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Ruling could result in reduction of water rates, refunds


March 05, 2014
A recent litigation between the San Diego County Water Authority Board could result in some savings for customers of Valley Center Municipal Water District, general manager Gary Arant announced during the group's March 3 Board of Directors meeting.

The San Diego County Water Authority Board received good news about the litigation against the Metropolitan Water District (MWD) of Southern California on Feb. 25. as the judge tentatively ruled that MWD violated the state's cost of service requirements.

San Francisco County Superior Court Judge Curtis E. A. Karnow's tentative ruling sided with the Water Authority's position that MWD's rates must be their actual costs of providing service and be reasonably related to any burdens imposed and benefits received by their member agencies.

"He ruled in favor of the Water Authority on two of the three causes," Arant said. "We think the lawsuit was correct - we have been overcharged."

Arant later told the Valley Roadrunner in an email that since MWD will probably appeal the decision that it could be some time before customers see a reflection of the judgment in the form of savings on their water bills.

"Since we buy all of our water from the SDCWA, if it ultimately prevails this could result in a rate decrease and a refund of past over-charges," Arant said, noting he couldn't speculate on the amount of a refund or rate reduction at this point.

The judge also found that MWD had been misallocating state charges to the transportation rate, rather than to the supplier, which in turn drives up the price of water, Arant said.

The final cause heard in court was tentatively ruled in favor of MWD, to whether or not the water district's rates fairly account for the costs of dry-year peaking used by its member agencies.

Arant explained that the judge found that there is no mechanism to capture the cost of the summertime peak.

The Water Authority has two remaining causes of action against MWD, which is the next phase of the litigation.

Of those causes, one is for a breach of contract and the other addresses "rate language."

According to the VCMWD's Website, "If, in Phase 2, the court finds MWD breached its contract with the Water Authority, the agency will be required to refund tens of millions in disputed payments the Water Authority has made since 2011."

"Our clear indication is that Metropolitan will appeal. That may drive it out another two years," Arant said.

In other news, a refund for just over $92,000 was delivered to the board during the meeting. The refund, was presented to district management because it is most directly responsible for the safety practices, training, and risk management programs which resulted in very low loss ratios. The check was presented by Bill Knutson, executive committee member of Association of California Water Agencies Joint Powers Insurance Association (ACWA/JPIA) who provides the district with its liability, property and workers compensation insurance.

"This is not our money, it's your money being returned," Knutson said.

In response to Governor Edmund G. Brown Jr.'s direction on water conservation and recent drought legislation, Arant recommend the board adopt Level 1 of a voluntary Water Supply Shortage Watch Condition that aims to conserve 20 percent of water usage.

"We ask our customers to stop washing paved surfaces," he said.

Another step toward conserving water includes irrigating before 10 a.m. and after 4 p.m. (excluding agriculture sales).

The board voted to adopt the Water Supply Shortage Response Program.

For more information, go to www.vcmwd.org.

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