Even though San Diego water customers may be owed hundreds of millions of dollars by the region’s largest water supplier, it will be a long time before anyone sees a dime.
A judge ruled last year that the Metropolitan Water District of Southern California charged too much to deliver water to San Diego from the Colorado River. The judge said Metropolitan owes the San Diego County Water Authority at least $243 million, including legal fees and interest.
Yet the Water Authority will be asked to keep paying the same rates that San Francisco County Superior Court Judge Curtis Karnow said were improper.
That’s because Metropolitan is appealing the ruling and refusing to change its rates in the meantime. Metropolitan’s latest budget proposal sets rates through 2018. It will be voted on next week.
The Water Authority buys water from Metropolitan and then resells that water to local water agencies, like the city of San Diego’s Public Utilities Department. The money from last year’s court victory could be used to provide relief from ever-rising rates.
But don’t count on that anytime soon.
The ruling isn’t final until after the appeal has been heard, said Metropolitan spokesman Bob Muir, who noted cases involving the two agencies have been reversed on appeal before.
The current case centers on Colorado River water. San Diego uses a bunch of water from that distant river. San Diego has specific rights to some Colorado water but can’t get the water here without using Metropolitan’s 242-mile Colorado River Aqueduct. Karnow said Metropolitan had improperly heaped charges on San Diego for use of the aqueduct in 2011, 2012, 2013 and 2014.
The Water Authority has also already sued Metropolitan for charging the same rates in 2015 and 2016 and is likely going to file a lawsuit over the rates if they remained unchanged in 2017 and 2018.
Mark Weston, chairman of the Water Authority’s board of directors, said Metropolitan’s decision to keep charging the same controversial rates was “alarming.”
The contested bill will only grow in coming years. The Water Authority is planning to use the aqueduct to get more and more Colorado River water as part of a deal with the Imperial Irrigation District. The Water Authority expects the controversial rates may total $500 million in the next five years.
That means, if Metropolitan loses its appeal, it could owe San Diego hundreds of millions more, depending on how long the cases drag on.
There appears almost zero chance that the two sides will settle the cases. Combined, they have spent some $30 million in legal fees.
None of this is surprising to folks in the water world. The relationship between Metropolitan and the Water Authority is not just litigious but caustic – laden with suspicion after years of exhaustive fighting.
But, while Metropolitan doesn’t want to reconsider the fees at the heart of its legal battle with the Water Authority, it is considering changing how it charges all of its customers in Southern California. Those changes affect the price of treated water that Metropolitan sells to San Diego, and the Water Authority has been fighting Metropolitan’s plans.
There are two kinds of water: treated water, which has been cleaned up for drinking; and raw water, which comes from a river or reservoir and is not yet fit for human consumption.
Metropolitan said it’s selling less treated water, in part because of the drought and Gov. Jerry Brown’s order last year that urban water users cut their consumption by 25 percent. Yet, it has several large water treatment plants it has to keep paying for. Right now, it collects money to pay for treated water based only on how much treated water it sells. It wants to create a new fixed fee for its customers, so that it can pay its bills when sales drop.
Under the plan, Metropolitan would collect the same amount of money – $257 million – but its 26 members would pay different portions of that cost. Some will pay less than they otherwise would have, some will pay more, depending on which of several rate plans Metropolitan adopts.
“The way I would describe that is, just like the EPA says, ‘Your mileage may vary,’” said Dennis Cushman, the Water Authority’s assistant general manager.
Under every scenario, the Water Authority pays at least a few million dollars more than it expected to pay for treated water.
The money is still only a small percent of the Water Authority’s $750 million annual budget, but an unwelcome expense nonetheless, and one that could fall hardest on agriculture customers in North County who rely on large volumes of treated water from Metropolitan.
About a tenth of the Water Authority’s water next year will be treated water it buys from Metropolitan. The rest will be raw water that Metropolitan delivers to San Diego but that can be treated locally or water the Water Authority buys from a company with a desalination plant in Carlsbad.
Tom Kennedy, the head of the Rainbow Municipal Water District in North County that has a lot of farmers, said he planned to speak against the new treated water rates but recognized that Metropolitan needs to make some changes in how it pays for its operations.
“I expect it to be an annoying but not a devastating increase,” he said.
San Diego water users aren’t alone in expressing concern about the new treated water rate.
David De Jesus, a Metropolitan board member who represents an inland water district in Los Angeles County, said during a committee meeting a few weeks ago that Metropolitan officials may want to spend more time considering what new rates to adopt.
“I think the best approach would be to take a step back, instead of taking two steps forward,” he said.