CLEARLAKE >>The Clearlake City Council will consider supporting a staff recommendation to grant franchise status to the Golden State Water Company (GSWC) at its regular meeting this evening.
If ultimately approved at another public hearing in late March, the deal would require the utility service to pay two percent of its gross annual receipts to the city — generating at least $20,000 in revenue towards the general fund.
According to finance director Chris Becnel, this would be the first time GSWC paid franchise fees despite it being in place since the 1970s.
“The city never established or entered into an agreement,” Becnel said. “There has been no franchise fees paid.”
Under the state Franchise Act of 1937, privately-owned utilities are required by law to pay these fees to local governments so they can use their infrastructure to operate their business. Clearlake has yet to access that revenue stream since its incorporation in the early 1980s, but it may have had a role in that.
“I suppose that no one ever asked them before,” the finance director said when asked why the city didn’t pursue the money in the past.
Lack of awareness was also the claim made by GSWC General Manager Paul Schubert, who will be answering questions at tonight’s meeting. He said that the lack of payment wasn’t intentional and was just due to an oversight. Requests to expound on this weren’t returned by the time of this publication, but the practice long predates those currently in office at the city and the water company.
In fact, Schubert added that the water company approached the city about this issue first and has been trying to make this deal for several years to no avail. These claims were corroborated by Becnel.
“We just realized we should’ve had one,” Schubert said, adding that the company wants to lay additional water mains.
Additionally, he believes that this deal may also be good for both parties because it will solidify the logistics during infrastructure work for the city and GSWC — something that it constantly has to determine in the absence of the agreement.
“It creates a roadmap,” he said. “If the city is widening the road, we know who does that.”
However, not everyone could possibly benefit from the granting of this franchise as more expenditures for GSWC means a potential increase in cost for the ratepayer.
According to the company’s website, the average water bill in Clearlake is $76.25 for those that use 600 cubic feet.
The good news, according to Schubert, is that any potential increase won’t be put in place until three years from now, as the current rates are locked in by the California Public Utilities Commission, which will ultimately approve this agreement if passed.
Still, in the “worst case scenario”rates increase by 1.5 percent, fitting with several other rate hikes within the last decade.
The meeting begins at 6 p.m. at Clearlake City Hall.
