Utility seeks rate hike for beleaguered Dillon Beach

  • Jean miltenberger
    Jean miltenberger
David Briggs

Marjon Row, a retired highway patrolwoman, had to make a choice: give up the Subaru she had bought a year ago or leave the home she was renting in Dillon Beach. But it wasn’t the rent that posed the problem—it was her hefty water bill that claimed the money she had planned to use for car payments. Before she moved in, the landlord said utilities would cost about $120 a month, she said. Ms. Row currently shells out about $300, including $160 for water alone.

Ms. Row’s Subaru was repossessed. Luckily a niece gave her a car, but she still has difficulties managing the pricey utilities, and now her landlord wants to increase her rent. “I can’t afford it,” she said simply. “I feel like I’m a victim.”

Ms. Row is one of many Dillon Beach residents incensed that their private water provider is seeking a 33 percent increase in rates starting next year. Over 40 Dillon Beach residents gathered at Tomales Town Hall last Thursday to decry the proposal and rattle off a litany of grievances.

Private water companies must get approval for water rates from the California Public Utility Commission (CPUC) every three years. During these rate reviews, public hearings presided over by an administrative judge are held in affected districts.

That 33 percent increase would create just under $137,000 more annual revenue for California Water Service Company, or Cal Water, one of California Water Services Group’s six subsidiaries. The parent company netted $48.8 million in profits in 2012.

The company claims that the “typical residential customer” in Dillon Beach, using 2.2 cubic feet or 1,645.6 gallons of water a month—which costs about $103 now—would pay about $122 in 2014 for the same amount. That price factors in a special subsidy given to Dillon Beach residents.

But Cal Water’s definition of a typical bill was only one of the many points of dispute aired at the hearing.

Those “typical” rates are based on “empty houses,” or part-time residents whose costs skew the average costs, said Dennis Sarantapoulas, an emergency medical technician and volunteer firefighter in Dillon Beach.

Many full-time residents say that despite fervent conservation efforts—and one woman’s mission to “account for every drop”—their water bills are much higher. The Light interviewed one woman, Carolyn Moore, who paid $175 a month, though she lived with only one other person. That current $103 monthly estimate assumes that every meter, or household, uses about 55 gallons a day.

Many who spoke at the hearing called the water rates a health hazard. Some spoke of showering every other day or even once a week and not flushing toilets on a regular basis. House guests are a financial nightmare for some, and one woman on disability said she shampooed her hair in the sink and did not wash her medical equipment as often as instructed.
“We all share these secrets” of skimping on water, she said.

Even ardent conservationists might take pause at 55 gallons a day. In water-conservative Bolinas, the public utility district restricted meters to 150 gallons a day for two months in 2009 during a water emergency. In Dillon Beach, 150 gallons per day would cost at least $234 a month.

The water district consists of six wells, but most of the water comes from one well near Dillon Creek. Water is piped to a treatment facility above Dillon Beach Road and passed through two filters to remove iron and manganese. It is disinfected with both ultraviolet light and a combination of chlorine and ammonia, or chloramine.
Darin Duncan, Cal Water’s rate manager, said during the hearing that low-income residents have access to its Low-Income Rate Assistance program (LIRA). But one resident who receives LIRA blasted the program.

“I get low income help,” Lia Christensen-Morris said: $12 a month, the maximum amount, which she called “a pittance” and “not even worth filing for” at the hearing. Cal Water has proposed increasing the maximum LIRA allowance to $14 a month.

Ms. Christensen-Morris, like Ms. Row, said her landlord did not reveal how much utilities would cost before she moved in, and said she never would have moved to the area had she been privy to the costs. Her most recent bimonthly water bill was $258.30, an amount she said was higher than usual because she had a guest. She normally uses between one to 1.5 units of water a month, or 25 to 40 gallons a day.
Cal Water is a “powerful company” that “gets mostly what they want,” Marcos Pareas, the owner of the William Tell House restaurant and hotel in Tomales and a Dillon Beach resident, said at the hearing.
Mr. Sarantapoulas, the fire fighter, incited a wave of raucous applause during a rousing speech when he cried that Cal Water was “using Dillon Beach like a piggy bank” and said, “Personally, I think we need to get rid of Cal Water,” which elicited a “hear, hear” from the crowd. The judge had to settle the room.

Although Dillon Beach’s roughly 250 water meters makes up a miniscule number of Cal Water’s over 470,000 customers, many residents feel taken advantage of by a company whose chair and CEO makes over $2 million, according to Morningstar, an investment research company. Many were also disdainful of the fact that Francis Ferraro, one of the parent company’s vice presidents, used to work for CPUC.
Gay Guidotti, district manager for the company’s Redwood Valley District, which includes Dillon Beach, said that these rates are a function of scale. “We don’t have enough customers” to spread the cost, she said. And Cal Water can’t add more customers in the area because the state’s health department imposed a water hookup moratorium in Dillon Beach over 10 years ago.

Cal Water took ownership of the district in 2000. Residents interviewed by the Light said the rates began to skyrocket somewhere between six to ten years ago. Around that time, in 2006, the company built a membrane treatment plant and a new tank and installed a solar pump. Water bills now include a special $11 monthly surcharge to pay back a loan the company took out for the plant, a charge that will remain on bills for the next 25 years. But the loan itself did not cover the entire cost and rate increases requested back in 2005, separate from that surcharge, were also implemented to pay for a portion of the cost.
Cal Water says the current requested increase would help replace 1,600 more feet of aging mains on Ocean View Avenue, build a connection to another water system for emergencies and pay for a permit for another water source. However, a division of CPUC wrote in a March report that it recommends nixing water main replacement from the budget because “It does not seem cost effective to replace the entire main due to the infrequent nature of leaks.”

