The California Public Utilities Commission today approved Valencia Water Company’s rate request to meet future operational needs, as well as the company’s request for an allocation-based tiered rate structure to encourage water-use efficiency under its WaterSMART program.

The tiered rate system and modest rate increase are scheduled to go into effect in February, 2011. In conjunction with the new tiered pricing system, Valencia Water Company has now measured the landscaped areas of all residential customers (with individual water meters) to more accurately set individual water allocations.

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“Allocation-based tiered rate systems are increasingly being used by water agencies throughout California to reward water efficiency and provide customers with economic price signals to discourage wasteful water use,” said Keith Abercrombie, Valencia Water Company’s general manager. “Valencia Water Company has carefully reviewed this process and has listened to its customers to ensure it is the most fair and equitable system for all residential customers.”

The original application, filed with the CPUC in January 2010, had been amended to request a lower increase. Valencia Water Company has decided, in light of national economic issues still impacting its customers and the general population, it was appropriate and manageable to defer certain capital improvements. Additionally, Valencia Water Company was able to realize cost savings through recent refinancing of its debt. These actions served to reduce the rate increase to a minimum.

The CPUC today approved a general water rate increase of 4 percent in 2011 and an increase of 1.8 percent to take effect in 2012. The rate increase is needed to account for general increases in the cost of treating and delivering quality water to customers. Even with the increase, Valencia Water Company’s rates remain among the lowest in the Santa Clarita Valley. Adoption of the tiered rate structure – even with the general rate increase – means many Valencia Water Company customers will see no annual increase in their water bills, provided they continue to be water efficient. In fact, some customers will see a decrease in their bills.

Valencia Water Company has worked extensively with CPUC staff and others to ensure the new rate structure is fair and equitable to all customers and that it would be effective at helping customers use water efficiently. Tiered rates are viewed as one important step to meet state legislation requiring all Californians to reduce water use 20 percent by 2020.

Valencia Water Company launched in early 2010 the WaterSMART program to give customers the opportunity to understand the new water allocation system before rates would be applied. The introductory period – unprecedented among California water agencies – permitted customers an opportunity to become more familiar with their water use and to identify any additional steps needed to use water in an efficient manner.

A customer’s individual allocation, how their actual use compares to their allocation, and other helpful details will be provided both on their bills and on their private online accounts on the Valencia Water Company website (www.valenciawater.com). A helpful chart easily shows customers whether they are using an efficient level of water in any given month. The chart is divided into five categories: Super Efficient, Efficient, Inefficient, Excessive and Wasteful.

Allocations vary by month depending on weather conditions. In warmer months, customers will generally receive larger allocations primarily to accommodate needs to maintain landscapes. The tiered pricing system approved by the CPUC and shown below will begin to appear on customer bills in February, 2011.