[env-trinity] CC Times- Paper shuffle allows for vast supply of easy money

Tom Stokely tstokely at att.net
Thu May 28 11:40:07 PDT 2009


 
Pumping water and cash from Delta
Contra Costa Times
 
Gaming the water system
Contra Costa Times
 
Water ownership murky, complicated
Contra Costa Times
 
Paper shuffle allows for vast supply of easy money
Contra Costa Times
 
+++++++++++++++++++++++++++++++++++++++
 
 
Pumping water and cash from Delta
Contra Costa Times - 5/23/09
By Mike Taugher
 

As the West Coast's largest estuary plunged to the brink of collapse from 2000 to 2007, state water officials pumped unprecedented amounts of water out of the Delta only to effectively buy some of it back at taxpayer expense for a failed environmental protection plan, a MediaNews investigation has found.

 

The "environmental water account" set up in 2000 to improve the Delta ecosystem spent nearly $200 million mostly to benefit water users while also creating a cash stream for private landowners and water agencies in the Bakersfield area.

 

Financed with taxpayer-backed environment and water bonds, the program spent most of its money in Kern County, a largely agricultural region at the southern end of the San Joaquin Valley. There, water was purchased from the state and then traded back to the account for a higher price.  The proceeds were used to fund an employee retirement plan, buy land and groundwater storage facilities and pay miscellaneous costs to keep water bills low, documents and interviews show.

 

Revenues from those sales also might have helped finance a lawsuit against the Department of Water Resources, the same agency that wrote the checks, documents show.

 

No one appears to have benefitted more than companies owned or controlled by Stewart Resnick, a Beverly Hills billionaire, philanthropist and major political donor whose companies, including Paramount Farms, own more than 115,000 acres in Kern County. 

 

Resnick's water and farm companies collected about 20 cents of every dollar spent by the program. 

 

Those companies sold $30.6 million of water to the state program, participated as a partner in an additional $16 million in sales and received an additional $3.8 million in checks and credits for sales through public water agencies, documents show.

 

"For a program that was supposed to benefit the environment, it apparently did two things - it didn't benefit the environment and it appears to have enriched private individuals using public money," said Jonas Minton, a water policy adviser to the Planning and Conservation League, a California environmental advocacy group.

Representatives of Resnick's farm and water companies did not respond to repeated requests for interviews. A woman who answered the phone at the Resnick's holding company last week said, "We don't talk to the press. It's company policy." She transferred the call to a company official who did not respond for an interview request.

 

The state Department of Water Resources also declined to comment for this story.

 

A paper accounting thing

The idea behind the environmental water account was to protect the Delta ecosystem without taking water away from people, farms and agencies that held growing expectations - and contracts - for water. By setting aside water that could supplement flows from the Delta, biologists would be able to slow Delta pumps at sensitive times, thereby protecting imperiled fish such as Delta smelt.

 

The water account was meant to enhance existing environmental protections and protect water users from the possibility that regulators might force them to give up more water to protect fish.

 

Despite good intentions, however, the program lacked the resources to provide the environmental benefits it promised. Traditional users got their water, but the environment suffered. Delta smelt dropped to levels near extinction. Even the backbone of the state's commercial salmon industry, Sacramento River fall-run chinook salmon, broke under the combined strain of ocean fluctuations and a variety of Delta-related problems, possibly including water management. That salmon fishery, which had never before been closed, is now off-limits to anglers for the second consecutive year, leaving supermarkets temporarily devoid of wild California salmon.

The way it was supposed to work was novel. If fish were in danger of being sucked into massive Delta pumping stations, for example, biologists could invoke the account to slow the pumps down. Then, contractors who would otherwise be deprived of water from the slowdown would be made whole with water from the account.

 

In order to provide that replacement water to contractors, the water account needed water stored south of Delta pumps. The underground water storage facilities in Kern County's aquifers and ancient river formations proved to be its most important source. 

