Some infuriating facts about Golden State Water Co.: Guest commentary

We Claremont voters are being bombarded by expensive, slick mailers paid for by Golden State Water Company to try to convince us to defeat “Yes on W.” In the mailers, they seek to confuse us with numbers from city studies. I thought that it might be illuminating to study the company’s own reports to their stockholders and required public filings. All of the following was found on the Internet in a single night.

Golden State Water Co. is wholly owned by American States Water Co. and currently provides 79 percent of the company’s revenues. This is a publicly traded company (AWR) on the New York Stock Exchange. I urge all Claremont voters to go to the company’s web site to get the real story behind Golden State’s desperate attempt to put up a smoke screen to confuse our Nov. 4 vote.

Some examples from the company’s website:

• A stock investment in 2000 would have returned a 231.04 percent investment today.

• The price of the company’s stock was relatively flat for years until it rose from around 18 to the mid-30s in the last two years.

Every Claremont voter and water user should read “American States Water Company Corporate Presentation — August 2014.” The company’s own message is packed with information that should infuriate us all.

Just a few examples:

Page 11: “Favorable regulatory environment in California .... Decouple revenue from sales to provide consistent returns through Water Adjustment Mechanism (WRAM) [i.e., a penalty for conserving]

Page 14: Compound annual growth rate 2009-2014 is 16.8 percent.

Page 15: In May 2014, the Board of Directors approved a 5.2 percent increase in cash dividend for the third quarter of 2014 in addition to a 14.1 percent increase in 2013. We are targeting a dividend growth rate of at least 5 percent over the long term.

Pages 16-17: The company approved a 5.2 percent increase in the third quarter cash dividend, approved a stock repurchase agreement up to 1.25 million shares, approved a two-for-one stock split. In 2013, the company also implemented a 14.1 percent increase in the cash dividend for the third quarter.

Page 19: GSWC Recent Accomplishments and Initiatives —

July 2014 — GSWC filed to allow GSWC to earn its 8.34 percent authorized return on rate base

Page 20: January 2014: GSWC plans to file its next cost of capital application in March of 2015. Currently, the following rates and capital structure are still in effect for the water segment: ROE (return on equity) 9.43 percent.

Page 21: GSWC Recent Accomplishments & Initiatives

May 2013: The CPUC issued a final decision in the water general rate case, approving new rates for 2013-2015. Among other things, the new rates were retroactive to January 1, 2013 and,

• generated ~$9.6 million, or 3.1 percent in additional annual revenues; and

• increased the water gross margin by ~$13.4 million, or 6 percent.

• GSWC continues to encourage conservation and has mechanisms in place to decouple revenues from sales through tiered rates.

• GSWC has surcharges in place to recover under-collections in its WRAM/MCBA accounts.

• The adjustment mechanisms protect earnings from declining consumption and rising water production costs.

One of the more disturbing revelations from studying this American States Water Co. document (page 22 and 25) is their plan to take advantage of the “non-regulatory environment” of the federal government. The company’s stated strategy is to go after the “privatization” of military bases as new golden geese. The company’s presentation sort of brags of this being an under-regulated market. As United States citizens and taxpayers, we Claremonters should be doubly outraged. This company has figured out how to rig the game every which way to Sunday.

We may not be able to affect some of this, but we can say Yes on W! We can take charge of our water.

Vote Yes on W — the last item on your ballot!

Diann Ring is a former mayor of Claremont and former president of the League of Women Voters of the Claremont Area.