Claim: Measure J will disrupt progress on Cal Am’s proposed desal plant and lead to rationing.

Facts: Measure J has absolutely NO impact on Cal Am's proposed deal project. It only addresses the ownership of our water system. If Cal Am can build their long promised desal plant that would be part of the public buyout.

Claim: Cal Am is worth $1 billion

Facts: Cal Am has typically estimated their value at about three times their selling price to scare off public buyouts. In the 2008 Felton buyout, Cal Am asked for $46 million, but sold for $13 million. In Ojai's recent public buyout, Golden State asked for $120 million and got $34 million. In Missoula, Montana, private owner Carlyle initially asked for $200 million, but the court ordered the sale at $88 million. MR Valuations was the appraiser in the Missoula case. They happen to be the same firm that appraised Cal Am at $1.04 billion.

The Measure J feasibility study will determine if we can afford to buy Cal Am. If the price is too high there would be no buyout. The process would stop right there. There is no blank check.

Public utilities are valued on their rate base. Cal Am’s rate base value is $125 million. Two times the rate base would be a typical purchase price for a corporate utility. Cal Am’s claim that they are worth a billion dollars is a scare tactic meant to make buying Cal Am seem impossible. In past acquisitions, their selling price was about a third of what was initially claimed. In the end, if a settlement is not possible, a court will determine a fair price in an eminent domain proceeding.

Cal Am’s claim that a public buyout would raise water costs is entirely based on their ridiculously inflated $1.04 billion dollar claim.

We can pay for Cal Am without raising water bills because bond payments to buy Cal Am would be paid in place of what we pay now to cover their profit and taxes. The low interest bonds needed to purchase Cal Am would be covered by the $19 million annually they now take from us for profit and corporate taxes. This is what Cal Am leaves out of the picture.

Claim: Measure J is not just a feasibility study

Facts: True, Measure J authorizes the Monterey Peninsula Water Management District   (MPWMD) to buy out Cal Am, but only if is found to be financially feasible and in the public interest. MPWMD is NOT authorized to move forward with a buyout if the cost is prohibitive. What part of “IF IT IS FOUND TO BE FINANCIALLY FEASIBLE” does Cal Am not understand?
 
The Measure J feasibility study will determine if we can afford to buy Cal Am.
If the price is too high there would be no buyout. The process would stop right there. There is no blank check. MPWMD will hold public hearings soon after the initiative passes to define “feasible” and then hire expert consultants to do the study. MPWMD is answerable to us. Cal Am is not.
 
The feasibility study would be paid for by MPWMD out of their reserves.
 
Measure J is the only way the Peninsula can get control of its water costs. The feasibility study it requires will give us the facts and show us if we can lower costs under public ownership.

Claim: Cal Am pays millions in taxes for local services

Facts: Cal Am paid approximately $5 million in state and corporate taxes in 2016. But this money leaves our community; it does NOT pay for public services like fire, police, schools or parks. The $340,000 in property taxes that Cal Am actually pays to support public services on the Peninsula could continue under public ownership through in lieu payments.

Claim: No government takeover of a water system in California in the past 20 years has resulted in lower costs to customers.

Facts: Ojai’s recent public buyout proves that public ownership can lower water costs substantially. They were able to pay for the purchase, do repairs and still lower costs to customers.

There have only been five public water buyouts in California over the past 20 years, largely because 83% of California’s water systems are already publicly owned. Most of these examples are tiny systems like Felton, whose system needed extensive repair. They used their public ownership savings for repairs and buyout costs and basically broke even. But the savings to their customers over time is dramatic.

Water costs drop when you eliminate profit. Over time our bills would be much lower than what Cal Am would charge. But the immediate savings can’t be known until the feasibility study is done and a purchase price is estimated. The $1 billion that Cal Am claims they are worth maybe about three times higher than their true value. Remember, in an eminent domain case a court will rule on a fair price.

