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Thirsty bird.WATER RATES RISE WHILE WATCHDOG WHISTLES

An open letter to the California Public Utilities Commission, Cal Am Water and those who support Cal-Am:

The CPUC, according to Commissioner Mike Florio, has approved a rate increase for Cal Am to make up for revenue lost due to herculean conservation efforts on behalf of the utility’s Monterey Peninsula ratepayers, revenue that he characterizes as “equity” for ratepayers as well as for the utility. Really?

Cal Am’s local manager is also quoted as saying that, in essence, we’ve still gotta maintain our pipeline system regardless of whether we’re pumping more or less water through it.  Sweet.

I understand that maintenance costs are constant, but I would not have a problem with reimbursing Cal Am for those costs  only if the following information was made known.

(1)  To what extent is the money funds sought by Cal Am and approved by the CPUC needed to cover on-oing and past operational and maintenance costs?

(2) To what extent are those same funds dedicated to the historic profit margin Cal Am has gained through several years of CPUC approvals?

(3) Did the CPUC rely upon a full and complete audit of the bases claimed by Cal Am in order to ensure they were accurate and legitimate, or were they supported by clear facts on the record?

The answers to the above questions are important and not covered in any way by the Monterey Herald’s article on this matter and by any public statement by Commissioner Florio.

No matter, those areas of inquiry are complicated and unfortunately have the potential for even more unfair treatment of ratepayers.   Remember, the CPUC has a legislative mandate to protect the interests of both its regulated utilities and their ratepayers.

So, unless clarified and corrected by information not publicly stated, we could conclude as follows:

(1) It is no secret that Cal Am has not always had  a sterling record of maintaining its infrastructure in sound and working condition.  Failure to keep up usually results in higher costs in the long run.

(2) Seeking reimbursement for maintenance costs is meritorious but only to the extent that the costs involved are meritorious themselves, as to amount and necessity and so long as they are not being incurred because of prior failures or negligence.

(3) If an audit was undertaken by the CPUC, why wasn’t that information made public so the public can fully understand the relative elements of the claimed reimbursements?

The conclusion is this:  If, in fact, the rate increase approved by the CPUC includes costs that are not clear or fully fact-supported and, if, in fact, the increase includes the profit historically obtained by Cal Am in prior rate cases, then there is no equity whatsoever in the decision characterized by Commissioner Florio.

In fact, that would mean that Peninsula ratepayers who suffered by undertaking significant conservation efforts will have to suffer for their honorable actions by paying higher rates.   At the same time, Cal Am will come out at least even – costs covered, profits ensured.  One party wins, one party loses. Is that equity in action?

It’s time to take a closer look at the CPUC.  It would seem to not be living up to its mandate.

Hood is a retired water lawyer and engineer who divides his time between Carmel and Ohio.

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????Ready for Cal Am’s 40% rate increase over the next three years, plus another 60% increase for the cost of desal?

Please show up Thursday and take your three minutes to let the California Public Utilities Commission know this is UNACCEPTABLE!

CPUC Public Participation Hearing on
Cal Am’s Water Supply Project
2 p.m. Thursday, Sept. 1
Carpenter Hall in Sunset Center, Carmel

It’s time to make it clear to the CPUC  that its protection of Cal Am’s revenue is excessive, unjustified, and wrong. Ratepayers and their conservation efforts are being penalized to ensure Cal Am’s profits. Residential ratepayers bear the largest burden because of the extreme tiered rate structure. Cal Am is a showcase for investor profit, and the CPUC is complicit.

Here’s what Cal Am wants and what it has already received:

• $100 million ($50 million plus $50 million in interest) for water we didn’t use due to our conservation efforts. This would be an 6% increase in Cal Am rates.

• $51 million in General Rate increases for 2017 to 2020. This would be a 16% increase.

• $130 million ($50 million plus $80 million in interest) for the new Monterey Pipeline. This is a piece of the Pure Water Monterey project. This would be another 8% increase in rates.  An alternative route for a base cost of about $15 million was rejected by Cal Am.

Just these first three total an increase of 30% and that’s with no new water! What other business can get away with this?

• $84 million for the Pure Water Monterey reclamation project that will provide new water. This would be a 10% increase in rates.

• $32 million for failed Cal Am projects from 2004 to 2011 was approved by the CPUC and has already been paid by ratepayers.

• 15% increase for the next 27 years is on current bills to cover the San Clemente Dam removal. This charge will move from a surcharge into the rate base, where Cal Am adds to its asset base. But remember, this was an asset that was removed.  So Cal Am can tear down the dam, but add the removal cost as an asset.

• 60% increase for Cal Am’s desal plant IF it ever gets approved.

• Cal Am has escaped any penalty for failing to meet the December 31, 2016 Cease and Desist Order (CDO) by agreeing to a series of milestones.  If Cal Am misses any milestone, ratepayers will be punished with rationing.

Riley is managing director of Public Water Now.

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Clean Drinking WaterI was breezing through the local daily the other day when I came across an editorial that put forth a peculiar proposition. It was a response to the Monterey City Council’s resolution in opposition to Cal Am’s request for a $50 million rate increase to compensate itself for water it didn’t sell because its customers were being good citizens and conserving water.

The editorial noted that the City Council had asked the Monterey Peninsula Water Authority to join in the opposition. The water authority, which is made up of the Peninsula mayors, was formed primarily to provide some level of oversight to Cal Am’s ongoing desalination venture.

The editorial’s thrust was that the water authority should stay out of the rate increase controversy because it would distract it from its main focus, helping to get the desal plant built. That’s the part I found peculiar.

