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An opportunity for CLWA, Valencia Water Co. and the SCV

Posted: December 16, 2012 2:00 a.m.
Updated: December 16, 2012 2:00 a.m.
 

It is a watershed moment in the public management of the Santa Clarita Valley’s water supply — the Castaic Lake Water Agency is acquiring Valencia Water Co., a purchase that will not only expand local control of our valley’s water resources but also will result in financial benefits for local ratepayers.

At CLWA, we believe it’s important for Valencia Water Co. and its vital resources to remain under local control, and as such it only makes sense for it to be consolidated with a local public agency such as CLWA. We believe CLWA is uniquely positioned to maximize the public benefit of acquiring Valencia Water Co.

The situation is of course rather complex, but in a nutshell that is what led the CLWA board of directors to vote Wednesday in favor of acquiring Valencia Water Co. from Newhall Land, the company’s owner, through eminent domain. The acquisition is proceeding on the basis of condemnation but with both parties seeking a mutually agreeable negotiated settlement in which CLWA will purchase all Valencia Water Co. stock.

This consolidation will improve the local water supply management landscape. CLWA, which serves as the local wholesaler of imported water from the State Water Project and other sources, already owns the Santa Clarita Water Division, the second largest of the four local water retailers. SCWD and Valencia Water Co. together account for 84 percent of all service connections in the SCV.

The Valencia Water Co. stock purchase price will be $73.8 million — an investment that promises significant long-term benefits to customers of both Valencia Water Co. and the rest of the Santa Clarita Valley. We’ve identified significant public benefits in four key areas:

n Financial: The newly consolidated retail water system will generate economies of scale to help keep future water rates low. The fixed costs of operating a combined retail water system will be spread over a larger customer base. Combining the two retail systems’ facilities will reduce duplication and also increase service reliability for customers. Also, a larger single public agency will have access to lower-cost financing mechanisms that will reduce the cost of future water infrastructure projects.

n Water Resources Management: CLWA, SCWD and the other three local retailers closely coordinate the planning of our valley’s water resources. However, a consolidation of VWC and SCWD under CLWA ownership will promote more efficient long-term planning. We believe it’s vital that our water resources are managed prudently, now more than ever, considering mounting challenges such as cyclical droughts, climate change, regulatory issues, escalating energy costs and the anticipated population growth.

n Water Conservation: CLWA and all four local purveyors coordinate their efforts to conserve water and promote conservation by local residents and businesses. However, there is an unavoidable duplication of some of these efforts, as each entity employs its own conservation department. The shared resources of CLWA, SCWD and Valencia Water Co. will more effectively promote a consistent conservation message with the goal of establishing a permanent water use efficiency ethic in the community.

n Legislative Outreach: To promote and protect the interests of ratepayers in the SCV, CLWA has had a long-term presence in Los Angeles County, Sacramento and Washington, D.C. Not only will CLWA’s influence increase as a result of owning both Valencia Water Co. and SCWD, but it also will more directly benefit customers of Valencia Water Co. As part of a consolidated regional public water agency, Valencia Water Co. will be eligible for future grants not made available to private water utilities.

As these points illustrate, this transaction is about ensuring proper and prudent water management for this valley, ultimately for the benefit of all customers. It means local control of not just the utility, but also Valencia Water Co. resources, including its groundwater supply.

We believe this course of action is in the best interests of the SCV, rather than being exposed to the risk of a sale of the company to an outside interest that may prioritize short-term financial gain over water reliability and longer term cost-effectiveness.

Consolidating these services makes tremendous sense and the associated economies of scale will significantly benefit our local ratepayers, both financially and through improved management of our precious water resources.

Thomas Campbell is the president and Bill Cooper is the vice president of the Castaic Lake Water Agency board of directors. Their column reflects the agency’s views, and not necessarily those of The Signal.

 

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