The disastrous contract with Calleguas for Well #8 should be renegotiated in major ways or terminated–Part 1.

The funding for Well #8 comes from Calleguas.  Under that contract, Crestview must deliver 3 cubic feet per second (“cfs”) for six months if Calleguas suffers an “outage of imported water.”  That would be 1,086 acre-feet, which exceeds the 717 acre-feet Crestview is allowed to pump in a whole year.

“Outage” is not defined.  Crestview has given the example of physical damage by an earthquake to a major aqueduct, but outage is not limited to physical interruptions.  The failure of the State Water Project (“SWP”) to deliver any water because of drought may also be an “outage.”  In 2022, Calleguas is getting only 5% of its requirements from the SWP.  If that is not an “outage,” then zero percent delivery, which could happen next year, probably is.

Maybe the Crestview board assumed it would not have to deliver water to Calleguas until Well #8 was completed and on line, but there is no such limitation in the contract.  Crestview’s delivery obligation exists even if Well #8 does not exist or is unable to deliver some or all of the 3 cfs 24/7.

Would Crestview impose water use restrictions on shareholders in order to send water to Calleguas instead?  Water Crestview delivers to Calleguas can physically get only to customers of Cal-American, the City of Camarillo, and the City of Oxnard.  Crestview customers will not be able to get any of that and, of course, will not be getting any normal deliveries from Calleguas.  Crestview can prioritize its own customers’ needs, but has to pay Calleguas $316 per acre-foot for under-deliveries.  If none can be delivered, that would be a $343,176 penalty on Crestview shareholders.

The contract provides that Calleguas will return to Crestview the same amount of water it “borrowed,” but only after the “outages” have ended, which in a continuing drought could be years later.

As reported here, here, and here, Crestview also has multi-million dollar exposure in the event the Well #8 project fails or costs more than $3.3 million—which it definitely will.

The only value Well #8 would have to Crestview is as a backup to Well #6.  That is what Crestview told the County when it was trying to get a permit for Well #7.  Why are we taking on such big costs and risks for such a small benefit?  We are forwarding this post to Crestview with a request for a response.

New to this newsletter?  Click on the Home tab and read earlier posts.  If this newsletter is useful to you, please forward it to other Crestview shareholders so they can sign up to receive future posts directly. Shareholders may comment below.

2 Replies to “The disastrous contract with Calleguas for Well #8 should be renegotiated in major ways or terminated–Part 1.”

  1. I read in the local paper where City of Camarillo is increasing their water rates 2%. The City is offering public meetings to discuss. What a breath of fresh air compared to our crummy water company. Again, is there no government entity that can put Crestview basically in receivership for mismanagement and not being transparent with its shareholders?

  2. Didn’t the board have a competent attorney go over the contract before it was signed? It doesn’t sound like it, or the attorney was not so competent.
    Jeez, it just keeps getting worse and worse.

Leave a Reply

Your email address will not be published. Required fields are marked *