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City of Claremont releases water financial feasibility study

As part of its agreement with Golden State Water signed on August 4, the city has released the financial feasibility study and amended ballot language in exchange for the stopping of a petition drive for a counter initiative and dropping of legal claims and lawsuits.

The financial feasibility study is a 110-page computer financial model of the Claremont water system, which is currently owned by Golden State.

The feasibility study was prepared by a team of experts with over 30 years of experience in utility rates, financial analysis and valuation, according to a city press release. The study was designed to be a tool to evaluate, analyze and compare rates between municipal ownership and private-investor ownership at different purchase prices of the Claremont water system. The study is based on data taken from Golden State Water Company’s official filings for the Claremont water system. The study was used to assist with the preparation of the city’s November 6, 2013 town hall presentation at Taylor Hall.

For purposes of assessing rate impacts between municipal and investor ownership, the model assumes the same operating costs as in Golden State’s California Public Utilities Commission filings for the Claremont system, according to the city. This includes the same operation and maintenance expenses, customer accounting expenses, and administrative and general expenses.

At the same time, unlike investor-owned utilities, the model assumes that municipal ownership has no operational costs for federal and state income taxes or profit.

An assessment of rate impacts for municipal bond financing at different purchase prices is also shown in the model. Claremont city staff contends that the model supports the finding that municipal ownership at an $80 million purchase price would not result in an increase in rates over Golden State’s rates.

To see the full report, visit the city’s website at www.ci.claremont.ca.us. A full story on the study will appear in a future edition of the COURIER.


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