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UPDATE: Marina council says no to Cal Am test well plan

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Child superhero modern city background.FRIDAY UPDATE: Marina City Council voted 3-2 late Thursday to deny Cal Am’s plan to proceed on test wells for desalination project. Cal Am expected to appeal to Coastal Commission. Detailed article in the Herald.

THURSDAY UPDATE: Marina City Council session on Cal Am test well proposal went until midnight Wednesday, with lots of Peninsula business interests speaking. Council to take up the issue again at 6 p.m. Thursday at Marina City Hall, 211 Hillcrest Ave.

UPDATE WITH LETTER TODAY FROM MARINA COAST WATER DISTRICT LAWYERS TO CITY OF MARINA: Letter Re. Appeal of California American Water Company (Cal Am) of the Denial by the City Planning Commission for a Coastal Deve (00265973xB0A85)

Forget what the agenda says about the Marina City Council meeting tonight. It makes it sound as though there will be a boring technical discussion about the hydrology and engineering ramifications of test wells Cal Am wants to drill along the Marina shoreline. What it really is, however, is a showdown between Marina, which is not in the Cal Am service area, and Cal Am’s interests on the Peninsula.

Some say the decision may be the most pivotal step this year in the long-running desalination saga. Some Marina officials don’t think there are many good reasons to be helpful to Cal Am, so Cal Am and its core supporters in the Peninsula business community are turning up the pressure.

For evidence of a power play in the making, there’s the instructions officials of Monterey Plaza Hotel issued last week to all the hotel employees living in Marina. They were told to go to the hotel’s personnel office one by one to talk to the personnel manager or his assistant about tonight’s meeting and to sign letters of support for Cal Am’s proposed desalination plant.

A note from personnel director Rick Salgado said his office would “educate” employees about the importance of speaking up at the public hearing, which precedes council discussion and possible action. Managers were told that none of the employees would be forced to sign the letters but were required to listen to the company message at the direction of hotel manager John Narigi. Narigi, of course, heads the Monterey County Hospitality Association’s water coalition and aggressively supports Cal Am.

It was not clear Wednesday whether the hotel’s Spanish-speaking employees would be provided with Spanish-language versions of the documents supporting the project.

Tonight’s session at Marina City Hall involves an appeal of the Marina Planning Commission’s earlier rejection of Cal Am’s test well program for the long-delayed desal plant that Cal Am now wants to build at the Cemex property on the shore in north Marina. The Planning Commission said no, based partly on technical concerns but also as an expression of Marina’s unsteady relationship with Cal Am. While Cal Am serves the entire Peninsula, Marina’s water purveyor is the Marina Coast Water District. At one time the Marina Coast district was a partner in the Cal Am desal venture but is now locked in pricey litigation over finances in that failed arrangement.

There are other issues in play as well. While Cal Am and its supporters in the business community have their eyes on a plant large enough to accommodate growth in Cal Am’s service area and beyond, the Marina council includes a strong environmentalist component that has been slow to support major development. Future development of Fort Ord, including the proposed Monterey Downs racetrack development, also could be affected by the desal plant’s timetable and location.

The meeting starts at 6:30 p.m. at council chambers, 211 Hillcrest Ave. After a number of routine items, the hearing on the test wells is the first matter on the agenda.

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Read This Unless You Like High Water Bills

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????Should large commercial and industrial concerns on the Monterey Peninsula receive preferential water rates, lower than the rates paid by California American Water Co.’s residential customers?

It is a fairly simple question but there’s nothing simple about getting it before the public for meaningful discussion. The public was shielded from the process before the special commercial rates were enacted a year ago. Now, a public forum on the issue may or may not take place Oct. 13 in Monterey. Cal Am seems to have agreed to take part but hotel industry representatives aren’t so sure they want to see that happen.

Some background, and then you decide for yourself what to make of it.

Since last October, the hotel industry and other large water users have enjoyed a price break that was negotiated in private by Cal Am, industry representatives and the California Public Utilities Commission. The Monterey Peninsula Water Management District was also involved in the discussions though its role isn’t entirely clear.

The business interests wisely recognized that Cal Am rates were headed up and nothing but up over the next several years. They feared, among other things, that the cost of the proposed desalination plant plus other efforts would double or triple their water rates, potentially devastating the hospitality industry and others with heavy water needs. So they banded together as a coalition of big water users, hired accountants, lawyers and other representatives, and created a price structure based on flat rates, as opposed to the tiered rates that are intended to promote conservation among residential water customers. They also managed to get for themselves relatively low rates for any businesses claiming to have taken significant conservation measures. No proof required.

