OTAY WATER SUES CITY OF SAN DIEGO FOR OVERCHARGES ON RECLAIMED WATER SERVICES

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By Miriam Raftery

June 4, 2017 (San Diego’s East County) – The Otay Water District filed a lawsuit in Superior Court on May 30th against the City of San Diego alleging breach of contract, overcharges on recycled water rates and lack of transparency.  The suit accuses San Diego of becoming “unjustly enriched at Otay’s expense,” according to Mark Robak, president of the Otay Water District, and asks the court to rescind a January 2016 rate hike and repay that money to the district.

The Otay district provides water for residents in Spring Valley, Jamul, Rancho San Diego, La Prensa, eastern Otay Mesa and eastern Chula Vista.  

The suit contends that San Diego violated a 2003 agreement with Otay when in November 2015, the city of San Diego decided to more than double rates on reclaimed water to pay for expansion of reclaimed water services to its customers in the North City area.  The rate hike included customers who get water from the South City Water Plant, where 99% of Otay’s water comes from, even though Otay customers won’t benefit from the upgrades for the North City plant.

Otay objected in writing and in oral testimony during the City’s rate setting process.  Otay argues that the jacked-up rates violate the California Constitution (Proposition 13, 218 and 26) as well as Otay’s 2003 agreement with the City.

Otay seeks repayment of around $16 million in overcharges.  By law, the City is not allowed to charge Otay any more than the reasonable cost of providing water from the South Bay facility to Otay, the suit contends.   Robak says the City should have adopted a separate zoned rate for its Southern service area.

In addition, Otay claims the City has failed to provide a proper accounting of Otay’s capacity reservation fee of $3.6 million for reserved capacity in the South Bay plant and its transmission facilities, and how the City used those fees. The suit further claims the City used Otay’s facilities in excess of the amount allowed in the2003 agreement without paying for the extra use.

The suit asks the court to rescind its new unitary rate, refund to Otay all payments mad under protest, refrain from charging Otay rates disproportionate to the reasonable and actual costs of providing Otay with reclaimed water from the South Bay Plant, and adopt a lawful rate structure for reclaimed water.

Otay is not the only agency balking at the recent rate hikes imposed by San Diego for reclaimed water. Objections have also been raised by Lemon Grove and other jurisdictions.

Rising water rates have drawn objections across the region following years of drought and costly efforts to boost local storage capacity and recycling of water. Two incumbents on the Helix Water District board lost their seats amid a veritable ratepayer revolt over a five-year rate hike imposed.  Padre Dam Municipal Water District is currently drawing fire from some ratepayers over its proposed rate hike despite having rates higher than most cities in the nation. 

At a recent El Cajon City Council meeting, Maureen Stapleton, general manager of the San Diego Water Authority, gave a slide show presentation and accused the Metropolitan Water District in Los Angeles, which supplies much of our region’s water, of squandering funds by buying five islands in the delta region without an appraisal or clear understanding of why such expenditure was necessary, a revelation Mayor Bill Wells called “really shocking.”

A May 25th report in Voice of San Diego indicated that San Diegans on average are paying double the national average on their monthly water bills, a challenge in a region that also has among the highest electricity rates and housing costs in the United States.