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PUC takes aim at water district funds

- MPWMD could lose half its budget


Published: December 31, 2010

A TOP official with the California Public Utilities Commission decided last week that the Monterey Peninsula Water Management District should not be entitled to $3.5 million in “user fees” that have been tacked onto customers’ water bills — a decision that could reduce the agency’s budget by 50 percent and prompt numerous layoffs.

In a proposed decision issued Dec. 21, Public Utilities Commission administrative law judge Maribeth Bushey rejected an application by California American Water to recover an 8.325 percent user fee it had been charging customers for the MPWMD’s Carmel River mitigation work.

The judge’s decision — which still has to adopted by the CPUC — could be devastating to the water district, established in 1977 to “manage, augment and protect water resources for the benefit of the community and the environment,” but which has drawn fire from many community leaders for its failure to alleviate the Peninsula’s longstanding water shortage. It was also the subject of a 2002 ballot measure, when 66 percent of voters recommended the water district be dissolved.

“If [Bushey’s] decision isn’t changed, and if we can’t work out a new funding arrangement with Cal Am, then we would have to [lay off] seven to 10” of the agency’s 26 employees, general manager Darby Fuerst told The Pine Cone Wednesday.

The MPWMD has a budget of about $7 million, half of which comes from water customers. “If [the decision] were to be adopted as proposed,” said Fuerst, who told The Pine Cone he’s retiring in mid-2011 after nearly 25 years of employment, “it would have a significant impact.”

The district’s steelhead program — which includes counting, monitoring and rearing — would probably be cut, as would the district’s riparian vegetation program, lagoon monitoring and numerous other Carmel River mitigation programs, Fuerst said.

Cal Am spokeswoman Catherine Bowie said Cal Am wants the MPWMD to continue the mitigation work, which is required by the State Water Resources Control Board to offset overpumping. “We don’t want to be in a position where we are not meeting the demands of the SWRCB,” Bowie said.

In July 2009, the 8.325 percent user fee was removed from customers’ water bills after Bushey questioned the fee and ordered Cal Am to find another way to fund the mitigation measures, which cost about $300,000 per month.

Since then, Cal Am has advanced the MPWMD about $4.1 million for the efforts.

While ratepayers haven’t been paying the user fee for about a year-and-a-half, it doesn’t mean they won’t end up eventually paying for it. “When the final decision is made, Cal Am can ask to recover those costs, with interest, from the ratepayers,” Fuerst said.

In her decision, Bushey was critical of Cal Am and the MPWMD and its motivation for the user fees, which are 88 percent higher than in 2006. Cal Am offered “no cost-justification for the proposed 88 percent increase ...” according to the judge.

While the MPWMD’s annual costs “were stable at $1.3 million to $1.7 million for many years,” costs in “recent years” have more than doubled “without explanation,” Bushey said.

She also pointed out that in 2000, the MPWMD spent nearly $1 million of the mitigation revenue to construct its new office building, and she questioned Cal Am’s accounting.

“Cal Am’s application [for the user fee] raises several issues, most notably several instances where duplication in effort and accounting may occur,” according to Bushey.

Former MPWMD director Ron Chesshire — who blasted the agency for discussing the issue at a meeting in closed session Wednesday — said if the MPWMD dissolved, it would ultimately save ratepayers money.

The MPWMD has “carried out some of [its goals] but has never really been good in augmenting the water supply,” he said. “It’s never really been more than a political football thrown about this area by groups wanting to restrict any development.”

Fuerst said MPWMD staff and attorneys are in the process of preparing comments in response to Bushey’s decision, which must be forwarded to the PUC by Jan. 10.

PUC commissioners likely won’t weigh Bushey’s decision until at least the last week of January.