Water dreams a mirage (May 5, 2015)

The time for the Town to purchase the water system was in 1988. The ship has long ago sailed away.

Fundamentally I am an economic conservative. I believe that private companies can do a better job of customer service than public entities. There are exceptions; police, fire, water and sewer have traditionally been provided by public agencies. The Town of Apple Valley has prided itself on having the smallest staff per capita of every city in the High Desert. Efficiencies have come from contracting out many functions to private entities.

Consequently, I have a really hard time understanding how the residents of the Town are going to be better off if the Town purchases Apple Valley Ranchos Water Company. I listened to the Town’s presentation last Tuesday evening, and I have had the opportunity to sit down with the managers of AVR and heard their rationale for keeping AVR as is.

Firstly, I question where the Town is going to get the water from to fill the pipes and serve the residents of the town and its environs. AVR owns approximately 12,000 acre-feet of water (according to their estimate) at the current price of $5,000 per acre-foot that would be a cost of $60 million. In an eminent domain proceeding the judge might price that water higher or lower, it makes no difference, a water system is only as good as the water it can deliver. The water in the High Desert is adjudicated and the Mojave Water Agency water master controls the buying and selling of water rights in accordance with the judge’s ruling. I do not believe there are currently sufficient additional water rights available to serve the current customer base of AVR if the Town took over the infrastructure.

Secondly, water is probably the most precious commodity that we have in California today. That may not always be the case if we have a stormy year, but essentially California is a desert. The cost of water will always increase, it is simple supply and demand. If MWA would have to recharge the Mojave basin with desalinized water the cost could easily reach $10,000 per acre-foot. How is the Town going to save us money with water prices constantly increasing?

Thirdly, I worked for 25 years for a regulated utility. I appeared in front of the Public Utilities Commission on numerous occasions to testify. The PUC is a substitute for competition for utilities where the cost of entry would be extraordinary. Companies regulated by the PUC get to charge a reasonable rate of return on their investment. Many local folks are complaining that the investment by AVR is unreasonably high. Remember that most of Apple Valley was equipped with steel pipe left over from old oil rigs when the system was first installed. Houses were few and far between. There are numerous breaks in that old system. AVR has done a credible job of replacing and repairing those old pipes. They deserve a reasonable rate of return on that investment. The time for the Town to purchase the water system was in 1988. The ship has long ago sailed away.

Fourth, the North Apple Valley Industrial Specific Plan will never be a reality unless there is adequate fire-flow for the buildings in that area. This will require a significant investment in tanks and pipes around the Apple Valley Airport. The Town needs to attract these businesses to improve its tax base. Yet, they requested the PUC to deny AVR’s request to add about $7 million to their rate base to build infrastructure for the Industrial area around the airport.

At Tuesday’s meeting there were four attorneys from Best, Best and Krieger to tout the Town’s position. Lawyers get paid to say what their clients want to hear. What I heard did not convince me that the residents of Apple Valley would be better off with a Town-owned system. If I was still on the council I would be making a motion to end this expensive endeavor. Perhaps one of the current members might agree.

Source: Peter Allan, Daily Press