MWD Rate Challenge

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MWD Rate Challenge

Lawsuits gain momentum as trial nears

The Water Authority won a series of important pre-trial rulings against the Metropolitan Water District of Southern California in advance of a trial scheduled for December 2013 over the legality of MWD’s rates.

MWD was forced to produce documents that show how it sets rates despite numerous attempts by the Los Angeles-based wholesaler to avoid disclosure. The court agreed with the Water Authority’s suggestion to coordinate its two related lawsuits – one filed in 2010 and another filed in 2012.

The cases present common legal and factual claims. The central element of the Water Authority’s case is that MWD improperly assigns unrelated water supply costs to the transportation rates in violation of state law and the state constitution. In the lawsuits, the Water Authority also is asking the court to address MWD’s failure to properly recover dry-year standby costs in its rates. Both cases also allege that MWD’s actions discriminate against the Water Authority, and that MWD breached its contract with the Water Authority by charging prices to transport water that violate state law.

Stakes are high for San Diego County ratepayers; the Water Authority was overcharged by an estimated $57 million for transportation services in 2013 alone, and the annual figure is projected to grow to $217 million by 2021 if MWD continues to misallocate its costs among its rates.


Water Authority leads charge against MWD’s over-collection of revenue

In June, the Water Authority spearheaded a protest against MWD’s plan to increase unbudgeted spending by $75 million and pressed MWD to return cash reserves above the board-established maximum to ratepayers across Southern California. At the time, MWD had collected $75 million more than its established reserve limit, yet it was moving ahead with a 5 percent increase in water rates for 2014.

Water Authority delegates to the MWD board asked MWD to refund the $75 million in overcharges to ratepayers across the region (including $16.4 million to San Diego County), and lower the 2014 rate increase. MWD refused to budge – but the Water Authority succeeded in highlighting MWD’s policy gaps, and it gained significant public awareness.