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Local water company dispute could go to court

Public Utilities Commission taking issue with Castaic Lake’s takeover of Valencia Water Company

Posted: February 17, 2014 2:00 a.m.
Updated: February 16, 2014 2:00 a.m.

The California Public Utilities Commission is expected to sideline itself in the dispute over Castaic Lake Water Agency’s takeover of Valencia Water Company, making civil court the venue for further action.

Since Castaic Lake bought out Valencia Water in a stock purchase, Valencia is now part of a public agency and thus not subject to Public Utilities Commission oversight, Administrative Judge Todd O. Emister said in a decision issued Jan. 28.

“We conclude that applicant and respondent Valencia Water Company is no longer a ‘private corporation’ by virtue of its acquisition by intervenor and respondent Castaic Lake Water Agency,” Emister wrote in his decision.

His ruling is a legal recommendation to the PUC, which is expected to act on it in the near future.

A group of taxpayers and environmentalists had disputed Castaic Lake’s takeover of Valencia Water before the PUC and also challenged its announced rate increase that followed on the heels of the takeover.

The focus will now shift to civil court, where the same legal challenges are due to be heard.

Among those who oppose the takeover is Newhall County Water District, which claims it’s illegal for Castaic Lake, a water wholesaler, to buy out one of its retail customers. 

The stock purchase is in “direct conflict” with Assembly Bill 134, whichpassed 13 years ago and allowed Castaic Lake Water Agency to buy what was then the Santa Clarita Water Company, another water retailer, said Newhall County General Manager Steve Cole. 

The district had sued the agency back then over conflict-of-interest claims — primarily that a water wholesaler should not also act as a water retailer — but the suit became moot when the state Legislature approved an act allowing the deal.

But guidelines laid out in AB 134 of 2001 prohibit the agency from exercising retail water authority outside certain prescribed boundaries that do not include the Valencia Water Company’s district, Cole said.

Castaic Lake Water Agency officials have staunchly defended the purchase of Valencia Water and say AB 134’s restrictions do not apply in this case.

Dan Masnada, general manager of the agency, says the PUC judge’s recommendation “doesn’t change CLWA’s approach to acquiring the stock of Valencia Water Company.”

“The agency is confident in (Valencia Water Company’s) ability to continue toprovide high-quality and economical service to the VWC customers without regulation by the PUC,” he said.
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