MOU Comments

Note: The City Council declined this MOU. The following document is for historical interest.

This memorandum and comments is also available to download as a PDF.

Twenty Commitments are offered by Golden State Water Company (GSW) to Claremont residents through the agency of a small group they call CAWA. The Claremont Courier explains, “Spear-headed by Claremont resident Donna Lowe, a businesswoman who ran for State Assembly in the 41st district in 2012 . . .” a small group gathered at her house to meet Denise Kruger, official of GSW.  As a result of that meeting, Denise Kruger, Senior Vice President of GSW, and CAWA hostess, Donna Lowe, signed a Memorandum of Understanding (MOU) which was presented to the City Council  on  July 8, 2014.

Golden State Water proposes twenty commitments to CAWA which it says GSW will strive to implement if the Claremont City Council abandons its efforts to seize the water system by eminent domain. (Below, regular print is text of the MOU; bold italics are commentary in response.)

1. Lower water bills for residential customers. Golden State Water will propose a new rate structure for residential customers in its upcoming rate filing scheduled for July 13, 2014. The rate proposal, which includes a proposal to convert the existing three-tier rate structure for residential customers to a four-tier rate structure, will result in lower monthly water bills for residential customers in the Region III ratemaking area. In addition to the implementation of a four-tier rate structure, Golden State Water will propose to segregate the districts within Region III for the purposes of establishing the size of the tiers in the new four-tier structure. Golden State Water shall support the continuation of this rate structure unless otherwise agreed by the City of Claremont and subject to approval by the CPUC.

GSW "will propose" to CPUC a 4-tier rate structure and "will propose to segregate the districts within Region III". But "proposals" are not guarantees and there is no indication of what effect four tiers or a segregated rate structure would have on the rates. Would they make total cost higher or lower? The CPUC (California Public Utilities Commission) still has the final word on any proposal and has a history of rulings which benefit GSW.

2. Funding of Feasibility Study and Potential Construction of Reclamation Plant. Golden State Water will fund the preparation of a study concerning the feasibility of constructing a water reclamation facility to serve the City of Claremont. In the event the facility is deemed feasible, Golden State Water will include the plant in its Urban Water Management Plan and seek approval from the CPUC.

The Claremont Colleges have already completed a “feasibility study” for reclamation of on-campus  water to be used on college grounds and playing fields. However, GSW claims any water supplied to their customers by recycling belongs to GSW, or requires a fee to be paid to them because it reduces GSW’s market for water.  GSW is offering no significant concession on recycled water.

3. Mitigation for water supply costs. Golden State Water will continue to apply a lower water supply cost structure that reflects the Region as a whole, to the benefit of Claremont customers. Currently, Region III rates reflect a 66 percent groundwater/34 percent imported water usage, while Claremont alone was forecasted to use 47 percent groundwater/53 percent imported water, and had an actual usage in 2013 of 41 percent groundwater/59 percent imported water. This results in lower water supply costs for Claremont customers as compared to Claremont’s actual costs.

GSWC has not been diligent in saving storm water or maximizing use of  local well water.  The mix of well water and imported water is essentially a trade secret. They give constantly changing estimates even to the CPUC about the amount of imported water they use in Claremont. They also do not admit pumping water from Claremont wells and delivering it to other communities.  Note they “will continue” to apply the current cost structure which means there will be no change. Furthermore, Claremont has many more wells than LaVerne, uses much more of the less expensive well water than LaVerne, and La Verne’s rates are far lower than ours! 

4. Continuation of policy resulting in lower monthly service charges. In 2009, Golden State Water implemented a three-tiered rate structure for residential customers. A key aspect of that change in rate design was a reduction in the monthly service charges. .. by approximately 5 percent. (For example, the monthly service charge in Region III for a 1” meter was reduced from $40.30 to 37.95, a decrease of 5.8%). In its upcoming 2014 General Rate Case filing (“2014 GRC”), Golden State Water’s proposed rate structure will continue the policy implemented in 2009 resulting in lower monthly service charges. This structure provides customers with the greatest ability to control water bills based upon actual water usage.

