Thursday, November 2, 2017
[Monterey County] Negotiations under way for four Monterey County-operated utility systems; Cal Am, Monterey One Water vying for control
Blog note: this article references a 2013-14 grand jury report.
Monterey County >> Looking to unload the four utility systems it operates, Monterey County has entered negotiations with California American Water or Monterey One Water to sell or transfer them, but without notifying customers about the potential deal.
County management analyst Lynette Redman confirmed Tuesday that the county Board of Supervisors had directed county officials to “move forward” with negotiations to sell or transfer the Chualar, Boronda and San Jerardo sewer systems, and the San Jerardo water system. Redman said Cal Am and Monterey One Water were chosen from a pool of three respondents to begin negotiations after a combined request for qualification was issued for all four utility services a year ago. California Utilities Service had also expressed interest. Redman did not disclose whether the interested parties would negotiate for all or just some of the four utility services, nor any of the prospective terms of a sale or transfer.
“The county would essentially like to get out of the (utilities) business,” Redman said. “We believe the utilities would be better served by an entity with utility experience.”
However, Redman said none of the customers currently served by the four utility services have been notified about the potential sale or transfer, and they would only be notified if and when negotiations are concluded. In all, the four utility services serve about 1,610 connections.
Cal Am spokeswoman Catherine Stedman confirmed the company is interested in all four systems, explaining that Cal Am is a “growing company and there are many communities interested in our service.” Stedman pointed out Cal Am already provides water service to Chualar.
Monterey One Water general manager Paul Sciuto also confirmed the public agency’s interest. He said the county asked if agency officials would be interested in responding to the request for qualifications. Sciuto said agency officials “thought being a good partner to the county, as well as lending our expertise to the community would be the right thing to do.”
Chualar’s sewer system, which serves about 170 connections with an annual budget of about $94,000 in the largely Latino community, has struggled financially for years as its rates don’t bring in enough revenue to meet the system demand. County supervisors agreed in March to forgive more than $1.166 million in county general fund loans for major repairs conducted between 2012 and 2014.
The supervisors also approved a rate increase proposal, the system’s first in 14 years, aimed at raising adequate revenue for operations, capital improvements and reserves. The proposed rate increase must be approved through a special assessment process, which allows for customers to file protests and to deny the rate increase if a majority of parcel owners in the district do so. If the rate increase is rejected the system would require either additional general fund loans or subsidies, or some other funding source to cover operations and maintenance.
According to a staff report, the proposed rate increase would “likely make (the system) more attractive to potential bidders.”
The 2013-14 county civil grand jury recommended the 50-year-old Chualar sewer system, including holding ponds near the Salinas River, be replaced as soon as possible and that a $4 million sewage treatment plant be built to handle system demand and provide farm field irrigation supply.
Redman said Pajaro, which serves about 1.013 connections with an annual budget of about $900,000, Boronda, with 360 connections and a $150,000 annual budget, and San Jerardo, with 67 connections and an $80,000 annual budget, are all operating with rates that cover costs.
However, the county did provide funding for a temporary water filtration system for low-income farmworker collective of San Jerardo after water contamination fouled its wells after the Alisal Water Company failed to address the issue, as well as upfront funding for a new water system.
October 31, 2017
By Jim Johnson