The desal project, and its companion projects like groundwater replenishment, are in the design and planning stages. Ground has not been broken. There is no welding going on, no trenches being dug, no machinery bulldozing the sand. In other words, there is not an awful lot for the water authority to do day-to-day, not a lot to monitor or even watch between meetings. The mayors for the most part are an able lot and I for one think they could ably do more than one thing at a time.

The mayors’ group represents each of the cities and, by extension, the residents of those cities. Its job is not to be a cheerleader for Cal Am or the desalination project but to protect the public interest, to help control costs and make sure the construction contracts are proper and not awarded to the project manager’s cousin. Heck, even the hotel industry, usually one of Cal Am’s coziest bed partners, is opposing this rate increase. If the authority helps control costs on the desal plant but just looks the other way while Cal Am wins obscene rate increases for other elements of its enterprise, the mayor won’t really have accomplished all that much.

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Richard Rauschmeier of the PUC’s Division of Ratepayer Advocates addresses about 100 people at Cal Am’s rate hearing Wednesday. At the rear, left, is W. Anthony Colbert, administrative law judge for the PUC.E

EDITOR’S NOTE: Testimony at Wednesday’s PUC public hearing on Cal Am request for 40 percent rate increase indicates the company wants to charge its customers 8.4 percent interest to reimburse the company for loans that cost it 5.4 percent. See story below and additional information from Jane Haines in comment section below. Also, for a different take on the numbers, look for Ron Weitzman’s comments  below Jane’s.

 

 

Public hearings on utility rate increases usually are as predictable as Sandra Bullock movies. Alarmed residents stand up to complain that their rates are too high already and the hearing officer maintains a blank expression throughout.

The Wednesday afternoon hearing on Cal Am Water’s latest increase proved the exception when the hearing officer, a Public Utilities Commission judge, asked Cal Am officials a basic question they couldn’t answer.

Some background.

Cal Am proposes to raise residential water rates on the Monterey Peninsula by 40 percent to make up for money it lost out on over the past five years because its customers did such a good job conserving water. Its view is that its costs remained the same even as usage went down so it is essentially being punished for promoting conservation. Cal Am argues that it was  authorized by state regulators to collect $40.6 million more than it actually collected and it wants to start collecting that money now. It proposes to have its customers pay that off over the next 20 years, plus 8.4 percent interest, for a total of $80 million or so.

Speaking in between a long lineup of angry customers, Cal Am officials on Wednesday told PUC Administrative Law Judge W. Anthony Colbert that the company had been required to borrow money to finance its operations over the past five years because it had not collected the entirety of its “revenue entitlements.”

That’s when Colbert lost the blank expression. He had some questions. He presided over Cal Am’s last general rate case and he indicated that he was somewhat confused by the current request. First addressing Eric Sabolsice, Cal Am’s local operations manager. Colbert wanted to know what the interest rate was on the borrowed money. In a long and winding answer, Sabolsice suggested it was 6.6 percent, but he allowed that he wasn’t entirely sure.

He was quickly replaced at the podium by Jeff Linam, Cal Am’s director of rates. He, too, had a lot to say but none of it included the interest rate.

Colbert repeatedly asked Linam if he knew what the rate was. Linam, hemming and hawing more than a little, finally said he did not.

“We have another hearing at 7 o’clock tonight,” Colbert directed. “Make some calls.” It was not a suggestion.

(The Partisan wasn’t able to  attend the evening session but attorney Jane Haines provides detail on the interest rate in comment section below.)

Other than that, the afternoon session was a model of a public hearing on a utility rate except that the speakers were an unusually well informed group, conversant on the ratemaking process and many of the other water-related issues that have dominated public debate on the Peninsula for the last several years.

Charles Cech is the retired engineer who discovered a severe conflict of interest that forced Cal Am to postpone important testing related to its proposed desalination plant. He told the hearing officer that he had gone back through Cal Am’s filings with the PUC and determined that it had enjoyed a profit margin of roughly 30 percent over the past five years, a total of some $100 million.

Among those able to put the current rate issue in perspective was Melodie Chrislock. She lives on an acre in the Carmel Valley, and, therefore, is a relatively heavy water user. Cal Am’s rate structure is meant to promote conservation by charging significantly higher rates for heavy users. Cal Am says the average residential customer will see the monthly bill go from $45 to $63 if the request is granted in full. Chrislock is above average.

She said her highest bill in the summer of 2008 was $184. This past summer, she used considerably less water but was billed $784. Now, she faces a retroactive charge for the water she didn’t use.

Defenders of Cal Am have noted repeatedly that other water agencies throughout California are raising rates for the same reason but they fail to acknowledge that the rates in those other places are generally much lower. They are mostly silent, too, on whether the other agencies propose, as Cal Am does, to simultaneously reduce rates for commercial customers at the expense of residential customers.

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????

It is an intriguing announcement from Public Water Now publicizing a Jan. 12 presentation on the Cal Am test well now in use in Marina.

“Cal Am’s Test Slant Well: Facts, Fictions and Questions.” That’s the name of the event.

The news release goes on:Public Water Now (PWN) has researched this for more than a year.  There is much that Cal Am is not reporting.  Neither are the media. We have facts. We will expose what we have, where it differs from Cal Am’s version, why it is important, and what we can do about it.

Come for the unreported story.  It is overwhelming.”