 

But the location at the southern end of the San Joaquin Valley was not ideal. It made more sense to store the water closer to the Delta, where distribution would be easier to a wider variety of places.

 

So the water in Kern County was "exchanged" for Delta water that was being pumped at record high - and environmentally damaging - rates. The Delta water was then deposited in the environmental water account at San Luis Reservoir near Gilroy.

 

The exchange legally moved the water that was stored underground in Kern County to San Luis, but the water was still there. To complete the trade, then, the underground water had to be treated as if it were being delivered from the Delta.

 

Sometimes, Kern County water agencies retrieved the "Delta" water from underground for irrigation, but in most cases, the state was delivering so much water they did not need to.

 

Instead, most of the time all they had to do was simply forego storing the excess Delta water and pocket the difference between the low rates they paid to the state and the higher market rates they collected from the sale to the water account.

 

"I wouldn't pump that water to sell the (environmental water account)," said Dennis Atkinson, general manager of the Tejon Castaic Water District, which sold about $2 million worth of water to the account. "How are you going to make any money? ... It's a paper accounting thing. We never turned on a pump."

 

The price of water

 

The cost to taxpayers for Kern County water averaged $196 per acre-foot. The price Kern County paid for Delta water varied, but in 2007, the last year the environmental water account was operating, Kern County water users paid an average of $86 for Delta water. Some of that water was purchased for as little as $28 from a discount program. 

 

The environmental water account was administered by the state Department of Water Resources, which also operates the state-owned pumps near Tracy. It bought most of its water from the Kern County Water Agency, whose general manager insisted the prices charged to taxpayers were fair and necessary to offset the cost of buying, storing and managing the water.

 

"The prices were in line with what we felt were the appropriate costs," said general manager James Beck.

 

Still, Beck acknowledged, there was nothing in contracts to prevent sellers from making money.

 

Of course, selling reserves can be risky, and Beck said market prices this year are $350 per acre-foot or more. Given this year's water shortages, he said that if Kern County landowners could go back in time and undo those sales, they would "in a heartbeat."

 

To Atkinson, of the Tejon-Castaic Water District, it made sense for water districts to reap a return on the sales because water contractors have been paying for the state's dams, pumps and canals since the 1960s, while the demand that more Delta water be dedicated to the environment is more recent.

 

"These guys have showed up lately and want something someone else has," Atkinson said. "Since they don't have infrastructure, they have to get it from the people who made the investment."

 

The vast majority of the financing for the nearly $200 million program came from state environment and water bonds that will be repaid with interest over the coming years. 

 

Of that total, about 70 percent was used to buy water from entities in Kern County.

 

And of the Kern County sales, the $30.6 million sold directly by Resnick's Westside Mutual Water Company was more than twice the sales of any other entity, records show.

 

Open spigot

The environmental water account's effectiveness was hampered by the fact it was perpetually short of the 380,000 acre-feet a year envisioned when it was set up. In addition, a 2002 court decision favorable to water users reduced a separate source of environmental water, a cut that had to be made up by the environmental account, according to a 2005 report by the Environmental Defense Fund.

 

Also in 2005, three years into the fish collapse but the first year scientists could be sure that what they were seeing was a statistically valid plunge, the Contra Costa Times detailed how biologists worried about Delta smelt near the pumps were unable to get water managers to fully accept recommendations to slow the pumps because of concerns about driving the environmental water account into debt.

 

A study published last fall in the scientific journal Environmental Management concluded the account improved the reliability of water supplies for Delta water users but it was unclear whether it provided any meaningful environmental benefit.

 

Meanwhile, while the water account was meant to offset the environmental damage done by pumping water out of the Delta, it was being relied upon during a period when the state Department of Water Resources was ramping Delta water deliveries up to record levels. The environmental water account went into effect in 2000, and the five highest water deliveries from the Delta were 2000, 2003, 2004, 2005 and 2006, years in which, along with 2007, state water officials also sold large volumes of discount water that Kern County agencies would buy in 2007 for $28 per acre-foot. 

