LUCERNE >> The recent drought has made many conscious of their water use, but for Lucerne residents like Lisa Carter each flush, washed dish, load of laundry and shower is carefully calculated and budgeted.
In excess, these functions could mean less food on the table, a delinquent payment on important bills. For others, water use nudges their ability to afford the roof over their head closer to a precipice.
The reason for this extreme concern? California Water Service (CalWater) charges more for the service than anywhere else around the lake.
That’s roughly 6 percent of gross annual income for most and for a quarter of the town that lives below the poverty line the percentage of income jumps to 9 percent or more.
“It’s a real serious hardship,” Carter said. “A lot of people in Lucerne live on a fixed income and they can’t afford it.”
These struggles have inspired her to team up with District 3 Supervisor Jim Steele along with a handful of others to fight back against water rates and bring ownership of the system back to the community.
“I don’t think that privatized water should even be legal,” she added. “This isn’t cable TV … this is a basic necessity of human life.”
But before the war for locally-owned water service can begin, advocates must battle against CalWater’s request to increase rates even further in the next three years.
The company’s General Rate Case (GRC) is currently under review by the California Public Utilities Commission (CPUC), the regulatory body for privately-owned utility companies in the state. If approved, Lucerne residents will see their bills rise by more than 6 percent in 2017 and 1.5 percent each subsequent year until the end of 2019.
Additionally, the publicly-traded company is seeking to phase out its Rate Support Fund. Every ratepayer supports it in each system throughout the state and without it many people in Lucerne and demographically similar systems would pay substantially more.
“In this economically disadvantaged area, burdened by the already high cost of water and no apparent relief to the economic situation in sight, the last thing that should be placed on the backs of Lucerne residents is an increase to already unbearable cots to access our most essential, water,” Supervisor Steele wrote in a released draft of a formal testimony he will later submit to the CPUC.
Loans, profit-margins, and ratepayers
Due to the historic drought, many water companies saw a decrease in revenues. CalWater was no different and its public income statements revealed that operating expenses rose by $4 million from its previous fiscal year.
To make up for those revenue losses and increased operating costs, the company applied increased WRAM charges. These are fees or credits initiated by the CPUC in 2008 to protect both ratepayers and companies from state conservation measures like the ones Gov. Jerry Brown enacted last year.
Such is the case for Lucerne, whose source is the surface water of Clear Lake that is collected by and purchased from the Yolo County Water District. That water is then hauled and treated in a plant back in town.
Despite decreased water usage as conservation measures kicked in, company representatives claimed in an email correspondence with Carter that operating costs to produce the water are still high and there wasn’t enough revenue to cover actual production.
Related to operation costs is another bill item State Revolving Fund (SRF) Surcharge. According to a 2014 advice letter from the company, these charges go towards the 30-year repayment of an approximately $7 million, interest-free loan the company received from the state in 2008 to refurbish the Lucerne treatment plant.
These payments are transferred on to the ratepayer, and the quantity of the charge is based on the level of service. Basic water customers pay nearly $35 every other month which goes towards a contingency fund. It is worth 10 percent of the loan and must be collected by the utility in the first ten years of the loan’s life.
In 2008, there were 1,280 ratepayers, which calculates to a $239.65 annual average per ratepayer. Those connections decreased to 1,200 in 2014, making per ratepayer averages increase by nearly $16 to $255.62.
According to Steele, the community’s problems are exacerbated by these high water rates. The supervisor claimed that at least 92 homes were lost in foreclosure from 2009 to 2012, leading to a town vacancy rate that is more than 25 percent.
“The ratemaking process has not taken into account this destructive cycle — costs are simply allocated to those who remain in on the system,” he said, adding that Lucerne residents pay more than $100 above the county water average. “Taken to its extreme — if only two residents remained in the community of Lucerne — would they be responsible for the entire fixed costs of the system?”
The CPUC will make its decision later in the year because many local governments and individuals apply to become official parties. Most of them, including Carter, have applied to protest the rate increases.
In fact, it’s approved rate increases every GRC (which is submitted every three years) sine 2008 as the The Record-Bee previously reported. The most recent was in 2014.
“We just had a huge rate increase, so I’m having trouble understanding how such a large company as [CalWater] planned poorly enough to need another increase,” Carter said.
In his plea to the CPUC, Steele quoted California Water Code Section 106(a) that says that it, “the established policy of the state that every human being has the right to safe, clean, affordable, and accessible water adequate for human consumption…”
He underlined the words, “right” and “affordable.”
“While these numbers may seem alarming, they are even more so when considering the reality of everyday life in Lucerne for those who choosing between their water bills and medicine or food,” he added.
