TFTT Report

KQED News, a California public media outlet, recently reported on the community of Lucerne in northern California, and the community’s water supplier, California Water Service (Cal Water). Unfortunately, instead of providing a fair reporting of the facts, the piece became an opportunity to push an anti-private ideological agenda.

For example, the outlet reported that one resident had a two-month bill of $712.70, or about $357 per month. What was not reported was that a Cal Water customer in Lucerne would have to use nearly 21,000 gallons of water per month – about 29 gallons every hour of every day – to have such a high bill.

Likewise, the piece failed to mention that Cal Water’s typical customer in Lucerne has a monthly water bill of about $84, or 30% less than what the report said was the “average” amount a “U.S. household” pays for water utility service every month.

The outlet also declined to report that Cal Water offers a Low-Income Rate Assistance (LIRA) program for qualified customers. Enrolled customers receive a 50% discount on their monthly service charge. When this discount is factored in, the average monthly water bill for Cal Water customers in Lucerne who participate in LIRA is more than 36% less than what was reported as the national average. While these types of assistance programs are offered by most private water utilities in California, most government-owned water suppliers do not offer them.

Further, the report also overlooked how the cost of providing water utility service throughout the area is relatively high, whether the water supplier is privately owned or not.  This is because many water suppliers in the area have a relatively small customer base, but significant water system infrastructure needs. For example, a customer in the government-owned Paradise Valley Community Services District pays nearly $120 per month for 5 CCFs (3,740 gallons) of water, or more than 42% more than a typical Cal Water customer. And, if customers in Lake County’s Paradise Valley service area used 10 CCFs (7,480 gallons) of water in a month, their bill would jump to more than $524 – nearly 300% more than a Cal Water customer in Lucerne using the same amount of water.

KQED correctly pointed out that, shortly after taking over operation of the Lucerne water system, Cal Water had to improve the system’s water treatment facilities to comply with California’s drinking water standards. Unfortunately, what was not mentioned was that the costs of these improvements were paid for with a zero-interest Safe Drinking Water State Revolving Fund (SRF) loan that Cal Water secured to help reduce the cost of the project. It was erroneously implied that “investors” are profiting from this project. In reality, Cal Water is not allowed to earn any return – or profit – on the new treatment plant precisely because it was paid for with an SRF loan.

More importantly, it was not mentioned that Cal Water is actively working with local legislators and California’s State Water Resources Control Board to utilize a new law passed in 2016 that would allow the principal of this loan to be forgiven. This simple step would eliminate about 23% of a typical customer’s bill in Lucerne.

Finally, the report stated that “people vote on bonds,” but the fact was ignored that most government-owned water utilities rely on “revenue bonds” – which are not subject to a public vote – to finance water system improvements. Further, it was not reported that Cal Water’s rates are set by an independent state agency, the California Public Utilities Commission, to ensure that they reflect the actual cost of operating, maintaining and upgrading the water system. This process happens every three years, and rates are set after an exhaustive 18-month audit of Cal Water’s costs, books, operations and proposed infrastructure improvements. Similarly, Cal Water’s customers are represented by a separate independent state agency in the rate-setting process, the Office of Ratepayer Advocates, whose sole mission is to obtain the lowest rates for customers while ensuring the safety and reliability of the water system. Finally, Cal Water’s customers can become formal parties to these rate-setting proceedings, which offers them far more influence over the process.

It is unfortunate that ideological predilections resulted in such a skewed, misleading report that ignored so many important details. The fact is that the cost of water service in Lucerne would be relatively high whether the system is owned by Cal Water or not. Compared to a government-run operation, Cal Water is uniquely positioned to help the Lucerne community by virtue of the company’s experience, expertise, and the economies of scale created by its statewide operations.