State Officials Urge 20% Price Cut for Water Agency

Alleging that the Santa Clarita Water Co. squandered money on high pay and phantom employees, state utilities officials have recommended that the company be ordered to cut prices 20% to compensate its customers, according to an internal Public Utilities Commission report.

The PUC’s Office of Rate Payers Advocates said the water company, which serves about 20,000 customers in the Canyon Country and Saugus areas, pays exorbitant salaries and benefits, and some employees have “no-show” jobs.

The internal report, a copy of which the PUC provided to The Times, alleged that four employees live outside the area, are “not actively engaged” in the company’s operation and are “rarely if ever present at Santa Clarita’s office.” The four earn a combined annual salary of $170,000 and are provided with a company car to use whenever they are in town, the report said.

The company said the four were consultants on legal, tax and operational matters, but those services were already provided by other employees for far less money, the report said.

“The Commission will not allow the proverbial gold plated costs, such as luxury cars, to be reflected in ratepayer rates,” the report said.

The water company pays higher salaries than other utilities its size, including payments for pensions, medical and life insurance, the report said. Although other such companies usually pay their presidents about $90,000 a year, Santa Clarita Water requested permission to pay its president, William J. Manetta, $137,300 next year and buy him a $40,000 company car, the report said.

Manetta did not return phone calls from The Times for comment.

The allegations were contained in a report last month by the advocates office to an administrative law judge, Orville Wright, who will hold a hearing in Los Angeles on Dec. 17 on the water company’s rates and report back to the PUC, which regulates private utility companies.

A 20% reduction would cut the average customer’s bill from $57 every two months to about $44.

The case began when the water company, which has not raised rates since 1982, asked the PUC last year for permission to increase prices beginning next year, under a four-year plan that would nearly double the cost of water by 2001.

In the spring of 1995, 61 of the water company’s customers filed a complaint with the PUC, challenging the rate-increase request on the grounds that they were already being overcharged.

For 13 years, the PUC has authorized the water company to earn a 13% rate of return, but the company has never made less than 14.5% and in 1989 cleared 23.36%, the report said.

The water company based its request on two factors--the need for more money to pay for damage caused by the Northridge earthquake in January 1994, and to pay a planned price increase by the Castaic Lake Water Agency, which sells water to the Santa Clarita company and three other private water companies.

The Castaic agency, a state government body, supports the price increase by its customer. In a letter to the PUC dated Nov. 22, Castaic agency Director Robert C. Sagehorn protested that if the PUC forced the Santa Clarita Water Co. to cut its prices, that would increase water costs “to all the agency’s customers, reduce water quality and virtually wipe out any chance of rational water planning in the [Santa Clarita] Valley.”

To recoup the revenue lost in the Santa Clarita company’s price reduction, the water agency would have to increase the prices paid by the three other companies, which would have to pass on the increase to their customers, he said.

Sagehorn wrote that the Castaic agency plans to join the case on the side of the Santa Clarita company to protect “the water users in the Santa Clarita Valley.”