Lois Henry

Saturday, Apr 27 2013 09:30 PM

LOIS HENRY: Cal Water wants to tap more from Kern River Valley wallets

By Lois Henry

I hear all the time how people only pay attention to water when taps go dry.Well, the folks in the Kern River Valley are paying attention big time right now. Not because the water has stopped but because of the ginormous bills it's bringing with it.

And they're about to get ginormouser, if California Water Service (Cal Water) gets its way at an upcoming general rate case. Cal Water is asking the California Public Utilities Commission (PUC) for a 43 percent rate increase over the next three years.

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Lois Henry hosts "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.

The PUC will hold two hearings on Cal Water's proposed rate hikes. The first hearing will be in Bakersfield and will focus on a proposed 20 percent rate increase for Cal Water's Bakersfield customers. The second will be in Lake Isabella and will focus on that area's proposed rate increase.

First hearing: April 29, 6 p.m., Bakersfield City Hall, 1501 Truxtun Ave.

Second hearing: April 30, 6 p.m., Lake Isabella Senior Center, 6409 Lake Isabella Blvd.

That will push the average monthly bill into the $100 and above, sometimes way above, range.

In the Kern River Valley. Really?

Most residents there are retired.

I'm not talking Santa Barbara type retirees. These folks worked for a living -- welders, teachers, truck drivers. Their fixed incomes are fixed pretty low.

This is not the place for a 43 percent rate hike for something no one can live without. Much less when you consider residents have already endured 10 years of rate increases since Cal Water took over for the former water purveyor, Dominguez Hills.

Average monthly bills have gone from about $27 to about $80 a month. At the same time, residents have reduced consumption dramatically.

In fact, they're already in compliance with a state mandate to reduce water use by 20 percent in the year 2020.

Concern over the proposed hike reached the ears of new Supervisor Mick Gleason, who was so appalled he recruited the County Counsel's office to petition the PUC for the county to get what's known as an "intervenor" status in the rate case. That means the county can provide experts and testimony to protest the rate hike.

"It's obscene," he said to me over and over of the proposed rate hike. "The income of the average person up here can't possibly sustain that kind of increase."

The local Cal Water manager, Chris Whitley, understood the angst and sympathized, but said there's only so much Cal Water can do.

Infrastructure needs updating and replacing and that costs money.

With only about 4,300 people on the system, that means each person has to pay a larger share.

"It's really hard. That's our biggest problem in the Kern River Valley," he said.

The company has already instituted a support fund, paid for by Cal Water's other 2 million customers. That automatically knocks $25 a month off Kern River Valley bills. It's petitioning the PUC to increase that to $30 a month in this rate case.

Kern River Valley customers also get $12 a month off for low income rate assistance, he said.

But at some point, he said, residents have to pay for the cost of getting that water, which doesn't come easy.

"For 4,300 connections, we have nine treatment plants," Whitley said.

That's because the area's water is naturally rich in uranium, arsenic, selenium and other minerals.

That may be the case, but that's not what Cal Water is asking to fund in this new rate case.

The $1.6 million a year they're asking ratepayers to pay back would be for a new well, tank, a 1,500-foot new pipeline project and generators to keep water flowing during the area's frequent power outages.

Residents understand the need to keep up infrastructure, though Gleason said it seems Cal Water is going for the "Cadillac version when a Toyota would do just fine."

"They want to change nuts and bolts on every tank every year," said Darlene Studdard, one of the founders of RAW, Residents Against Water rates, which is also trying to get intervener status at the PUC.

"They're just making up things to do so they can make their capitol return."

Cal Water, like other utilities, doesn't make a profit on the water it sells. Its shareholders are only allowed to make a return on capital investments, such as new tanks and wells. That has worked out to an average annual return of 9.35 percent for the last 20 years, according to the company's 2012 annual report.

"It's an awkward arrangement," said Deputy County Counsel Charles Collins, who's working on Kern's intervener status. "It incentivizes raising rates."

In that same realm, the company is allowed to charge for water residents don't use.

You heard right.

It's called a Water Revenue Adjustment Mechanism (WRAM) and it's meant to help the company recover its service costs in times when people don't use as much water as the company had anticipated.

Whitely reminded me the company isn't charging for water, but for what it costs to get the water to residents, treatment, electricity, etc.

It has to have all the infrastructure needed to meet a certain anticipated demand. If that demand doesn't meet projections, the WRAM helps "balance" the difference.

"It could go the other direction. If we collect more than anticipated in our rate filing, we'd do a rate credit."

Studdard said that never seems to happen.

Instead, as Kern River Valley residents have used less, they've been charged more.

Whitely agreed residents are stingy with a drop, averaging just 5,236 gallons per month. Typical consumption in Bakersfield is about 9,000 gallons per month, according to a 2009 Californian story.

Studdard says the solution is simple, combine the Kern River Valley with Bakersfield and spread the costs among more ratepayers.

Whitely said that just isn't a viable solution as the systems are completely separate. It would mean ratepayers in Bakersfield are subsidizing Kern River Valley residents for no benefit.

Frankly, I'm not sure what the right answer is. But a 43 percent rate hike is definitely the wrong answer.

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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