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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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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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????They once promised to be the solution to one of desalination’s biggest drawbacks. Most of the world’s 14,000 desalination plants draw seawater directly from the ocean, sucking in varying amounts of sea life. But slant wells, sharply angled in order to pump water from below the ocean floor, would use the sea bed as a natural filter, leaving all the aquatic critters where they belong.

That idea turned into a noble but failed experiment as California American Water began the long and expensive process of building a desalination plant to solve the Monterey Peninsula’s water problem. At the direction of state regulators, including the California Coastal Commission, Cal Am adopted slant wells into the design and for the past several months has been testing one such well at the plant site next to the Cemex facility on the Monterey Bay shore north of Marina.

The testing was delayed because of political opposition, concerns about feasibility and questions about whether the environmental impact of the testing itself had been fully considered. Once it started, it encountered additional delays for technical reasons and the discovery of a glaring conflict of interest. One of key hydrologists involved in the design and execution of the testing turned out to be a patent holder on the technology being tested, calling into question the advice he was giving his employers, both Cal Am and Cal Am’s chief regulator, the Public Utilities Commission, a compound relationship that created yet another conflict.

At one point, the testing was halted because a monitoring well showed that groundwater in the area was dropping significantly. Among the factors being tested is the desalination plant’s impact on area groundwater and, most specifically, an underlying aquifer that extends all the way to the Salinas Valley and supplies much of the water that sustains Salinas Valley agriculture. Though the intent is to draw seawater exclusively, the test well in fact draws a significant amount of its water from the brackish oceanside edge of the aquifer. If the desalination process draws too much water from the aquifer or aggravates the existing issue of seawater intrusion into the fresh water aquifer, the desalination plant’s design and/or location seemingly would be doomed, absent a purely political solution.

According to Cal Am’s declarations to state officials, the testing remains highly inconclusive but the company says it has learned enough from the exercise to plunge ahead into the overall plant approval process and then into the construction phase, which would result in the drilling of an additional nine slant wells. According to water activist George Riley, the company has already started awarding well-drilling contracts despite the absence of any data supporting that decision.

If the plans continue on that track, the Marina plant would be the first in the world to use slant wells. Recent tests of the same technology at a proposed Dana Point plant failed dramatically, taking in as much fresh water as salt water, and operators of a proposed plant at Huntington Beach, also under state pressure to use slant wells, recently announced the technology there to be unfeasible.

Against that backdrop, an array of speakers at a forum sponsored by Public Water Now lined up Tuesday night in Carmel to explain why the slant-well plan should be abandoned in the name of maintaining some semblance of control over the desal costs.

Public Water Now founder George Riley ran out of descriptors as he labeled the slant-well approach “a sham, a hoax, a fraud” because it provides none of the benefits that its supporters promised and carries with it unacceptable costs and complications. The most recent cost estimates show that water from the proposed Cal Am plant would cost more than double the costs expected in either Dana Point or Huntington Beach.

Public Water Now was formed to pursue public ownership of Cal Am, an idea that Monterey voters narrowly rejected a year ago. Riley and the organization support desalination as a solution to the region’s water-supply problem but they argue that the state Public Utilities Commission will be making a huge and expensive mistake if it does not order serious study of alternate, cheaper proposals, the People’s Project and Deepwater Desal, or does not toss out the slant-well approach on grounds of inefficiency and expense.

A partial solution to one of the slant-well technology deficiencies was announced Tuesday, when Cal Am revealed a plan to sell fresh water to the Castroville area. The fresh water to be sold is same fresh water that the slant wells will draw into the desal plant, where it will be processed along with the sea water. That agreement settles one of several potential water rights disputes that Cal Am faces but it is an imperfect solution to a problem that would not exist if the slant wells worked as intended. The volume of freshwater pumped from the aquifer essentially increases the size and cost of the desal plant, an expense borne by Cal Am customers, but Castroville is not expected to pay a commensurate amount.

Among the revealing presentations Tuesday was one by retired mathematician and computer language expert David Beech. He demonstrated how Cal Am has misled the public and even the Coastal Commission by repeatedly suggesting that the test well would extend 1,000 feet into the sand below Monterey Bay. In fact, Beech showed, the drilling angle and the location of the inland wellhead reduce the overall length to just 724 feet and the net effect is that only the final 35 feet of the well are in contact with ocean water.

Most of the water pumped into the desal plant under the current design would come from the freshwater aquifer, Beech and others concluded, which strongly suggests that there is no reason to use expensive slant-well techniques when vertical wells drilled directly into the aquifer would produce approximately the same result. The idea of switching to vertical wells was even endorsed Tuesday night by Paul Bruno, president of Monterey Peninsula Engineering, an aggressive backer of Cal Am’s desalination project. EDITOR’S NOTE: Bruno now denies having said this. He said his comment was that vertical wells would be less expensive than slant wells. 

Another speaker, water activist and retired teacher Michael Baer, complained that Cal Am and its contractors still have not fully tested the potential ramifications on the groundwater despite repeated urging from a hydrologist working for Salinas Valley ag interests.

Ron Weitzman of the Water Ratepayers Association of the Monterey Peninsula, another proponent of public ownership and alternate proposals, used computer modeling to demonstrate his assertion that Cal Am has intentionally manipulated its measurements of sea level and groundwater levels in order to make its plans appear logical.

Riley noted that the cost of the testing has risen steadily, adding additional costs to a project that will result in astronomical water bills throughout Cal Am’s local service area. The initial estimate for the testing was $4 million, which rose to $7 million as a result of both avoidable and unavoidable delays. It rose next to $10 million, which doesn’t include the costs of special review by scientists at the Lawrence Berkeley National Laboratory. The overall cost of the plant is now estimated at more than $300 million.

If Cal Am shareholders were responsible for the costs, they would have ended the slant-well experiment long ago in favor of something more efficient and less expensive, Riley insisted. Unfortunately, though, common sense does not prevail when the regulators and the utility know that the costs of every misstep will be passed directly to the water ratepayers.

Riley said there is no longer any question that a desalination plant will be built. A looming cease-and-desist order on the overuse of Carmel River water has created enormous political pressure to find a solution and nothing on the horizon presents meaningful competition to desalination, Riley acknowledged. It is entirely likely, he said, that the various state agencies will approve the overall project even before the environmental impact study for the plant has been completed and before various other water rights issues have been adjudicated.

What is important now, he said, is for Cal Am customers and their elected leaders to persuade state officials to stand up to the momentum and take a long and deep look at the costs of staying on the current path. Both the alternate plant proposals and simpler well technology promise lower costs for the ratepayers, he said, and it is the responsibility of officialdom at the local and state levels to do everything they can to take the sting out of future water bills.

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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.

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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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Businessman chained to a large ballMany knowledgeable people on the Peninsula, including friends and others whose opinions I respect, believe the tarot cards are slowly but surely pointing to an eventual Cal Am demise.   I am reading the cards differently and here is why:

  • There aren’t enough people rising up against Cal Am. Some point to the recent parade of angry ratepayers who spoke publicly before the Cal Am board as a sign of a developing groundswell. That may be true, but in the near and long term, will there ever be the critical mass necessary to accomplish major change? There were people who were angry with the water bill spikes, but that seems now to be ancient history.  A respectable 45 percent of those who voted on Measure O, the Cal Am takeover initiative, clearly opposed Cal Am.  But 45 percent of what number? I recall that the turnout was less than 25 percent of registered voters eligible to vote.  In some cities (e.g., Seaside) the turnout was even smaller. About 11,000 people voted for th measure but Cal Am’s customer base, homes and businesses, numbers some 40,000.

