Lukins water company problems

12/08 unedited tahoe mt. news story

By Kathryn Reed

Lukins Brothers Water Company is beginning to be a familiar name at the California Public Utilities Commission office in San Francisco. On Dec. 4 the PUC approved a surcharge for infrastructure improvements, at the end of the month South Lake Tahoe’s complaint against the water company should be addressed and a proposed rate increase will be heard on a yet to be determined date.
When the idea to raise rates by 71.4 percent first surfaced in the summer, the city was up in arms because the money was slated for operating costs and not infrastructure.
At the Aug. 22 public hearing in South Lake Tahoe conducted by the CPUC, the city brought up its concerns about the lack of fire protection for Lukins’ customers and how the rate increase was not intended to address that issue.
Danny Lukins, who runs the company his father started, said the increase is so high because it’s the first one he’s asked for in eight years.
He said the commission reviews his books and operating costs and then makes a decision. He said it was the city’s complaint which focuses on his company’s inadequate firefighting capabilities that brought the surcharge issue to light before the rate increase.
At the hearing the first Thursday of December, the commission agreed $169,840 needs to be raised by the water company for engineering work. The draft resolution says this money is “to do preliminary design of overall system rehabilitation and detail design of 12th St. water main replacement …. The preliminary design of total system rehabilitation will assume that construction work will be done in separate phases over several years.”
The state PUC wants this money in a separate account. Lukins is fine with that.
Lukins customers pay $293 a year now for water. The surcharge would add $143.17 to a single family dwelling. The PUC will decide when the surcharge goes into affect.
“There is a 20-year plan we are going to put together. It’s a lot of work. This is just the first phase to get this off the ground,” Lukins said after the hearing.
He wants to upgrade the system but doesn’t have the cash to do it. As a private company, he must go through the city to obtain any available state or federal dollars.
City Manager Dave Jinkens plans to apply for a $1 million grant from the U.S. Department of Housing and Urban Development in January that could help with Lukins’ issues. He also wants the Lukins’ service area to be part of future redevelopment projects at the Y so money could go specifically to its infrastructure.
“Our primary concern is safety,” Jinkens said.
When South Lake Tahoe incorporated in 1965, public safety was one of the overriding reasons to do so – this included fire protection.

Company details

Lukins has 946 flat rate connections and 16 metered residential customers all in the city limits near Highway 89. The problem is the aging system is inadequate by today’s standards.
When the company started in the 1940s it had two wells that transferred water through 2- and 4-inch mains. The system still has 400 feet of 2-inch main. It also has 4-, 6- and 8-inch mains. Six inch is the minimum that can be put in the ground these days.
“Some parts of the system cannot carry enough water for adequate fire flow because the mains are too small Also, there are too few hydrants in the service area to meet current fire code standards,” a CPUC report says.
Lukins has seven hydrants.
Lack of water in fire hydrants during the Yorba Linda fire last month was to blame for a handful of houses being reduced to rubble.
South Lake Tahoe, Lukins and fire officials are all aware that had the spot fires during the Angora Fire that crossed Highway 89 become full blown, the resources were not and are still not in place to handle such an inferno.
Much of Lukins can handle 300 gallons of water per minute, while state Fire Code says 1,500 gpm are necessary.
“We are not in the firefighting business. Laws have changed throughout the years since this company was built,” Lukins said. From the get-go it was considered a domestic water system. “In a wildfire domestic water is a good asset to have, but it’s not always going to be good to put a fire out.”
Way back when, fire departments relied on water tenders to fight fires.
When it comes to fire ratings, Lukins is a class 9, with 10 being the worst.
When South Tahoe Public Utility District looked at buying Lukins Bros. in 2006 the cost to upgrade the smaller system was $18.4 million. Lukins believes he could overhaul his system for between $12 million and $18 million. He believes it would take 20 years to make the necessary upgrades.
Lukins is not alone in this quagmire. The Environmental Protection Agency says of the country’s 52,000 water systems it would take $277 billion to fix them all.

The complaint

Jinkens doesn’t believe Lukins is working fast enough and that’s one reason why the city filed a complaint against the company with the CPUC on Nov. 12.
Lukins said he thought everyone was working well together until the complaint was filed.
“I think the city doesn’t understand how complex the problem is of getting something put through. They say, ‘Let’s do this, let’s do this’,” Lukins said. “The commission governs every segment of our operation. That includes borrowing money, starting projects. They ensure the public is protected.”
South Lake Tahoe has a 50-year franchise agreement with Lukins that expires in 2016. Lukins gives the city 2 percent of its annual gross. This equated to $6,740 for fiscal year 2007-08 and $6,779 in 2006-07.
The six-page complaint contends Lukins is violating the state Fire Code by not upgrading its system and that by doing so it has “created a severe hazard to life, property, and the public safety.”
The city also maintains that Lukins has not provided the city with a plan to make the needed upgrades.
“I really can’t comment on the complaint. The simple fact is the commission has rules and regulations which will govern their response,” Lukins said.
Jinkens told the Tahoe Mountain News that the city should have done things differently years ago to make sure Lukins’ system was adequate.
“Whether we are late to the game or not, we are in the game,” Jinkens said. “We have a duty to make sure the system is in place. For us to ignore it now would be negligent.”
Bert Cherry, who was the city’s fire chief from 1981-92 had recommended Lukins’ system be upgraded. The powers that be – elected and otherwise – ignored those recommendations and helped create the system that exists today.
Still, that does not let the water company off the hook for not doing its due diligence in providing its customers with a system that meets minimum state standards.