Audit: Private water more costly (April 30, 2015)

State document affirms Town officials’ beliefs, they say

APPLE VALLEY — The State Auditor has concluded an audit of four High Desert water providers and issued a report that says the two private companies included had higher costs and higher rates than their public counterparts. In a surprise to city officials, however, the report also blasts Victorville for its possibly unlawful use of ratepayer revenue.

The audit document issued Thursday, Apple Valley Area Water Rates, surveyed Apple Valley Ranchos Water Co. and Golden State Water Co. serving the town, and the city water departments of Hesperia and Victorville. Its stated purpose when requested in August was to conduct an audit of water rates in and around the town in an effort to identify the reasons for escalating water costs.

Differences between the private and public providers include taxes the companies must pay and low-income assistance programs that contribute to higher costs, and the fact the city departments benefit from additional revenues collected by the cities.

The audit report appears to clearly support our statement all along that rates for the private water utilities are higher, are routinely raised with support of the (California Public Utilities Commission) and are profit-driven, Apple Valley Town Manager Frank Robinson said. Conversely, the public entities audited show rates that are lower and more stable — exactly what we are seeking for the citizens of Apple Valley through community ownership of our water system.

The audit request was prompted by ratepayer concerns and frustrations with Apple Valley Ranchos Water Co.’s general rate case application, then-state Sen. Steve Knight’s request letter to the Joint Legislative Audit Committee said. The rate case, in which AVR requested a three-year hike of more than 30 percent, is still not finalized.

The rate case is expected to be resolved at a lower figure, the Office of Ratepayer Advocates said earlier. The ORA is an independent office that looks out for ratepayers’ interests; it is attached to the California Public Utilities Commission that hears and approves utilities’ rate requests.

The audit also figures into the town’s preparations to pursue acquisition of Apple Valley Ranchos.


This audit confirms that Apple Valley Ranchos’ rates and supporting documentation are regulated, public, transparent, and comprehensive, said Tony Penna, vice president and general manager of Apple Valley Ranchos. The audit covered a broad range of topics related to rates for water service in the High Desert.


The report takes issue with the way Victorville used money from its water department and airport authority accounts to construct an industrial wastewater treatment plant for Dr Pepper Snapple Group.


Despite difficulties past or present, Apple Valley Ranchos — like the town — finds some justification for its position in the comparisons.

Unlike what appears may be happening in government-owned water utilities as this state audit indicates, it is important for Ranchos’ customers to be confident the rates they pay for water service are authorized and set by an independent third party in a public, comprehensive, and transparent manner, Penna said.

Source: Gary Brodeur, Daily Press