Lois Henry

Tuesday, Mar 12 2013 08:00 PM

LOIS HENRY: Oildale water fight drying up

By Lois Henry

When was the last time you heard of a government entity actually reducing its grip on power (not to mention money)?

Well, keep your eyes on Oildale and you might see that very thing come to pass.

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Lois Henry hosts "Californian Radio" every Wednesday on KERN 1180 AM from 9 to 10 a.m. You can get your two cents in by calling 842-KERN.

The North of the River Municipal Water District (NOR), which is public, has been warring with the private Oildale Mutual Water Company for decades.

Though it's still early in the process, there is an option on the table that would strip NOR down to zero employees from six and zero assets, not even an office building.

NOR would retain its tax collection powers and have a board of directors. But it would be primarly a pass-through agency maintaining a contract with the Kern County Water Agency for state water. All its other functions, including its water retail business, would be ceded to Oildale Mutual.

That's just one option. Two other options are to create a new community services district that could take over water purchases and delivery, among other functions. Or to redo the contract between the two entities.

But I'm betting the consolidation-strip down option will win out and here's why.

After decades of feeling that NOR was taking advantage of the relationship, Oildale Mutual struck back -- big.

The private water company fronted three candidates for NOR's board last November and won all three seats, gaining a majority vote.

Suddenly, the entities found a way to set aside a lawsuit that Oildale Mutual had filed against NOR in 2011.

And they've been meeting every month since the new NOR board members were installed in January to find a long-term solution to their dysfunctional relationship.

I say dysfunctional because NOR and Oildale Mutual can't survive without each other. NOR is a wholesaler with one client, Oildale Mutual. And Oildale Mutual gets its water from essentially one source, NOR.

But then NOR got into the water retail business in the 1980s. That's where things went bad. Arguments that NOR was padding Oildale Mutual's bills in order to shore up the NOR retail business went back and forth and in and out of court for the next 20 years.

There had been talk of consolidation before, but with the three new NOR board members, the talk has gone from "what if" to "how."

And the how is going to be tricky.

As NOR's General Manager David Aranda explained to his board at a special meeting March 4, there are lots of legal and engineering questions to be answered.

Such as:

How does a public agency "give" assets including infrastructure, equipment and buildings to a private entity? How will CalPERS continue funding pensions for public employees with no new employees contributing to the system? How will responsibility for increased water purchases (made during the boom and not now needed) be divvied up? How will NOR retail customers, who recently paid for infrastructure upgrades, be charged if more upgrades are needed in the larger system?

And more.

"It may sound corny to say, but honestly, we have to know how this will impact the people we serve," Aranda said. "And there are lots of avenues of impact to our customers."

All of those avenues need to be explored before any decision is made, he said.

Oildale Mutual's General Manager Doug Nunneley agreed, saying the process will go much slower than he had initially anticipated.

"But with every month we delay, we're losing hundreds of thousands of dollars in potential savings," he said.

Nunneley's proposal, which would strip NOR down to a board of directors only, estimated savings at more than $1.3 million just in 2013 by eliminating duplicate employees, equipment and functions. (Not to mention a reduction in potential legal fees if the two entities aren't going to court every 15 minutes.)

As an aside, I was perplexed to see in Nunneley's proposal that those significant savings wouldn't immediately be reflected in customer's bills, but would rather lead to "rate stabilization." Hmmm. Something for Oildale customers to watch closely.

Oildale Mutual and NOR still don't see eye to eye on all the numbers, costs and potential savings.

But they are taking a huge step in the right direction for the community of Oildale.

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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