Golden State Water Company, one of the largest privately-owned water companies in California and the primary supplier of water to a number of Southern California cities, and the City of Claremont have recently been engaged in heated discussion over rate increases. As a private company, Golden State Water (GSW) is permitted to submit an application for rate increases every three years under regulations set forth by the California Public Utilities Commission (PUC). Most recently, GSW submitted an application in July of 2011 which outlines rate increases for the next three years.
According to the application submitted by Golden State Water on July 21, 2011 to the Public Utilities Commission of the State of California, the order, if approved, will authorize an increase by approximately $77,799,000 over three years in the form of a 21.4% increase in 2013, a 2.7% increase in 2014, and a 3.2% increase in 2015. This is not the first time Golden State Water has requested such an increase either; in 1996 GSW requested a 56% rate hike and the PUC approved a 12% increase, in 1999 19.37% and 10% respectively, in 2002 43.84% and 18.16% respectively, in 2005 27.24% and 11.54% respectively, in 2008 37% and 20% respectively. These past increases have culminated in the high price of water in Claremont. When compared to prices in surrounding cities in the Inland Empire, the price of water in Claremont is approximately 27% higher than that of the second most expensive city in the area, Glendora, and 62% more expensive than that of the least expensive surrounding city, Upland.
Since the submission of the application to the PUC in July 2011, the City of Claremont has been working with legal counsel to oppose the increase, but progress toward a mutual agreement is lacking. City officials argue that the impact of another rate increase on the local economy could be devastating. In fact, a recent investigative report by CBS points out that the potential increase has both homeowners and local entrepreneurs second-guessing decisions to live and/or conduct business in Claremont. The report also calls into question the validity of the purpose for the increase, an argument that concerned citizens of Claremont and city officials have focused on. Opponents argue that Chief Executive Officer, Robert Sprowl’s salary of about $1.6 million is excessive and that an increased burden on ratepayers is not justified by a desire for a 58th consecutive increase in annual dividends.
The City of Claremont continues to stand in firm opposition to the increase and is now exploring a number of alternatives to merely reaching an agreement or accepting the rate hike. One option that received a substantial amount of attention from citizens and officials is the possibility of establishing a municipal water system in Claremont. However, such an outcome would most likely require the use of eminent domain, which has created division amongst opponents of the increase because some do not believe a city owned water system will be as cost efficient or they disagree with the usage of eminent domain. The City is currently in the process of appraising the water system and other infrastructure and equipment necessary for the distribution of water to better determine the best policy to pursue. A certified appraisal is expected to be released later this month. Regardless of the policy the City of Claremont decides to pursue, officials, including Mayor Larry Schroeder and council members, assure ratepayers that the “process will always remain transparent.”
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