“It is a large increase;
it’s high in terms of percentage,” utilities engineer
Victor Chan, principal author of the report, said in an interview.
“But it’s justified based on what we saw.” He said
the company has recently made significant infrastructure improvements
and needs to make more.
A spokesman for Golden State said the company would not have an immediate
response to the report. Previously, company spokesmen have said Golden
State’s rates are higher than nonprofit public water companies
because it receives no government subsidies and must pay taxes.
But critics of Golden State said it should not be allowed any rate
increase until it provides good service and water quality and cuts
its overhead.
“It’s the city’s position that the service is so
poor that there has to be a tie between any rate increase and an improvement
in service,” said city manager Jere Kersnar. “Until service
improves, we don’t think any rate increase is warranted.”
Kathy Couturie, who is heading an effort by residents to buy Golden
State’s Ojai operation, said the Ratepayer Advocates’
report is outrageous, because the company should not be rewarded for
high rates and bad service.
“The Ratepayer Advocates office ought to be renamed puppets
of private water companies,” she said Tuesday. “This report
was written weeks ago. Our comments fell on deaf ears. This whole
system feels corrupt. It’s a scam.”
Golden State, the subsidiary of a large corporation traded on the
New York Stock Exchange, operates in Ojai under a long-standing, open-ended
contract with the city. Its service cannot be discontinued since it
owns the pumps and water lines that serve the community, unless local
water users buy the waterworks –valued by owners at tens of
millions of dollars.
So, Ojai water users must rely on Golden State, a San Dimas-based
company. And the Office of Ratepayer Advocates says the company deserves
a raise.
The Ratepayer Advocates’ office recommends that Golden State
be allowed to increase its revenue from $3.26 million this year to
$4.06 million in 2008, with slight fluctuations the following two
years. Golden State has asked for annual earnings of about $4.71 million.
The Ratepayer Advocates recommended base rate would still allow the
water company an average return each year of about 8.8 percent, down
from the company’s request of about 9.4 percent. The ratepayers’
office also concluded that Golden State should receive a 10.27 percent
annual return on its equity investment in Ojai, compared with 11.25
percent requested by the company.
In its report to the Public Utilities Commission, which is expected
to make a final decision by the end of the year, Ratepayer Advocates
also concluded that Golden State has provided reasonably good service
and water quality in Ojai.
The Ratepayers Advocate Office said it reviewed various Golden State
and state Department of Health Services documents and found that the
Ojai water system had been in compliance with drinking water standards
from 2004 through 2006.
Indeed, report author Chan said he was surprised by how many angry
customers showed up last Thursday at the Public Utilities Commission
hearing in Ojai to voice their complaints about rates, water quality
and service. At least 100 attended and more than 20 spoke. A petition
signed by more than 500 upset customers was presented.
“That was unusual,” he said. “I’ve heard complaints
before, but this is one of the few that had this kind of turnout ...
I thought the service and quality levels had been fairly good.”
He will meet with Golden State within 20 days to see if they can agree
on any differences spelled out in the Ratepayer Advocates’ report,
and a decision on that would be made by mid-June.
Formal PUC hearings before an administrative law judge will be held
in San Francisco over five days at the end of June and early July,
with Judge Regina de Angeles’ decision expected within two months
after that, Chan said. Then the case would go to the Utilities Commission
in late fall, he said.
“This report is only the first round,” he said.
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