The San Diego County Water Authority’s Board of Directors Thursday announced a plan to distribute a rebate of $44.4 million to its 24 member agencies across the region.
They did so after receiving a check for that amount from the Los Angeles-based Metropolitan Water District of Southern California to pay legal damages and interest after a long legal battle.
I have some important news for our region to share: The San Francisco Superior Court has ruled the San Diego County Water Authority is the prevailing party in the agency’s first two lawsuits heard challenging rates and charges set by the Los Angeles-based Metropolitan
Water District of Southern California.
The order entitles the Water Authority to recover its attorneys’ fees and costs in those cases, in addition to a $44 million damage and interest awardmade earlier.
“San Diego prevailed, and the judgment not only benefits its own ratepayers but all of thenearly 19 million people in Metropolitan’s service area because enforcing cost-of-service principles serves the interests of all ratepayers,” said Superior Court Judge Anne-Christine Massullo in her Jan. 13 order, which can be appealed.
The exact amount of recoverable fees will be decided later. It is deeply gratifying that the court not only validated our claims but acknowledged the importance of protecting ratepayers by water agencies following the law.
The order makes it clear once and for all that our desire to protect San Diego ratepayers was never intended to harm MWD, its other member agencies or the ratepayers they serve. Rather, the litigation was necessary to address serious flaws in MWD’s rates that will, as the court said, ultimately benefit not only San Diego County ratepayers, but all Southern Californians.
This order is another major step toward achieving Water Authority board objectives and one of my key initiatives as Board Chair: to conclude the litigation and work together with other MWD member agencies to address MWD’s water resource and rate challenges. This is essential in order to ensure MWD’s fiscal sustainability—and that of its member agencies—now and in the future.
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A San Francisco Superior Court judge ruled the San Diego County Water Authority is the prevailing party in the first of two lawsuits challenging rates and charges set by the Los Angeles-based Metropolitan Water District of Southern California. The order entitles the Water Authority to recover its attorneys’ fees and costs in those cases, in addition to a $44 million damage and interest award made earlier.
The San Francisco Superior Court has ruled the San Diego County Water Authority is the prevailing party in the agency’s first two lawsuits to be heard challenging rates and charges set by the Los Angeles-based Metropolitan Water District of Southern California. The order entitles the Water Authority to recover its attorneys’ fees and costs in those cases, in addition to a $44 million damage and interest award made earlier.
“San Diego prevailed, and the judgment not only benefits its own ratepayers but all of the nearly 19 million people in Metropolitan’s service area because enforcing cost-of-service principles serves the interests of all ratepayers,” said Superior Court Judge Anne-Christine Massullo in her Jan. 13 order, which can be appealed. The exact amount of recoverable fees will be decided later.
In light of the order, Water Authority Board Chair Gary Croucher reiterated the Water Authority Board’s longstanding desire to avoid litigation and find common ground with other MWD member agencies. “This ruling only enhances our determination to find an equitable resolution that will not only conclude the few issues that remain pending in court, but also help avoid future litigation as new rates and charges are being considered for 2023 and subsequent years,” he said.
The Water Authority filed lawsuits between 2010 and 2018 challenging water rates and charges as they were set and imposed by MWD on San Diego County agencies and their ratepayers. After a favorable court ruling invalidating MWD’s Water Stewardship Rate on the Exchange Agreement, the Water Authority worked with MWD to try to resolve the remaining issues. The MWD Board promised to fund almost $500 million in local water supply projects in San Diego County and the Water Authority agreed to dismiss claims against MWD’s Water Stewardship Rate on supply, which is used to fund local projects under the MWD program.
“It is deeply gratifying that the court not only validated our claims but acknowledged the importance of protecting ratepayers by water agencies following the law,” Croucher said. “This week’s order makes it clear once and for all that our desire to protect San Diego ratepayers was never intended to harm MWD, its other member agencies or the ratepayers they serve. Rather, the litigation was necessary to address serious flaws in MWD’s rates that will, as the court said, ultimately benefit not only San Diego County ratepayers, but all Southern Californians.”
The Water Authority’s first two rate cases – covering 2011 to 2014 rates – resulted in the court ordering an increase in the Water Authority’s preferential right to MWD water by as much as 100,000 acre-feet a year, equivalent to about twice the annual production of the $1 billion Carlsbad Desalination Project. MWD has already complied with this ruling and adjusted its records accordingly.
The court also determined that MWD must pay the Water Authority damages for illegal charges imposed on delivery of the Water Authority’s water under the Exchange Agreement. A Superior Court judge in August 2020 awarded the Water Authority $44,373,872.29 covering rates paid by San Diego County ratepayers during 2011-2014.
San Diego County ratepayers have also avoided paying more than $45 million from 2018-2020 after MWD suspended its invalid Water Stewardship Rate charges on the Exchange Agreement. The improper charges would have cost local residents more than $500 million over the term of the Exchange Agreement. Currently, MWD owns the only pipeline that can deliver the Water Authority’s independent supply of Colorado River water to San Diego County and it sets the unregulated water rates which govern and control the delivery of water to San Diego County.
In addition, the court ruled that MWD had illegally barred the Water Authority from receiving money from MWD’s local water supply program, even though the Water Authority was still being forced to pay for it. MWD lifted the ban in response to the court’s order, and ultimately promised the nearly $500 million for water supply projects in San Diego County including the City of San Diego’s Pure Water North City Project Phase 1, East County Advanced Water Purification Project, Escondido Membrane Filtration Reverse Osmosis Facility and Fallbrook Groundwater Desalter Project.
