The Valencia Water Co. asked the Public Utilities Commission to disregard its ruling on a recent complaint filed by several local environmental groups, in documents filed Tuesday.
The water company had 10 days to respond to a ruling by Administrative Law Judge Douglas Long, who said the Castaic Lake Water Agency needed to seek PUC approval in order to purchase the local water company.
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VWC general manager Keith Abercrombie refused to comment on the ruling, citing the fact that the litigation was complicated, and the company was still formulating its official response to the various complainants.
In its response to the PUC, the Valencia Water Co. said state law cited in the case doesn’t apply to companies being acquired, only to a company that seeks to do the acquiring.
“They want to have it both ways,” said Lynne Plambeck, president of the Santa Clarita Organization for Planning and the Environment, which is one of the complainants cited in the PUC’s original ruling.
“It’s as though on one side of their mouth (VWC officials) are pretending as though they’ve already merged,” she said. “But at the same time, it would be easier for them to have the PUC approve (a proposed) rate increase.”
Valencia Water Co. officials recently requested an approximately 15-percent rate increase, Plambeck said.
The state’s regulatory agency for utilities has oversight over all privately held utility companies; however, the CLWA, which purchased VWC last year for more than $53 million, is a public agency that has a board comprised of elected and appointed directors.
The complaint that sought to stop the sale cited a state law on the books that gave the CLWA, a state water wholesaler, the rights to retail water, but only to a specific area, the district boundaries served by the Santa Clarita Water District.
According to a response by Valencia Water Co. officials:
“(Valencia Water Co. officials) cannot truthfully aver facts sufficient to support an application by Valencia under §851, §852, or §854 in the present circumstances.
As noted above, Valencia has no standing to file an application under §854. Valencia does not propose to acquire or control any public utility and it has never acquired, owned, or controlled any public utility. Valencia has no authority to file an application on behalf of any other entity.
Valencia simply cannot aver the facts necessary to support an application under §854.”
Citing state law and a recent complaint by the Santa Clarita Organization for Planning and the Environment (SCOPE), an administrative judge for the California Public Utilities Commission (CPUC) said the Castaic Lake Water Agency (CLWA) must ask permission for a recent utility sale, according to a ruling Thursday.
The ruling said the Castaic Lake Water Agency’s purchase of Valencia Water Co.(VWC), 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," said Dan Masnada, general manager for the CLWA, referring to 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 Company 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 Company 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 Company 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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