Claim: The CPUC gave Cal Am the green light on their desal project

Facts: On September 13th the CPUC issued a permit for Cal Am’s desal project. This further proves the CPUC’s tight relationship with Cal Am and total disregard for ratepayers. The CPUC’s statement on the “protection for ratepayers against unreasonable costs” was laughable. IF Cal Am can ever build this desal plant it would double our water costs according to the Monterey Herald. The CPUC did not take the cost to ratepayers into consideration.

Remember this is only one permit for Cal Am and they face many more hurdles with their proposed desal project. They must still get permits from the City of Marina (good luck on that), the Coastal Commission and the Regional Water Quality Control Board. Plus Cal Am is already facing litigation because they have no water rights to the source water for their deal plant.

The CPUC decision only emphasizes the fact that Measure J is the only way we can begin to get control of our water costs and free ourselves from both Cal Am and the CPUC.

Claim: Peninsula ratepayers will get stuck with legal costs. Claremont’s experience proves it.

Facts: Cal Am likes to cite Claremont as an example of a public buyout that failed and cost ratepayers in legal fees. The truth is there have been over 400 successful public water buyouts over the past 25 years in the United States. Only one or two cases have failed, Claremont being one of them. It is rare for a public agency to fail in a public buyout.

Claim: Cal Am’s desal is the only answer to our need for more water

Facts: The Monterey Herald and LandWatch Monterey County both report that if Cal Am’s $300 million desal plant can be built; our already outrageous water rates will double! We can’t afford this water.

The Pure Water Monterey Expansion of recycled water is a better solution for now. It meets our current needs at less than half the cost and does so in time to comply with the Cease and Desist Order (CDO) deadline. It’s environmentally superior and uses only 25% of the energy needed for desal. A publicly owned regional desal plant should be considered in the future.

Cal Am’s project is now being legally challenged because it has no water rights to the source water for its proposed desal plant (draws Marina’s brackish groundwater, not ocean water). This will cause more delay and raise costs further. It’s not the solution Cal Am presents it to be.

Claim: The Monterey Peninsula Water Management District can’t run our water system

Facts: The Monterey Peninsula Water Management District (MPWMD) would be the new public owner of our water system. They have a board of directors that is elected by us and answerable to us.

MPWMD would retain most of the local Cal Am employees who currently run the system within a meet and confer process to determine comparable wages and benefits. They would hire a new local management team.

MPWMD was created in 1977 by state legislation followed by a public vote in response to the 1975-76 drought.

MPWMD is highly competent. They were created to develop additional water supplies, protect the watershed, manage available water supplies and promote water conservation. That’s exactly what they've done.

MPWMD has been responsible for developing over 7000 acre-feet of new water over the past 25 years. That’s a substantial amount of the 9,900 acre-feet that the Peninsula currently uses annually). Cal Am has developed NO new water in 52 years of ownership. More on MPWMD here: http://www.mpwmd.net

Historically Cal Am and a few commercial and development interests were responsible for smearing MPWMD with bad press and trying to eliminate them with legislation.

PWN FACTS vs. CAL AM FICTION

• Cal Am says: It's worth $1 Billion.
  Get the FACTS
  
  
• Cal Am says: Measure J is not just a feasibility study.
  Get the FACTS
  
  
• Cal Am says: It pays millions in taxes for local services.
  Get the FACTS
  
  
• Cal Am says: No government takeover of a water system in California in the past 20 years has resulted in lower costs to customers.
  Get the FACTS
  
  
• Cal Am says: The CPUC gave Cal Am the green light on their desal project.
  Get the FACTS
  
  
• Cal Am says: Cal Am’s desal is the only answer to our need for more water. 
  Get the FACTS
  
  
• Cal Am says: Measure J will disrupt progress on Cal Am’s proposed desal plant and lead to rationing.
  Get the FACTS
  
  
• Cal Am says: Peninsula ratepayers will get stuck with legal costs. Claremont’s experience proves it. 
  Get the FACTS
  
  
• Cal Am says: The Monterey Peninsula Water Management District can’t run our water system. 
  Get the FACTS

PWN Fundraiser
Silent Auction & Raffle
September 7th, 7:00 - 9:00 pm
Hilton Garden Inn, Big Sure Room
1000 Aguajito Road, Monterey

Please join us in the beautiful Big Sur Room for this Public Water Now fundraising event. Proceeds will help to pass the Public Water Now initiative (Measure J) in November.

