Division of Ratepayer Advocates opposes regional agreement due to unacceptably high costs and high risk for ratepayers
The DRA released a report on the Regional Project and the implementing agreements. Visit the DRA website for their analysis of the project. Here is an excerpt:
"DRA opposes the current Settlement Agreement because it lacks meaningful cost controls, inequitably allocates costs and risks to Cal Am ratepayers, denies Cal Am ratepayers meaningful representation, and fails to adequately address the operations and maintenance of the desalination plant and associated costs. On balance, the Settlement does not meet the Commission's settlement approval standards; it is unlawful, unreasonable, not in the public interest, and not supported by the record in the proceeding."
On April 15th The Monterey County Weekly published an opinion from Supervisor Jane Parker:
Closed-door desal deals are the wrong approach
In the past two weeks, there’s been a lot of talk about a Regional Project to address the water supply problem on the Monterey Peninsula. In a flurry of activity, the Board of Supervisors, Marina Coast Water District, Monterey Peninsula Water Management District and several other organizations were encouraged to quickly approve a set of agreements that would govern how the proposed project would be implemented.
My dissenting vote on the agreements presented to the Board of Supervisors on April 6 reflects my commitment to informed public participation. Released on the afternoon of March 30, these documents had not been public long enough to give people a chance to read, understand and comment on them. They are long, confusing and contradictory.
As a public representative, I would have preferred to vote on these complex issues informed by an independent analysis of the terms, conditions, costs and assumptions being proposed.
As part of the scheduled Public Utility Commission process, there will be just such a report presented on April 30 by the Division of Ratepayer Advocates, an organization whose job it is to follow, analyze and report on proposals such as this one to ensure fairness to water customers. In fact, the DRA’s initial overview prompted it to write a letter to Peninsula mayors saying, “If implemented, [the agreement] will result in unacceptably high costs, unfair risks, and a lack of accountability to Monterey Peninsula ratepayers.”
We are so close to a workable solution! The best way to honor the hope and the good, solid work that has been invested so far is by ensuring that the agreements are fair to all parties. Unfortunately, the agreements that have been proposed to govern the project’s implementation are not consistent with that spirit.
There are several areas of concern, including who pays for the project, controls on costs, the ratio of fresh water to salt water, and the long-term safety of the Salinas Basin since only theoretical modeling has been done. For now, to illustrate how seriously flawed these agreements appear to be, I will focus on their impact on the water customers in Cal Am’s Peninsula service area.
Desalinated water is expensive. I want to be able to look my neighbors in the eye and assure them that the charges they are paying are truly fair and reasonable. Here are some of the reasons I have concerns that this would not be the case under the existing agreements:
Initial comparisons show that the proposed desal plant is exceptionally expensive for its size. The industry standard for desalinated water is between $1,000 and $2,500 per acre-foot; already the price here is between $4,000 (proponents’ estimate) and $7,500 (DRA’s figure) per acre-foot.
Marina Coast will only pay $149 per acre-foot for its share of water.
All project costs will be passed along to Cal Am customers, including loan repayment defaults by Marina Coast or Water Resources Agency, litigation costs, and all expenses to study and plan for a desalination plant – not specifically this Regional Project. This could allow Marina Coast to be reimbursed by Peninsula ratepayers for the cost of exploring the development of its own desal plant – an idea it’s now abandoned in favor of the regional project. Cal Am customers are already paying for pre-construction costs Cal Am incurred for the Coastal Water Project and alternatives.
There are no cost controls on construction of the project or the price of water under these agreements. Normally, the PUC reviews potential expenses, disallows those it does not find reasonable or customary, and must determine the fairness of any price increases. These agreements declare that the costs are “reasonable” – because Cal Am, Marina Coast and Water Resources Agency say so – and exclude the PUC and the public from the review process.
Virtually all costs will be passed along to Cal Am customers, yet the desal plant and wells will be owned by Marina Coast and Water Resources Agency, respectively.
The agreements lock Peninsula customers into these terms for up to 94 years, with no input or recourse.
The terms and conditions put forth in these agreements, developed behind closed doors, are an example of what can happen when the public is excluded.
