Lucerne residents raise rate hike concerns at California Public Utilities Commission hearing
- Elizabeth Larson
- Posted On
LUCERNE, Calif. – Concerned community members spoke out at a California Public Utilities Commission hearing on Monday night about their concerns about California Water Service Co.’s proposed water rate increase and how it will impact Lucerne.
Administrative Law Judge Charles Ferguson presided over the public participation hearing, which drew bout 50 people and lasted just under two hours at the Lucerne Alpine Senior Center.
Ferguson said Cal Water’s rate case is so large that he is one of two administrative law judges assigned to it, and that if you lined up all of the material Cal Water had submitted to him, it would stretch from one wall in the senior center to another.
District 2 Lake County Supervisor Bruno Sabatier was in the audience for the hearing. His colleague, Supervisor EJ Crandell – a Lucerne resident and the Northshore’s board member – was unable to attend.
Cal Water has submitted a general rate case seeking a 16.4-percent increase companywide – the company has 22 systems across California – totaling just over $115 million.
Lucerne is part of the Redwood Valley District. Cal Water spokeswoman Yvonne Kingman said that in 2017, that district’s rates were consolidated with one of Cal Water’s Bay Area districts “to enable future infrastructure improvements and costs to be shared among a larger base of customers, lessening the impact for our local customers here in the Redwood Valley District.”
She said that formed the Bay Area Region. For that region, Cal Water is seeking a 17.3-percent increase, or $15.6 million, Kingman said.
If the rate increase is approved as proposed, Kingman said the typical residential customer in the region with a ⅝-inch by ¾-inch meter and using 5,984 gallons of water per month would see an increase in his or her monthly bill of $2.96 in 2020, or 10 cents per day; $1.41 in 2021, or about 5 cents per day; and $1.51 in 2022, also about 5 cents per day.
She added, “Our customers in Lucerne tend to use less water than this each month.”
The company said it is requesting the revenue increase to cover infrastructure investments and operating expenses.
On the infrastructure side, Cal Water is proposing to install 86,000 feet of new pipeline statewide, which will cost $42.2 million, or 42 percent of the projected 2020 revenue increase.
Under operating expenses, it plans to update its information technology infrastructure for customer support services, at a cost of $1.9 million or 9 percent of the 2020 revenue increase. There also will be $1 million in regulatory fees, or 5 percent of the 2020 revenue increase.
Kingman said that some of the major infrastructure upgrades Cal Water plans to undertake in Lucerne specifically include:
· Additional water quality treatment to ensure continued compliance with federal and state water quality standards, and improve aesthetic issues
· Water main replacements to prevent failure of aging and high-risk pipelines;
· Booster pump replacements to enhance system reliability and water pressure;
· Meter replacements to ensure accurate recording of water use;
· Upgrades to its Supervisory Control and Data Acquisition, or SCADA, system to monitor and quickly respond to changes in the water system; and
· Security enhancements to protect water system infrastructure.
Taking community input
Judge Ferguson told the audience that he wanted to hear what they had to say about the rate increase. He emphasized the hearing’s importance, explaining that what community members had to say will be scrutinized by several different layers of the CPUC, from the Water Division to the Public Advocates Division.
Before taking community input, Ferguson invited Greg Milleman, Cal Water’s vice president of California rates, to speak.
“We are committed to our customers' best interests,” said Milleman, explaining that the company needs to maintain and improve the Redwood Valley District infrastructure.
“We all have the same purpose. We all want to have safe, reliable water, at affordable rates,” Milleman said, adding that a low water bill is no good if water coming out of tap isn't safe to drink or there is no water at all when firefighters need it.
Milleman said Cal Water serves two million Californians, and 3,200 in the Lucerne area.
He went over some of the planned expenditures – most of them the same as those referenced above by Kingman, along with plans to install an active carbon filtration system at the treatment plat to address cyanotoxin, odor and smell – and said they would include 400,000 more water quality tests a year to meet all federal and state water quality requirements. Those improvements will be made over the coming three years.
Milleman said Cal Water redesigned its rates to keep them affordable, and in doing so reduced the first tier, which is for customers who use between one hundred and seven hundred cubic feet. One hundred cubic feet, or one CCF, equals 748 gallons. The second tier is 8 to 12 CCF and the third tier is more than 12 CCF.
Ting Yuen of the CPUC Public Advocates Office told the group, “Your presence here is very important and it means a lot to us” – both the commission and his office.
He explained that the Public Advocates Office is an independent office within the CPUC that has the job of advocating for ratepayers. “Our statutory mission is to obtain the lowest possible rates consistent wit safe and reliable service.”
Yuen said that in the current rate case, they have a team of 20 professional assigned to review it because of its size. He said they are finalizing a final recommendation in response to Cal Water’s general rate case, which won’t be issued until Feb. 22.
Ferguson said that in the first week of June there will be an evidentiary hearing for five days straight, in which all sides will get chance to submit their arguments in the rate case. “We're going to delve into all of the issues.”
