Otay Water District Sues for Overcharges
June 8, 2017
By Andrea Lopez-Villafaña
The Otay Water District filed a lawsuit against the City of San Diego on May 30 which challenges the amount of money the City charges the provider for reclaimed water and recycled water.
Otay is seeking damages in excess of $16 million of overcharges from the City.
In 2015, the City doubled the rate at which reclaimed water was being sold from $350 per acre foot to $753 per acre foot and was placed in effect January 2016.
The rate change includes the cost of the City’s two plants – the North City Water Reclamation Plant and the South Bay Water Reclamation Plant, but the Otay Water District only purchases from the south plant.
General Manager of the Otay Water District Mark Watton said they do not receive reclaimed water from North City because there is no physical delivery from North City to the Otay Water District.
Otay purchases 99.7 percent of the reclaimed water produced at the City’s South Bay Plant.
Due to the City’s increase in rates, Otay raised their customers general rate to cover the new costs.
Mark Robak, Otay Water District Board president, released a statement regarding the lawsuit and an explanation to the Writ of Mandate.
According to the statement, making Otay pay for the cost of the North City plant is a breach of contract and a violation of the California Constitution Proposition 13, 218 and 26.
Watton said they spoke to city staff, lobbied the City Council and reached out to a mediator but the City still went through with the rate increase.
“It became very clear that the City just wasn’t interested in changing their methodology and at that point you’re kind of at a dead end,” he said.
The City adopted a unitary rate but Otay suggested a zonal rate structure instead, because the costs associated with the north plant would be paid for by the customers that benefit from the system and vice versa for the south plant, according to the statement.
The statement also includes that the City’s own rate consultant, Raftelis Financial Consultants, Inc., concluded that a zonal rate structure would more closely align the rate charged to the cost of operating each individual facility and system.
Watton said he expects general denial from the City regarding the lawsuit but won’t have a specific answer for several months.