Our silent auction will feature fine art from the Holman collection, vintage and collector’s quality wines, Cambria beach vacations, 49er football tickets, and much more!
We’ll have live music performed by violinist Frakahd Khudyev.
Cash bar. Ticket includes one complimentary drink.

7:00 pm – 8:00 pm Silent auction bidding
8:00 pm Raffle featuring 2-day beach getaway
8:30 pm Silent Auction winners announced
9:00 pm Take home your treasures

Tickets are $10 in advance or $20 at the door
Advance tickets may be purchased here by donating $10 per ticket.
We’ll hold them for you at the door.

You can also pick up tickets at the PWN Office
1340 Munras in Monterey
Wednesdays & Sundays from noon to 3pm

California American Water (Cal Am) has owned and mismanaged the Monterey Peninsula’s water system for over 50 years. Their corporate profit-driven approach has raised our water costs 68% over the past 2 years and we still have no new water supply. Where will it stop?

We have the MOST EXPENSIVE water in the United States

According to Food & Water Watch, the Peninsula now has the most expensive water in the country. Their 2015 and 2017 studies looked at the 500 largest water systems and calculated consumer water costs based on a typical household usage of 60,000 gallons annually (5,000 monthly). They found that the average annual cost in the U.S. is $315 for publicly owned water, versus $500 for privately owned water. But here on the Peninsula our cost is $1,202 annually!

How Cal Am has failed us

• Cal Am is currently charging us $64 million for water we did not use! After they asked us to conserve water, Cal Am rewarded our efforts with increased costs to make up for their lost revenue.
• Cal Am has recklessly overdrawn both of our natural water sources: the Carmel River and theSeaside Groundwater Basin. The State ordered them to stop overdrawing the Carmel River in 1995. They are still overdrawing it.
• Cal Am has produced no new water, but they have charged us $34 million for three failed water projects and $152 million to tear down the San Clemente Dam.
• Cal Am is years away from a desalination solution. They have no water rights to the groundwater they intend to pump, making litigation all but certain. Their slant wells are experimental. There are no slant wells being used for desal anywhere in the world.

Public water is more affordable

Currently 87% of the people in the U.S. receive their water from public agencies for good reason. It provides local control and lower costs. We too can achieve affordable, sustainable water for our community. Now is the time to buy out Cal Am and replace them with public ownership.

VOTE to do the study…there’s NO RISK!

The Public Water Now initiative received 11,557 signatures in support, qualifying it for a public vote. It will appear on the November ballot. If passed, it will require the Monterey Peninsula Water Management District (MPWMD) to pursue a buyout of Cal Am if it is found to be financially feasible and in the public interest.

Once the initiative is passed the first step would be a feasibility study conducted and paid for by MPWMD.  This will give us the facts on whether buying Cal Am is in the public interest — and the study costs us nothing.

Who will replace Cal Am?

The Monterey Peninsula Water Management District would replace Cal Am. Created in 1978 to find new water solutions, the MPWMD is the only existing local public agency with the authority to purchase Cal Am. Over the past 25 years MPWMD has developed five new water supply projects giving us over 7,000 acre feet of new water. Cal Am has completed no new water projects in 50 years.

We can afford to buy Cal Am

Research shows that we can pay for the low interest bonds to buy Cal Am with the profits and taxes that they now take annually as a private corporation. The bond cost would be repaid on our water bills in place of Cal Am’s profits and taxes, with no anticipated increase in our bills. In 2016 Cal Am took $19 million in profit and corporate taxes. 

The California communities of Felton, Montara and Ojai, as well as Missoula, Montana, have all been successful in their recent public buyouts and now have control of their water future. We can too!

