Monday, August 6, 2012

45% Water Rate Increases at AWA Could Soon Be Reality

On July 26, the Amador Water Agency Board directed staff to send out notices informing ratepayers of five water rate increases over the next 4 years, averaging 31%. Amador Water System customers (Jackson, Ione, Sutter Creek, Plymouth, Drytown, Amador City and Martell) can expect an average 26% increase over 4 years. Upcountry’s CAWP system will get an average rate increase of 45%. Camanche rates will increase an average of 19%, and LaMel Heights rates will go up an average of 28% over the 4-year period.

Members of the public attending the meeting were surprised that the AWA Board would ask for rate increases with their accounting in a state of disarray. As the Grand Jury noted, AWA’s auditor found that “the Agency's bank accounts have not been truly reconciled." Bill Condrashoff questioned, “Why would ratepayers give AWA more of their hard-earned dollars if AWA cannot account for what they are collecting now?”   Under Proposition 218, ratepayers have the right to protest the rate increase. If more than 50% object, the increase will not go into effect.   At the meeting, consultant Robert Reed gave a presentation on the still incomplete System-Wide Water Rate Study.

The rate study recommends raising rates five times over a 4-year span. In the first year, AWA’s 7,000 water customers will pay an additional $1,195,700 for water (an 18.5% increase). Four years of “automatic” Consumer Price Index (CPI) increases will then follow, giving a total customer water rate increase of 31% (assuming inflation is 2.5% per year). Over the first five years, the increase will generate an additional $7,900,000 ($1,100 per customer). In the rate study, Reed noted that the “automatic” rate increases may not be enough and that “additional water rate increases might need to be considered within the next five years…” The proposed rate increase is a further subsidy of the 16 specially favored landowners participating in the Amador Water System Community Facilities District.

Reed’s presentation showed that the CFD will generate only $120,000 to help with the debt service on the Amador Transmission Line. However, Reed’s March 2012 rate study assumed the CFD would generate $300,000. The $180,000 shortfall required an additional 4 to 5% increase to AWS customers. The Grand Jury found that the AWS CFD “appears only to be beneficial to a select number of developers and may not make any substantial decrease in the ATL loan debt.”   The AWA Board asked to review the rate increase notice before it is mailed to ratepayers. AWA attorney Steve Kronick said that the Board may need to hold a special meeting before the next regularly scheduled meeting on August 9th to approve the notice.   Once the AWA Board approves the rate notices, they will be mailed to all water customers and landowners with water connections. Ratepayers will have 45 days to protest the increase. If more than 50% object, the increase will not go into effect.


  • Proposed CFD Discounts Infrastructure to 16 Landowners at Ratepayer Expense On July 26, the AWA Board adopted a resolution declaring its intention to establish a Community Facilities District (CFD) in the Amador Water System (AWS). AWA Board members said they believe that the CFD will reduce the need for future rate increases. However later in the same meeting, the Board voted to send out notices to raise rates for all Amador Water Agency water customers. Though the CFD will only include 16 property owners (208 parcels totaling over 20,000 acres), it will affect all AWS ratepayers because the 16 landowners will be guaranteed water treatment facilities at a 60% dicount. Ratepayers will make up the 60% difference with higher water rates. No documentation of how the tax amount was determined was presented to the Directors. Bill Condrashoff explained the problem for existing ratepayers: “The most recent fee study from AWA shows that the cost of treatment is over $4,000 per household. Participating in the CFD will cost only $1,500 to reserve treatment. Existing ratepayers will pay higher rates to make up the difference. This plan is just another ponzi scheme to extract money from ratepayers”.

  • AWA has scheduled a public hearing on the CFD for August 27, 2012, at 9:00 a.m.

  • AWA Rate Protest Procedure More Difficult for Ratepayers Based on complaints from the public and Howard Jarvis Taxpayers Association (HJTA) , AWA’s attorney recommended amending the protest procedures that the Board adopted in March. Specifically, the new procedure would require that each protest include the AWA customer account number and a parcel number. After a heated discussion with the public, the Board denied that requiring account numbers would deter ratepayers from signing a protest form. Although AWA only needs a name and address to identify a service connection and the responsible ratepayer, customers will now have to find their parcel number and account number in order to exercise their Constitutional right to protest. Back in 2010, AWA refused to disclose account information for Upcountry ratepayers, claiming that ratepayer indentification information is confidential. The new Prop 218 procedure requires supposedly confidential information on protest forms, which will be availalable to the public after they are submitted to AWA.
  • AWA’s General Manager and Attorney instigated the changes, making a repeat of the successful 2010 rate protests more difficult. The Directors denied involvement. However, when asked where the funds came from to pay the Attorney, it was disclosed that the Directors had set up an $80,000 account for the General Manager to use as he saw fit. All the AWA Directors support a policy whose only practical effect is to disenfranchise their constituents, suggesting that there is more to this story than was disclosed in public. David Evitt commented, “If the Directors respected democracy, they would explain to their constituents why they need a rate increase and accept the result of the protest. Instead, they are changing the rules because they do not dare tell current ratepayers that they are paying for new facilities that will benefit someone else.”
  • Board Approves $200,000/Year General Manager Contract The AWA Board approved a contract with General Manager Gene Mancebo. Mancebo’s annual salary is $137,004 with 10+ weeks of paid leave and other fringe benefits estimated at approximately $68,000. Ratepayers will pay about $200,000 ($17,000 per month) for Mancebo’s employment as GM, even though AWA’s books are in such bad shape that no accurate audit can be prepared for at least the last two years. The list below shows what the AWA Board agreed to in exchange for Mancebo’s services:
    • $137,004 salary
    • $500/month car allowance
    • $60/month cell phone allowance
    • Health insurance for Mancebo and his dependants
    • Dental Care
    • Vision Care
    • Life Insurance $300,000
    • Personal Disability Insurance
    • Worker Compensation Insurance
    • Retirement Benefits
    • 25 Days Paid Vacation Leave
    • 12 Days Paid Sick Leave
    • 15 Days Paid Administrative Leave
    • Paid Holiday Leave
    • Other Discretionary Benefits



      • AWA Spends $79,013.72 on Attorney in 6 Months In the last 6 months, the AWA Board spent nearly $80,000 of ratepayer funds on legal issues. $25,000 was spent on the recent rate study and the CFDs that are still not complete. $8,400 in attorney fees was used to respond to public records requests, including a letter he wrote to explain why AWA would not provide the publicly-requested financial documents tracking restricted funds. The Directors voted to refuse to disclose AWA’s financial status, and the “66013” lawsuit was filed because that was the last option for finding out what happened to the money. $7,000 went towards the legal issues specifically related to the “66013” restricted funds suit filed in March 2012. The suit asks that accurate financial reports be produced. Ken Berry commented, “AWA still has not produced accurate reports and the Board is still spending ratepayer funds on their attorney to avoid producing the reports.” Asked if he thought there was any connection between the “66013” lawsuit and the consolidation and its rate increase, Berry said, “I think it is clear that the Directors know that ratepayers and voters demand accountability for public funds. The lawsuit has already demonstrated that the Directors cannot explain where the money has gone. What else can they do but try to get another rate increase before their mismanagement is exposed? They should hire a bookkeeper to account for the money, not pay their attorney to delay that accounting.”
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