Dear Administrative Law Judge and Commissioners,

I am writing on behalf of residents of Sierra City to express serious concern regarding the proposed Resolution W-5311. A proposed rate change from Sierra Water Resources Inc. (SWR) for a rate increase of 72% that would increase average monthly water bills from $98/month to $158/month.

Sierra City is a small, rural community with a significant number of residents living on fixed or limited incomes, including retirees and working families. The scale of recent rate increases places a disproportionate burden on this community and raises serious concerns regarding affordability.  It should be noted that the residents impacted by this rate increase are part of an economically disadvantage area (SB 535, CA. Disadvantaged Communities” DACs) and most of the residents rely on social security to pay their bills or have fixed incomes.

While we understand that water systems require ongoing maintenance and investment, rate increases of this magnitude are not sustainable for many households in our area. For some residents, these increases represent a meaningful financial hardship and may impact their ability to maintain essential services.

Sierra Water Resources acquired the RR Lewis Small Water Company (RRL) in January of 2024 under Resolution W-5270. In the summary of Resolution W-5270 the CA. PUC stated:

                                                   "This Resolution finds that the sale and transfer of RRL to SWR is in the public interest and meets the                                                                                    Commission’s ratepayer indifference test."

It should be noted that under the PUC Ratepayer Indifference Test, any sale of a public utility should not have any net consequences that cause the ratepayer to prefer the seller to the buyer. So, in the initial ruling of January 2024, the PUC claimed that we, the ratepayers, would face no "net consequences" when SWR became owners and operators of the local water company. Yet here we are facing a potential 72% rate increase in the current year. This sounds exactly like what SWR did when they acquired the Sonora Water Company in 2022. Although the holding company is known as Sonora Water Resources, it is owned by CEO Larry M. Morales and his son Nathaniel L. Morales. Soon after that acquisition, SWR filed for a 56% rate increase like what Sierra City residents are now facing.

A72% increase in our monthly water rates is a significant NEGATIVE net consequence for all of us, the ratepayers and as such, it represents a failure of the Ratepayer Indifference Test by a large margin. We respectfully request that the Commission consider the following:

• The economic profile of Sierra City residents, including fixed and limited incomes.
• Whether the rate increases are reasonable and affordable for this specific community.
• Whether a reduced rate increase could be implemented to lessen the financial burden given that SWR is following a well-established procedure that negatively impacts the very communities it serves.
• Whether additional oversight is warranted to ensure that increases are directly tied to measurable and timely system improvements because there is real doubt that that is occurring.
   

Had SWR properly vetted RRL prior to sale, they might have been more informed about the condition of the system, the financial status of the company and they would not be so prone to the many errors noted in your Resolution W-5311. Operating expenses from SWR over the past 2 years far exceed the expenses that RRL incurred. RRL made it a point to support the community by hiring from within and not bringing in out-of-county contractors at inflated prices. Larry Ostrom hired many of our neighbors to do routine work, trenching and backhoe work, testing and repairs, so some of RRL income was returned to the community. None of that is happening now. 

The proposed rate increases will exacerbate the economic vitality of this small mountain town at a time when we need protection, not abandonment. Please reconsider the financial impact this rate increase will have on our community.