Who is Public Water Now?

Public Water Now is a local non-profit volunteer organization. It’s made up of citizens like you who are tired of being held captive by Cal Am. We are dedicated to achieving an affordable and sustainable water solution for the Monterey Peninsula. 

Cal Am’s claims have NO basis in FACT

They are simply scare tactics meant to sow the seeds of fear, uncertainty and doubt. If Cal Am could really prove their claim that our water would be more expensive under public ownership, they would not oppose the feasibility study to get the facts.  What don’t they want us to know?

Why did Felton want public ownership of their water?
In 2008 Felton was paying $69 a month for 5,000 gallons of water under Cal Am ownership.
Their neighboring public water system, San Lorenzo Valley Water District (SLVWD), was only paying $32 a month for that same amount of water. At that time Cal Am was requesting a 74% increase.

Like many other cities around the world they decided it was time to take their water back. They wanted lower rates, local control and environmental sustainability.
 
What did Cal Am do to try and stop them?
They ran a campaign of lies and misinformation to sow fear, uncertainty and doubt (FUD). They formed paid fake community groups that spoke out against the buyout. They even threatened to defeat politicians who supported the buyout.

But Felton prevailed with a campaign to educate their community with the facts. A big part of this was their door to door, talk to your neighbor campaign. They managed to talk to every household in the community (1,400).
 
How was a purchase price set?
Cal Am continued to say they were not for sale, but at one point they claimed the Felton system was worth $46 million. Felton’s research showed that Cal Am had paid only $2 million for the Felton system a few years earlier. SLVWD appraised the system at $7.6 million. Eventually Cal Am appraised it at $25.6 million. They settled out of court for $11 million.

Felton expected to pay $10 - $12 million. In the end they paid $11 million, just as they expected.

Why did Felton decide to put the purchase price on their property taxes?
Felton was being adopted into an existing water district (SLV) and they could not finance the bond any other way. They used a Mello-Roos special tax that was added onto their property tax to repay the bond principle and interest over 30 years.
 
What happened to Felton’s water costs over the last 10 years?
In 2008 Felton’s water cost was $69 a month. In 2018 their water cost is $96 a month. Both costs are figured on 5,000 gallons monthly. Over the past 10 years Felton’s water has only increased by 39%.
 
What would Felton pay today if they had stayed with Cal Am?
Felton had done a 30 year cost projection on what they anticipated their costs would be under SLVWD and under Cal Am. They projected that their costs would roughly double over that time if they stayed with Cal Am. Their projected cost under SLV is only $14 dollars a month higher today than what they projected it would be 10 years ago. And that includes the cost of taking care of significant system repairs that were not disclosed by Cal Am at the time of purchase.

How do Felton’s water costs compare to the Monterey Peninsula’s over the last 10 years?
Another way to look at what Felton’s costs would have been had they stayed with Cal Am is to apply the increase the Peninsula has seen over the last 10 years.

In 2008 the cost for 5000 gallons on the Peninsula was $38 a month. Today it is $102 a month. That’s a 168% increase. Remember Felton has only seen a 39% increase over that time under public ownership!

If Felton had seen the Peninsula’s 168% increase over the last 10 years they would be paying $184 a month now instead of $96. In this projection a Felton household saved $88 a month, $1056 annually or a total of $10,560 over 10 years with public ownership.
                                                                           Monthly                  Annually
Felton Cal Am – 2008                                         $69                        $828
Monterey increase over 10 years                                     168%
Felton Cal Am – 2018 projected                         $184                       $2,211
Felton SLVWD – 2018                                        $96                         $1,152
Savings with public ownership                            $88                         $1,056
                                                                   
How does Felton’s water system compare to the Monterey Peninsula’s?
Felton made the point that comparing the two systems is like comparing apples and oranges.
Felton is a very small water system with less than 1,400 connections. The Monterey Peninsula has 40,000 connections. Tiny water systems like Felton typically have much higher water costs. Larger water systems have economies of scale. Felton was amazed that our water costs more than theirs.  Historically that had not been true.

