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After securing more than $350 million in “Water Stewardship Rate” benefits for the San Diego region, the San Diego County Water Authority’s Board of Directors voted in February 2020 to dismiss related claims against the Los Angeles-based Metropolitan Water District of Southern California.
That decision represents a major step toward resolving the litigation, which has been pending for more than 10 years. The suits challenged water rates and charges imposed by MWD on the Water Authority and local ratepayers from 2010-2018. The Water Authority’s Board action will allow the parties to avoid a trial scheduled for June 2020, and clear the way for judgment to be entered in the older cases.
The Water Authority Board has worked for more than three years to settle the litigation. In late 2019, those efforts gained momentum as the two wholesale water agencies traded settlement offers. When those proposals didn’t produce an agreement, the Water Authority Board decided to take unilateral action consistent with its settlement offer.
The Water Authority’s action was partly a response to MWD Board of Directors approving more than $350 million for three water supply projects in San Diego County:
- $285.6 million for the City of San Diego’s Pure Water Project
- $23.6 million for the Fallbrook Groundwater Desalter Project
- $42.7 million for the City of Oceanside Pure Water & Recycled Water Expansion Phase
Litigation Produces Significant Benefits
Landmark litigation initiated by the San Diego County Water Authority in 2010 was designed to protect San Diego County ratepayers from rates and charges set by MWD. MWD owns the only large-scale conveyance facilities in Southern California for transporting water from the Colorado River, and the Water Authority pays MWD to transport its independent Colorado River supplies to San Diego County. The lawsuits are focused on the terms under which MWD moves that water.
Water ratepayers across the San Diego region derived significant benefits from the litigation. Rulings in the 2011-2014 cases include:
- MWD must pay the Water Authority approximately $45 million for Water Stewardship charges MWD added to the transportation rates it illegally charged the Water Authority. MWD used this money to fund local supply and conservation projects for some MWD member agencies. The decision also prevents MWD from imposing more than $15 million in illegal charges annually going forward.
- MWD cannot enforce a contract clause it used to disqualify local water supply projects in San Diego County from receiving funding because the courts determined it was unconstitutional.
- The Water Authority is entitled to approximately 100,000 acre-feet of additional MWD water annually – about twice the production of the $1 billion Claude “Bud” Lewis Carlsbad Seawater Desalination Plant. The court determined that MWD unlawfully under-calculated the Water Authority’s statutory water right. As a result of the recalculation, the Water Authority's preferential right to MWD water increased from 18.53 percent to 24.22 percent in fiscal year 2018.
- A determination that MWD breached its contract with the Water Authority by not setting legal rates.
The Water Authority also challenged MWD’s allocation of its State Water Project supply cost to the transportation rate it charges to move the Water Authority’s independent Colorado River supplies. While the trial court in 2015 found those rates to be illegal, that finding was overturned by the Court of Appeal in June 2017. The Water Authority’s petition to the California Supreme Court to review the Court of Appeal ruling was denied in September 2017, meaning the Water Authority lost on that issue.
The Water Authority has additional cases challenging MWD’s rates from 2015-2020 that have been stayed in Superior Court while the appellate proceedings were ongoing.
Correspondence and Consultant Reports