Felton Water News 
Tod Landis

If you are looking for information about Felton FLOW, www.feltonflow.org is the place to go. 

July 27, 2008

CalAm and the SLVWD entered into a purchase agreement just before the eminent domain court action was to commence.  The deal calls for for the company to receive $10.5 million, and for the district to assume the remaining $2.9 million dollar debt rfor the Kirby Street plant.  The settlement agreement itself is on the SLVWD web site:   Settlement Agreement.

FLOW's victory BBQ yesterday was yet another great "feel good" moment.  FLOW listed my wife and I as honored guests, which, as a practical matter, meant free hot dogs.  They tasted very fine.   Thank you, FLOW! 

Former PUC Commissioner Loretta Lynch attended the  celebration.  Lynch was on the PUC during the time energy companies "gamed" the California energy market.  She was a Gray Davis appointee who disappointed him by blowing the whistle on the cozy reslationship between the PUC and corporations, even suing her own commission.  (One of the most extraordinary things I learned while working on the CPUC consolidation proceeding was that Ammerican Water executives and former executives were among those teaching CPUC staff how to decide water rate cases!) 

Which brings me to the real point of this note...

Felton's experience with the CPUC, much of it documented here, is evidence that the commission now serves the very corporations it should be policiing.  And that is because the California governor's office now serves those corporations and makes commisioner appointments to the CPUC that meet their approval. 

In the case of Felton, this meant that a series of CPUC rate increases were granted that should not have been.   And that meant an acqustiion price that should not have been.  I'm guessing the company harvested a $5 million gain on the sale of the disttrict (figure $3 million for the acqusition, $2.5 million dollars spent for legal and "perception management" services, leaves about $5 million.  The water bond is a wash as far as the company is concerned.  Profits like that are a real incentive for the trans-nationals to do this again and again.  Hopefully we can learn the actual profit figure.

Which brings me to the work we need to do...

We have watch dogs who aren't watching when our governor makes odorous CPUC appointments like John Bohn (see the next post) and Michael Peevey.  Let's understand that process a little better.  Our state senate confirms the governor's  CPUC appointments, so let's find out how our state senator, Joe Simitian voted and how he plans to vote in the future.


Here is a partial biography of  John Bohn, one of the CPUC commissioners and the commissioner who takes the lead on water issues, just copied (5-6-07) from his bio on the CPUC web site:

In addition to his duties at the CPUC, Commissioner Bohn was recently elected as a Director of the National Endowment for Democracy in Washington, D.C. and to the Advisory Board of the Yale Institute for Corporate Governance and Performance. He also serves as Trustee of Northern Trust Multi-Advisor Fund, an international multi-advisor investment fund of the Northern Trust Company, and is a member of the Capital Markets Reform Commission, chartered by the U.S. Chamber of Commerce to re-evaluate the operation of U.S. capital markets in light of globalization. Commissioner Bohn is a principal in GlobalNet Partners, N.A., LLC, a global advisory and consulting firm that provides market focus, strategic advisory and active client development services as well as management and capital to U.S. and foreign firms. Commissioner Bohn is also a member of The Council on Foreign Relations in New York, and a director of the World Affairs Council in San Francisco. He recently stepped down as Chairman of the Center for International Private Enterprise and as a member of the Executive Committee of the U.S. Chamber of Commerce in Washington, D.C.

Prior to his present position, Commissioner Bohn was a co-founder and Executive Chairman of CheMatch.com (now Chemconnect), an Internet based trading exchange for petrochemicals. He spent 1-1/2 years at Burson-Marsteller, the world’s largest public relations firm, where he served as Managing Director, focusing on international markets, and economic resources issues, and was special advisor to the Government of Korea during the Asian financial crisis. From 1989-1996, Commissioner Bohn served as President and Chief Executive Officer of Moody’s Investors Service, the world’s leading credit rating and financial analysis company, and a major publisher of financial information.

