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Chevron Can Hike Water Rate 89% | Oil Watchdog

Chevron Can Hike Water Rate 89%

Tue, May 20, 2008 at 11:06 am

    Chevron Can Hike Water Rate 89%

    Commission Votes to Allow Casmalia Water Rate Increase

    Rates May Rise 89 Percent

    The California Public Utilities Commission has decided that the utility
    supplying water to the tiny community of Casmalia can raise its rates
    to produce an 89 percent increase in revenue.

    Casmite Corp. was
    granted the increase Thursday on 5-0 vote of the commission. There was
    no discussion, according to commission staff.

    Residents of the
    community, many of whom are on fixed or low incomes, have been fighting
    the increase that they say could push their water rates out of reach.
    The utility company, which is owned by Chevron, has said the increase
    is needed to cover the cost of operating the small, rural system.

    There
    was no immediate comment from the Casmalia Community Services District
    following the ruling, but the board is planning a special meeting
    Tuesday to discuss the decision, said Terri Stricklin, CSD secretary.

    She noted that she is disappointed but not surprised by the ruling.

    Casmite officials say the rate established by the PUC allows the utility to recover the cost of the system.

    “Unfortunately,
    in a small rural area like Casmalia, the cost per customer is high due
    to the high fixed costs and small customer base,” Brian Kelly, Casmite
    vice president, said in an e-mail. “The only ways to alleviate the high
    cost is to operate as efficiently as possible and/or to merge with a
    larger agency or utility to create a larger customer base.

    “Casmite has been pursuing both paths,” he added.

    Initially,
    Casmite petitioned the PUC in October 2007 to raise water revenue by
    138 percent, or $99,500 for 2008. However, PUC staff recommended a
    phased in 89.73 percent increase, or $52,767, over the next three years.

    According
    to the PUC resolution, Casmite has been providing water for the
    community of roughly 200 people since the 1940s, when the company began
    oil operations in the area and constructed a water system.

    In
    1953, Casmite was purchased by Unocal, and the new oil company
    continued to serve the nearby community as a “courtesy.” In 1994,
    Unocal sold its oil fields in the area but kept the water system.

    When
    Unocal was purchased by Chevron in 2005, Casmite became a wholly owned
    subsidiary of Chevron. In 2005, Casmite was certified as a public
    utility and brought under the regulation of the PUC.

    The system
    has six metered customers, including the community services district,
    which then serves 52 residential and two commercial customers.

    A Casmite official could not be reached for comment.

    Following
    the issue in Casmalia, John Simpson, consumer advocate with the
    nonprofit consumer rights group Consumer Watchdog, criticized Casmite
    and its parent company for even seeking the revenue increase,
    especially in light of record oil profits.

    “We’re talking about
    amounts that aren’t even pocket change for Chevron, but an 89.7 percent
    water rate increase could kill Casmalia,” he said. “PUC regulations may
    allow Chevron to do this, but that doesn’t make it right.”

    Malia Spencer can be reached at 739-2219 or mspencer@lompocrecord.com

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