Buy the water company

On April 11 the Inland Valley Daily Bulletin published an editorial titled “Claremont ought to buy out water firm,” after the Bulletin’s opinion editorial board met with the  League of Women Voters to discuss the proposed acquisition. (The board had previously met with Golden State Water.)

Golden State Water has commissioned several much-publicized studies being used to persuade the public it would be foolhardy for Claremont to go ahead with  acquisition. 

On April 16, Vice President Denise Kruger sent a letter to residents quoting studies published in the COURIER and the Bulletin. The label side of the mailer reads “Your annual cost increase for the next 30 years” would be “$469.73 additional if city pays: $54 million,” and “$2,361.41 additional” at $204 million. There is no mention of very real cost savings under a nonprofit municipal system, no recognition of the net difference, and no acknowledgment of the Bulletin editorial. 

In the Bulletin editorial board interview, the League compared the municipal water system in La Verne with the privately-owned system in Claremont. The board concluded “the logic put forth in the League of Women Voters analysis makes sense: Ignore all that back-and-forth, and simply compare the water rates in La Verne and Claremont.”

Here are some of the facts that led to that conclusion:

Claremont and La Verne are similar in water quality, water use per customer, age of the infrastructure, elevation and location, water sources (imported from the Delta and pumped from local wells), and population.

There are important differences:

La Verne owns its water system; Golden State Water (GSW) owns the Claremont system. La Verne sets its own rates; the PUC reviews Claremont rates proposed by GSW. La Verne rates are local; Claremont’s rates are regional. La Verne charges only for water used; GSW bills include a “service charge” and “adjustments.”

La Verne must use about two-thirds expensive imported water; Claremont about one-third to one-half. La Verne does not pay for water used by the city; Claremont does. The La Verne system is not taxed; GSW-owned facilities are. La Verne has access to state and federal grants not available to GSW. La Verne’s water income stays in the city; GSW (part of American States Water) is guaranteed a hefty profit. Executive salaries are high and not subject to local control.

La Verne water rates for the average customer were approximately $52 less per month than the average rate in Claremont last year, according to usage and rate data from GSW and La Verne.

But can the city afford to purchase the system? Will rates go up? We can afford the purchase, and very likely without raising rates above what they are now to fund the purchase. Let’s assume that after Claremont acquires the system, local water users could be paying the same rates as LaVerne but, instead of lowering rates, the city kept them the same as they are now and used the extra income to pay for the purchase of the system. 

The city’s income from its 11,000 water customers would be about $7 million per year (52 x 11,000 x 12), and there would be other savings as there are in La Verne. With this much money, the city could purchase a 30-year water bond worth about $150 million. There would be no need to raise taxes or for water users to pay more than they are now. But will the system cost more than $150 million? That seems unlikely since the infrastructure was recently appraised at $54 million.  (In 2004, a price of $50 million was negotiated for the system. With water rights, the total negotiated was about $88 million.)

GSW has shown they would like to deceive us. Water is a resource we can not do without. It should be under public control.

Sally Seven and Betsey Coffman
co-presidents League of Women
Voters of the Claremont Area