In 1981, Commissioner Bohn was asked to join President Reagan’s administration. He served first as special assistant to Treasury Secretary Don Regan and was subsequently appointed by President Reagan as U.S. Ambassador and Executive Director of the Asian Development Bank. In 1984, President Reagan appointed Commissioner Bohn to the post of Vice Chairman of the Export Import Bank of the United States, a U.S. Government corporation that finances and insures the sale abroad of American produced goods, and thereafter to the position of Chairman and President of the Bank, in which capacity he served until 1989.

Please note the part I highlighted in bold and the other troubling affiliations.  His partnership provides "active client services"  for US and foreign firms, while he serves on the CPUC.   Certainly ounds like a conflict of interest. Here's an interesting related note, from December 15, 2006:

NARUC President Taps New Vice Chairs for Water Committee

National Association of Regulatory Utility Commissioners President Jim Kerr appointed California Public Utilities Commissioner John Bohn and South Carolina Public Service Commissioner John Howard as Vice Chairs of NARUC’s Committee on Water.  

This remainder of this site provides, now old, "nitty gritty" details concerning FLOW's PUC proceedings and links to documents related to those proceedings, but it is not an official FLOW site.  It also includes links to information concerning the SLVWD acquisition of the Felton water district:

If you find errors here, please contact me at 831 338 6967, and I will correct them.

June 26, 2006

The Wall Street Journal is carrying
 a front page story about RWE and Felton is prominently featured.  Here's a quote "RWE found itself fighting in town referendums and state legislatures across the country, winning many battles but losing the war".  Felton is one of those places where RWE is losing, because of us  Here's another quote:

Seeing its operations under attack, RWE became embroiled in Santa Cruz County politics. Mark Stone, a county supervisor, says officials from American Water's local subsidiary told him they would torpedo his election bid in 2004 if he supported a public takeover. A spokesman for the local unit says no threat was issued but acknowledges the company sent mailings to people urging them to avoid candidates who would raise taxes to fund a takeover by the government.

The assessment district I proposed in the Fifth District Supervisor's race now exists.  The important question, now, is how much Felton will need to pay for the CalAm property.  Keep your eye on the company's rate base, which is the amount the company actually paid for the district and is between $3 million and $4 million.   We want to hold the acquisition price down as close to that amount as is possible.

The WSJ article is on the front page of today's paper and on the the Felton FLOW web site:  http://feltonflow.org/.  Santa Cruz Sentinel coverage of  the flier is here:  http://www.santacruzsentinel.com/archive/2004/January/27/local/stories/08local.htm

Posted June 24, 2006
The "Felton Amendment" permitting the SLVWD to annex the Felton water system is on the agenda for the LAFCO meeting Monday, June 26th, 7:00 pm, in the Zayante Fire Station.   The staff report recommends annexation.  Look for the report on this page:  http://www.santacruzlafco.org/pages/agendas.html


May 13, 2006
On May 5th, CalAm filed a PUC application (A.06-05-005) to issue $187,000,000 in public stock and debt securities.  

From an earlier statement signed by nine US mayors and elected officials in California , Kentucky, and Illinois, including Supervisor Mark Stone:

The former CEO of Thames Water, Bill Alexander, said in March 2003 that RWE’s
global water subsidiary "would not go anywhere it was not welcome.�1

Neither RWE, Thames Water, American Water, nor any of its state or local subsidiaries,
has upheld this company directive. RWE’s announcement that it will pursue an initial
public offering (IPO) for American Water demonstrates that the company’s leadership—
headed by president and CEO Harry Roels—is out of step both with its customers and
with market realities. RWE has been unwilling to evaluate fair offers from municipal
buyers, who are seeking to fix the problems created by RWE. 
We call on Harry Roels and the Executive Board to allow interested municipalities such
as ours to negotiate the purchase of our water utilities before RWE proceeds with an IPO
for American Water.

The complete letter is here.

May 13, 2006

The PUC, which had denied CalAm's application to consoidate the Felton and Monterey Districts, also denied Felton FLOW's attorneys compensation for their work.  The complete decision is here and Santa Cruz Sentinel coverage is here.  

