LOS ANGELES — The five-day trial to settle a rate dispute between the San Diego County Water Authority and its wholesale water supplier ended Monday without the judge making a ruling.
SDCWA sued Metropolitan Water District of Southern California in 2010 and again in 2012 alleging the water wholesaler had imposed illegal rates not based on the cost of providing the services.
The two lawsuits disputing rates were coordinated for trial by Superior Court Judge Curtis E. A. Karnow.
The earliest a ruling could occur in the case is in late January.
Karnow requested post-trial briefs from both parties be submitted by Jan. 17 with a hearing to follow on Jan. 23. The judge will not rule at the end of the hearing, but will take the matter under submission and issue a written order sometime after the hearing.
MWD, established in 1928 through a California statute, can levy property taxes within its service area, establish water rates, impose charges for water standby and service availability and incur general obligation bonded indebtedness and issue revenue bonds. The Triple-A rated MWD has $4.5 billion in outstanding revenue bond debt.
The primary purpose of the water district is to provide a supplemental supply of water at wholesale rates to its member public agencies. As a water wholesaler, Metropolitan serves 26 member agencies; it has no direct retail customers but provides water for almost 19 million people in six counties through its member agencies.
The San Diego County Water Authority claims that MWD overcharged it to use MWD's pipelines to transfer large volumes of independent water supplies from the Colorado River.
According to the water authority's attorneys, other MWD member agencies benefit from the corresponding undercharges, which totaled $57 million this year and are projected to reach $217 million annually by 2021.
The first phase of the trial focused on the water authority's challenges to MWD's rates for 2011 through 2014. A second, yet-to-be-scheduled phase of the trial would address the water authority's claim that MWD miscalculates San Diego County's preferential rights to MWD water, which are particularly important during water shortage allocations, according to SDCWA's attorneys.
The litigation stems from agreements the water authority signed with MWD a decade ago to secure independent sources of water from the Colorado River and reduce its once near-total reliance on MWD for water. SDCWA is the only MWD member agency that uses MWD's pipelines to transport third-party water.
In court filings, MWD has stated that it is exempt from the requirements of California statutes and the California Constitution requiring public agencies to tie the rates they charge to the actual cost of the services they provide.
The water authority interprets the law differently.
"Over the past five days of hearings, we have conclusively shown that MWD set rates to preserve its revenues, and that is flatly illegal," said John W. Keker, special counsel for the Water Authority and a partner in the San Francisco office of the law firm, Keker & Van Nest. "We believe the judge will direct MWD to reformulate its rates - so they are no higher than what is needed to cover services."