Customers of Golden State Water (GSW) in North Tustin pay 50%, 100% or more than their neighbors who receive water from other water companies (comparison1 comparison2). There is a proposal by GSW to make this premium even larger. The current proposal, if approved later this year, will increase rates by 31.7% over the years 2013-2015 with most of the increase in the first year. This increase assumes the total volume of water use is unchanged. Increased cost is likely to encourage less use. GSW has an agreement with the California Public Utilities Commission that the rates can be automatically increased if water use decreases in order to maintain the same amount of profit for the company. Wouldn’t you like to have a company where if the customer buys less, you can charge more and the customer has to pay it. Because conservation is is likely the proposed rate increase is likely an under estimate and we will pay more than what is being proposed.
If you want to oppose the proposed increase, you can sign a petition. Both postal and email petitions are available.
Enter you name and address in the form below and a email will be sent to the CPUC and the Administrative Judge overseeing the approval process. Click here to see what will be sent using the form (with your contact info replacing that of John Q Customer).
You can print this version and have it collected by Denise (714-714-734-0616, DenisePDurham@gmail.com) who will have it mailed along with others. Allowing Denise to mail the petition ensures that we know how many have been sent.
Why is GSW More Expensive?
This is a question that we are trying to answer. If there is someone with accounting experience who would like to help contact rnelson@FCAhome.org. Data supplied by GSW shows that the largest factors contributing to the proposed increase are
1. Reduces Sales (35%),
2. Admin & General (27%), and
3. Capital Financing (21%).
The reduced water usage by customers as a result of the increased cost and introduction of tiered rates requires the rates be increased to maintain the same profits for the company. In most companies
if there is a reduction in sales, the company cuts costs to maintain profit margin. GSW has taken the opposite approach and increased prices. This can only be done because they have a monopoly. There is no evidence that GSW is trying to cut costs. One could ask whether this should be encouraged by the CPUC. The problem with this reasonable question is that the CPUC is not concerned with whether the company is cost competitive with other local companies. They are asking whether GSW can justify their costs not whether they are cost competitive. In fact, GSW has no incentive to reduce costs; they are guaranteed an approximately 10% profit rate. A guaranteed profit rate encourages GSW to spend as much money as possible. This may explain why GSW is the high cost provider in all 80 communities they serve in California. 1 in 36 Californians receive their water from GSW.
Administrative and General Costs are presumed to be overhead and the salaries of general management. Overhead includes costs such as office furniture, office supplies, and employee benefits. Are the salaries competitive with other corporations and municipal companies (e.g., Tustin Water Company, Orange Water Company, or East Orange County Water District)? Since GSW is a private company we don’t know. The salary structure of the municipal companies should be public information. Are they being prudent in expenses for office? We do not know. As a monopoly, there is little incentive to be economical.
Capital financing would pay for new pipelines and new processing and storage facilities. Does the pipeline replacement rate (miles per year) follow industry norms? We don’t know but will try to find out. How do they manage capital projects? After a project is justified and approved are they free to move money around like a checker board to fund pet projects or projects harder to defend? This would not be tolerated in other companies. We will try yo find out.
What is FCA Doing?
1. Providing objections to the proposed increase.
2. Acquiring legislator support.
3. Understanding the orgin of the problem.
Between 500 to 1,000 petitions have been supplied to the CPUC objecting to the proposed increase. This si the minimum that can be done. If there are no objection “No one cares about the increase and it can be rubber stampted”. If you have not sent a petition use one of the forms at the top of this page.
We are informing our legislative representatives and politicians about the severity of the problem. We have met with Don Wagner, Todd Spitzer, anmd Bill Campbell. All have sent letters objecting to the proposed increase. Meeting are planned with John Campbell and Mimi Walters.
We strongly suspect that GSW is abusing their monopoly position and are working to understand this.