Further, the number of persons who are knowledgeable and willing to be real activists has grown over the past two years, but I would doubt if they currently number more than 500. People join groups like Public Water Now and the Water Ratepayers Association of the Monterey Peninsula but only a very few are truly active and committed on a scale necessary to effect change.

Cal Am has conducted polls and surveys that indicate, according to the company’s vice president for communications, most younger people who have been on the Peninsula for five years or less typically rent and have no serious issues with the company.  And while the older “more conservative” long-term locals (his words) are more concerned, he still maintains that the poll/survey results indicate that the number truly opposed and angry is minimal.

A local water activist has stated that future water rates will have a greater impact on ratepayers so that more and more persons will join the fight to oust Cal Am.  Once again, I am not sure.   After the Herald wrote a good article on the “spanking” that the Cal Am board received from so many citizens at its recent public meeting, I contacted Cal Am’s VP and asked for his take.  He said there were definitely things to learn and Cal Am needs to be more intelligent about rate applications and rate structures. Cal Am and this gentleman are not stupid. I interpret his statement as an indication that Cal Am may revise the way it seeks rates, fees and other costs, and may redesign the tier structure in a way that lightens the future impact on the greatest number of ratepayers. If I were a Cal Am senior officer, I would certainly consider such changes

Cal Am’s communications officer also indicated that the company’s overall PR program needs revitalizing – I don’t know what that would include, but it might include greater transparency and more detailed information on current and future plans, which, like it or not, would also tend to simmer down potential opposition.

  • Unless the California Public Utilities Commission process is statutorily corrected to protect ratepayers, Cal Am may well be able to continue as is as long as it can count on three votes on the commission. Correcting the CPUC process is a longshot, because it would be so politically sensitive that few politicians at the state level could be counted on to become involved. I sent a letter to the area’s state legislators and the governor suggesting changes.  I received a response from Assemblyman Mark Stone but no one else, as I expected. Ratepayers will always be on the losing side as long as any utility can put together at least three commissioners on its side in a rate case, and as long as the CPUC’s Office of Ratepayer Advocates is not recreated as an independent state agency with the authority to sue the CPUC on behalf of ratepayers.   Since commissioners are appointed, effecting change in that regard is almost beyond the ken of anyone on the Monterey Peninsula.  Likewise, without the leadership of your elected officials, you won’t get an independent ORA either.   The likely result:  Cal Am will succeed in its rate cases no matter how many people don’t like it.
  • For the sake of argument, assume that a critical mass does exist and there is another Measure O. What then? This is the area in which think not enough analysis and discussion and/or debate has taken place.  If another Measure O were to pass, perhaps a stronger measure calling not only for a study but the outright acquisition of Cal Am, what agency would do it and how? How much would it cost?  Would the new entity’s ratepayers be protected from future rate hikes?  Would they be assured that their input would be heeded?  Would Cal Am give up and sell out?

A simple review of existing public agencies does not result in terribly positive answers to those questions.

There is some thought that some Peninsula cities would form a joint powers agency to take over Cal Am. But this isn’t small-town Felton, where a takeover did occur. There are six cities on the Peninsula, with no real history of working together for a common goal. Who would be on the board of such a partnership?  Some of the same people who have turned the mayor’s joint powers agency into a money-spending waste of time?

Some say the water district could take the lead. It has the statutory authority and perhaps even the staff to undertake the responsibilities of Cal Am (and could presumably hire ex-Cal Am employees to bolster its capabilities).  However, as we all know the district has not been successful on many fronts, even when it did take the initiative to increase the Peninsula’s water supply. A further problem is that the board’s membership includes two appointed officials, one from the cities, and one from the county. Those individuals, no matter how good-hearted and well-intentioned, come to the board with built-in conflicts and with other issues to distract them from solely water issues.   In order for the district to actually perform in the best possible manner, both of those appointees would have to be replaced by two additional electees, from two newly formed districts. Of course, this couldn’t be accomplished without statutory correction, and the same hurdles against changing the CPUC are in place against reforming the district.

So what is left?  Create a new JPA? JPAs in Monterey County (e.g., FORA) are rife with dissension. Name me a JPA that would clearly be successful.

Consider other agencies, such as the Moss Landing Harbor District or the Marina Coast Water District. Think of the difficulties in bringing together Marina and Peninsula interests that have never been in sync.   Another suggested option would be public ownership contracting out to a private enterprise to build, operate and deliver water to the Peninsula.  Problem is: what agency or what entity could or would represent the public and who would own the water system?   Further, such a contract would require policy decisions, oversight and funding on behalf of the public owners. That brings us back to reviewing the possible government agencies that could do it, which already seems to lead to the end of a cul-de-sac.

  • What about the possibilities of a current private desal project encouraging a local city to form a JPA which, in turn, would acquire the project’s assets and hire private firms to build and operate the desal plant?   In fact, local water activists are in the process of encouraging the city of Monterey to create a new JPA to acquire Nader Agha’s Peoples’ Desal Project at Moss Landing, which is actually ahead of Cal Am in a schedule to obtain permitting and begin construction. Once created, the JPA, representing public ownership, would hire consultants to build and operate the system.  The question remains, however:  a “JPA (Joint Powers Authority)” by its very nature, is a collaboration created by an agreement between two or more government agencies. So, what “other agencies” would agree to participate, and what are the realistic expectations that such an animal, if ever created, would be any different than what we have historically seen?   I hope it can happen, but a seachange in local political collaboration, creativity, initiative and commitment would have to arise where it never has before.  I know and admire my friends who are involved in this effort, and if anyone can, they can.  So God bless – prayers will be required.
  •   Finally, Cal-Am has a lot of money, is determined to remain on the Peninsula because it has been an outstanding revenue source. What does that mean?   For one, the company will almost certainly fight an eminent domain action.  They will not sell. They are not afraid of litigation. They say they care about ratepayer’s concerns, and they will probably take steps to actually go in that direction, but in the end, a good ROI (Return on Investment) trumps everything.

I am running out of options.   I have always supported public water as a concept, but have never had to sit down and figure out if it were handed to me how would I implement it in the best interests of the public. It is not necessarily as inevitable nor as straightforward as some would make out. In spite of all the delays, mismanagement, conflict of interests, data manipulation (as alleged), and so on, Cal Am is still afloat, the CPUC and Coastal Commission have not kicked them out and have barely slapped their hands. My take is a gloomy, negative one, for sure.   But even though I am a public water advocate, I have come to believe that facts and history unfortunately suggest that any grass-root attempt to right all the wrongs is facing great odds.

Bill Hood is a retired water resources engineer and attorney and executive director of the Association of Monterey Bay Area Governments. He lives in Carmel and Columbus, Ohio.

