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State water wholesaler needs CPUC approval before it can take over Valencia water retailer, according to ruling.
| Friday, Feb 1, 2013

valenciawaterco_logoCiting state law and a recent complaint by the Santa Clarita Organization for Planning and the Environment, an administrative judge for the California Public Utilities Commission said the Castaic Lake Water Agency must ask permission for a recent utility sale.

Thursday’s ruling said the Castaic Lake Water Agency’s purchase of Valencia Water Co. could be put on hold until the CLWA seeks the proper approval from the CPUC, which commission officials said has yet to be sought or granted, in the ruling.

The purchase of the VWC would give CLWA officials control of approximately 84 percent of water retailers.  The move was approved by CLWA board members in December.

“It’s being reviewed, because it has to be responded to,” CLWA General Manager Dan Masnada said of Thursday’s ruling. “The only thing I can say is that it’s under review.”

While it was initially established as a water wholesaler, CLWA has a legal right to own Valencia Water Co., a water retailer, according to Masnada.  Masnada is also a recent appointee to the VWC board of directors.

However, in a complaint last month, members of SCOPE contend CLWA officials have no authority to make such as transfer, as the entity was set up as a water wholesaler meant to manage the distribution to retailing companies, not to be a water retailer itself.

“We asked the (CPUC) to require an application for the transfer of control pursuant to CPUC code,” said Lynne Plambeck, President of SCOPE. “They aren’t supposed to be able to transfer (VWC) until the CPUC approves the sale.

“This is the second time the CLWA has sort of thumbed its nose at the CPUC,” Plambeck said, citing the CLWA’s purchase of the Santa Clarita Water District as the first incident.

When the CLWA purchased the Santa Clarita Water District, which is also a local water retailer, it did so with a controversial piece of legislation that was not without opposition.

However, AB 134, which was legislation created to allow the CLWA to own and operate the Santa Clarita Water District and its 29,000 customers — or 41 percent of the retail market — with certain provisions that limited retail operations to SCWD customers. AB 134 cites that CLWA “may not exercise retail water authority outside the boundaries (prescribed for the SCWD).”

This means that as the state law stands now, the CLWA has the authority to own the water retailer, but it will be operated as a Public Utilities Commission-regulated entity.

The CPUC, which exercises statewide authority over all privately owned utilities, issued the ruling from its San Francisco office Thursday afternoon.

The official four-page ruling from the California Public Utility Commission stated the following:

1. Valencia Water Co. must file and serve an application for a transfer of control pursuant to California Pub. Util. Code §851 and any other applicable code provisions. This application must be filed no later than 14 days from the date of this ruling. (A.13-01-003, C.13-01-005 DUG/sbf)

2. Valencia Water Co. and Castaic Lake Water Agency must timely file and serve a full and complete answer to Case 13-01-005. (This case number is a reference to a recent complaint filed by SCOPE.)

3. All parties and persons of interest are hereby put on notice that any transfer of control of Valencia Water Co. to Castaic Lake Water Agency or any other entity may be void absent specific authority granted by this Commission.

(Dated January 31, 2013, at San Francisco, Calif.)

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