Unaudited financials CalAm filed with the PUC include  $2.4 million for one year's "Regulatory Expense".  Scanning down through this web page, you may wonder how much of that "Regulatory Expense" went to CalAm's lawyers for clever legal maneuvers that backfired.

May 10, 2006
Felton FLOW's comments concerning intervenor compensation are here.  It appears that the denial of compensation for FLOW's attorney fits in with a larger pattern:  compensation was also denied for the attorneys representing Larkfield and Lucerne in similar cases.   A few Felton residents are driving up to hear the decision, tomorrow (May11th), and I'll be  there too. 

April 27, 2006

Santa Cruz County filed a statement in support of the  DRA comments:  "the County hereby joins in each and every comment made by DRA on this matter, and respectfully requests that Felton FLOW be awarded full intervenor compensation in accordance with its request." 

We also learned that  there is no requirement that the judge notify the parties to a proceeding of a proposed decision like this one.  More and more CPUC rules and practices remind me of the game of Squamish, as described by Mad magazine in the 1960s.   No one wins at squamish, because no one can figure out the rules:

Image above Copyright E.C. Publications
click for details

At the April 27th Public Utilities Commission meeting, Commissioner Brown requested that the decision regarding Felton FLOW intervener compensation be held over for one meeting for further review.   His unopposed request was granted.  The next Commission meeting is May 11th.   The judges decision denying FLOW compensation had been on the commission's consent agenda.   Quid, Me Anxius

Next:  the RWE divestiture.   Stay tuned.

April 26, 2006

"The Opinion seeks to silence stakeholder and public input and deny affected parties due process rights by applying Commission Rule 77.7(f)(6), which allows for waiver of the otherwise applicable comment period.  ... This attempt to stifle the public comment must not be allowed. ... Felton FLOW should be granted compensation because it did make a substantial contribution to the proceeding. "

The complete statement, signed by Jason Reiger for the DRA is here.

April 26, 2006

My own letter to the commissioners protesting the judge's decision (see below)  is here.  

Here's what I thought was most important:  "FLOW witnesses described multiple water line breaks caused by poorly supervised CalAm work crews, one that endangered public health.  Also sloppy CalAm work on roads that created hazards, one that nearly broke a horse's leg.  And public inconvenience when a street was closed without notice.  Bacterial contamination of water.  Delayed, unhelpful telephone customer service.  An annoying and costly company disinformation campaign, including a company executive's use of automated phone messages to mislead the public."

April 21, 2006

The proposed decision by the Administrative Law Judge assigned to the Monterey-Felton district consolidation proposal denies the attorneys who represented Felton FLOW any compensation.   A fair summary of the judge's ruling is that none of the evidence presented by FLOW mattered.  His ruling is here.  

The testimony presented by Felton residents didn't matter, therefore, the attorney who helped them introduce it should not be paid.  The same judge earlier advised FLOW representatives that to be taken seriously,  FLOW witnesses would have to testify under oath and available for cross examination by CalAm attorneys.  Squamish anyone?

Much of the material ignored by the judge is linked from this page, including FLOW's original protest (scroll down and you will see it).   The chlorine gas leak, the dangerous road work, the main breaks, and poor customer service resulting from consolidation--none of it matters.  The fact that the neighboring, publicly-owned water district could provide water for less than half as much did not matter.  The fact that more public funds were invested in the Felton water system than private did not matter.   These were the issues raised by FLOW, and if the CPUC were doing its job, they would have mattered when the commission considered a consolidation of water districts separated by forty miles. 

February 6, 2006
From the LA Times:   "Gov. Arnold Schwarzenegger paid thousands of dollars in campaign money to a California Public Utilities commissioner three weeks after receiving contributions in the same amount from a company the commissioner regulated.  Susan P. Kennedy, now the governor's chief of staff, received $25,000 from his campaign account 21 days after AT&T donated $25,000 to the fund. "

Kennedy was the "Assigned Commissioner" for some of the Felton PUC proceedings. 

