Water authority gains lawsuit support from RMWD, says refund possible
By Karen Brainard
Ramona Municipal Water District (RMWD) could be in for a sizable refund if its sole water provider is victorious in a lawsuit against the Metropolitan Water District of Southern California.
That’s what Dennis Cushman, assistant general manager of the San Diego County Water Authority (CWA), the region’s water wholesaler, told RMWD directors at their Feb. 28 meeting as he updated them on the lawsuit and asked for their support.
The Ramona water board unanimously approved a resolution supporting CWA’s lawsuit against Metropolitan.
In the lawsuit, CWA claims that Metropolitan, the Los Angeles-based water wholesaler, overcharges the water authority tens of millions of dollars each year by misallocating water supply costs to transportation charges. The water authority, the Met’s largest customer, pays a transportation rate to Metropolitan to move water supplies, which come from the Colorado River and the state water project, to San Diego County. Cushman said CWA believes the overcharges subsidize other Metropolitan member agencies.
Cushman said the Met is required to put the disputed payments into an escrow account. The 2011 overpayments in the escrow account amount to $38 million, of which $467,400 is RMWD’s share, he said. The Ramona water district is one of 24 member agencies of the water authority.
On Feb. 23, Cushman said, the water authority board adopted a policy: “If the water authority is victorious in its litigation and Metropolitan’s forced to send back to the water authority the disputed amounts in the escrow account, that we will first subtract our costs of pursuing this litigation from that amount and then refund all of the money to those that paid—those are our member agencies and rate payers.”
The escrow balance is expected to grow to $78 million by the end of this year and to $135 million by the end of 2013. CWA is estimating a trial court decision will be made late this year.
Cushman told the RMWD board that earlier in the day the Metropolitan board voted to move its 2013 and 2014 rate-setting hearing from April to March 12. Metropolitan is proposing to adopt two years worth of rate increases, he said.
“Why they thought they needed to rush adoption from April…to March we’re not quite sure,” said Cushman, adding that CWA doesn’t think it sends a good message.
Cushman invited the Ramona directors to attend the rate hearing in Los Angeles on March 12.
“We’re here today to ask you to stand with us in this litigation, to take action to adopt the resolution,” he said. “We’re fighting for you and every one of our member agencies. We’re fighting for you and the 3.1 million people we serve in San Diego County.”