Spreading the cost of these major infrastructure projects between just 250 customers is Cal Water’s primary explanation for Dillon Beach residents paying more per unit of water than any other district it runs. And while the current increase request is significant, it is not nearly as dramatic as some previous rate increases.

The company requested a whopping 322.7 percent rate increase for 2006-2007, and CPUC ultimately approved a 150 percent increase. Cal Water then sought a 154.8 percent rate increase in 2011, an 8.8 percent increase in 2012 and an 8.1 percent increase in 2013. CPUC ultimately granted a 50 percent increase in 2011, 14.8 percent in 2012, and 0.5 percent in 2013.

But prodigious rate increases have resulted in extreme conservation, and so, like a seesaw, falling water use has further pushed prices upward because of the fixed costs of running the system.
“This can’t go on,” Bessie Lee, who has lived in Dillon Beach since 1989, said at the hearing. “We all know the rates are going to get higher and higher.”

Fire hydrants are another bone of contention between Cal Water and residents. Multiple people, including volunteer firefighter Mr. Sarantapoulas, claim there is only one working fire hydrant in the village area of Dillon Beach. Ms. Guidotti disputed the allegation in a phone interview. “I would disagree with that,” she said, claiming they installed two fire hydrants two years ago.

Mark Brown, deputy fire chief for Marin County, said that all the hydrants in Dillon Beach work but that “some work better than others.” Firefighters may choose to use hydrants with higher volume output but that such choices do “not inhibit operations.”

Yet another issue that roused residents was a pipe that broke during a storm on Dec. 23. Ms. Lee said Cal Water did not communicate effectively during the precautionary water boil advisory to ensure its potability. Ms. Christensen-Morris said her water was yellow, and resident Theresa Byrne said people were drinking “filthy dirty water on Christmas.” Ms. Guidotti said the company manually handed out notices around town and that subsequent testing did not reveal any health concerns. She added that the repair may have stirred up the contents of the pipes, and that it may have taken longer for the system to “flush out” because people use such little water. While some people had no water for about four hours on Dec. 23, she said only a few houses—located on a hill—were out of water for several days while many had below-normal water pressure.

Dillon Beach residents also voiced concerns over the many senior citizens who do not have expendable income for yet more expensive water bills. Terri Sylvain, a case manager at West Marin Senior Services who has some clients in Dillon Beach, said at the hearing that she was “frankly appalled” by the rates and called them “criminal.”

The CPUC’s Division of Ratepayer Advocates, a quasi-independent division within CPUC, is advocating for a smaller increase. The DRA, represented at the hearing by Program and Project Supervisor Ting-pong Yuen, recommends a 15 percent jump. But residents felt that anything other than a reduction was unjustified and espoused a lack of faith in the CPUC to protect them. Mr. Pareas said that the DRA recommendation is “still a lot of money” and “people would be losing their homes,” especially renters for whom such an increase could tip the scales.

Dillon Beach resident Jeff Young, a retired project and business development manager and real estate agent, is an intervenor or official party in the current rate review. As an intervenor he is eligible to participate in negotiations and file briefs.This is the fourth case in which he has been an intervenor.

He believes the DRA has finally realized that the rates are unsustainable and is looking to significantly reduce water rates in small districts like Dillon Beach through substantial changes in the Rate Support Fund, originally created in 2005, which offers assistance to small districts. The pot of money is funded through a one-cent charge on every 100 cubic feet of water sold to all residential customers.
The fund provides small allotments to customers in five small districts, ranging from just over $2 up to $25 a month per customer. Dillon Beach residents get about $10 off per month. But if those surcharges were increased even a little bit on bigger districts, Dillon Beach residents could have a vastly lower monthly bill – in Mr. Young’s estimation, ideally about 1.5 times what the average Cal Water customer pays.
“This would be very significant,” as well as “very fair,” Mr. Young said. “Why should water not be affordable?”

Though Mr. Duncan of Cal Water declined to comment on the specifics of what an increased support fund would look like, he said the company would like to see “a subsidy as high as possible” without placing too much of an onus on other customers.

The crisis of affordable water in Dillon Beach is one that moves people to scrimp on a material necessity while offering up surprising overtures of generosity.
Theresa Byrne, a retired nurse and longtime resident of Dillon Beach who lives on under $1,200 a month, spent hours escorting this reporter around the area to ask people about their water bills. She recently found a water bill from 1997, when she paid about $50 bimonthly for four units of water. She now pays about $125 every two months, but only uses a single unit every two months, or 12.5 gallons a day.
Mr. Pareas, the owner of the William Tell and who was an intervenor in the three previous rate cases but not the current one, operates a well that provides water not only to his business but to seven nearby residences. He doesn’t charge anything.

A revamped Rate Support Fund could make Cal Water more like other utilities for which everyone pays the same rate no matter where they live, Mr. Young said. He is optimistic that the company could adopt such a program, which wouldn’t affect profits.

A recent bill, AB 685, was signed into law by Governor Jerry Brown in September. It says that every Californian has the right to safe and affordable drinking water, which was perhaps the catalyst the DRA needed to consider taking serious action.

But the CPUC, in a separate case, is considering the issue of fair water rates on a vaster scale. In the other case, which implicates all private water companies operating in the state, the CPUC is considering whether all customers in California should pay more equitable rates.

A final decision from the CPUC is expected in December.