Supervisor to state: Deny water-rate hikes By JONDI GUMZ SENTINEL STAFF WRITER October 29, 2002

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October 29, 2002

Supervisor to state: Deny water-rate hikes
By JONDI GUMZ
Sentinel staff writer

County Supervisor Jeff Almquist filed a formal protest with the state on Monday, opposing higher rates sought by California American Water Works in Felton, saying that would hurt the local fire district and local schools.

Almquist, a Cal-American customer himself, hopes to persuade the state Public Utilities Commission to schedule a hearing in Felton to take testimony before a rate-hike decision is made.

His letter was accompanied by 170 protest letters and 1,200 signatures gathered in the past week — almost as many as the 1,350 water customers in Felton.

Among the arguments cited by Almquist:

Rates are already higher in Felton than for customers served by the San Lorenzo Valley Water District, which operates in the same watershed as Cal-American and the neighboring Scotts Valley Water District.

"It defies logic that a public utility directly adjacent to their operation can consistently deliver water to its customers at a substantially lower rate," Almquist said.

Profit margins for American Water Works, Cal-American’s parent company, are 10.9 percent. The company’s stock has jumped 10 percent in the past year while stocks in general have declined. The CEO is paid $698,000 a year and the chief financial officer $411,000.

The statistics paint "a picture of a corporation ... making a substantial profit margin already," Almquist said. "These are hardly indications that it needs to increase its margin."

The Felton water supply situation is quite different from another small system near Monterey, also acquired from Citizens Utilities. Expenses there are higher because the company had pursued a dam on the Carmel River in face of staunch opposition, and after voters rejected the idea, the costs of finding alternatives have been passed onto ratepayers.

"There is no just reason that Felton ratepayers should bear any increased cost ... to simplify accounting procedures for the company," Almquist said.

"They are two separate and distinct physical operations that are not inter-tied in any way."

American Water Works said residential water rates in Felton would go up only 4 percent, but that fire service rates would jump 81 percent.

Almquist said that would hurt the Felton fire district, which operates with volunteers and a shoestring budget, and the San Lorenzo Valley Unified School District, which faces a $1.5 million shortfall before a higher water rates are factored in.

Almquist urged state officials to hold off on the rate decision until they review the proposed acquisition of American Water Works by RWE Aktiengesellschaft, of Essen, Germany, the third-largest for-profit water provider in the world.

"I ask you not to put the profits of Cal-American ahead of the well-being of our community," he said.

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