In September 2011, after discarding a $55,000 rate study by consultant Bob Reed that had a $20,000 cost overrun, the Board earmarked an additional $120,774 for a new rate study to consolidate the water systems. At the May 10, 2012 meeting, General Manager Gene Mancebo informed the Board that he needed an additional $14,500 to complete the new study and pay Reed to attend meetings with wholesale customers (Cities) and large water users.

Mancebo said it would like to have Reed present to answer detailed questions about the report that could arise at meetings with Cities and wholesalers. Debbie Dunn explained that the Directors and Mancebo should have a full understanding of the rate study before they go to the Cities and public to recommend the study. If they fully understood what they were approving, Directors could answer questions, thereby saving the ratepayers Reed’s fee of $240/hour to attend and travel to and from each meeting.

Bill Condrashoff pointed out that Mancebo told the Board the consolidation would save ratepayer funds. Condrashoff then repeatedly asked how the $200,000 that was already wasted on the consolidation would come back to ratepayers. No Directornor Mancebo answered the question.

Karen Crabtree stood up and scolded the board for not having an answer to Condrashoff’s question and her comments prompted this response from AWA attorney Steve Kronick: “The impetus for this rate study was not to produce a savings. That wasn’t what this was all about. The impetus of this rate study was we had three systems that were in the red that were upside down. So the impetus of this study was to develop an equitable rate structure for all agency customers. That’s the purpose of this study. The purpose of this study is not to produce some sort of specific savings. It’s to create a rate structure that is fair and equitable to all of the agency’s customers.”

In September 2011, Mancebo said that the consolidated rate structure would provide benefits including:

• The rate setting process would be streamlined. The single process would be more efficient and cost-effective than multiple duplicative processes.
• Customers would benefit from improved financial stability for the Agency and improved equity in water rates.

If AWA’s attorney and general manager can't agree on the reason for the consolidation and the Directors do not comment on the reason, the public is unlikely to trust any of the information they are given. So far, the “streamlined, cost-effective” process has taken 9 months, cost more than $180,000 and AWA will not give a date or total cost for completion.

According to the preliminary report, one system that was "upside down" will get an average rate decrease. The "financial stability" promised is nothing more than passing costs onto the one system that is financially sound.

After an hour and 30 minutes of discussion, the board voted to expend $7,500. That brings the total authorized for Reed to $183,274, without any completed rate study. Reed was originally going to prepare a study for the financially sound system for $35,000.

Mancebo is to report back in 30 days if his latest plan does not work out and he needs more funding.

After 7 weeks, AWA’s General Manager Gene Mancebo still did not explain problems the public found in AWA financial reports on March 22, 2012. At the May 10th meeting, Mancebo asked the Directors for $5,500 to contract an outside accounting firm to do a review of the Agency’s financial system.

In the meeting the public told the Board that AWA did not have separate accounts for the restricted funds which, according to Government Code 66013, must not be intermingled with other funds. Mancebo told the Directors that although there was not separate accounting for the 66013 funds the reports were accurate and staff was working to get the audit to agree with those reports.

RPA members at the meeting asked that before Mancebo was given more funds to spend that he first give the Board a list deliverables from the contract and an estimated cost to execute the recommendations. The Directors approved a motion for Mancebo to bring two proposals to the board on May 24th.