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SANTA CRUZ — County supervisors will protest rate hikes proposed for 1,350 customers of California-American Water Works in Felton.

That’s good news for Barbara Johnston, who has seen her water bills more than quadruple since moving to Felton from San Jose two years ago.

The supervisors voted unanimously Tuesday to pursue a course of action proposed by Supervisor Jeff Almquist, who represents Felton. That includes:

The Felton water system was known as Citizens Utilities until last year, when it was purchased by American Water Works, the largest publicly traded water company in the United States.

A year ago, RWE announced plans to buy American Water Works for $7.6 billion. American Water Works stockholders approved the RWE takeover in January. Now the deal is undergoing regulatory scrutiny.

County supervisors plan to work with the Montara Sanitary District, which is north of Half Moon Bay, to make their concerns known. Montara has official standing in the case.

Montara claims the company plans to increase rates to recover the premium above the price paid to shareholders.

"It’s illegal to recover the premium from ratepayers," said Scott Millar, an aide to Almquist. "It has to come out of profits."

In Indiana, where RWE bought Indiana-American Water Works, the local company also requested a rate hike before the acquisition.

Millar said a couple dozen people have called the county voicing concerns about higher water rates. All but one, he said, preferred a takeover by the San Lorenzo Valley Water District, the public utility serving Boulder Creek, Brookdale, Ben Lomond and part of Scotts Valley.

When American Water Works bought out Citizens, company officials said rate hikes would be on hold until 2005. Now a 57 percent increase in revenues is being sought from Felton water customers.

A letter from Cal-American on Wednesday specified an 81.5 percent rate hike for fire-service customers, 10 percent for commercial customers and 4 percent for residences.

The company’s argument is that Felton rates should be equalized with higher rates in Carmel, where Cal-American has another operation. It’s an argument Millar doesn’t buy.

Millar said residents also are upset the German firm is talking to Arrowhead Water Co., a subsidiary of the French giant Perrier, about exporting water from the San Lorenzo River watershed. In 1989, Arrowhead was caught exporting water from Boulder Creek without a permit and fined.

Millar suggested residents with concerns write to the supervisors, who will forward their letters to the Public Utilities Commission, which will review the rate-hike request and the proposed sale.

Millar said Almquist, who is a Cal-American customer, could not recall receiving a notice on his bill about the German company’s acquisition. Customers who called Almquist’s office said they didn’t recall seeing a notice, either.

Notices went to the county counsels in all the counties affected by the proposed acquisition except Santa Cruz, where the notice went to the district attorney and county clerk but never reached the supervisors.

Contact Jondi Gumz at jgumz@santa-cruz.com.

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