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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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STATE HAS MADE CAL AM DESAL PROJECT A TEST CASE

OFFICIAL IN CHARGE OF EIR WAS PROJECT’S FIRST CHEERLEADER

TIME PRESSURE GIVES OFFICIALS EXCUSE TO CUT CORNERS

To hear some people tell it, one of the big problems facing Cal Am’s desalination project in Marina is criticism from those concerned about the environmental and economic impacts. Project supporters go so far as to blame the critics for the various delays that have forced repeated changes in the pre-construction timetable.

But after following the process closely for a decade now, after being counseled interminably by project proponents and reading environmental impact reports, feasibility studies and all manner of other paperwork, I have come to the opposite conclusion. I believe one of the venture’s biggest problems is that it has too much support. By that, I mean that agencies that should be honestly evaluating the project are advocating for it instead, leading to lapses in judgment and errors in execution. Peninsula business interests, meanwhile, panicked by the threat of water cutbacks, have taken a full-speed-ahead posture that could help produce a flawed and incredibly expensive answer to a problem that has other solutions.

When a previous incarnation of the desal project fell apart, it wasn’t because naysayers had put up too many obstacles. Key factors in its demise were a politically awkward management structure and the fact that money was being passed under the table in an effort to advance the project, not destroy it.

Now, proponents and participants in the project have proved again to be their own worst enemies, first by making overly optimistic projections about the composition of the water to be desalted and by ignoring glaring conflicts of interest built into the process of testing the water at the plant site north of Marina.

In defense, those in charge cite the heavy deadline pressure, with the state threatening to force untenable cuts in the Peninsula’s use of Carmel River water. They say time is so tight that they must push on or else the Peninsula’s economic well being will be in grave danger. Such thinking plays right into the hands of Cal Am, of course, which makes its money no matter how many times it has to start over.

When I was opinion page editor of the Monterey Herald, we came out in favor of desalination because of the shortage of practical alternatives. We were one of the first entities in the community to voice support. I now feel that the alternatives are becoming more attractive and that the project in its current configuration presents even graver danger to the well being of Cal Am customers on the Peninsula, who will be forced to pay for it no matter how expensive it becomes—even if it never produces a drop of drinkable water.

PENINSULA PLANT COULD BE A MODEL, FOR A PRICE

Creating additional pressures and costs, the state is using the project to test its preferred water-intake technology with minimal compensation to the Peninsula. As it stands, Peninsula water customers will be required to cover millions and millions of dollars in expenses regardless of whether the test is a success. Remember when Cal Am and its supporters were breathlessly arguing that testing of the intake method needed to begin as soon as possible, and that anyone who said otherwise was an obstructionist? That testing is on hold now for reasons that informed and objective observers could have seen coming, and the money meter continues to spin.

Carmel Mayor Jason Burnett, an almost full-time participant in the desalination process as chair of the Peninsula mayors’ water authority, agrees that the financial burden created by the experiment should be shared by state taxpayers, and he indicated he is working on it.

Tap drippingEven now, while the testing and environmental impact review are both stalled, Cal Am is going after yet another set of rate increases to help pay for the plant that may never be built and to offset income it has lost because its Peninsula customers have done such a good job of conserving water. Residential customers, who already consume and conserve some of the most expensive water in the state, would see rates increase by 29 percent under a request Cal Am filed last week with the Public Utilities Commission. At the same time, businesses would see a rate reduction of some 14 percent even though some business interests already pay discounted rates in what amounts to a reward for supporting the desal project.

Cal Am’s ability to obtain rate increase after increase from the PUC helps explain why the utility is comfortable doing whatever the state wants, no matter how illogical or expensive. In the cost-plus world of utility accounting, bigger expenses mean bigger profits.

PENINSULA IS A DESAL GUINEA PIG IN A COSTLY EXPERIMENT

Few people quarrel with the need for a desalination plant or some other means of stretching the Peninsula’s water supply. We have nearly destroyed the Carmel River, our primary water source. State officials were correct to issue a cease and desist order that will require Cal Am to greatly reduce pumping from the river in stages, which local officials are desperately attempting to postpone until the plant comes online.

Compounding the challenge significantly, the project has become an important test case that will help decide what type of water intake should be employed by other desalination facilities now on the drawing boards up and down the state.

They make it sound super complicated. It isn’t. It is worth your attention if only because it will help you understand the latest conflict of interest issue that has thrown a wrench into the process.

The easiest and least expensive intake is known as open ocean, which means pumping water straight from the ocean. The problem is that all manner of marine life is pumped into the plant along with the salty water.

Environmental groups and the various regulatory agencies greatly prefer the idea of subsurface intake, which involves pumping from below the ocean floor, using the sand and other sediment as filters to protect aquatic life. In the best case from an environmental standpoint, the wells would be drilled some distance from the shore and slanted so that their intakes would extend below the ocean floor.

Unfortunately, there is some guesswork involved in deciding exactly where to drill the so-called slant wells and there are few successful examples.  Cal Am’s project presents the state with one of the largest and most meaningful tests of the slant well technology so far.

Racks of filters in a desalination plantAlso unfortunately, not everyone involved in the project has the same agenda, and the state apparently ignored some well-established principles of how public works projects should be organized and assessed.

Perhaps the best way to illustrate that is to examine the shifting roles of the man now in charge of preparing the all-important environmental impact report for the current project. That’s Eric Zigas of the San Francisco firm of Environmental Science Associates.

Zigas may be a familiar name to those who have followed the desalination follies from the start. He also one of the architects of the previous incarnation of the desalination project–the version that devolved into a web of litigation. Before that he was a key part of the Public Utilities Commission team that decided desalination was the best solution to the Peninsula’s water problem.

PROJECT’S CHIEF ENVIRONMENTAL MONITOR STARTED WITH A VERY DIFFERENT ROLE

The current desalination proposal grew out of what became known as Plan B after plans for a dam on the Carmel River fell apart. The Legislature put the Public Utilities Commission in charge of finding an alternative and Zigas was hired to help draft the plan. He teamed with officials at UC Santa Cruz and various state and local agencies to help craft an ambitious scheme for a desalination plant at Moss Landing with a long list of environmental amenities such as a garbage-powered energy supply. The PUC then assigned Zigas to tout the plan to various Peninsula business groups, service clubs, news outlets and others. He effectively helped sell the community on desalination.

But for various reasons, most of the bells and whistles were later removed from the plan, and the project became a cumbersome joint venture between Cal Am, Monterey County and the Marina Coast Water District. Despite Zigas’ earlier role as the official cheerleader for the project, his firm was hired by the PUC to prepare the environmental impact report on that proposal before other factors caused it to be shelved.

Today, Zigas leads the environmental analysis of the process he helped initiate. Those who have worked with him say his experience on the Peninsula gives him unmatched knowledge of the issues involved, which are many. The project is complex, including a plant processing countless gallons of sea water, disposing tons of brine, and dispatching fresh water through a new network of pipelines. The expectation, of course, is that the analysis will be scientific and unbiased. A draft of the EIR is now circulating and the technical community now examining the document will determine whether has Zigas successfully switched hats. Considering how much controversy the process has created, the final EIR is very likely to be tested in court.

