We 625 shareholders own valuable rights to the groundwater under our feet. Without those rights—and Crestview doing the pumping—we would have to buy all our water from northern California. We would have severe shortages and sky-high rates—and Crestview would be absorbed by Camarillo or Cal-American.
The only reason Crestview exists is to pump and distribute our cheap groundwater and to protect our pumping rights. Protection involves first and foremost pumping every year every drop to which we are entitled because our rights are “use-it-or-lose-it.” (There may be limited short-term banking and local trading options, which could and maybe should change, but those would not be a basis for a strategy.)
In addition, protecting our rights involves vigilance and advocacy at the Fox Canyon Groundwater Management Agency, which determines our annual pumping allocation, and in the big lawsuit adjudicating our rights relative to other pumpers. Protecting our rights also includes not entering into contracts that let other agencies take our groundwater or limit our use.
Crestview’s biggest strategic challenge may be to have enough wells to take our full allocation—but without excessive redundancy because new wells cost $3-6 million, depending on how skillfully they are sited and designed.
We need precipitation in Ventura County to replenish our groundwater, and this year was our driest ever. Fox Canyon GMA will limit pumping to the “sustainable yield,” as required by State law. What range of allocations should we plan for? Our current baseline allocation is 717 acre-feet per year, which supplies about 80% of our historic consumption. We need two active wells to pump all of that, but if consumption were reduced slightly in spring and fall, one pump would be enough—especially if our allocation were lowered to 500-600 acre-feet per year, as might well happen by 2024. In that case, a second well would be a spare and a third a waste of money. Similarly, if a spare well were only going to be needed for, say, a few weeks every five years, buying imported water during such emergencies would be better than investing in a third well.
Crestview has a secondary business of importing and reselling northern California water. It costs about ten times as much and supplies about 20% of our historic needs. It is a secondary business because it could shrink or go away and because Crestview’s overhead is so high that, if it were the only business, shareholders would be more efficiently served by consolidating with another water service.
As we have seen in the last month, access to imported water can suddenly go away or become unaffordable and subject to onerous conditions. What range of assumptions should we make about how much water we will be wanting and able to import 5, 10, and 15 years from now—and how much it will cost?
We urge Crestview to develop a new strategic plan (evaluating multiple financial scenarios) before evaluating or spending money on any new well or other capital project. The needs of our aging infrastructure should also be evaluated.
If this newsletter is useful to you, please forward it to other Crestview shareholders so they can sign up to receive future posts directly. Click on the Home tab and read earlier posts, or use the Tags word cloud or Search box to focus on a topic. Shareholders may comment below.