Bakersfield poised to oppose Cal Water rate increase

100603_kern_water_bankPhotograph: Peakwater.com

Bakersfield is ready to fight a proposed fee hike from the city’s largest water company, one that would raise rates nearly 17 percent over three years.

Stung by the timing of the California Water Service Co.’s July rate increase request to the state — less than two months after a customer surcharge targeting water wasters was announced and as the city negotiates another 50-year franchise with the company — Bakersfield city officials will oppose it.
They consider it adding insult to injury as residents grapple with the fourth year of a historic drought.

“My constituents, I have heard from them and some of them are hurting,” said Councilman Chris Parlier, who represents south Bakersfield. “People don’t want to be under the impression that somebody is profiteering off of what is more or less a national disaster.”

Cal Water charges customers $1.67 for 100 cubic feet of water and serves about two-thirds of Bakersfield residents.
The city water system serves the remaining one-third of residents, mostly in the southwest, and charges them 91 cents per hundred cubic feet.
One hundred cubic feet of water is about 748 gallons.

Rudy Valles, Cal Water’s district manager, said the cost difference merely reflects the advanced age of Cal Water’s system, parts of which are likely more than 100 years old, and its larger size — including 954 miles of pipe, nearly twice the size of Bakersfield’s network, 14 pressure zones and 58 water tanks.

Local Cal Water customers, who are currently subject to an existing three-year series of 16.9 percent rate increases that was approved by the California Public Utilities Commission, wouldn’t be affected by these new rate increases before 2017.
As with other public utility companies, the CPUC reviews Cal Water’s operations, finances, costs and needed improvements every three years. That’s also when the company can ask to increase its rates.

Councilman Willie Rivera, whose southeast area is among six of seven wards served by Cal Water, said the company’s current rate and fine structure unfairly targets certain customers and “in my mind is, for all intents and purposes, an illegal rate increase because, the reality is, they did not have to go to the PUC to establish” it.
“All the while, they have a pending rate increase at the PUC and they just finished raising rates in their service area less than three years ago. For me, those things don’t add up,” Rivera said.
“I have senior citizens, I have people who can barely pay their bills now, who could be stuck with a bill that’s 20 percent larger, for something they need in order to survive. I don’t think that’s fair,” Rivera added.

Valles said the company imposed its much–maligned surcharge, which soaks households $4.19 for every 748 gallons they use over their water budgets, to cut its water production 32 percent as mandated by the state.
He said only five to 10 percent of Cal Water’s 70,100 Bakersfield connections have had a surcharge on their bills.
Unlike the city water system, which fell 2 percent shy of its 36 percent conservation goal in June and 4 percent short in July, Cal Water met its state target in June and surpassed it in July.
Yvonne Kingman, a Cal Water spokeswoman, said the surcharge was part of its Water Shortage Contingency Plan approved by the CPUC in late April. It first appeared on customers’ July bills.

And Valles defended the rate increase request in an interview, saying Cal Water has incurred “a ton” of additional maintenance and electrical costs from the drought, from things like pumping groundwater and lowering pumps as water levels drop.

“What we are doing is justified,” Valles said. “We’re not doing frivolous requests for rate increases. It’s what’s necessary. We’ve always done the right thing and we’re going to continue to do what’s right.”
He noted Cal Water has a decades-long relationship with the city and its residents, which he expects will continue.

Valles said he’s met individually with some members of the Bakersfield City Council to discuss the surcharge, the requested rate increase and the likely franchise extension.
This Wednesday, partially in response to a request from Councilman Ken Weir, who represents the northeast, Valles will give a presentation to the council on everything from the cost of water service to the surcharge.

Cal Water’s existing franchise agreement, which has had two six-month extensions since being approved in November 1964, is another likely topic.

Assistant City Manager Steve Teglia said the council will get a draft of the new franchise agreement in its agenda packet, along with a resolution of intention to grant the franchise — and a staff recommendation to approve it.
An addition to the new franchise, Teglia said, is a request that Cal Water “come before the council” whenever it requests a rate increase to the CPUC.

“I think next Wednesday night will be interesting. I think it’s safe to say that the surcharge situation has put a bad taste in the mouths of constituents,” said City Attorney Ginny Gennaro, calling the timing of a rate increase in a franchise renewal year “coincidental.”

Council members admit the franchise with Cal Water, which maintains and operates the city water system for Bakersfield — and is thought by many to do a good job — will likely be approved by year’s end.
But during a Sept. 2 closed session, Rivera requested to discuss the franchise and council members directed the city to become a party to the CPUC’s review of the rate increase, which comes before a judge Sept. 21.

“The city basically does it for cost and Cal Water is a for-profit — a reasonable profit — but their costs seem to be much higher than ours,” said northwest Councilman Bob Smith, referring to water sales.

Andrew Kotch, information officer for the CPUC, reminded a reporter that “What the utility is asking for in their application is not a given,” and pointed out the judge could recommend the CPUC approve a smaller increase than what Cal Water is seeking — or none at all.

Attorney Colin Pearce, who represents Bakersfield on water cases including this one, said the proceedings could take up to 18 months to conclude and are just beginning.
“I don’t want to make it sound like it’s not going to be contested or be adversarial,” Pearce said. “But it’s not the start of World War III.”

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