The Regional Water Project’s name reflects a spirit of cooperative problem-solving that has gone into the process. Here’s how we can deliver on that spirit and ensure the implementing agreements are fair to everyone:
Write a letter to the PUC expressing your opinion. E-mail firstname.lastname@example.org or fax to (415) 703-2057. Watch for a Division of Ratepayer Advocates-sponsored local opportunity for public participation and attend. Call for governance by a Joint Powers Agency that includes Peninsula representation.
June 28th and 29th - PUC Public Participation Hearings
The Public Utilities Commission (PUC) will hold Public Participation Hearings on June 28th and 29th to solicit comments on the Regional Water Project. These hearings provide the final opportunity for members of the public to give a statement, verbally or in writing, to the judge and Commissioner who are assigned to decide whether the terms proposed for the Regional Water Project are fair and just. This is the time to ask for a governance structure that includes the Monterey Peninsula ratepayers and provides better cost controls on the project.
The PUC has been asked by the Division of Ratepayer Advocates and the Monterey Peninsula Water Management District to require changes to the proposed terms, including the creation of a more inclusive governance structure, better cost controls, and other safeguards to ensure that the agreement is fair to the residents who will be paying for this project.
The hearings will take place at the following times and locations:
Monday, June 28th at 7 p.m. at the Monterey City Hall, 580 Pacific Street; and
Tuesday, June 29th at 1:30 p.m. and
Thank you for participating in our democracy!
Tuesday May 4th Forum:
Desal and the Agreements with the Division of Ratepayer Advocates
Title: The Regional Water Project: Desal and the Agreements
Time: 6pm on Tuesday May 4, 2010
Contact: Linda Agerbak, 659-5229, email@example.com
Venue: Unitarian Universalist Church, 490 Aguajito Road, Monterey
Speaker: Diana Brooks, of the Division of Ratepayer Advocates, the California Public Utility Commission, Sacramento.
On May 4 a public forum will give ratepayers a chance to learn about the proposed Regional Water Project. The meeting, entitled "Regional Water Project, Desal and the Agreements" will take place at the Unitarian Universalist Church, 490 Aguajito Road, starting at 6pm.
The speaker will be Diana Brooks, from the Division of Ratepayer Advocates, the consumer protection arm of the California Public Utilities Commission. She is the author of an analytical new report on the proposed desal agreement.
"The public has only had an extremely short time to understand the new agreements," says Dennis Mar, President of the local League. "This forum will provide important information that Monterey Peninsula ratepayers need to know. The League is also very concerned about the governance structure since Peninsula ratepayers are not directly represented in the decision-making process. The Monterey Peninsula Water Management District, which is elected by the residents who will be affected by new rates, was totally excluded from a significant oversight role", he concluded.
PUC proceedings on the new agreement will take place in San Francisco from May 10-14. The public may attend but cannot speak. The PUC has the power to accept, deny or amend the proposed agreement.
The public is encouraged to send comments to the firstname.lastname@example.org. Such comments are copied to the five Commissioners, the Administrative Law Judge and the Division of Ratepayer Advocates.
REGIONAL WATER PROJECT TIMELINE:
March 30 - After difficult closed-door negotiations, CalAm, Marina Coast Water District and Monterey County Water Resources Agency make public a complex new settlement and financial agreement for a brackish-water desalination plant.
April 5 - Division of Ratepayer Advocates, the consumer protection arm of the California Public Utilities Commission, releases critical preliminary findings on the agreement. Objections include those of cost, reliability and governance.
April 5 - Monterey Peninsula Water Management District withdraws support from the Agreement.
April 5-6 - Supervisor Jane Parker, Citizens for Public Water, LandWatch Monterey County, and League of Women Voters of the Monterey Peninsula raise objections to the Agreement.
May 10-14 - PUC proceedings before Administrative Law Judge Angela Minkin take place in San Francisco. Public may watch hearings but not participate.
June 28 and 29 - Depending on public interest, PUC may schedule public participation workshops on the Monterey Peninsula.
September ? - Administrative Law Judge Minkin releases her draft decision.
Before Christmas ? - Public Utilities Commission makes final decision on the Coastal Water Project. It can adopt all or part of the Agreement, amend it, or deny it. The PUC's final decision may be different from the Agreement.