San Diego Business Journal

San Diego County Water Authority Gets Key Court Victory in Billing Dispute Against MWD

By SDBJ Staff Sunday, April 27, 2014

San Diego County Water Authority has prevailed in the first phase of historic rate litigation case against the Metropolitan Water District of Southern California. The Water Authority claims it has been over charged for water deliveries by the MWD.

San Francisco County Superior Court Judge Curtis Karnow affirmed the Feb. 25 tentative ruling in the Water Authority’s favor. The judge determined that the MWD violated cost-of-service requirements of the California Constitution, statutes and common law when setting rates for 2011, 2012, 2013 and 2014, according to the Water Authority.

The judge also set a case management conference for May 16 to schedule the second phase of the trial on the Water Authority’s claims based on breach of contract and preferential rights.

“Today’s decision seals our victory in this pivotal phase of the litigation,” said Thomas Wornham, chair of the Water Authority’s board of directors. “There’s still a long road ahead, but such a strong validation of our efforts only enhances our determination to continue this fight on behalf of San Diego County ratepayers.”

Lawyers for the Water Authority argued during a five-day trial in December that the 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 largest user of the MWD’s transportation service, according to the Water Authority.

“We’ve said all along that [the] MWD is not above the law,” said Maureen Stapleton, general manager of the Water Authority. “I hope that Met’s board of directors listens to a judge saying the same thing and conducts a real, independent cost-of-service study and sets rates that comply with the law.”

Phase two of the trial is expected to determine the disposition of tens of millions of dollars in disputed payments the Water Authority has made since 2011. Should the court award a refund to the Water Authority, the agency will deduct its litigation expenses and return the remaining money to its 24 member agencies in proportion to their past payment of the MWD’s overcharges, according to the Water Authority

During its regular monthly meeting, the Water Authority’s board voted unanimously to authorize another lawsuit against MWD over rates it adopted April 8 for 2015 and 2016 using the same methodology it used the prior four years, according to the Water Authority.