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One SCV water district sues another

Rate restructuring would be unfair to customers, retailer says. Wholesaler says it’s necessary

Posted: April 29, 2013 6:03 p.m.
Updated: April 29, 2013 6:03 p.m.

A local water retailer announced Monday it has sued the Santa Clarita Valley’s water wholesaler, saying proposed rate changes are unfair to its customers.

Newhall County Water District officials said they filed a lawsuit in Los Angeles County Superior Court to stop a change in the way local water retailers would pay for state water they get from the Castaic Lake Water Agency.

Newhall County Water officials say the change would force a rate increase on its more than 44,000 customers. Newhall County Water serves areas of Newhall, Canyon Country, Castaic and Saugus.

The lawsuit challenges a controversial new rate adopted by Castaic Lake Water Agency, which provides State Water Project water to Santa Clarita Valley’s four retail water agencies.

“We hope a judge finds that when you set water rates, you need to take into account all the resources used,” said Steve Cole, Newhall County Water’s general manager.

“They didn’t recognize our historical use of groundwater,” he said. “And, historically, the agency has always recognized that a portion of our water is groundwater.”

Castaic Lake Water Agency owns one of the valley’s other water retailers, Santa Clarita Water Division, and is in the process of taking over another, Valencia Water Company. The fourth district serves a small area in Castaic-Val Verde.

Newhall County Water representatives squared off against agency directors in January when four new rate structures were proposed at a general board meeting.

Agency members favored a structure that did not take into account the district’s use of groundwater, Cole said.

“We offered a compromise and their consultant analyzed it, recognizing that part of our supply is groundwater, but the board did not select that option,” he said.

The lawsuit alleges a violation of Proposition 26, which requires governmental charges to bear a fair or reasonable relationship to benefits provided.

If implemented, the agency’s plan would cost district customers more than $850,000 per year in increased rates at a time when all businesses and residents have had to cut back, according to a district news release issued Monday.

Agency heads, however, say the rates are fair and necessary.

“We strongly believe the courts will agree with us that the new structure is equitable, fair and reasonably allocates CLWA’s operating costs to the Santa Clarita Valley’s water retailers, including NCWD,” agency board President Tom Campbell said in a prepared statement.

“The new structure promotes efficient management of our valley’s precious water resources and fairly distributes the fixed costs of providing an imported water ‘safety net’ to the entire community.”

The agency’s Board of Directors approved the new structure on Feb. 27.

Under the new structure, scheduled to take effect July 1, retailers would each pay a proportionate share of the agency’s fixed operating costs based on their total combined water demand — groundwater plus imported water from the wholesaler — over the prior three-year period.

Previously, wholesale rates have been 100 percent variable — which means retailers have paid the agency solely based on how much imported water they use. About 80 percent of Castaic Lake Water Agency operating costs are fixed, however, meaning they don’t fluctuate based on volume of water used because CLWA incurs the same expenses regardless of how much water the retailers use.
on Twitter @jamesarthurholt




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