Annual Shareholders Meeting- Source Compliance Options
April 05, 2019
Compliance Order NO. 05-13-18R-002 was issued by the State Water Resources Control Board (SWRCB) Drinking Water Division. The SWRCB placed a service connection and building moratorium on Sheep Creek Water Company (SCWC). SCWC cannot place any new service connections or cannot issue any “Will Serve Letters” for any building permits. Due to the drought in California, SCWC's well levels and production have been on a steady decline, beginning in June of 2016 well production began to drop significantly. Again in 2018 well production dropped causing the SWRCB to issue a Source Capacity Violation due to SCWC unable to meet the required 10 Year Maximum Day Demand (MDD). In order for SCWC to meet the required 10 year MDD, SCWC needs to have a pumping capacity of 1,453 gallons per minute or 2.09 million gallons a day (MGD).
The SWRCB required a Feasibility Study be completed by Sheep Creek Water Company (SCWC). SCWC contracted with Infrastructure Engineering Corporation (IEC) to complete the required Feasibility Study. The report was required to have options to bring SCWC into compliance with the regulation to meet the MDD. One of the options considered needed to be Consolidation with Phelan Pinon Hills Community Services District (PPHCSD). Based on production records for July 2018 SCWC could produce .72 MGD and with the addition of Well #11 (361,440 gallons per day), SCWC's total production is 1.05 MGD, a deficit of 1.04 MGD. SCWC will need to drill additional wells to come into compliance with the MDD regulation.
Feasibility Study Alternative Plans: 2 options were evaluated.
Alternative 1- Drill Additional Wells: Alternative 1 would keep SCWC as a private water company. Based on the information provided about Well #11, SCWC will need to drill additional wells to increase available production to meet the required MDD. The engineering report developed from IEC would require up to four wells be drilled. If production on additional wells is higher than the estimated 250 gpm, this could reduce the amount of wells necessary to achieve the required MDD. Several meter services for the Snowline School District have been transferred to PPHCSD and as additional services are transferred, SCWC's MDD may be reduced.
Engineers estimated cost to drill and equip wells along with associated pipework to connect to the existing water system is $5,806,000.
Alternative 2- Consolidate Sheep Creek Water Company with Phelan Pinon Hills Community Service District: Alternative 2 would merge Sheep Creek Water Company with Phelan Pinon Hills Community Service District and dissolve the Sheep Creek Water Company. Minimum requirements from PPHCSD to consolidate the 2 water systems are as follows:
- 3 Flow control facilities and associated pipework needed to connect the 2 water systems.
- Install blow offs at the remaining 27 dead end lines.
- Replace all water meters throughout the SCWC District with automatic meter reading devices.
- With the combined MDD of the 2 water systems, a new well will need to be added. Cost and production for a new well are based on the information from SCWC’s new Well #11.
Engineers estimated cost for consolidation with PPHCSD- $3,374,700. Grant funding of $5,000,000 is available for consolidation through the State of California SWRCB.
The Sheep Creek Water Company Board of Directors have the following requirements before they can support a consolidation between the 2 water districts:
- A fair market value needs to be determined for all 8,000 shares.
- Shareholders will need to be compensated for their shares based on fair market value.
- All outstanding debt must be paid.
- Employees need to be treated fairly.
- Water users must be treated fairly.
This item will be presented to the Shareholders for discussion and be put to vote on how the Shareholders wish to proceed. The Annual Shareholders Meeting Agenda will be posted on April 11, 2019. If you are unable to attend the Shareholders Meeting, please sign a proxy form to a Shareholder you wish to vote for you and return it to the Sheep Creek Office no later then May 9, 2019.