Glendale has entered the legal battle over wholesale water charges to San Diego County that could have major implications to local customers.
The San Diego County Water Authority is suing the Southern California Metropolitan Water District — the Southland's main water suppliers to member utilities, such as Glendale, Burbank and the foothills — over what it claims are illegal overcharges included in rates for 2013 and 2014.
If San Diego County is successful, the financial impact to Glendale and other Metropolitan member utilities could be significant, translating into higher rates for customers, officials say.
For Glendale, the cost could be an additional $11 million for water over the next 20 years. For the Foothill Municipal Water District, which sells Metropolitan water to the Crescenta Valley Water District, the cost could be an extra $6 million over the same period.
“There's big repercussions if the lawsuit is lost,” said Glendale Councilwoman Laura Friedman, the city's representative on Metropolitan's board of directors. Glendale residents, she added, “should care because if San Diego wins, our rates will go up.”
Glendale this week filed court documents denouncing the San Diego County Water Authority's lawsuit, which claims Metropolitan has been inflating the fees it charges to transport water.
The San Diego utility's assistant general manager, Dennis Cushman, said the rates other agencies have been paying are “artificially lower today because they're overcharging on transportation.”
“The issue isn't about winners versus losers. The issue is about whether or not Metropolitan Water District rates are lawful and appropriately allocated,” Cushman said.
Metropolitan's rates have increased significantly over the past several years, putting pressure on Glendale Water & Power and other utilities to boost their own rates. Glendale, which gets about 70% of its water from Metropolitan, most recently raised rates in March.
The tensions stretch back to 2003 when Metropolitan “unbundled” rates, separating the cost of supply from transportation. While San Diego is one of the authority's largest customers, it purchases much of its water from an Imperial Valley agency, but pays Metropolitan to transport it.
The San Diego agency claims Metropolitan includes non-transportation-related charges in those rates, according to court documents. Metropolitan denies those claims.
Nina Jazmadarian, general manager of Foothill Municipal Water District, said San Diego is trying to wiggle out of paying its fair share after striking a deal with the Imperial Valley agency to boost its independence from Metropolitan.
“It was just a bad business decision on their part,” Jazmadarian said, adding that Foothill may have to raise rates 5% to 7% if San Diego wins.
The stakes are huge for the San Diego County Water Authority, which faces a $217-million annual tab by 2021.
In addition to the battle over rates, the two sides are quarreling over how Metropolitan's 26 member agencies meet and discuss policy. San Diego claims there is an anti-San Diego “shadow government” — which Glendale is allegedly a part of, according to Cushman — that secretly discusses rates and other issues.
Glendale and Metropolitan have both stated in court documents that the assertions are baseless and should be stricken from the lawsuit.
All sides expect the lawsuit to be a long, drawn-out battle.
“It may be years,” Cushman said.