Facing repeated rate increases of up to 78%, residents of the small town of Felton, California, organized to buy back their water system from a subsidiary of a huge German corporation. By applying the pressure of an eminent domain lawsuit, the community won local ownership and control of its water.
Felton Water System
FLOW staged a play about Felton's battle with a water corporation
In 2002, California American Water Co. bought the water system of Felton, population 6,000, in the coastal redwoods outside Santa Cruz. Cal-Am, a subsidiary of American Water, which is in turn owned by German energy and water giant RWE, immediately sought to raise rates 78%.
Felton residents organized a citizens group called Felton Friends of Locally Owned Water (FLOW), with support from the Santa Cruz County Board. Despite their protests, the California Public Utilities Commission allowed Cal-Am a 44% rate increase. The company soon asked for another rate hike of 60%.
FLOW put a property tax increase on the local ballot to raise $11 million to buy the water system. The measure passed in July 2005, with 74.8% of the vote and the San Lorenzo Valley Water District offered $7.6 million to buy the Felton system from Cal Am. Cal-Am valued the system at $25 million and refused to sell, so the Felton residents and the county started eminent domain proceedings.
Less than a week before the eminent domain trial was to start, in May 2008, Cal-Am agreed to sell the system to the water district for $10.5 million. The deal included 250 acres of forested watershed land.
The shift to public ownership cut the average customer's base bi-monthly water bill from $183 to about $86. However, with the higher taxes to buy the system, the total average cost comes to roughly $177 every two months.
In January 2009, the San Lorenzo Valley Water District raised its rates 30% over the next three years. While some Felton residents complain about continued rate increases with the public system, the private company had previously imposed much steeper increases. According to the California Public Utilities Commission 2008 annual report,Cal Am requested a 2009 rate increase of 80% for water systems it still owned.
Felton voters were galvanized primarily by the steep rate increases. They also were frustrated with consistently poor customer service and shoddy maintenance. On evenings and weekends, customers' calls were answered by a call center in Alton, Ill., where the operators were ill-equipped to solve any problems, according to FLOW leader Jim Graham. There were repeated reports of lost water pressure, causing concern about possible contamination of the system, and hazards such as ditches left poorly covered. One winter, a main line repair took five months, tying up morning and evening traffic on the main artery in and out of San Lorenzo Valley.
Friends of Locally Owned Water (FLOW) was a grassroots organization of community members, with some assistance from the national organization Food and Water Watch. FLOW had about 70 committed volunteers and a strategy of making personal contact at least three times with more than 1,000 local households.
FLOW raised money for legal fees via bake sales, garden tours, dances and other community events, and then turned to the Intervener Compensation Program that provides financial resources for residential and small business utility companies to intervene in rate request before the Public Utilities Commission.
After Felton's victory over Cal-Am, several members of FLOW decided to offer the benefit of their experience to other community groups interested in regaining public control of their water systems. They have helped organize similar efforts in Monterey, Aptos, Spreckels and Chattanooga, Tenn.