This is why Calleguas is funding Well #8. What’s in it for Crestview?

Calleguas Municipal Water District is paying for Well #8 so it can have a local supply if an earthquake blocks its 1.3-mile-long Santa Susana Tunnel.  This would replace a small part of the interrupted supply of northern California water into our part of Ventura County.  This picture, from a recent Ventura County Star article, shows the 8-foot-wide tunnel under construction in 1962.

One of Calleguas’s local resources is the right to pump 29,000 acre-feet of groundwater from the same basin that Crestview draws from.  Calleguas acquired these rights in the past by delivering imported water to in-basin pumpers in exchange for their rights to the water they did not pump while receiving deliveries from Calleguas.  This is a “stranded asset” because Calleguas has insufficient pumping capacity to withdraw that water quickly in an emergency.  The solution is to pay for a new well, Well #8, that will be donated to Crestview.  In an emergency like the collapse of the Santa Susana Tunnel, the contract provides that Calleguas can demand that Crestview run the well day and night for up to six months and deliver the water to the Calleguas reservoir at the Springville Dog Park.  From there, Calleguas would deliver it to the City of Oxnard and other parts of the Oxnard Plain, but the plumbing does not allow Well #8 to deliver any water to us in the Crestview service area while pumping to Calleguas.

In exchange for the right to use Well #8 as a backup well in the event that Crestview’s Well #6 (or another well goes offline), Crestview has to pay all the costs of maintaining and operating Well #8, including for expensive repairs and replacements.  Even in normal times when Calleguas is not demanding deliveries, the existence of this additional “Crestview well” does not allow Crestview to deliver any incremental groundwater to its customers because the aggregate production of all Crestview wells is limited by its annual pumping limit set by Fox Canyon Groundwater Management Agency.

Among the issues that the new Crestview Board of Directors is facing is that the Calleguas contract presently contains a spending limit that is far too low to pay for construction, and Crestview must finish the project at its own expense or repay all the money that Calleguas has advanced.  We believe those advances are in the range of $1 million, but that is not ascertainable by looking at Crestview’s financial statements.  A daunting question is how Crestview will pay for Well #8 cost overruns and all the costs of Well #7–or even just the Well #7 costs.  If we could borrow all that money, how much would our rates have to increase to cover the debt service?  Would our water rates go from among the lowest of our peer suppliers to among the highest?

Another issue is that nobody has ever estimated the costs of repairs and maintenance and other operating costs that Crestview will be required to pay to keep Well #8 always available in perpetuity (the contract has no end date).  When the operating costs and the risks of capital cost overruns are balanced against the value of having a fourth operating well, is it a good deal or bad deal for Crestview (which has never in its 70+ year history had more than two operable wells at once).  The need for some redundancy is uncontroversial, indeed some redundancy is required by law, but people are noticing that it can be met in other ways than by building additional multi-million dollar wells.  Crestview can supply more than 95% of customer requirements in the hottest months with just one well by running if round the clock.  The implication of this calculation is that if peak consumption came down by just 5%, our two existing wells would give us 100% redundancy all year round.  Another confounding factor is that our annual pumping allocation is likely to decline in the future as Fox Canyon Groundwater Management Agency and the State of California tighten the screws to stop pumping the aquifer faster than it recharges.  How many more wells do we need to pump less water?  The Board must decide.

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One Reply to “This is why Calleguas is funding Well #8. What’s in it for Crestview?”

  1. Who negotiated that deal with Calleguas? Is there an alternative option? It seems we have a lot of sunk costs (High costs) without anything to show for it. What is the upside of the Calleguas contract fo Crestview Mutual Water Company Shareholders? Clearly the board and staff’s charter is to negotiate on our behalf. Nearly 1M sunk on Well 7 and 1M sunk on Well 8 without any tangible results is alarming… What are our options?

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