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????COMPANY HAS NO RIGHT TO SOME OF THE WATER

Back in July 2013, a settlement agreement was reached between California American Water, local water agencies, certain ag interests in the Salinas Valley and several non-profit agencies including the group now known as Public Water Now. The agreement related to Cal Am’s proposed water supply project that involves building and operating a desalination plant in the vicinity of Marina.

Public Water Now is headed by George Riley, a well-known leader in the ongoing effort to seek fair water rates for Peninsula residents. Public Water Now signed the agreement not because it was in full support of the project but because, as a party to the agreement, it would be entitled to participate in reviewing draft reports and other activities. It would be in the loop rather than on the outside.

The settlement agreement contains important language that gives the parties, including Public Water Now, the right to challenge the project’s source of water if it is shown to harm the Salinas Valley Groundwater Basin or the Sand Dunes Aquifer in the Seaside-Marina area. It is unlawful to extract water from one groundwater basin and transfer it to another. Water taken from either or both of those sources and used by a desal plant would be unlawful. On top of that, Cal Am has no underlying legal right to either source.

Therefore, Cal Am turned to the idea of drilling slant wells under Monterey Bay in order to reach sea water for desalination. Drilling data, however, have clearly shown that significant amounts of fresh water, not totally saline water, is in the water pumped so far, meaning Cal Am is pumping water to which it has no legal rights. Further, in spite of Cal-Am’s continuing arguments that slant wells are a tried and true method of obtaining water for a desal plant, the company has provided no proof of that, and Public Water Now has determined that no ocean desal plant in the world is served by slant wells.

Given these facts, Riley sent two emails in 2015 and 2016 to all parties before the California Public Utilities Commission in connection with the continuing hearings on Cal Am’s project. He wrote that he and Public Water Now were exercising the right under the agreement to withdraw support for slant wells and to actively work for legal and reliable alternatives. He provided the necessary facts on the record to support his claim.

Neither email was incorporated into the record.

In response, Cal Am and its supporters had their lawyers submit a “Motion to Strike” Riley’s emails.

The motion asserts that the emails were sent “ex parte,” meaning sent without notice to other involved parties, including a decision-maker. Even though the other involved parties did indeed receive notice, the CPUC prohibits such communications if a decision-maker such as an administrative law judge is a recipient. The administrative law judge was, in fact, a recipient.

The underlying purpose of limiting ex parte communications in a judicial or quasi-judicial setting, such as the CPUC’s administrative action involving Cal Am, is to ensure that no party can gain an unfair advantage by communicating off-the-record with any decision-maker.

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George Riley

It is important to note that administrative law judges do not have decision-making authority on substantive matters. They make procedural decisions but their opinions on matters of substance are only recommendations to the commissioners. None of the five commissioners received the emails, so the integrity of the process was not compromised.

If Cal Am succeeds in having the emails stricken from the record, important facts will be kept out of the record upon which a final decision will be made on the desal project.

What are they afraid of?

If the information and facts offered by Riley and Public Water Now were faulty, why would Cal Am be so concerned about them and go to such effort to have them stricken from the record?  They are concerned about those facts because they are the basis for showing the world the mistakes, misleading statements and other errors that have increased the project costs that will probably be transferred to ratepayers.

The motion asserts that the time for “commenting on the agreement” had long passed when, in fact, the emails were not comments on the settlement agreement. The emails address issues that arose after the settlement agreement. Since the settlement, concerns about the slant wells have evolved, including conflicts of interest involving the man who designed the wells and the validity of the data collected from test wells.

So it comes down to this. The emails were, by a strict definition, ex parte communications prohibited by the PUC. But at the same time, the substance of the emails had nothing to do with comments on the settlement agreement. Rather, they were direct communications necessary to notify all parties involved that Riley and Public Water Now had gathered sufficient evidence from the record to support the exercise of the right to challenge the source of water for the proposed desalination plant.

If the motion is adopted by the administrative law judge, facts that are not supportive of Cal Am would never see the light of day. The motion also threatens serious sanctions against Riley and Public Water Now.

The motion to strike is inappropriate and PWN’s emails should be incorporated into the record. Fairness and equity also demand that the final decisions in this case be determined on the basis of all the facts that should be contained in the entire record. As such, facts adverse to Cal-Am should be included as long as they are facts and can be supported as such. Riley has made that case. Justice demands that the motion fail. If it is adopted, the administrative law judge should direct Riley and Public Water Now to resubmit their materials in another format.

Hood is a retired lawyer and engineer who divides his time between Carmel and Columbus, Ohio. He is a former executive director of the Association of Monterey Bay Area Governments.

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Antique water fountain, detail of a source for drinking water, drinking water

Antique water fountain, detail of a source for drinking water, drinking water

Editor’s note: The following by Tom Moore of the Marina Coast Water District originally appeared as a response to a previous Partisan post about the advertising for the Sea Haven development, formerly Marina Heights, planned for Marina. It is reposted here to expose it to a wider audience.

Now that we’ve gotten out of our system the national politics associated with the “Coming Soon Marina Heights” development or whatever misleading marketing names they will come up with for it, let’s get back to water and why you should not worry/worry.

The Sea Haven/Marina Heights project, along with all of the former Fort Ord, is served by Marina Coast Water District (MCWD). While most of you know the following facts, they are included here for any new readers:

  • MCWD is a government organization, not a private company. As such it is prohibited from making a profit off its ratepayers.
  • MCWD has nothing to do with Cal Am or the Cal Am service area (unless you count the various suits filed by Cal Am against MCWD and MCWD’s countersuits against them as “having to do with”…).
  • MCWD owns outright all of the water service and wastewater collection infrastructure on the former Fort Ord and in Marina itself.
  • MCWD owns nearly 5,200 acre-feet per year (AFY) of the 6,600 AFY of groundwater pumping rights attached to the former Fort Ord (the U.S. Army owns the other approximately 1,400 AFY).
  • MCWD owns 2.2 million gallons per day (MGD) of wastewater treatment rights for the former Fort Ord (the Army owns the other 1.1 MGD).
  • By contract (with FORA), MCWD is honoring and will continue to honor FORA’s allocation of the 5,200 AFY of groundwater pumping rights to the underlying land use jurisdictions (Seaside, DRO, Marina, City of Monterey and Monterey County).
  • FORA long ago divvied up the 5,200 AFY and distributed portions to these land use jurisdictions (even though they do not actually own the rights themselves).
  • ALL of this groundwater comes from the Salinas Valley Groundwater Basin (SVGB). None of it comes from the Carmel River or Cal Am.

When the “Coming Soon Marina Heights” development proposal came to the city of Marina many years ago (under a different political regime) it got several sweet deals. The one that irked those of us keeping an eye on MCWD was that the city pretended that the development would use less water than MCWD engineers said the development would need. This occurred because the city wanted to entitle not only “Coming Soon Marina Heights” but also the Dunes development and Cypress Knolls. However, MCWD’s engineer told the city that there would most likely not be quite enough water in the city’s allocation of groundwater from FORA to build out all three developments.

