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Comments and comparison with the city-owned water system in La Verne

by Freeman Allen

[Editor’s note: The following viewpoint was submitted in an effort to refute claims made by Golden State Water in their letter to Claremont customers that was distributed September 11, 2012 by Denise Kruger, senior vice president of GSW. The original letter can be viewed at http://www.gswater.com/csa_home pages/claremont.html. —KD]

Claim: Water rates. Customer bills also include a City-mandated 5.5 percent Claremont Utility Tax. 

That is correct. The tax added $941,000 to the Claremont city budget in 2011.

What isn’t said: In La Verne, there is no added tax, but the city water enterprise contributes $1,000,000 to the city budget, more than taxes do in Claremont.  Yet La Verne water costs the user much less than in Claremont.

Claim: Proactive maintenance is the right way to protect the system.

What isn’t said: La Verne has been more proactive than Golden State Water by building emergency water storage facilities. Golden State is still using temporary storage facilities and just beginning to catch up. Those who know the La Verne system say it is better maintained, and the water quality is as good as in Claremont.

Claim: We (GSW) receive a government-approved rate of return. 

What isn’t said: Golden State’s rates are approved by the California Public Utilities Commission, notorious for favoring corporate interests over those of consumers. There is a charade: Golden State routinely requests about twice what is granted.

If Claremont owned the water system, the city would set its own rates and not need CPUC approval.

Claim: Essentially, your water rates are based largely on consumption.

What isn’t said: Rates approved by the CPUC are supplemented by hefty GSW “adjustments.” Perhaps the most notorious is WRAM—the Water Rate Adjustment Mechanism that allows increases in rates as water is conserved! Service charges (meter charges) are also manipulated to increase income. For example, there was a huge increase in 2010 when CPUC-approved water rate increases were applied. A third higher-rate tier was added, and meter charges were also increased.

Claim: Then the city would have to create a water agency.

What isn’t said: That is not necessarily so. The city might partner with a neighboring city and jointly manage the system.

Claim: Homeowners would bear the full cost for eminent domain takeover, through a property tax increase/or additional fees.

What isn’t said: Claremont water users now pay an estimated $8 million or more per year than they would under La Verne rates. If that money was used for a bond to purchase the system, even at a cost of more than $100 million, there would be money left over to reduce rates significantly. And in the future, we would determine our own rates, not Golden State and the CPUC.

Claim: Impact on rates. Claremont residents will end up paying substantially higher water costs for a lower level of service, now and in the future.

What isn’t said: That is not correct. Water costs could decrease, and rise less in the future than under Golden State. La Verne, a city remarkably similar to ours, has a city-owned system. Their costs to the user are half what they are in Claremont if the cost of water to the providers is taken into account. 

It is remarkable to imply that a municipally-owned system, where the local customers are the only concern, would have poorer service.

Claim: If anyone suggests otherwise, ask for the details.

Offer: A detailed analysis is posted on the League of Women Voters and Sustainable Claremont websites, www.claremont.ca.lwvnet.org and www.sustainableclaremont.org. See for yourself.

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