Quite a bit has been reported, of course. After delays of various sorts, Cal Am is testing a so-called slant well drilled at the site of the Cemex plant on the shore north of Marina. It is slanted so it could pump water from beneath the floor of the bay, turning the ocean bottom into a filter of sorts to limit the amount of sea life suck into the proposed desalination plant.

Sounds simple but the associated issues include the amount of sea water pulled into the pipes, the salinity, the amount of ocean life included, the impact on the groundwater supply both near and far and the economic viability of the process.

From the news release, it appears that Public Water Now and water activist George Riley have come up with more to be concerned about. I know they have my attention.  It’s at 7 p.m. Tuesday Jan. 12 at the Unitarian Universalist Church, 490 Aguajito Road, Carmel. From Highway 1, take Aguajito east off the freeway, away from the ocean, and you’re almost there.

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newsOpen letter to Sen. Bill Monning and Assemblyman Mark Stone

Re: Suggestions Regarding Changes to CPUC Composition and Process

 

Recently, I forwarded to each of you a copy of a letter that I wrote to Robert MacLean, president of California American Water Co. In that letter, I pointed out some of the serious issues that ratepayers have with the company, and I provided him some suggestions that, if adopted, could help both Cal Am and its Monterey Peninsula ratepayers.

However, there is another equation that, in my opinion, should be considered side-by-side with any analysis of Cal Am’s actions if one is to determine if there are fixes that could result in a future water supply for the Peninsula that would be reliable, affordable and acceptable from all regulatory standpoints. It involves the California Public Utilities Commission. I am sure you know of the problems that have surfaced recently with allegations of conflicts of interest and biases and the resulting great loss in the credibility of the commission and its system of regulating private utilities.

With respect to the CPUC and its relationship with Cal Am, the issues are more localized, but are every bit as concerning as the more global issues that have been making the news. The problem with the CPUC, as far as most Peninsula ratepayers will tell you, is that the agency tends to bend over backwards to approve rate increases for Cal Am, irrespective of certain facts that, on their face, would indicate the applications do not merit positive results for Cal Am.

In my letter to Mr. MacLean, I cite the San Clemente Dam rate case as a terrible example of how the commission disregarded the recommendation of its Division of Ratepayer Advocates, as well as the administrative law judge who actually heard the case, and voted instead for a recommended decision that, for all the world, looked like it was drafted by Cal Am itself.

So here is what I see. The CPUC and its process has several flaws. First, persons appointed as commissioners are not required to have any specific experience in areas that are critical to the making of decisions on complex issues that will come before them.

Second, ratepayers really have no agency or external group that has the power and authority to come to their aid when the commission has stepped over the line with respect to reasonableness and fairness. The Division of Ratepayers Advocates has a very competent and experienced staff, and they frequently analyze and point out many issues in rate cases that bear full attention. Unfortunately, they have no authority beyond making recommendations, and the full commission can accept or reject as it wishes, and it does.

Third, rate cases are most often heard in San Francisco, which does not provide significant access to and participation in the process for ordinary ratepayers. Most ratepayers are unable to participate as parties, which usually requires retention of legal counsel, time and travel costs to San Francisco and back to their homes. In addition, the three-minute rule, while I understand its adoption, works as a further limitation on the ability of most ratepayers to participate and have their serious concerns heard.

I am proposing a general outline of what would be a legislative, and regulatory fix for these issues, and am forwarding them to you in hopes you will give them serious consideration as to changes that should be pursued

In the State of Ohio, where my wife and I have a part-time home, a person appointed as a commissioner to the Public Utilities Commission must have experience in one or more of the following areas: economics, law, accounting, finance, natural and physical science, natural resources, or environmental studies. Presently, under California law, there are no such qualifications required and this should be changed.

An independent body, such as the Ohio Consumers Council, needs to be established, one that undertakes the same roles as the DRA, but one that has the ability to bring suit on behalf of ratepayers, not just one that can make recommendations that can be ignored. In Ohio, for example, the most comparable entity has a staff of about 15 professionals, including attorneys, analysts and public outreach specialists, and has an annual budget of $8.5 million.

If this option is not feasible, for whatever reason, I would recommend that the Commission, if voting to adopt a decision opposed by the DRA, must address each and every point of opposition expressed by the DRA.

With respect to access, I would recommend that a commissioner assigned to a rate case schedule several public meetings in a location that is most favorable for attendance by ratepayers potentially impacted by the outcome. The times would be also set reasonably to promote maximum attendance. In order to get around the three-minute rule, a process would be created whereby ratepayers could identify a limited number of representatives who would speak on behalf of those persons. Such named representatives would be identified to the CPUC and the sitting commissioner would grant such representatives up to 15 minutes to state their positions, plus reasonable time to respond to questions/comments that are raised. If time permitted, the commissioner could also allow individuals to speak, but they would be limited by the three-minute rule.

The ex parte rules currently in use by the CPUC probably present the most significant potential for abuse and the creation and continuation of the perception that regulated utilities have a path, hidden from view, to exert undue influence on the decisions of the commission. This is a sensitive subject, but recent disclosures surrounding the past chairman and his relationships with certain utilities strengthen the need for a close analysis and the implementation of changes that will bring the process more out in the open. If and when there would ever be an intent and agreement between a utility and a commissioner to abuse the system, the ratepayers who bear the brunt of such an action, under current ex parte rules, would have little or no access to protect themselves. So here are my suggestions.

1. Commissioners would not be allowed to meet privately with anyone representing a former employer or anyone with whom they had been associated with as a representative or consultant or anyone who had made contributions of more than $___ to any political campaigns engaged in by said commissioner.

