Newhall County Water District officials announced Monday it filed suit in Los Angeles County Superior Court against the Castaic Lake Water Agency, claiming a recent rate increase would be harmful and costly for more than 44,000 residents.

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The lawsuit challenges the new rate adopted Feb. 27 by Castaic Lake Water Agency, a wholesale agency responsible for selling imported water to Santa Clarita Valley’s four retail water agencies, including NCWD.

NCWD officals’ lawsuit alleges a violation of Proposition 26, enacted by California voters in November 2010, which requires governmental charges to bear a fair or reasonable relationship to benefits provided.

“The main issue that we have with the rate is that it doesn’t recognize our ability to produce groundwater,” said NCWD General Manager Steve Cole. “The rate is based on total demand, which is inclusive of both state water, project water and groundwater, the groundwater we provide for ourselves and our customers. We proportionally utilize more groundwater, and it doesn’t recognize that usage.”

CLWA officials say charging a flat rate to their clients is fairest way to cover their fixed operating budget.

Though previous wholesale rates were 100 percent variable, meaning water agencies paid based on the imported water they used, 80 percent of CLWA costs are fixed.

“This new rate structure enables the four retailers to equitably shoulder their fair share of the fixed cost burden, said CLWA Board President Tom Campbell. “The new rates are effectively revenue-neutral for CLWA’s wholesale operations. It’s simply a matter of more fairly and reasonably distributing CLWA’s fixed operating costs among retailers based on their total water needs.”

Under the new CLWA rate structure, scheduled to take effect July 1, each retailer would pay a proportionate share of CLWA’s fixed operating costs based on their total combined water demand over the prior three-year period.

Click the link to view a copy of the NCWD lawsuit.

CLWA officials’ plan would cost their customers more than $850,000 per year in increased rates, at a time when all businesses and residents have had to cut back, NCWD officials said Monday.

“We are standing up on behalf of our customers in opposition to this unfair, unprecedented rate increase,” said NCWD Board of Directors President Maria Gutzeit. “It’s very disappointing that Castaic Lake Water Agency has chosen to ignore the concerns of our district’s residents and businesses and move forward with this rate increase, which we will vigorously fight in court.”

CLWA is standing by their policy, and believe they have a good chance of winning the case.

“Ultimately, the proof in the pudding will be what the court decides, and we believe we have a really good case and our position will be justified by the court system,” said CLWA General Manager Dan Masnada.

And despite the controversy, CLWA is committed to providing the same level of service to all their retailers during this time, NCWD included.

“We recognize Newhall County Water District is one of our customers, just like the other three retailers are,” Masnada said, “and we will continue providing them the same high level of service as we are to the other three retailers.”

About Newhall County Water District
Newhall County Water District traces its roots back to 1913 and is the Santa Clarita Valley’s first public water utility, currently providing service to more than 44,400 residents in portions of the City of Santa Clarita and unincorporated Los Angeles County communities, including Newhall, Canyon Country, Valencia and Castaic. For more information, visit their website.

About Castaic Lake Water Agency
The Castaic Lake Water Agency is the Santa Clarita Valley’s public water wholesaler. CLWA is one of 29 State Water Project contractors and receives water imported from northern California and Kern County through the California Aqueduct. CLWA operates two large treatment plants, three major pump stations, three water storage facilities and more than 45 miles of large diameter transmission pipelines delivering water to four local water retailers. For more information, visit their website.

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