Golden State Water states case to thorny Claremont crowd
About 150 people funneled into a multipurpose room at the Claremont Colleges Tuesday night as Golden State Water questioned the city’s planned water system acquisition.
The meeting, moderated by the water company, was held two weeks after a town hall hosted by the city of Claremont, at which time the Claremont City Council unanimously approved the use of $350,000 to prep financial and legal documents needed for the potential purchase of Claremont’s water system.
The city of Claremont and Golden State Water have continued to battle over water system ownership for the past two years, following the water company’s request to once again raise its rates. In November 2012, the city offered Golden State Water $54 million to purchase the city’s water system, followed by a $55 million offer last month. The water company has denied both bids, stating the price is too low and the water system is not for sale.
At the town hall meeting on November 6, Claremont officials asserted the city could afford up to $80 million with little to no impact to existing water rates and without resorting to a water bond or parcel tax. If the water system purchase was to cost $100 million or $120 million, city experts estimated water costs would still be lower than existing Golden State Water rates in 9 or 17 years.
Golden State Water representatives begged to differ. Company executives questioned the city’s figures and state they have made several public information requests to obtain the data surrounding those findings. City officials remain firm in keeping the feasibility study confidential until legal proceedings are concluded.
In a study conducted for the water company by local water consultant Rodney Smith, the company upholds a $54 million water system purchase alone would result in a water bill increase of $469 a year for Claremont residents based on capital expenditures, or the cost of maintaining the company’s assets, income tax, operating expenses and the water itself.
“Sales are down everywhere and utilities have to cover their costs,” said Denise Kruger, Golden State Water’s senior vice president of regulated utilities, who served as the night’s moderator. “If they’re not doing that, if you don’t see their rates going up, you need to ask how they’re covering their costs. Are they not doing the infrastructure investment? How are they making that up, are they not maintaining the system like they should?”
The water company says it has spent more than $20 million investing in infrastructure for the Claremont system since 2000. In 2012, they spent $3.1 million. These expenditures were necessary in part because of the city’s heavy water usage, particularly in the north, and the wear and tear on the system from channeling water through the city’s inconsistent elevation levels. Despite comparisons to the city of La Verne, Mr. Lewis says Claremont uses 2.7 million more gallons of water than its neighbor, an equivalent to 16 million pounds of water per day.
“When it comes to Claremont the southern part of the system is roughly 1000 feet lower than the upper part of the system, and accordingly there is a lot of energy that is required to move water within those different elevations within Claremont,” Mr. Lewis said.
Despite the water company’s many investments, many residents remained at odds with the company’s fixed business costs—valued in the millions—and vocalized their frustrated over their conservation efforts while water costs continue to rise.
Among the concerns vocalized repeatedly during the meeting’s question and answer period was the water company’s Water Rate Adjustment Mechanism (WRAM), a surcharge created in 2009 as a means of ensuring the company had enough money from its ratepayers to continue business. With state legislation mandating water companies cut back their customers’ usage, Golden State Water officials say they needed to find a way to recover any potential losses.
While applauding residents’ conservation efforts and vocalizing her empathy, Ms. Kruger recognized that not much could be done to change the company’s fixed costs in order to eliminate WRAM surcharges.
“They are what they are,” she said. “It’s backwards, but that is unfortunately the reality of the water business…I wish the answer was if you use less water our rates are going to go down, but that is just simply not possible.”
The answer did not sit well with Randy Scott, co-leader of the grassroots organization Claremonters Against Outrageous Water Rates, who stood with a group of residents holding signs outside the meeting before its start.
“By what we’ve seen tonight, nothing has changed. They have presented us with the same answers and we still feel like we are being overcharged,” Mr. Scott said.
Claremont resident Arnold Tuason said he attended the city’s town hall earlier this month, and decided to take part in Golden State’s meeting in an effort to hear both sides. While Mr. Tuason agreed it might not be financially feasible for the city to obtain its water system, he did say he is unhappy with the way the water system currently operates.
“I have no faith in the California Public Utilities Commission and we are at the mercy of Golden State Water,” he said. “The only options as I see it are to get out of the system or work together with the water company as a partner.”
Mike Skapik, a homeowner in south Claremont, is hesitant to get the city involved in water system ownership and says he is troubled that the city refuses to disclose the feasibility study to the public.
“I think its time for a timeout and not do anything until we get all the facts out on the table,” Mr. Skapik said.
City Manager Tony Ramos—present at the meeting along with City Attorney Sonia Carvalho—maintains the city has been transparent in its efforts and will make every effort to continue to do so. A page dedicated to water acquisition has been added to the city’s website, where Mr. Ramos says information is readily available on the status of the city’s quest for local control.
“[Transparency] is not the issue here,” Mr. Ramos said. “The issue is how does Golden State plan to move forward with lower water rates? That hasn’t been addressed.”