When GSW went to tiered rates they sharply increased water costs so that heavy users pay far more than before. Meter charges are fixed, usage charges are based on gallons of use. GSW did reduce meter fees for a time but the 1” meter fee is back up to $40.40 as of May 2013. Again GSW only offers to continue past policy, not to institute improvements.

5. Limitation on future revenue increases. Golden State Water’s requested revenue requirement increases in the 2014 GRC will not exceed three (3) percent annually for the period 2016-18. Golden State Water will work with the City, CAWA and local stakeholders on the General Rate Case filing for the 2019-21 years to maintain the same three (3) percent requested revenue increase cap for the 2019-21 filing. The parties acknowledge, however, that environmental, regulatory or other circumstances could arise that would prevent Golden State Water from maintaining reliable quality water service at this revenue level.

GSW offers to limit rate increase requests to 3% per year for 3 years, and will work to continue this 3% increase through 2021—but states that environmental, regulatory or other circumstances could prevent them from maintaining quality water service at this revenue level. Six years is a short-term concession at best. Continued high increases are clearly anticipated and GSW makes the point they do not guarantee reliable quality service a lower rates.

6. Alternatives to the WRAM/MCBA. Golden State Water shall not object to or obstruct any party from seeking to remove or modify the WRAM rate adjustment from rates applicable to the City of Claremont within the context of the CPUC process so long as the alternative ensures that Golden State Water can meet its fixed cost obligations, accounting for water supply costs regardless of sales levels. Golden State Water reserves the right to present evidence regarding the pros or cons of any such modification, and reserves the right to advocate in favor of the existing WRAM if, in its opinion, no better alternative is submitted. Further, Golden State Water will cooperate as necessary to timely provide data and other information on the water system costs and revenue to any interested party through the CPUC’s ratemaking process to determine if there is an alternative mechanism that rewards customers who meet agreed-upon per capita usage levels while at the same time allowing the company to meet its revenue requirement and cover fixed costs.

Listen carefully: GSW “shall not object to any party seeking to remove or modify WRAM charges through the CPUC” if they offer a better way of raising the same amount of money for the company’s profits.  GSW  offers no reduction in Water Rate Adjustment Mechanism (WRAM) charges now assessed with CPUC agreement to keep profits assured even when consumers save water—a horrifying prospect in times of drought.

 7. Credit for grants or other outside supplementary funding for water service. Customers shall continue to receive full benefit for any supplementary public funding, disaster relief funding or other infrastructure grants made to the company applicable to the term of the Agreement no matter when received.

If GSW receives supplementary public funding, e.g. federal funds for drought, disaster, or state bonds, they expect to use them.  Of course, that’s the condition of receiving the funds, although there is no promise to use them in Claremont. Their use is a continuation of existing policy.

8. Advocate for lowest possible imported water costs. Golden State Water will actively represent Claremont customers in rate increase requests from Three Valleys Municipal Water District and Metropolitan Water District of Southern California to minimize “pass through” water supply costs that affect Golden State Water. Golden State Water will support efforts by CAWA and the City of Claremont to join this effort to minimize external potential rate increases arising from the cost of imported water. Golden State Water shall inform CAWA and the City of the comment and / or participation period as such become applicable, to the extent known by Golden State Water.

So, GSW will urge MWD and Three Valleys MWD to keep imported water cost low, which benefits GSW financial bottom line.  GSW offers nothing new.

9. Support for CAWA Intervener Status. Golden State Water shall support CAWA’s direct involvement in the ratemaking process. This includes the following:

  • CAWA to determine who participates in its effort.
  • Golden State Water will provide CAWA with references for expert legal counsel to provide independent guidance and support to CAWA’s involvement.
  • Golden State Water will not oppose CAWA’s request for reimbursement of CPUC eligible expenses accrued as part of their good-faith efforts to impact the process in a meaningful and consumer-focused way.
  • CAWA will be empowered to address any proposed charges for ongoing service or system improvements to ensure Claremont customers are protected.

