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State PUC Grants Oil Giant’s Water Company 89.7 Percent Rate Increase; Chevron Wanted 138 Percent

Santa Monica, CA -- A decision today  by the California Public Utilities Commission to grant a whopping 89.7 percent water rate increase to a tiny water company owned by oil giant Chevron means three years of increasing fiscal agony for the hamlet of Casmalia, Consumer Watchdog said. The increase will be phased in over that period.

Chevron, which just posted record first-quarter profits of $5.17 billion, had originally sought a water rate increase of 138 percent.  The average monthly water bill in Casmalia is $115 compared to $40 to $60 for the same amount of water provided by other agencies in Santa Barbara County.  Under the new rates, Casmalia’s average monthly bill would soar to $148 immediately. In 2009 it would rise to $183 and in 2010 to $217. Under Chevron’s initial plan the average monthly rate would have been $272.

“Folks in Casmalia are in a special class,” said John M. Simpson, an advocate with Consumer Watchdog. “All Californians get shafted by Chevron when they go to the gas pump. Only residents of Casmalia get shafted a second time when they go home and drink a glass of water.”

In a letter to the Public Utilities Commission before today’s meeting, Casmalia Community Services District President Bill Ostini wrote, “If this increase is granted, it will signal the beginning of the end for us."

Village officials estimate the median household income for the town is around $30,000. The final Chevron water bill would swallow nearly 9 percent of that income.

Casmalia is 1.5 miles north of Vandenberg Air Force base. In the early 1900s, the population was 1,500. It's since dwindled to around 200, and the town is perhaps best known for the Hitching Post Restaurant. From 1973 to 1989 the notorious Casmalia Resources Hazardous Waste Facility operated a mile north of town. During the time it was in business, the toxic dump received more than 4 billion pounds of waste from around the Golden State. Fumes regularly blew into town and sickened residents. Those days are over. Now the site is the target of an EPA Superfund cleanup, and Chevron is involved as a member of the Casmalia Steering Committee.

Casmalia gets its water from the Casmite Water Corp., owned by Chevron. Casmite has provided Casmalia's water since the 1940s, when it had oil operations in the area. Unocal acquired Casmite in 1953, and then Chevron swallowed up Unocal in 2005.

"Oil giant Chevron, needs to harness some of the 'human energy' it touts in a multimillion dollar ad campaign and solve this community’s problem,” said Simpson, “We're talking about amounts that aren't even pocket change for Chevron, but an 89.7 percent water rate increase on top of already exorbitant rates will kill Casmalia. PUC regulations may allow Chevron to do this, but that doesn't make it right. If I were a Chevron executive, I would be embarrassed by what's happened in Casmalia."

Consumer Watchdog said Chevron should follow the example of oil company Atlantic Richfield when it faced a similar situation in New Cuyama in 1977. The oil company turned over their small water agency along with $1 million to run it to the Community Services District.

Read an opinion piece in today’s San Francisco Chronicle about the Casmalia water situation.

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Consumer Watchdog is California's leading non-profit and non-partisan consumer watchdog group.