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Water retailer challenges purchase of Valencia Water Co.

District says law prohibits water wholesaler from operating water retailer

Posted: January 16, 2013 7:20 p.m.
Updated: January 16, 2013 7:20 p.m.

The agency providing wholesale water to the Santa Clarita Valley is legally prohibited from operating the Valencia Water Company, officials with another water retailer said Wednesday.

But a spokesman for the Castaic Lake Water Agency refutes the claim.

During a sit-down meeting with The Signal Editorial Board on Wednesday, officials with the Newhall County Water District presented graphs, charts and numbers to argue their point: that state law prohibits the Castaic Lake Water Agency from purchasing the privately owned Valencia Water Company.

According to Newhall County’s general manager, Steve Cole, the agency’s move to acquire Valencia Water’s stock is in “direct conflict” with Assembly Bill 134, which passed 13 years ago and allowed Castaic Lake Water Agency to buy what was then the Santa Clarita Water Company, another water retailer.

The district sued the agency 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.

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.

“It limits that ability to a specific area in which they can do that service,” he said.

District officials provided editors with a map of the boundary articulated in the act that allows the agency to operate a retail service.

“They can only provide retail service in that block,” Cole said, pointing to the boundary.

“The Legislature was concerned at the time that if they had the ability to provide retail to the entire area, it would give them an undue advantage as far as monopolizing the service, and those were our concerns.”

Cole said “fast-forwarding” to today and to the recent purchase by the agency of a second retail water company, district concerns about monopoly are the same ones.

“They started pushing the ‘one valley, one water monopoly,’ as I call it,” Cole said.

Maria Gutzeit, president of the district’s board of directors, and board member Dan Mortensen joined Cole in expressing concerns that the purchase would ultimately result in higher rates for Valencia Water customers.

“The Castaic Lake Water Agency has an insatiable appetite for revenue,” Mortensen said.

Dan Masnada, general manager of the Castaic Lake Water Agency, said he disagrees.

“There is no question that the purchase is legal and there is no question that we can legally operate it under the (California) Public Utilities Commission,” he said.

“The (agency) board is in the process of determining what we have to do as far as taking it public for the benefit of Valencia (Water Company) users,” he said.

The agency maintains Valencia Water customers will face less steep rate increases under Castaic Lake’s management.

Valencia Water, which was created by Newhall Land Development Inc. to provide water to its master-planned community of Valencia, has the lowest water rates in the Santa Clarita Valley and the lowest outstanding debt among all four local retail water districts.
on Twitter @jamesarthurholt




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