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The San Diego County Water Authority’s Board of Directors in December 2019 made a comprehensive settlement offer to the Metropolitan Water District of Southern California that would conclude every rate case between the two agencies, improve the transparency of MWD’s ratemaking process, and provide $140 million for San Diego County water ratepayers in addition to benefits already secured in court. It also would provide certainty about how much MWD charges to transport the San Diego region's independent water supplies.
For more than a year, the Water Authority has been working with the Metropolitan Water District of Southern California in confidential settlement discussions to find an equitable resolution to litigation over MWD’s rates. Those meetings didn’t yield an agreement, prompting the Water Authority to make a public settlement offer.
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