Two dozen members of the San Diego County Water Authority, a wholesale water supplier in the county, will be collecting more than $10 million as part of a successful litigation against the Metropolitan Water District of Southern California.
A total of $90.7 million has now been collected by water agencies from Carlsbad to Yuima in Pauma Valley through the SDCWA’s successful rate litigation.
The lowest total distribution to a member agency was nearly $12,000 to Pendleton Military Reserve; the highest nearly $37 million to the city of San Diego.
The money will allow water agencies throughout the county to offset current and future inflationary pressures.
Reactions from water agencies around the county was celebratory.
“Helix Water District’s share of refunded legal fees will help the district weather the potential financial impact of the drought and state-mandated water use restrictions, and allow our capital projects to continue, while helping to avoid rate spikes,” a statement from the East County water providers said.
Helix’s total distribution is nearly $6 million.
Offsetting Rising Supply Costs
Kyle Swanson, general manager at Padre Dam Municipal Water District in Santee, which has collected nearly $2.3 million, said the distribution of the money from litigation wins is the “appropriate” thing for the Water Authority to do.
“Padre Dam will use this, two prior rebates and proposed zero percent revenue increases over the next five years to help offset the impact of rising supply costs on water rates,” Swanson said.
On May 26, the Water Authority’s board of directors voted to distribute another $10.4 million, which was the amount of money from attorneys’ fees that were paid by the Metropolitan Water District.
In 2021, two previous distributions totaling more than $80 million were paid out. Member agencies — 24 retail water providers, including cities, special districts and a military base – were provided refunds based on their portion of purchased water.
The Water Authority announced in February that it was distributing $44.4 million to those agencies after receiving a check for that amount from the Metropolitan Water District of Southern California.
A San Francisco Superior Court ruled in favor of the Water Authority in January 2021 in two lawsuits against Metro challenging rates and charges.
The money is for legal damages and interest from the decade-long rate cases. The Water Authority filed lawsuits between 2010 and 2018 over water rates and overcharges on imported water as they were set by Metro on San Diego County agencies and their ratepayers.
Avoiding Future Overcharges
The Water Authority sent a portion of the damages received to member agencies based on each agency’s overpayments from 2010-14.
Over the past several years, the Water Authority won key issues in several related cases contesting MWD’s rates and was deemed by the court to be the prevailing party in the 2010-14 cases. That means MWD paid legal fees and charges in addition to damages and interest.
Besides the cash distributions, the court rulings also help avoid future overcharges by Metro and will minimize future disputes over Metro’s rates charged to transport the Water Authority’s Colorado River water supplies through Metro facilities.
Those charges – if they had continued – would have cost county residents more than $500 million over the life of the Water Authority’s water delivery contract with Metro, Water Authority spokesman Ed Joyce said.
Another outcome of the lawsuits affirmed the Water Authority’s access to Metro programs supporting development of local supplies and water-efficiency measures.
Since the court ruled it was illegal for Metro to prohibit the Water Authority from accessing these programs, the Water Authority has secured almost $500 million in local project benefits for the San Diego region, helping to lower the costs of Pure Water San Diego, East County Advanced Water Purification Program out of Santee and Pure Water Oceanside.
Joyce said the agency hopes to finish the remaining elements of the litigation as quickly as possible, while continuing to work collaboratively with Metro on critical issues such as drought response and resource planning.
The Water Authority also announced that it is taking steps to minimize rate increases for its member agencies and their customers. In May, the agency proposed increasing rates and charges for member agencies by 5.2 percent for treated water and 3.7 percent for untreated water in calendar year 2023.
Joyce said that the increases are attributable to inflation, energy cost increases from San Diego Gas & Electric and cost increases by Metro.
The Water Authority Board is expected to vote on rates for next year at its June 23 meeting following a public hearing. The 2023 rate proposal includes withdrawals from the Water Authority’s Rate Stabilization Fund, which was created in 1990 to help avoid rate spikes.
To reduce the proposed rate increases by about $39 per acre-foot, the Water Authority plans to draw $14 million from that fund. An acre foot of water is about 325,900 gallons, enough to serve the annual needs of 2 1/2 typical four-person households in the county.