EDITORIAL, in OPINION - The Register, Thursday July 17th, 2014
Privatization, not threats, best drought action
In your editorial of July 17, 2014 you make the point that “Cost would be good incentive for conservation” and “Individuals would conserve based on what they could afford to consume”. This incentive point overlooks the fact that in Placentia, Stanton, La Palma, Los Alamitos, Yorba Linda, North Tustin, Rossmoor, Seal Beach and Cypress some 15,000 Orange County customers of Golden State Water, a PRIVATE for profit Water Company cannot reduce their cost of water by conserving water. The conservation incentive has been removed. How? It is called WRAM. When GSW sells less water and therefore receives less revenue, the revenue difference is calculated and added to each bill. Golden State Water is allowed to collect the shortfall from the customer using the CPUC approved “Water Revenue Adjustment Mechanism” (WRAM). Everyone’s bill has the WRAM and the additional charge to make up for lost revenue. With the WRAM all revenue risk is transferred from Golden State Water to their customers. The result, we pay for water we never use. The Golden State Water Companies prime directive is to maximize profits with ever increasing water rates. They are not interested in protecting consumer’s pocket books.
The many local PUBLIC water agencies such as Orange Water, Tustin Water, and East Orange County Water District deliver water as a public service. Customers are charged only the actual cost of water and the cost of operating the system, no profit and far lower prices. Communities have local control of these agencies, the agencies do not answer to the CPUC, not so with private Golden State Water. It is the California Public Utilities Commission who approves the rate increases, the tiers, the surcharges, the WRAM.
During the last five years including 2014, this private company has with CPUC approval, raised their delivered water price by well over 55%. They utilize rate hikes to maximize profits, to support their parent company American States Water and their investors. Some of the categories listed as part of their summary of earnings include: paying property tax, payroll tax, local taxes, state and federal income tax. In addition, they are guaranteed by the CPUC over 8% profit on infrastructure and capital improvements, this and more is added into the price of the water they sell as a commodity. Golden State is by far, the high price water company and there is no financial incentive for their customers to conserve.
Water, this necessity of life should never treated as a commodity or be sold for profit.
Legislating privatization of water is not in the public interest. It would be a colossal costly mistake for the public and a windfall for any private company.