Fact Checking
Following are claims about Liberty Utilities, Apple Valley made by the Apple Valley Town government on the Town website, including their H2Ours Fact Sheets and press releases. All these statements and claims are related to the Town government’s attempted to take over Liberty Utilities, Apple Valley which are incorrect and/or misleading.
These claims have been part of a misinformation campaign leveled at the Liberty Utilities, Apple Valley and its employees. These are the facts according to documents, legal filings and regulatory information that are publicly available.
Town of Apple Valley “Claim”
“Liberty Utilities, Apple Valley rates have increased by 112% over the last ten years.”
the fact
The actual CPUC-authorized increase in Liberty Utilities, Apple Valley’s rates over the last ten years, 2005-2014, is 68% on a compounded basis. That’s an average annual increase of 5.3%. The average water bill, due to conservation, has risen just 3% per year.
TOWN OF APPLE VALLEY “CLAIM”
“Town can afford to purchase water district [Liberty Utilities, Apply Valley] at a fair price without raising taxes.”
the fact
This is false. The Town doesn’t set the value of a water system. The court does. Most governments seriously understate the value and Town’s feasibility study does also. Even so, the Study finds the acquisition financially feasible “If voters approve a new property tax, special tax, or special assessment.” The Town will have to increase the costs for water service with higher rates and/or taxes-or both.
TOWN OF APPLE VALLEY “CLAIM”
“If water system needs to be improved, Town will do it more cost-effectively.”
the fact
This claim assumes the Town can raise money at a lower cost through tax-free financing. When Liberty Utilities, Apply Valley issues debt on a non-tax-free basis, the interest is on the debt is tax-deductible and that is a savings passed on in rates. On an after-tax basis Liberty Utilities can actually issue debt at about the same cost as the Town. This claim also ignores the fact that the Town will be bound by prevailing wage requirements typically resulting in the cost of capital improvements being 15% to 20% higher.
TOWN OF APPLE VALLEY “CLAIM”
“The Town has expertise in water service.”
the fact
The Town owned and operated a small water system (one well and nine customers for about ten years) and sold it to Liberty Utilities, Apple Valley 15 years ago. The Town made no improvements to the system and did not disinfect the water. Town’s 2014 Feasibility Study states “The Town would begin a new relatively complicated enterprise involving employees and a large customer base, but the Town has no actual experience operating a water system.”
TOWN OF APPLE VALLEY “CLAIM”
The Town will do a good job with water service due to “a history of excellent service in operating the Town’s sewer system.”
the fact
Water is not the same as sewer — people drink the water — and the Town’s operation of the sewer system has had problems. A water system has to maintain water that people drink and maintain pressure for fire protection. Over the last ten years the Town has had significant overflows of sewage at its lift-stations which required Liberty Utilities, Apply Valley to temporarily shut down its near-by wells to avoid contamination.
TOWN OF APPLE VALLEY “CLAIM”
Liberty Utilities, Apple Valley has a guaranteed return on investment , or “profit.” The H2Ours Town claims the “elimination of profit, a guarantee of 9.7 percent.” In the Town 8/14 Press release on State Audit: “Private water companies that offer investors a guaranteed rate of return as high as 10%...,” according to Town Attorney John Brown.
the fact
The CPUC is required by law to set rates that provide an opportunity for regulated utilities like Liberty Utilities to earn a return on investment based on what the CPUC finds reasonable, but the utility is NOT guaranteed that return. The Town staff, consultants and lawyers know this and Town’s consultant confirmed it in 2011 before the Blue Ribbon Water Committee. The video confirming these statements is on the Town’s website.
TOWN OF APPLE VALLEY “CLAIM”
“Town will better protect interests of ratepayers compared to an investment firm.”
the fact
This is misleading. Under Liberty Utilities, regardless of who is the parent company, the interests of ratepayers is protected by the CPUC. This protection will be lost if the Town were to own the system and customers will depend on politicians to invest in the water system. Other than enforcement of the Safe Drinking Water Act by the Water Resources Control Board, there will no other agency holding the Town accountable for regularly investing in the water system and maintaining service standards.
TOWN OF APPLE VALLEY “CLAIM”
“Through the 218 process, [Town] rate increases would be presented to our ratepayers, with an opportunity to address the Town Council at public hearings.”
the fact
This process provides less opportunity than the CPUC process does since there is no third party consumer advocate involved, no evidentiary hearings, and Town Council comments are limited to three minutes.
TOWN OF APPLE VALLEY “CLAIM”
Dennis Cron, Assistant Town Manager says: “If it’s information that Liberty Utilities, Apple Valley wants us to have, they will share it. If it’s not, we get to go to court and demand it.”
the fact
Over the last 25 years the Town has not been proactive in initiating discussions with Liberty Utilities, Apply Valley on rate matters, other than in the last two rate cases. In every case where Town requested information from Liberty Utilities, Apple Valley on rate matters in a reasonable and timely manner, Liberty Utilities provided that information.
TOWN OF APPLE VALLEY “CLAIM”
“A 35% rate increase has already been approved by the CPUC. ”
the fact
This is incorrect. AVR requested increases for 2015, 2016 and 2017 that totaled 34.8% (compounded) for all three years. The CPUC has not yet issued a decision on Liberty Utilities, Apple Valley’s current rate request. Liberty Utilities, Apple Valley expects the CPUC to authorize a rate increase that is less than what was requested.
TOWN OF APPLE VALLEY “CLAIM”
“If Missoula [Montana] is successful in its condemnation proceeding [of Mountain Water] in March, and if the Town does not proceed with the acquisition, Park Water’s administrative overhead currently spread over Missoula, Apple Valley and LA County basin would be spread over only Apple Valley and LA customers. This should alarm all local ratepayers.”
the fact
The Town’s conclusion that Missoula will succeed in condemnation is speculation — Missoula tried before and failed in court. If Mountain Water were condemned, LIberty Utilities, Apple Valley customers will not automatically pay the administrative support cost previously allocated to Mountain Water. There would be no immediate impact until the CPUC determines what is appropriate and what, if any, rate impact there would be.
TOWN OF APPLE VALLEY “CLAIM”
“Liberty Utilities, Apple Valley is attempting to stop Town’s recycled water project and deprive Apple Valley of the benefits of recycled water.”
the fact
Liberty Utilities, Apple Valley is not opposed to the recycled water project. Liberty Utilities is opposed to Town’s plan to prevent the water company from being the retailer of the recycled water, which is its right by law and according to the Town’s prior agreement.