February 6, 2006

SLVWD selected special acquisition counsel at its December 15th meeting:

The district selected Rutan and Tucker, LLP.  They were selected over the firm representing OMI-Thames customers in Stockton, and the two firms that represented Montara when it succssfully negotiated a purchase of the CalAm district there.  Hopefully, the committee that selected R&T knew what it was doing.  The agenda for the  April 26, 2005 public hearing of the Board of Supervisors of the County of Santa Cruz on establishment of Community Facilities District No. 1. (Felton) is here linked as agenda item 47.   It includes these items which were called out in the  SLVWD agenda packet:

   -March 15, 2005 Letter of Santa Cruz County’s County Administrative Officer
   -Joint Facilities Agreement between the County of Santa Cruz and  the San Lorenzo Valley Water District
   -Letter of Meyers/Nave on behalf of California American Water Company beginning on page 102 of the Attachment.
March 3, 2005

On Friday, CalAm made a last-minute motion to strike my testimony concerning problems with CalAm's maintenance work, because it contained hearsay evidence.  Hearsay can be introduced as evidence in PUC proceedings, but only with a judge's permission.  FLOW's attorney had not even had time to read the motion before the judge ruled in CalAm's favor.  The result was that all of  my testimony having to do with maintenance problems was removed from the formal record. 

I testified again on Monday, and got some of the material back in the record, but there was no way for me to get all of it back in, particularly the Hillcrest problems which we really wanted to have. Ed O'Neill did a brilliant job extracting information about Monterey tank leaks, the chlorine gas leak and other problems from an uncooperative CalAm representative.

FLOW scrambled and Lisa Meyer, Maria Lindsay, Alexis Krostue, and Connie Barr, all showed up for the hearing Wednesday.  They all made great statements--and I'm  sure it surprised the judge that we could carry this off. 

It turns out that their "motion to strike" completely backfired on CalAm, because Lisa provided many more details about the problems on Hillcrest then I could.  Worse for CalAm, she also contradicted earlier testimony by a CalAm representative and had the photos to back it up.  CalAm has some serious explaining to do.   More here.

January 12, 2005

At a PUC hearing last week a PUC Administrative Law Judge denied CalAm's motion to strike FLOW's testimony against the company.  He also instructed CalAm to file an amended application to consolidate the Felton and Monterey districts on Friday, January 14th to correct errors made by CalAm in its original filing and to include the effects of CalAm's latest 60% rate increase application

CalAm now has  a serious credibilty problem.  Just about everybody at these hearings--at least those not employed by the company--knows about the misleading "good news" phone message (audio and transcript below) and has heard about the $45 million mailer.  Even the judge has pointed out misleading company remarks.
Now comes FLOW's testimony, which links customer accounts of problems they have experienced, letters by California American Water Company executives,  and evidence obtained by discovery to show that managing the Felton water district from Monterey has simply not worked and will not work.   Work crews were inadequately supervised.  Customers who should have been boiling their water weren't warned to do so.   CalAm's road repairs were shoddy and hazardous.

The PUC can take action to improve things, and there are some indications are that it will.  More to come...

December 22, 2004

CalAm has filed a "motion to strike" portions of PUC testimony by representatives of FLOW and the Monterey Penninsula Water Management District.  Their motion is here.  (CalAm particularly doesn't want you to read pages 5 to 9 of FLOW's testimony--the ones where we list the service problems)

The motion came by email in a document named:  "Motion to Strike Portions of Testimony of ORA, FLOW, MPWMD.DOC"  suggesting that the company originally intended to strike the Office of Ratepayer Advocates testimony too, but thought better of it.

Among other things, FLOW's testimony refers to two letters written by Cal Am President Paul Townsley to a Felton resident.  I think those letters clearly show the degree to which CalAm company management had lost touch with Felton operations, but judge for yourself:  The letters are attachments 3 and 4 in the attachments to FLOW's testimony.  The testimony is here, and the attachments are here.

