The state Division of Ratepayer Advocates (DRA) has issued a scathing report lambasting Salinas-based Alisal Water Corporation for overcharging customers, not properly responding to complaints and withholding financial data. The report, which was finalized late last week, concludes Alco is unfit to serve the city’s planned growth area. “Alco lacks the technical, managerial, and/or financial fitness to extend service to the Salinas Future Growth Area,” the report says.

Mohsen Kazemzadeh, the DRA’s project manager and report’s main author, recommends fining Alco $500,000 for numerous public utility code violations. Kazemzadeh also wants a full audit.

Alco denies any wrongdoing. “We believe that the report by the DRA has left out pertinent information that was submitted to the DRA,” says Tom Adcock, Alco’s vice president. “When that information is brought forward, certain comments of the DRA will change.”

The state’s report is the latest development in an investigation into whether Alco is providing clean water and good customer service. A public hearing about Alco’s operations will be held Thursday, Feb. 21, in Salinas.

According to the state’s report, “Alco has unjustly enriched itself to the detriment of ratepayers by illegally recovering in rates by surcharging ratepayers $3.82 per month over 12 months for receivership expenses.” The receivership expenses come from a 2002 federal order that stripped away eight Monterey County water systems from Alisal Water, Alco’s parent company. Alco should refund Salinas customers $382,624 plus interest, the report says.

The report also says the Public Utilities Commission should lower Alco’s rates by $316,000. Alco used the money to pay for “unused and unnecessary” pipelines and plants, the report says.

Adcock counters that the commission approved the rates and that the pipelines were ordered by federal court. “The commission allows rates,” Adcock says. “I did not set rates.”

The report says Alco has a water shortage of 5,747 gallons per minute. Adcock says Kazemzadeh’s math is wrong.

Although residents have long complained of low water pressure, an engineering firm didn’t find any water pressure problems in Alco’s system and concluded that the low flow is most likely caused by residential plumbing.

During the proceedings, Alco has been reluctant to release financial information, including employee salaries. Both the State and the City have filed motions to compel Alco to circulate documents.

The DRA also found that Alco is not following through with recordkeeping requirements for customer complaints. “It is impossible to know how long it takes to speak to a customer service representative or how long it takes to receive assistance because the company does not keep track of that information,” the report says.

Alco will have a chance to formally respond to the state and city reports. After an evidentiary hearing, Administrative Law Judge Linda Rochester will make the final determination about Alco’s performance.

Alco Ratepayers Can Make Public Comments At Hearings Today At 2pm And 7pm, Salinas Community Center, 940 North Main St., Salinas.