President’s first monthly message to shareholders errs re Well #8 and redundancy.

President Frank Mezzatesta will be writing a message to shareholders on the back of every monthly invoice.  In his first one, he writes about “optimal number of wells.”  He explains that we need two working wells to produce enough water in the hot dry season to meet household and irrigation needs and that we need another well in case of a problem with either existing well.  (If the current outage of Well #4 reoccurs in the summer, Crestview would have to buy expensive imported water and limit irrigation to once weekly.)

Actually, having a backup source of water is a legal requirement for Crestview.  From 2007 until now, that requirement has been met by Well #5.  However, “water quality from Well #5 is so poor, it can reasonably be used only during the most drastic of emergency situations,” according to the General Manager’s June 19, 2018 report to the Board justifying the Well #7 capital project at 191 Alviso.  That project included destroying Well #5 as soon as Well #7 becomes operational, giving Crestview two operational wells (#6 and #7) and one (#4) which the report says is within 20 feet of “going dry.” Clearly, that would be better than one fully operational well, one in danger of going dry (#4) and one (#5) suitable only for a “drastic emergency.”

The GM’s report explains that equipping Well #7 with a variable frequency drive would enable it to pump directly to Reservoir 2 (which serves the lower distribution zone) through an existing 10″ transfer main, or to pump directly through a 8″ distribution main to upper zone customers without first going through a different existing transfer main to Reservoir 3.  However, acknowledging that Well #7 would likely produce water needing treatment for manganese and iron, the GM wrote, “approximately 1,600ft of 10″ Transfermain should be installed to tie Well #7 to the existing Well #4 Transfermain to the Treatment Plant to ensure the best chance for good water.”  The Transfermain would cost roughly $240,000 and the Treatment Plant restart would cost about $450,000, according to the GM’s estimates in 2022, but this $690,000 is not in the Well #7 budget.

Well #7 could supply Reservoir 2 (lower zone) only if the water does not require treatment because the only way to get treated water there would be to pump it to the Treatment Plant beside Reservoir 3 (upper zone) and flow it down by gravity to Reservoir 2.  This is how either Well #4 or Well #7 could back up Well 6, but there are limits:  At 1,000 gpm, either of those wells could produce 1.44 million gallons per day (mgpd), some hours at higher electricity rates and with more-than-preferred temporary drawdown of the water table.  For comparison, Crestview budgeted to produce 1.05 mgpd in August 2022 and actually pumped 0.81 mgpd.

Presumably this is the “predetermined method” mentioned in the President’s message for backing up Well #6 using Well #4 these last 15 years and for Well #7 to back it up if that water needs treatment.  This plan seems “imperfect,” but would the Board have tolerated it for 15 years if it had been “inadequate.”  This seems to be what our President meant when he wrote, “One redundant well in one zone is very helpful but not a complete answer. A redundant well in each water zone is a complete solution.”

Then the President makes a mistake:  It is not true when he writes we “have an agreement with Calleguas Municiipal Water District to pay for our Well #8. . . . [W]e effectively get a redundant well at no cost.”  Calleguas has only agreed to pay the first $3.3 mln of capital costs for Well #8 and none of the operating and maintenance costs, and it is certain there will be substantial cost overruns.  The GM estimated to Crestview Watch in 2022 that the overrun would be about $300,000, but he was not including the cost of certain modifications the City is likely to require, which could raise the overrun to $1-2 mln. How much is it worth to improve the redundancy plan for Well #6 from “imperfect” to “perfect.”  That is the question Crestview needs to answer, starting with a complete and up-to-date capital and incremental operating cost budget for Well #8. It would also be good to have the GM inform the Board in writing about each of the “predetermined methods” for dealing with well outages with only our existing wells, and with the addition of only Well #7 or only Well #8.  The case has not been made that paying for two new wells, instead of one, is a sound business decision.

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