Strawberry Property Owners Association
President's Response

The following is the SPOA President's response to the proposed water rate increase at the public meeting conducted on September 30, 2006 meeting in Strawberry.


Fri, 27 Oct 2006

SPOA Members:

For those of you who have been following our efforts supporting the transition from the Conlin Water Company to the Del Oro Water Company, the California Public Utilities Commission (PUC) conducted a public meeting on September 30 at the Pinecrest Elementary School in Strawberry to collect public input on Del Oro's application for a 76% water rate increase.

The meeting was attended by approximately 35 Strawberry residents and property owners along with PUC staff and representatives from Del Oro. The primary reason for conducting this meeting was to give staff the opportunity to collect comments and concerns over the proposed increase prior to preparing a staff report for the Commission to use in making a decision. According to Del Oro, the large increase is necessary to raise revenue ($111,000) up to a level to meet estimated operating expenses due to long-standing losses incurred during the entire time that Conlin Water was running the water company and provide an adequate return. Because of this, coupled with the fact that rates have not been adjusted since 1999, Del Oro has applied for this large rate increase.

In addition to the letter SPOA submitted to the Commission on September 19, we were present at the meeting and reiterated our concerns with the size of the increase and asked staff to validate the accounting data that Del Oro is using to justify their request above the 40% they had originally projected in the settlement agreement negotiated in the purchase of the company earlier this year. If the Commission finds the data accurate, they can decide to increase our water rates to the level that Del Oro has requested. If not, it is very likely we will see a 40% increase at a minimum then future adjustments made through additional General Rate Increase (GRI) applications to the PUC.

Given the long-standing history of mismanagement within the water company under the previous owner that has led to its purchase by Del Oro and the poor physical condition of the entire water system (pipes, holding tanks, and treatment facility) our water rates do need to be increased. Because this application is only for increased expenses and providing Del Oro with an adequate rate of return as the new systems owner/operator, we still will be faced with a substantial rate increase to pay for the much needed physical upgrades and repair of the equipment within the entire system. This will be done separately sometime in the future once the engineering studies have been conducted that will outline what improvements need to be made and in which order of priority. Only until then will Del Oro be able to submit another application to the PUC for another rate increase.

According to PUC staff, they cannot determine when the Commission will act on Del Oro's current application given other issues they are currently adddressing. We can be assured that no action will be taken until after the staff report has been prepared and distributed for public review and comment. Only after this is completed will the Commission schedule a public hearing on the application and make a final decision. My guess is that this will not happen until the December/January time frame at the earliest or sometime in early 2007.

We will continue to keep you posted on the progress of this important action by the PUC.

Michael Jackson
SPOA President

Return to the SPOA home page