The Court of Appeal ruled today in the San Diego County Water Authority vs. Metropolitan Water District rate case. By my quick skim of the decision, it looks rather mixed with some things being remanded to the trial court. An appeal to the Supreme court is likely, notes San Diego in their press release, so it’s probably not over yet. You can read the decision here.
Here’s what the litigating parties had to say (listed in alphabetical order).
From the Metropolitan Water District:
Jeffrey Kightlinger, general manager of the Metropolitan Water District of Southern California, issues the following statement on the decision by the California Court of Appeal on two lawsuits by the San Diego County Water Authority challenging Metropolitan’s rate structure:
“This ruling by the three-justice panel of the California Court of Appeal scores a major legal and financial victory not only for Metropolitan, but for the district’s cooperative of member public agencies as well as the millions of consumers they serve. We are gratified that the court sided with Metropolitan on the central issue in this case, finding “the California Aqueduct unquestionably is an integral part of the system by which Metropolitan transports water to its member agencies” and it is lawful for Metropolitan to recover its State Water Project conveyance costs in its wheeling rate and the transportations rates charged under its exchange agreement with San Diego County Water Authority.
“The Water Authority’s years-long effort to shift costs relating to their own water supply onto ratepayers elsewhere in Southern California has failed. We are equally pleased the court upheld Metropolitan’s full service rate—which represents the vast majority of Metropolitan’s revenues—including our ability to fund projects advancing conservation and local resource development through that rate.
“In the end, years of litigation brought by the Water Authority and tens of millions of dollars in related costs borne by ratepayers have fundamentally changed no major aspect of Southern California water management or financing. While Metropolitan has prevailed as to the overwhelming majority of costs under challenge in this litigation, nobody is a winner when water districts decide to fight in court rather than resolve their differences in a democratic and collaborative fashion.”
For more from Metropolitan on their side of the rate case, click here.
From the San Diego County Water Authority:
The state Court of Appeal on June 21 ruled in favor of the Water Authority, the San Diego region, and its ratepayers on several significant elements of the Water Authority’s lawsuits to secure legal rates at the Los Angeles-based Metropolitan Water District of Southern California.
One key ruling is that the Water Authority is entitled to tens of thousands of acre-feet more water from MWD than MWD had credited to San Diego under its preferential rights formula. A correct calculation of the Water Authority’s preferential rights confirms its right to tens of thousands of acre-feet more water annually for the San Diego region – a water supply comparable to the amount produced annually by the $1 billion Carlsbad Desalination Project.
Another important ruling is that MWD collected millions of dollars in illegal charges from San Diego ratepayers for “water stewardship.” MWD used this money to fund local supply and conservation projects for some MWD member agencies.
In addition, the court found that MWD breached its contract with the Water Authority, which required MWD to set legal rates. The court also ruled that MWD’s ‘Rate Structure Integrity’ contract clause is unconstitutional and that the Water Authority has legal standing to challenge it. The RSI clause was designed to punish the Water Authority for its decision to challenge MWD’s rates in court.
The court ruled against the Water Authority on one important issue with implications for ratepayers and taxpayers statewide – essentially, whether MWD must base its rates on the costs it actually incurs in providing its various services. The Water Authority believes that the California Constitution, state law and voter-approved Proposition 26 compel MWD to do so – and the trial court agreed. MWD argued that it’s above the law, and convinced the Court of Appeal to reverse the lower court ruling on this key finding. The Water Authority is also concerned about the chilling effect this ruling could have on water transfers and their benefits for the environment.
With so much at stake, both the Water Authority and MWD are likely to seek review from the California Supreme Court of various aspects of the June 21 decision.
Click here for more from the San Diego County Water Authority on their side of the rate case.
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