Golden State Water seeks to confuse, hide the real numbers
We Claremont voters are being bombarded by expensive, slick mailers paid for by Golden State Water Company to try to convince us to defeat “Yes on W.” In the mailers, they seek to confuse us with numbers from city studies. I thought that it might be illuminating to study the company’s own reports to their stockholders and required public filings. All of the following was found on the Internet.
Golden State Water Company is wholly owned by American States Water Company and currently provides 79% of the company’s revenues. This is a publicly traded company (AWR) on the New York Stock Exchange. I urge all Claremont voters to go to the company’s web site to get the real story behind Golden State’s desperate attempt to put up a smoke screen to confuse our November 4 vote.
From the company’s website
A stock investment in 2000 would have returned a 231 percent investment today.
The price of the company’s stock was relatively flat for years until it rose from around 18 to mid 30’s in the last two years.
Most importantly, every Claremont voter and water user should read “American States Water Company Corporate Presentation – August 2014”. The company’s own message is packed with information that should infuriate us all.
Just a few examples
“Favorable regulatory environment in California. Decouple revenue from sales to provide consistent returns through Water Adjustment Mechanism (WRAM) [i.e. penalty for conserving]
Compound annual growth rate 2009-2014 is 16.8 percent.
In May 2014, the Board of Directors approved a 5.2% increase in cash dividend for the third quarter of 2014 in addition to a 14.1% increase in 2013. We are targeting a dividend growth rate of at least 5% over the long term.
The company approved a 5.2% increase in the third quarter cash dividend, approved a stock repurchase agreement up to 1.25 million shares, and approved a two-for-one stock split. In 2013, the company also implemented a 14.1% increase in the cash dividend for the third quarter.
May 2013: The CPUC issued a final decision in the water general rate case, approving new rates for 2013-2015. Among other things, the new rates were retroactive to January 1, 2013, and generated $9.6 million, or 3.1% in additional annual revenues; and increased the water gross margin by $13.4 million, or 6.1%.
GSWC continues to encourage conservation and has mechanisms in place to decouple revenues from sales through tiered rates.
GSWC has surcharges in place to recover under-collections in its WRAM/MCBA accounts. (Duh—-penalties for conserving water)
The adjustment mechanisms protect earnings from declining consumption and rising water production costs.
Regulated Utilities (GSWC) Strategy
Maintain good working relationship with state regulatory commission and be proactive in managing resources and influencing policy.
CEO and president Robert J. Sprowls said in a Wall Street Transcript interview (8/29/2012), “I think the investment community may be underestimating the favorability of California regulation on water utilities. With forward-looking test years for rate cases and a significant number of regulatory balancing account-mechanisms, I believe it’s a very productive regulatory environment.”
One of the more disturbing revelations from studying American States Water Company document is their plan to take advantage of the “non-regulatory environment” of the federal government. The company’s stated strategy is to go after the “privatization” of military bases as new golden geese. The company’s presentation sort of brags as this being an under-regulated market. As United States citizens and taxpayers, we Claremonters should be doubly outraged. This company has figured out how to rig the game every which way to Sunday.
We may not be able to affect some of this, but we can say YES on W! We can take charge of our water.
Vote YES on W – the last item on your ballot!
Former mayor of Claremont
Former President, League of Women Voters of Claremont