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Water rates could leap next year

Posted: July 7, 2009 8:52 p.m.
Updated: July 8, 2009 4:55 a.m.

Customers will inevitably feel the pinch if the local state water contractor decides to raise wholesale water rates.

Castaic Lake Water Agency Finance Committee will begin a two-month study on wholesale water rates on July 14, said Dan Masnada, Castaic Lake Water Agency general manager.  

Under the proposed rate increase, water agency wholesale rates could shoot from $295 per acre foot to $400 per acre foot, Masnada said. If approved, the proposed rate increase will begin in January 2010.

Masnada blames rate stabilization and the cost of operations as the culprit in the proposed increase.

“The last three years we weren’t fully funding our operating budget through rates,” he said. Property taxes picked up the portion of operations costs not paid for by the rate structure.

Continuing to use property taxes to offset the operation and maintenance costs could stall the water agency’s capital improvement plans, Masnada said.

If Castaic Water adopts the new rates, the customers will have to swallow an average increase of $54 per year, said Steve Cole, general manager for the Newhall County Water District.

“The increase will most likely pass through to our customers,” he said. “There’s no other way to deal with it.”
Castaic Lake Water Agency doesn’t directly bill consumers, but since it supplies as much as half the water sold by Santa Clarita retailers, the cost increase will inevitably spill over to consumers via the water retailers, Cole said.

“The impact looks like a 10 percent annual increase to customer rates,” he said.

“Industry-wide, everyone is increasing mainly because of the state water crisis.”

However, the water crisis isn’t responsible for the Castaic Lake Water’s proposed rate increase.

“Property taxes pay for out imported water,” Masnada said.

The other cost driving the rate increase is the water use efficiency plan that Castaic Lake is leading along with the four retail operations in the Santa Clarita Valley.  

The $750,000 per year conservation program includes increasing the number of low-flush toilet rebate vouchers and high-efficiency appliances that conserve water, Masnada said.

Castaic Lake Water is not the only water utility considering a rate increase this summer.

Castaic Lake Water’s retail arm, Santa Clarita Water Division, is looking at its own retail-rate increase. The Castaic Lake Water board of directors will decide whether to start a rate hearing at tonight’s meeting. If the board adopts the rate hearing resolution, a public hearing will be scheduled for September.

The Water Division proposal would raise rates from $39.92 per month for the average home to more than $50 per month by 2012.

The proposed wholesale rate increase is partially fueling the retail-rate increase, Masnada said.

“The wholesale water rate is an element of the retail rate that the customer pays,” he said.  

The Castaic Lake Water Agency wholesale rate case is not subject to a public hearing.  



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