December 15, 2004

Today, a PUC Administrative Law Judge ruled that FLOW is eligible for intervenor compensation in the consolidation proceeding.  Judge McVicar added "FLOW will enjoy a rebuttable presumption of eligibility for compensation in other PUC proceedings commencing between December 15, 2004 and December 15, 2005."  Presumably that applies to CalAm's new application for yet another enormous rate increase.  The complete ruling is here as a DOC file. 


December 8, 2004
Felton FLOW's Intervenor Testimony, filed December 8th, is here:

FLOW linked customer accounts of their experiences, letters by California American Water Company executives, and evidence obtained by discovery to show that managing the Felton water district from Monterey caused serious problems.   Work crews were inadequately supervised.  Customers who should have been boiling their water weren't warned to do so.   Road repairs were shoddy and hazardous.
FLOW also showed that Felton customers would be far better off if their district were annexed by the San Lorenzo Valley Water District and that this is a feasible alternative. 
Jondi Gumz scooped everybody:  "California American Water has filed papers with the state proposing a 108 percent rate increase for its 1,315 customers in Felton.

The proposal amounts to a 60 percent increase on top of the 44 percent increase authorized in May and then put on hold, according to Danilo Sanchez of the Public Utilities Commission Office of Ratepayer Advocates."

More at:  "Rate hike proposal takes customers by surprise"


An email from Alexis Krostue describes it:

Last night was great!  My highlights were

the guy who read the phone call message (transcript below) from Cal Am with the "good news" saying he felt embarassed that Steve Leonard was there and would he like to read it instead,
Jim Mosher putting ____ in his place,
Lisa talking about her horse falling in a hole from Cal Am's shoddy work ( I saw the Cal Am boys talking to themselves after that one),
Patrick telling Cal Am to keep Evan from eating our cookies and Evan saying "I paid for a ticket",
Glenn saying when Cal Am's customer service gets worse they don't lose customers, they make more  profit,
Cal Am refusing to give us the numbers of the rate increase and
finally, the judge helping put away tables and chairs!

Oh and when I got home from Monty's last night I had a message from someone who was very impressed with my razor sharp mind and obvious grasp of numbers.  I'm now the head of Cal Am's accounting dept.
Shortly after the last PUC Decision was reached, a CalAm spokesman left a misleading phone message on answering  machines belonging to ratepayers in Felton.  In it, he said "Today the California Public Utilities Commission  approved plans to keep Felton water rates at their current level.  They wll consider a plan to consolidate our Felton rates in the coming months.  This good news means water rates won't go up at this time."

But rates were going up.  The PUC had actually approved a 35% increase in Felton water rates, effective immediately following the PUC decision (see details at the bottom of this web page).  The difference between the new rates and the old rates is being recorded in a "balancing account".  CalAm wants to collect that balance, which will be about $300,000 next May, with a new surcharge.

Audio for CalAm's voice message is here, and here is a transcript:


This is Steve Leonard from California American Water calling with good news!

Today the California Public Utilities Commission approved plans to keep Felton water rates at the current level.

They will consider a plan to consolidate our Felton rates in the coming months.

This good news means that your water rates won’t go up at this time. You will receive more information about this decision by mail.

If you have any questions about any water issues, visit our site at

Or call us at 335-1915.

The PUC has scheduled two public participation hearings to hear from CalAm customers about the company's proposal to consolidate Monterey and Felton:

           December 6, 2004 at 7:00pm
           Monterey Conference Center - Ferrante Room II and III
           One Portola Plaza
           Monterey, California

           December 7, 2004 at 7:00pm
           Felton Community Hall -- Main Auditorium
           6191 Highway 9
           Felton, California

The "Scoping Memo" for the PUC proceeding to consider the consolidation (A.04-08-012) is online at:  http://www.cpuc.ca.gov/PUBLISHED/RULINGS/40273.htm.


