YWC sale clears CPUC hurdle (February 25, 2015)

AVRWC now waits for court decision

YERMO — The sale of the Yermo Water Company recently cleared another hurdle when the California Public Utilities Commission denied an application by the Town of Apple Valley for a rehearing on the matter.

The town was asking Apple Valley Ranchos Water Company to conduct a California Environmental Quality Act review to proceed with the purchase of Yermo Water Company. But the PUC ruled that Apple Valley Ranchos is exempt from doing that review.

John Richardson, who was assigned receivership of Yermo Water Company, is now able to file with the San Bernardino County Superior Court to finalize the $300,000 sale.

The Town of Apple Valley is currently seeking to purchase Apple Valley Ranchos Water Company in an effort to control rising water rates.

Ultimately, we were protecting our residents (from) unnecessary rate increases, town spokeswoman Kathie Martin said.

In the filing with the PUC, the Town of Apple Valley argued that a CEQA review is warranted because the transfer involves improper piecemealing, an expansion of Apple Valley Ranchos’ service area and significant infrastructure and capital improvements and change in operations. But the PUC ruled the town offers no facts to support a conclusion that the transfer will result in an expansion of service territory subject to a CEQA review.

It is true that AVR’s individual service area will be greater to the extent it absorbs the Yermo System, the PUC ruling said. However, there will be no expansion of the total service territory as it currently exists on a combined basis.

Apple Valley Ranchos executives have repeatedly said the water provider is not for sale on its own, apart from its parent Park Water Co., which is a part of Western Water Holdings under the umbrella of the Carlyle Group. Western Water is on track for purchase by Canada-based Algonquin Power Co.’s Liberty Utilities, which already has a presence in California.

Eric Larsen, manager of financial services for Apple Valley Ranchos, said the Town of Apple Valley’s opposition to the Yermo Water Company acquisition is an attempt to cost us money and slow us down.

According to a PUC filing, Yermo Water Company serves approximately 250 metered customers near or within the community of Yermo. Apple Valley Ranchos is a class A Commission-jurisdictional water utility providing service to approximately 22,000 connections in and near the town.

We also reject (Apple Valley) claim that there will be impacts to wells, since (the town) concedes that would occur only ‘should pumping increase,’ the PUC ruling said. AVR did not propose, nor did Resolution W-4998 approve, any change in operations.

The town argues Apple Valley Ranchos will undertake infrastructure and capital improvements that will have dire effects on the physical environment. Town lists impacts to: Air quality, traffic, noise, water quality, agricultural use, and desert habitat.

We approved $732,000 in rate recovery for AVR to undertake emergency short-term repairs and system upgrades to address service quality deficiencies, the PUC said.

The court-appointed receiver was authorized by the PUC on Aug. 28 to sell the company, and Apple Valley Ranchos was authorized to buy it. Yermo has a consolidation of three commission-certificated water utilities. The three former utilities consisted of Yermo, Marine Water Company, and Hel-Bro Water Company. All three utilities came under common ownership in 1966. The Marine and Hel-Bro water systems are interconnected. The Yermo water system is not connected to either of the other two systems.

According to the PUC ruling report, Yermo has had a long, troubled, and well-documented history of absentee ownership, mismanagement, negligent operations and unsafe, inadequate or substandard water service, including unsafe water supplies, service interruptions, contamination and other operational problems that threatened the health and safety of Yermo customers.

Source: Mike Lamb, Desert Dispatch