For more information on Springville residents’ concerns, see our previous article, “Beleaguered Springville residents square off again in ongoing battle with Del Oro Water Co.“
The Del Oro Water Company says the 12.88% rate increase it has requested from the California Public Utilities Commission (CPUC) is actually a rate decrease. But customers in the company’s small Springville water district say Del Oro is conflating two separate issues in order to make the claim.
Del Oro Says ‘Misunderstanding’ Drove Customers Protest
Del Oro officials made the claim in a letter to customers dated September 5. It was a response to dozens of customer complaints and protests filled with the CPUC
“After reviewing the concerns raised in the protest letter/emails, Del Oro Water would like to clarify an important point: the current proceeding involves an overall rate decrease, not an increase,” the letter – signed by Janice Hanna, Del Oro’s director of corporate accounting and regulatory affairs – said.
Hanna claimed the Springville customers probably misread the company’s request, likely based on a lack of understanding of the complex nature of the rate-change process.
“We understand that rate changes can sometimes be confusing, and we appreciate our customer’s engagement in the regulatory process,” Hanna wrote. “However, the protests received appear to be based on the misunderstanding that rates are being increased. We hope this clarification resolves the misunderstanding and provides reassurance that rates are, in fact, being reduced for the benefit of all SRF paying customers.”
Del Oro Requested Rate Increase, Surcharge Decrease
According to Hanna, Del Oro’s local customers will see their bills go down thanks to a decrease in loan service payment approved by the state in November 2022. The surcharge change will reduce customer bills by $32.67 a month.
The company did not reduce the loan cost for its customers previously, Hanna wrote, because the water treatment plant the loan funded was not “formally completed” until July of this year. Del Oro began collecting the surcharge in 2021. The treatment plant began operations in July 2024.
The requested surcharge reduction is included in the same request to the CPUC that asks for a 12.88% permanent rate increase to offset one-time costs associated with construction of the state-mandated water treatment facility. It is this technicality on which Hanna’s claim of a rate reduction is based.
However, the company’s Springville customers said this is a fallacious argument.
“The rate is not being reduced,” said Del Oro customer Raffaella Woods. “They are not making a differentiation between the surcharge change and a rate increase.”
And Woods said the surcharge decrease is what they owe their customers, but it’s overdue.
“What they’re asking for is a reduction in the surcharge, and they should have done that three years ago,” she said. “They’re not giving us everything. Now, they have no choice but to reduce it to what it should have been.”
A Matter of Slippery Semantics
Woods said Del Oro has previously drawn a clear line of differentiation between the water rates and the surcharge for the water treatment plant. Now, Woods said the company is changing its tune.
“When we said our rates are too high, they said it’s because there’s a surcharge for the water treatment plant,” she said. “You can’t have it both ways. It’s not a rate decrease; it’s a surcharge decrease.”
Woods is also troubled because the rate increase Del Oro requested is intended to reimburse the company for a fixed set of one-time costs associated with the water treatment facility, yet the increase has no end date. Woods fears the company is getting an open-ended rate increase that will create far more revenue than Del Oro claims it is owed.
Del Oro’s Hanna did not respond to a request for clarification on either objection.
Woods and other customers have also repeatedly requested an accounting for the $673,054.68 in “prior project costs” Del Oro paid from 2011 to 2016. The letter from Hanna gives a rough breakdown of the spending. It includes money for soil and environmental testing, engineering and surveys. The state, however, is checking the receipts, she said.
“At this time, the Water Division staff will complete an audit and review of all the Del Oro Water invoices included in the $673,054.68 additional Rate Base,” Hanna wrote.
But the company never told its customers, Woods said, they would be hit for costs dating back more than a decade. They also weren’t told the high price they’d pay.
“They’ve known about those charges for the last 10 years, but they never once mentioned to us that we might have a $7,000 (per customer hookup) surcharge,” she said.
Rate Decrease Claims Seems Not to Hold Water
Del Oro estimates the 12.88% rate increase will drive customers’ bills up by $24.09 based on consuming 3,500 cubic feet of water a month. A “readiness-to-serve charge” will also increase by $9.66 per month. Combined, the total rate increase to customers is $33.75 per month.
Hanna’s letter places the savings from the surcharge reduction at $32.67. If both rate changes are approved next month by the CPUC, the total proposed change will be an increase of $1.08 per month.
However, she claims the $24.09 “proposed monthly bill increase” is based on flawed reasoning, stating, “this assumption significantly overstates typical consumption and misrepresents the true burden on low-usage households.”
Fewer than half of Del Oro’s customers consume 3,500 cubic feet of water or more per month, the letter said, meaning most customers will see a lesser rate increase. Woods doesn’t trust the validity of that assessment.
“They’re saying the rate increase won’t affect most people,” she said. “But last year they sent a bunch of notices saying people were using too much water.”
Woods and her neighbors were getting monthly bills in excess of $600 at the time. She suspects air entered the company’s lines during periods of partial service, and this caused water meters to misread the flow. She said she’s using more water now, but paying far less for it.