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PCWA funding issues signal time for change

Letter to Editor
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I had the privilege of leading an amazing coalition of neighbors, teachers, clergy, Municipal Advisory Committee members, firefighters, business owners and local water executives in 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. Without a partner, they seek to become a power company, a highly risky business and, in effect, repeat the disastrous folly of the Bear Sterns supported lawsuit with PG&E 25 years ago. PCWA’s own recent debt proformas, I believe, show the agency 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, which now involve Zone 3 (District 5) water revenues being pledged to bondholders. PCWA Director Otis Wollan said in the Sept. 14 issue of the Auburn Journal, “There is virtually no debt.” Unfortunately, page 62 of PCWA’s 2007 accounts show water debt almost tripling — from $34 million in 1998 to $85 million in 2007. And thatt’s without the Middle Fork borrowings. Time for a little change? John Sellers Prescott, Ariz.