2. In the event of any ex parte meetings, the commissioner shall be required to comply with the existing disclosure requirements and prepare a bullet summary of the key points that were discussed at the meeting for distribution to all parties to the case within three days. The petitioner shall agree to provide be cross-examined, under oath, with respect to the content and nature of the meeting if called for by any party to the case, and shall respond to all relevant questions that are not rejected for cause by the sitting ALJ.

My preference would be to ban all ex parte meetings in a rate case. In lieu of that, my preference would be that all communications between the parties and the commissioners be in writing and directly distributed or made available to all parties. A completely open process, while not infallible against those who want to circumvent it, still provides a stronger potential that behind-the-scenes communications will not be factors that wrongly influence the decisions of the commission in a rate case, where millions of dollars can be on the line.

This is not an indictment of the integrity of anyone. However, events of the past have led to a widely held belief that behind-the-scenes contacts have resulted in unfair results and have caused significant damage to the credibility of the CPUC.

It is clear to me that the CPUC needs to be reprogrammed in such a way that its deliberations and decisions are perceived as fact-based and fair and reasonable to both the utilities that they regulate and the public. Right now, that perception is almost entirely the opposite – that politics and back-door influences are involved, and, as a result, ratepayers cannot rely upon the agency to protect their interests.

In my career, I have drafted proposed regulations and legislation and would be pleased to provide you with a working draft, should you have any interest in pursuing this matter.I can be reached by email at wshood37@yahoo.com.

Hood is a retired lawyer and engineer and former executive director of the Association of Monterey Bay Area Governments.

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????Two items in the Pine Cone today could not help but pique my curiosity. Perhaps the Partisan readers can join me in asking the Mayors’ Authority and the Pine Cone a few questions to ask their interviewees the next time they discuss water projects with them:

1. Cal Am will now miss the August Coastal Commission meeting, and is shooting for September. Fair enough, but how does the conflict of interest investigation by the Public Utilities Commission enter into the discussion regarding restarting a well that relies upon audit results of the person being investigated?

2. Deep Water Desal has announced that it can have desalinated water produced for distribution by Fall 2017. They have not yet even started the EIR process, in fact, their public partner, the California Lands Commission, has not even started the process of obtaining a consultant. The Moss Landing Harbor District has been very clear that Deep Water’s plan to punch a hole under Highway 1 and under the Harbor District’s property is a non-starter. So, Deep Water, how do you plan such an aggressive schedule when you do not currently possess an intake option for your 25 MGD (25 million gallons per day) plant?

Steve Collins is an accountant and former chairman of the Monterey County Water Resources Agency board of directors. He helped lead the county’s efforts to develop a desalination plant in partnership with Cal Am and was prosecuted for a conflict of interest that he maintains was encouraged and approved by top county officials. He has worked as a consultant for Nader Agha, who is pursuing a separate desalination project.

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Closeup portrait unhappy, angry, mad, pissed off woman, giving thumb down gesture with hand looking with negative facial expression, disapproval, isolated orange background. Human emotion attitudeRMC Water and Environment, the company that was Cal Am’s project manager for the first attempted desalination project, has found itself in hot water again in San Jose.

Two recent news reports focus on a $4 million contract that was awarded to the San Jose company without competitive bidding by the Santa Clara County Water District even though one of the district’s top officials is married to one of RMC’s owners.

The new reports, on the San Jose Inside website and on NBC Bay Area, said the district’s board wasn’t aware of the relationship when it approved the contract on a 5-2 vote. The dissenting voters, including the board chairman, have called for a formal outside investigation.

The contract is one of several the district has awarded to RMC over the past several years. It calls for the company to draw up plans for a water-recycling project.

In Monterey County, RMC was accused in 2011 of making $160,000 in under the table payments to county water official Steve Collins while he and the company were working on Cal Am’s first effort at a desalination plant for the Peninsula. Collins pleaded no contest to conflict charges but RMC was never charged. The criminal case played an important role in ending the project, but Cal Am is attempting to move forward with a different plan. The current project has stalled, also because of conflict of interest concerns, this time involving a hydrologist who had been retained by the water company and the Public Utilities Commission to analyze water well technology for which he holds the patent.

According to the news reports, Melanie Richardson, deputy director of the Santa Clara water district, reported in a statement of economic interests filed in 2010 that she held stock in RMC worth between $100,000 and $1 million through her husband, RMC principal Tom Richardson.

Melanie Richardson and RMC have denied any wrongdoing. The district’s top official, Beau Goldie, told NBC Bay Area that the district had looked into the relationship several years ago and determined there was no conflict. He said Melanie Richardson has no role in awarding contracts to RMC.

The contract awarded to RMC without competition involves design work for a recycling plant that could cost as much as $800 million. District insiders told reporters they feared that RMC would have an inside track for that contract as well. Goldie said it was decided to hire RMC without seeking bids in order to expedite the process in response to the drought, but district critics said it would be at least four years before the plant could be operational.

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Vote no campaign and protest signs for a political or social issue in an election resulting in a group demonstration protesting to stop a law  or policy made by a politician on an isolated white background.BILLS FOR SOME HOMES WOULD JUMP 43 PERCENT

Public Water Now is launching a protest to Cal Am’s recent request for a rate increase. Although Cal Am may feel under-funded, we ratepayers are under-represented and under-appreciated.

