Commission Votes to Allow Casmalia Water Rate Increase

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Rates May Rise 89 Percent

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.

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.

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.

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.

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.

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.

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.

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 [email protected]

Consumer Watchdog
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