San Diego water district wins ruling in MWD pricing dispute

In storied water wars of the West, few have been as long and bitter as the one between San Diego officials and the Metropolitan Water District of Southern California.

San Diego doesn't have enough water for its population and relies heavily on Metropolitan, the region's water importer, for help. But for decades, some in San Diego have accused the MWD of unfair treatment.

On Wednesday, San Diego won a round.

San Francisco County Superior Court Judge Curtis E.A. Karnow found that the MWD had charged San Diego too much for the use of its aqueduct to bring water from the Colorado River under San Diego's deal to buy water from the Imperial Irrigation District.

If the judge's tentative ruling is upheld, the San Diego County Water Authority would be due $188,295,602, plus interest.

At issue is San Diego's contract to buy large amounts of water from the Imperial County district — a portion of Imperial's allocation from the Colorado River. It's part of an effort by San Diego County to reduce its reliance on the MWD, which at one point supplied 95% of the region's water.

With the Imperial Valley deal and the opening of a desalination plant in Carlsbad, San Diego buys closer to 50% of its water from MWD.

But San Diego needs the MWD's aqueduct to get the Imperial water to its communities. The judge ruled that the MWD was charging San Diego too much to carry the Imperial water, amounting to a violation of its contract.

"This is a complete, total, unadulterated victory," said Dennis Cushman, assistant general manager of the San Diego County Water Authority.

MWD officials vowed to appeal.

"We disagree with but we're not surprised by the decision," MWD said in a statement, "given the judge's ruling on the early phase of the trial. Metropolitan will file objections to the tentative statement and, at the conclusion of the litigation in the trial court, will appeal the adverse ruling."

The judge's ruling could save San Diego water customers some $2 billion over the length of the San Diego-Imperial deal, Cushman said.

Since it joined MWD after World War II, San Diego has complained that it was being cheated in the preferential rights calculation in relation to other Southern California water agencies that belong to MWD. In his ruling, Karnow sided with San Diego.

In rough form, preferential rights are calculated based on how much local agencies paid to establish the regional wholesaler, which now supplies water to six Southern California counties. San Diego was not among the founding agencies and only joined with great reluctance, given the historical antipathy of San Diego toward Los Angeles-based entities.

The specter of San Diego's water supply being drastically cut so that Los Angeles could remain wet has angered and motivated decades of San Diego water officials to pursue "water independence" from MWD.

A year ago Karnow sided with San Diego, ruling that MWD had violated provisions of Proposition 26, passed in 2010, which limited the amount that government can charge for a service to the amount it actually costs to render that service.

San Diego, in its lawsuit, claimed that MWD was lumping all sorts of charges into its payment schedule for San Diego under the 2003 deal between the San Diego County Water Authority and the Imperial Irrigation District. The deal is set to last 45 years and is considered the largest farms-to-cities water deal in the U.S.

As part of the 2003 deal, San Diego promised not to file a lawsuit for five years. As soon as the five years were completed, it sued MWD.

San Diego water officials assert that after decades of having San Diego as its "cash cow," MWD was determined to keep it paying premium rates for the Imperial Valley water.

MWD said that by signing a payment agreement as part of the Imperial Valley deal, San Diego lost the right to sue, even after the five-year limit. San Diego argued that it promised only to delay a lawsuit.

"San Diego's position is consistent with the plain language of the provision and Met's position is not," Karnow said in a 30-page ruling laden with arcane details about water law.

Just how much additional water San Diego would be entitled to buy from MWD is not included in Karnow's ruling, should it become final and be upheld on appeal. Karnow is expected to make his ruling permanent within two months.

Karnow also ruled that San Diego is entitled to have various payments made to MWD included in a formula that determines preferential rights in times of cutbacks.

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