It was an evening of tense questioning and a lack of local details on Wednesday, January 8 as the San Marino City Council grilled representatives from the California American Water (CAW) Company on why the city is facing a proposed increase of water rates of 16.64 percent starting January 1, 2021.
According to a presentation by CAW representatives Brian Barreto, external affairs manager, and Wes Owens, director of rates, a general rate case application for drinking water and irrigation water is filed every three years and the latest was filed in July 2019, which will affect 2021-2023.
The current general rate case application seeks a 16.64 percent residential increase for San Marino, which includes a desire for CAW to consolidate their three Southern California water districts into one. Without consolidation, the rate of increase for residential would be 23.62 percent.
“The advantage of [consolidation] is over the long term effect, the cost of doing business and the risk of any sort of emergency cost to come up is spread out over a large customer base,” said Baretto. “Right now without consolidation, we’re not allowed to spread out any major cost… It’s important for us… We’re trying to create an even playing field for everybody.”
CAW is proposing a $50 million capital budget infrastructure improvement increase over 2021-2023 for the entire Los Angeles district which includes San Marino. During the presentation, a list of ongoing projects specific to San Marino was presented. The primary drivers of the rate increase were noted as an ongoing need to invest in infrastructure, adjustments for higher costs in purchased water and increases in operating and maintenance costs.
“Wherever we’re doing an investment, whether it be in the city of San Marino or for example in the city of San Gabriel or the city of Rosemead, the residents and the customers here in the city of San Marino benefit from that investment as well,” said Baretto.
Council Member Steve Talt asked the representatives what the rate of return was for San Marino. Owens said that the weighted average cost of capital amounted to 7.61 percent in 2018 and wasn’t broken down by individual cities.
Talt said the lack of clarity on the burden San Marino would carry in that cost was an issue.
“The problem is when you’re looking for a 16 percent increase … we look at that as you’re trying to make that 7.6 percent off of our backs, at least part of it, because you’re looking at a substantial increase larger than any other location,” said Talt. “You’re coming after San Marino for the highest rate in the Los Angeles area… When you can’t tell me what the rate of return that is, it leads me to believe that part of your rate of return is [that] we have a greater return of 7.61 percent in San Marino and it allows you to average out across the state.”
Talt asked the representatives how much the San Marino infrastructure improvements would also serve other cities. He was told the information wasn’t immediately available but could be sent in the future. Talt told The Tribune that as of Monday, he had not received anything from CAW.
“It’s tough because I’m looking at you guys seeking 16.64 percent off of our residents and you’re using capital investment budget for the Los Angeles district as a validating point and yet that information is not available [for San Marino], nor is the information on the rate of return, and this makes it very frustrating,” said Talt.
Barreto said that the California Public Utilities Commission (CPUC) will review the application and has the authority to approve, modify or reject the application.
“We anticipate over the next 18 months of going through testimony, data request, public participation hearings that we should have a decision from the Public Utilities Commission sometime late December 2020 with rates taking effect Jan. 1, 2021,” said Barreto.
Barreto also noted that the Rate Payer Advocacy group will be involved, which works on behalf of the customer to review CAW’s testimony and application. To date, CAW has received over 600 data requests asking for clarification and more detail from the group, according to Barreto.
Barreto reported that he met with Public Works Director Michael Throne and City Manager Marcella Marlowe in October to share the same information. Several council members said during the meeting that they hadn’t seen the information before and expressed a sense of frustration from the lack of clarity.
In an interview with The Tribune on Tuesday, Marlowe said the representatives had shared a different “rough draft” presentation that included a much broader look at information and wasn’t centered on San Marino. She also said they had promised to reach out personally to members of the council, which did not occur.
“We were disappointed at their level of preparation for questions from the council,” said Marlowe.
The public is invited to join Talt, Throne and other city leaders for a CAW open house to learn about the proposed rate increase and how rates will be affected on Wednesday, January 22, from 5 – 7:00 p.m. at the Courtyard by Marriott, 700 West Huntington Drive in Monrovia.
On Wednesday, January 29, there will be a CPUC public participation hearing from 6 – 8:00 p.m. at the same location. At the public participation hearing, there will be an administrative law judge and a court reporter in attendance, with less “give and take” compared to the open house, according to Baretto.