Those of us who have been paying attention have noted that the full build-out of these various Ord Community developments (despite even the current rapid pace of construction) is many years away. So there is still time for MCWD to find and develop the additional relatively small amounts of water needed to support full build-out …. (OK, if you want to glom onto the “no worries” viewpoint you should stop reading here)… unless things go badly with our groundwater.

So how could things go badly with our groundwater? There are two broad possibilities:

1. If Cal Am succeeds in using the CEMEX property to obtain source water for the size of desal plant that it wants, Cal Am will be taking at least 27,000 AFY from a location a mere 1.8 miles from MCWD’s nearest potable water well and less than 1,800 feet from the location of the source water well for MCWD’s desal plant. This presents a serious potential threat to the groundwater south of the Salinas River where all of MCWD’s wells are located.

(For comparison purposes, MCWD currently pumps less than 4,000 AFY from its wells — thanks to water-conserving ratepayers in Marina and the Ord Community! However, MCWD has the right to pump more than a total of 10,000 AFY eventually. Just the Ord Community’s build out demand has been estimated at 9,000 AFY.)

2. The new groundwater sustainability act ends up forcing MCWD to forfeit some portion of its current total groundwater pumping rights. The whole point of the act was to make groundwater pumpers behave collectively in such a way as to sustain indefinitely the groundwater basins that serve them. Since the Salinas Valley Groundwater Basin has for decades been experiencing seawater intrusion, it is not currently in a sustainable condition. The consequence could be cutbacks in future pumping of groundwater.

And for those of you who may believe that we really don’t have a problem because we live next to the ocean and there is an infinite amount of water there, here is some more bad news. For the past 20 years or so, Cal Am has been proving that it’s not so easy to get source water from the ocean. If it was so easy, why aren’t they getting their source water from Monterey, Seaside or Sand City beachfronts? They could buy up a property in Sand City for the Cal Am desal plant itself and save a whole bunch of pipeline construction. For that matter, if it is so easy to get source water for a desal plant, why not get it from Carmel beachfront? They would avoid tens of millions of dollars of new pipelines through Monterey that are required under their current proposal.

The fact is that desal is NOT easy. Ratepayers don’t want to pay for it, some folks don’t want infrastructure on their pristine beach, regulatory agencies want to make sure the infrastructure causes as little harm as possible, the plants themselves are complicated to operate and maintain, the plants are expensive to build and very expensive to operate (salt and other stuff just doesn’t like to leave water – check the physics involved in the chemistry), the engineering is challenging and few people welcome the disposal of the brine output in their patch of sea. Oh, and did I mention that the ratepayers don’t want to pay for it.

All of these challenges have to be overcome to build a successful desal project that produces water. MCWD should know because it built and operated the first government-owned desal plant on the Central California coast. MCWD knows what these challenges were like and what kind of limitations they put on what is actually feasible. And the plant is currently mothballed precisely because it is too expensive to operate and maintain as long as we have access to groundwater at one tenth the cost.

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American Water Works, the parent of Cal Am Water, has two basic strategies for expanding its business. One is to expand into areas where development is expected. The other is to buy up small water services, those under 10,000 customers.

Both methods are in the works for Cal Am, the Monterey Peninsula’s principal water purveyor.

Cal Am has a long history of not adding supply infrastructure, from 1966 when it bought the Peninsula system, to 1996 when the State Water Board ordered it to change direction. Even after the California Public Utilities Commission added its recommendation in 2001 to build a desal facility at Moss Landing, Cal Am has worked at snail speed.

A “eureka moment” occurred, however, Cal Am realized that the future required new water to come from north of the Peninsula. Exciting visions of sugar plums began dancing in Cal Am’s head. Maybe all the cards were lining up, putting development at the former Fort Ord into play for Cal Am. After decades of neglecting the infrastructure, Cal Am now had a profitable game changer.

This explains everything. But for it to work, Cal Am would have to win legal battles and not simply meet engineering hurdles.

It had to play along with the Regional Desal Project in 2008-2010 because the CPUC, Cal Am’s regulator, had designed that process. But that venture was not to Cal Am’s liking. The CPUC had approved a project that was about 80% publicly owned, providing Cal Am with little ownership and infrastructure. That greatly limited its ability to collect profit. At the first opportunity, Cal Am and Monterey County’s government scuttled the project. They used conflict of interest charges to sink it.

Then Cal Am decided to pursue a fully corporate-owned and larger desalination project, which fit its profitable expansion strategy. It would be located near the former Fort Ord, the only part of the Peninsula with development potential. It would require Cal Am to overcome numerous legal hurdles.

The company first needed to overcome the county ordinance requiring public ownership of any desal facility. It got the county to cooperate and to get the CPUC and the State Water Board to lay the groundwork with quasi-legal opinions in support.

Soon, Cal Am’s primary consultant on the project was caught in a conflict of interest (Dennis Williams of Geoscience holds patents on slant well technology). The CPUC agreed that a conflict existed. But Cal Am skirted that issue by adding a legal non-revenue sharing agreement, Williams continues on the job with the potential to make millions even though a much less severe financial conflict of interest had sabotaged the Regional Desal Project.

Cal Am’s strategy shows up in various ways. Though the company initially promised the public and the permitting agencies that the intake for the current desal project would be under the bay, the intake is inland. This aggravates the legal challenge over water rights. Remember that Cal Am has no water rights for this project.

Being inland, the intake is smack in the seawater-intruded Salinas River Groundwater Basin (SRGB). The desal intake draws seawater inland, causing more seawater intrusion and legal problems. But Cal Am, of course, has a legal strategy for a “practical solution,” claiming a beneficial use of the largely abandoned intruded aquifer water. It is an innovative legal strategy that must overcome decades of court cases that conclude that overlying water rights holders have prevailing rights. The legal test is yet to come.

By pumping from the Salinas Basin, Cal Am is obliged to “return” source water taken from the intruded aquifers. This is the local law, the Agency Act, governing the basin.

There seems to be no great alarm about the continued high volume of Salinas Basin water in Cal Am’s test slant well samples. Why not? In my opinion, it is because the requirement to return water to the basin is being used to justify expanded infrastructure into new territory. Cal Am is credited with “success” by negotiating a breakthrough deal – the Peninsula and farmers agreed to the plan! But Castroville and the farmers got a great deal, paying less than 3 cents toward each dollar in costs. The difference of 97 cents will come from Peninsula ratepayers.

But the main point is not the cost. It is the infrastructure and rights Cal Am needs to implement the return water agreement. It will need to construct piping and pumping infrastructure in the area, and it will need obtain the authority to deliver potable water to Castroville. It will seek to be a water distributor right in the middle of the jurisdiction of another water purveyor, Marina Coast Water District (MCWD). Yes, it will be able to deliver potable water smack in the middle of another water service area and adjacent to the future development opportunities on the former Fort Ord. Despite another legal challenge, Cal Am will be positioned exactly where it has wanted to be for many years – able to provide water to new Fort Ord development.

