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San Diego County Water Authority Awaits Ruling in Trial Challenging MWD Rates
| Reuters
1. San Diego County Water Authority Awaits Ruling in Trial
Challenging MWD Rates | Reuters
San Diego
County
Water Authority Awaits Ruling in Trial
Challenging MWD Rates
The second phase of the San Diego County Water Authority's landmark rate
case against the Metropolitan Water District of Southern California
ended today in San Francisco Superior Court. A tentative decision is
anticipated by June, and a final ruling is expected by August.
In April 2014, the Water Authority prevailed in the first phase of the
case, with Judge Curtis E. A. Karnow ruling that rates charged by MWD in
2011-2014 are illegal and violate several provisions of California law
and the state constitution.
A ruling in Phase 2 will determine the amount of damages the Water
Authority should be awarded as a result of MWD's breach of its
contractual obligation to set legal rates. The Water Authority has
calculated that MWD has overcharged San Diego County ratepayers tens of
millions of dollars each year since 2011. Whatever damages the Water
Authority receives, its Board of Directors has already determined that
the agency will deduct its litigation expenses and return the remaining
money to its 24 member agencies in proportion to their payment of MWD's
illegal overcharges over the four years San Diego DUI defense lawyers in dispute.
Phase 2 also will determine whether MWD miscalculates the Water
Authority's preferential right to MWD water. Each MWD member agency has
2. a preferential right - or legal entitlement - to a percentage of MWD's
available water supplies based on a provision in the MWD Act. The
preferential rights issue is significant because MWD has understated the
San Diego region's right to purchase water by tens of thousands of
acre-feet a year - more than the annual production capacity of the $1
billion Carlsbad Desalination Project that is expected to begin
commercial water deliveries this fall.
"Given the result of the first phase of the trial, we are guardedly
optimistic the Phase 2 ruling will have a positive outcome for our
ratepayers," said Mark Weston, chair of the Water Authority's Board of
Directors. "The severity of the current drought highlights the
importance of standing up for our region and for lawful water rates.
Should we prevail again, we will be able to return millions of dollars
to our member agencies, and we will secure our rights to additional
water supplies. Those are both goals worth fighting for to protect our
region's $206 billion economy and quality of life for its 3.1 million
residents."
The second phase of the trial included hearings on March 30 and April 1,
2, 27, 28 and 29. Appeals are likely.
On April 24, 2014, Judge Karnow issued a final statement of decision in
Phase 1 of the trial that said MWD violated cost-of-service requirements
in California's statutes and common law when setting rates for 2011,
2012, 2013 and 2014. He also said MWD's 2013 and 2014 rates violate
Proposition 26, approved by voters in November 2010 and embodied in the
California Constitution as Article 13C. Proposition 26 shifted the
burden to public agencies to prove they are not charging more than the
3. actual cost of the services they provide.
After the April 2014 ruling, the Water Authority was forced to file
another lawsuit because MWD set its rates for 2015 and 2016 using the
same methodology and cost allocation declared by the court to be
illegal. That case has been stayed by stipulation of the parties pending
the final outcome of the current cases.
For more information about the Water Authority's lawsuits, including
court documents, go to www.sdcwa.org/mwdrate-challenge.
Litigation background
The Water Authority's lawsuits stem from historic agreements the agency
signed in 2003 to secure independent sources of water from the Colorado
River and reduce the San Diego region's once near-total reliance on MWD
for water. To transport its Colorado River water supplies to San Diego
County, the Water Authority must use pipelines controlled by MWD, which
has a monopoly on imported water distribution facilities in Southern
California.
MWD's current rates were expressly designed to protect its monopoly and
to discriminate against the Water Authority by shifting unrelated water
supply costs onto transportation rates, while illegally subsidizing
MWD's water supply rate to the benefit of its 25 other member agencies.
The Water Authority filed its first rate lawsuit against MWD in 2010,
then filed a second suit in 2012 because MWD refused to reform its
rates, which effectively force San Diego County ratepayers to subsidize
water ratepayers in other parts of Southern California. The two cases
were coordinated for trial, with the main issues being broken into two
4. phases of hearings.
Attorneys for the Water Authority argued in the December 2013 Phase 1
trial that MWD had loaded unrelated costs onto the rate it charges for
transporting water - a scheme that disproportionately damages San Diego
County ratepayers because the Water Authority is the only water agency
that uses MWD's transportation service (also known as "wheeling") to
move large volumes of supplies purchased from sources independent of MWD.
MWD asserted in court that it can set rates without regard to the actual
costs of service, and that it can even collect more than the costs of
the services it provides, as long as a majority of its board votes for
it. MWD also contended in court that it was exempt from Proposition 26,
as well as other constitutional and statutory provisions of California
law.
The San Diego County Water Authority is a public agency serving the
San Diego region as a wholesale supplier of water from the Colorado
River and Northern California. The Water Authority works through its 24
member agencies to provide a safe, reliable water supply to support the
region's $206 billion economy and the quality of life of 3.1 million
residents.
San Diego County Water Authority
Mike Lee
858-522-6703 office
760-208-0588
cell
Mlee@sdcwa.org
