Lois Henry

Saturday, Apr 12 2014 07:00 PM

LOIS HENRY: Was grand jury report supposed to be an apology?

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    Californian columnist Lois Henry

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By Lois Henry

The Kern County grand jury should just stay out of the Oildale water fight.

Really. Every time it comes out with a report on relations between Oildale Mutual Water Co. and North of the River Municipal Water District, it's either borderline libelous or just flat pointless.

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Lois Henry appears on "First Look with Scott Cox" every Wednesday on KERN 1180 AM from 9 to 10 a.m. The show is also broadcast live on www.bakersfield.com. You can get your two cents in by calling 842-KERN.

I suppose the only benefit to last week's latest waste of 0s and 1s -- I can't say "ink" because the report came out online -- is that it got me wondering how these two H2O Hatfields and McCoys are getting along in our northern burb.

For your background entertainment, Oildale Mutual and NOR have been locked in an ongoing financial battle for most of the past 20 years. The two entities share the exact same boundary, serve essentially the same customers and can't exist without each other. As I've said in past columns, it's like watching two sides of the same coin having a tug of war.

Oildale Mutual is a private water company founded back in 1919. When the population increased beyond available groundwater supplies, NOR was created in 1969 as a public district to be able to tax residents so it could buy water from the Kern County Water Agency and sell it wholesale to Oildale Mutual and, at the time, another private water company, Highland Park.

Highland went belly up in the 1980s and NOR took over its retail customers.

That did not sit well with Oildale Mutual, which became convinced NOR was subsidizing its retail operations on Oildale Mutual's back.

Oildale Mutual sued and, after many years, won. There was a series of settlement agremeents but cooperation stalled and Oildale Mutual sued again a few years ago.

Then, in 2012, Oildale Mutual backed three candidates for NOR's board. They won and the two entities have since been trying to figure out a way to consolidate operations.

That's where the grand jury first came in last May with a report that was so filled with errors and outrageous allegations against Oildale Mutual and its directors it was gasp-worthy.

The report claimed Oildale Mutual General Manager Doug Nunneley's father was one of the newly elected NOR directors. No, Nunneley's father had died years before this fracas started.

It said Oildale Mutual had lost $1.5 million a year for the past three years.

Uhhh. They were paying off debt.

And it claimed, among other things, that Oildale Mutual directors got underhanded free water hook ups. Not true -- and, as I said at the time, potentially libelous. (Oildale Mutual has another month to sue the grand jury, which it may still do, I'm told).

It's a mystery why the grand jury even wanted to step into the Oildale water feud as grand juries have zero jurisdiction over private entities. Grand juries are supposed to act as the public's watchdog over government wrongdoing.

Which makes this latest report even weirder.

It basically says nothing. It does correct some of the more glaring errors from the last report and acknowldeges those errors. Perhaps it was intended as some kind of apology. Who knows?

One of the grand jury's recommendations was for NOR and Oildale Mutual to "meet and confer" to resolve disputes.

Duh. They've been meeting and confering all over the place. In fact, they've worked out an agreement to consolidate that will begin at the end of this fiscal year, June 30.

Consolidation will, essentially, mean NOR gives up its retail operations to Oildale Mutual.

It will also contract its physical operations to Oildale Mutual so that only one crew will be working on pipes, turning valves, etc. That will mean all but two of NOR's employees will be out of work. Some will retire. Others, Nunneley said, are welcome to apply at Oildale Mutual, which will have to expand its workforce to take on NOR's facilities.

NOR will continue to exist as a public entity able to assess taxes, and will continue to hold the contract with Kern County Water Agency.

The bigger question that the grand jury could have -- and should have -- asked, which actually would have been within its purview, is whether giving its retail operations to Oildale Mutual is a "gift of public funds," which would be a big no no.

Sigh. I have to do everything myself.

Oildale Mutual hired an independent accountant, engineer and attorney to look at all the various wrinkles involved in a potential consolidation.

One of the main questions they asked was the gift of public funds issue.

I read the report of the attorney, Joe Hughes, which states that, no, it's not a gift. His reasoning rests primarily on the fact that Oildale Mutual will be continuing the same public service offered by NOR.

Trusting soul that I am, I ran his report by a couple other lawyers. With some nitpicking (they are lawyers, after all) they concurred. It's not a gift of public funds.

Yes, Oildale Mutual will get new retail business, including whatever money NOR has in its retail accounts. But it will have to continue running that retail operation, servicing equipment and supplying water. The company can't just pocket the accounts receivable and leave the customers out to dry.

NOR will also be getting Oildale Mutual's wastewater operation, a valuable source of recharge water.

Oh, and consolidation will also end the potentially costly lawsuit that was still pending.

Oildale Mutual expects to see substantial savings as duplicative efforts are reduced and those savings will be passed on to ratepayers, the company has said in its newsletter.

So, it appears that our long national, er, Oildale nightmare is poised to be over.

Good. I couldn't take another ridiculous report by the grand jury on this issue.

Opinions expressed in this column are those of Lois Henry, not The Bakersfield Californian. Her column appears Wednesdays and Sundays. Comment at http://www.bakersfield.com, call her at 395-7373 or e-mail lhenry@bakersfield.com

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