In addition, Felton does not have tiered water rates. Everyone pays the same cost per unit.

Under public ownership does Felton have control over their water rates?
Yes, they can vote down a rate increase with a simple majority vote. They can and have negotiated with SLVWD over proposed rate increases and reached agreement for lower rate increases. Many of the rate increases they have seen under public ownership are to repair their system after years of private ownership neglect.
 
What are Felton’s costs with the addition of the bond payment?
When the bond was first issued, it was $535 a year per household or about $45 a month.
They were able to refinance the bond after a year. It dropped to $448 a year or about $37 a month.
In 20 years they will own the system.

Felton’s total monthly cost of $37 for the bond + $96 for water is $133 a month for 5,000 gallons.

Felton’s total cost has gone up 93% over the last 10 years if you include the cost of buying their water system.

The Monterey Peninsula’s cost has gone up 168% over the last 10 years.
We’re still renting.

The Most Expensive Water in the Country... Brought to You by Cal Am! 

By Melodie Chrislock 

In 2015 Food & Water Watch completed a study of the 500 largest public and private water systems across the county, ranking them by the annual cost of water to the consumer. This is the largest study of its kind ever done. The study was based on a household using 5000 gallons of water monthly / 60,000 gallons annually.

In the original study, the Monterey Peninsula was ranked #9 of the Top Ten Most Expensive water providers in the country with an annual cost to the consumer of $716. Since then the average Cal Am customer on the Peninsula has seen a 68% increase in their water cost and that percentage is much higher if you use water in tiers 3, 4 or 5. The Food & Water Watch study is based on moderate water usage of 5000 gallons monthly, which falls into Cal Am’s Tier 2 billing here on the Peninsula.

In April 2017 Food & Water Watch announced their 2017 update of the Top Ten Most Expensive Water Providers in the Country. The Monterey Peninsula now ranks #1 with the most expensive water in the United States. The annual cost to Cal Am’s Peninsula customers for 60,000 gallons is $1202.

To put the cost of our water in perspective, the average cost of publicly owned water across the country is $315 a year, the average cost of privately owned water is $500 a year or 59% higher. But here on the Peninsula our cost is now $1202 a year.

In general, publicly owned systems have the lowest water cost to the consumer and private systems have the highest. 87% of U.S. consumers get their water from publicly owned systems. It’s worth noting that six of the Food & Water Watch Top Ten Most Expensive water providers in the country are owned by American Water, Cal Am’s parent company.

With Cal Am’s  March 2017 changes in rate structure and additional charges, water bills for many Cal Am customers doubled or tripled. One of the new charges on our Cal Am bills is $64 million for water we didn’t use due to our conservation efforts as a community. That’s right, Cal Am can charge us for water we did not use to make up for their lost revenue under the California Public Utilities Commission rules.

To make matters worse, the cost for new water projects like Cal Am’s proposed desal plant, the Pure Water Monterey (recycled water) project, or the pipeline currently under construction, are NOT yet included on our water bills. Plus Cal Am is asking the CPUC for another 22.7% rate increase over the next three years. Costs will continue to rise sharply with Cal Am. We can do better than this with publicly owned water.

By Bill Hood, Guest commentary 

The Herald, in its most recent editorial, said a lot — but overlooked even more. The paper has been a regular supporter of Cal Am in its “efforts” to build a desal plant that is touted as the solution to the Peninsula’s longstanding water supply problems. So it was not a surprise that the paper took water activists to task for continuing their efforts to derail Cal Am. To generously paraphrase, the paper assuredly concluded: the activists are losers (e.g., Measure O lost by 10 percent!); Cal Am is the only viable organization that can bring us the water we absolutely have to have; and we need water so, activists, back off and play in your sand box by yourselves!

Agreeing with The Herald or not, it is unfortunately true that the paper’s conclusions are lockstep with Peninsula locally elected officials and with the hospitality community (at least most of the time).

However, in writing the piece, The Herald somehow overlooked these facts: