Claremont City Council invites all residents to a Town Hall meeting at Taylor Hall on Wednesday, November 6 at 6 p.m. to hear and discuss their report and negotiations on acquiring the local water system now owned and operated by Golden State Water Company. A brochure folded into this edition of the Claremont COURIER, and this Demystifying Sustainability column, provide background for that meeting.
Should Claremont buy its water system to gain local control over our water deliveries and rates? Why?
In 1929 Southern California Water Company acquired Claremont’s local water system, while all our neighboring cities own their water companies and their rates are much lower than ours. La Verne, for example, has owned their water utility since the 1920s. A comparison of their rates and their operating system with Claremont’s is quite informative. Why is there a difference? There are several reasons.
City-owned water companies, such as the one in La Verne, set their own water rates, but rates for private utilities must be approved by the California Public Utilities Commission (CPUC) and the profitability of the company is assured. In 1998, Golden State (at that time “Southern California Water”) initiated legal proceedings to “adjudicate” the Six Basins Aquifer that supplies Claremont’s well water and was allowed to pump and sell 34.7 percent of the “safe yield” of water from the aquifer. Then, in 1999, the CPUC allowed Golden State to establish regional rates.
Golden State, now a wholly-owned subsidiary of American States Water Company, sells water to a number of cities in the Southland. They established a regional rate structure that includes Claremont, so local rates are no longer based on local costs but rather reflect costs across “Region 3” that includes cities from the coastal area to the desert. This regional system does not work to Claremont’s advantage. For example, with CPUC approval, the water usage rates in Claremont have more than doubled over five years, while the rates in La Verne rose less than 25 percent.
Water bills in La Verne, for the typical water user, are now about $50 per month lower than in Claremont for the same amount of water usage, although La Verne is similar to Claremont in population, location, water quality, service and age of the system. Actually, one might expect La Verne rates to be higher, not lower, since they have less access to inexpensive local well water and depend more heavily on expensive imported water.
Golden State encourages customers to conserve water. But, again with the approval of the CPUC, Golden State is assured profits for water they don’t sell! As water is conserved, the cost of water is increased for everyone through a “Water Rate Adjustment Mechanism” (WRAM) that increases usage rates on every water bill. The Claremont Outrage campaign, advocating local control, is a community response to these high rates.
Responding in part to this outrage, the Claremont City Council met in closed session on January 10, 2012, to begin discussions on taking over the water system. Subsequently, they voted unanimously to approve a study of potential acquisition, and entered into negotiations with Golden State. The results will be presented at the Town Hall meeting.
The cost of acquisition, and whether Claremont can afford it, are major concerns. The system was recently appraised at $55 million by a state-approved appraiser, but Golden State contends that valuation is much too low, and they will not be a willing seller. Golden State piles on all the costs they can, ignores potential savings, then tells the city it cannot afford to buy the system without increasing taxes and water rates.
Fact is, it seems they have shown that Claremont cannot afford not to buy the system. In comparison with La Verne, considering differences in water bills and financial benefits to the city, Claremont and its water users now pay about $8 million more each year than they would under a city-owned system. If that amount were used instead to purchase the system, it could buy a 30-year revenue bond worth much more than $55 million.
While water rates are important, in the long run local control of this vital resource is critical. Claremont faces possible disruption of water supplies from northern California, likely water shortages with drought and climate change, and increased demand with projected population growth. Water is a resource we cannot do without. There is no substitute. It is important that Claremont have local control to be able to plan effectively for its future water needs and respond to challenges in ways that put the public good first.
The brochure, Claremont’s Water Future, included in today’s COURIER, highlights well-researched facts we hope you will find useful. Bring it to the Town Hall meeting, and share it with others who might like to see it.
Freeman Allen and Marilee Scaff
Demystifying Sustainability is a project of Sustainable Claremont (sustainableclaremont.org), email address firstname.lastname@example.org, or follow them on Facebook at: facebook.com/sustainableclaremont and on Twitter #GreenClaremont.