Report 2014-132 Recommendation 2 Responses

Report 2014-132: Apple Valley Area Water Rates: Differences in Costs Affect Water Utilities' Rates, and One Utility May Have Spent Millions of Ratepayer Funds Inappropriately (Release Date: April 2015)

Recommendation #2 To: Victorville Water District

To assist low-income water customers, Victorville should work with its governing body to consider the feasibility of using revenues from sources other than water rates to implement a rate assistance program.

Annual Follow-Up Agency Response From December 2020

The Victorville Water District's response has not changed, our rates continue to be significantly lower than Golden State or other private water companies currently present in the area.

This recommendation was apparently made because of rate assistance programs offered at Apple Valley Ranchos and Golden State. The Victorville Water District offers low rates to all customers. According to Figure 4 on page 18 of your investigative audit, apple Valley Ranchos Water Company customers had an average effective rate of $4.36 per unit over the study period, Golden State has an average effective rate of $4.70; whereas, Victorville has an average effective rate of $2.65. Even when rate assistance is applied, the effective rates of the private water companies are still significantly higher than Victorville's rates.

Victorville and Hesperia have done very well to keep rates low for all customers. These rates are significantly lower than private water companies in the region, including any application of rate assistance, as demonstrated by the Hesperia City Manager in his letter to you on April 14, 2015. Victorville ratepayers who may be low-income or may otherwise qualify for rate assistance already pay significantly less than persons in similar circumstances who are customers of nearby private water companies. Any further assistance would be arbitrary and purely for public relations reasons. Arbitrary rate adjustments are prohibited by Proposition 218 and any use of other funds would necessarily take away from the purpose those funds are collected. At this time Victorville has no intention on adding such a rate and will instead endeavor to keep rates low for all customers.

California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement

As we indicated on page 59 in our report in response to the City of Hesperia, regardless of the rates of other utilities in the area or its current rates, we believe cities should, consistent with applicable legal requirements, consider a rate assistance program to help low-income customers in its service area.

1-Year Agency Response

Victorville did not submit a 1 year response.

California State Auditor's Assessment of 1-Year Status: Will Not Implement

We contacted Victorville and it stated that it will not be changing its statement from the 60-day response. Please see its 60-day response and our assessment of that response below.

6-Month Agency Response

Victorville did not submit a 6-month response.

California State Auditor's Assessment of 6-Month Status: Will Not Implement

We contacted Victorville and it stated that it will not be changing its statement from the 60-day response. Please see its 60-day response and our assessment of that response below.

60-Day Agency Response

This recommendation is apparently made because of rate assistance programs offered at Apple Valley Ranchos and Golden State, but it ignores basic math. The Victorville Water District offers low rates to all customers. According to Figure 4 on page 18 of your investigative audit, Apple Valley Ranchos Water Company customers had an average effective rate of $4.36 per unit over the study period, Golden State had an average effective rate of $4.70, whereas Victorville had an average effective rate of only $2.65. Even when rate assistance is applied, the effective rates of the private water companies are still significantly higher than Victorville's rates.

Victorville and Hesperia have done very well to keep rates low for all customers. These rates are significantly lower than private water companies in the region, including any application of rate assistance, as demonstrated by the Hesperia City Manager in his letter to you on April 14, 2015. Victorville ratepayers who may be low-income or may otherwise qualify for rate assistance already pay significantly less than persons in similar circumstances who are customers of nearby private water companies. Any further assistance would be arbitrary and purely for public relations reasons. Arbitrary rate adjustments are prohibited by Proposition 218 and any use of other funds would necessarily take away from the purpose those funds were collected. At this time Victorville has no intention of adding such a rate and will instead endeavor to keep rates low for all customers.

California State Auditor's Assessment of 60-Day Status: Will Not Implement

As we indicated on page 59 in our report in response to the City of Hesperia, regardless of the rates of other utilities in the area or its current rates, we believe cities should, consistent with applicable legal requirements, consider a rate assistance program to help low-income customers in its service area.

All Recommendations in 2014-132

Agency responses received are posted verbatim.