Judge Rejects MWD Efforts to Avoid Discovery in Water Authority Rate Challenge

Short Title
Judge Rejects MWD Efforts to Avoid Discovery in Rate Case
Sept. 5 Hearing Set to Consider Order for MWD and Other Parties to Produce Documents

San Francisco Superior Court Judge Richard A. Kramer today rejected arguments made by the Metropolitan Water District of Southern California and other Southern California water agencies that they do not have to produce documents to the San Diego County Water Authority disclosing how MWD set its 2011 and 2012 water rates.

Judge Kramer set a September 5 court hearing at which time he is expected to order MWD and the other parties to produce documents sought by the Water Authority.  Judge Kramer again rejected MWD’s position that the Water Authority was entitled to no discovery at all.  MWD had filed a motion seeking to reverse a June 5, 2012 recommendation by a Court-appointed discovery referee, Judge James L. Warren (Ret.), who had recommended that Judge Kramer order MWD, its member agencies and third parties Malcolm Pirnie and Cordoba Corporation to produce documents within 45 days relating to the cost-of-service basis of MWD’s water rates and a contract provision designed to punish the Water Authority for exercising its legal right to question the basis of MWD’s water rates.

“We are pleased that the Court has once again agreed that permitting discovery is the only way to enable a meaningful review of MWD’s water rates and rate-setting process,” said Daniel Purcell, special counsel for the Water Authority with the law firm of Keker and Van Nest, in San Francisco.  "MWD has done everything it could over the past year to block any discovery into its rates or its process.  Today was only its latest unsuccessful attempt to avoid answering reasonable questions, and we look forward to receiving and evaluating MWD’s document production."

Today’s hearing was MWD’s fourth attempt since January 2012 – when Judge Kramer first ruled discovery was permissible in the case – to prevent the Water Authority from obtaining background documents about the bases of MWD’s water rates.  In addition to relitigating the same objections repeatedly before Judge Kramer and Judge Warren, MWD also filed a writ petition with California’s First Appellate District Court of Appeal seeking to overturn Judge Kramer’s initial January 2012 discovery ruling.  The Court of Appeal denied MWD’s writ petition summarily in April 2012.

The Water Authority filed this case in June 2010 to challenge MWD's 2011 and 2012 rates.  A second complaint was filed on June 8, 2012 to challenge rates adopted in April 2012 by MWD for the 2013 and 2014 calendar years.  The second lawsuit was necessary in part because MWD has taken steps to delay timely resolution of the first lawsuit.  The cases raise similar issues, and the Water Authority and MWD have agreed to seek the transfer of the second case to San Francisco, where the first case is proceeding. The Water Authority alleges that MWD improperly overcharges the Water Authority for the transportation of the Water Authority’s independent Colorado River supplies and uses that money to artificially lower the cost of MWD’s imported water supplies to its member agencies.  This violates California’s Constitution, numerous California statutes and standard water utility practice.

The stakes in the case are high. The Water Authority estimates San Diego County ratepayers will be overcharged by $40 million in 2012 and more than $50 million in 2013.  By 2021, the overcharges would grow to more than $217 million annually.

To view a copy of the complaint challenging MWD’s rates, click here:

www.sdcwa.org/sites/default/files/files/water-management/ratechallenge/2ndAmendedPetition.pdf

For more information, visit www.sdcwa.org/mwdrate-challenge