Inyo County continues to strategize its approach to operating County water systems in Lone Pine, Independence and Laws after a Inyo County Board of Supervisors workshop presentation by County Public Works Director Clint Quilter earlier this month.
The County originally took over financial responsibility for the water systems from the Los Angeles Department of Water and Power (LADWP) in 1999, gaining complete ownership of the systems in 2005. The LADWP had proposed raising the water rates to the same level as rates in Los Angeles, prompting residential and County protest, and County involvement to keep the rates at a lower level.
However, according to Quilter’s workshop presentation to the Board in August, the user rates under County ownership have rarely generated enough funding to cover the cost of operations, let alone create and maintain a Capital Improvement Fund. Quilter estimated that, based on the California Department of Public Health model, capital improvements to the town water systems could come to about $370,000. Yet the County has been operating the water systems at an average annual loss over the past four years of $35,000.
The County has therefore been looking to a third party to lease the three town water systems for the next 15 years. However, as of this month, it is now taking a step back to create on Operational Plan with assistance from the California Rural Water Association (CRWA). The Operational Plan would identify operational requirements and activities, as well as a budget for contingencies, Quilter explained. A more specific understanding of what operation of the systems entails, as well as what expenses the County must budget for, such as upgrades to portions of the system that are more than 10 years old, will help the County craft a more well-defined scope of work and contract for a third party. Staff aims to complete the Operational Plan by Nov. 15 of this year.
Quilter expressed hope that a redefined scope would open the application process to a broader market of private, public, and quasi-public proposers. “If there’s a Mutual Water Company or a Community Service District that wants to do this, that would be great,” he said. The County had only solicited private contractors during the lease proposal application process, he added; two local companies, McMurtrie-Tanksley, Inc. and Owenyo Services, had expressed interest. With a new scope and baseline contract value, Quilter said the Board could approve a new operator by Jan. 31, 2014.
The baseline contract and newly identified operational costs could determine any potential rise in rates under new management, Quilter said. “We’ll do our best to get the operational cost to where it’s as efficient as possible before we consider adjusting rates,” he said. During the August workshop, Quilter had acknowledged that rates under a 15-year lease could double or even triple. The proposed 15-year lease would also significantly reduce local control of rates, he added, as any local input on rates would go through the “much less local” California Public Utilities Commission versus Inyo Cty.
County staff has begun evaluating rates in the area for comparison, in order to ensure that a double or triple in rates would still be within reason for residents. Typically, residents pay a base monthly fee plus an additional charge per 100 cubic feet of water, Quilter explained. Staff determined that the average Inyo and Mono County resident uses about 2,900 cubic feet of water, or 29 billing units, per month. From that average, staff calculated that Inyo County residents currently pay about $36.05 per month for their water. Had the LADWP continued to manage the County water systems, those residents would be paying about $140.46 per month, Quilter said. For further comparison, the average monthly rate for residents in Mammoth Lakes is about $90.33; in June Lake, $57.52. Municipal rates for Bishop are about $34.00.
Quilter also noted proof that residents whose water systems are regulated by the California Public Utility Commission (CPUC), as the Inyo County water systems in Lone Pine, Independence, and Laws would be under a 15-year lease agreement, pay significantly more than residents whose water systems are managed by municipalities, counties, or Public Utility Districts. For instance, Trona’s CPUC regulated water system costs residents an average of $137.92 per month. The CPUC regulated system in Bishop costs about $113.36, while the CPUC regulated system in Big Pine costs about $73.09 per month.
As Quilter concluded after the August workshop presentation to the Board, when it comes to how to (and who will) operate County water systems, “It will be some time before we make a decision.”