Felton FLOW's "Notice of Intent" to claim intervenor compensation is here:  NoticeofIntent.doc.  CalAm's response is here:  Response.doc

Here is the main reason we are doing this:
We want legal representation during the evidentiary hearing part of these proceedings.  We have learned that a corporation's legal team prevented another citizens' group  from introducing evidence, and we are concerned that the same thing will happen to FLOW.  We have a story to tell that will not be heard if CalAm's high-priced lawyers can block us.

The Adminstrative Law Judge assigned to hear the CalAm application to consolidate  the Felton and Monterey  water districts ruled Monday, Sept 20th, to allow Felton FLOW to intervene in the PUC proceedings. 

He also ruled that Felton FLOW's protest, which is based on "worsening of service", merits consideration.  In support of its protest,Felton FLOW made these six points:
1.  The two districts are separated by about 40 miles
In fact, Mapquest says it is 49.5 miles from the New Leaf Market in Felton to the Monterey City Hall.  Maintenance trucks moving between the two districts will need to  pass through "the fishhook" corridor in Santa Cruz, which is heavily congested during rush hours.

The company claim that it can remotely detect problems in one district from another just doesn't hold water.  In Monterey, a CalAm water leak went undetected sufficiently long to trigger a landslide into the Carmel River.  In Seaside a leak continued for some five days.   ("Seaside Water Leak Continues for Five Days" by Virginia Hennessey, Monterey Herald, 8/25/04)

2.  Monterey and Felton are much different water districts
Monterey faces a critical water shortage.   Felton has a water surplus.  Parts of the Monterey district have an urban character.  All of Felton is rural.

3.  Future Monterey water costs are unknown
Although the CalAm application specifies that the cost "to develop" new Monterey water sources with not be borne by Feltoners, it is not clear who will bear the future operating costs.  The Monterey Herald reports that operating a Monterey desalination plant could cost as much as $5.97 million a year.  (see "Moss Landing desalination plant favored..." by Dennis Moran, Monterey Herald, August 10,2002)

4.  Felton residents would benefit from joining SLVWD instead
Santa Cruz LAFCO has already considered this question.  Because the benefits were clear, it extended the SLVWD Sphere of Influence to include the Felton district.  Incidentally, even economists hired by CalAm described the SLVWD as a "well run" district.

SLVWD is contiguous with CalAm's Felton district.

CalAm customers in Felton would pay less if they were in the SLVWD.

5.  Felton residents want to leave CalAm and join the SLVWD
Felton FLOW, which stands for Friends of Locally Owned Water, has become one of the most popular clubs in our community.  It organizes movie fundraisers and, yesterday, a  barbecue and fundraising auction, all of which are well attended.  About fifteen Felton residents regularly attend meetings of FLOW's steering committee and many more residents are active in FLOW committees.

6.  CalAm is poorly run.  Scaling back CalAm operations makes sense
The CalAm  management structure is clearly overtaxed.  We can see this in the way that several Felton maintenance projects were botched, and in the large number of disgruntled CalAm customers who regularly turn out for Felton water meetings.   The problem seems to be a lack of on-site supervision by people who know how to run water companies.

The Felton FLOW protest is here:

CalAm's response to our protest--and the protests of Santa Cruz County, the Office of Ratepayer Advocates, and the Monterey Penninsula Water Management District is here:

Transcripts of the Pre-Hearing Conference are available from:
Ana Gonzalez
Hearing Reporter
California Public Utilities Commission
505 Van Ness Avenue, Room 2106
San Francisco, CA  94102
(415) 703-2503