 

The sharp decline in fish populations began around the same time, starting in about 2002. And while there are likely numerous factors that caused the collapse, most scientists studying the problem believe pumping patterns contributed.

 

Water officials have argued that the increase in discount water deliveries through a program known as Article 21 made no difference, since the price of water has no biological effect and because the amount of water pumped annually was below the maximum authorized by the U.S. Fish and Wildlife Service. 

But regulators disagree.

 

A permit from the Fish and Wildlife Service, first issued in 2004, contained restrictions that were supposed to protect Delta smelt from going extinct due to water pumping. It was issued based on regulators' understanding that the use of Article 21 would be much less than it turned out to be.

 

In a 400-page analysis accompanying a replacement permit issued in December, the service's biologists noted that the Article 21 program was used far more extensively than they had been told when they issued the 2004 permit.

 

And that, in turn, helped drive up overall pumping rates from the Delta, which regulators tied to the environmental decline.

 

A coalition points elsewhere

Most of the water sold through the Kern County Water Agency originated with about a dozen smaller public water district "member units" and a handful of private interests who previously stored water, mostly from the Delta, in underground reservoirs. 

 

Several of those entities are members of the Coalition for a Sustainable Delta, a group that banded together to fight back against pumping restrictions imposed in late 2007 by courts and regulators.

 

The coalition has filed three lawsuits and threatened to file several more to shift blame away from water pumping's role in the Delta's collapse. The group contends other environmental threats are also to blame for the Delta's demise, including housing development in Delta floodplains, pesticide use, dredging, power plants, sportfishing and pollution from mothballed ships near Benicia.

 

The Coalition for a Sustainable Delta's phone number is the same as Paramount Farms, and of the four coalition officers listed on tax documents, three are Resnick employees: William Phillimore, chief financial officer and executive vice president for Westside Mutual and Paramount Farming; Scott Hamilton, resource planning manager for Paramount Farming; and Craig B. Cooper, chief legal officer for Roll International, Resnick's holding company.

 

A spokesman for the coalition said that although it has an employee working out of the Paramount Farms office, the group is governed by dues paying members and not Resnick. He attributed the heavy presence of Resnick's companies on the group's tax returns to issues associated with getting the new coalition up and running. 

"It's an ad hoc coalition. You have to organize that way," said spokesman Michael Boccadoro.#

http://www.contracostatimes.com/search/ci_12439808?IADID=Search-www.contracostatimes.com-www.contracostatimes.com

 

Gaming the water system
Contra Costa Times - 5/25/09
By Mike Taugher
 

Just before Interstate 5 climbs the Grapevine out of the San Joaquin Valley is a massive underground reservoir that its owners say is the largest water banking project of its kind in the world.

 

Here among the tumbleweeds, sand and scrub, 15 miles west of Bakersfield, the gush of crystal-clear water appears as curiously out of place as the great blue herons cruising along the bank's six-mile canal. 

 

The Kern Water Bank, which was owned by the state Department of Water Resources from 1988 to 1995, is now in the hands of Kern County interests and is 48 percent owned by Westside Mutual Water Company, a private water company controlled by Beverly Hills billionaire Stewart Resnick. 

 

It is 32 square miles of desert where one natural river and two artificial ones pass: the Kern River, which originates in the southern Sierra Nevada; the California Aqueduct, which carries Delta water more than 400 miles to a reservoir in Riverside County; and the Friant-Kern Canal, which takes water to valley farmers from behind a dam on the San Joaquin River.

 

"We have lots of water conveyance facilities that bring water past the Kern Water Bank," said Jonathan Parker, general manager of the Kern Water Bank Authority. "That makes this location pretty unique."

 

In wet years, the water bankers deposit water from the rivers into ponds where it percolates into the Kern River's alluvial fan. 

In dry years, they make withdrawals, which is why on a tour of the bank earlier this year water was gushing out of the ground from pipes and bubbling up into the canal from underground structures. 