Related legal hurdles include overcoming Marina Coast Water District worries that it has been invaded. MCWD is litigating against Cal Am for not making promised payments from the earlier Regional Desal Project. But expect Cal Am to play hardball. Remember that American Water Works has a national expansion strategy to acquire smaller water services (under 10,000 customers) when opportunities arise. These are called “tuck-ins.” MCWD has about 8,000 customers.

Recently, I have pleaded with the Mayors Water Authority to look at the legal risks Cal Am is facing, and the relevant water supply contingencies. But those in the know seem not to be concerned.

This is not mission creep, nor a series of unexpected circumstances. It is corporate planning. I have seen, read and heard too much over the years to think otherwise. I think the corporate strategy is clear. Cal Am will be positioned exactly where it has dreamed to be, right in the middle of Fort Ord, the only area with significant growth potential on the bay. All because it expects to win every legal challenge.

With such litigation ahead, who has confidence that Cal Am will meet the milestones set by the state’s cease-and-desist order?

Riley is managing director of Public Water Now and a regular contributor on water issues. He has been an active observer of each aspect of Cal Am’s desalination ventures and a technical adviser to the Peninsula Mayors Water Authority.

 

George Riley
georgetriley@gmail.com
645-9914

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Carmel River photo courtesy of Leor Pantilat. For more on his work, see end of post

If Jason Burnett was injured during his political struggles in Carmel or his controversial efforts to promote the Cal Am desalination project, he hides his wounds well. On a recent Friday he seemed more relaxed than he had in years as he prepared to immerse himself in a project with no political or policy overtones. He carried a giant chainsaw in the back of his pickup and was heading off to slice a dead black walnut tree into slabs to be turned into furniture.

During a break from the morning’s discussion, he showed off cell phone photos of some of the pieces he had previously crafted from redwood and the Big Sur cabin that he had brought back to life. He was more relaxed than ever and smiling like he does when he his son is the topic. He talked about the trip his little family will make soon into the north woods in search of relaxation and trout.

Burnett, 39, spoke proudly of his extremely active role in the desalination project and says he doesn’t worry about the criticism he has received for working so closely with rapacious Cal Am, which in some quarters is seen as a corrupter of public policy on the Central Coast. The way Burnett sees it, if people understood what he and associates have accomplished, they’d be “celebrating instead of criticizing.”

Public-ownership advocate George Riley, the most knowledgeable water activist on the Peninsula, agrees that Burnett has made several important and positive contributions to the desal venture, jeopardizing his political standing in the process. But at the same time, Burnett as a leader of the mayors’ water authority, spent “gobs of public money” and “ignored all the other water costs piling up on the ratepayers,” Riley said.

Burnett is no longer mayor of Carmel. He chose not to run for re-election this year following a period of great contentiousness that saw several city employees cut loose, followed by sizable public protest and, finally, the very public departure of the city manager that Burnett and his City Council allies had installed. It was made worse by terribly lopsided coverage in the weekly newspaper, whose publisher had felt disrespected by the manager. Whatever the cause, it placed another large speed bump in the path of Burnett’s political career.

He remains involved in the desalination project, though not in an official role. While he was on the Carmel City Council, he helped form the Monterey Peninsula Regional Water Authority in order to give Peninsula mayors and residents some say in Cal Am’s tremendously controversial and equally expensive desalination venture. Now, at least when he’s not out fishing, he will serve as an unofficial adviser to the new president of the authority, Pacific Grove Mayor Bill Kampe.

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Burnett at the beach

“A few months from now I hope he won’t be needing any input from me,” Burnett said in an interview that jumped from desal to Carmel politics to his love of fly-fishing, something he learned from his father and grandfather, David Packard of computer fame.

Foolishly or courageously depending on how it turns out, Burnett did something no other Peninsula politician dared. He stuck his neck out and provided some local leadership for the desalination project. Monterey County Supervisor Dave Potter for years had been in the best position to assume that role by virtue of his membership on the Peninsula water management board, his past membership on the Coastal Commission and his numerous other associations. But when he did become involved, behind the scenes at the county level, the result was a nest of conflicting interests that unraveled the initial attempt at a desal plant for the Peninsula.

Though it has cost Burnett political capital locally, he jumped into the whirlpool with both feet and had some serious successes. Most importantly, considering the venture’s hefty pricetag, he helped create a bond-financing structure that reduces the project’s cost to Cal Am customers by 20 percent or more. He also helped create an oversight body that provides the public with a limited measure of scrutiny over the project, which is now penciled for completion in five years though the construction schedule has been and remains highly elastic.

But by becoming so closely involved in the project, and by working so closely with Cal Am, Burnett’s stock slid sharply in progressive circles over the past several years. He believes, without belaboring it, that his reputation has suffered unfairly simply because of the company’s reputation. Part of an international utility conglomerate, it has come under constant attack over the high and rising cost of its water locally, its general arrogance in dealing with its customers and its reliance on deceptive advertising to beat back a couple of efforts to start a public takeover of its local operations.

The company does have its allies, mostly in the hospitality industry, which fears great business losses if the desalination venture continues to sputter and the state makes good on its threat to severely cut the Peninsula’s use of Carmel River water. But Burnett seems unlikely to regain his political momentum unless and until a desal plant is up and running and running well.

As recently as five years ago, Burnett was seen as a likely replacement for U.S. Rep. Sam Farr, D-Carmel, the Central Coast’s longtime representative in Congress. Though he never said he was going for that seat, the troubles in Carmel and his association with desal put an end to that talk. Simultaneously, the Peninsula watched Jimmy Panetta’s star rise, making favorite son Leon Panetta’s actual son the odds on favorite to take over for Farr.

According to Burnett, the desalination project is being embraced elsewhere as “the most environmentally advanced desalination plant” despite the picture its local detractors have painted.

He ticked off the environmental pluses.

  • The slant-well technology, which has led to considerable controversy and delay, but Burnett says ongoing testing of the technology is proving to be a great success. The result will be a water intake process that causes relatively little harm to ocean life.
  • The appropriate size, big enough to help prevent water rationing but not big enough to promote additional development.
  • The locatio, one of the best possible along the bay, next to the Cemex plant north of Marina, which is no longer pristine and creates no habitat or erosion issues. It is also close enough to the Marina landfill to create the possibility of being powered by electricity produced by the burning of methane created at the waste site.
  • The $10 million plan to use underwater diffusers if necessary to disburse the brine if it accumulates at the bottom of the bay below the waste-water outflow.

“I’m really proud of what we have done,” Burnett said. “We will be able to demonstrate that we can do desal in an environmentally sensitive way.”

But what about the cost? Peninsula water customers will be paying well over $400 million for the plant, not counting various related costs, and that’s on top of Cal Am bills that already are some of the highest in the nation.

Certainly that’s a large concern, Burnett acknowledged, but the community has no choice but to move ahead because the alternative is to continue killing the Carmel River and the habitat it supports.

Burnett said he grew up fishing on the river and is motivated more than anything by a desire to preserve and restore it. In his view, continuing to drain the river in violation of state water policy would have been both illegal and unconscionable.

“If we had continued on the same trajectory, the steelhead would be dead. I think in the long run that it will be recognized that this was absolutely the right thing to do both for the ocean and the river.”