(When the first draft of the official environmental impact report incorrectly concluded that there were no functional agricultural wells near the plant site, Zigas briefly defended his team’s work before adopting a no-comment stance. )

eric-zigas

Eric Zigas

Zigas isn’t talking to the press, at least not to the Partisan, and he hasn’t publicly addressed his role in the latest delays.

The EIR process has been pushed back a few months because of a conflict created by the involvement of a firm that holds a patent on the slant-well technology. To help assess the test well, Zigas’ firm had brought in a company called Geoscience, headed by noted hydrologist Dennis Williams. In addition to the potential conflict presented by his patent, Williams also was working for Cal Am on the same project.

The PUC’s project manager, Andrew Barnsdale, was reassigned last week because of the revelations, which were brought to light by project critics. At the same time, a PUC administrative law judge, Gary Weatherford, issued a lengthy order requiring ESA and Cal Am to provide the contracts of everyone involved and to explain the degree to which the testing process may have been tainted.

It should not be forgotten that the Geoscience situation surfaced after the Coastal Commission suspended pumping at the test site last month because the well apparently was taking in more fresh water than anticipated. After the testing began, the groundwater table started dropping, which Cal Am blamed on agricultural pumping though it had insisted previously that there was no agricultural pumping in the area. Critics of the project had nothing to do with that.

GEORGE AND JASON LOOK AT PROJECT FROM DIFFERENT PERSPECRTIVES

George Riley has followed the project’s process as closely as anyone, and has a unique perspective. While he is an activist and head of a group that advocates public takeover of Cal Am, he also has been an accredited participant in the PUC processes as well as a member of a technical advisory committee advising Peninsula mayors on desal matters.

He agrees that the process has been marred by inter-connections.

“A quiet alliance of advocates, appearing as specialists, has emerged,” he said by email. “All are also quietly supported by the ruling state agencies. The ruling water elites at the state level have a greater role here, and has not been discussed.  And Monterey Peninsula as guinea pig is useful for them.”

Riley said Zigas and Environmental Science Associates do deserve credit, both for helping get the well testing process on track after Cal Am’s dawdling had worsened the time crunch and for pushing for well testing data to be included in the environmental impact report. The idea, Riley said, is for the final EIR to become “the vehicle for tooting the horns for slant wells” strongly favored by the various state agencies.

In Riley’s view, the fumbles that have marred the process would not be so worrisome if the state was helping to pay for the slant well testing and if the state would do more to encourage competing proposals that possibly could address the Peninsula’s water needs more quickly and less expensively.

Burnett, in a telephone interview Saturday, said he supports the PUC’s decision to call a brief timeout over the patent issue and examine where things went wrong with the test well team. He said it is important now to view Geoscience as a “proponent” rather than an arms-length analyst.

But Burnett disagrees that the process is fundamentally flawed or that the project’s management structure should be overhauled. He said he has great faith in Weatherford, the administrative law judge who is reviewing the testing conflicts.

(Burnett, by the way, has taken quite a beating politically in some quarters for his role as a leading advocate for such a controversial project. His detractors should be reminded that he helped  create a financing package for the plant that should save ratepayers millions of dollars over time and managed almost single-handedly to impose some level of public oversight over the project despite serious resistance from Cal Am.)

Antique water fountain, detail of a source for drinking water, drinking waterSUCCESS SHOULDN’T REQUIRE SETTLING FOR SECOND-RATE

From where I sit, it seems clear that the PUC needs to do more than study the known conflicts and then continue on the same course if this project is to be salvaged. Soonest, it needs to join with local politicians and work with the State Water Resources Control Board to eliminate the artificial pressure caused by the cease-and-desist order deadlines before they result in a hopelessly flawed and expensive project.

Barnsdale, the now departed PUC project manager, is a bureaucrat, a permit processor, not a construction or desalination expert. His replacement needs to be someone with real world experience rather than a purely regulatory background.

The PUC also needs to do what it can to support alternative measures such as wastewater recycling and stepped up conservation and to take a closer look at the competing proposals, the Moss Landing plans being pursued by Nader Agha and the DeepWater group, to see if they could effectively supplant some or all of the Cal Am project.

Obviously, the PUC also needs to take a long look at Cal Am’s rate structure for the Peninsula and drill into the company’s argument for two classes of rates, one set for the relatively helpless residential customers and a discounted set for the more politically powerful business class.

Finally, Cal Am and its supporters need to stop attempting to vilify anyone who raises questions about the process. All major public works projects encounter problems and this one is  more complex than most. Clearly, outside scrutiny will make it stronger, not weaker. As a community, there is strong agreement that we are obligated to stop abusing the Carmel River and unless someone works some magic and soon, we seem to be stuck with desal as the solution. That does not mean, however, that we must accept a project that carries a bloated pricetag and creates as many problems as it solves.

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Illustration depicting a large number of directional roadsigns in a chaotic arrangement. White  background.After careful contemplation and the expenditure of countless hours of staff time and other resources, I have come to the conclusion that the two biggest problems facing the Monterey Peninsula are quite closely related.

Problem No. 1, of course, is the declining water supply, which should have been addressed decades ago before we decided that strawberries and grapes were good choices for desert cultivation. The leading proposed solution at the moment involves a possible desalination plant near Marina and an assortment of smaller efforts involving conservation and recycling.

Problem No. 2, almost as obviously, is that just about every element of Problem No. 1 seems so complicated, complex and confounding that there are only a handful of people who understand any of it. On top of that, most of those who do understand it don’t care that you don’t. In fact, some are glad you don’t and there are even those who are being paid to make sure you don’t.

Why so complicated?

First, complexity makes things more expensive,  and when you’re on the receiving side of “cost plus,” there’s a lot to be said for expensive. Second, with all of that cost plus to be spread around, there are many players willing to participate in the search for solutions. Too many.

That starts with the misleadingly named California American Water Co., which has as much to do with California as the autobahn. It is supposed to be playing a lead role in solving Problem 1 but it spends most of its time wading around in the swamps of Problem 2, creating complications and looking for trouble. The company likes to portray itself as a helpful fellow in boots going out into the community, patching leaks and coaching Little League teams when the truth is that the bean counters in the home office depend on those very leaks in order to keep the bottom line above water. Way above water.

Then there’s the Public Utilities Commission, which technically is in charge of solving Problem No. 1 even though it has absolutely no experience in problem solving and even less in desalination. The Public Utilities Commission apparently was put in charge of this process because our state legislators wanted to keep it away from all aspects of gas pipeline safety. You might say that the PUC is Problem No. 3.

A key concern of those involved in the effort locally is that if the PUC ever approves a timeline and a production schedule, it might as a matter of routine order them confidential and put them under seal, effectively killing the venture.

Then there are the local agencies. For instance, the mayors’ authority, a quasi-government agency made up of the mayors of the Peninsula cities. It was set up because the first local agency given an oversight role, the Monterey County Board of Supervisors, couldn’t figure out how to convert desalination progress into campaign contributions. The supervisors are hoping to get involved again when construction seems imminent and quite a few construction contracts will need to be awarded.

