Donner Water Co. seeks $12 million loan
Donner Lake Water Company has filed for approval by the California Public Utility Commission to borrow $12 million for capital improvements, for immediate repairs and to repay outstanding debts of $557,000.
Janice Hanna, director of corporate accounting for Del Oro Water Company, the parent company for Donner Lake Water Co., requested the state commission permit the water company to recover the debts through a surcharge with the initial portion for 2001 in the amount of $4.8 million, which includes reimbursement of $557,000 of project costs incurred from 1998 through November 2000.
The application, as it appears before the Utility Commission, is split into two major requests: to receive the loan sum of $12 million for a five year capital improvement plan, and for the expedited delivery of $4.8 million from conventional lenders and via safe drinking water state revolving funds.
“Up to $2 million (of the $4.8 million) will arrive through conventional financing,” said Heather Milne, Del Oro Water Co. spokeswoman. Interest with conventional financing is expected to be 10 percent. Interest on the remaining portion of the loan, funded by the state, will have an interest rate of 2.7 percent.
Donner Lake Water Co. was mandated by the California State Department of Health Services to begin repairing the water system in 1993. Following several deadline extensions, surveys, legal delays and environmental studies, the company has yet to rebuild the system.
In a press release Donner Lake Water Co. stated that on three specific occasions over the past seven years, it notified customers of a prospective rate increase, which was ultimately withdrawn. While the company is required to inform its customers of rate increases, it is not required to announce when the requests are withdrawn.
“We apologize for failing to inform you that we had withdrawn our request for rate increases and that consequently there would be no new charges to your bill. You will be notified if this surcharge request is withdrawn,” wrote former Del Oro spokeswoman Karin Caves.
Donner Lake Water Co. applied for a $3.7 million state revolving fund loan last August for construction of a water treatment facility, but was denied by the Utility Commissioners on Sept. 3 because of litigation with Donner Lake Village Resort and opposition from homeowners.
If the partial loan for $4.8 million is approved, the surcharge would amount to to an additional average cost of $16.31 per customer per month the first year and $31.51 for the remaining 19 years of the 20-year payment plan. The actual amount of the surcharge per customer would vary depending on the size of pipe connecting the user to the system and the type of service (metered vs. flat).
Member of the Donner Lake Citizens Group for Drinking Water, a group of Donner Lake residents working to further the Truckee Donner Public Utility District’s involvement with the water system, feel many residents are unaware the water company is seeking $12 million to rebuild the water system, and the expedient delivery of $4.8 million.
Emilie Kashtan, a member of the citizens group, wrote that the public comment period before the PUC hearing is too brief, and would be missed by many residents because of the holidays. Donner Lake residents must submit comments or concerns to the CPUC by Monday, January 8.
“We are doing a letter of protest,” Kashtan said. “Those figures are only for the $4.8 million surcharge and not for the $12 million. And that’s on top of our water bill … I don’t think it was ever made clear in the letter that those are only part of the charges and those are separate from our water bill.”
Milne said notice of the company’s action was sent out to all of the Donner Lake customers.
Donner Lake Water Co. has been working to improve the quality of water at Donner Lake for several years.
Last year litigation with the Town of Truckee, Donner Lake Village Resort Homeowners Association, and a class action lawsuit with customers of its Lime Saddle Water District headlined the list of delays for the water company.
In addition, the water company was cited three times in eight months for not complying with water quality standards outlined by the state surface water drinking rule.
Milne said the remaining $7.2 million of the total $12 million would be used to complete the five year capital improvement plan.
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