JUDGE BACKS WATER AGENCY'S RATE PROPOSAL : SCV RESIDENTS' CHALLENGE DISMISSED.

Byline: Sherry Joe Crosby Daily News Staff Writer

An administrative law judge Tuesday dismissed complaints by local residents that Santa Clarita Water Co. inappropriately negotiated a proposed settlement with state officials that calls for a 6 percent rate increase.

Judge Orville Wright said the water company and the Office of Ratepayer Advocates, an advisory agency of the state Public Utilities Commission, committed no wrongdoing in reaching a tentative agreement without the participation of water company customers.

``I have no indication that anyone engaged in secret meetings or any other nefarious activities,'' said Wright, who instead ordered the agencies to release the proposed agreement in February during a public hearing.

Those who complained said nevertheless they were pleased with the judge's decision.

``This particular judge gave ratepayers all we asked for,'' said Allan Cameron, a member of Citizens Against Unfair Water Rates, which asked Wright to delay a decision on the tentative agreement until customers have enough time to review the document, which wasn't ready in time for Tuesday's hearing.

Attorneys for both agencies said they expect to file the proposed agreement with the PUC in two to three weeks. The public will have 30 days after that date to review the document.

The proposed agreement, which calls for rate increases of 1 percent to 2 percent annually over a three-year period starting in 1997, must be approved by Wright and the PUC.

The Santa Clarita Valley's largest water retailer, the privately owned company serves 20,000 homes and businesses in Saugus and Canyon Country. It last raised its rates in August 1982.

In its application, the company sought to nearly double its rates over three years to recover $9.2 million in expenses. But the Office of Ratepayer Advocates recommended that the water agency instead slash its rates by 20 percent in 1997.

The water company and PUC advisory agency reached the proposed agreement after further investigation revealed that Santa Clarita's future operating expenses would not increase as dramatically as once thought. Attorneys for both sides reached the tentative settlement after holding two public meetings attended by ratepayers in November and December and discussing details in later telephone conversations.

Residents, however, said another public hearing should have been held before the agencies announced the tentative agreement last week.

``I was stunned and shocked. (The proposed settlement) obviously reflected a tremendous amount of thought that I was never able to witness,'' said Cameron who learned about the proposed agreement last week during a telephone conversation with Peter Fairchild, counsel for the Office of Ratepayer Advocates.

Fairchild said customers did not miss any of the negotiations.

``The ratepayers participated in both (meetings) and offered their comments and some information. We had pretty much the general outline of agreement,'' Fairchild said, adding that he and attorneys for the water company later ``caucused among ourselves based on the new information.''

The next hearing is scheduled for 10 a.m., Feb. 19 and 20 at the State Office Building, 107 S. Broadway, Room 1120.

Santa Clarita's request to raise its rates was prompted by a PUC complaint filed in April 1995 by 61 customers who claimed that they paid for state aqueduct water - at $145 an acre-foot - but received well water, which costs $95 an acre-foot.

An administrative law judge ordered the company to file a report seeking a rate change.