The mayors’ committee was hoping to jumpstart the process because the hospitality industry pretty much decides who gets to be mayor in these parts and it needs water for hotel rooms occupied by tourists who won’t have to pay for the project. The mayors have gotten off to a slow start, however, because the Del Rey Oaks mayor is busy building ammunition bunkers throughout his community and the Sand City mayor is napping.

A water district in Marina has some role in all of this, but for now its leadership seems to be in a sort of bureaucratic penalty box and won’t be allowed back into the game until the second overtime period. It is a shame because some of the district’s leadership has demonstrated to interested members of the public that you don’t have to have a clue to get involved.

Part of the problem has to do with the news coverage but it isn’t what you might expect. In this age of shrinking newspapers, it hasn’t been a lack of coverage. Just the opposite. In the last decade, the Herald has published nearly 173,500 articles mentioning Cal Am, 62,600 articles containing acronyms for non-existent water agencies, the same number of articles in which Cal Am spokeswoman Catherine Steadman says, “We’ll get back to you about that,” and some 20,000 articles in which County Counsel Charles McKee says documents are being sealed in the interest of full disclosure.

Some of the confusion is, of course, the public’s owned damned fault. For instance, believe it or not, there are those in the community who can’t seem to grasp why   a desalination plant designed to take water from the ocean and convert it into drinkable fresh water needs to drill a series of inland wells in order to take already fresh water from Salinas farmers and, through a process invented by the Coastal Commission, convert it into cash to be used to pay consultants to declare the existing water supply more than adequate as an effective hedge against the 180-foot aquatard. Do the math, people. Sheesh.

Cal Am isn’t the only game in town, of course, which makes things that much more complicated.

Peninsula wheeler-dealer Nader Agha has the property and the plans to build a better and cheaper desalination plant in Moss Landing but Cal Am keeps telling people that Agha and former county Supervisor Marc del Piero are the same person, which violates a county ordinance requiring desalination operators to front only for seated supervisors.

Then there’s Deepwater Desal, a creation of Monterey PR man David Armanasco, who has been sidelined because his core clients have hired him to paint murals of wharf pilings to installed over the actual pilings at Fisherman’s Wharf.

And speaking of the wharf, let’s not forget the lawyers. Every lawyer in California who ever lived in a house with a low-flow shower has been declared a water expert for purposes of this feeding frenzy. For convenience and efficiency, each seems to have brought on Tony Lombardo as local counsel. Those who have been around a while will remember him. He wrote the previous general plan while representing most of the supervisors and many of the businesses at Fisherman’s Wharf, including the two warring fish houses that both claim to have invented cioppino Monterey, which consists of a handful of saltwater taffy, samples of five kinds of clam chowder, a couple of restaurant pagers, Sal Cerrito’s will, a half loaf of Armenian pita bread and a half pound of Bubba Gump shrimp but, alas, no sardines.

And let’s not forget the environmentalists, the “no-growthers” who, we are constantly told, are busily working against the interests of the community to reverse all the  progress on the desal front.

Next: Sheriff Bernal’s plan to patrol the waterfront.

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Drowning Piggy

Water agencies throughout California are paying exceptionally close attention to an upcoming appellate court ruling that could dramatically change the way water bills are computed, potentially ending the tiered rates designed to promote conservation.

Whether the ruling would apply to Monterey Peninsula ratepayers isn’t clear, however, because the court case focuses on government-operated water systems and the Peninsula water purveyor, California American Water, is a private company.

With the majority of Californians served by municipal or special district water systems, state officials would likely scramble to amend either state law or the state Constitution to eliminate the language that led a lower court to strike down tiered rates. One possibility is that the higher water rates for heavy users would be recharacterized as penalties instead of fees, skirting state law that requires government agencies to charge no more than the actual cost of providing services. Los Angeles Times article on the case.

An association of government water agencies says in court papers that tiered rates are critical because they provide strong incentive for customers to conserve and because those paying higher rates are essentially providing the money for future water supply projects. Only one water district, Mesa, in Costa Mesa, has broken with the pack. It says its customers have effectively conserved water through voluntary measures without the need for tiered rates.

The underlying case is the Capistrano Taxpayers Association versus the city of San Juan Capistrano. Orange County Superior Court Judge Gregory Munoz ruled for the taxpayers group in 2013 but the city has maintained its staggered rates pending a decision from the Fourth District Appellate Court in Santa Ana. That court heard arguments in January and is expected to rule shortly.

In San Juan Capistrano, the city created a rate structure that has the heaviest water users paying 366 percent more than the thriftiest customers. The top rate there works out to $9.05 per 100 cubic feet of water. In contrast, Cal Am’s top rate for residential customers is about $45 per 100 cubic feet.

Munoz found that the city had failed to demonstrate that the cost of water in the higher tiers “were proportional to the costs of providing water services to its customers.” In Monterey County, Cal Am has never argued that the tiered rates are tied to any actual costs but are only intended to promote conservation. The higher fees in recent years have sparked numerous complaints about relatively minor leaks or unexplained increases in water usage leading to some homeowners receiving bills in the thousands or tens of thousands of dollars for one month. Cal Am has denied that it profits from the tiered rates.

In the Orange County case, Judge Munoz also ruled that water agencies could not charge different rates for different classes of customers, such as residential users and commercial users. Cal Am’s effective top rate for most commercial users is about 20 percent of the top rate for residences. (Cal Am does have a higher commercial rate but only for customers who aren’t willing to fill out a form saying they conserve water when they can.)

At the center of the litigation is Proposition 218, which state voters approved in 1996 to limit the ability of government agencies to raise taxes or fees. It requires that government fees not exceed the actual costs of service and requires the agencies to obtain voter approval before raising fees or taxes. Proposition 218 is the basis of a recent lawsuit aimed at the Monterey Bay air pollution control district, which allegedly collects fees well in excess of actual costs.

Judge Munoz agreed with the Capistrano taxpayers that that city is collecting a premium not based on any actual costs. In response, the city and an association of government water agencies argue that they are essentially charging big water users for the cost of future water facilities that wouldn’t be needed if they did a better job of conserving. They also argue that the state Constitution mandates water conservation and that tiered rates are the most effective method of achieving that goal.

CALIFORNIA CONSTITUTION ARTICLE 10  WATER

SEC. 2.  It is hereby declared that because of the conditions prevailing in this State the general welfare requires that the water resources of the State be put to beneficial use to the fullest extent of which they are capable, and that the waste or unreasonable use or unreasonable method of use of water be prevented, and that the conservation of such waters is to be exercised with a view to the reasonable and beneficial use thereof in the interest of the people and for the public welfare.

In court filings, the Association of California Water Agencies and the League of California Cities cite fears that if Munoz’s ruling remains intact, water providers would be required to account for the exact cost of water from each source – groundwater, rivers, desalination, wastewater treatment, etc., — and calculate each customer’s bill based on whatever blend the customer is receiving. The water agencies say that would be prohibitively expensive. They also worry that the ruling would affect how they charge customers for certain programs, such as the cost of water recycling programs. As it is, those costs are included in the bills of most customers, even those who don’t receive recycled water or directly benefit from the recycling programs.

The city says that if it can’t  spread the cost of such programs throughout its customer base, the cost to some ratepayers would be excessive. The city says that could actually result in increased rates for everyone because it could eliminate the use of some supplementary water supplies, requiring expansion of the overall water system.