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George Riley

Riley, the leader of Public Water Now, gives Burnett high marks in several areas, especially his work to create a public governance committee that has some oversight powers over the process and, eventually, the actual operation of the plant.

Riley said Burnett “became enormously knowledgeable, more so than any non-water professional,” but may have taken too much credit for some of the progress. He said Dave Stoldt of the Monterey Peninsula Water Management District deserves serious credit for helping put together the bond package that will shave costs from the project and for the related ground water recovery program, along with Paul Sciuto of the Monterey Regional Water Pollution Control Agency.

So what’s next for Burnett, whose family money creates a long list of options? Before jumping into local politics, he was the managing partner of Clean Fund, an investment firm specializing in renewable energy projects, and before that he was associate deputy director of the U.S. Environmental Protection Agency, where he specialized in climate change and greenhouse gas issues.

If he has a plan, he wasn’t sharing it that day, though rumor has it that he’s likely to play some role in the Clinton presidential campaign. He mentioned only the upcoming fishing trip, and the retro trailer he plans to tow behind the truck, and said simply, “I’m going to take some time off.”

Proprietor’s note: Silicon Valley lawyer Leor Pantilat’s excellent blog, “Leor Pantilat’s Adventures,” includes this section on the Carmel River Gorge.

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Money greed. Business man holding holding case with dollars tightly isolated on grey wall background. Worship, miser, excessive gain, finance conceptOops, says Cal Am. When we said we needed $40 million more from our Peninsula customers, plus loads of interest, we really meant $50 million, plus loads of interest.

That was the gist of a story in Friday’s Monterey Herald about how Cal Am is amending its request to charge its local customers for the water they didn’t use because they were conserving water, partly because Cal Am hasn’t been able to provide a sustainable supply.

Never mind that Cal Am’s original request was for $40.6 million in reimbursement even though the Public Utilities Commission’s Office of Ratepayer Advocates says the original request actually amounts to $44.2 million. (In the world of utility finance, maybe $3.6 million is a rounding error.)

Never mind that the Office of Ratepayer Advocates, after a lengthy examination, also found that it was Cal Am’s own mistakes and miscalculations that resulted in its failure to collect  at least half the money it is now seeking.

Never mind that the Public Utilities Commission is supposed to keep utility company’s financially healthy but has no obligation to make a tremendously profitable venture even more profitable.

Here’s an earlier Partisan piece that does a pretty fair job of explaining the whole thing.

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Drowning PiggyIt was mostly California American Water’s own fault that it failed to scoop up every dollar it was entitled to collect from Monterey Peninsula customers in recent drought years, according to state consumer protection officials who also found that some customers contributed somewhat to the under-collection by overstating the number of people in their homes.

Under Cal Am’s current rate structure, the per-gallon price of water declines as the number of people in a household increases. For water billing purposes, a state watchdog agency calculated that the number of residents claimed by Peninsula customers is some 15,000 greater than the actual population. The Office of Ratepayer Advocates, an arm of the California Public Utilities Commission, concluded that Cal Am could have and should have spotted the inflated numbers but cannot even reconstruct its own numbers from as recently as 2013.

The Office of Ratepayer Advocates recommends that Cal Am be allowed roughly half the rate increase it is currently seeking but only if it makes several procedural changes and equalizes rates between residential and non-residential customers on the Peninsula.

Cal Am’s  rate application is a complicated affair, seeking several modifications to the way rates are calculated, but the heart of the application is Cal Am’s hope to raise rates about 43 percent for residential customers to make up for some $44.2 million that the company was entitled to but missed out on because of conservation measures. (The company has said publicly that the figure was $40.6 million but state officials say their calculations put the figure at $44.2 million.)

One customer was billed on the basis of having 999 full-time residents in the home while another was recorded as having 900 residents.

Cal Am and water agencies throughout the state are arguing that they have unfairly watched their revenue decline as water use declined. The natural response from customers, of course, is that they should not have to pay for water they didn’t use.

In a deeply detailed report completed this week, the Office of Ratepayer Advocates recommends that Cal Am absorb $17.4 million of the requested $40.6 million “as this portion of the current balance is reasonably attributable to lack of adequate management oversight” over the company’s water allotment system.

Cal Am proposes to collect the $40.6 million over the next 20 years, at 8.4 percent interest. The Office of Ratepayer Advocates recommends instead that Cal Am collect $23 million of that over the next five years with no interest.

Allowing Cal Am to stretch the collections out over 20 years at the stated interest rate would require Monterey district customers to pay roughly $91.3 million in total surcharges, including $47.2 million in interest alone, ORA calculated.

If Cal Am’s request is granted, the Public Utilities Commission would be allowing it to charge interest on an amount that already  includes the company’s guaranteed rate of return. In other words, the company would be calculating the total amount of uncollected revenue, adding its profit margin to that number and adding 8.4 percent interest on top of that, creating a double recovery.

Cal Am may have created the impression that the uncollected revenue is a debt that must be paid back. ORA says that there’s no truth to that — it is simply money over and above the amount of revenue that Cal Am collected during a period of healthy profit-taking.

The ORA report also focuses on discrepancies in Cal Am’s rate structures for residential and non-residential customers. While Cal Am was angling for the business community’s support for its desalination project, it created a rate structure that provides discounts for businesses that claim to be following sound conservation practices, a structure that does not include the type of tiered pricing that punishes residential customers who use large amounts of water.

ORA found that the disparity between residential and non-residential rates is slight at the moment but will grow rapidly when Cal Am starts collecting millions in uncollected revenue from residential customers. For 2014, ORA calculated that residential customers used 65.3 percent of the available water and provided 66.2 percent of Cal Am’s local revenue.

To help cure the looming disparity, ORA proposes to shift about 8 percent of the residential customers’ current burden, about $3 million annually, to Cal Am’s commercial customers.

ORA faulted Cal Am for not maintaining accurate records of household sizes, an important consideration because under the company’s longstanding approach to setting rates, larger households have paid less per gallon of water.

The watchdog agency used a simple approach, comparing Cal Am’s records to census data. The numbers didn’t come close. In 2014, for instance, Cal Am’s records indicated there were 115,148 full-time residents in the core of its Monterey district while the census put the number at 99,396.

(The ORA report mentioned in passing that Cal Am can’t find population data from before 2014 because of a change in its record-keeping system.)

Some of the improperly rewarded discounts are likely to have contributed to the uncollected income that Cal Am seeks to recover in the future, ORA reported.

In some cases, Cal Am calculated the fee structure for homes based on wildly inaccurate numbers. One customer was billed on the basis of having 999 full-time residents in the home while another was recorded as having 900 residents. In four other cases, Cal Am apparently took the homeowners’ words for it and set prices as though more than 50 people lived at each residence. From the report, it appears that those discrepancies were discovered by ORA. ORA also reported that an unusual number of customers reported that their lots had grown significantly, apparently in another effort to receive discounted rates.

“ORA agrees with Cal Am that the current rate design is overly complex, susceptible to abuse and can present challenges for the stable collection of authorized revenues,” the report sayd. The agency said it therefore supports a system with standardized block rates and one that strongly rewards conservation while promoting revenue stability.

