Frequently Asked Questions
What is the issue?
Cal-Am purchased Citizens Utilities in 2002. Since then, Cal-Am
has outsourced jobs, moved management to Monterey and requested
rate hikes that will more than double our water bills, which are
already among the highest on the Central Coast.
Felton residents created Friends of Locally Owned Water (FLOW)
to fight the rate increases and investigate buying back the water
district. We propose merging our water system with the San Lorenzo
Valley Water District, which serves residents in Boulder Creek,
Ben Lomond and Scotts Valley. SLV residents already pay 40% less
for water than we do and merging the systems will guarantee that
water stays affordable for everyone.
Who is Cal-Am?
California American
Water is a subsidiary of New Jersey-based American
Water. Despite the patriotic-sounding names, Cal-Am and American
Water are both subsidiaries of the German company Rheinisch-Westfsches
Elektrizitwerk Aktiengesellschaft (RWE) - the third largest
water supplier in the world. RWE's business model calls for purchasing
small water districts, consolidating them to reduce costs and applying
for rate increases to boost profits.
Why is buying the water system back the best option?
Buying back the water system will ensure that our water rates remain
affordable for everyone for decades to come. It also means that
decisions on rate increases will be made locally by a board of directors,
our phone calls will be answered locally and repair crews will be
dispatched locally. Once we are part of the San Lorenzo Valley water
district, we can vote for board members, all of whom must live in
SLV. They're our neighbors, we can stand up and speak at board meetings
where decisions are made, we can call them on the phone, we can
vote them in or out of office, and we can run for the board ourselves.
Where will the money to buy the water system come from?
Money to buy back the water district will come from a bond measure
that Felton residents will vote on in July. The maximum amount of
the bond will be $11 million. If we pass the bond, the County or
the SLV water district will negotiate the purchase of the water
system from Cal-Am. Each ratepayer of the new water district will
have a bond payment added to their property tax bill and the bond
will be paid back over 30 years.Your bond payment has to be balanced
against your water rate savings with SLVWD (See chart below).
What if I am on a well but live in the new water district. Will
I have to pay for it?
No. Only people who use the water system will pay for it. If you
opt to connect to the water system in the future, you will pay a
share like all other participants.
Cal-Am says I will pay more in property taxes to buy the system
back than I would just leaving things the way they are. Why are
their statistics different?
In presentations Cal-Am has given, they leave out rate increases
they've already been granted and pretend that they will not have
any increases over the next 30 years. This is misleading and does
not reflect what Felton residents will actually pay. Buying back
the water system will eliminate Cal-Am's rate increases, which more
than offset what we each will contribute to buy the water system.
You keep talking about rate increases but my bill has stayed
pretty much the same.
That's correct. The Public Utilities Commission (PUC) granted Cal-Am
a 44% rate increase in May 2004 (Cal-Am originally requested 74%).
FLOW challenged Cal-Am's request, and due in part to our efforts,
implementation has been postponed until the PUC rules on the water
company's request to merge the Monterey and Felton water districts.
When the rate hike is implemented, it will be retroactive to May
2004. Cal-Am and the PUC’s Office of Ratepayer Assistance estimate
that we will owe $285,000 to CalAm by June, 2005.This is about $15
a month per household that’s adding up.
What if Cal Am doesn't want to sell?
We can continue to negotiate with Cal-Am as long as it seems reasonable.
If Cal-Am opts not to bargain in good faith, the county has the
right to purchase the district through its powers of eminent domain.
Cal-Am says that if it is allowed to merge the Monterey and
Felton water districts, it will lower the rate increase it has requested.
The way Cal-Am would lower rates is by taking the increase they’ve
been granted for Felton and spreading it over the much larger customer
base of Monterey. People in Monterey don’t want to pay for
us and are strongly objecting. In addition, Cal-Am has now asked
for a 114% increase, if we’re merged, instead of the 44%!
Merging the Felton and Monterey water districts is a bad idea for
several reasons. Cal-Am has already consolidated management of the
Felton water district in Monterey, which means decisions on what
happens here are being made 40 miles away. Night and weekend phone
calls to Cal-Am are answered by operators at a call center in Illiniois.
Meter reading and repairs are increasingly being handled by Cal-Am
staff from Monterey who have difficulty finding our meters and have
been rude to Felton customers.
What Cal-Am considers "cost-savings" we view as "cutting
corners". This proposed merger is being opposed by individuals
in Monterey, the Monterey Chamber of Commerce and by the PUC's own
Office of Ratepayer
Advocates, a citizen's watchdog group funded by the State of
California.
Click
on chart for larger view
Click on chart
for larger view
Cal-Am says we will have to pay FLOW's legal fees.
FLOW raises all of its money from community events like the Garden
Tour, dances, movie nights, BBQs and donations from local businesses
and individuals. We have received a tremendous amount of free legal
support, but do have to pay for some specialized legal help in dealing
with the complicated bureaucracy of the PUC. The State of California,
which understands that citizen groups are not as well funded as
companies like Cal-Am, does allow citizen groups to request reimbursement
for some legal fees. There is no guarantee that we will reimbursed.
It's also important to remember that we are paying for Cal-Am's
lawyers and lobbyists with our monthly water bills.
Are you opposed to capitalism and a company making a profit?
Absolutely not. In fact a good number of FLOW's organizers and supporters
are local business people. Unlike other Felton businesses, Cal-Am
has a monopoly on the water delivery system and the PUC guarantees
Cal-Am an 11% profit - a luxury not afforded to any other Felton
business owners.
If we are unhappy with a price charged by a local business, we
can always shop elsewhere. We already have some of the highest water
rates on the Central Coast, but, because Cal-Am has a monopoly on
the delivery system, we don't have the option of comparison shopping
for lower-priced water.
We believe that water is a right, not a commodity. By working
to buy back our water system, we are exercising our rights under
the State Constitution and more importantly working to ensure that
access to affordable water is guaranteed to everyone living in the
San Lorenzo Valley.
Who gets to vote?
Every registered voter in the new district gets to vote – well
owners, too (even though they won’t pay). You don’t have
to own your home to vote: you just have to be a registered voter
who lives in the district.
What else do we know about the vote so far?
The vote will be by mail ballot mailed to your registered address.
You’ll get the ballot several weeks before the final vote date,
but send it in early. We need 2/3 of registered voters to support
the vote for it to pass. You’ll be asked to vote on two items:
1) to set up an assessment district and 2) to authorize the bond
with payments over 30 years.
What if I want to pay my whole assessment up front?
Great! You can do so, avoiding interest charges. But the interest
is pretty low, so you may want to hang on to your capital and pay
this over time.
Can I pay off the balance of my assessment early?
Yes. If you want to sell your home without the assessment on it,
you can pay it off then – or at other times. You’ll pay
just principal, accrued interest, the premium the bond holder charges,
and a small administrative charge.
Once we authorize a bond, is that the amount we pay for the
water system?
No, it’s just the maximum amount we can pay. The negotiated
price will probably be less. The maximum bond amount gives us room
in case there are extraordinary legal expenses or unexpected costs.
We will only make bond payments on the final negotiated price of
the system and expenses. And FLOW, the SLV water district and the
county will be watching all expenses and prices carefully.
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