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Lawsuit: ‘Fiscal integrity’ of SCV water service threatened

Newhall water retailer sues water wholesaler over takeover of Valencia water retailer

Posted: April 25, 2014 5:20 p.m.
Updated: April 25, 2014 5:20 p.m.

One of Santa Clarita Valley’s four water retailers is suing the agency from which it buys a portion of its water, claiming the Castaic Lake Water Agency illegally purchased the Valencia Water Company, another water retailer.

On Friday, directors on the board of the Newhall County Water District announced they filed a lawsuit challenging the agency’s acquisition of Valencia Water early last year.

The board cited protecting customer interests and the integrity of the regional water system as the basis for litigation. The lawsuit was filed Thursday in Los Angeles Superior Court.

“In taking over Valencia Water Company, (the Castaic Lake Water Agency) violated state law and threatened the fiscal integrity of the region’s water service,” district board President B.J. Atkins said in a news release.

“We can’t sit idly by as CLWA compromises the public’s resources. We took action to protect the interests of our customers.”

Castaic Lake Water Agency is a wholesaler that sells to local water retailers, including Valencia Water and Newhall County Water District. This is the second time it has purchased one of its retail customers, the previous being the buy-out of Santa Clarita Water Company.

Newhall County Water District officials noted in their Friday news release that the California Public Utilities Commission recently terminated its jurisdiction of Valencia Water, leaving its 116,000 customers without government representation.

Those same customers are now “in limbo” and without government representation, district General Manager Steve Cole recently told The Signal. The Public Utilities Commission previously served in the role.

The environmental group Santa Clarita Valley Organization for Planning and the Environment, or SCOPE, also sued Castaic Lake over the Valencia purchase.

Agency General Manager Dan Masnada, however, said last week that plans are under way to “take the Valencia Water Company public.”

“The CPUC decision results in a temporary situation that will be addressed by the CLWA board after the SCOPE litigation is resolved and the issues raised in the litigation have been legally addressed,” Masnada said Monday.

“The agency has made no secret of the fact that it intends to ultimately take (Valencia Water) public and combine it with the Santa Clarita Water Division, and will do so utilizing a legal and public process,” he said. “The outcome of the litigation may have some bearing on the approach that is utilized.”

“The decision by the CPUC follows a year-long investigation by two of its administrative law judges and is effective immediately,” Masnada said.

In January, Administrative Judge Todd O. Emister decided that 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. Recently, the commission upheld the judge’s decision, prompting Cole to speak out.

“They’re really left in no man’s land,” he said of Valencia Water ratepayers. “Historically, they’ve been able to discuss issues with the Public Utilities Commission. They were able to vet their complaints.

“It leaves them with no representation,” he said in an interview. “And one of their main concerns is rates.”
on Twitter @jamesarthurholt





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