More info at the Felton FLOW website.
CalAm customers can comment on the CalAm proposal to consolidate the Felton and Monterey districts by sending email to public.advisor@cpuc.ca.gov   You can still send comments.
Use the salutation "To the Public Advisor:" and refer to PUC application A.04-08-012, the proposal to consolidate CalAm's Felton and Monterey
water districts.  Include your name, address, and phone number.
Polite comments, the more specific the better,  will probably have the most impact.
From "Seaside Water Leak Continues for Five Days", by Virgina
Hennessey, Monterey Herald, 8/25/04:  "Leonard said the tank overflowed for about 17 hours, causing as much as 50,000 gallons of water to run down a hillside, triggering a landslide into the Carmel River."
Related Links:
  CalAm Leak Damages Property, Letter to the Editor, Monterey Herald
  Monterey Herald Editorial, 8/30/04

10:00 a.m.
ALJ McVicar
Comr Kennedy

A.04-08-012 (PHC) - In the Matter of the Application of California-American Water Company for Authority Pursuant to Public Utilities Code Section 454 to Restructure and Consolidate its Rates for its Monterey and Felton Districts,
Commission Courtroom, San Francisco

Copies of this application are available from the Office Connection in Felton for about $4.

CalAm has filed another PUC application "for Authority Pursuant to Public Utilities Code Section 454 to Restructure and Consolidate its Rates for its Monterey and Felton Districts submitted to the State Public Utilities Commission".  It is listed in written correspondence for the Board of Supervisors meeting on the 24th, which is on the county website.  Anyone interested should be able to get a copy of the application from the Clerk of the Board's office, and I will try to leave a copy with Office Connection.
Stephany Aguilar recommends "What's So Special About Special Districts:  A Citizen's Guide to Special Districts" as a source of information.

The Little Hoover Commission report mentioned by Carol Evans, in the talk sponsored by CalAm, is described here:  Special Districts:  Relics of the Past or Resources for the Future?  Among its findings:  "The commission found that many special districts are clearly doing a good job - reliably and responsibly making California a safe, healthy and prosperous place to live.
The Santa Cruz County Board of Supervisors passed a resolution, introduced by Mark Stone, and drafted by county staff to take these steps"
1. accept Clerk's Certification of Examination of Mello-Roos District Formation Petition;
2. waive the advance funding requirement for the formation of the Community Facilities District as provided for in the County's Policies and Practices for Land Secured Financing of Public Improvements;
3. authorize the expenditure of budget funds not to exceed $50,000 for Bond Counsel and Financial Advisor in the formation of the District and authorize the County Administrative Officer to negotiate and sign the appropriate agreements; and
4. authorize the County Administrative Office to work with the County's Bond Counsel, the County's Financial Advisor, representatives of FLOW and the San Lorenzo Valley Water District on satisfying the conditions for establishing a Community Facilities District which would finance the acquisition of the private water system now serving Felton.

It was a wonderful, feel-good moment!  

Creation of a Felton Community Facilities District is on the agenda for the Board of Supervisor's meeting August 3rd:
    Correspondence   (this is a large PDF file)
    Agenda for Board Meeting
A special meeting is scheduled for 7:30 pm.

The full PUC decision on the CalAm rate case is available online at:

The "Conclusions of Law" part, which says neither Santa Cruz
County nor Almquist objected to the final settlement, is at:

Technically, this was an "uncontested settlement":
We reach this conclusion notwithstanding Santa Cruz's objection, stated on brief as, "The settlement between Cal-Am and ORA fails to meet this [Rule 51.1(e) approval] standard, particularly with respect to the recovery of the acquisition premium paid by [American Water Works] to acquire the Citizens facilities." First, Santa Cruz did not file and serve comments contesting the settlement as it was required to do by our Rules of Practice and Procedure, Rule 51.4, if it desired to contest the settlement.4 Under Rule 51.5, "Any failure by a party to file comments constitutes waiver by that party of all objections to the stipulation or settlement...." Second, the common CalAm and ORA position on the Citizens acquisition premium issue to which Santa Cruz objects on brief is not mentioned in, nor do we consider it part of, the settlement.5 ORA evaluated CalAm's acquisition premium figures in its pre-hearing investigation, concluded that CalAm had proven that total synergies exceed the annual acquisition premium amortization cost, and recommended in its direct showing that CalAm's acquisition premium amortization expense amounts be adopted.6 ORA went on to recommend that in future GRCs CalAm be allowed to recover its full acquisition premium amortization expense without having to demonstrate synergies savings, in exchange for all, rather than 90%, of any excess synergies going to customers. We discuss and decide both the synergies savings issue and the revised sharing proposal on their merits later in this decision.  [italics added  Tod]