Here at last is GSW’s definition of local control:  having created an entity they call CAWA, an instrument of GSW, they empower that group with “Intervener” status to negotiate Claremont’s water rates. GSW offers to pay their legal expenses, to reimburse any other expenses—one thinks, telephone surveys, mailings, newspaper ads, signature-gatherers-- and offers this bogus substitution of CAWA for the legal entity which is the City of Claremont— and call it LOCAL CONTROL. 

Wait a minute:  CAWA has no legal status to make an MOU with Golden State for the City of Claremont. CAWA  does not represent the people, and  they cannot negotiate for the City. They are a “name-only“ organization, cooperating with a PR firm working for GSW.  Note also that GSW, as stated above, will provide CAWA legal services and expense reimbursement. Giving them “Intervener Status” to represent the citizens is legally impossible.  No one can represent the citizens of Claremont but their democratically elected City Council— and that Council has deliberately chosen to give the citizens a vote on November 4th to support the bonds, if needed to buy the water system for Claremont.   That is LOCAL CONTROL IN CLAREMONT.

10. Benefits of Regional Organization. By October 31, 2014, Golden State Water would host a local meeting and provide a report and public presentation to residents detailing the benefits to Claremont of being part of a regional structure. CAWA will maintain its ability to protect this structure within the CPUC process as an intervener.

GSWC will continue to promote their regional point of view with CAWA at their side.

11. Collaboration in the Development of General Rate Case Filings. Consistent with federal and state laws governing water utilities and federal Securities and Exchange Commission regulations, Golden State Water will work with the City and CAWA on future rate case filings, including development of Urban Water Management Plans (which contain long-term capital investment summaries that affect water rates) and recommendations for future rate designs to maximize the financial benefit to customers who are using water most efficiently.

So CAWA will go stand alongside GSW in filing Rate Cases before the CPUC. This is no concession to Claremont, as CAWA does not represent us.

12. Ongoing accounting of system improvements. Golden State Water shall provide to CAWA, the City and post publicly online a report of all capital projects identified in a General Rate Case or supplementary filing that have been constructed and included in customer rates. The initial report will go back to January 1, 2000 and will be updated annually.

GSWC proclaims how “transparent” they will be.  Actually rate case filings are public information and are already supposed to be publicly available. For years requests for information have been met with the response, “That is proprietary information; we can’t give it to you.” Rate Case Filings are public information. However it has been impossible to get accurate, up-to-date information. Detailed data to back up their assertions has never been available.) See Item 13.

13. Information transparency. Golden State Water shall provide the City of Claremont and CAWA with copies of any studies, reports or other documents with respect to Claremont agreed to in the 2010-2012 or 2013-2015 General Rate Case, including settlement agreements, and all future settlements and General Rate Case orders simultaneously with providing said documents to the CPUC, Office of Ratepayer Advocates (ORA), The Utility Reform Network (TURN) or other organizations identified on the service list.

CPUC filings are public documents, already legally required to be made available to the City and any citizen or organization who requests them. True, it has been hard to track Supplemental filings.

14. City Participation in PVPA. The Pomona Valley Protective Association (PVPA) controls over 600 acres of land in Claremont, including the spreading grounds for the Six Basin aquifer that supplies approximately 60% of the water used in Claremont. Golden State Water will invite City personnel to all PVPA meetings as its guest, and in the event of objection by any PVPA member Golden State Water will collaborate with the City to respond in the most effective manner to achieve the City’s attendance.

Again no guarantees. What is the benefit of being a “guest”? Perhaps getting more accurate reports. Note here GSW says our aquifer provides 60% of water used in Claremont, while Item 3 earlier cited 51% for 2013. That’s quite a difference. Which is correct? Only GSW knows.    

15. Assistance and Access regarding CPUC Filings. Golden State Water will, at all times, maintain in its San Dimas offices a full copy of the current rate case filings for public inspection and photocopying. GoldenState Water will provide on its website a link by which any member of the public can make an appointment to view such documents, and will designate a knowledgeable company representative to be available by prior appointment to meet with residents to address questions about the contents of the filings. (Reasonable restrictions as to duration and frequency of such appointments will be determined.)

Public access to CPUC filings is required by State Law. GSW has not always been helpful in making their filings available on request of a citizen.