Previous Partisan pieces on the rate hike:

Cal Am’s Monterey Peninsula rate hike is so outrageous that even KSBW opposes it

UPDATED: Some of the numbers elude Cal Am officials at PUC hearing on rate increase

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Cal Am rate increases, all lined up as far as you can see

Red 3d 40% text on white background. See whole set for other numbers.

Your Cal Am bill is going to be going up again. If you’re thinking 30 percent, you’re getting warm. Thirty-five? Warmer. Forty? Good guess

RATES UP FOR MOST BUT DOWN FOR COMMERCIAL USERS

When I received my most recent letter from Cal Am, I knew it wasn’t a late Christmas card. The first thing I noticed was the little blue box in the lower corner. “See inside for important information about your rates.”

Based on experience, I was pretty sure this was not signal of lower rates. I was right, but only half right.  More on that in a bit.

The mailing announced a Jan. 27 workshop on California American Water’s application to modify some of the conservation and rationing rules that affect most of the company’s customers in Monterey County, and to make some changes in the “rate design.”

On the last page I discovered that this means an increase in my water rates. As a somewhat typical water customer in a single-family home, I can expect to see my bill go up by about 40 percent. I should count myself lucky that I don’t live in an apartment because if I did, my bill would be going up about 43 percent.

Why is this happening? Didn’t Cal Am get a rate increase like 20 minutes ago?

I read the whole thing rather thoroughly and couldn’t find anything about improvements to the system or to service, fixing leaky pipes, or solving the water supply problem or saving fish in the Carmel River. None of that frivolous stuff. I didn’t see any talk about the rising cost of taking Public Utility Commissioners to dinner. As far as I can tell from the four-page letter, my bill is likely to go up because Cal Am wants to change the way it calculates bills, the way it applies conservation rates and how it does other things that have no impact on me other than increasing my bill.

Cal Am says, without explanation, that it wants to charge increase “the service charge to recover 30 percent of residential fixed costs, compared to a 15 percent recovery currently.”

Perhaps we should be relieved. What if Cal Am had picked 40 percent or 50 percent instead of 30 percent?

According to the letter, Cal Am also wants to charge me more by collecting money in the future that it should have collected from someone, who knows who, in the past. In other words, someone slipped up and failed to wring every dollar out of us at some point and the company thinks it should be able to remedy that. I have to presume that I was not the person or persons who should have paid more in the past because I am fairly certain that Cal Am has never missed an opportunity to get every possible nickel from me.

This is not a done deal, of course. It is part of an application before the Public Utilities Commission, which, if the past is a good predictor, will likely approve the requested increase and present Cal Am with an award for creativity and accounting prowess. This also is not a full reflection of what is likely to happen to your water bill in the near future. Cal Am rate increases are a lot like El Nino storms. Right behind this one, there’s another one taking shape.

But what of the lucky others whose rates aren’t going up? Those would be the Cal Am customers in the commercial category. They apparently aren’t being affected by most of the changed accounting procedures Cal Am wants to implement but they would be impacted by the effort to collect money that previously uncollected. On account of that, commercial ratepayers can expect to see their bills go down by about 9 percent.

If this is explained in any meaningful way in the letter, it is written in invisible ink.

It is difficult to see why commercial rates are to go down. Based on the information at hand, it could be that Cal Am thinks the uncollected money in past years should have been collected from residential customers and that commercial customers overpaid.

Or it could be that Cal Am just likes commercial customers than it likes the rest of us, or that it is more interested in keeping commercial customers happy.

You may recall that is was just a couple of years ago that Cal Am dramatically cut rates for commercial customers, or at least any commercial customers who were willing to sign a paper certifying that they really into conserving water whenever possible. They did that for various reasons, some of them sound. But I and a few other cynical types suspect that it was part of a deal. Something like this: Back us up on our desalination plans, the rate scheme for the San Clemente Dam removal and on other issues as needed, and we’ll lower your rates, and lower them again at the next opportunity.

Can I prove that? Heck no. In the byzantine world of utility accounting, it becomes ridiculously difficult to prove much of anything.

Now before someone gets all doesn’t-he-understand-that-what’s-good-for-business-is-good-for-everyone on me, I get it, I get it. What I don’t like is that decisions on such things are being made in places where I’m not normally invited and are being reached by people who don’t live anywhere near my neighborhood.

Which takes us to my final point. While there are some good Cal Am watchdogs already – people like George Riley and Ron Weitzman and Charles Cech as well as the fine people at the PUC’S Division of Ratepayer Advocates – I submit that they cannot possibly keep up with the all the rate storms lining up in the Pacific and heading our way.

Cal Am is regulated, and its rated set, by the state Public Utilities Commission, but that body in recent years has been preoccupied with keeping PG&E shareholders happy and overwhelmed by the need to monitor each public utility in this huge state.

Here’s what I think. We need someone in Monterey County, some highly credible person with great accounting skills, to take on the task of analyzing and reporting on all Cal Am rate increase requests and analyzing the company “rate design” and everything else it has or does that impacts our water rates.

Once upon a time, the Monterey Peninsula Water Management District had some role in regulating Cal Am. That function has mostly gone away, but it seems entirely reasonable that the district hire someone to perform the function I propose.

Another possibility is the mayors’ water authority. Its primary function is to advance the Cal Am desalination project, the biggest storm of all, and to provide some level of public scrutiny over that venture. Seems to me it would be well equipped to take on the task.

The Monterey County Board of Supervisors could make it work as well if the members really wanted to, though the county wouldn’t be my first choice.

I see this person issuing public reports on Cal Am rate proposals and representing area residents at rate hearings before the PUC. A key function: educating Cal Am customers to the point that we could represent ourselves at rate hearings.

Some of the work would duplicate work already being done by the Division of Ratepayer Advocates. The difference is that the division is responsible for the entire state and must constantly change its focus. This person would have one mission – making whatever Cal Am is up to make sense.

There are those out there doing some of this work now. The George Rileys and Ron Weitzmans. But they cannot keep up with the volume it on their own, without someone able to devote full time to the effort. Rate applications consume hundreds of pages of fine print and tie into previously approved side deals, surcharges and recalculations. Only someone devoting full time to the challenge has any hope of ever understanding all of it.

Expensive? Kind of. What isn’t? an energized and effective person in this role could save Cal Am customers, including businesses and government bodies, more than enough to cover expenses, more than enough many times over.

Right now, Cal Am has us right where it wants us. Divided. Confused. Overwhelmed. The PUC has no motive to fix that and neither does anyone else. We need to create our own seat at the table.

About that workshop, it’s at 2 p.m. and again at 7 p.m. Wednesday Jan. 27 at the Oldemeyer Center, 986 Hilby Ave., Seaside. Presiding over the sessions will be an administrative law judge for the PUC. 

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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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Wrong conceptAlways trying to stay one step ahead of the pack for discriminating readers of the Monterey Bay Partisan, I’m doing a little self-accountability project.

