COURT RULES CLWA CAN RUN PRIVATE FIRM.

Byline: Susan Abram Staff Writer

SANTA CLARITA - The Castaic Lake Water Agency won an appeal Thursday of a 2002 Superior Court ruling that would have prohibited it from operating the Santa Clarita Water Co.

In rejecting the lower court ruling, the higher court upheld the CLWA's right to acquire the former Santa Clarita Water Co., and sell water at retail prices within defined boundaries. The Castaic agency is the region's wholesaler of state water.

Castaic contended that under Assembly Bill 134, which former Gov. Gray Davis signed in October 2001, the agency was allowed to operate at retail within a small geographic area and not through an intermediary.

``This is great news,'' said Dan Masnada, general manager for the CLWA. ``It's a win for the agency and for ratepayers, certainly to customers in the Santa Clarita Valley. Had the other side prevailed, the cost would have gone up.''

The Castaic agency, which imports, stores and distributes water from Northern California to retailers, paid $63 million in August 1999 for the formerly private water company.

Four local residents, including former Santa Clarita Councilwoman Jill Klajic, sued to block the purchase, saying the agency was chartered as a wholesaler, not a retailer. The state Court of Appeal ruled that the agency had the right to buy the company, but not the authority to run it. Justices also said the retail operator would be subject to regulation by the state Public Utilities Commission.

The plaintiffs said they were concerned that the agency was moving toward a monopoly on the local water market, which could favor development interests. Agency officials had said they were in charge of providing water, not controlling growth. CLWA officials have said the idea of a monopoly was a confusing idea, since they are seeking to manage water supplies better.

Upon hearing the ruling Thursday, plaintiffs Lynne Plambeck and Joan Dunn said they were disappointed. Additionally, they were concerned that Santa Clarita Water Co. customers were not receiving representation on the CLWA board.

An election was to be held this year, to appoint someone to represent the customers, the plaintiffs said, but it was never held.

``I think the concern that we were bringing forward does continue in that it does not serve the interest of the community,'' Plambeck said.

A Superior Court judge had ruled that the CLWA was operating the company illegally, ordered it to comply with the state Water Code within 90 days and gave the agency two options: to contract with an independent agency that is PUC-regulated or allow a public agency, such as the Newhall County Water District, to run the retailer.

``It would be a monopoly, because who could the people complain to,'' Dunn said. ``Without a PUC oversight, who do we go to now? If you complain to Castaic, the public be damned. That is very worrisome.''

Masnada said an election will be held, but has been postponed due to the litigation. He said the cost of appealing the Superior Court's ruling was under $50,000.

``What complicated the election was the litigation,'' Masnada said. ``Ultimately it will happen. The process is in place.''

Last week, a groundwater-banking program by the CLWA that also was challenged, but by two environmental groups, was upheld by a Ventura County Superior Court judge, who found the plan adequate under the California Environmental Quality Act.

Susan Abram, [phone]

susan.abram(at)dailynews.com