 

Kern County water users, thanks in part to local ownership of the Kern Water Bank, became the biggest source of water for CalFed's "environmental water account" that cost taxpayers nearly $200 million. 

 

The account was in effect during a period when record amounts of water were pumped out of the Delta and fish populations staggered to record lows. One species, Delta smelt, could be near extinction in large part because of Delta water pumping. 

 

Roughly one-fifth of all the money spent to buy water for the program went to companies owned or controlled by Resnick, one of the state's largest farmers.

 

More than half of Kern County's water sales to the environmental water account - and all of Westside Mutual's sales - came from the Kern Water Bank.

And thanks to the magic of paper water trades, less than half of the water sold from here was actually pumped out of the ground.

 

Representatives of Resnick's farm and water companies did not respond to repeated requests for interviews over a two-month period.

The state Department of Water Resources also declined to comment.

 

Deal's 'linchpin'

The deals worked by letting sellers trade the underground water they were selling at market prices for water the state was delivering to them at much lower prices.

Instead of going to Kern County, then, Delta water went to San Luis Reservoir east of Gilroy.

 

The state got the Delta water at the reservoir, while in Kern County the water was either pumped out of the ground for farmers' use or, more often, simply reclassified as if it were delivered from the Delta. The sellers then pocketed the price difference.

 

The exchanges made some sense because, by taking delivery of the water upstream, the state could deliver it almost anywhere it would want to without unnecessary pumping.

 

But it also meant that at a time when the state Department of Water Resources was pumping record amounts of water out of the Delta - in some cases exceeding conditions regulators had approved as safe for Delta fish - it was delivering some of that water to itself for a program that was supposed to protect the same fish populations that were damaged by the high pumping levels. 

 

And it paid Kern County interests with taxpayer money for the ability to do so.

 

The general manager of the Kern County Water Agency, James Beck, said the program was a way for the state to ensure those buying water in Kern County got the water to which they were entitled.

 

"The environmental water account was a good example where water was provided to the state at a reasonable price ... to assist the state to meet its contractual obligations to its contractors," Beck said.

 

For many sellers to the environmental water account, including Resnick's companies, the key was ownership of the Kern Water Bank.

 

The deal that transferred the Kern Water Bank from state ownership to Kern County interests has its roots in the last big California drought, from 1987 to 1992. As have been the past three dry years, the last drought featured water cutbacks and severe environmental strains in the Delta, where fish were being added to the lists of threatened and endangered species.

 

In Kern County, the last drought was particularly acute because contract rules at the time required Kern County's farmers to take deeper cuts to their Delta water supply than Southern California cities.

 

To avoid a court fight, water officials representing the state, Kern County and Southern California reached a deal with ramifications that linger today. Among other things, the deal transferred the Kern Water Bank from the state to local interests.

 

The "Monterey Agreement," named for the city where the negotiations took place, along with the CalFed plan that followed, laid much of the groundwork for how the state's water supplies would be managed and how the Delta environment would be protected.

 

The results were mostly good for big water users, and almost entirely bad for taxpayers and the environment.

 

"The environmental water account was in some respects the linchpin to close the deal for the CalFed plan," said Spreck Rosekrans, a co-author of a 2005 Environmental Defense Fund study that showed how the account lacked the resources it was expected to get while it also was required to do more than planned.

"It involved buying some of the water that had been overpromised. It allowed folks to game the system and gain profits that were unwarranted," Rosekrans said.

State denied

 

At the time of the last drought, Resnick was expanding his farm holdings near Bakersfield. Kern County property tax records show his companies appear to own more than 115,000 acres - nearly four times the size of San Francisco and more than all the parks in the East Bay Regional Park District combined.

 

The water supply for those farms and orchards, which his companies boast include the largest pistachio and almond growing and processing operations in the world, was secured in part by the Kern Water Bank.

