Double-digit rate increase is an outrageous request

Golden State Water Co. has a rebellion on its hands. It deserves it. In several communities across the state, ratepayers are boiling over steep rate increases the water purveyor is requesting from the California Public Utilities Commission.

Overall, the company is seeking a $58 million increase from its 256,000 customers in 2013, followed by anearly $9 million increase in 2014 and another $11 million in 2015. Customers— as well as some of the public officials who represent them — have been outraged.

Ojai residents have asked a local agency, the Casitas Municipal Water District, to use the power of eminent domain to buy out the water company and take over service.

In Barstow, the mayor has asked the state Attorney General to investigate, and the entire City Council asked the state Public Utilities Commission to deny the utility’s request for nearly 30 percent in rate increases over the next few years.

Closer to home, more than 100 people packed a meeting room in Los Osos recently to protest the increases at aPublic Utilities Commission hearing. San Luis Obispo County Supervisor Bruce Gibson said he doesn’t believe the company has given adequate justification for the 48.9 percent increase it’s seeking from the 3,300 customers it serves in Los Osos and Edna Valley. That would raise the average monthly bill to $85.50, from the current $57.44. And that’s on top of a27 percent increase approved for 2011 and 2012.

Golden State is justifying its rate increase requests by pointing to a laundry list of improvements it’s planning in various service areas; to rising labor and maintenance costs; and ironically, to a drop in water use attributed to conservation.

In its application to the Public Utilities Commission, it also says the rate increases “are necessary for GSWC to earn a fair, just and reasonable return on the capital it invested.”

Golden State does deserve a reasonable return on its investment, but the utility is woefully out of touch with reality if it expects ratepayers to swallow such big rate increases, especially when so many families are struggling in this economy.

Residents of Los Osos are particularly hard hit, since many of them will also be paying for the new sewer project.

Ken Petersen, the coastal district manager for Golden State Water, says $5 million in upgrades are needed in Los Osos and Edna over the next three years, including a new well in Edna and the replacement of a50-year-old reservoir in Los Osos. The reservoir, he said, could fail in the event of an earthquake or other catastrophe.

We understand that Golden State Water needs to make some capital improvements and it must be able to pay off those projects. But saddling a captive audience of customers with a nearly 49 percent rate increase in a single year is outrageous.

The company must find a way to reduce the burden on ratepayers, whether by cutting expenses or putting off capital improvements. After all, cities and other public agencies that provide water, sewer and other services have managed to do so.

The Public Utilities Commission will rule on the rate increase application late next year; it should deny it. To do otherwise would only reward a company that has shown too little regard for the financial well-being of the ratepayers it should be committed to serve.

Editorials are the opinion of the Tribune.