Many leading pundits, in an odd but self-congratulating gesture, used the end of 2015 to look at how well their predictions for the year stood up when all was said and done.

Really, just about all was said and done by Dec. 31. Much of it by Republican Party front man and performance artist Donald Trump, who capped the year conjugating schlong (which remains outlawed in many red states and proposed for a ban in the 2012 GOP platform).

Trump saved a full-throated defense of aerosol hair spray for men, one of the great issues of modern times, in his final stump speech of the year. Make American comb-overs tough as plastic, erosion-proof and great again.

Many pundits, of course, failed big when it came to Trump’s campaign. They predicted the near-end of Trumpmania so many times that poor Jeb Bush actually believed some of the losers. The ones who saw Wisconsin Gov. Scott Walker as a political juggernaut should lose their sinecures and be forced to clean Tim Pawlenty’s lumberjack shirts by hand.

I know I’ll be wrong plenty this year, so many times that I’d best get started and confess the errs of my future ways.

— I will be wrong in predicting House Speaker Paul Ryan will shave his beard. I never imagined part of his deal to take the crumby job but still go home weekends was so he could not only to see his young children, but perform with Wisconsin’s top ZZ Top karaoke tribute band.

— I will be wrong again when I predict the Monterey Peninsula would take the opening of the new In ‘N Out burger joint in Seaside in a sophisticated, understated way. I never guessed it would be accompanied by a blimp fleet, laser light show, massive traffic jams and Mayor Ralph Rubio’s unfortunate ribbon-cutting mishap.

— I’ll be red-faced when my bold prediction that Castroville, under the new effort to normalize relations with Cuba, will establish a sister-city bond with a community on the island nation. Seems I was wrong in thinking there’s a place called Castroburg near Havana. Monterey, meanwhile, will add six more sister cities.

— I’ll really have to eat my optimistic words that 2016 will be the year of miracle, when all parties in the gigantic fight over Monterey Peninsula water — including the steelhead — will find common bonds in their existential weariness. Under the peace deal I envisioned, all golf courses would be irrigated for 18 months by desalted tears of joy. But Cal Am’s filing for a rate increase with the CPUC on all tear-supplied waters doomed the fragile agreement.

— Crow will be served on my plate for my rash declaration that Congressman Sam Farr will rescind his retirement and seek another term to take up the cause of shocking abuse suffered by fleas in the American flea-circus industry. Internal polling swiftly shows the popularity of fleas among voters ranks just below bedbugs and slightly above drug-price gouger Martin Shkreli. Farr’s plan to celebrate his re-retirement with an old-fashioned bonfire on the Carmel beach ends in horrible chaos as police disperse the celebrants with perfume-scented pepper spray.

— I will be sadly mistaken by my inability to collect on a $20 wager for correctly predicting Donald Trump will win the GOP nomination in Cleveland this summer. The former reporter colleague with whom I made the bet moves out of the area, denies knowledge of the wager, says he can’t afford to pay because his cat needs a tummy tuck, and, finally, responds to all my pay-up messages with a blanket “Shut up, Larry” Just like the old days in the newsroom.

— With deep shame, I admit my vow to never shut up when there are good fights to fight and Trump hair jokes to make went awry when Monterey Bay Partisan Czar R. Calkins replaces me early in 2016 with the new “cranky geezer” app. The app spits out superior topical humor in mere seconds, while improving on the very old model — me — by spelling words corectly.

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PARTISAN News Quiz 2015: No one will get all these right

110_F_66851562_fFaspr2gJRZ649D8HnBiDZyATXAzuOcPThe people of the Central Coast are an enlightened lot, but just how enlightened? To find out, we designed this quiz to test how well Partisan readers were paying attention in 2015. As always, go to the comment box at the end and let us know how you did.

A. Which of the following happened in 2015

  1. Monterey County District Attorney Dean Flippo retired
  2. The various Peninsula agencies agreed on a plan to increase groundwater storage and expand conservation efforts
  3. A sheriff’s deputy with no management experience became the head of  the county’s largest law enforcement agency
  4. The Salinas murder rate went down
  5. None of the above (hint hint)

B. Cal Am continued to make progress on

  1.  A test well
  2. Plans for a test well
  3. Plans to study a test well
  4. The hiring of consultants without conflicts of interest to study plans to study a test well

C. Which of these development projects continued to exist, at least on paper, despite demonstrably inadequate water supplies:

  1. Monterey Downs
  2. Ferrini Ranch
  3. Corral de Tierra shopping center
  4. All of the above

D. GOP political consultant Brandon Gesicki

GOP campaign manager Brandon Gesicki

GOP campaign manager Brandon Gesicki

  1. Changed his registration to Democrat
  2. Went into partnership with campaign manager Alex Hulanicki to form the Icki Group.
  3. Was elected to public office
  4. Started taking a correspondence course to become a bail bondsman

E. Which of the following comics attracted record crowds

  1. Don Rickles
  2. Don Knotts
  3. Don Trump

F. A sequel was produced for which of these movies

  1. The Graduate/The Retiree
  2. Star Wars: Luke Skywalker/Star Wars: Luke Buys a Walker
  3. The Godfather/The Great-Godfather
  4. Groundhog Day/Groundhog Day

G. The Pebble Beach Co.

  1. Announced plans for more gates with entrance fees on a sliding scale
  2. Banned American cars
  3. Bought Del Rey Oaks for employee housing

H. The Transportation Agency for Monterey County chose as its top 2016 priority

  1. Construction of a roundabout at Highway 1 and Holman Highway
  2. A study of roundabouts on Monterey-Salinas Highway because it has been free of construction delays for several weeks
  3. Approval of a sales tax measure to finance additional study into the need for an additional sales tax measure

I. The following decided to run for Sam Farr’s seat in Congress

  1. Jimmy Panetta
  2. Jimmy Panetta’s offspring
520986e1f3cd9.preview-300

Howard

J. Howard Gustafson of the Marina Coast Water District said 

  1. The Surfrider Foundation should “go F— yourselves.”
  2. He had once been engaged to Jane Fonda
  3. He gets all his information from the Partisan
  4. Voters would be better off replacing him randomly

K. Two homeless men apparently died of exposure in downtown Monterey, leading to 

  1. A communitywide effort to build housing for the homless
  2. An outpouring of blankets and warm clothes
  3. Pretty much nothing

L. Officials at the Monterey County Weekly disclosed that the Squid Fry column

  1. Is written by Paul Miller
  2. Is edited by Dave Potter
  3. Is a repeat of the column from exactly a year earlier

M. Sand City officials announced plans to

  1. Rezone the beachfront light industrial
  2. Annex Seaside
  3. Eliminate sales taxes throughout the shopping district
  4. Cancel municipal elections

Beach campfire on lake with sand shore. burning wood on white sand in daytimeN. The city of Carmel eliminated beach bonfires and banned

  1. The sale or marketing of necessities
  2. Any public references to Jason Stilwell or Sue McCloud
  3. Children

O. The city of Marina approved plans for

  1. A citywide no-parking zone
  2. A gluten-free, cheese-free, meat-free pizza truck
  3. Shrinking the city limits to cover two walkable square blocks

SCORING: Because we attended Christmas Eve services at a Unitarian church, we encourage you to decide for yourselves which answers are correct. If you answered all 15 questions correctly, you are a liar and a cheat and need to know that there is plenty of time to take out papers for a seat on the Board of Supervisors. If you correctly answered 10-14 questions, you are Mary Duan, editor of the Monterey County Weekly. If you got 6-9 questions right, you’re more than qualified to start your own blog or, at least, write your own editorials. Fewer than 6 right? You had help from either Howard Gustafson or Paul Bruno

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DSCN0048

Consultants working for the California Public Utilities Commission and Cal Am Water stand around a well that the could have sworn does not exist

Q: How many fellows representing the Public Utilities Commission does it take to  look at a well?

