on proposed water rate increases for Claremont residents and other Region 3 ratepayers through 2015. The settlement now moves on for its final approval by the CPUC.

The settlement agrees on water rate increases of 15.1 percent in 2013, 2 percent in 2014 and 1.8 percent in 2015, according to a news release. Golden State Water initially sought a 24 percent rate increase for Region 3 in 2012, followed by moderate increases in 2014 and 2015.

The settlement was filed with the California Public Utilities Commission (CPUC) last month after an agreement reached between the 2 groups on June 21. If approved by the CPUC and administrative law judge, the decision will bring to an end months of negotiations between Golden State Water, the DRA and numerous organizations throughout the region.

DRA officials say they are pleased with the decision, while asserting this is only the beginning of the process.

“There is a lot that goes into deciding whether we should settle or not. The CPUC might find our assertions weak,” said Danilo Sanchez, manager at the DRA. “We probably won’t see an end to this case until the end of the year.”

Last April all parties involved in the rate case, including the city of Claremont, were asked to take part in settlement negotiations, in an attempt to reach an agreement without further litigation. The DRA believed reaching a settlement would be more favorable because of costs associated with the legal proceedings and the potential for a higher rate, according to Mr. Sanchez.

“We take a risk [with litigation],” Mr. Sanchez said. “We may present a strong case, but then the utility might lobby through the commission and the rate gets changed. Sometimes it doesn’t, but we take a risk by doing so. We may end up with a higher rate increase than if we settle the case.”

Following the initial April 16 negotiation meeting, a series of negotiation sessions were set up over the next 2-week period. A decision was reached based on a more thorough analysis of proposed infrastructure. “We asked them to slow down the rate of replacement in certain areas as we saw appropriate and tried to reach a compromise,” said Mr. Sanchez of how they reached the 15 percent rate increase.

From the file date through last week, parties involved in the case have been allowed to submit comments on the proposed agreement to the CPUC. The city of Claremont filed comments on July 31.

Claremont administrators feel the settlement undermines city efforts in the case. Efforts include hosting a hearing with the administrative law judge in December, written testimony, rebuttal evidence and participation in hearings. In addition, the city had been granted “intervenor status,” preparing to take part in litigation as the CPUC review’s the rate case and prepares to make a decision.

“The settlement between the DRA and Golden State Water is disappointing and frustrating,” said City Manager Tony Ramos. “The ratepayers deserve full consideration of the evidence and this process has been cut off by the settlement.”

The settlement doesn’t cut off any review or any effort by the public to participate, responded Denise Kruger, Golden State’s senior vice president of regulated utilities.

“All of the comments that were a part of the CPUC hearing in the city of Claremont are part of the record and will be taken into consideration by the judge,” Ms. Kruger noted, “and even though the city chose not to participate, the DRA participated as an advocate for the ratepayer.”

Golden State officials claim they are “surprised” by these frustrations over the settlement agreement because “the city chose not to participate in the settlement process in a meaningful way.” Ms. Kruger alleged that the city of Claremont was only present at the initial April 16 negotiations meeting, though other cities throughout Region 3 were present throughout the entire negotiation process.

Though the DRA contends the new rates are fair, Claremont officials remain frustrated at increasing costs to Region 3 ratepayers, especially in light of recent increased costs. The new rates come on the heels of a more than 30 percent increase within the last few years, according to city officials.

“We are of the opinion that the rates agreed upon by the DRA and Golden State Water are still too high for our residents,” stated Mayor Larry Schroeder. “Many of our residents are struggling to afford their current water rates. A 15 percent increase in one year is unacceptable.”

The DRA is expected to submit reply testimony in response to the comments and the settlement on August 16. A final decision on all issues in this proceeding is expected by December 2012. In the meantime Claremont officials continue to trudge forward with their intent to acquire the city’s water system. Administrators await response from Golden State Water to a formal notice of its decision to appraise the water system, as required by law. The appraisal may take up to 4 months for completion.

—Beth Hartnett



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