News Feature | May 6, 2014

California Water Wholesaler Accused Of Illegal Activities

Sara Jerome

By Sara Jerome


A water wholesaler in California known as the Metropolitan Water District (MWD) is being accused of unethical and illegal activities by a key customer, the San Diego water authority. 

MWD sells water to the San Diego County Water Authority and other member agencies.

The courts have already sided with San Diego on some of the accusations. A judge ruled last month that MWD overcharged San Diego, violating "cost of service requirements of California’s Constitution, statutes and common law when setting rates for 2011, 2012, 2013 and 2014," SD Metro reported. This could have cost San Diego ratepayers up to $2 billion, the report said. 

The San Diego water authority has filed suit to demand repayment.  

But that is not the end to the accusations against MWD. The San Diego authority is accusing MWD of additional unethical conduct. San Diego says MWD is executing a public relations campaign to wiggle out of the repayment costs.

It is unclear whether this is true, since WMD is not funding the controversial ad campaign. The campaign is funded by Riverside's Eastern Municipal Water District (EMWD). Like the San Diego authority, the Riverside authority is a member agency of WMD, according to ABC 10 News. Riverside's ad campaign allegedly aimed to persuade San Diego ratepayers to accept the overcharges. 

Why would the Riverside authority do MWD's bidding? On some level, the motive is clear: San Diego authority official Dennis Cushman said that "all other member agencies benefit by San Diego being overcharged.  He said that is why a seemingly random water agency would target San Diego for a public relations blitz," ABC reported. 

But the big question is this: Is MWD involved with the ad campaign? San Diego authority officials say yes, arguing that MWD is calling the shots. 

"For this notion that [MWD] had nothing to do with this, the documents really speak for themselves," Cushman said to ABC. "They don't support that story line."

"[The Riverside authority] was carrying out these activities on behalf of Metropolitan and its member agencies," Cushman continued.  "I don't believe this community is going to wake up tomorrow, or a year from now, and say, 'gosh those folks from Metropolitan sure are good guys looking out for our best interests."

Officials from MWD and the Riverside authority said they did not collude, according to ABC.

A statement from the MWD said: The ad campaign "was designed by [the Riverside authority] to provide a more balanced representation and dialogue in San Diego County on regional and statewide water issues - including those impacting EMWD customers. The completed...plan was presented to staff at the Metropolitan Water District of Southern California. Metropolitan chose not to entertain the suggested plan."

But critics say the paper trail that tells a different story.  

Seaside Courier reported: "Documents obtained under the California Public Records Act show that the top official with the Los Angeles-based Metropolitan Water District of Southern California participated in meetings on the development of a covert public relations campaign designed to discredit the San Diego County Water Authority and its long-term water supply diversification strategy. The sub-rosa campaign is the latest in a string of similar efforts by MWD and some of its member agencies dating back to the late-1990s, records show."

The San Diego water authority has praised the courts for finding fault with its wholesaler. "We've said all along that MWD is not above the law,'' SDCWA General Manager Maureen Stapleton said to KBPS. "I hope that Met's board of directors listens to a judge saying the same thing and conducts a real, independent cost-of-service study and sets rates that comply with the law.''

Image credit: "San Diego Skyline," FlyNutAA © 2007, used under an Attribution 2.0 Generic license:

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