Public Water Now has settled into the role of watchdog, but now feels the need to pursue action with a stronger and stronger voice. Because we were relentless in seeking a review of the water rate structure, Cal Am recently acquiesced.  Our main interest was to compare and understand the significant differences between residential and commercial rates. We are not convinced that things are fair. And so far, neither Cal Am, nor the commercial interests, has been able to explain how the stark differences are fair.

We did get a meeting with Cal Am officials a few weeks ago on the new rate design. We were told to expect 1) removal of the allotment system, 2) a compressed rate structure, and 3) a shift of costs to the fixed meter charge and away from volume and usage charges. The community’s success at conservation has Cal Am in a tizzy. When the Herald carried the news of the specifics, I was stunned because only days earlier Cal Am had not shared with us the size of the increase (averaging 29% for residential), nor the commercial decrease (averaging 14%), nor the short time period for protest, ending on Aug. 12.

I remember a California Public Utilities Commission workshop in 2012 where Cal Am proudly announced its research showed that higher rates would not cause reduced use. The Peninsula was different, Cal Am said. Cal Am’s view of price elasticity was the opposite of other research Cal Am shared that was unanimous in concluding that the higher the price, the lower the demand. I remember calling Cal Am out on this, in front of about 25 interested and mainly local parties, about its counter-intuitive statement. I was criticized by Cal Am for doing so. It seemed wrong then, and it surely has proven that Cal Am’s research expert was totally wrong.

Cal Am has a serious under-collection of revenue because it misjudged the elasticity of demand. For a protected utility without competition, it has no experience in the business of economic dynamics. Why so many seemingly savvy local business people support Cal Am is mysterious. It boggles the mind to witness such corporate incompetence.

Cal Am’s current rate request is on this link.

My conclusions and the points of protest are these.

  1. Cal Am is using conservation, and the cease-and-desist order and drought crises, to piggyback its under-collection performance. The underlying pitch is to shore up its revenue stream. Guaranteed revenue is the point. This is an inappropriate rationale, timing and method to restructure Cal Am’s entire revenue picture.
  1. The proposed protest period is excessively short, ending Aug. 12
  1. Cal Am has called for workshops, but none has been scheduled by Cal Am or the water management district. This shortcoming undermines the deadline.
  1. The residential rate for Tier 1 users goes up 43%, far exceeding the reported average of 29%. This is where the main water conservers have ended up, so now Cal Am will get its piece of gold from them. It is also where most voters will begin to feel the heat of Cal Am costs. The more we conserve in the public interest, the more we serve the corporate interest.
  1. The commercial rate decrease is not explained, which calls into question if the commercial rates still create an incentive for conservation as advertised.
  1. The fact of under-collections proves Cal Am has not had a rational revenue structure, or it proves Cal Am is inefficient in its management.  Both should be evaluated.
  1. Cal Am revenue reports, contained in its application (link) shows plenty of income after expenses.  Where and how is Cal Am under-financed?
  1. Cal Am claims, but does not explain, how it is less costly to have these new rates.

Protests can be filed by email (below).  In correspondent to the PUC and the Office of Ratepayer Advocates, you should refer to the case number, which for now is  A.15-07-?  (The question mark is correct for now)

Public Utilities Commission: public.advisor@cpuc.ca.gov

Office of Ratepayer Advocates: richard.rauschmeier@cpuc.ca.gov

Monterey Peninsula Water Management District: arlene@mpwmd.net

Monterey Herald: mheditor@montereyherald.com

Monterey County Weekly: mail@mcweekly.com

Monterey Bay Partisan: calkinsroyal@gmail.com

Riley is managing director of Public Water Now.

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love profitOpen Letter to Cal Am President Rob MacLean:

During my active professional career, I worked for several major international and national corporations, including ExxonMobil, Ashland Chemical (a division of Ashland Oil) and Valero Energy. I fully understand that the focus of management in such organizations is to create equity, reduce debt and keep shareholders happy. So I am not surprised that Cal Am takes every effort available to it as a CPUC-regulated private utility to accomplish those same goals.

As I am sure you know, your company is not popular, except with the hospitality industry and the elected officials who walk in lock step with the industry, and has lost credibility.

The latest news is that, because of less than expected infusion of payments, due primarily to the ratepayers’ herculean efforts on conservation, Cal Am is seeking new rate increases. Your spokeswoman explains that the rate increases are intended to “simplify” water bills, and, in the long run, save ratepayers “millions of dollars.” As usual, her comments contain threads of truth but without a full explanation. As such, they come across as political spin, putting the best face forward on a negative proposal by careful choice of certain words and the careful avoidance of others. The result: unacceptable.

It is one thing to seek rate increases that cover deficits in reasonably expected and justifiable income projections. It is entirely another thing to seek rate increases to cover deficits caused by your own failed strategies, litigation costs that could have been avoided, and other examples of mismanagement or negligence. It is also another thing to rely upon the historical fact that the CPUC will grant most, if not all, of the rate increases for which you have applied.

An egregious example proving that last point is the fairly recent circumstance, regarding the San Clemente Dam, where a CPUC administrative law judge who tried the rate case, heard all the evidence and read all the briefs had his recommended decision ignored by the full commission. Instead, an alternative decision that handed Cal Am an additional $150 million was adopted, and now your ratepayers will be paying your company that extra amount for the next several decades. What’s worse, no one stood up on the ratepayers’ behalf other than the CPUC’s own Ratepayers Advocates Division, whose recommendations can be ignored.

The Peninsula community finally rose up in arms and, in a major show of dissatisfaction with what your company has done, placed Measure O on the ballot, calling for the acquisition of Cal Am by a public agency. The measure came very close to being successful, but those supporting it could not compete with the amount of money raised by your company and its supporters, and so it lost. Regardless of the outcome, the extent of anger and the near success of the measure should have been a very big wake-up call to you and your company. Unfortunately, it wasn’t.

