Monopolies and their discontents
In his two-part rebuttal to my September 4th letter to the editor warning Montecito voters about Mr. Floyd Wicks’ tenure at Golden State Water, Mr. Wicks continues to insist that his experience as CEO of Golden State Water uniquely qualifies him for a vacant seat on the Montecito Water Board (MJ Vol 22/37 “Wicks Ready to Serve” Pts. 1&2). Perhaps he has not read the words that the California Appellate Court used in its decision against Golden State Water in their attempt to overturn a local election in Ojai that funded a bond to buyout Golden State’s interest in our water district and repair its long neglected infrastructure.
Monopolists have long been unpopular in this country. When KingGeorge III's choke hold on government led to intolerable levels of taxation, he was forced to divest his holdings. At the end of the nineteenth century, Congress passed the Sherman Antitrust Act with only a single dissenting vote. (26 Stat. 209, as amended, 15 U.S.C. §§ 1-7.) Introducing his landmark bill, Senator Sherman summed up the prevailing sentiment: "If we will not endure a king as a political power we should not endure a king over the production, transportation, and sale of any of the necessaries of life." (21 Cong. Rec. 2457 (1890).)
The court went on to state, “residents of Ojai, fed up with sky high water bills, voted to oust appellant Golden State Water Company, the private utility that monopolizes water service to their city.” And yet Ojai is not alone in revolting against the water monopolists. Claremont is in a similar fight with Golden State, and recently Los Osos began a their own movement against Golden State – and there are others. I would never deny Mr. Wicks his success as a businessman. With the help of the Public Utilities Commission, which in effect legitimizes the Golden State monopoly, Mr. Wicks has made his company and its stockholders a lot of money. Unfortunately, that business success has come at the expense of many ratepayers in many communities who have been left with poorly maintained, crumbling infrastructures. The real question for Montecito voters is whether Mr. Wicks’ experience as a the chief executive of a utility monopoly is an appropriate background for a citizen seeking a seat on a municipal utility – a utility owned by the people of that municipality, not a private, for-profit entity.
The case of the destruction of the Ojai Playhouse by a broken Golden State water main was not the central argument of my original letter to the Montecito Journal, but as Mr. Wicks has focused so much of his rebuttal on it I feel the need to clear the air on that subject. Mr. Wicks claims that water main breaks are inevitable and it is unreasonable to expect otherwise of any system. I can certainly accept this as a reasonable statement in and of itself. Accidents happen. What I have a problem with is the number of such accidents that have occurred in Ojai to Golden State’s system. And why after two years does Golden State Water continue to refuse to repair the Playhouse forcing the owner to pursue litigation against them and their insurance carrier? How would Santa Barbara residents feel if the Granada Theater had been destroyed in a similar incident? And while it is true that Mr. Wicks was not Golden State’s CEO at the time the water main destroyed the Playhouse, shouldn’t a chief executive assume some responsibility for the corporate culture that leads to this kind of egregious irresponsibility? There is a lot of talk about corporate cultures in our country these days, but very few executives who assume responsibility for them.
And yet the water main break that destroyed the Ojai Playhouse is not a solitary, isolated case. Water main breaks are epidemic in Ojai. I personally counted over twenty breaks on the water main that runs down the road adjacent to my property before Golden State finally decided that part of the main needed to be replaced. These water mains breaks occurred between 2006 and 2008, in the last years of Mr. Wicks’ tenure as CEO of Golden State. At that time there were also multiple breaks along Grand Avenue and Signal and at countless other locations around town. Golden State did finally replace these lines, but only after the Public Utilities Commission granted them an 11% return on investment, in the form of rate increases, for every dollar they proposed investing in repairing their under-maintained system.
Finally, with regard to Mr. Wick’s claim that residents of Ojai “pay approximately half” of what Montecito and Summerland residents pay in water rates; this is more than a little exaggeration. While it is a false equivalence to compare Montecito and Ojai water rates as they depend on completely different sources and distribution infrastructures, Ojai does pay approximately 25% less than residents of Montecito and Summerland, not 100% less. Water bills are a little more complex than just the rate matrix. There is also the meter charge, which is 100% more expensive in Ojai, while Montecitans pay more for their usage rates and slightly more than we do for their version of our WRAM surcharge. But then, Mr. Wicks should know all of this. The question is why is there a need to exaggerate the actual facts? And if he really wanted to make a fair comparison of our water district to a district very similar to it he would have compared it to the Casitas Water District, a municipal water company that charges a third as much for the same water Golden State Water distributes to Ojai.
I had not planned to write a rejoinder to Mr. Wicks’ rebuttal of my letter to the Journal. He certainly has a right to defend himself, but in consideration of the fact that he has now authored two such rebuttals to my original letter, I felt that an answer to some of the claims he was making was appropriate. Clearly, Mr. Wicks has experience in the water business. Montecito voters just need to decide whether this is the kind of experience they want or need. From my own personal experience I would suggest that it is not.
