Guaranteed profit

Apple Valley Town council member Scott Nassif’s recent letter claims that Apple Valley Ranchos Water Company’s profit is guaranteed by the California Public Utilities Commission (“It’s about rate stabilization,” Daily Press, July 9, 2015).

Lest anyone be confused or swayed by this statement, here is what Leigh Jordan, Executive Vice President of Apple Valley Ranchos, wrote to the Town council back on January 1, 2015:

“This misconception that regulated utilities have a guaranteed return is often repeated by people who do not know the facts of CPUC regulation, but it is simply not true. The CPUC is required by law to set rates that provide an opportunity for utilities to earn the return that the CPUC finds reasonable, but the utility is NOT guaranteed that return. The CPUC provides regulatory mechanisms covering the impact of production costs and reduced sales due to conservation, but nothing that allows Ranchos to receive its authorized return if other expenses or capital costs are higher than estimated. Town Staff and attorneys know this.”

The proposed takeover of Ranchos by the Town of Apple Valley is complicated enough without representatives of the Town repeatedly issuing misleading and/or false statements.


Note: See also this video clip of a BRWC meeting at which this matter came up.