In court papers, the “city contends that it is appropriate to distribute the cost of recycled water to all ratepayers because they benefit  from this practice in that by supplying recycled water to ratepayers who can  use it,  this  displaces demand for local potable supplies that can  thus be made available to other customers.  In other words, City’s position is that if recycled water customers had to bear the whole cost of this service, its cost would be prohibitively high, demand for potable sources would increase, and everyone’s rates would rise due to the need for more expensive water imports.”

Below, attorney Jim Markman explains the impact of Judge Munoz’s ruling to the Brea City Council. Markman is a water specialist who is the city attorney in Brea and who also represents the Marina Coast Water District in its continuing litigation with Cal Am and Monterey County

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500_F_29758468_l9QixsSx8YdGJXteaQQYqGL70OmarU0SIt’s a good idea to have Monterey County represented on the mayors’ water authority. The agency’s main role is to push for a desalination plant to help ease the water shortage and to help oversee its construction and operation. Without county representation, residents of unincorporated areas of the Peninsula would have almost no say in the process.

It would not be a good idea, however, to have county Supervisor Dave Potter represent the county as planned. As ideas go, that’s a bad one, a very bad one, a no-good, rotten, horrible, what-are-they-thinking type of idea. It’s like using the wrong tool, painting your house the wrong color, or hiring a plumber to fix your car.

Even under considerable pressure from the state, getting a desalination plant built is proving to be a huge challenge for local officialdom. It’s complicated, controversial and costly. It doesn’t help that the leading players in the process are California American Water and the California Public Utilities Commission, two entities with public approval ratings about on par with the Kardashians.

Among the problems with Potter is that he could have been the public official who led the Peninsula toward a water solution years ago but never really tried. He was in the perfect position. He has been on the Board of Supervisors for more than a decade. He simultaneously served on both the California Coastal Commission and the Monterey Peninsula Water Management District, two key players in the water world. Instead, Potter played a low-key but important role in actually derailing the previous effort to build a desal plant. Cal Am’s initial effort was getting nowhere fast when it completely crashed and burned after it was discovered that Monterey County’s official delegate to the process, Steve Collins, was being paid under the table by the project engineer. Collins says Potter and Supervisor Lou Calcagno engineered and approved his actions. They deny that, of course, but there’s little doubt in the public’s mind that neither of the supervisors has been forthcoming about what they did and when they did it.

In the court of public opinion, Potter has pleaded ignorance. Many students of local governance don’t buy it. Potter gets deeply involved in most issues of importance. If he was as uninvolved as he claims to have been in round one of the desalination process, he was derelict. If he was as involved as he should have been, he knew what Collins was up to.

Potter is a remarkably intelligent and crafty politician who has flirted with serious financial and legal issues throughout his career. He has been on the wrong end of several personal lawsuits, and he needed to turn to rather mysterious financing to avoid bankruptcy. His former wife once alleged he had forged her name to paperwork for a second mortgage on a house he had purchased from the family of a development lawyer. He brought us the hugely controversial Monterey Downs racetrack proposal. That he has remained in good standing with voters is testimony to his considerable political skills or the public’s forgetfulness.

It is true that of the five county supervisors, Potter is the most knowledgeable about desalination. That is not necessarily a good thing, however.

One of the biggest obstacles to successful completion of Cal Am’s current desalination plan is public skepticism, both about Cal Am’s ability to carry it off and about the price tag. The failed process previously and the current one have been start-and-stop affairs. Some of that is natural because the list of regulatory agencies involved is monumental, but the constant delays also have raised questions about Cal Am’s ability and even its commitment. While the process stretches on, Cal Am merrily collects considerable profits from the Carmel River water it sells to Peninsula residents, and it is virtually guaranteed to be repaid for every expense attributed to the desalination effort, every expense plus a 10-percent profit.

Potter’s appointment to the authority board would not reduce the skepticism one ounce. In fact, it would add considerable unnecessary weight. His motives and allegiances would be questioned at every turn.

At the moment, county officials are awaiting an opinion from the state Attorney General’s Office on whether Potter or other county officials would have a conflict of interest. There is considerable litigation swirling around the players in the desalination arena, and the county is heavily involved in all that. But letting an AG’s opinion be the decider would be the worst kind of cop-out. Potter may not have a conflict in the narrow legal sense in that none of the participants in the process is likely to wire money directly into his bank account or stuff cash into his pockets, but he could hardly be more conflicted.

Potter’s wife is a hotel executive and the local hotel industry is Cal Am’s biggest supporter on various water issues. Potter had a highly publicized legal dispute with one of Cal Am’s potential desalination competitors, Nader Agha, after soliciting him for an unorthodox and essentially illegal campaign contribution. Another potential competitor is represented by local public relations kingpin David Armanasco, whose interests usually mesh with Potter’s. Among other things, Armanasco negotiated the out-of-court settlement that prevented details of the Potter-Agha matter from becoming public.

So what should the county do? It is considering paying its share of past expenses for the mayors’ authority and becoming a dues-paying member, complete with representation on the authority board. Potter already is a member of the authority’s governance committee, but it remains possible that he could be removed before any permanent harm occurs.

Calcagno is out as the county’s representative. He leaves office at the start of the year and one of the first questions about any property proposed for desalination purposes is whether Calcagno owns it.

Supervisors Fernando Armenta and Simon Salinas are out as well. Armenta has absolutely no standing on the Peninsula, and Salinas, despite being a former state legislator, has shown no inclination to study Peninsula issues.

That leaves Jane Parker, which is a very good thing.

Now that Potter has become a full-time champion of development interests, Parker is THE environmentalist of the board. Her critics in the hospitality industry and at the chamber of commerce would violently oppose her involvement, which would represent yet another mistake on their part.

Parker is indeed close with environmental interests who fear that a large desalination plant would be growth inducing. She, therefore, could not be counted on to be a gung ho, no-questions-asked supporter of the current process. Which means that project advocates would need to convince her of the worthiness of their decisions. Which means that, unlike Potter’s assent, Parker’s approval would have meaning. If funny business were to break out as it did in the first attempt, Potter would likely be an accomplice. Parker would be the first to point out the problem.

Though there is good reason to worry about the necessity, expense and viability of desalinated water, there also is good reason for this project to continue. If there is not a confluence of additional conservation and other smaller projects that combine to ease our water woes, desalination could in fact be the key to preventing a state-ordered cutback in water usage, a cutback that could devastate the Peninsula’s economy. It is a solution with a long list of harmful side effects, but for the most part those who oppose it are those whose livelihoods are not dependent on an  adequate water supply.

Too much has gone wrong with the process and there are too many unanswered questions to warrant full support at this point. The principals need to step it up. But if the process is to proceed, if it is to have any hope of gaining the public support it needs to prove worthwhile, Potter should be on the sidelines and Parker should be in the thick of things.

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It was encouraging to hear that Cal Am is surveying area residents. Could it be that our water purveyor has decided to start listening to its customers? A lot of people on the Peninsula have a lot to say about the company, its price structure, its customer service, its approach to protecting its monopoly.

