The Bakersfield City Council on Wednesday voted to have city staff prepare to intervene in California Water Service Company’s proposed 1.49 percent rate increase.
“On behalf of taxpayers, on behalf of constituents, I think we need to intervene,” said Ward 3 City Councilman Ken Weir.
His motion for city staff to prepare what needs to be done to intervene in the rate case passed unanimously.
This month, Cal Water sent a request to the state Public Utilities Commission to raise rates by 1.49 percent in January 2018. The increase, the proposal said, would raise the typical customer's bill by 65 cents a month.
Cal Water presented this rate increase proposal to the City Council as it is required to do under its current franchise agreement.
The purpose for raising the rate, Bakersfield District Manager Mike Mares explained in an email, is to increase the cost of capital, or the amount that Cal Water can include in rates to cover stockholders’ return on investment in infrastructure and cost of long-term debt.
But Weir looked at Cal Water’s 2016 Summary Annual Report and found the shareholders' rate of return has risen by 170 percent in the past five years. Also, the water utility’s operating revenue increased by $107 million during years of the drought, when it was selling less water.
“It’s hard for me to say, ‘Well, gosh, I can understand how we need this,’” Weir said, “because your annual report, it doesn’t display that.”
He added that while he understands there are a lot things that go into this, when he sees such an increase in returns in five years of drought, it gives him pause and cause for concern.
Ward 7 Councilman Chris Parlier joined in and asked if Cal Water could provide the amount of return on the tiered rates compared to what it would have been in a non-drought year.
Cal Water representatives were not ready with that information at the meeting.
Meanwhile, Ward 1 Councilman Willie Rivera said he is frustrated at all the rate increases.
“One, I don’t see a ceiling being reached,” Rivera said. “Certainly - correct me if I’m wrong - I couldn’t point to an instance where relief has actually occurred on the rate front.”
“It frustrates me that there’s really no end,” he said.
If the city ultimately chooses to intervene, this would be the second time the city has intervened in Cal Water’s proposed rate increases.
Cal Water officials told the council they want to continue discussing the matter.