 

With a capacity of at least 1 million acre-feet, it is like having a reservoir the size of Folsom Lake, near Sacramento, or 10 reservoirs the size of Los Vaqueros, near Brentwood. 

 

There are other advantages too. Little water is lost to evaporation. Terrestrial habitat is not flooded.

 

The water is easy to get out of the ground: It only costs $35 to $40 to pump an acre-foot - nearly 326,000 gallons, Parker said.

 

Though the state invested a total of $74 million in buying and developing the Kern Water Bank, it could never get the groundwater storage operations up and running, partly because of a state law that requires the Department of Water Resources to receive local approval for groundwater projects. 

 

Kern County never granted that approval.

 

As a result of the negotiations in Monterey, the bank was transferred from the state to the Kern County Water Agency in exchange for Kern County interests giving up a small portion of their claim to water. The agency immediately turned the bank over to a joint powers authority made up of a handful of water districts and Westside Mutual Water Company, which has a 48 percent stake.

 

Another 10 percent is owned by Dudley Ridge Water District, where Resnick's farming company, which owns more than 40 percent of the district's irrigated acreage, is the largest landowner. 

 

Dudley Ridge's board president, Joseph MacIlvaine, is also president of Resnick's farm company, Paramount Farms.

 

The agreement made in Monterey also forced Southern California cities to share equally with Kern County farmers in the pain of drought. 

 

And it created a new program that allowed agencies in Kern County, Southern California and elsewhere to buy so-called surplus water for cheap - discount water that flowed so freely that, until the Delta ecosystem hit the skids, it amounted to more than the cut they took in their water contracts to obtain the water bank. 

 

The U.S. Fish and Wildlife Service, in a December analysis, said delivery of "Article 21" water was also much more than what they approved when they issued a permit in 2004 meant to protect Delta smelt from the effects of Delta water pumping.#

http://www.contracostatimes.com/news/ci_12443070

 

Water ownership murky, complicated
Contra Costa Times - 5/23/09
By Mike Taugher
 

Kern County water users who sold millions of dollars worth of water to a program meant to help the environment said the arrangement made sense because the water was rightfully theirs.

 

Few would dispute that water that was purchased and stored in Kern County could be sold to the environmental water account.

 

But the sales were made easier by the fact that the state Department of Water Resources was cranking up water deliveries to unprecedented heights at the same time it was buying water back for the environment. 

 

The general manager of one of the agencies that sold water through the program, Dennis Atkinson of the Tejon-Castaic Water District, acknowledged that the sales only made sense to him if state pumps were delivering more water than his district could immediately use.

 

In other words, the higher pumping levels not only took an environmental toll on the Delta, they also made water available to buy back to protect the Delta.

Was the state required to deliver all that water or could it have pumped less and potentially saved the cost of buying it back? Put another way, does Delta water belong to contractors or do environmental needs have priority?

 

The answer is unclear.

 

Kern County water districts have a contract that awards them about 1 million acre-feet of water a year. And as customers of the State Water Project, they have to make the same payments on the project's dams, pumps and canals no matter how much water they get. 

 

The state's water customers contend the contract obligates the state to make water available, and the contracts and simple fairness support that, at least to some degree.

 

On the other hand, a consolidated version of the full contract - which runs 348 pages and has nearly 40 amendments - appears to recognize that water shortages can develop "due to drought or any other cause whatsoever."

 

And the right to water in arid states is always conditional. The government can promise all the water it wants, but it can't make it rain. 

 

Environmental laws, a constitutional requirement that water use be reasonable and beneficial and an ancient legal doctrine that ensures water is used in a way that considers public trust values - including the health of natural resources such as the Delta - further limit the use of water, making the question of who "owns" water complicated.

 

"Because it's called a right, people tend to think of it like the First Amendment," said Phil Isenberg, a former legislative leader and chairman of a Delta Vision task force appointed in 2007 by Gov. Arnold Schwarzenegger to figure out how to fix the Delta.

 

"The water rights system is a way of figuring out who is first in line when supplies aren't enough to satisfy all of the water needs."

