BILL MAY LOWER COSTS OF WATER.

Byline: Teresa Jimenez Daily News Staff Writer

A state bill signed into law this month that will deregulate electricity suppliers could lead to a savings of up to $40,000 a year for the Castaic Lake Water Agency.

The local retailers who buy water from the agency - the Valencia Water Co., Santa Clarita Water Co., Newhall County Water District and Los Angeles County Water Works - also should expect to save money on electricity bills, said Ed Dunn, president of the Newhall district board.

The savings will build over time, with a 5 percent reduction in the first five years, and the potential for a 20 percent to 30 percent reduction after that, Dunn said.

Bob Sagehorn, general manager of the Castaic water agency, said he could not predict when savings could be passed on to consumers.

``I think in the long term it will save consumers money,'' Sagehorn said. ``But we will not see an immediate change until we see a demonstration of what the impacts are.''

Though a deregulation bill was signed into law last year, special districts such as the Castaic Lake Water Agency were unable to participate because the laws governing them still did not allow it, Sagehorn said.

As a result, state Assemblyman George Runner, R-Lancaster, proposed legislation that would specifically permit special districts to purchase electricity from other outlets. Gov. Pete Wilson signed the bill into law this month, to take effect Jan. 1.

``It will permit us to work with other water purveyors to purchase electricity,'' Sagehorn said. ``It's introducing competition.''

Eventually, the deregulation should have a strong impact on water districts' budgets, he said. For example, the Castaic Lake Water Agency currently spends about $500,000 a year for electricity, mostly to pump water, he said. The Newhall district spends about $750,000 on electricity, Dunn said.

Water agencies around the state plan to purchase electricity as a group to save even more money by buying in bulk, Sagehorn said.

To do that, the Association of California Water Agencies, an organization with 435 members that has existed for years, has formed the Utility Service Agency charged with purchasing the electricity, said Erin Curtis, a spokeswoman for ACWA.

ACWA-USA, which has 117 of those members, signed an agreement last month with New Energy Ventures in Los Angeles to supply electricity, Curtis said.

If all of the 117 members participate in the program, the organization would purchase about 1 billion kilowatt hours of usage annually - about the amount of electricity needed to power an industrial city with 100,000 people for a year, Curtis said.

The deregulation should bring down water prices over time for consumers similar to the way telephone deregulation has, Runner said.

``We have succeeded in expanding open, competitive markets, which ultimately benefit consumers,'' Runner said. ``This new law keeps the door wide open in the new era of electrical restructuring.''