During public comment, Ferguson heard a wide variety of complaints, from the cost of water for a poor community to criticism of how the company is run, water quality and taste, concerns about fire protection and whether the CPUC is really concerned about ratepayers. One man pulled a darkened filter out of a plastic bag and said it was what he used to clean his water; after the meeting, Yuen spoke to the man and took a picture of the filter.
Charles Behne raised the issue of a charge to offset Cal Water’s losses due to state-ordered conservation that continues to remain on customers’ bills even though the governor said the drought was over in 2016.
Ferguson asked Milleman to respond, and he acknowledged that the charge would still be on Lucerne customers’ bills through April 1.
Charles Moton said a privately owned utility doesn't have to worry about competitors. He said Cal Water can guarantee its stockholders a healthy return on investment, year in, year out – check.
Moton said the inflation rate for 2018 was 1.9 percent, it’s estimated to be 2.3 percent for 2019 and 2.1 percent for 2020, and he questioned how Cal Water’s requested increase could be so much higher than the inflation rate, with no sunset.
Gary Sharpe said Cal Water has raised rates for all 13 years he’s lived in the community, including the recession years. In that time, he’s also had to let his yard die due to the high cost of water to irrigate it.
“A corporation is formed for one purpose only, to make money,” Sharpe said, noting that all other considerations are irrelevant when compared to the goal of making shareholders money, and the parent company’s stock has risen 46 percent in the last year.
Sharpe said he sees the ratepayers very unhappy and getting nothing in compromise, while Cal Water gets everything it asks for. He added that he thought all of the CPUC’s reassuring rhetoric is worthless, and that they do nothing for the community.
Karen Kennedy raised issues with the improvements to the system promised in the past. “We are dealing with the same skinny, leaky pipes we've had.”
She said they finally have one new working fire hydrant at the corner of Bel Ray and Frontage in the first Lucerne Riviera.
“I don't have any faith that this company is ready to protect us from fire, and that is their responsibility,” Kennedy said, questioning what they are doing with their money and emphasizing her desire to see new pipes and fire protection.
Ferguson asked if Cal Water provides fire protection. Local Manager Darin McCosker said they do provide fire protection and hydrants. Ferguson asked him to speak to Kennedy after the meeting.
Dr. Herbert Gadbury said he moved to Lucerne about a year ago and said he wouldn’t have had he known about the water rates, which he said are far higher than when he owned a quarter acre with fruit trees and a lawn in another community.
In addition to cost, he faulted the company for water quality, specifically, the taste. Gadbury said he and his wife use bottled water to drink and cook with and for doing their dishes because he doesn’t trust the water.
Elise Jones said Cal Water is only interested in making money for itself, and reported that its per share cost on the stock exchange was more than $51, compared to the $14 per share for Pacific Gas and Electric. She faulted the company for the millions in bonuses paid to its chief executive officer while an average household income in Lucerne is $30,000.
“When is enough enough?” She asked.
Ferguson told Jones that the CPUC also is holding proceedings looking into affordability for water and other utilities in an effort to find a uniform, statewide plan for how to charge for those services.
He suggested she also submit her comments to that separate proceeding. “There are many people like you throughout the state who are saying the same thing.”
Supervisor Sabatier told the commission that he lives in Clearlake and is on a system owned by Golden State Water, which also is pushing up rates.
He said he sits on the Lake County Local Formation Commission, or LAFCo, which review all the municipal services that are available to community members. They’re not allowed to do the same for private water systems like Cal Water.
Sabatier said that when LAFCo reviews utility districts, it looks at quality of services, efficiency, and if there is a reasonable cost to payers for the service.
“I’m going to ask the CPUC to please try and look at it from the same perspective as LAFCo,” he said, asking them to also consider nearby water systems – like Nice Mutual Water Co., which was referenced by other community members as having better service and lower rates than Lucerne – to understand the disparity in costs.
He said that the county had to consolidate nine small water districts in the Cobb Mountain area that were damaged in the Valley fire. That process cost $15 million, most of it obtained through grants. Even with that expense, he said the rates for residents there are still a fraction of what Lucerne residents pay for water.
Ferguson thanked community members for giving their input. “These meetings help focus the attention of the judges and the commissioners on the issues,” he said, adding, “I'm taking away a lot from tonight's meeting.”
Community members can still offer input, which Ferguson said should be submitted by June 3. Comments can be submitted via email at This email address is being protected from spambots. You need JavaScript enabled to view it..
The court reporter taking notes for the transcript said the CPUC also is posting transcripts of the proceedings online. She said those should be available online within a week of hearings and related invents.
For more information about the Cal Water general rate case, visit https://www.calwater.com/rates/iip-2018/.
Email Elizabeth Larson at This email address is being protected from spambots. You need JavaScript enabled to view it.. Follow her on Twitter, @ERLarson, or Lake County News, @LakeCoNews.