Questions residents may have regarding
Rosario Water System
Although Washington Water Service has not taken a position on the vote to annex the Rosario water system service area into Eastsound Water and Sewer District, we are providing the following information to clear up some misconceptions.
Questions residents may have:
What does the annexation actually mean to residents?
Annexing does not transfer the ownership of the water system. If the annexation vote is approved, the East Sound Sewer and Water District (District) can begin a costly condemnation process that could take a year or more. Eventually, if the District prevails in the condemnation, it will pay the court-appointed value for the water and wastewater systems, legal costs, appraisal costs, and court costs, all of which would be passed on to residents.
Who is Washington Water Service Company?
Washington Water Service Company has roots dating back to the 1970s, and currently serves over 50,000 people in 272 communities throughout the state, including customers of Washington Water systems and municipalities. Above all, Washington Water is committed to providing excellent customer service and reliable, safe drinking water of the highest quality. In fact, we were recognized by the Department of Health with a “Grace Under Pressure” award for our service to customers during the storms of December 2006. Washington is a subsidiary of the California Water Service Group, the largest investor-owned water utility in the West. California Water Service Group's other operating subsidiaries are California Water Service Company, New Mexico Water Service Company, Hawaii Water Service Company, and CWS Utility Services. As part of a larger organization, Washington Water has access to resources that smaller providers do not typically have. Our financial stability is evidenced by the fact that we have paid dividends on our stock since 1945.
Does annexation ensure that residents can keep Cascade Lake water for their own use? What happens to water rights if the annexation is successful?
The Rosario system currently owns only enough water rights to serve its existing service areas. However, if the District prevails in a condemnation process, it could negotiate to purchase or move forward with a condemnation to obtain additional water rights.
Does annexation ensure local control of the water utility?
Again, annexation is not condemnation. If the District does acquire the Rosario system, its board, which is made up of “at-large” members from throughout the District boundaries, will make decisions regarding the water system. Re-districting would be required to change board member representation. While Washington Water is not governed by elected officials, it is regulated by various state agencies and has community advisory panels. Since purchasing the Rosario system, Washington Water has begun assembling a consumer advisory panel for the Rosario system.
How much would annexation cost?
Since annexation is an election process that has been placed on the ballot, there is minimal direct cost to Rosario customers. However, if a condemnation is undertaken, it will be very costly, and those costs will likely be passed on directly to Rosario customers.
Since Washington Water has shareholders, would water service be less expensive if the District condemned the Rosario system?
Any water provider, including the District, must pass on its costs to customers. Currently, the UTC has authorized Washington Water the opportunity to earn 12% on its shareholders’ investment. Since the return to shareholders is not fixed or guaranteed, the rate is higher than the interest paid on debt. However, Washington Water’s shareholders have earned an average of only 7% over the past six years, which is not significantly higher than the interest rate paid on debt. Based on Rosario’s recognized investment, Washington Water expects to earn approximately $2.90 per customer per month, or less than 10 cents per day, as shareholder return. Washington Water believes this amount can is offset by efficient operations and the savings from having certain services, such as construction and engineering, available in-house. Even without acquisition costs that would be passed on to the District’s customers, water rates would likely be no less than Washington Water’s rates.
Why would Rosario water system customers want a private water utility like Washington Water to serve them?
Washington Water has extensive experience in providing water utility services; oversight to assure that rates are fair, just, and reasonable; greater efficiency from economies of scale; and access to greater resources. As a state regulated utility, Washington Water Service Company can only pass on actual operating water system costs; there is no profit mark-up added to operating costs of the water system. Additionally, Washington Water Service Company pays local and state taxes, which help support the local communities in which it serves. Unlike cities and districts, Washington Water does not have the ability to levy taxes.
Does Washington Water plan to sell the water system?
No, Washington Water is in the business of providing water service and does not sell water systems.
Does Washington Water have “Economies of Scale” that a local District would not have?
Yes. As a larger water purveyor Washington Water has “economies of scale” that result from spreading certain costs over all its customers. With more than 50 employees in operations, construction, customer service, and engineering, Washington Water has the staff to not only respond quickly to emergencies, but also the in-house engineering and construction staff to quickly design and construct repairs and improvements during emergencies. Furthermore, during last year’s Rosario Utilities rate case, the UTC staff noted that the rates being requested were lower than would be justified as a stand-alone system, due to Washington Water’s economies of scale.
Would Washington Water operate the Rosario system if condemned?
While Washington Water does operate water systems for government agencies and would be willing to discuss an operating contract with the District, each operating contract is evaluated based on several factors, including price.
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WASHINGTON WATER
SERVICE COMPANY