So I’ll admit to some disappointment when I learned that the telephone survey is only partly designed to find out what’s on the community’s mind. Unfortunately, it’s more like one of those “push polls,” in which the surveyor is engaged in spin more than in research.

shutterstock_117041995You may have been on the receiving end of such a poll during a political campaign: “Would you vote for So and So for county supervisor if you knew that he routinely drives drunk and does not recycle?” Or “Would you vote for Measure X if you knew it would end all property rights forever?”

The Cal Am survey is subtler than that but the intent reveals itself as the questions go on. It starts, interestingly enough, by asking for the respondent’s opinion of the Peninsula water management district, Cal Am, PG&E, city government and Monterey County government. The nice caller from Quantel, a research outfit out of Ogden, Utah, asks the respondent to rank each of them, from very favorable to very unfavorable. It then asks for impressions of various utility services, including cable TV, electricity, gas, cell phones, sewage and, of course, water.

Speaking of PG&E, here is an excellent editorial from the San Francisco Chronicle this week urging the removal of Public Utilities Commission Chairman Michael Peevey because of his extreme coziness with a company he supposedly regulates.

The poll continues. How do you like the way your water bill is calculated? (My own answer is that I would like it better if it resulted in smaller numbers.)

How do you feel about the reliability of your water service? Would you be willing to pay more for water if it would ensure an adequate supply during drought or other emergency? Excellent question, that one.

This may be one of the most important questions: Are you tired of the debate over who should own the water system? If so, how tired? And don’t you wish those darned elected and community leaders would work with Cal Am on a solution? (They didn’t really use “darned.”) The ownership question is particularly important because the group pushing for public ownership of the water system appears undaunted following its November defeat and is pursuing various strategies.

I emailed some questions of my own to Cal Am spokeswoman Catherine Stedman on Thursday. I wanted to know the purpose of the survey and who’s paying for it, Cal Am shareholders or ratepayers. I also asked about the cost. As of Friday morning, I haven’t heard anything back yet. I’ll update this if and when I do.

If you’d rather not wait, maybe you could ask Stedman yourself. Catherine.Stedman@amwater.com.

EVENING UPDATE: In response to an inquiry from a Partisan reader, Stedman had this to say: “The survey is an opinion research poll and it is being conducted by a very reputable firm, not at ratepayer expense.” Perhaps other Partisan readers can get her to disclose the purpose. 

I particularly enjoyed where the poll went next. Quantel wants to know to what extent folks agree that Cal Am has integrity. It might have been more interesting if the question had been worded like this: “If you knew that Cal Am spent a fortune to defeat a ballot measure regarding public ownership and used a variety of deceptive techniques in the process, would you think the company has integrity?”

If there was any question about whether this is about spin or research, the following points cleared it up. The poll asked respondents how they feel about Cal Am’s:

Involvement in the community

Management abilities

Rercord of keeping the community informed

Practice of sharing the community’s values

Concern for its shareholders and workers

Rate structure, which requires big water users to pay more than small water users

Its performance in finding a new water supply

The survey taker also wanted to know how people feel about Cal Am’s practice of providing rain barrels to area schools, providing training grants to firefighting groups, and providing water-bottle filling stations at the airport.

I’m guessing a fair number of people like those things. But then the survey goes deep with tougher questions. Such as how do you feel about Cal Am’s 75 employees living right here, and how do you feel about Cal Am’s success in fixing leaks to the point that it ranks better than average? How does it make you feel to know that you pay just a penny for a gallon of tap water compared to what you pay for bottled water? How do you feel about Cal Am’s highly reliable service?

Buried among the fluffy questions are a couple of good ones. How do you feel about the proposed desalination plant? Do you think it will ever get built? How much of an impact do you believe it will have? Good questions that might have been even better about a decade ago.

Have you heard about sharp rate increases? If so, how concerned are you?

Near the end, the survey includes a message from Cal Am President Rob McLean saying the company had been caught off guard by the move to the four-tier pricing structure and was not set up to handle it. He may be talking about those huge bill spikes for customers whose homes did or did not develop leaks. He correctly notes that the result may have shaken consumer confidence in the company, and he apologizes for the inconvenience.

Among the concluding questions is this. Now, having heard all this, what do you think of Cal Am?

Feel free to use the comment section below to answer that question for yourself. You’ll find that the comment box is blacked out. You can leave a comment in the blacked out box though it is very hard to read what you are typing. I do not know why it is like that, but I’m working on it. Sorry for the inconvenience.

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An Open Letter to Peninsula Mayors and Supporters of Measure O

The mayors have stated their satisfaction with the defeat of Measure O, which would have initiated a process that could have culminated in the public ownership of Cal-Am.  They gladly supported Cal-Am, which used a massive amount of money to head off that potential outcome.   In the process, the mayors spoke only in generalities, arguing that “the time was not right” and any effort at public ownership would only be a “distraction” from the task of completing a desalination plant.

However, there are lessons, some clear, some not so clear, for the mayors that can be derived from an analysis of the election results.

Absentee voters, who filed their votes early in the process, had only the words of the mayors and Cal-Am to guide them. Even so, notwithstanding the over-generalizations and serious misstatements from the Measure O opposition, all of that empty rhetoric persuaded only  53% of the absentee voters to oppose the measure.

In contrast, voters who waited until the very end of the process and voted on election day had an opportunity to gather more information. They heard the arguments of the measure’s supporters and heard the reality behind the misstatements.

The Measure O supporters, despite limited resources, carried out a vigorous grassroots campaign, and spoke to many individual ratepayers, answering questions and seeking support directly from them. Fact:  55% of the election-day voters voted to support the measure.

So here are the lessons for the mayors:

(1) Spending a lot of money and failing to be completely honest with your constituents may not work the next time.  When people had an opportunity to ask questions, and hear and read facts directly from real people,  they rejected all those dire predictions you made without a speck of factual support.

(2) However, the low turnout of voters makes it more difficult to draw other firm conclusions.  In a mid-term election, even a major issue that had significant potential impacts on every voter wasn’t enough to inspire great numbers of voters to actually vote.    We don’t know for sure, but if even an additional 20% of registered voters had  voted, the result could have been different – or it could have been the same.  If that additional 20% mostly waited until election day, we might conclude Measure O would have passed with flying colors.

(3) But we can tell you this:  Even a group outspent 20 to 1 came close to pulling the election off.   That means, at it base, that you can’t continue to rely on persuading the voters with Pablum (typical political hyperbole).  They want and deserve facts.

(4)  They also deserve honest and aggressive representation of their actual rights, needs and demands. In the context of Measure O, that means protection against future out-of-control water rates, if Cal-Am is going to continue to be the water purveyor.   The efforts of those supporting Measure O are not going away.  They will be tracking your actions closely and if you continue business as usual, expect a strong and effective reaction.

(5) Since you and Cal-Am prevailed and although you might believe Cal-Am is under no immediate threat of a takeover, you should seriously initiate a sea-change, a 180-degree redirection of your relationship with that company.  From this point on, you should show your constituents, by words AND actions, that you will collectively do everything in your power to control and prevent unfair, outrageous and unnecessary future rate increases for everyone, not just a favored few.

