SDCWA lawsuit against biggest supplier heard in court

REGION — Only closing briefs and a final hearing remain before a decision is made on SDCWA’s (San Diego County Water Authority) lawsuit against its primary water supplier, MWD (Metropolitan Water District).

Judge Curtis E.A. Karnow heard the lawsuit, which has potentially billions of dollars at stake, in San Francisco Superior Court Dec. 17 through Dec. 23.

SDCWA filed lawsuits in 2010 and 2012 arguing that MWD’s water rates for 2011 through 2014 do not align with the cost of services it is providing San Diego County. The lawsuits stem from SDCWA’s continued reliance on MWD despite its efforts to the contrary.

MWD is the main supplier of imported water for six counties, San Diego included, supplying about 19 million residents in Southern California.

In 1991, MWD cut water deliveries to San Diego by 30 percent due to limited water supplies from a multi-year drought. At the time, 95 percent of SDCWA’s water supply came from MWD.

In the years since, SDCWA has worked to diversify its water sources with strategies including investing in the construction of the seawater desalination plant in Carlsbad and developing greater recycled water sources.

However SDCWA’s most significant source of diversification is its 45-year contract, signed in 2003, to obtain water from the Colorado River via the IID (the Imperial Irrigation District).

In 2013, MWD is still SDCWA’s main supplier, providing 46 percent of San Diego’s water, but IID is the second largest supplier, providing 16 percent of SDCWA’s water. SDCWA anticipates that by 2020 only 30 percent of its supply will come from MWD and 24 percent will come from IID.

But to get the water from IID to San Diego, SDCWA has had to rely on MWD’s water transportation system.

SDCWA is the only MWD agency that uses the district’s pipelines to obtain a large volume of water from a third party water supplier.

SDCWA is arguing that MWD inflated the rates designated to pay for the transportation of IID’s water through its facilities to subsidize the water costs of its other 25 member agencies.

“MWD’s flawed rates create overcharges for San Diego County for the transportation of water and corresponding undercharges for the water MWD sells to its member agencies,” stated a SDCWA Dec. 16 press release.

The county water agency claims that MWD’s rates overcharge San Diego by $57 million this year. They claim that MWD has the potential to overcharge the county by $1.3 billion to $2.1 billion over the course of SDCWA’s 45-year contract with IID.

MWD is asserting that SDCWA is seeking to avoid its fair share of the pipeline network costs.

“SDCWA’s lawsuit seeks to avoid paying its share of maintaining this transportation system — at the expense of the system’s other users,” said a statement from MWD.

MWD argues that if SDCWA wins the lawsuit, it would have to shift the cost of delivering SDCWA’s water from IID to consumers in Los Angeles, Orange, Ventura, Riverside, and San Bernardino counties.

With the main arguments finished on Dec. 23, the trial is anticipated to conclude in early 2014.

Post trial briefs from each party are due Jan. 17 and a hearing on those briefs is scheduled for Jan. 23, according to a press release from SDCWA.

Karnow will issue his decision sometime after the hearing, but subsequent appeals are anticipated regardless of his ruling.

 

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