OPINION: Letter Misrepresents Water Company, Golden State Says

Golden State Water Company has responded to a letter to the editor published by Claremont-La Verne Patch in which Claremonters Against Outrageous Water Rates attempts to dissect the water suppliers history of water rate hikes and profit.

The Claremonters group is a grassroots organization made up of local residents opposed to the water company's planned water rate increase.

The city of Claremont has begun a campaign to buy Golden State's water delivery system. Officials were angered after their water supplier was granted permission to claiming Golden State was making a profit and were needlessly raising rates.

Not true, Golden State has said in several letters and editorial pieces submitted to Claremont-La Verne Patch. Golden State latest statement follows:

A recent letter about water rates and the level of state oversight left your readers with an incomplete and inaccurate view of a complex issue. Here are the facts.

Golden State Water Company’s rates reflect the total cost of running and maintaining the water system, as well as paying for needed upgrades to improve the infrastructure and protect customers against a costly and inconvenient failure.  All water systems need ongoing care and maintenance and Golden State has been proactively working to ensure that the system is well taken care of.  The costs of those capital improvements are built into the rate structure. 

The ratemaking process is robust and transparent.  All of Golden State’s proposed infrastructure projects are listed in the rate case filing.  The California Public Utilities Commission’s (CPUC’s) Division of Ratepayer Advocates (DRA), whose sole mission is to protect ratepayers, closely scrutinizes all proposed infrastructure projects and expenses.  Interveners in the rate case, such as the City of Claremont, have an equal opportunity to challenge the rate request and question the infrastructure investments and expenses should they choose to do so.  Members of the public can also review those projects and challenge those they feel should be delayed in order to keep rates down for water customers.  In fact, a recent report from the California Bureau of State Audits recommended that the role of the DRA should be required for all utilities and not just those, which are privately owned.

Golden State is also faced with the rising cost of purchasing water from outside providers, a significant problem for all water companies in California - both public and private.  Forty percent of Claremont’s water comes from Metropolitan Water District (MWD) via Three Valleys Municipal Water District, and MWD’s rates have increased by almost 100% since 2006. While these costs are passed along to Golden State, we are committed to providing affordable water and providing excellent service.  That’s why we’ve taken action to reduce our costs to protect our customers in this recession, including shifting from a defined benefit pension program to a defined contribution program.  As a publicly traded company, our parent company American States Water Company provides information as required by federal law, and recently reported strong earnings. These earnings reflect the performance of all American State’s subsidiaries, not just Golden State Water Company. 

As it relates to GSWC Claremont ratepayers, we only recover the expenses related to water service on a dollar-for-dollar basis.  The CPUC exercises strict oversight including a public review process over the rate of return that is allowed to privately-owned utilities like Golden State.   That modest rate of return is used to fund capital improvements, and to pay a dividend to shareholders who finance those capital improvements.  In Claremont’s case, in the last five years, Golden State reinvested about 97% of its Claremont earnings back into improving the local system.  The city also benefits from the significant tax revenue generated by Golden State through the 5.5% Claremont utility tax. 

Golden State is taking a responsible approach to investing and keeping Claremont’s water system in good operational condition in order to provide a safe and reliable supply to its customers.   Given rigorous state oversight, there is no mystery concerning how the rates are set.  Claremont today has a quality, reliable water system because we've invested more than $20 million since the year 2000 to ensure that it is as modernized and efficient as possible.