(6) For every day that Cal-Am remains the water supplier, and as history indicates, Peninsula ratepayers will remain under a cloud of potentially unfair and uncontrolled rate increases that could bring pain and even bankruptcy to many lower income persons.   What they DON’T need is a group of politicians gloating and resting on their laurels because they deflected a determined effort to take Cal-Am public.

(7) What ratepayers DO need is for their elected leaders to slough off their egos, their personal biases and interests, and to roll up their sleeves, working as hard as they can at arms’ length from Cal-Am to ensure their constituents are treated fairly in ALL respects, starting right NOW.

Can they do it?   They’d be smart to consider it. A large, growing and determined group of observers won’t sit still if they don’t.

Hood is a water lawyer and engineer who also served as director of the Association of Monterey Bay Area Governments.

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PURELY OPINION: The Monterey Herald gets one right

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For many readers, a good editorial is one they agree with. As long as the conclusion or recommendation is on target, the supporting information is secondary. For good editorial writers, however, the supporting information is the most important element. After that come the usefulness of the analysis, the crafting of the piece and, finally and in a distant fourth place, the actual position taken.

An editorial is an opportunity for a writer schooled in a topic to use any number of creative tools to analyze and explain an issue of public importance. Unlike the beat reporter, largely constrained by the rules of he said/she said journalism, the newspaper editorial writer is free to use various writing devices to demystify anything from water politics to Dave Potter’s political longevity. That’s why astute readers are likely to disregard the most subjective passages while keying in on the rest of the package.

The importance of the underlying information is why I was pleased to see the announcement in Sunday’s Monterey Herald that Phyllis Meurer has been added to the Herald’s editorial board.

This means Meurer will have a place at the table when the four-person board considers its positions on various issues. Presumably, her vote will carry  as much weight as that of the other members, Publisher Gary Omernick, Editor Don Miller and editorial writer Tom Honig. (Sometimes publishers insist on veto power, which seldom works out well.)

The upside here is that Meurer brings a deep understanding of government, politics and public policy in Monterey County. She is a former Salinas city councilwoman, a onetime leader of the League of Women Voters and the wife of former Monterey City Manager Fred Meurer. What she doesn’t know about public affairs in Monterey County, her husband does.

Some readers of the Monterey Bay Partisan will remember that I was editor of the Herald until February and I wrote the editorials for the past several years. I am not a fan of what has happened to the editorial page since my departure – a sharp right turn in the choice of columns and editorial cartoons and a decline in the number of local editorials and columns. Some of that is a function of the relatively short tenures and divided focus of the editorial board members.

Omernick has been publisher about six years but the realities of modern newspapering require him to concentrate on the business side of the operation, both here and at the Santa Cruz Sentinel. Miller has spent his entire newspaper career at the Sentinel, where he continues to serve as editor even while holding the same position in Monterey. He is counting the days to retirement. Libertarian-leaning Honig also spent his entire newspaper career in Santa Cruz before being replaced by Miller. Honig’s relatively short Peninsula experience prior to his recent Herald assignment consisted of working for the Armanasco public relations firm and the Panetta Institute. I write about their backgrounds not as criticism but to explain their challenge. It’s tough to thoughtfully editorialize on local issues when your idea of local involves a different locality. Meurer’s appointment to the editorial board can help change all that. She has a remarkable depth of local knowledge and an endless list of local contacts to help the Herald unravel the issues.

Still, there already has been grousing in some quarters—progressive quarters—about Meurer’s new role. I believe much of it is misplaced and, even if it isn’t, it really doesn’t matter all that much.

One issue on the left side of the political dial is her leadership role in the successful campaign against last year’s Measure M, which was intended to stop the proposed Monterey Downs racetrack development at Fort Ord. She told me she was motivated largely by her belief that the proper government decision-making process is preferable to decision-making by referendum. I strongly disagree with her, largely because the government process in the land-use arena is easily and often corrupted. But because she probably doesn’t see the government process the same way, her position is sincere if not valid.

During that campaign, I called Meurer to ask how she defended the highly deceptive advertising her camp was using in its campaign against Measure M. I wasn’t satisfied with her answer, which essentially was that the other side was being deceptive as well. But I did come away feeling that she truly believed what she was saying. Some of my environmentalist friends who were on the opposite side of the issue have suggested that she was somehow bought off. She was not.

Also from the progressives comes concern about Meurer’s husband, Fred, who ran Monterey’s City Hall for decades before retiring and taking a position with the Panetta Institute. Fred was an exceptionally capable and accomplished city manager who could balance a budget in the morning and fix the Planning Department copy machine before lunch.

In recent years, unfortunately, Fred Meurer has been vilified by some as a tool of business interests, the hotel industry, the good ol’ boys of local commerce. I understand the perception. The local economy and city government revenues are so dependent on the hotel industry and other elements of the local power structure. (Did I mention Cal Am yet?) I don’t embrace the accusation, however, because when a City Council has five members, city managers quickly learn how to count to three. Those who didn’t like Meurer’s administration should have spent less time complaining and more time getting their candidates elected or lobbying the successful candidates. Fred Meurer would have been an equally forceful and successful manager on behalf of an entirely different sort of city council.

Phyllis Meurer is an independent and highly capable woman who has nothing to apologize for as she assumes this new role. While I was at the Herald, the publisher talked often about bringing a woman from the community onto the all-male editorial board. I made a series of suggestions but never mentioned Phyllis because of Fred’s City Hall role at the time. If not for that, I certainly would have recommended her.

It doesn’t particularly concern me that she favors Monterey Downs. For reasons I never understood even though I was there, the paper editorialized early on in favor of that project. Never mind that it is seriously misplaced and doesn’t have an adequate water supply and that horse racing is the sport of scoundrels. It doesn’t concern me that her husband has been a huge figure in local politics and public policy for decades. I am won over by knowing she brings with her a wealth of knowledge about how things work around here, about who pulls the strings and even about where the bodies are buried.

One thing that does concern me is that her new role could help cement the Herald’s fear of offending Cal Am. Fred Meurer has been a consistent supporter of Cal Am, which has developed a loyal following in the business community by engineering a pricing structure that favors large commercial customers over residential water users. Phyllis Meurer will provide a valuable service if she demonstrates her independence and research skills in this area.

During the recent campaign over Measure O, the unsuccessful ballot measure in favor of public ownership of the Cal Am water system, Monterey County Weekly published an absolutely excellent editorial in favor of the proposition. Beyond the appropriate conclusion, what made it so strong was the information and analysis it presented. It was unusually long, long enough to discuss each significant issue and explain it to a population that was clearly confused. It was so well researched that it would have been instructive even to the staunchest opponent of Measure O. The Herald’s editorial opposing the initiative was little more than a rehash of Cal Am talking points.

It is my hope that with Phyllis Meurer aboard, the Herald will be reminded of the importance of research no matter which direction the paper leans on specific issus. As I said at the start here, editorials succeed not by how much they persuade but by how much they inform. I expect Meurer to provide some of the necessary information and, when she doesn’t have it, to ask that it be provided in some fashion before an editorial decision is made. If she draws from her strong League of Women Voters experience, the Herald and its readers will be well served—even when its opinions are all wet.

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