It is entirely possible, of course, that special water rates for private industry is in everyone’s best interest. The “What’s Good for GM” argument. If higher water costs resulted in hotel closures, higher hospital bills and lower taxable income for some enterprises, the impact on the entire Peninsula could be more harmful than relatively high water bills for residents. Presumably that was a big part of the pitch the business community made to the Public Utilities Commission, but there’s no real way to tell. There’s also no way to tell whether anyone responded on behalf of the residents’ interests or was allowed to join into the cost-benefit analysis.

As of last October, the steeply tiered rate structure for residential customers on the Peninsula started at 56 cents for the first 100 gallons supplied to a household with minimal water usage.

For a household on the other end of the conservation spectrum, a household irrigating significant landscaping and doing little to keep use down, the rate potentially topped out 10 times higher, $5.65 per 100 gallons, not counting various surcharges. The rates at the high end help explain the well-publicized cases of monster water bills for households experiencing water leaks or phantom usage. (These figures come from Cal Am’s public rate schedules from a year ago so they could be both out of date and overly simplified, but they remain useful for comparison purposes.)

Until last October, commercial users were charged one price if they kept their water use below a monthly allotment based on type of business, past usage and size. They were charged a higher price if they exceeded their allotment.

Since last October, the rates for commercial users have started at 89 cents per 100 gallons, higher than the bottom-tier residential rate. That is for commercial users who do relatively little irrigation and who submit paperwork claiming they have adopted solid conservation techniques.

Enterprises with irrigation requirements closer to average pay a rate about 12 percent more. Those that irrigate more than 10 percent of their property, and who claim to be fully compliant with best conservation practices, pay about 12 percent on top of that, or about $1.11 per 100 gallon.

For practical purposes, that makes $1.10 per 100 gallons the highest effective commercial water rate, as compared to $5.65 for residential users. Technically there is a higher commercial rate, more than $2 per 100 gallons, but that is only for businesses that don’t even claim to be following good conservation practices. It seems unlikely that any business would remain at that level for more than one month. Even those businesses would be paying less than half as much per unit as residences at the highest tier.

(For commercial users, the new rate structure actually uses 75 gallons as the standard unit of measurement rather than the 100 gallons in place for residential users. It has been suggested by cynics that it is meant to make comparisons more difficult.)

When the Public Utilities Commission approved the special commercial rates, there was little publicity beyond a news article and an editorial in the Monterey Herald. I wrote the editorial, raising questions about the different rate structure and the process used to create it. Personally, I received only one call of complaint. It was from  Mike Zimmerman, who is now the chief operating officer for the Cannery Row Co. He said he would set up a meeting to discuss the issue and would call back. He didn’t.

I speculated at the time that the hotel industry decided to go low-profile, hoping the rate structure not receive much attention. I suspect that may still be the case.

The issue finally began generating some interest earlier this year during the campaign over Measure O, which would have started a formal effort toward a public takeover of Cal Am. Now, Public Water Now is pushing for some public discussion of the rates and the ramifications. Public Water Now, by the way, was not daunted by Measure O’s failure and is continuing its public-ownership effort.

Plans for the Oct. 13 session apparently grew out of an Aug. 19 Monterey City Council session in which Cal Am representatives made some sort of a presentation about rates. The minutes don’t reflect exactly what was said, but some went away believing that Cal Am was on board for a wider ranging discussion of rates of all types. Out of that session, Public Water Now’s George Riley proposed an October workshop on the topic of commercial vs. residential rates. An exchange of emails since then seems to put the idea in question, however.

In one, John Narigi of the Monterey Plaza Hotel told Riley that Cal Am had not agreed to a discussion involving the commercial rates.

“It was an agreement to discuss and provide additional information/education regarding the current rates for residents and answer additional questions regarding this specific topic,” Narigi wrote.“You are now asking for a panel discussion on ‘whatever topics the parties want and would assume the public as well’??? Please provide an honest and accurate agenda so we the coalition can decide if there is even a need or desire to participate.”

The coalition Narigi mentioned is the Coalition of Peninsula Businesses, headed by the Monterey County Hospitality Association.

In an email to Narigi, Ron Weitzman of the WaterPlus group said his understanding was that the discussion would involve both commercial and residential rates.

“There are obviously two sides to the issue. To hear only one side would be propaganda, not education,” wrote Weitzman. “…We do not question your need to be rid of the tiered rate structure. Residential ratepayers would also like to be rid of it … .”

So there you are. See you at Monterey City Hall on Oct. 13. Or not. The hotel industry will let us know.

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