16. Report to the community. Upon not less than 15 days notice, Golden State Water will present an official report to the community at a publicly noticed City Council meeting, at the City Council’s discretion. Golden State Water will address all community and council questions, directly at the meeting or within one month of the meeting. The responses will be made public through Golden State Water’s Claremont customer website.

A kindly offer, but it doesn’t address any problem except possibly GSWC’s current unwillingness to be forthcoming with information and to listen. That would be an improvement.

17. Regular meetings and report to the Community. Golden State Water will organize and facilitate periodic meetings with Claremont residents and CAWA as may be necessary to implement the intent of this Agreement. These meetings will address all local concerns including those raised during the report to the community. Golden State Water’s District Manager will lead the meeting, and appropriate company officers will also be directly engaged in the process.

We had one such meeting in 2014, well attended, standing room only in a college classroom. We did hear GSW’s defense of present practices but only 15 minutes for questions, and did not get answers to all local concerns.

18. Conservation partnerships and programs. Golden State Water will work with the City, CAWA and local stakeholders to create, fund and sustain water conservation programs. The specific programs would be developed collaboratively, detailed in the General Rate Case application and subject to final CPUC approval.

GSW already touts its conservation and education programs. However, conservation still incurs WRAM charges. GSW, with CPUC approval, penalizes water conservers. Collaboration would be astonishing, but nothing may infringe on corporation profits.

19. Development of a water conservation and STEM curriculum for use in Claremont schools. Golden State Water will fund the development and maintenance of an ongoing water conservation curriculum for use in the Claremont Unified School District, subject to appropriate state academic standards, the District’s policy and CPUC approval. Additionally, Golden State Water will support the District’s ongoing science, technology, engineering and mathematics curriculum to encourage students to maximize these skills, which are critical to water resource management and ongoing water service.

GSWC has educational programs, some simple take-home material  and forms to be filled out.  Rather a waste of time according to some elementary teachers. What fundamental deficiency in the school curriculum does GSW think there is? As for offering to design a STEM curriculum, GSW does not have qualified curriculum specialists, nor qualified teachers. These educational offers are irrelevant.

20. Dismissal of Litigation. Currently there are three pending lawsuits that arise from the City’s preparatory steps to seize the Claremont water system from Golden State Water: study concerning the costs and projected water rates under the City’s seizure plan (Golden State Water Co. v. City of Claremont and Tony Ramos, et al , Los Angeles Sup. Ct. No. BS 146523); and the CEQA lawsuit alleging that the City’s purported environmental review of the  seizure plan is faulty and premature without a clear commitment as to what entity would operate the Claremont water system if it is taken by the City (Golden State Water Co. v. City of Claremont, et al., Los Angeles Sup. Ct. No. BS 148759). [A third has recently been added, GSW is suing two Council members, Sam Pedrosa and Opanyi Nasali, for stating that GSW rates have doubled in the last five years.—Ed.] As to each of the pending actions, if the City abandons its effort to seize the water system  before a trial or other dispositive hearing on the merits is conducted in the Superior Court, Golden State Water will dismiss the pending action and will not seek recovery of any attorneys fees or other litigation costs from the City.

If Claremont abandons all efforts to acquire the water system, GSW promises to cease filing suits against the City and not charge them for GSW attorneys. You can be sure than any expenses that GSW incurs will be passed on to Claremont ratepayers.

Term of Agreement.

“The Initial term of this MOU is from June 1, 2014 to December 31, 2018. . . provided, however that either party may terminate the MOU in its sole discretion, and thereby extinguish all commitments and covenants herein, . . by giving the other party written notice of termination. . . .”

 This MOU is a legal absurdity; in addition it promises almost nothing new but is a recitation of presentt GSWpolicies and why Claremont citizens should be grateful.  Finally, how binding are all those promises, if the City accepts them? They can be cancelled at any time!

Signed by Denise Kruger, Senior Vice President, Golden State Water Company            6/9/201

Donna Lowe, Claremont Affordable Water Advocates                                                               

Comments CFA / MKS 7/22//2014