 

One of the state's biggest difficulties in delivering water to users while protecting the environment is the fact that water has been dramatically overpromised, Isenberg said.

 

As the Delta Vision committee was wrapping up its work last year, a memo arrived that members had requested from the state agency that administers water rights.

It carried this sobering comparison: The average natural flow of water in the Delta watershed is 29 million acre-feet per year, while the face value of water rights in the same watershed is 245 million acre-feet, or more than eight times the average flow.

 

"I was dumbfounded," Isenberg said.

 

Not all of the water in those rights is actually used, some of the rights are double-counted and much of the water that is used finds its way back into rivers where it can be used again.

 

Nevertheless, the figures are convincing evidence to Isenberg and others that the state has promised far more water than it can deliver. 

 

Further complicating matters, the State Water Project signed contracts with Kern County, Southern California and others at a time when plans called for dams to be built on North Coast rivers that would produce millions of additional acre-feet a year to spill into the Delta for contractors to use. Those dams were never built.

Faced with overpromised water, population growth, a sensitive environment and periodic droughts, it is no surprise California has difficulties managing water.

Those difficulties also are not new.

 

After the last major drought ended in 1992 a series of deals were struck to fix the system, culminating in 2000 with a plan known as "CalFed."

There may not have been enough water to satisfy farmers, cities and the environment, but when the deal was signed in 2000, the state was awash in money thanks to soaring real estate, stocks and dot-com enterprises. 

 

One of the keys to the CalFed deal was the environmental water account. 

 

The idea was to use the market to strike a new balance between the needs of the environment and people. The account would be used by regulators to enhance the environment by buying water from willing sellers, thereby reducing conflicts that arise when regulators take it away from water users. 

 

In the absence of an environmental water account, water users faced the possibility of additional environmental restrictions, according to a 2001 report by the Legislative Analyst's Office. For that reason, the LAO said water users should help pay for the program.

 

"Since compliance with endangered species laws is a responsibility of the state and federal water projects, (the environmental water account) in effect reduces the compliance burden for these projects," the LAO found.

 

Instead, the environmental water account ended up relying almost exclusively on taxpayer-backed bond funds, and most of that money was spent to buy water stored in Kern County.#

http://www.contracostatimes.com/news/ci_12437097

 
 
Paper shuffle allows for vast supply of easy money
Contra Costa Times - 5/23/09
By Mike Taugher
 

It must have seemed like easy money.

 

The state was delivering more water than ever to its customers, and in Kern County some of those customers sold some of it back, through a simple trade, at a higher price.

 

Tens of millions of dollars in sales to the "environmental water account" were little more than paper shuffles. It was all perfectly legal.

 

But the environment lost while Kern County water agencies collected $138 million in sales to the program, the vast majority of which was paid for with the proceeds from taxpayer backed environment and water bonds. 

 

Public water agencies in Kern County used money from sales to an environmental water account to fund an employee retirement plan, buy land and pay for miscellaneous repairs, documents and interviews show. 

 

One document shows that the Kern County Water Agency used revenue from the sales to help finance a lawsuit against the Department of Water Resources - the same agency that wrote the taxpayer-backed check to the agency - to lower its water bills.

 

The head of the Kern County Water Agency, James Beck, denied the lawsuit was funded with the sales revenue, but he could not explain why the general manager of one of his agency's member districts recounted that version of events to his board of directors.

 

Beck said revenues from the sales were used to cover the cost districts paid to buy, store and deliver the water. He also said funds were set aside to cover the cost of future purchases to replace water that was sold. 

 

But documents and interviews show the sales were seen by the water agency's "member units," at least in some cases, as a source of revenue that could be used for a wide variety of purposes:

 

In 2003, the Buena Vista Water Storage District, based in Buttonwillow, put $500,000 in revenues from the environmental water account sales into its employee retirement plan, documents show.

