Attempt to take over Cal-Am is a gross overreach

OPINION – The Monterey Peninsula’s water system is extensive — made up of 680 miles of pipeline and 100 water storage tanks — and provides reliable service to 100,000 residents and businesses throughout Monterey, Carmel, Seaside, Pacific Grove, Pebble Beach, Del Rey Oaks, Sand City, Carmel Valley, Salinas and Chualar. Operated by California American Water (Cal-Am), the region’s vast water system is among the most complex and highly engineered in the state. The scientists, engineers and water managers who quietly work behind the scenes to keep the region’s water running — and demand met — have been embedded members of the community, successfully managing scarce water supplies through climate extremes.

Understanding the need for future sustainable economic and community growth, Cal-Am has been advancing a three-pronged climate adaptation strategy, known as the Monterey Peninsula Water Supply Project. It includes the development of three new water sources for the water-strapped Monterey Peninsula: expanded aquifer storage and recovery, additional groundwater recycling and a new desalination plant to meet current and future water needs.

Unfortunately, a planning agency that has never managed or operated a water system is distracting Cal-Am from the important business of planning for the future by attempting a hostile takeover of the water system.

The Monterey Peninsula Water Management District (District) has spent six years and more than $3 million embroiled in an attempted eminent domain takeover which has already proven infeasible. The case in Monterey represents the largest and most expensive eminent domain suit in California history. It could cost the Peninsula more than $1 billion in buyout costs — a staggering bill that ratepayers would have to pay. What’s more, if the district were to successfully take over Cal-Am’s Monterey system, it would also cost Monterey County at least $75 million annually in lost tax revenue.

As a long-time water policy manager and Executive Director of the California Water Association, I see the Management District’s attempted takeover as a recipe for disaster.

The fact is, past public takeovers of private water utilities have failed, and the attempted takeover of Cal-Am’s system is proving to be a boondoggle, too.

To see eminent domain in practice, look no further than Felton, California, a small town in neighboring Santa Cruz County with an outdated water system.

In 2002, American Water asked the California Public Utilities Commission (CPUC) for approval to raise rates in Felton over three years to repair critical water delivery infrastructure. The water rate increase, approved and deemed necessary after the state CPUC’s extensive review, spurred some public opposition that led to a push for a government takeover, or condemnation, of the water system.

After six years of American Water operations, the system was brought under government control by eminent domain. Ironically, and unfortunately for the residents of Felton, government ownership resulted in even higher rates than originally proposed — three times more than condemnation advocates promised. And today, residents are largely ignored and can no longer rely on the transparent and participatory CPUC rate-setting process to air concerns.

This is not what we want for the Monterey Peninsula. Especially not at this critical juncture.

The eminent domain legal process is long, complicated and expensive and, time and again, has proven to result in higher costs for residents and communities. There has never been a successful attempt in California history to take over a water system of Cal-Am’s size and complexity.  Meanwhile, successful eminent domain proceedings on a much smaller scale, like the one in Felton, have had negative, unintended consequences.

The courts should reject the district’s attempt to take over Cal-Am by eminent domain. Supplying water to the Monterey Peninsula safely, reliably and affordably ought to be left to the experts.

The costly and unnecessary takeover attempt by an inexperienced planning agency is a distraction from the real work at hand — securing the region’s water supplies for generations to come and restoring critical ecosystems.

Jennifer Capitolo is Executive Director of the California Water Association, which represents California’s investor-owned water companies, providing a forum for sharing best management practices, promoting sound water policy and educating the public about the protection and efficient use of water resources.