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Small Towns Tell a Cautionary Tale About the Private Control of Water

Second of two parts

May 30, 2006|Tim Reiterman | Times Staff Writer

In San Jerardo, a tidy but poor farmworker cooperative encircled by the black earth of Salinas Valley fields, residents have been drinking bottled water for almost five years because the tap water they buy from a private company is unsafe.

Nearby, families in the modest town of Chualar are still smarting over monthly water charges that in some instances ballooned by 1,000% or more.

And about 40 miles to the northwest, the Santa Cruz Mountains hamlet of Felton voted last year to tax each household up to $700 a year to take control of the local for-profit water system after the new owner proposed a series of rate increases.

These communities are fronts in a statewide battle over the price, quality and reliability of water that investor-owned utilities are supplying to nearly one in five Californians.

In the late 19th century, private companies delivered water to most of the state's homes and businesses. Today about 80% of the state's people live in large cities and towns served by publicly owned utilities. About 140 for-profit companies provide water to more than 6 million people, mostly in suburbs and smaller communities.

Supporters of government-run water systems point out that they, unlike investor-owned utilities, do not need to pay taxes or produce a profit. But big companies contend that they can operate with less overhead per customer.

At the core of the dispute are philosophical differences over whether an indispensable resource should be controlled by private firms.

In San Jerardo, a farming co-op of converted military housing several miles from Salinas, residents still are paying for their tap water, although it was declared unsafe in 2001 when Alisal Water Corp. found high levels of nitrates in a company-owned well serving the community of 250.

Since then, the company has been providing households with three five-gallon bottles of purified water each week for drinking and cooking. Residents complained that it was not enough.

Monterey County recently began providing 10 additional gallons weekly to families that needed more, said co-op manager Horacio Amezquita.

"It is better because people ran out of the 15 gallons," he said. "Right now, it is working, but when summer comes, people will use more water."

Down the street, fieldworker Manuel Alcala said he doesn't like paying $35 to $45 a month for tap water his family of five cannot drink -- and that cannot be used to wash his baby's bottles. "The water is no good," he said.

In 2004, U.S. District Judge Jeremy Fogel fined Alisal and its owners $500,000 for violations of the Safe Drinking Water Act that Fogel said jeopardized the health of thousands of customers in several communities around the county. Federal officials said it was the largest penalty ever imposed on a water utility.

The judge ordered the sale of the company's eight small water systems. Investor-owned utilities with nearby service areas are buying the largest ones.

Residents of San Jerardo are still waiting for a clean, adequate water supply, though recently a public water district moved to acquire the co-op's system and devise a plan to remedy its water supply problem with government funding.

Marc Fairman, lawyer for Alisal, said that, despite the violations cited by the federal government, the Salinas-based company "never had any kind of serious health problems with their systems."

In nearby Chualar, residents who had been paying $21 per month for water got a rude introduction to privatization two years ago, when Monterey County sold the town's water system to California-American Water Co.

A monthly charge of more than $200 prompted Rebecca Trujillo, a farmworker whose husband owns a concrete business, to call Cal-Am's customer service line in Illinois. She said she was told there must be a serious leak.

But that was not the problem -- and Trujillo was not alone. Some monthly bills exceeded $500.

With approval from the California Public Utilities Commission, which regulates investor-owned water companies, Cal-Am had started assessing Chualar customers the same rates as its customers in a Carmel Valley neighborhood of million-dollar homes.

The rates were designed to encourage conservation by steeply increasing charges for households that used more water than a typical family of four. But Chualar's households often are much larger than that.

When residents protested at a PUC meeting in San Francisco, Cal-Am agreed to restore the old rates until more reasonable ones could be developed.

The residents want rates tailored to their ability to pay. "Water is very special because three-quarters of our bodies are water," said Trujillo, surrounded by relatives in her bungalow. "It is more important to bring the water than food."

State and company officials concede they were at fault.

"The whole idea of setting rates based on.... an adjacent area is pretty shaky," said Fred Curry, water branch manager at the PUC. "It was a shortcut that the commission allowed Cal-Am to get away with, but it blew up in their face."

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