California Water Service Co., which controls Lucerne's water system, is proposing the hike, as Lake County News has reported.
In a 4-0 vote – with Supervisor Rob Brown absent for the vote – the board agreed to approve the letter, drafted by District 3 Supervisor Denise Rushing, who represents the Northshore on the board.
“I felt it was appropriate given the economic situation of Lucerne that we weigh in,” Rushing told the board last week, noting that several years ago – when Cal Water was seeking a rate hike nearly four and a half times as large – the board also took up the town's cause with the California Public Utilities Commission (CPUC).
Rushing said times have changed dramatically since then, and with rising unemployment and businesses hanging on she suggested some of the requests in Cal Water's filing were “out of line.” Those requests included asking for wage increases for all Cal Water employees and a request to accelerate the company's capital investment in the town's aged water infrastructure.
She said the letter was strongly worded, and didn't know if the board would agree with the strength of its sentiments. “I felt it was important.”
Rushing's letter – accompanied in the board packet by a letter from Lucerne resident Dr. Wilson Goddard, who pointed out a number of failures in Cal Water's operations and their rate hike justifications – pointed out that the Board of Supervisors also is a governing board for other water systems in the county.
“We are aware of what it takes to run a water system in Lake County, and are painfully aware that many of the local systems are underinvested,” the letter stated. “However, we are also aware of the times we face and that certain expenses in these times are unreasonable. For example: to ask a disadvantaged community to pay more in rates in order to increase employee salaries in the next couple of years is unconscionable (our own employees are not getting increases).”
The letter also drew attention to the area's record-level unemployment, coupled with home and business vacancies. As such, the letter suggested that the “cost-recovery plus rate of return” rate model “is plunging this community into a negative economic spiral.”
That's a situation that no other redevelopment area community is facing “at the hand of its water company,” the letter stated.
Lucerne resident Craig Bach, representing the Lucerne Community Water Organization, thanked the board for considering sending the letter.
When he moved to Lake County four and a half years ago, Cal Water was seeking a 278-percent rate increase, Bach said. “Cal Water was trying to build a new plant and they wanted all the money for it.”
Bach said the company is back “and they'll continue to keep coming back.”
The proposed hike that's currently before the CPUC amounts to a 77-percent rate hike over the next three years just on the cost of water, raising the cost from $5.44 per 100 cubic feet to about $9.33, according to Bach.
“Nobody has any more money than they need,” he said of the community, where people are just trying to make ends meet. “Cal Water doesn't care.”
Most of the requests covered by the rate hike don't relate to Lucerne, which Bach said only amounts to about 1,300 of the company's 500,000 customers statewide. He said the company wants every local district to pay for itself, but Lucerne can't.
Bach said the board's willingness to send the letter is much appreciated by the community. He urged them to address the letter to Administrative Law Judge Jeffrey P. O'Donnell and refer to Application No. 09-07-001.
“I'm convinced that the judge actually does have our best interests at heart,” said Bach, noting that the Division of Ratepayer Advocates told him that the CPUC rarely overturns a judge's ruling.
Rushing said she was suggesting in the letter that the CPUC's model of cost recovery plus rate of return includes no incentive to Cal Water to invest reasonably, as any money they don't spend on the community ends up on the corporation's bottom line.
“I believe that the benefit to the shareholders needs to somehow be tied to the success of the community itself,” which Rushing said is a “unique concept” that has yet to be suggested to the CPUC.
“At this point it's not just perception, it's reality – the corporate interests aren't necessary aligned with the interests of the community,” she said.
Bach noted that the deadline for O'Donnell's ruling is April 26. The board then voted to accept the letter.
Last Thursday, two days after the board voted to send the letter, O'Donnell released a ruling allowing Cal Water to send out “advice letters” in July to districts including Redwood Valley – of which Lucerne is a part – for interim rates.
O'Donnell ruled that companies like Cal Water that experienced a delay in their general rate cases under the CPUC's rate case plan can seek a rate modification.
However, his ruling noted that such interim rates will be subject to refund “and shall be adjusted upward or downward back to the effective date of the interim rates” upon the commission's adoption of final rates in the current case.
E-mail Elizabeth Larson at
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