A: Four, if this week’s visit to the Ag Land Trust well is an indication. One to say, “Look, there it is.” Another to say, “Yup, that is a well, isn’t it?” A third to say, “Looks like a well to me.” And the fourth to say, “Hmm.”

Readers who pay close attention to water issues locally may remember the stories in May about how the people preparing an environmental impact report on the Cal Am desalination project had reported that there were no wells on the Ag Land Trust property adjacent to the Cemex plant where Cal Am plans to located its desal facility.

Attorney Marc Del Piero of the Ag Land Trust argues that the pumping at the desalination plant would infringe on the groundwater rights of other property owners in the area and would accelerate seawater intrusion, threatening farms in the area.

Although there are two wells on the Ag Land Trust property, the consulting firm Environmental Science Associates wrote in the draft environmental impact report that such concerns were invalid and, as to support that position, declared that there are no such wells.

In response, Del Piero switched on the pump at one of the wells, producing a cascade of water that made for a terribly amateurish but relatively interesting video clip on the Partisan website.

You can see the clip and read the history here.

Tuesday, ESA representatives and others got a guided tour of the wells as they work on an environmental impact report to replace the original version. Draft No. 1 wasn’t tossed out because of the missing wells but because one of the key hydrologists working on the first study turned out to have a sizable conflict of interest. He was being paid to assess the type of wells Cal Am intends to use even though he holds patents on the technology.

DSCN0056 (2)

Eric Zigas of Environmental Science Associates listens to Peninsula water activist Michael Baer

Among those getting his feet muddy at the Ag Land Trust property on Tuesday was Chuck Cech, the retired engineer who first spotted that conflict. He mentioned that he has some new concerns about the methodology being used to test the water being pumped by the Cal Am test well at the Cemex property.

The fellow heading the EIR process for ESA, Eriz Zigas, was one of those who was nodding Tuesday about the existence of the wells. He wrote a nice note Wednesday to Del Piero and the Ag Land Trust’s Sherwood Darrington:

“I wanted to thank you both for taking the time yesterday, to escort me and members of the MPWSP (Monterey Peninsjla Water Supply Project) CEQA (California Enviromental Quality Act) Team onto your property in Marina, for the expressed purpose of viewing the Big Well and the small well. It was a useful and helpful visit. It was important for us to learn about your preservation and restoration activities, and it certainly was a surprise to see so many other interested parties at the walk through!”

You’ll notice he said “surprise” but not “pleasant surprise.”

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Unknown-1The criminal case against Monterey County water official Steve Collins ended some time ago with a no contest plea involving  conflict of interest in connection with a Cal Am desalination project. But Collins continues to plead his case in the court of public opinion. To that end, he has released a series of documents in an attempt to bolster his position that when he quietly took a side job with the project management firm, he was acting at the direction of other county officials, particularly supervisors Lou Calcagno and Dave Potter.

Last week he distributed a transcript of a prosecution interview with Curtis Weeks, who once was the county’s chief water official. Weeks acknowledged he knew about Collins’ double role almost from the start.

Then he released logs of Deputy County Counsel Irv Grant’s emails, which strongly suggest Grant was discussing Collins’ side job with outside counsel and others nearly a year before he claims to have learned of the situation.

Next, Collins released a transcript of a prosecution interview with Potter, who acknowledges that Calcagno was expressing concerns about Collins’ role early on.

Watch for more on this angle later. That isn’t what this piece is about, however. It’s about a side comment by Potter in that interview, a comment that doesn’t amount to anything of import but that his constituents might find intriguing. Or at least amusing.

Under questioning by then-Deputy DA Stephanie Hulsey, Potter was discussing the difficulties Collins was having working with Peninsula interests and how he was more comfortable dealing with Salinas Valley types.

“… In order to get those wells that were needed,” Potter said, “uh, you know, for a Peninsula project, really, really was a pretty heavy political lift, because there’s no love lost between the ag guys in the valley and the citizens of my district, a very effete, light, you know, affluent community versus the hard-working we-toil-in-the-soil, don’t-tell-us-what-to-do ag community.”

What he meant by effete and light, I have no idea, but I looked up effete. Here’s the first entry that popped up.

Eff-ete

adjective: effete

  1. (of a person) affected, overrefined, and ineffectual.”effete trendies from art college”
  2. synonyms: affected, pretentious, precious, mannered, overrefined; More: ineffectual; informal la-di-da, “effete trendies”
  3. No longer capable of effective action.”the authority of an effete aristocracy began to dwindle”
  4. weak, enfeebled, enervated, worn out, exhausted, finished, drained, spent, powerless, ineffectual “the fabric of society is effete”

So there you have it, Potter constituents in effete Carmel Valley, light Monterey and affluent Pebble Beach. Or vice versa.

By the way, I’m not able to link to the transcripts, but if you’d like to see them, shoot me an email, calkinsroyal@gmail, and I’ll be glad to send them along.

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Rather than rely on the newspapers or Cal Am’s paid flacks for the straight story about the debacle of the Regional Desalination Project (RDP), I urge you to read the document that has been filed with the San Francisco Superior Court.  It’s only 28 pages long and you really only need to read pages 4-19 to understand the real facts.  This document was filed by Marina Coast Water District in response to being sued earlier this summer by Cal Am and Monterey County for approximately $10 million.

If you want to download your own copy of this filing document, go to http://www.sfsuperiorcourt.org/online-services, then click on “Case Number Query” and follow the instructions to get to the place where you can enter the case number (547125).

Marina Coast Water District (MCWD) is a local agency that provides potable water, waste-water collection and water conservation services to the Ord Community (including portions of Seaside, Del Rey Oaks, Monterey and Monterey County) and the city of Marina.  By law MCWD is a non-profit government organization.

MCWD became a significant partner in the Regional Desalination Project (RDP) for five reasons:

  1. To be assured of eventually getting the additional water demanded by the Fort Ord Reuse Authority for the full planned build-out of the former military base;
  2. To be part of a larger desalination project in order to get slightly less expensive water due to the resulting economy of scale;
  3. To help our neighbors and employers in the Cal Am service area after they had significantly overbuilt their existing water resources and failed for decades to do much about it;
  4. To replace the capacity in its mothballed 300 acre-feet per year existing desalination plant; and
  5. To ensure that the RDP would not harm the Salinas Valley groundwater basin and the agricultural community in it.

