FixEID

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EID Board Fiscal Oversight - Grade F

DEBT MORE THAN TRIPLED:
Under the current Board since 2002, EID Debt has more than TRIPLED, from $110 million to $390 million.  Annual interest cost for this increase is $15.6 million, or 38% of 2011 rate revenue.  (Note: EID already has notified current Bond holders that it intends to raise an additional $60 million of new Debt in late 2012…46% of additional Water rate increases have been planned to pay for this additional Debt).

$137 MILLION EXCESS CAPACITY:
As valued by EID’s Finance Director, $137 million of EID’s Debt (half of the $280 million Debt increase) is for current excess capacity (Read Report).  Interest cost on this excess capacity is $8.0 million annually, or 19% of current rates.  Yet the number of 2010 Water and Sewer customers is almost exactly what was projected by EID in June 2000, 38,500 Water and 20,600 Sewer customers, respectively (Review the chart).  So, why so much excess capacity?

SPENDING EXCESSES:
EID’s Board approved a 2011 Operating Budget that increased $4 million (10.6%) over actual 2010 spending, deeming the spending budget “cut to the bone”.  Yet big increases in travel, meetings, training, consultants & contract services, employee benefit costs, etc. were included as “essential to the quality and safety of our water supply”.  Additionally, the Engineering budget surged $0.5 million while Capital projects decreased 41%.  Just who is our EID Board looking out for?

PROPOSITION 218 VIOLATIONS:
EID’s rates for Sewer, Domestic Irrigation, Small Farms and Recycled Water are in substantial NON-compliance with Proposition 218 (Sec 6.(b)) proportionality requirements. The 2011 Sewer rate increase was NOT cost-justified as required under Proposition 218 and the SECOND average $101 Sewer increase since March 2010 should be rolled back immediately.  Meanwhile, large increases for all Water customers are required to cover existing subsidies (not allowed under Proposition 218 (Sec 6.(b)) to Domestic Irrigation, Small Farm, Hydro, Recreation and Recycled water.

DECEPTION AND DUPLICITY:
EID’s Management proclamations, Press Releases, and website too often deceive ratepayers and the general public.  Misrepresented “Flat” budgets (that actually increase 10.6%), “Wage Freezes” (that don’t freeze for seven more months), are just a few highly material examples.

RAMPANT RATE HIKING:
The current EID Board has raised rates an average 80% since 2003; half of the rate increases funded increased interest costs for overcapacity.  Various current rate subsidies will require some rates to increase further while others decrease.

ACCOUNTING IRREGULARITIES:
Several multi-$ million accounting "irregularities" suggest that EID’s rate hiking "pain" is far from over. About $50 million of unfunded pensions and retiree medical costs need to be paid for (see Pay & Perks). Also, the Board raided $40 million of legally-restricted FCC reserves that should be replenished against what they call a $137 million FCC “Accounts Receivable”. ("FCC's" are what EID calls its new facility connection charges.)

EXCUSES:
EID’s Board blames
  a) a change in the El Dorado County Master Plan,
  b) former Management, and
  c) “everybody else was doing it”
for many of these financial woes. 

But, just whose interests were the Board watching out for?  Employees, Bond salesmen, Developers, Contractors, Consultants?  All of these constituencies were big winners from EID Board decisions, leaving EID ratepayers to pick up the (huge and unwarranted) check. 

“GOODIES” FOR DEVELOPERS:
In February 2011, EID’s Board again demonstrated that Developers are more important than ratepayers.  Not satisfied that all the current $137 million extra capacity was because of “overly rosy” growth predictions by the Developers, the Board voted (agenda item 7) unanimously to renew the Weber Dam agreement, an effective $1+ million “giveaway” of ratepayer money to Developers.