The Partisan | A Sad New Cal Am Tactic New mailer, a signal of desperation, is filled with serious deceptions

OPINION |

By Royal Calkins

It should surprise no one, not even Cal Am’s pals in the business community, that the company will stop at nothing in its latest effort to prevent a public takeover of its water monopoly on the Monterey Peninsula.

Four years ago, in the run-up to ballot Measure O, the utility outspent takeover advocates by some 20-1 and ended up winning a close race that likely would have gone the other way if the company hadn’t bought so much deceptive campaign advertising.

At the heart of the Cal Am campaign in 2014, and an earlier contest, was the argument that the takeover process would distract the company from the crucial task of completing its much delayed desalination project. There were TV ads featuring actors walking along the beach, looking out to sea and declaring that the desal plant was just beyond the horizon. At the heart of the Cal Am campaign this year, predictably, is the same argument even though the project has barely drifted any closer to the shore. (Which doesn’t really matter to Cal Am because state law lets it charge its customers 110 percent of the cost of the project no matter the outcome. In the world of regulated utilities, failure is just as profitable as success.)

Now faced with a better-organized takeover effort following years of out-of-control rate increases, Cal Am has added a new trick. Last week it sent out an exceptionally deceptive mailer that instructs voters on how they can remove their names from the takeover petitions being circulated by Public Water Now.

Public Water Now (PWN) has just two weeks left to collect enough signatures to qualify a new takeover measure for the November ballot. PWN founder George Riley says the petition drive is doing just fine and called the latest Cal Am tactic “an act of desperation.”

The Cal Am mailer includes a coupon that petition signers can use to request that their signatures be removed. It also repeatedly accuses PWN of trying to deceive voters by claiming that residential water bills would be reduced under public ownership, which has proved to be the case elsewhere no matter how loudly Cal Am disagrees. See Missoula, Mt., and Nashua, N.H.

Cal Am maintains that water customers would see rate increases as a result of a takeover and that their property taxes would climb dramatically to cover the acquisition costs. PWN, however, forecasts that simply eliminating Cal Am’s automatic profit margin of 10 percent could allow the purchase to be financed without increasing property taxes.

Not surprisingly, considering the company’s record, Cal Am’s mailer contains other serious deceptions of its own. The most blatant involves what occurred after voters in the Santa Cruz County community of Felton agreed to buy out the Cal Am operation there.

PWN touts a Food & Water Watch study that found Peninsula water rates to be the highest in the country. Cal Am, which makes a practice of creating false and indecipherable comparisons, argues in the mailer that Felton’s rates under public ownership are higher yet.

But Cal Am says the average bill in Felton is $111 per month when it actually is significantly less. Cal Am correctly argues that property taxes in Felton went up dramatically to cover the purchase cost, but even accounting for that leaves Felton customers paying less than Cal Am claims.

Trying to make valid rate comparisons is beyond tricky when Cal Am is involved because it is willing to bend any number to suit its purposes. The company employs number crunchers with no real incentive to provide meaningful or accurate figures.

Cal Am’s view of the Felton takeover is largely contradicted by a recent study by a national economic consulting firm. The work by the Analysis Group was paid for by the California Water Association, a trade group dedicated to combating public takeover efforts. Cal Am is a member. It concluded that water customers receive no financial benefits from public ownership, in large part because of acquisition costs. It failed to recognize, however, that acquisition costs are financed up front, eliminating a major expense within 20 to 30 years. In other words, if rates don’t go down immediately under public ownership, they will eventually, and the benefit will accrue to future generations upon generations.

The Analysis Group study even indicates that rates in Felton actually declined marginally. PWN’s Reilly says the Felton rates now are closely aligned with what takeover proponents there expected, numbers that the community is comfortable with.

The PWN ballot measure would set up an intense cost analysis. The acquisition costs would be determined either by negotiation or court order. In other words, the impact of a takeover would be well understood before it came about, so there is no reason for anyone to pay any attention now to anything Cal Am has to say on the subject.

The bottom line: Cal Am is barely acquainted with the facts and has millions of reasons to obscure them. The company maintains an able and conscientious workforce in the field locally. But upper management locally and nationally stumbles badly when it comes to technology, engineering, cost controls, public relations and fair play. The company’s top rate expert once argued publicly that the words “median” and “mean” mean the same thing.

Public Water Now’s members might occasionally get carried away in their zeal to remove a bad corporate actor from the scene, but it has already won the credibility contest by a landslide. Peninsula voters should do themselves a favor by paying close attention to PWN and ignoring almost everything the company has to say.

Calkins writes a weekly column on local politics and public affairs. He welcomes communications at calkinsroyal@gmail.com

Have something to say about this story? Send us a letter or leave a comment below.