Monterey County unilaterally pulled out of the RDP agreements because its own board member had a financial conflict of interest at the time he voted on the agreements.  Cal Am then used the alleged conflict of interest and the county’s withdrawal to also pull out of the agreements, even though MCWD had already spent $18 million on engineering design, permitting, land acquisition for the plant, etc.  MCWD never pulled out of the agreements and had no motive for doing so.  Nor did MCWD ever have a motive for being a party to destroying the whole project.

But was Cal Am’s stated reason for withdrawal from the RDP its real reason?  It’s interesting to note that under the RDP agreements, Cal Am was to build about $105 million of the needed infrastructure. Thus under the RDP agreement it stood to receive a Public Utilities Commission-authorized profit of about $10 million on that $105 million capital investment.  However, now that Cal Am has the entire $400 million project to itself, it stands to make a PUC-authorized profit approaching $40 million on that capital investment.  Would the possibility of an additional profit approaching $30 million be enough to cause Cal Am to withdraw from the RDP in order to take the whole project over itself, even if they had to pay MCWD for some the work already done?  You be the judge of that….

Please take the opportunity to read the attached court filing — you can be sure that the battalions of attorneys hired by Cal Am and the county are reading it.

Moore is a director of the Marina Coast Water District and an instructor at the Naval Postgraduate School.

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Boat house on poles in lake Tahoe, California

A weak snow pack left the piers of Lake Tahoe high and dry this summer

The lawns of the northern Sacramento suburbs are an ugly shade of tan,  sort of a dull straw color that makes the houses look shabby, even abandoned. Presumably the rest of the lawns in Sacramento look like that, too.

Some 400 miles south, many of the lawns of Laguna Niguel and Mission Viejo are still green. Maybe not as green as they were last summer, but a decent green. Maybe the homeowners are watering more often than they should, or maybe it’s just that Orange County is cooler than Sacramento County.

Lake Tahoe, down a little. As of last week, it had fallen about six feet, enough to inconvenience boat owners but not enough to detract from the loveliness of the lake. The pier pilings were exposed, meaning you couldn’t motor a boat up to the dock and load up your lunch and your wakeboards. But people could still swim at the private beaches of Incline Village or the packed public beach at Sand Harbor.

Across California, San Luis Reservoir was finally down, way down to a depressing level, giving support to Big Ag’s argument that their crops will be stressed before the harvest. Grape growers are grateful that the warm weather is ripening the crop early, avoiding the need for some late-season irrigation.

I’ve driven a lot in California the last couple of weeks and seen some of the impact of the drought. The Golden State is mostly crispy at the moment, scorched around the edges. Trucks rushing along I-5 create little dust storms. Sierra meadows are dry. The skinny Salinas River is 6 inches deep at San Ardo, shallower still before King City. The mountains surrounding the Los Angeles basin look more like the mountains of Nevada. Fires are everywhere.

The composite that emerges is that California has reached its limits. We seemed to think we could build more, plant more, just keep drilling wells, but the drought is showing us that the party is over. Sure, there seems to be enough water to get by, enough water to sustain the status quo as long as our next winter is a wet one. But just enough water. If we had to, we could blast giant Lake Tahoe open on the California side and nurture some more growth for a couple more years, but we’d have to cash in quickly to cover the lawsuits from the marina owners. Pyramid Lake on the Grapevine between Bakersfield and L.A. is nearly full, so someone in Southern California has figured out how to manage the supply or how to steal enough to keep the southland relatively smug. The drought is a function of weather but its impact is a function of politics and money. We have plenty of politics but the money to create new water, it has dried up as well.

The west side of the San Joaquin Valley used to be nothing but scrub-land, hardpan and sagebrush, alkali flats. Now it is half that and half almond trees and vineyards, lush rectangles that end abruptly where the water lines stop. The vineyards of Paso Robles now stretch inland for 20 miles before they give way to the desert. Surely the owners of much of the badlands dream of drilling wells or stringing pipes to make cash bloom for them as well, but the drought is telling us that that can’t happen or at least should not.

Southern California Highway to Sierra Nevada Mountains. California Country Highway. United States

Irrigated orange trees break up the sunburned browns of Tulare County

Along Highway 46 between the oil wells of Lost Hills and the wineries of Paso Robles, hundreds of fairly new acres of almonds look strong, a deep green, but some of the trees nearest the road look like they need a drink. One island of nut trees is failing entirely, its trees as bare as they were last winter, but there is only one of those islands visible from the four-lane.

Signs lining Interstate 5 in Fresno County criticize the politicians for creating a crisis in the fields. There are signs that remind us “Water equals jobs.” A sign in Kern County says “Growing Food Wastes Water?” but the closest crop is cotton.

I don’t mean to pick on the farmers, even the it-takes-a-gallon-of-water-to-make-an-almond farmers. They, like the taxpayers who paid for the dams, have invested heavily and they should be provided enough water to bring in their crops. But the drought should be teaching us that land ownership doesn’t come with automatic planting rights. We’re maxed out. We’ve reached the limit. Just because you can drill a well and plant pistachios doesn’t mean you should. Anyone who needs more water than they were using a year ago should be looking at other ventures. Just because your farm expanded in the last decade doesn’t mean it can grow in the next. Although there are already thousands of acres of grapes in the Salinas Valley, there is room for more. Our county government would likely say there is enough water. We should trust our county government why?

The same goes for homes and businesses. They say that capitalist ventures can’t survive if they don’t grow. It is time to test that. Yes, I’d hate to be a homebuilder or a carpenter now that California has reached its limits, but we’re out of water. If you build those 200 houses, another 200 already here will go without someday or they’ll have to pay a company like Cal Am ridiculous amounts to go through the motions to make some more.

Some say we need to build more dams to trap the water that rushes out to sea, “wasted.” Maybe we should have a few decades ago, but it’s too late now. Sacramento may declare an emergency to suspend the environmental rules but Washington isn’t going to go along. If we start planning dam projects now, we’ll start approving construction projects based on future water that may never become available. What makes sense is to improve the existing infrastructure. We can manage what we have better but I’m not going to pay big bucks so that someone in Wasco can plant walnuts or subdivisions and neither are you.

Closer to home, why are we still talking about Monterey Downs, the big horse-racing and housing compound planned for Fort Ord? If there is enough “extra” water in the ground for that project, great. There isn’t, but if there was, we could use it now to keep the hotels running and to take some of the pressure off the nearly defeated Carmel River. We don’t have enough water for our current needs so we’re going to say yes to making things worse for ourselves?

Next to the water-related signs along the inland highways are signs proclaiming “100 acres zoned commercial.” Give me a break. Drive into the next town and you’ll find hundreds of acres zoned commercial, some of it vacant, most of it dusty. I’ve got nothing against business. I’ve got something against nonsense.

California always was the land of promise, of potential, of possibilities. We believed the promises and exploited the potential. We have made great use of the possibilities, but we have done enough. There are other lands of promise and possibilities and some of them have water. We have created something special here, and we have, for the most part, finished it. Now it is time to take care of what we have.

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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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