A judge has awarded the San Diego County Water Authority $44.4 million in a final judgment of two lawsuits over rates paid to transport water supplies from 2011 to 2014.
The Water Authority had worked for more than a decade to resolve the dispute, which concerned San Diego’s independent supply of water from the river that was carried by Metropolitan Water’s aqueducts and pipelines.
As you know, the Water Authority has been working for years to conclude lawsuits over rates set by the Los Angeles-based Metropolitan Water District of Southern California – and this week, we have taken a big step forward with the entry of final judgment in two major cases.
Yesterday, a Superior Court judge has awarded the San Diego County Water Authority $44,373,872.29 for two cases covering rates paid by San Diego County ratepayers during 2011-2014. The award included $28,678.190.90 in damages for MWD’s breach of contract for the four years at issue, plus pre-and post-judgment interest. As these first two cases are finally concluded, the Water Authority is also working to narrow the scope of the remaining 2014, 2016 and 2018 cases (a 2017 case has already been dismissed).
Entry of final judgment caps a 10-year effort by the Water Authority Board of Directors on behalf of San Diego County ratepayers, proving once again our region is stronger together in charting our water future. While the damages and interest award is important, the entry of judgment will also help avoid future overcharges and thereby minimize future disputes based on rulings by the Court of Appeal. MWD’s improper charges – if they had continued – would have cost San Diego County residents more than $500 million over the life of the Water Authority’s water delivery contract with MWD.
The lawsuits generated other substantial benefits, such as requiring an increase in the Water Authority’s preferential rights to MWD water by approximately 100,000 acre-feet a year, equivalent to about twice the annual production of the $1 billion Carlsbad Desalination Project.
In February, the Water Authority’s Board of Directors voted to dismiss certain issues from the litigation after securing more than $350 million in local project subsidy benefits for the San Diego region, beginning late last year. In doing so, the Water Authority acknowledged the MWD Board action to stop imposing the district’s Water Stewardship Rate as a charge for transporting the Water Authority’s independent water supplies through MWD facilities, thus resolving for now that issue in future rate years. Consistent with the Water Authority Board’s direction, its attorneys are taking the steps necessary to narrow the litigation and have recently dismissed one case in its entirety.
As the lawsuits continue to wind down – which remains my personal goal – the Water Authority is working collaboratively with MWD member agencies across the district’s six-county service area to update MWD’s long-term water resource and financial planning. MWD’s Integrated Resources Plan, or IRP as it is called, will be its roadmap for the future, factoring in updated data and plans by many MWD member agencies who are working to develop their own local water supplies like the Water Authority and its member agencies have done over the past two decades and we will continue to do in the future.
A Superior Court judge has awarded the San Diego County Water Authority $44,373,872.29 in a final judgment for two cases covering rates paid by San Diego County ratepayers during calendar years 2011-2014. The award included $28,678,190.90 in damages for the Metropolitan Water District of Southern California’s breach of contract for the four years at issue, plus pre-and post-judgment interest.
A Superior Court judge has awarded the San Diego County Water Authority $44,373,872.29 in a final judgment for two cases covering rates paid by San Diego County ratepayers during calendar years 2011-2014. The award included $28,678,190.90 in damages for the Metropolitan Water District of Southern California’s breach of contract for the four years at issue, plus pre-and post-judgment interest.
The Water Authority has worked for more than a decade to resolve disputes with MWD in cases filed from 2010-2018. In February, the Water Authority’s Board of Directors voted to dismiss certain issues from the litigation after securing more than $350 million in local project subsidy benefits for the San Diego region, beginning late last year. In doing so, the Water Authority also acknowledged the MWD Board action to stop imposing the district’s Water Stewardship Rate as a charge for transporting the Water Authority’s independent water supplies through MWD facilities, thus resolving for now that issue in future rate years. Consistent with the Water Authority Board’s direction, its attorneys are taking the steps necessary to narrow the litigation and have recently dismissed one case in its entirety.
“Entry of final judgment caps a 10-year effort by the Water Authority Board of Directors on behalf of San Diego County ratepayers, proving once again our region is stronger together in charting our water future,” said Jim Madaffer, chair of the Water Authority’s Board of Directors. “While the damages and interest award is important, the entry of judgment will also help avoid future overcharges and thereby minimize future disputes based on rulings by the Court of Appeal.”
As the lawsuits continue to wind down, the Water Authority is working collaboratively with MWD member agencies across the district’s six-county service area to update MWD’s long-term water resource and financial planning. MWD’s Integrated Resources Plan, or IRP, will be its roadmap for the future, factoring in updated data and plans by many MWD member agencies to develop local water supplies such as the Water Authority and its member agencies have done over the past two decades and will continue to do in the future.
In its judgment, the San Francisco Superior Court:
The Court will retain continuing jurisdiction over the cases. A hearing will be held later this year to determine the prevailing party’s right to recover attorneys’ fees and costs.
With a judgment issued in the first two cases, the Water Authority is also working to narrow the scope of the remaining 2014, 2016 and 2018 cases (a 2017 case has already been dismissed).
“Like most court proceedings, it will take a little time to work through all the details,” said Water Authority Board Secretary Christy Guerin, who led the most recent litigation settlement efforts for the agency. “We recognize that MWD is at an important crossroads, and we look forward to working with the other MWD member agencies on charting a future course to ensure both a reliable Southern California water supply and MWD’s fiscal sustainability.”
Click here for more information about the rate case litigation, including the final judgment in the 2010 and 2012 cases.
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