Two Water Authority Rate Cases Against Metropolitan Water District to be Coordinated

November 10, 2012

The San Diego County Water Authority’s ongoing quest for fair water rates gained more pre-trial momentum on Friday after a…

The San Diego County Water Authority’s ongoing quest for fair water rates gained more pre-trial momentum on Friday after a Superior Court judge said he would coordinate the agency’s two challenges to wholesale water rates set by the Los Angeles-based Metropolitan Water District of Southern California.

The ruling means the pre-trial process for the two cases – one filed for the 2011 and 2012 water rates and the second for the 2013 and 2014 water rates – will proceed on a coordinated basis, which will allow for a more efficient process leading up to trial, while allowing for the judge to make separate rulings in each case.

“The court’s decision today is a positive step for water ratepayers across Southern California,” said Daniel Purcell, special counsel for the Water Authority with the law firm of Keker & Van Nest in San Francisco. “The core legal issues and facts in these two cases are basically the same, so it makes sense to coordinate them in order to manage litigation costs and expedite a final resolution of these disputes. The court’s ruling will allow the Water Authority’s ratepayers to more quickly obtain a determination that Metropolitan’s rates are invalid and illegal.”

The cases present common factual and legal claims. Each case asserts that MWD’s rates assign water supply costs to transportation rates in violation of state law and the state constitution. Both cases allege that the water rates set by MWD discriminate against the Water Authority by artificially inflating the price charged for “wheeling” (or transporting) water through MWD’s pipes if it is purchased from a water supplier other than MWD.  The Water Authority purchases water from the Imperial Irrigation District and receives other independent water supplies from relining the All-American and Coachella canals. The Water Authority is the only MWD member agency that uses the pipelines MWD controls to transport a large volume of third-party water.

Both Superior Court cases also include claims that MWD breached its contract with the Water Authority by charging a price to transport water that violates state law. The Imperial Irrigation District has joined both lawsuits, alleging that MWD violates California’s Wheeling Statute, which is designed to force monopolies like MWD to make public facilities available for use by others when there is space available in the pipelines, so long as fair compensation is paid.

During the court hearing today in San Francisco, Superior Court Judge Richard A. Kramer denied MWD’s motion to stay the case challenging MWD’s 2013 and 2014 rates until after the first case challenging MWD’s 2011 and 2012 case has concluded. 

“With today’s ruling, the Water Authority is a big step closer to a final resolution of these disputes,” Purcell said. “It’s important, not only for San Diegans who are being forced to pay these illegal charges, but for the rest of Southern California ratepayers, who ought to know the truth about what is driving the increases in MWD’s wholesale water rates.”

The first challenge was filed in June 2010, after MWD set its 2011 and 2012 rates. The Water Authority filed a second complaint in June 2012 after MWD set rates for 2013 and 2014, which were based on the same flawed cost of service methodology as the first action. The second lawsuit was necessary because MWD’s foot-dragging in the first lawsuit delayed its resolution.

The stakes in the cases are high for San Diego County water ratepayers. Under MWD’s current rate scheme, local water ratepayers will be overcharged for transportation services this year by $40 million. By 2021, the overcharges could grow to more than $217 million annually.

The Water Authority has prevailed in a long series of pre-trial rulings but months of legal maneuvers by MWD means the case is unlikely to go to trial until late 2013.

To view the court documents, and other information about the cases, please visit:

  • The San Diego County Water Authority sustains a $268 billion regional economy and the quality of life for 3.3 million residents through a multi-decade water supply diversification plan, major infrastructure investments and forward-thinking policies that promote fiscal and environmental responsibility. A public agency created in 1944, the Water Authority delivers wholesale water supplies to 23 retail water providers, including cities, special districts and a military base.

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