Golden State Water's water expert says holdings in Claremont worth as much as $204 million

Wes Woods II, Staff Writer CLAREMONT - Golden State Water Co. presented a feasibility study by a water expert it paid for that said the water company's Claremont assets could cost as much as $204 million. That figure was offered by Rodney T. Smith, a former professor of economics at Claremont McKenna College and now president of Stratecon Inc., an economics and consulting firm specializing in water resources. "I'm not saying it can't be above $200 million but that's a reasonable rate," Smith said Tuesday afternoon in a presentation given to media with Denise L. Kruger, senior vice president of regulated utilities for Golden State. The San Dimas-based utility has already turned down Claremont's initial offer to purchase the local assets for more than $54 million in November. Smith cited an experience he had as an expert in water rights trial involving Yolo County's attempt to take over a local water company. From that trial, he believes value of the Claremont assets of Golden State could reach more than $200 million. "The county got an appraisal of $35 million," Smith said of Yolo County's case. "When you added up everything, (the value) was $500 million. The long story short is (the county) walked away" from taking over the water company. Smith said even if Claremont is able to purchase the company at $54 million, the annual revenue requirement rates for the city will go up about 30 percent for decades, Smith said. The revenue requirement is a "core concept" in rate making that includes total water supply costs and operational and maintenance costs, Smith said. If Golden State refuses to sell to Claremont, the city's only alternative is to use an eminent domain procedure and take it through court action. "And if they lose ... I call it the litigation lottery. It will be 70 percent ($104 million) or double or more. If you lose the litigation lottery, your rates are going to go over the roof." He said the city has not yet hired expert personnel to run a water company, something that will further add to the cost of operation. City officials have long been at odds with the water company after it asked the Public Utilities Commission to approve a rate increase of more than 24 percent in 2013 and additional increases in 2014 and 2015. A negotiated settlement resulted in Claremont's 11,000 customers and ratepayers receiving a 15.1 percent rate increase in 2013, 2 percent more in 2014 and 1.8 percent in 2015. City Manager Tony Ramos said Tuesday he had not heard of Golden State's presentation and "if and when we see it then we will comment. It's unfortunate they have gone to the press first without showing any of this information to the city." Ramos said the water company and city are scheduled to have a meeting after the first of the year. Hal Hargrave, of the group Claremonters Against Outrageous Water Rates, has been pushing back against the rising water rates. "As a group, they're going to stop at nothing because they have so much to lose," said Hargrave about Golden State. "They will continue to print lies, they will continue to sensationalize and they will continue to ... try and sway our residents and confuse our residents."  Reach Wes at via email, call him at 909-483-8549, or find him on Twitter @ClaremontNow. See this article

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