Since then, you have sought to drill wells with an unproven technology in a location where you have no water rights, all with the expectation that those sunk costs can be recovered easily from ratepayers. No lessons learned there, although the CPUC’s recent actions might dictate a future change of course that might end up to be a lesson learned.

Another lesson that you could have learned is that being truthful, transparent and responsive while showing ratepayers the respect they deserve might actually benefit your company in the long run. If you personally have made attempts to undertake any of those actions, they have been blurred and nullified by the propensity of your political and economic supporters to obfuscate and their refusal to be open and truthful about why and what they are supporting.

So here are some suggestions:

First, replace your spokesperson. I have nothing personal against her, but she is not effective, is prone to generic platitudes that don’t educate and are not responsive. I would much rather see a person in that role who can tell it like it is, even if the “it” is something completely favorable to Cal Am and not to the ratepayers.

Second, do not seek rate increases for costs that are directly the result of mistakes that the company makes. That would include any fines imposed for failure to meet the Carmel River cease and desist order, costs involved in pursuing technical and engineering strategies that common sense, known research and history tell you have little chance of success, and litigation that evolves from such actions.

Third, respect ratepayers’ efforts in conservation without punishing them. The state should create a mechanism to cover reasonable losses that a utility incurs under such circumstances, because the state is mandating the conservation.

I write this not because I am an enemy of Cal Am. If Cal Am were to do an about-face, take a measure of responsibility for the mess we now have, commit and pledge to work with the people (not just through elected officials who have already failed the test) and also commit to seeking only righteous and justifiable rate increases, it might be possible to develop a collaborative system that will ensure your company fiscal soundness, ensure real access by the people, fair and reasonable water rates, and communications between both that are clear and truthful.. That is a lot to ask and I have no basis to believe you and your senior company management will listen and consider them. At the very least, however, positive responses to the first three suggestions are, in the minds of those who pay your bills, absolutely required, no matter what else be accomplished.

Hood is a retired lawyer and engineer who once headed the Association of Monterey Bay Area Governments. He is a frequent contributor to the Partisan on water issues.

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See update at end. Also new, PUC Judge Gary Weatherford’s order detailing true information he wants from Cal Am and others about the latest conflict of interest.

 

There were some nice surprises in Jim Johnson’s story today in the Monterey Herald. The subject was desalination but it was not about delays or cost increases, at least not directly.

Johnson reported that Public Utilities Commission project manager Andrew Barnsdale is being relieved from the responsibility of overseeing the Cal Am desal project on the Peninsula. There were two surprises right there.

One was that there was a specific someone at the PUC who was responsible for the desal project. The impression had been created long ago that no one was in charge unless it was Cal Am. Whenever anything big happened at the PUC level, it always seemed to be the work of an administrative law judge who was allowed no contact with anyone except large law firms. Some of those administrative law judges seem pretty bright, but they’re pretty much limited to ruling on matters put in front of them by others who may or may not qualify for that distinction.

So someone named Barnsdale was in charge? Good to know. His name had come up along the way, but it hadn’t stirred much interest in the growing community of desal watchers locally for several reasons. First, his background is mostly in environmental law, electricity and permitting issues, not water or construction. Second, he had responsibilities for other significant projects around the state. Apparently the PUC thinks that overseeing an extremely important and tremendously challenging $400 million-plus desal project is a part-time job for someone without desal experience.

Dollar bills close-up - Money keeps silentAlso under surprises but in the “good surprises” category was that whoever Barnsdale reports to took action upon learning of a conflict of interest situation. It involves testing of the well technology that Cal Am intends to use. It turned out that the testing was essentially being carried out by one fellow who was being paid by most everyone involved in the effort, and who stood to make more money the longer the technology seemed to be working. Among those he was working for was the PUC and Cal Am. And the company preparing the environmental impact report on the project.

There are a couple of surprises contained in the preceding paragraph. No, not the conflict of interest part. The conflicts were apparent months ago to just about everyone involved, everyone except the PUC apparently. The surprises are that the PUC either didn’t know or pretended not to know something that should have been obvious to anyone with a passing interest in the subject, that it admitted to recognizing the problem eventually and, probably most surprising of all, that it did something about it.

UPDATE: Following the original post of this article, Monterey water activist George Riley weighed in with a comment, see below, strongly supportive of Barnsdale. Considering George’s superior knowledge of this project, the process and the players, this very strongly suggests that Barnsdale is being scapegoated. Stay turned for more on this.

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Washing plates in the dishwasher. Inside a dishwasherAlthough I am generally supportive of California American Water’s effort to build a desalination plant to solve the Monterey Peninsula’s water problems, I have less faith in Cal Am’s public relations department. They just don’t seem to grasp the basic realities of modern household plumbing and water use.

About two and a half years ago in a blog post,  I challenged Cal Am’s excuses for sudden unexplained spikes in some people’s water bills. Cal Am argued that they were caused by “silent” toilet leaks, which is baloney because toilet valves made in the last 30 years or so are designed to make noise when there are even small leaks.

Sometime between then and now Cal Am ran ads about fixing shower leaks. They had a photo of an attractive lady taking a pipe wrench to a shower head, which was oh so very wrong! Shower leaks, like all faucet leaks, occur at the valves – the handles where you turn the water on – not where the water comes out. Pipe wrenches don’t work on faucet valves, and if you used one on a shower head you’d scratch the finish so badly you’d have to buy a new one.

