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Chevron's Water Fight | Oil Watchdog

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Chevron's Water Fight


Tue, Mar 4, 2008 at 3:25 pm

    Chevron's Water Fight

    3-04-08 by simpson

    A California Public Utilities Commission staff report recommends a whopping 89.7 percent rate increase for a Chevron-owned water company serving the tiny hamlet of Casmalia.  Not as outrageous as the 138 percent increase the company asked for, it still threatens the town’s existence.

    The PUC proposed hike would mean an average $217 monthly water bill for the 52 residential customers in the California Central Coast community just north of Vandenberg Air Force Base.

    The average monthly bill under the Chevron plan would have been  $272, up from the current average of $115. The total amounts being talked about aren’t even pocket change to the oil giant, which made $18.7 billion in profit in 2007.

    The PUC recommendation from staffer S. Robert Weissman is based on a zero rate of return for the oil giant.  That’s probably an acknowledgement that the 200 residents say the rates proposed by the Chevron subsidiary, Casmite Corporation, would kill the town.  Median household income in the community is less than $30,000, officials estimate.

    I did a realty check on the rates by looking at my own water bill for last month. It was $17.

    Chevron got into the water business in Casmalia by acquiring Unocal, which in turn had purchased Casmite Corp. in 1953.  It’s pretty clear that Chevron now wants out.

    Certainly there has to be a sensible way Chevron can leave without killing the community. Chevron needs to harness some of the vaunted “human energy” touted in its multi-million dollar ad campaigns and solve this.

    You can comment on the staff report until March 31 by sending an e-mail to S. Robert Weissman, project manager, at srw@cpuc.ca.gov.

    Here’s one possible solution: Before leaving, Chevron should pay whatever is necessary to get the water system in shape and do whatever else is needed so it can be merged with a viable utility, one that’s actually in the water business. Chevron should also set up a trust fund to help subsidize the system for several years.  Merged with a larger water company, Casmalia’s rates could be spread over a reasonable customer base.

    It’s not like there is no precedent. New Cuyama faced a similar situation when oil company Atlantic Richfield wanted to stop providing water service in 1977. The solution was to create the Cuyama Community Services District and turn over the water system — and $1 million to maintain it — to the community.

    Or do Chevron’s executives really prefer this public relations black eye to gain an annual amount that is barely pocket lint to its executives? After all, CEO David O’Reilly was paid $8.8 million in 2006, and no doubt more in 2007.  Ruining a little town to get out of a business that it wants to shed seems beneath a company and a CEO that have profited so handsomely from California motorists, including those who live in Casmalia.

    Town officials are scheduled to meet with Chevron executives on Wednesday. I hope the Big Oil executives think about something other than the bottom line for a change.


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