Economics Of Water System Purchased Questioned



I've been following theeated debate/argument over whether or not Pine and Strawberry should purchase their water companies and create a combined community-owned entity. I understand and appreciate therguments of both sides, but would like to speak to the economics ofhis purchase.

The pro-purchase group (Rim Country Water)ave presented financial analysishich shows thathey wille able to buy the water systems, make repairs, connect to more wells, and manage the water companies without having to raise rates at all. At besthis suggests arofound misunderstanding of the actual costs involved, and at worst a purposeful misstatement designed to dupe a financially unsophisticated public. If it's the former, do we want a group this naive in charge of our water? If it's the latter, do we want a group this purposefully misleading in charge of our water?
RCW shows the cost of buying the water companies to be $3,000,000. My research shows more realistic price to be $5- to $6-million, assuming there's a willing seller. People who have actually talked with the owner of the water companies tell me that he is most definitely not a willing seller. This would result in the need to either pay above the market price to motivate him to sell, or go through the long (3-plus years) and expensive (maybe $500,000 in legal fees) process of condemnation and a court-determined sales price (the nuclear option). The ultimate result? An even higherost.
Then there is the income and expenseroforma prepared by the RCW. I believe that the expenses shown in this proforma underestimate the cost of operation by at least 25 percent, and that's even before taking into consideration the cost of the water from the proposed new well hook-ups and the cost of the loss of economies of scale (i.e., the way Wal-Mart can sell things more cheaply than a Ma & Pa store). Again, is this due to ignorance or a purposeful desire to mislead the public? Either way, do we want these people in charge of our water?

I realize that there is some legitimate discontent with the current owner's management of the water system. But I'm wondering if this isn't an "out of the frying pan and into the fire"ption that we're presented with here. I think we'll end up paying even more for water under the new ownership system, and end up withn even more divided community.

And has anybody really asked Strawberry residents (who don't have a water problem)hether they want to be linked in a combined water company with Pine (who does have a water problem)?

Kate Harrison

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