Rule 51.4
provides a 30 day comment period, which the county ignored.  In the "Settlement Discussion" part of the decision we read:

    Whenever a party to a proceeding does not expressly join in a stipulation or settlement proposed for adoption by the Commission in that proceeding, such party shall have 30 days from the date of mailing of the stipulation or settlement within which to file comments contesting all or part of the stipulation or settlement, and shall serve such comments on all parties to the proceeding. Parties shall have 15 days after the comments are filed within which to file reply comments. The assigned administrative law judge may extend the comment and/or response period on motion and for good cause  [italics added  Tod].

Related Links

The ALJ's recommendation
Santa Cruz Sentinel, Water rate hike recommended in Felton

Title Page 


      MAILED 05/11/2004

      Decision 04-05-023 May 6, 2004


    In the Matter of the Application of the California-American Water Company (U210W) for an Order Authorizing it to Increase its Rates for Water Service in its Sacramento District to Increase Revenues by $8,198,700 in the Year 2003; and $1,955,000 in the Year 2004.

    Application 02-09-030

    (Filed September 19, 2002

    And Related Matters.

    Application 02-09-031

    (Filed September 19, 2002)

    Application 02-09-032

    (Filed September 19, 2002)

    Application 02-09-033

    (Filed September 19, 2002)

        Lenard G. Weiss, Attorney at Law, for California-American Water Company, applicant.

        Carol Dumond, Attorney at Law, and Raymond A. Charvez, for the Commission's Office of Ratepayer Advocates, protestant.

        Edward W. O'Neill, Attorney at Law, for County of Santa Cruz, and Montara Sanitary District; Jeff Almquist, Attorney at Law, for County of Santa Cruz, El Solyo Associates, and himself; interested parties.

        [I've deleted material here...see the version on the PUC web site.  Tod]

      This decision approves a partial settlement agreement between California American Water Company (CalAm) and the Commission's Division of Ratepayer Advocates (ORA), and grants CalAm test year 2003 and test year 2004 rate increases of $254,700 (34.6%) and $70,800 (7.1%) in Felton district, $327,700 (21.1%) and $58,200 (3.1%) in Larkfield district, and $5,487,200 (33.9%) and $816,000 (3.7%) in Sacramento district. CalAm may file the test year 2003 increases immediately; the 2004 increases are deferred to 2005 in accordance with the Commission's earlier order approving CalAm's acquisition by RWE Aktiengesellschaft, Thames Water Acqua Holdings GmbH (RWE). CalAm may file advice letters seeking additional increases in Sacramento district to recover amounts in its purchased power balancing and memorandum accounts, and expenses associated with its start up costs for surface water procurement from Placer County Water Agency. CalAm's requests to combine for ratemaking purposes Larkfield district with Sacramento district, and Montara and Felton districts with Monterey district, are denied. CalAm's request to withdraw Application (A.) 02-09-033, its Montara district general rate case (GRC), is granted.

Related Links

SLVWD selects Rutan and Tucker LLP

Felton Amendment Report-Santa Cruz LAFCO

Felton FLOW

PUC Decision on
CalAm-Citizens Merger

DOC File:  PUC Decision on CalAm-Citizens Merger

--  Details on Acquisition Premium

DOC File:  PUC Decision on
RWE Merger

-- Short-Term and Long-Term Economic Benefits to Ratepayers from Comment Decision

PUC Decision Granting
the Felton Rate Increase

-- Settlement Discussion

Old News
The Felton Water Situation
in November, 2003

Santa Cruz LAFCO
(scroll down to the "Felton Amendment" entries in August and September, 2003)
Notes from
December, 2002