Claremont Takes Step Toward Acquiring Water System

Claremont's City Council have directed staff to prepare documents needed so the city can eventually acquire the water delivery system from their water supplier, a privately-owned company.

Councilmembers made their decision to begin the process during a community town hall meeting held Nov. 6. More than 350 residents attended the meeting as hundreds watched a live web-based broadcast, according to a city news release. 

The city has been at odds with its water supplier Golden State Water Company who they claim has been raising water rates and making large profits. Water Company officials, however, claim the city uses more water than some of the neighboring cities.

Recently, the city’s second $55 million offer to purchase the water system was turned down by the water company that insists that a city-run utility would mean a drop in the quality of service and increase in water rates.

The company is described by city officials a wholly owned subsidiary of American States Water Company, which is a for-profit corporation, traded on the New York Stock Exchange.

“At the City Council’s direction, we will work with our legal counsel to prepare the financial, environmental and other legal documents necessary for the city to pursue potential acquisition of the water system,” City Manager Tony Ramos is quoted in the news release.  “We anticipate this process will be completed over the next several months, at which time they will be available for public comment as well as potential action by the City Council.”

City officials said more than 200 participated through the City’s live webcast.

Councilmembers discussed how for-profit utilities regulated by the California Public Utilities Commission differ from municipal water systems and experts provided detailed analyses on issues such as water supply and reliability, financing, operations, and how rates are established under both types of water systems, according to officials.

“Claremont ratepayers have been faced with double-digit rate increases for many years.  Unlike many of our neighboring cities who receive their water from a municipally owned system, our residents are forced to obtain water from a private, CPUC-regulated monopoly that is focused on profit margins and paying dividends to its shareholders.  But under California law, municipal water systems are prohibited from earning a profit, and are only permitted to charge the actual cost of providing service,” Ramos said.

The majority of California residents receive their water from a municipally owned or other local public water system, officials said.