An open letter to Bill McDaniel (October 17, 2016)

Dear Bill,

Thank you for offering to answer my questions at your H2Own meeting tonight (Monday, October 17). Allow me to recap our discussion. Then I’ll show you the documentation you said you had not seen, and I’ll finish up by making some points I was not able to make due to the brevity of our contact.

First, the purpose of your meeting was to answer questions from the public about Measure W, which I believe to be the Town of Apple Valley’s end-run around accountability to the voters for the monies they intend to spend seizing Liberty Utilities, our local water company.

My main question centered around two fliers I had received earlier today in the mail. One was in support of Measure W, and it had your organization’s name on it as the source. One side showed quotes about high water bills. On the reverse side, there was the claim that Measure W would stabilize or lower water rates. I pointed out that Measure W would do nothing to lower water rates. Your response was that it would allow the Town to lower water rates. Thus, you implicitly confirmed that the Measure W flier from your organization contained information that was at the very least misleading, if not false.

The second flier came from the Town of Apple Valley, and in the section about water rates, rather than saying the Town will lower water rates, the flier changes the subject and deals with other issues. Thus it is safe to say that the Town’s official position is that water rates will not go down after the takeover. This position stands in stark contrast to implications and promises made by Town representatives and supporters, including those by your organization.

(As an aside, this is a huge red flag for me because any reasonable person — seeing how your organization and the Town target the small minority who have high water bills with your pro-takeover message — would naturally assume the quid pro quo of lower water rates in exchange for spending hundreds of millions of dollars forcing the sale of the water company.)

Your response was that the Town can’t make that promise yet because they don’t know how much it’s going to cost to purchase Liberty Utilities, etc. I agree. They don’t know anything, so they have no business making any kind of definitive statements or promises about what the future will bring, with them in control of the water system instead of Liberty Utilities.

Rather than respond directly to my points, you produced a chart showing how high water rates would be after several years of 14 percent annual rate increases. I asked where that 14 percent figure came from, and you referred to a portion of Liberty Utilities’ president Greg Sorensen’s presentation to investors that took place some months ago.

I confess that I suspected what your source was as soon as you mentioned the 14 percent annual increase. It was during the January 26, 2016, transparency report that I first heard Assistant Town Manager Marc Puckett mischaracterize Sorensen’s presentation as dealing with rate increases, even though the graphic employed by Mr. Puckett clearly refers to future investments. Sadly, such errors are common in the work of Mr. Puckett, as has been pointed out time and again by myself and many others.

On February 12th, Town reiterated this falsehood on its Facebook page. I posted, Somebody stop them from investing in our community right away! We don’t need their money. As Barb Stanton once said, ‘Can’t we just borrow the money?’ Daniel Seagondollar posted, ‘Base rate’ isn’t the rate you pay for water. Base rate is the capital (typically operating and indestructible costs) amount of expenditure that the PUC allows to be used against the billing rate. Unless I’m missing something there is nothing in that graph that states they will be raising rates. Looks like they will be spending a lot of money to fix old pipes.

On February 23rd, even the normally taciturn Liberty Utilities issued its own comment: The Town of Apple Valley posted a photo of Liberty Utilities President Greg Sorensen making a presentation to shareholders, alleging that he was announcing a 14 percent rate increase in Apple Valley. That is not true. The presentation addressed California’s historic drought, conservation, and the need to make infrastructure investments to strengthen conservation, water quality, and system reliability for generations to come. Rates were never discussed. If you are interested in viewing the presentation, we are happy to send it to you in its entirety. Please contact us directly.

Undeterred, on April 13th, the Town once again promoted this false narrative with a special mailer (!) that claimed, … boosting profits on the backs of ratepayers is still what they’re all about. Just hear what their President is saying …

Although I had written about this before, the Town’s serial buffoonery compelled me to write another letter to the editor covering this topic, which the Daily Press published May 1, 2016 (Gaffe riot — revisited). The facts notwithstanding, Mr. Puckett continues to reiterate this falsehood, including at the third transparency report he delivered to the Town Council on September 13th.

I even indicated on your print-out where it said Sorensen was talking about investments, not about rates. I asked if you had seen the responses from Daniel Seagondollar, Liberty Utilities, or others pointing out the error of Puckett’s interpretation. You said you had not. I offered to show them to you, but you were not interested, stating that you had the facts and I did not.

(This latter statement is curious not only because you refused to consider — or even view — evidence that illuminates the facts you seem to value, but also because on August 7th your organization banned me from posting on your organization’s Facebook page owing to the fact that I seem to have access to all the numbers and data.)

There’s no nice way to put this: Your best evidence to support your grievances against Liberty Utilities is a falsehood, and it was provided by the Town of Apple Valley.

Furthermore, your assertion that the Town’s measure would allow the Town to lower rates is utterly unsupported speculation, as there is nothing in the wording of the measure itself to effect this, and to the extent that it could come true by happenstance, there is nothing in the voter-initiated Measure V that encumbers the Town’s ability to set rates. This fact, combined with the fact that the Town’s measure offers virtually no new protections to ratepayers, totally eviscerates any argument in favor of voting yes on the measure you support. Only the voter-initiated Measure V has a chance of protecting the ratepayers of Apple Valley.

At the risk of running long, I must bring up another issue. As you were a member of the second Blue Ribbon Water Committee, I’m hoping you will be in a position to understand it, even though most will find it technical, arcane, and tedious.

Let’s say for the sake of argument that Liberty Utilities was planning on increasing investments in Apple Valley by 14 percent annually. First off, we should be so lucky. Apple Valley has nearly 150 of water mains that are (or soon will be) beyond their service life, but with that level of investment Liberty Utilities might actually be able to get ahead of the curve, despite delays and obstructions imposed by the Town.

More to the point, you must know that the California Public Utilities Commission and Office of Ratepayer Advocates do not allow Liberty Utilities to mark up all its expenses, and they limit the recovery of qualifying expenses. Therefore, Liberty Utilities would be investing millions in our community with virtually no possibility of reimbursement, let alone profit. Unless Liberty is the most generous corporation on the planet, there is zero chance that it would ever spend its money so recklessly. I personally doubt that the CPUC and ORA would allow it, regardless.

Again, I thank you for discussing this important issue with me. I’ve invited many others at Town Hall and elsewhere to do this, but you’re the first to come forward. Should you ever wish to continue the dialogue, please don’t hesitate to contact me.


Greg Raven
Apple Valley, CA