 

Water districts put environmental water account revenues into their coffers to offset miscellaneous repairs and other costs in order to keep customers' water bills down, said Dennis Atkinson, general manager of the Tejon Castaic Water District. "We take that money and apply it against our bills," Atkinson said. 

 

One district participated only marginally - selling small amounts of water at a relatively low price to the account's precursor one year and participating as a partner to help other water districts complete their sales in another. The Rosedale-Rio Bravo Water Storage District, based in Bakersfield, still was able to buy land to expand its groundwater storage capacity and build facilities with the proceeds, said general manager Eric Averett. Increasing the groundwater banking capacity is arguably consistent with managing water for the account, although the district did not sell any water to the account after 2001.

 

MediaNews identified $8.6 million worth of checks, refunds and credits, presumably to offset water purchases and pumping costs, including more than $3 million to Paramount Farms, that were paid to landowners in public water districts that sold to the water account. Blackwell Land LLC also received more than $3 million in refunds from the sales, while the remainder went to fewer than 10 other private landowners.

 

In 2003, Westside Mutual Water Company and the Wheeler Ridge-Maricopa Water Storage District negotiated a $600,000 payment to the water company, controlled by Beverly Hills billionaire Stewart Resnick, after a change in circumstances shifted a portion of the sales from Westside Mutual to the water district. At a meeting of sellers to the account, there was "a plea from Westside MWC that some compromise be worked out to adjust for the windfall" to the Wheeler Ridge-Maricopa district, which gained a greater share of the sales at Westside's expense, according to a memorandum from the water district's general manager, William Taube. 

Wheeler Ridge, which serves water to about 90,000 acres of farmland south of Bakersfield, shifted $600,000 in sales to Westside Mutual, which still left the district with $1.4 million in "net revenue."

 

The most unusual use of environmental water account money may have been its apparent use to sue the state Department of Water Resources - the agency that wrote the check for the purchases - to lower Kern County's water bills.

 

Beck denied that happened, but that is what Taube told his board of directors in May 2007.

 

In an interview, Taube said that while it was possible he was mistaken, the point he made was that Kern's "member units" would not have to contribute attorneys' fees because enough revenue had been generated from the water sales.

 

The lawsuit, known as the "Hyatt-Thermalito litigation," is a dispute over how the state prices power from turbines at Lake Oroville. Kern County Water Agency and other water districts north of the Tehachapis, including Bay Area districts, want the prices to reflect market rates, which would increase the cost of water in Southern California - where it takes more electricity to deliver Delta water because of the greater distance and the need to pump the water over the Tehachapis. 

 

The power sales are applied to contractors' debt for the State Water Project's dams, pumps and aqueducts, so raising the price of the electricity would reduce debt for contractors north of the Tehachapis at Southern California's expense.

 

In May 2007, Taube told his board that at the Kern agency's April board meeting he attended, the Kern board "directed that 2007 EWA sale proceeds accruing to the Agency would be used to fund the Hyatt-Thermalito litigation. This will reduce the litigation cost borne by Member Units and delay the time when Member Unit contributions to this litigation will be necessary," according to minutes of the Wheeler Ridge-Maricopa district's meeting.

 

Beck said that was incorrect but did not offer an explanation for how a misunderstanding might have occurred.

 

"That was my understanding at the time," Taube said. "If he (Beck) disagrees, maybe I misunderstood something."

 

Asked to clarify what his understanding was at the time, Taube said it was that, "They weren't going to need to call on member units ... because of the EWA."

Department of Water Resources Director Lester Snow, through a spokesman, declined to comment on the possibility that the proceeds from taxpayer-financed water sales to his agency may have been used to sue his agency.

 

In response to a formal request under the state Public Records Act, the Kern agency said it had no records showing environmental water account revenues being used to pay for lawyers. The official minutes of the Kern agency's April 2007 meeting contain no mention of the Hyatt-Thermalito lawsuit and its meetings are not recorded.#

http://www.contracostatimes.com/news/ci_12437335

 

 

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