Pacific Grove, California • August 23, 2013

Guest Commentary by Ron Weitzman

   WaterPlus was not just trying to be a kill-joy by not signing the Settlement Agreement much of the print media praised so highly recently. We could not sign it and remain true to our core mission, which is to seek as much water as possible at as low a price as possible for Monterey Peninsula ratepayers. Obviously now, in view of the near-unanimous support of the agreement, virtually no one else involved in the negotiations shares that mission, at least without qualification. In fact, for all the signatories, qualifications so outweighed ratepayer interests that in the 13,089 words of the agreement the word "ratepayers" is tellingly absent.

   In formal comments to the Public Utilities Commission, I pointed that out for WaterPlus and then added, "This glaring omission demonstrates as clearly as anything could that the parties filing the agreement did not have ratepayers in mind when they negotiated it." Rather than cost to ratepayers, the predominant interest of the mayors and the other signatories to the agreement when they negotiated it was to use it to show the state Water Resources Control Board such community due diligence that the board would rescind its cease-and-desist order potentially so ruinous to us all. The mayors had come to realize that the project they had chosen to support could not meet the state deadline, or any date even close to it.

   In its attempt to avert economic Armageddon, wittingly or otherwise, the agreement shows solid local support for Cal Am and its water-supply project which, without effective PUC cost controls, could itself be an economic disaster for our community. That is why, in the agreement, the mayors proposed three major possible ways to control costs: securitization, groundwater replenishment (GWR), and state revolving-fund low-interest financing. Securitization and GWR in theory could remove profits, reduce interest, and eliminate taxes via public financing. The trouble is that none of these three fixes is likely to work. Securitization in California water financing is illegal. The agreement itself acknowledges that GWR when used with desalination (the "portfolio" proposal) would be more, rather than less, costly than desalination used alone. And a private company like Cal Am is not eligible to receive state revolving-fund financing. The agreement proponents have said they plan to seek changes in the laws or their interpretation but so far have made no progress in that direction. So when we look at this picture, are we seeing the real thing or a Potemkin village, like a two-dimensional store-front in a Western movie?

   My comments to the PUC on the agreement ended with this alternative cost-savings proposal: The PUC should require Cal Am to offer the entire privately-owned portion of its water-supply project for sale as soon as it is completed to a local public agency at cost plus ten percent plus any actual shareholder equity invested in the project at the time of the sale. Rather than only tens of millions if the mayors' fixes actually worked, this requirement could save ratepayers hundreds of millions of dollars over the amortization period of the loans used to finance the project-savings in profits, taxes, and inflated interest and management charges customers would have to pay Cal Am but not a public agency. This proposal allows Cal Am to earn a fair profit without breaking any county laws or the ratepayers' bank.

   For details, please visit the WaterPlus website:, which also contains the agreement, together with the WaterPlus comments on it.

Ron Weitzman
President, WaterPlus

Cedar Street Times is a free weekly print and online newspaper published in Pacific Grove, California. Click here to download the entire issue from August 23, 2013. (pdf file) This Guest Commentary is on page ten.

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