DWP MAY CHARGE VALLEY CITY EXTRA.

Byline: Michael Coit Daily News Staff Writer

The Los Angeles Department of Water and Power wants to keep serving San Fernando Valley residents and businesses even if the area breaks away from the city, although a separate Valley city could face higher rates for water, the utility's top official said Tuesday.

S. David Freeman told Daily News editors and reporters the DWP has a clear responsibility to continue serving the Valley. Deregulation will eventually give people a choice of electricity suppliers, but water rights and water rates will be thorny issues if the Valley forms a new city, he said.

``We love the Valley. We don't want to lose any customers,'' Freeman said.

He also said a little-known city ordinance provides for a surcharge on all water service the city provides to areas outside the city. The surcharge covers the department's costs to buy water from the Metropolitan Water District of Southern California to supplement the DWP's supplies from its aqueduct and groundwater basins.

``I think the logical answer is the City Council would allocate the cheaper water to its constituents,'' Freeman said.

Leaders of Valley Voters Organized Toward Empowerment contend the DWP needs the Valley's customers to stay viable. They say a Valley city could demand the same rates residents and businesses pay now.

``The water rights are going to be divided, so it's just a question of paying for the infrastructure to deliver the water that's already owned by L.A. and the Valley,'' said Richard Close, chairman of the board for Valley VOTE.

``More important, I think we have more leverage than L.A. has. Unless we buy water from L.A., how is the city going to pay its debt?''

The DWP has 467,000 residential customers and 232,000 of them are in the Valley.

Splitting the city would change the structure of the nation's largest municipal utility.

At issue with water rights is the difference between ownership and the right to water service. The City Attorney holds the view that Los Angeles would retain all water rights and could be required to serve existing customers, while cityhood proponents contend Valley residents have contributed taxes to the system and get a share of water rights, as well as current rates.

Freeman said he isn't ``trying to stir up a fuss'' over water rates, but added that the mandatory surcharge would apply. ``You better assume the city would charge more.''

The surcharge amounts to 22 cents for every unit of water used monthly. A unit is equal to 748 gallons and the median monthly usage by Valley residents is 15 units. So the median monthly cost of $25.65 would increase by $3.30, said Richard West, water rates manager.

The city of West Hollywood and Universal City are among the few areas that pay the surcharge.

The DWP draws about 80 percent of its water from its Owens Valley aqueduct and groundwater basins. It buys the remaining 20 percent from the MWD, a wholesale agency that provides State Water Project and Colorado River Aqueduct supplies to Southern California.