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Valley Voices: Private companies make tough water choices (November 3, 2015)

The Oct. 21 letter to the editor titled Cost of water makes some astute observations and I’m hopeful Apple Valley’s citizens will take note of the points. Many want to compare Ranchos’ water rates to local municipalities by only looking at the bi-monthly water bills and may not realize government-run utilities are prone to use multiple sources of revenue from tax dollars to make up for shortfalls in the rates they charge for public services like trash, sewer, safety, and even water.

A private water utility is transparent in that everything it costs to provide water service is reflected in a customer’s bill for water service. Therefore, the writer is correct in his conclusion that as a conserving customer of a municipal utility he would be subsidizing people that choose not to conserve.

Let’s consider cities like Hesperia and Victorville. Most of these cities charge connection fees for water service (between $4,000 and $6,000 in the High Desert) for every new home built during the housing boom several years back. These fees brought in millions of dollars that are typically set aside to replace aging water infrastructure in future years. But when water sales decreased due to state-mandated conservation requirements by the governor, cities like Hesperia and Victorville are dipping into these reserve funds, designated for water infrastructure, to supplement day-to-day operations.

This gives their ratepayers a false sense of what it actually costs for their water service. Their politicians won’t make the tough, unpopular decision to raise water rates. So what happens when the pipes fail and no funds are available from the reserves that were spent on shortfalls in water sales? Politicians will issue a bond that taxpayers have to pay back and call it a tough decision made by your dedicated politicians.

In the meantime, rates for water service remain artificially low and the reserve funds pay for customers who refuse to conserve as the future generations are left to pay the bill for a lack of accountability and responsible government. Apple Valley’s town government is likely to be no different if they take over Ranchos as we have already seen with the golf course and the sewer bill. You are absolutely correct when you have reservations about this whole deal.

— Eric E. Larsen, CPA, is manager of financial services for Apple Valley Ranchos Water Company.

Source: Daily Press