The latest bit of nonsense was printed on a flyer that came with our last water bill. The theme of the flyer was that saving water also saves energy. It had the usual advice, take shorter showers, install more efficient appliances — most of it common sense stuff that’s been drilled into our heads since the 1970s.

But one piece of advice made absolutely no sense. It said “Run the dishwasher with a full load once a week instead of twice and SAVE.” Now, if they had said “Run your dishwasher only when it’s full and not half empty” that would have made sense. But setting a once a week schedule is ridiculous.

Our two-person household packs a full dishwasher about every three days. If we only ran it once a week we’d have an enormous ceramic backlog in short order! Families with children probably fill their dishwashers at least every two days and maybe even daily. I think only a single person living alone could manage to get by on Cal Am’s suggested dishwashing schedule. Perhaps that is who wrote it, a single person. If anyone takes Cal Am’s suggestion seriously, they’ll probably hand wash everything that doesn’t fit in the weekly load and end up using more water while believing they’re using less.

Dishwashers aren’t even big water users. The water-saving dishwasher we bought last year uses only four gallons per load, every three days, which in our household works out to just two thirds of a gallon per person per day. Our old “wasteful” dishwasher used a little over five gallons per load. Even that was a wee bit less than a gallon per person per day. Compare that to most modern toilets, which use 1.5 gallons per flush, or a “water saving” shower head that pours out anywhere from 1.5 to 2.5 gallons per minute, and you realize that dishwashers are nothing to worry about.

Speaking of showers, one of the best ways to save water is to install a flow control valve between the pipe coming out of the wall and your shower head. It allows you to quickly and easily adjust the amount of water from full blast down to a tiny dribble or anywhere in between depending on your need of the moment. You can save a good deal of water this way without having to rush your cleansing ritual. Since it doesn’t require fiddling with the faucet a shower head valve maintains a constant temperature and you don’t have to waste time and water readjusting it every time you turn the water back on. Used properly, you’d probably save enough water with a single shower to run the dishwasher two or three times. The valves are pretty easy to install even if you’ve never worked on plumbing before. Just don’t use a pipe wrench! A crescent wrench will do nicely. I’ll leave the full installation instructions to the hardware sales people. That’s what they get paid for.

James Toy is a Carmel native, currently living in Seaside, who occasionally gets involved in local political matters. He is the creator of a community oriented website called The Monterey Peninsula Toy Box at www.montereypeninsula.info. This commentary also appears on that site.

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????On July 6, 1977, the Monteey Herald ran an editorial, quoted verbatim, below. It was written during the height of a drought period, which any long-time Peninsula resident remembers well.

The last paragraph in the editorial is particularly interesting in that it states that Cal Am, even back almost 40 years ago, was claiming it had rights to ALL the water in the Carmel River Valley, both surface and subsurface. And, in light of what we know today, the editorial writer, almost naively, states that Cal Am should go to court to thwart others who export water from the CV basin for a profit.

That would be comical if history wasn’t proving that it is so sad. History also proves that a line of successive community leaders, both elected and otherwise, have never been able to wrap their intellects around the big picture, which has come home to bite us in the rear:
Protecting the Aquifer

Protection for the Peninsula’s dwindling water supply in the Carmel Valley aquifer is becoming a matter of growing concern as other potential water sources are tried and found wanting.

Last week it was disclosed that the California-American Water Co. had capped a test hole after drilling down 800 feet in the mid-Valley without finding the so-called Tularcitos aquifer, which at least one local geologist is convinced is down there somewhere. And another other property owner has drilled down over 500 feet without finding this hidden treasure.

Well drilling, we are aware, is a tricky science, and one man’s dry hole may be but a few yards away from another man’s gusher. Thus it is also possible that geologist Richard Thorup is right in his claims that others have found water at a deeper level and are now using it.

But so far no one has struck a deep source which will produce water at a rate of at least 1,000 gallons a minute, which the water company would need for a commercial well. Nor is there evidence that the deeper valley wells are not just isolated pockets. Nor can it be said with any certainty what effect the more shallow Carmel Valley aquifer has on this elusive Tularcitos aquifer, or, indeed, how the Tularcitos aquifer would be replenished.

Until these questions can be answered, and until a commercially useful well proves itself, it is prudent to assume that the Peninsula’s water resources are limited, and that the Carmel Valley aquifer is the key to survival until normal rains resume.
The Monterey County Board of Supervisors recently passed a well ordinance which may help stem the tide of well drilling in the Carmel Valley, where almost 200 permits for drilling have been issued by the health department since the first of the year.

In the case of individual wells, bacterial tests now will be required to insure that the well is not contaminated by septic tank wastes. This should protect the larger aquifer from contamination from private wells.

The ordinance also requires geological and hydrological studies for wells with multiple connections to determine the effect of pumping on the groundwater level.

Useful though this ordinance may be, it does not stop owners of existing wells from exporting water from the Carmel Valley aquifer for use elsewhere on the Peninsula– or beyond the Peninsula, for that matter. Nor, of course, does it put any sort of moratorium on the drilling of new wells until the drought has ended.

This might be the appropriate time for Cal-Am to test in court the right it has long claimed to all the water in and beneath the Carmel River. It would be most interesting to see what would happen if Cal-Am were to seek an injunction to halt further export of water by individuals from the Carmel River aquifer until regular rainfall starts to replenish the underground basin. It just might stop some current exploitation of the community’s major water source for personal profit.

