Water agency is overdue for change in policies

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I had the privilege of leading an amazing coalition of neighbors, teachers, clergy, MAC members, firefighters, business owners and local water executives trying to bring water into the Applegate area. This failed because of a total lack of political will at Placer County Water Agency, which runs without supervision. As a seasoned Wall Street energy and project finance investment banker, I had no trouble penetrating the mirrors of PCWA’s financial reporting. Three years ago their financial plight was quite strained. Today, with the almost total disappearance of one-time connection charges, it is in my view even more serious. This is compounded by their mad dash to secure the Middle Fork license from PG&E. They seek, without a partner, to become a power company, a highly risky business, and in effect repeat the disastrous folly of the Bear Stearns-supported lawsuit with PG&E 25 years ago. PCWA’s own recent debt proformas, I believe, show PCWA will not be able to afford any reasonable offer to renegotiate the 2013 PG&E water contract — even if they wanted to. This is because of restrictive debt covenants that now involve Zone 3 (District 5) water revenues being pledged to bondholders. PCWA Director Otis Wollan was quoted recently saying, “There is virtually no debt” (Journal, Sept. 14). Unfortunately, page 62 of PCWA’s 2007 accounts show water debt almost tripling from $34 million in 1998 to $85 million in 2007. That’s without the Middle Fork borrowings. Time for a little change? John Sellers Prescott, Ariz.