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February 25, 2014  
In This Issue
Water Authority Wins Landmark Ruling in MWD Rate Challenge
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San Diego County Water Authority

Water Authority Wins Landmark Ruling in Rate Challenge Against Metropolitan Water District of Southern California   

In a major victory for the Water Authority and water ratepayers throughout San Diego County, San Francisco County Superior Court Judge Curtis E. A. Karnow today tentatively ruled that in setting rates for 2011, 2012, 2013 and 2014, the Metropolitan Water District of Southern California violated cost of service requirements of California's Constitution, statutes and common law.  Specifically, Judge Karnow's tentative determination is that MWD's rates violate:

  • Proposition 26;
  • the Wheeling Statute;
  • Government Code Section 549997(a); and,
  • Common law rules that apply to ratemaking.

The tentative ruling came in lawsuits filed in 2010 and 2012 by the Water Authority challenging rates imposed by the Los Angeles-based Metropolitan Water District of Southern California for 2011-2014, inclusive. The parties will have 15 days to file objections to the Court's order, after which the Court will issue a final statement of decision. A second phase of the trial will be scheduled on the Water Authority's claims based on breach of contract and preferential rights.


"Today's tentative ruling validates the difficult and extraordinary measures the Water Authority was forced to take to protect the ratepayers and the economy of San Diego County," said Thomas V. Wornham, Chair of the Water Authority's Board of Directors. "MWD has fought us every step of the way for more than three and one-half years, but our Board of Directors, our member agencies and the entire San Diego community have stood united and resolved to fight these illegal rates. We will continue to fight for lawful rates from MWD inside and outside the courtroom."


The judge's tentative ruling agreed with the Water Authority's longstanding position that MWD's rates must be based on the actual costs of providing service and must be reasonably related to the burdens imposed and benefits received by MWD's member agencies. Notably, Judge Karnow also tentatively ruled that MWD's rates for 2013 and 2014 are subject to Proposition 26, approved by voters in November 2010. That proposition, now embodied in California's Constitution, shifted the burden to public agencies to prove they are not charging more than the actual cost of the services they provide. MWD had contended in court that it was exempt from Prop. 26 as well as other constitutional and statutory provisions of California law.


Click here to read the news release.


Click here to read the judge's decision.

Click here for more information on the rate case.

The San Diego County Water Authority works through its 24 member agencies to provide a safe and reliable water supply to support the region's $188 billion economy and quality of life of 3.1 million residents.