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????I want to congratulate the Carmel Pine Cone on being the latest victim to obtain a Cal Am press release and print it in a newspaper as journalism: “Slant Well Salinity not There Yet” but …”it’s moving in the right direction, Cal Am says,” on Page 1 of Friday’s edition. Perhaps this pronouncement could have generated a couple of piercing questions from the newspaper. Since that did not happen, let us discuss what was reported.

1. “The Company said Thursday that the facility (slant well) has completed an important five day continuous operation of the well, with promising results.” Response: The initial operation testing is a CEQA requirement, with immediate reporting to parties required.

2. “At one of the monitoring wells, Cal Am said the drop in groundwater levels and salinity changes (due to the pumping of 2,000 gallons per minute) were much better than limits set by the California Coastal Commission.” Response: Swell, what is the reduction and salinity changes at the other six monitoring wells?

3. “The salinity of the water from the test well itself increased from 23,000 parts before the test to 26,000 parts at the conclusion of the 5 day test.” Response: 23,000 ppm is 65.71% seawater, or 34.29% fresh water. At 26,000 the numbers are 74.28% and 25.71%. This is a far cry from 4%, but ask yourself how does the water composition change by 3,000 in a five day test? Seawater intrusion, remember this is an unconfined aquifer.

4. “Given the large volume of water located within the shallow dunes sand and relatively small pump volume,” Cal Am reported that “these two trends are very positive and indicate that ocean water is moving toward the well.” Response: And fresh water is being evacuated from the aquifer, and pumped directly back into the ocean in violation of state law and the Beneficial Use rules of the California Water Code.

I am sure it is possible to read this article in a positive light and ignore the Cal Am spin, but the statements against self interest, in this article, in their water rights lawsuits have to make their attorneys cringe. Cal Am has consistently said it will draw primarily seawater and that any take of fresh water would be incidental. Let me put the 2 year “take” Cal Am proposes into mathematical perspective.

1. 2,000 gallons per minutes equal 2,880,000 gallons per day. That is equal to 8.32 acre feet per day. Five days of testing equals 41.6 acre feet for the CEQA test. Of that 41.6 acre feet, approximately 30% (split the diff. 23K v 26K) is fresh water, or 12.48 acre feet.

2. Now let’s run the test for the first year: 1,051,200,000 gallons of water, or 3,038.15 acre-feet of water, that will be pumped into one pipe and blown back out into the ocean in another pipe, with no beneficial use. Assuming the 30% fresh ratio, that is 911.45 acre-feet of fresh water wasted. These numbers may be low because Cal Am has been permitted and is allowed to pump 4,000 acre-feet per year for 2 years, so they may increase the pump rate, but we need to ask them.

3. Second year: Assume same numbers, another 3,038.15 acre-feet of water, and another 911.45 acre-feet of fresh water.

4. Combining the two years gives us 6,076.3 acre feet of water pumped, of which 1,822,900 is Salinas Valley fresh water that has simply been illegally extracted from an overdrafted basin by increasing seawater intrusion.

Now let’s politically put these numbers into perspective. Recently two land-use decisions were made by the Board of Supervisors that allowed the projects to move forward. I forget the numbers on one of the projects, but the other was 90 acre-feet of Zone 2C water per year. For the record, I live off Highway 68 and am not a fan of either project, but I am simply trying to make a point. The posturing from the dais at the Board of Supervisors meeting predictable. Jane Parker voted no, and I truly believe she votes her conscience and believes what she says, water is an issue, and a no vote. Potter, after doing a head count and knowing he had 3 votes yes, pontificated about 90 acre-feet and voted no.

Where is the hue and cry over the 1,822.90 acre feet of Zone 2C water being wasted on a test that will never get close to 4% salinity. And why is 4% a magic number? It is still water Cal Am does not own and not legally transport.

Let me put two points to rest for the Cal Am naysayers who say 1) the test was necessary, and 2) we did not have preexisting test data.

The test numbers in the EIR certified by the state Public Utilities Commission in 2010 pegged the fresh water percentage in the groundwater at the CEMEX site at 25%. Going vertical with a deeper core at the same site generated the infamous 15% that was heavily debated. Memories starting to return? All you have to do is pull up the prior EIR to find this data.

The State Water Resource Control Board and the Coastal Commission, following CEQA guidelines, require evaluation of all the applicable water sources. Prior data testing that is timely and relevant may be included in the data set presented to the regulatory authorities, for evaluation.” Straight from the CEQA handbook, perhaps Marc Del Piero can weigh in on this.

One final thought, the salinity and total dissolved solids measurements can be done hourly and with a kit. I find it interesting that two months turned into a Friday report with no other press outlet reporting. Congratulations, Pine Cone, on hard-hitting investigative journalism.

Steve Collins is an accountant and former chairman of the Monterey County Water Resource Agency board of directors. He helped lead the county’s efforts to develop a desalination plant in partnership with Cal Am and was prosecuted for a conflict of interest that he maintains was encouraged and approved by top county officials.

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Sorry I stole your horse, mister. Wanna buy it back?

In case you missed it, the Weekly’s Sara Rubin had an important water story this week. Here it is. It’s about Cal Am Water and its plans for a desal plant in Marina and what happens if the plant, while sucking up ocean water, also sucks up Salinas Valley groundwater from a basin that extends to the shore.  That wouldn’t be legal, but Cal Am figures it can find a way to make it legal AND to take that Salinas Valley groundwater and sell it back to its rightful owners.

The correct reaction to that is “Amazing!”

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