SUPPORT NONPROFIT JOURNALISM  

Royal Calkins

About Royal Calkins

Contributing writer Royal Calkins has worked for newspapers in Santa Cruz and Monterey. For the past couple of years, he has produced a local news and commentary blog, the Monterey Bay Partisan. He can be reached at calkinsroyal@gmail.com.

10 thoughts on “The Partisan | A Sad New Cal Am Tactic New mailer, a signal of desperation, is filled with serious deceptions

  1. I love this piece… taking something very complicated and distilling it down so us averge jill’s can get the message.

  2. Cal Am, a subsidiary of American Water, a White Collar Criminal Organization, like the cigarette industry, the oil industry, or La Cosa Nostra, they will do whatever it takes to make obscene profits at the expense of The Public; that is, their employees & their consumers. What is at stake now is nothing less than our Democracy.
    Power to the Public!!!

  3. The salient part of Royal’s article is that the ballot measure simply sets the stage for “an intensive cost analysis” of a public take-over. What does Cal Am have to fear? Perhaps investigation into their operating costs, the true numbers involved in a public take-over? From their view, any kind of detailed analysis is a lose-lose. When you can make a 10% profit doing business regardless of the outcome, there is nothing in this for them. welcome to Public Sector over site of our private water monopoly. I do appreciate the offer from Cal Am to do my thinking for me.

  4. Thank you again Royal! Great article – You always hit the nail on the head. Would that all of the Peninsula voters were clued into the “Partisan” so they could read this. PWN will certainly get it out to our volunteers and fans.

  5. In addition to the fact-free mailer, they’re doing phone banking to voters insulting the character of the PWN signature gatherers, our neighbors and friends, who generously volunteered their time to get this on the ballot.
    There is more immediate benefit to public ownership than generously doing the right thing for future generations. CalAm is not incentivized to do maintenance, it’s a total loss on their books, and have been caught red-handed falsifying records to their advantage, claiming work done when it wasn’t. Local control by those who drink the same water and pay the same bills as ratepayers do is the answer.

  6. Cal Am has added deceptive phone calls to their campaign. I received a call last night asking me to watch for the mailer so I can remove my name from the petition being circulated by Public Water Now. The caller said that the petition will increase my water rates and put the future of my water security at risk. When I asked how much the rates will increase, he said he did not know. When I asked how the future of my water security was going to be at risk, he said he did not know. When I asked who was paying him to call and where he was calling from, he said he was not at liberty to tell me this information, but he was a third-party outbound call center. He did say he got my phone number from the Voter Registrars Office.
    I really resent having to pay for the mailers and the phone calls as part of my inflated water rates with Cal Am.

  7. I too received both the mailer and a phone call. I returned the form from the mailer (without my signature but with some negative comments about the dishonesty of Cal Am) in their postage-paid envelope. The young man who called me would not give me his name but did start reading his script. After he said that the Public Water Now petition endangers our future water supply I interrupted him, saying, “Wait a minute. How would the petition endanger the future water supply?” He responded, “I don’t know.” Then I told him “Well if you don’t know why are you saying that,” to which his answer was “that’s what I’m told to say.” Of course he wouldn’t tell me who told him, or who is paying for the phone calls. He reverted back to reading his script until I told him that what he was saying was lies and dishonest.” Finally he gave up and to me to have a nice afternoon.

  8. I am not pro or con to water companies in charge at this time.
    I am wondering who is interested in investing into the services of CalAm?
    The writers are all knowledgeable about CalAm failures, but who wants private public water
    Company , that we do not know who they are?
    Is it true that MRWPCA the most qualified to assume the responsibility of owning the water company? Personally I do not know what MRWPC responsibilities are. The charges are clearly paid by residences, but why? CalAm is all there is? So who wants to be a private water company? I always understood the CPUC was responsible for all that is done in utilities. Has the CPUC lost control of what CalAm can do? Please identify problems with good solutions.

  9. Note that the Ph.D. who wrote the report for the California Water Assoc also wrote the recent Herald commentary wherein he strongly concludes, and cites his own report to support that conclusion, that private water is much better and should be preferred over public water. His reputation should be in some dispute, because in the intro to the study, he states that the purpose of the study is NOT to reach conclusions as to which option – private or public – are clearly more beneficial. Looks like he either has a short memory, or, more likely, he’s been paid to blab about Cal-Am as the hero and PWN as the villain.

  10. Let’s hear from a few dozen property owners from Santa Cruz County (Felton)
    What was and what is the cost per month
    for water usage now after the take over

Leave a Reply

Your email address will not be published. Required fields are marked *