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

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

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

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

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

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

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

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

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

RATES UP FOR MOST BUT DOWN FOR COMMERCIAL USERS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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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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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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keeleytestifyingAre you ready for some good news on the political front? Well, you’ve come to the right place.

Leading candidates for the open seat on the California Public Utilities Commission include East Bay Assemblywoman Nancy Skinner and former Central Coast legislator Fred Keeley, and that, as they say, is a win-win for those who would like to see the PUC return to its core mission of protecting the public interest.

Keeley’s name was forwarded to the governor by the Silicon Valley Leadership Group and he is high on the short list. He would be an exceptionally good choice for the Central Coast because he knows all about the water shortages on the Peninsula and in coastal Santa Cruz County and would be in the perfect spot to shape the solution.

While Keeley was in the Assembly, he authored what came to be known as Plan B, a state policy statement favoring desalination instead of a new Carmel River dam as solution to the Peninsula’s water shortage. Though the Peninsula has struggled with that and other methods of addressing its severe water shortage, Keeley demonstrated considerable knowledge on both the political and technical fronts as he helped steer the process.

It’s an odd situation, but the PUC is in charge of the current effort to build a desalination plant to serve the Peninsula. As it stands, it has been content to let the Peninsula’s water purveyor, California American Water, mostly dictate the terms but someone with Keeley’s abilities on the commission could put the customers back into the equation.

During the state’s electricity crisis at the start of the century, Keeley was the Assembly’s point person on the exceedingly complex issue, advising both the Legislature and the governor’s office and negotiating with power producers and brokers.

Keeley, 64, a liberal Democrat, began his political career as an aide to Santa Cruz County supervisor Joe Cucchaira. He then became chief of staff to then-Assemblyman Sam Farr. He later served two terms on the Santa Cruz Board of Supervisors before campaigning for an Assembly seat in 1996. He served two terms and quickly gained the reputation as a leader in budgeting and the environment.

He left the Assembly in 2002 because of term limits and became executive director of the Planning and Conservation League, turning down an appointment to head the state Department of Finance under Gov. Gray Davis. In 2005 he was appointed Santa Cruz County treasurer and he was elected to the position the next year.

A spot is open on the commission because its battered president, Michael Peevey, opted to leave at the end of his term this month rather than seek reappointment. It was essentially a compromise intended to spare him the embarrassment of removal over revelations of the commission’s remarkably friendly relationship with PG&E, which it purportedly regulates.

Peevey is a former chief executive of PG&E’s southern counterpart, Southern California Edison.

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Nancy Skinner

Skinner, also a Democrat, doesn’t have the Central Coast connections that Keeley does but she has strong progressive credentials that suggest she would stand up rather than cozy up to the utilities.

She is leaving the Assembly this month because of term limits. She began her political career while she was a student at UC Berkeley, starting in student government and then becoming the first student elected to the Berkeley City Council. She earned degrees in natural resources and education.

While in the Assembly, Skinner distinguished herself in the areas of climate change and taxation.

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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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Does PUC President Peevey Have Dirt on Gov. Brown or What?

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Businessman holding a cardboard with a clown on it in front of hIf Michael Peevey isn’t removed from the state Public Utilities Commission by the end of the week, it could finally be time for Californians to find a way to eliminate the commission and develop some other vehicle for regulating utilities.

The big news Monday was that four senior PG&E officials have been fired because they had been involved in a long exchange of emails that documented the sweetheart relationship between the energy company and its so-called overseers. Among many other things, the emails showed that the PUC, especially Peevey’s staff, welcomed the company’s input on which administrative law judges should preside over PG&E rate proceedings and other matters.

The emails leading to the departure of the PG&E crew add to a sorry record of inappropriate communications between the agency and the utility. For instance, last year when PG&E was indicted over the catastrophic natural gas explosions in San Bruno, Peevey, the commission president, didn’t give the company advice about safety. Instead, he quietly lectured it about PR. In an email, he told company officials that they should not have announced the coming indictment in advance because that resulted in two damaging news stories instead of one. He called PG&E’s attempt at transparency “inept.”

In response to Monday’s action, Peevey scrambled to save his job. After an earlier batch of inappropriate emails was distributed, Peevey canned one of his staffers. This time, he said he would recuse himself from the process of setting the fine against PG&E over the San Bruno explosions but would continue hearing PG&E rate matters. His response is as unsatisfactory as everything else he has done. He needs to be removed from office before he can do any more damage.

Other PUC officials said it seems the commission needs a refresher course on the rules, which obviously is true. PG&E was wrong to take advantage of an ethically challenged bureaucracy, but it is that bureaucracy that is the bigger villain here. One PUC official tried to put a positive spin on things, suggesting this is a good thing because it likely will lead to greater transparency. That demonstrates confusion about the meaning. When the public talks about transparency, it’s saying it wants better and more honest government, not simply a better view of the corruption.

Peevey was president of Southern California Edison before Gov. Gray Davis appointed him to the commission. One of the commission’s roles is to keep the state’s utilities healthy so they can stay in business and obtain financing at reasonable rates. Peevey gets that part but he apparently hasn’t a clue about its even more important role, protecting the public. It’s time for him to go.

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